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EXHIBIT 10.10
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This First Amendment (this "AMENDMENT") is entered into as of
August 3, 1999, between DURAMED PHARMACEUTICALS, INC. ("BORROWER"), and
NATIONSCREDIT COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION ("LENDER").
WHEREAS, Borrower has requested that Lender agree to increase
the principal amount of the Maximum Facility Amount and modify certain covenants
of that certain Loan and Security Agreement dated November 6, 1998 (the "LOAN
AGREEMENT"); and
WHEREAS, Lender has agreed to do so subject to the terms
contained herein;
NOW THEREFORE, in consideration of the premises and mutual
agreements herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to such terms in the Loan
Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
(a) Subsection 2.2(d) of the Loan Agreement is hereby amended
to replace the reference to "$10,000,000" with "$17,000,000".
(b) Subsection 9.8 of the Loan Agreement is hereby amended to
replace the referenced to "$33,000,000" with "$40,000,000".
(c) Subsection 1(a) of Schedule A is amended to increase the
Maximum Facility Amount from $33,000,000 to $40,000,000.
(d) Subsection 1(b)(i) of Schedule A is amended to read as
follows:
(i) Accounts Advance Rate:
85% (75% on accounts arising from the sale
of Cenestin(C), which advance rate on
accounts arising from the sale of
Cenestin(C) Lender may, in its sole
discretion, consider increasing upon a
showing of the successful sales performance
of Cenestin(C), but which Lender shall not
be required to increase); PROVIDED, that if
the Dilution Percentage exceeds 5%, Lender
may, at its option, (A) reduce such advance
rate by the
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number of full or partial percentage points
of such excess or (B) establish a Reserve on
account of such excess
(e) Subsection 1(d)(i) of Schedule A is hereby amended to
replace the reference to "$12,000,000" with "$13,000,000".
(f) Subsection 1(c) of Schedule A is hereby amended to
add the following subpart (i) in appropriate order:
(i) Sublimit on advances $3,750,000, until further
against accounts notice from Lender, which
arising from the Lender may give or
sale of Cenestin(C) withhold in its sole
discretion upon a showing
of the successful sales
performance of Cenestin(C)
(g) Subsection 2(a) of Schedule A is hereby amended to
read "Principal Amount for Term Loan A".
(h) Subsection 2(b) of Schedule A is hereby amended to
read "Repayment Schedule for Term Loan A".
(i) Subsection 2(b)(i) of Schedule A is hereby amended to
read as follows:
(i) Equipment Advance: The Equipment Advance shall be repaid in
consecutive monthly installments payable
on the first day of each calendar month
in installments as follows:
August 1, 1999 to July 30, 2000 -
$158,341.61
August 1, 2000 to Maturity Date -
$67,046.58
with the entire unpaid balance due and
payable on the Maturity Date; PROVIDED,
that if at any time Lender determines
that the unpaid principal balance of the
Equipment Advance exceeds 85% of the
value of Eligible Equipment owned by
Borrower on the date of the Agreement as
set forth on the most recent of the
Updated Equipment Appraisals (as defined
in Section 12 of this Schedule A), then,
Borrower shall repay
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such excess in 6 equal consecutive
monthly installments payable on the
first day of each calendar month
commencing with the month immediately
following the date of such determination
by Lender (which payments shall be in
addition to the regular amortization
payments set forth above), AND PROVIDED
FURTHER, that if Borrower's cumulative
pre-tax loss (net of any Included
Subordinated Debt and any Additional
Equity) from October 1, 1998 through the
end of the Term is less than $4,000,000,
the monthly amortization with respect to
the Equipment Advance shall immediately
upon telephonic or other notice from
Lender to Borrower be reduced to
$67,046.58; PROVIDED, that if Borrower
fails to pay immediately when due any
such amounts to Lender, such failure
shall constitute an Event of Default
under Section 8.1(ii) of the Agreement,
BUT PROVIDED FURTHER, that if Borrower
has Cash Flow greater than $0 for each
of six consecutive months, and if no
Default or Event of Default then exists,
Lender will consider entering into a
written amendment of the Agreement
increasing the Loan Limit with respect
to the Equipment Advance back to the
lesser of $6,000,000 and 85% of the
appraised auction sale value of
Borrower's Eligible Equipment, but
Lender shall have no obligation to agree
to any such increase
(j) Section 2 of Schedule A is hereby amended to insert the following
subsections (c) and (d) in appropriate order:
(c) Principal Amount for Term Loan B: $7,000,000
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(d) Repayment Schedule Term Loan B shall be repaid in equal
for Term Loan B: consecutive monthly installments
amortized over 48 months payable on the
first day of each calendar month
commencing September 1, 1999, with the
entire unpaid balance due and payable on
the Maturity Date; PROVIDED, that if
Borrower's cumulative pre-tax loss (net
of any Included Subordinated Debt and
any Additional Equity) from August 1,
1999 through the end of the Term exceeds
$4,000,000, the principal amount with
respect to Term Loan B shall be
automatically reduced by $2,000,000 and
Borrower shall immediately repay to
Lender such amounts as shall cause
Borrower to be in full compliance with
such reduced principal amount (which
payment shall be in addition to the
regular amortization payments set forth
above), PROVIDED FURTHER, that if
Borrower's cumulative pre-tax loss (net
of any Included Subordinated Debt and
any Additional Equity) from August 1,
1999 through the end of the Term should
thereafter be reduced to less than
$4,000,000, Lender will, in its sole
discretion, consider increasing the
principal amount with respect to Term
Loan B by $2,000,000; PROVIDED FURTHER,
that if Borrower fails to pay
immediately when due any such amounts to
Lender, such failure shall constitute an
Event of Default under Section 8.1(ii)
of the Agreement; PROVIDED FURTHER, that
if Borrower completes an additional
public offering of common or preferred
stock, Lender will have the option, in
Lender's sole discretion, to require
Borrower to prepay Term Loan B in full
or in part with the net proceeds (after
payments, charges and expenses) of such
offering (without obligation to pay more
than the aggregate amount of the net
proceeds of such public offering);
PROVIDED FURTHER, that Borrower shall
prepay an aggregate principal amount of
Term Loan B, on the last day of each
fiscal quarter beginning with the fiscal
quarter ending December 31, 1999, equal
to 50% of the amount by which the Cash
Flow after actual cash taxes paid for
such fiscal quarter exceeds $0, with
each such prepayment being applied to
the installments
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of principal owing on Term Loan B in the
inverse order of their maturity.
(k) Subsection 3(b) of Schedule A is hereby amended to read as
follows:
(b) Term Loan A: 0.75% per annum in excess of the Prime Rate
Term Loan B: 1.25% per annum in excess of the Prime Rate
(l) Section 5 of Schedule A is hereby amended to insert
the following subsections (c) and (d) in appropriate order:
(c) Maximum days after
original INVOICE DATE for 150
accounts arising from the
sale of Cenestin(C) between
May 1, 1999 and July 15, 1999
(d) Maximum days after
original INVOICE DUE DATE 30
for accounts arising from the
sale of Cenestin(C)
between May 1, 1999
and July 15, 1999
(m) Subsection 6(g) of Schedule A is hereby amended to read as
follows:
(g) Warrants: 110,000 warrants at 110% of market value.
(n) Subsection 13(a) of Schedule A is hereby amended to
increase the maximum amount Borrower may invest or loan to Europe in the
aggregate during any fiscal quarter of Borrower from $100,000 to $200,000.
(o) Schedule B is amended to replace the definition of
"CAPITAL EXPENDITURES" with the following:
"CAPITAL EXPENDITURES" means the amount capitalized for
capital expenditures (including, without limitation, with respect to capitalized
leases) for the period, as determined in accordance with GAAP.
(p) Schedule B is amended to replace the definition of
"CASH FLOW" with the following:
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"CASH FLOW" means at any time of calculation, on a cumulative
basis from the date of the Agreement through the date of calculation (unless a
different time period is expressly specified elsewhere in the Agreement),
Borrower's net income (or net loss) before taxes for such period, PLUS
depreciation and amortization deducted in determining net income for such
period, LESS Capital Expenditures for such period not financed, LESS all current
principal maturities (including, without limitation, the principal portion of
scheduled payments of capital lease obligations) paid or scheduled to be paid
during such period, all as determined by Lender, on a consistent basis, based
upon the most recent financial statements received by Lender from Borrower.
3.CENESTIN(C). Nothing contained in this Amendment
shall impair Lender's rights under the Loan Agreement to declare an Event of
Default if the outcome of any litigation by Schein concerning Cenestin(C) either
violates subsection 8.1 of the Loan Agreement or is materially adverse to
Borrower (as determined by Lender in its sole discretion), nor shall anything
contained in this Amendment impair the Lender's rights under the Loan Agreement
to deem any Inventory relating to Cenestin(C), any Accounts arising from the
sale of Cenestin(C) or any other Collateral to be ineligible.
4. EQUIPMENT. Borrower may utilize Revolving Loans to purchase
items of Equipment with an original cost not to exceed $1,000,000 in the
aggregate that have been or will be hereafter affixed to any real property in
such a manner, or with such intent, as to become a fixture and such $1,000,000
in purchases shall not be applied against the $100,000 limit specified in
subsection 5.3(ii) of the Loan Agreement; PROVIDED THAT, Lender shall not limit
or waive any of its other rights and remedies under the Loan Agreement or any
other Loan Document.
5. CONDITIONS PRECEDENT. This Amendment shall become
effective when the Lender shall have received a $140,000 amendment fee and each
of the following, duly executed and in form and substance satisfactory to
Lender:
(a) a fully executed copy hereof;
(b) the Term Note B;
(c) a fully executed copy of the Warrant for the Purchase of
Shares of Common Stock dated as of even date herewith, as described in
Subsection 2(j) herein;
(d) a fully executed copy of the First Amendment to
Patent Mortgage; and
(e) a fully executed copy of the First Amendment to
Trademark Mortgage;
6. CONDITION SUBSEQUENT. Borrower hereby agrees to use its
best efforts to grant to Lender a security interest in the Exclusive License for
generic Biologicals Limited on the use of Z-Tamoxifen in Oncology in the United
States, and to use its best efforts to obtain together the consent of licensor
thereto, within sixty (60) days of the date hereof.
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7. MISCELLANEOUS.
(a) WARRANTIES AND ABSENCE OF DEFAULTS. In order to induce
Lender to enter into this Amendment, Borrower hereby warrants to Lender, as of
the date hereof, that:
(i) The representations and warranties of Borrower contained
in the Loan Agreement are true and correct as of the date hereof as if
made on the date hereof.
(ii) All information, reports and other papers and data
heretofore furnished to Lender by Borrower in connection with this
Amendment, the Loan Agreement and the other Loan Documents are accurate
and correct in all material respects and complete insofar as may be
necessary to give Lender true and accurate knowledge of the subject
matter thereof. None of the information furnished to Lender by or on
behalf of Borrower contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the
statements contained herein or therein not materially misleading.
(iii) No Event of Default or Default exists as of the date
hereof.
(b) EXPENSES. Borrower agrees to pay on demand all costs and expenses
of Lender (including the reasonable fees and expenses of outside counsel for
Lender) in connection with the preparation, negotiation, execution, delivery and
administration of this Amendment and all other instruments or documents provided
for herein or delivered in connection herewith. In addition, Borrower agrees to
pay, and save Lender harmless from all liability for, any stamp or other taxes
which may be payable in connection with the execution or delivery of this
Amendment or the Loan Agreement, as amended hereby, and the execution and
delivery of any instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided in
this SECTION 4(B) shall survive any termination of this Amendment and the Loan
Agreement as amended hereby.
(c) GOVERNING LAW. This Amendment shall be a contract made under and
governed by the internal laws of the State of New York.
(d) COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
(e) REFERENCE TO LOAN AGREEMENT. On and after the effectiveness of the
amendment to the Loan Agreement accomplished hereby, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import, and each reference to the Loan Agreement in any other Loan Documents, or
other agreements,
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documents or other instruments executed and delivered pursuant
to the Loan Agreement, shall mean and be a reference to the Loan Agreement, as
amended by this Amendment.
(f) SUCCESSORS. This Amendment shall be binding upon Borrower, Lender
and their respective successors and assigns, and shall inure to the benefit of
Borrower, Lender and the successors and assigns of Lenders.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
and delivered at New York, New York as of the date first above written.
DURAMED PHARMACEUTICALS, INC.
By /s/ Xxxxxxx X. Xxxx
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Its: Senior Vice President Finance
NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT
COMMERCIAL FUNDING DIVISION
By: Xxxxx Xxxxxxx
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Its: Authorized Signatory
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