EXHIBIT 10.28
March 16, 2004
Caraco Pharmaceutical Laboratories Ltd.
110 Elijah McCoy Drive
Detroit, MI 48202
Re $10,000,000 line of credit
Gentlemen or Ladies:
Citibank, F.S.B. ("Citibank") is pleased to advise you it holds
available for Caraco Pharmaceutical Laboratories Ltd. (the "Borrower"), a
corporation organized and in good standing under the laws of the State of
Michigan, a line of credit (the "Line") in the amount of $10,000,000, subject to
the following terms an conditions:
1. Description of the Line:
Loans provided under the Line shall be evidenced by Citibank's Master
Note (the "Note") in the amount of the Line. Each advance thereunder shall bear
interest at a rate to be elected by the Borrower at the time of each advance
thereunder equal to either:
Prime Rate Option: A rate equal to the prime rate of interest as
published in the Money Rates column of the Wall Street Journal from time to time
(the "Prime Rate"); any change in the Prime Rate shall take effect on the date
of the change in the Prime Rate, or
LIBOR Rate Option: A rate equal to the Reserve Adjusted LIBOR, as such
term is defined in the Note, plus a margin of 100 basis points.
Interest on the unpaid principal balance of the Note from time to time
outstanding shall be payable monthly in arrears commencing on the first day of
the month following the date of the first advance under the Note. Any advance
under the Line made by Citibank in its discretion shall be in an amount not less
than $100,000.
In the case of a Prime Rate advance, such advance may be prepaid, in
whole or in part, in increments of not less than $100,000, without premium or
penalty.
The Borrower agrees to indemnify Citibank and hold Citibank harmless
from any loss or expense that Citibank may sustain or incur, as more
particularly described in the Note should the Borrower make any prepayment of
the principal of an advance hereunder bearing interest at the LIBOR Rate or in
the event of a default by the Borrower in the payment or performance of any
terms of the Note or this line letter.
There shall be available under the Line a sublimit for commercial
letters of credit (each, an "L/C" and collectively, the "L/Cs") and standby
letters of credit (each, a "SBLC" and collectively, the "SBLCs") in an amount
not exceeding $500,000 in the aggregate.
Each L/C issued under the Line shall be governed by the terms and
conditions set forth in Citibank's Master Letter of Credit Agreement. There
shall be payable in respect of each L/C, a fee equal to -1/4% ($100.00 minimum)
upon the opening and 1/4% ($100.00 minimum) upon the negotiation thereof
together with Citibank's fees and charges therewith. The maximum tenor for each
L/C shall be one year.
The SBLC issued under the Line shall be evidenced by Citibank's
Agreement for Standby Letters of Credit which shall provide for the payment by
the Borrower of a fee equal to 1% per annum. The SB shall, by its terms, expire
not more than one (1) year after its issuance, but shall be automatically
renewable for successive one year periods, unless written notice of termination
is given by Citibank.
Availability under the Line shall be limited to the aggregate principal
amount of the Collateral SBLC in favor of Citibank in form and substance
satisfactory to Citibank.
The Borrower acknowledges and agrees that the Line is uncommitted and
requests for advances or extensions of credit thereunder shall be approved in
the discretion of Citibank, which may refuse to make an extension of credit
under the Line at any time without prior notice to the Borrower, and that the
performance or compliance by the Borrower of the agreements contained in this
letter, or in any other document or agreement evidencing or securing such
advances or extensions of credit. shall not obligate Citibank to make an advance
or provide an extension of credit thereunder.
Subject to the terms and conditions hereof, the Line shall be available
until March 15, 2005.
2. Purpose of the Line:
The purpose of the Line shall be to support the Borrower's working
capital needs, debt redemption and capital expenditures.
3. Security for the Line:
The Line shall be secured by "irrevocable and unconditional" Standby
Letter(s) of Credit (the "Collateral SBLC") in favor of Citibank in form and
substance satisfactory to Citibank.
4. Conditions Precedent:
Prior to the Borrower's initial request for an advance under the Line:
(a) It shall have provided to Citibank:
(a) A copy of the resolutions passed by the Borrower's
Board of Directors certified by its Secretary as being in full force and effect
authorizing the borrowing described herein and the execution of all documents
and agreements required by Citibank to evidence and secure the Line; and
(b) A certified copy of the certificate of incorporation
of the Borrower.
(b) Citibank shall have received the Collateral SBLC in favor of
Citibank in the amount of $10,000,000 in form and substance satisfactory to
Citibank.
5. Financial Reporting:
The Borrower shall provide to Citibank:
(a) As soon as available, but in any event within one hundred
twenty (120) day after the last day of each fiscal year, a balance sheet of the
Borrower, as of such last day of the fiscal year, and statements of income and
retained earnings and cash flows for such fiscal year prepared in accordance
with generally accepted accounting principles consistently applied, in
reasonable detail, such statements to be audited by a firm of independent
certified public accountants satisfactory to Citibank.
(b) As soon as available, but in any event within sixty (60) days
after the end of each fiscal quarter, a balance sheet of the Borrower and
statements of income and retained earnings and cash flows of the Borrower for
such quarter, and the portion of the fiscal year through such date all in
reasonable detail, such statements to be prepared by the Borrower in accordance
with generally accepted accounting principles consistently applied.
Each of the financial statements specified in Sections (i) and (ii)
above shall be accompanied by a certificate signed by the president or chief
financial officer of the Borrower to the effect that such statements fairly
present the financial condition of the Borrower as of the balance sheet date and
results of the operations of the Borrower for the period(s) then ended in
accordance with generally accepted accounting principles consistently applied.
(c) Such other financial or additional information as Citibank may
from time to time request.
6. Special Requirements:
The Borrower agrees that the Line shall be supported by a negative
pledge agreement in form and substance satisfactory to Citibank.
7. Origination Fee:
In order to compensate Citibank for any costs attributable to
Citibank's due diligence review of the Borrower's financial condition and
business operations, including, without limitation, any credit and financial
analysis conducted by Citibank to determine whether the Line shall be made
available to the Borrower, the Borrower agrees to pay Citibank an administration
fee of $10,000. If the origination fee is no remitted herewith, the Borrower
authorizes Citibank to charge any of the Borrower's accounts maintained with
Citibank for the payment thereof.
8. Acceptance:
If the foregoing is acceptable, please so indicate by signing and
returning this letter together with the origination fee before March 29, 2004,
the date this letter will otherwise expire, unless extended in writing by
Citibank.
Very truly yours,
CITIBANK, F.S.B.
By: CITIBANK, N.A., Servicing Agent
By: /s/ Martin Efron
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Martin Efron
Vice President
Agreed and Accepted this
19th day of March, 2004
CARACO PHARMACEUTICAL LABORATORIES LTD.
By: /s/ Jitendra N. Doshi
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Name: Jitendra N. Doshi
Title: Chief Executive Officer
State of Michigan
County of Oakland, Acting in Wayne County
On this 19th day of March 2004, Jitendra Doshi personally appeared before me,
who is personally known to me to be the signer of the above instrument, and he
acknowledged signing of his own free will.
By: /s/ Susan Banks-Williams, Ph.D.
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Susan Banks-Williams, Ph.D
Notary Public, State of Michigan
My Commission Expires September 1, 2007