Exhibit 10.25.8
EIGHTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
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EIGHTH AMENDMENT, dated as of December 28, 1999 (this "Amendment"), to
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the Loan and Security Agreement referred to below by and among GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation ("Lender"), PAR PHARMACEUTICAL,
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INC., a New Jersey corporation ("Borrower"), PHARMACEUTICAL RESOURCES, INC., a
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New Jersey corporation ("Parent"), NUTRICEUTICAL RESOURCES, INC., a New York
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corporation ("NRI"), and PARCARE, LTD., a New York corporation ("ParCare").
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Parent, NRI and ParCare are hereinafter referred to as "Guarantors".
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W I T N E S S E T H
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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
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Agreement"); and
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WHEREAS, Lender, Borrower and Guarantors have agreed to amend 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
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shall have the meanings ascribed to them in the Loan Agreement.
2. Amendment to Recitals to the Loan Agreement. Recital A of the
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Loan Agreement is hereby amended as of the Amendment Effective Date (as
hereinafter defined) by (a) deleting the text "3 years" set forth under the
caption "Term:" and inserting in lieu thereof the text "5 years", (b) deleting
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the text under the caption "Unused Line Fee:" and inserting in lieu thereof the
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text "0.25% per annum" and (c) deleting the text under the caption "Prepayment
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Fee:" and inserting in lieu thereof the text "1.0% in years three and four; and
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0.75% in year five".
3. Amendments to Section 5 of the Loan Agreement. Section 5 of the
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Loan Agreement is hereby amended as of the Amendment Effective Date as follows:
(a) Section 5(b) is hereby amended and restated in its entirety to
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read as follows:
"(c) 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 (i) $6,500,000 in any Fiscal Year ending
on or before December 31, 1999 and (ii) $10,000,000 in any Fiscal Year
ending thereafter;"
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(b) Section 5(c) is amended by deleting clause (v) thereof and the
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word "and" appearing immediately before such clause and inserting in lieu
thereof the following new clauses:
"(v) Indebtedness of Borrower secured by Borrower's real property in a
maximum aggregate amount outstanding (together with any such
Indebtedness secured by Borrower's real property set forth as
Disclosure Schedule (5(c))) and (vi) Indebtedness represented by
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Capital Lease Obligations; provided, however, that the aggregate
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amount of Indebtedness incurred by Borrower under clauses (v) and (vi)
of this Section 5(c) shall not exceed $5,000,000;"
4. Amendment to Schedule A to the Loan Agreement. Schedule A to the
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Loan Agreement is hereby amended as of the Amendment Effective Date as follows:
(a) The definition of "Permitted Encumbrances" is hereby amended by
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deleting the word "and" appearing immediately before clause (xiii) thereof and
inserting the following new clause immediately after such clause (xiii):
"; and (xiv) Liens created under Capital Leases securing Capital Lease
Obligations permitted under Section 5(c)(vi) of the Agreement."
(b) The definitions of "Commitment Maturity Date", "Commitment
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Termination Date", "Fiscal Year" and "Sano Stock Reserve" set forth in Schedule
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A are hereby deleted in their entirety and the following new definitions are
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hereby inserted in appropriate alphabetical order:
`"Commitment Maturity Date" shall mean the earliest of (i) December
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30, 2001, (ii) the date Lender's obligation to advance funds is
terminated and the Obligations are declared to be due and payable
pursuant to Section 7.2, and (iii) the date of prepayment in full by
Borrower of the Obligations in accordance with the provisions of
Section 1.2(b)."
`"Commitment Termination Date" shall mean the earliest of (i) December
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30, 2001, (ii) the date of termination of Lender's obligation to
advance funds pursuant to Section 7.2, and (iii) the date of
prepayment in full by Borrower of the Obligations in accordance with
the provisions of Section 1.2(b)."
`"Fiscal Year" shall mean any of the annual accounting periods of
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Parent and its Subsidiaries ending on December 31 of each year.
Subsequent changes of the fiscal year of Parent and its Subsidiaries
shall not change the term "Fiscal Year" unless Lender shall consent in
writing to such change."
`"Sano Stock Reserve" shall mean a reserve in the amount of
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$2,852,800, established pursuant to Section 1.15 hereof; provided,
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however, that such reserve shall be reduced to (a) $1,426,400 upon
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receipt by Lender of Borrower's audited Financial Statements and
supporting documentation for the Fiscal Year ending December 31, 1999,
as required by Section 4.2(d) of the Loan Agreement, so long as no
Default shall have occurred and be continuing on the date of such
receipt and (b) $-0- upon receipt by Lender of Borrower's audited
Financial Statements and supporting documentation for the Fiscal Year
ending December 31, 2000, as required by Section 4.2(d) of the Loan
Agreement, so long as no Default shall have occurred and be continuing
on the date of such receipt."
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5. Amendment to Schedule D to the Loan Agreement. Schedule D to
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the Loan Agreement is hereby amended as of Amendment Effective Date as follows:
(a) The last two sentences of Section 2 (including the table set
forth therein) is deleted in their entirety and the following new sentence is
hereby inserted in lieu thereof: "The" Unused Line Fee Percentage" shall be,
with respect to any period, 0.25%."
(b) Section 4 is hereby deleted in its entirety and the following new
section is inserted in lieu thereof:
"4. Prepayment Fee: An amount equal to the Maximum Amount multiplied
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by:
1.00% if Lender's obligation to make or incur Revolving Credit
Advances is terminated by Borrower after the second anniversary of the
Closing Date and on or before the fourth anniversary of the Closing
Date, payable on the Commitment Maturity Date; or
0.75% if Lender's obligation to make or incur Revolving Credit
Advances is terminated by Borrower after the fourth anniversary of the
Closing Date and on or before the fifth anniversary of the Closing
Date, payable on the Commitment Maturity Date.
Borrower acknowledges and agrees that (a) it would be difficult or
impractical to calculate Lender's actual damages from Borrower's early
termination of Lender's Revolving Credit Loan obligations pursuant to
Section 1.2(b) of the Agreement, (b) the Prepayment Fees provided
above are intended to be fair and reasonable approximations of such
damages, and (c) the Prepayment Fees are not intended to be
penalties."
6. Amendment to Schedule F to the Loan Agreement. Schedule F to
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the Loan Agreement is hereby amended and restated as of Amendment Effective Date
in its entirety to read as set forth in Schedule F hereto.
7. Amendment to Schedule 1.6 to the Loan Agreement. Schedule 1.6
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to the Loan Agreement is hereby amended as of Amendment Effective Date by
deleting the proviso at the end of such Schedule in its entirety and inserting
in lieu thereof the following new proviso:
"provided, that (i) Lender shall have the right to create and adjust
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eligibility standards and related reserves from time to time in its
reasonable credit judgment and (ii) Lender shall establish a reserve
against the amount of Eligible Accounts otherwise used in the
Borrowing Base calculation for each percentage point that the dilution
of Borrower's Accounts (calculated as the average dilution over the
rolling 12-month period then ended) exceeds 5%."
8. Representations and Warranties. To induce Lender to enter into
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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
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Agreement"), by each Credit Party signatory thereto: (i) are within their
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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.
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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
signatory thereto 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.
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.
9. No Other Amendment/Waivers. Except as expressly provided in
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Section 2 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 3 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.
10. Outstanding Indebtedness; Waiver of Claims. Each Credit Party
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hereby acknowledges and agrees that as of December 28, 1999 the aggregate
outstanding principal amount of the Revolving Credit Loan is $5,389,464.96.
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.
11. Expenses. Borrower hereby reconfirms its obligations pursuant to
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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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12. Effectiveness. This Amendment shall become effective as of the
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date hereof (the "Amendment Effective Date") only upon satisfaction in full in
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the judgment of the Lender of each of the following conditions on or prior to
December 29, 1999:
A. Amendment. Lender shall have received two original copies
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of this Amendment duly executed and delivered by Lender and each Credit Party.
B. Secretarial Certificate. Lender shall have received in form
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and substance satisfactory to it a certificate of the Secretary or an Assistant
Secretary of each Credit Party certifying (i) the resolutions adopted by its
Board of Directors approving this Amendment and the transactions contemplated
hereby and (ii) the names and true signatures of the authorized officers of such
Credit Party.
C. Payment of Expenses. Borrower shall have paid to Lender all
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costs and expenses (including a non-refundable renewal fee in the amount of
$65,000) owing in connection with this Amendment and the other Loan Documents
and due to Lender (including, without limitation, reasonable legal fees and
expenses).
D. Representations and Warranties. The representations and
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warranties of each Credit Party contained in this Amendment shall be true and
correct on and as of the Amendment Effective Date.
13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
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INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
14. Counterparts. This Amendment may be executed by the parties
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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:
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PAR PHARMACEUTICAL, INC.
By: /s/ Xxxxxx X'Xxxxxx
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Name: Xxxxxx X'Xxxxxx
Title: VP-CFO
Lender:
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GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Its: Duly Authorized Signatory
Parent:
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PHARMACEUTICAL RESOURCES,
INC.
By: /s/ Xxxxxx X'Xxxxxx
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Name: Xxxxxx X'Xxxxxx
Title: VP-CFO
(SIGNATURES CONTINUED ON NEXT PAGE)
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Subsidiary Guarantors:
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NUTRICEUTICAL RESOURCES, INC.
By: /s/ Xxxxxx X'Xxxxxx
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Name: Xxxxxx X'Xxxxxx
Title: VP-CFO
PARCARE, LTD.
By: /s/ Xxxxxx X'Xxxxxx
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Name: Xxxxxx X'Xxxxxx
Title: VP-CFO
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Schedule F
Financial Covenants
PARAGRAPH NUMBERING REDEFINED HERE
1 Minimum EBIT. Parent and its Subsidiaries on a consolidated
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basis shall maintain for each four Fiscal Quarter period, commencing with the
four Fiscal Quarter period ending on or about December 31, 1999, EBIT for such
period of not less than the amount for such period set forth below:
Four Fiscal Quarter Period Ending
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on or about: Minimum EBIT
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December 31, 1999 $(2,500,000)
March 31, 2000 (4,000,000)
June 30, 2000 (3,600,000)
September 30, 2000 (1,500,000)
December 31, 2000 1,800,000
March 31, 2001 3,000,000
June 30, 2001 5,000,000
September 30, 2001 5,500,000
December 31, 2001 6,000,000
2. Minimum Tangible Net Worth. Parent and its Subsidiaries on a
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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
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on or about: Minimum Tangible Net Worth
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December 31, 1999 $35,000,000
March 31, 2000 34,000,000
June 30, 2000 34,000,000
September 30, 2000 35,000,000
December 31, 2000 36,000,000
March 31, 2001 37,000,000
June 30, 2001 38,000,000
September 30, 2001 39,000,000
December 31, 2001 40,000,000
3. Capital Expenditures. Parent and its Subsidiaries on a
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consolidated basis shall not make aggregate Capital Expenditures in any Fiscal
Year in excess of (i)$7,000,000 for the Fiscal Year ending on or about December
31, 1999, (ii)$4,700,000 for the Fiscal Year ending on or about December 31,
2000 and (iii)$5,000,000 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
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meanings set forth below:
"EBIT" shall mean, for any period, the Net Income (Loss) of Parent and
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its Subsidiaries on a consolidated basis for such period, plus interest expense,
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tax expense and extraordinary losses and minus extraordinary gains, in each
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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
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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
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date, all amounts which, in
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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
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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).
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