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EXHIBIT 10.72(b)
FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the "Amendment")
is made as of the 29th day of May, 1996 by and between MEDICIS PHARMACEUTICAL
CORPORATION, a Delaware corporation ("Borrower"), and NORWEST BANK ARIZONA,
NATIONAL ASSOCIATION, a national banking association, as successor-in-interest
to NORWEST BUSINESS CREDIT, INC., a Minnesota corporation ("Lender").
R E C I T A L S:
WHEREAS, Borrower and Norwest Business Credit, Inc. ("NBCI") are
parties to that certain Credit and Security Agreement dated as of August 3,
1995, as modified by letter agreements dated March 6, 1996 and April 11, 1996
(collectively, the "Credit Agreement"), pursuant to which NBCI agreed to make
available to Borrower, on a revolving basis, a sum not to exceed $2,000,000 (the
"Revolving Loan"), which Revolving Loan is evidenced by that certain Promissory
Note dated August 3, 1995 from Borrower to NBCI in an amount not to exceed
$2,000,000 (the "Revolving Note");
WHEREAS, NBCI has assigned, and Lender has assumed, all of NBCI's
right, title, interest, privileges, obligations and liabilities under the Credit
Agreement, as amended, and any documents, agreements or instruments evidencing,
securing or in any way related to Borrower's obligations under the Credit
Agreement, as amended (the "Loan Documents"), subject to and on the terms and
conditions contained herein; and
WHEREAS, Borrower has requested that Lender commit to advance an
additional $3,000,000 to finance capital expenditures, product development
costs, brand purchase contracts, licensing agreements and other financial needs
mutually agreed upon in writing by Borrower and Lender in their sole and
absolute discretion, and Lender has agreed thereto on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower and Lender,
intending to be legally bound, agree as follows:
1. INTERPRETATION. Except as otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement.
2. RECITALS. The recitals set forth above are true and accurate in
every respect.
3. OUTSTANDING INDEBTEDNESS. As of May 29, 1996: the outstanding
principal balance of the Revolving Loan is $0.00; the accrued and unpaid
interest on the Revolving Loan is $0.00; the prorated Minimum Interest Charge
(including the unused
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fee described in Section 2.11(b) of the Credit Agreement) payable to NBCI is
$24,843.36; and the collateral examination fee previously incurred by, and
payable to, NBCI is $2,300.
4. NO OFFSETS. Borrower acknowledges with respect to the amounts owing
to Lender that, as of the date of execution of this Amendment, Borrower has no
offset, defense or counterclaim with respect thereto, no claim or defense in the
abatement or reduction thereof, or any other claim against Lender or NBCI or
with respect to any document forming part of the transaction in respect of which
the Revolving Loan was made or forming part of any other transaction under which
Borrower is indebted to Lender or NBCI. Borrower acknowledges that all interest
imposed under the Revolving Note through the date of execution hereof, and all
fees and other charges that have been collected from or known by Borrower to
have been imposed upon Borrower with respect to the Revolving Loan evidenced by
the Revolving Note were and are agreed to, and were properly computed and
collected, and that NBCI has fully performed all obligations that it may have
had or now has to Borrower, and neither NBCI nor Lender has any obligation to
make any additional loan or extension of credit to or for the benefit of
Borrower, except as provided in the Credit Agreement, as amended by this
Amendment.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. To induce Lender to
enter into this Amendment and the arrangement contemplated by this Amendment,
Borrower represents and warrants to Lender as follows:
(a) This Amendment and all other instruments executed and
delivered to Lender concurrently herewith, were executed in accordance with the
requirements of law and in accordance with any requirements of Borrower's
certificate of incorporation and bylaws and any amendments thereto.
(b) The execution and delivery of this Amendment and any other
instruments executed and delivered to Lender concurrently herewith, and the full
and complete performance of the provisions hereof will not result in any breach
of, or constitute a default under, or result in the creation of any lien, charge
or encumbrance upon any property or assets of Borrower under any indenture,
mortgage, deed of trust, bank loan or credit agreement or other instrument to
which Borrower is a party or by which Borrower is bound.
(c) The Loan Documents executed by Borrower and this Amendment
are the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their terms.
(d) There is no pending or overtly threatened litigation
involving Borrower.
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(e) Borrower has not derived ten percent (10%) or more of
Borrower's Net Sales in any Fiscal Year from any Applicable License as described
in Section 6.14 of the Credit Agreement.
(f) The patent applications described in Exhibit F to this
First Amendment are the only patent applications Borrower has pending before the
PTO Office and none of the pending patent applications has yet been approved by
the PTO Office.
(g) The Beecham Loan (as defined in the Credit Agreement) has
been paid in full and any collateral securing the Beecham Loan has been duly
released of record.
(h) There are no oral agreements, understandings or course of
conduct that would modify, amend, rearrange, vary, diminish or impair the Loan
Documents or the obligation of Borrower to pay the indebtedness evidenced
thereby or to perform fully the obligations of Borrower in strict accordance
with the Loan Documents, or which would permit Borrower to void or avoid its
obligations in whole or in part.
(i) The indebtedness relating to the financing statement from
Borrower, as debtor, to Victor T. Weber, as Collateral Agent, as secured party,
filed on August 10, 1993 in File No. 32228383, Financing Records of the Maryland
State Department of Assessments and Taxation, has been paid in full and the
secured party has no further obligation to advance monies to Borrower.
(j) All of the respective representations and warranties made
by Borrower in the Loan Documents remain true, complete and correct as of the
date hereof, including, without limitation, the representations and warranties
in Section 5 of the Credit Agreement.
No representation or warranty made by Borrower and contained herein or in the
other Loan Documents, and no certificate, information or report furnished or to
be furnished by Borrower in connection with any of the Loan Documents or any of
the transactions contemplated hereby or thereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein not misleading in the light of the circumstances under which such
statements were made.
6. CONTINUED ENFORCEABILITY OF LOAN DOCUMENTS. Except as modified
herein, all of the terms and provisions of the Loan Documents remain in full
force and effect. In the event of any conflict between the terms and provisions
of this Amendment and the terms and provisions of the Loan Documents, the terms
and provisions of this Amendment shall govern and prevail. Borrower
acknowledges, confirms and ratifies the enforceability of the Credit Agreement,
the Revolving Note and the Loan Documents, as modified pursuant to this
Amendment, and the continuing validity,
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enforceability and priority of the liens and security interests granted in the
Loan Documents.
7. RELEASE OF CLAIMS.
(a) Borrower hereby releases Lender and NBCI, their officers,
employees and agents from all claims and demands (known and unknown) it may have
on the date hereof arising out of or in any way relating to the extension or
denial of credit by NBCI or the Lender to Borrower or other matters relating to
the indebtedness, any collateral securing payment and performance of such
indebtedness, or any matter preliminary to the execution and delivery by
Borrower and Lender of this Amendment. The release set forth above shall not
extend to any claim arising after the date hereof to the extent based on acts or
omissions of Lender occurring after such date, except that such release is
specifically intended by the parties to include the transactions leading up to
the execution of this Amendment. This Amendment and the release provisions
contained in this Section 7 are contractual, and not a mere recital.
(b) Borrower acknowledges and agrees that Lender is not, and
shall not be, obligated in any way to continue or undertake any loan, financing
or other credit arrangement with Borrower, including, without limitation, any
renewal of the indebtedness evidenced by the Loan Documents, except on the terms
and subject to the conditions set forth in the Loan Documents as hereby amended
and modified.
8. CONDITIONS OF CLOSING. Lender's obligation to enter into this
Amendment and the other documents and instruments required hereunder shall be
subject to the satisfaction of all of the following conditions on or before May
29, 1996 (the "Closing" or the "Closing Date") in a manner, form and substance
satisfactory to Lender, which conditions may be waived by Lender in its sole and
absolute discretion:
(a) On the Closing Date the representations and warranties of
Borrower set forth in the Loan Documents shall be true and correct in all
material respects when made and at and as of the time of the Closing.
(b) The following shall have been delivered to Lender, each
duly authorized, executed and acknowledged, where applicable:
(i) An Assignment of the Loan Documents from NBCI to
Lender.
(ii) Assignments by NBCI to Lender of each of the
UCC-1 Financing Statement from Borrower to NBCI.
(iii) This Amendment.
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(iv) A Multiple Advance Note from Borrower payable to
Lender in the original principal amount not to exceed
$3,000,000.
(v) A UCC-1 Financing Statement from Borrower in
favor of Lender to be filed in the central filing agency of
the State of Maryland.
(vi) An Amendment to the Collateral Account
Agreement.
(vii) An Amendment to the Patent Collateral
Assignment and Security Agreement.
(viii) An Amendment to the Trademark, Tradename and
Service Mark Collateral Assignment and Security Agreement.
(ix) An Amendment to the Agreement as to Lockbox
Services.
(x) A Consent from CEDC in connection with the
Intercreditor Agreement between CEDC and NBCI.
(xi) A Consent from Londen Center L.L.C. in
connection with the Landlord's Subordination, Disclaimer and
Consent dated as of August 3, 1995 among NBCI, Borrower and
Londen Center L.L.C.
(xii) A Consent from USCO Distribution Services, Inc.
("USCO") in connection with the Tri-Party Agreement among
NBCI, Borrower and USCO.
(c) Borrower shall have performed and complied in all material
respects with all agreements and conditions contained in the Loan Documents to
be performed by or complied with by Borrower prior to or at the Closing, and no
Event of Default or Default shall have occurred and be continuing or would occur
by Borrower entering into this Amendment and each condition precedent to the
effectiveness of each of the Loan Documents shall have been satisfied.
(d) Lender shall have received such documents as Lender shall
require to establish the proper organization and good standing of Borrower, the
authority of Borrower to execute this Amendment and any other documents or
instruments required hereunder, and evidence that all approvals and/or consents
of, or other action by, any shareholder, governmental agency or other Person
whose approval or consent is necessary or required to enable Borrower to (a)
enter into and perform its obligations under the Loan Documents and (b) grant to
Lender the Security Interests, have been obtained.
(e) All filings of Uniform Commercial Code financing
statements and other filings and actions necessary to perfect and maintain the
Security Interests as
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first, valid and perfected security interest in the Collateral shall have been
filed or taken (or such filings delivered for filing immediately following the
Closing, to Lender or a third party acceptable to Lender) and confirmation
thereof shall have been received by Lender.
(f) Lender shall have determined to its satisfaction that, as
of the Closing Date, there has been no material adverse change in the financial
condition of Borrower from the financial statements dated as of March 31, 1996
and other documents submitted by Borrower to Lender prior to the Closing Date.
(g) Borrower shall have paid to Lender an origination fee of
$50,000, which shall be fully earned and non-refundable upon Lender's execution
and delivery of this Amendment (Lender shall pay its attorneys' fees associated
with negotiating and preparing this Amendment and the related documents).
(h) Lender shall be satisfied that (a) Borrower has good and
indefeasible title to all of the Collateral and (b) Borrower at all times shall
be entitled to the use and quiet enjoyment of all assets necessary and desirable
for the continued ownership and operation of Borrower's business, including,
without limitation, the use of equipment, licenses, fixtures and warehouses.
(i) Borrower shall have paid all of Lender's out-of-pocket
costs and expenses incurred in connection with UCC lien, litigation and judgment
searches and verifications and filing and recording fees.
(j) Borrower shall have paid all of the fees and reimbursable
costs and expenses due to NBCI pursuant to Section 3 hereof.
9. DEFINITIONS. (a) The definitions of "Beecham Loan" and "Minimum
Interest Charge" in Section 1.1 of the Credit Agreement is hereby deleted in its
entirety; (b) the definitions of "Base Rate", "Floating Rate", "Loan Documents"
and "Termination Date" in Section 1.1 of the Credit Agreement are hereby deleted
in their entirety and the following inserted therefor:
"Base Rate" means the rate of interest publicly
announced from time to time by Norwest Bank Arizona, National
Association, as its "base rate" or, if such bank ceases to
announce a rate so designated, any similar successor rate
designated by the Lender.
"Floating Rate" means an annual rate equal to the sum
of the Base Rate plus 125 basis points, which Floating Rate
shall change when and as the Base Rate changes.
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"Loan Documents" means this Agreement, the Notes, the
Financing Statements Form UCC-1, the Security Documents and
all other documents previously, concurrently or hereafter
executed or delivered in connection with the Revolving Credit
Facility or the Term Credit Facility.
"Termination Date" means July 31, 1997.
and (c) Section 1.1 of the Credit Agreement is hereby amended to add the
following definitions in proper alphabetical order:
"Borrowing Base Certificate" means a monthly
statement, in form approved by Lender, showing Accounts,
Eligible Accounts, Inventory and Eligible Inventory by
location, and the outstanding principal balance on the
Revolving Credit Facility at the last day of each month,
certified as correct by Borrower's President or Chief
Financial Officer.
"Current Assets" means cash, cash equivalents,
including Permitted Investments, trade receivables, tax
refunds and inventory.
"Current Ratio" means, as of any date of
determination, on a consolidated basis, the ratio of Current
Assets to current liabilities under GAAP.
"Maturity Date" means July 31, 2001.
"Maximum Amount" means $3,000,000.
"Net Worth" means the gross value of the Borrower's
Equity plus debt subordinated to the Lender in a manner
acceptable to the Lender (using the Lender's standard form).
"Equity" means Borrower's retained earnings plus the "book
value" of all issued and outstanding stock in Borrower
(including all common and preferred), plus paid-in capital
less treasury stock.
"Permitted Investments" means investments in direct
obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America
having a maturity of one year or less, commercial paper issued
by U.S. corporations rated "A-1" or "A-2" by Standard
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& Poor's Corporation or "P-1" or "P-2" by Moody's Investors
Service or certificates of deposit or bankers' acceptances
having a maturity of one year or less issued by members of the
Federal Reserve System having deposits in excess of
$100,000,000 (which certificates of deposit or bankers'
acceptances are fully insured by the Federal Deposit Insurance
Corporation and "Money Market Funds" acquired through an FDIC
insured bank and/or a division or subsidiary thereof.
"Revolving Credit Facility" means the working capital
credit facility not to exceed the Commitment being made
available to Borrower by Lender pursuant to Article 2 hereof.
"Tangible Net Worth" means, as of any date of
determination, on a consolidated basis, Net Worth less the net
book value (after deducting reserves applicable thereto) of
all assets classified as intangible assets under GAAP,
including, without limitation, goodwill, trademarks, trade
names, service marks, copyrights, patents, licenses, permits,
covenants not to compete, and rights related thereto, less any
stock or other securities or evidences of indebtedness of any
other Person, any loans or advances to any other Person, or
any investment or interest whatsoever in any other Person,
including specifically, but without limitation, any
partnership or joint venture, except Permitted Investments.
"Term Credit Facility" means term credit facility not
to exceed the Maximum Amount being made available to Borrower
by Lender pursuant to Article 2 hereof.
"Term Note" means the multiple advance promissory
note from Borrower payable to Lender in the principal amount
not to exceed the Maximum Amount and any amendments,
modifications, supplements, consolidations, replacements or
consolidations thereto or thereof, including, without
limitation, any replacement note issued pursuant to Section
2.13 hereof.
"Treasury Bill Constant" means the sum of (x)(i) the
yield to maturity reported, as of 10:00 a.m. (New York City
time) on the third Business Day preceding the Termination
Date, on the display designated as "Page 678" on the
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Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity of forty-eight (48) months from
the Termination Date (as near as practicable) or (ii) if such
yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, the
Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so reported
on or prior to the third Business Day preceding the
Termination Date, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity of
forty-eight (48) months from the Termination Date (as near as
practicable) plus (y) three hundred (300) basis points.
10. ADVANCES. (a) The preface to Section 2.1 of the Credit Agreement is
hereby deleted in its entirety and the following inserted therefor:
Section 2.1 Advances. The Lender agrees, on the terms
and subject to the conditions herein set forth, to make
Advances to the Borrower from time to time during the period
from the date hereof to and including the Termination Date, or
the earlier date of termination in whole of the Revolving
Credit Facility and Term Credit Facility pursuant to Sections
2.4(a) or 8.2 hereof, in an aggregate amount at any time
outstanding not to exceed the Borrowing Base, with respect to
the Revolving Credit Facility, and the Maximum Amount, with
respect to the Term Credit Facility, which Advances shall be
secured by the Collateral as provided in Article 3 hereof. The
Revolving Credit Facility shall be a revolving facility and it
is contemplated that the Borrower will request Advances, make
prepayments and request additional Advances thereunder and the
Term Credit Facility shall be a term facility and it is
contemplated that Borrower will request Advances for capital
expenditures, product development costs, brand purchase
contracts, licensing agreements and other purposes mutually
agreed upon in writing by Borrower and Lender in their sole
and absolute discretion, which Advances will be repaid in
accordance with the terms of this Agreement. The Borrower
agrees to comply with the following procedures in requesting
Advances under this Section 2.1:
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and (b) Section 2.1(b) of the Credit Agreement is hereby deleted in its entirety
and the following inserted therefor:
(b) Each request for an Advance under this Section
2.1 shall be made to the Lender prior to 11:00 a.m. (Phoenix
time) of the day of the requested Advance by the Borrower.
Each request for an advance may be made in writing or by
telephone, specifying the date of the requested Advance and
the amount thereof, and (i) shall specify whether it is an
Advance under the Revolving Credit Facility or the Term Credit
Facility and the purpose of the Advance, and (ii) shall be
made by (A) any officer of the Borrower; or (B) any person
designated as the Borrower's agent by any officer of the
Borrower in a writing delivered to the Lender; or (C) any
person reasonably believed by the Lender to be an officer of
the Borrower or such a designated agent.
11. NOTE. Section 2.2 of the Credit Agreement is hereby deleted in its
entirety and the following inserted therefor:
Section 2.2 Notes. All Advances made by the Lender
under this Section 2.1 shall be evidenced by and repayable
with interest in accordance with the Note and the Term Note.
The principal of the Note shall be payable as provided herein
and on the earlier of the Termination Date or acceleration by
the Lender pursuant to Section 8.2 hereof, and shall bear
interest as provided herein. The principal of the Term Note
shall be payable as provided herein and shall bear interest as
provided herein, and, absent acceleration by the Lender
pursuant to Section 8.2 hereof, shall be amortized commencing
on the Termination Date as provided herein.
12. INTEREST. Section 2.3(b) of the Credit Agreement is hereby deleted
in its entirety and the following inserted therefor:
(b) INTENTIONALLY DELETED
13. VOLUNTARY PREPAYMENT; TERMINATION OF AGREEMENT BY THE BORROWER;
PERMANENT REDUCTION OF COMMITMENT. (a) Section 2.4(a) of the Credit Agreement is
hereby deleted in its entirety and the following inserted therefor:
(a) Borrower may, in its discretion, prepay the
Advances in whole at any time or from time to time in part.
The Borrower may terminate this Agreement at any time
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and, subject to payment and performance of all the Borrower's
obligations to the Lender, the Lender shall promptly release
the Security Interest and the Borrower may obtain any release
or termination of the Security Interest to which the Borrower
is otherwise entitled by law by giving at least 30 days' prior
written notice to the Lender of the Borrower's intention to
terminate this Agreement.
and (b) Section 2.4(b) of the Credit Agreement is hereby deleted in its entirety
and the following inserted therefor:
(b) INTENTIONALLY DELETED
14. MANDATORY PREPAYMENT. Section 2.5 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
Section 2.5 Mandatory Prepayment. Without notice or
demand, if the sum of the outstanding principal balance of the
Advances with respect to the Note shall at any time exceed the
Borrowing Base, the Borrower shall within forty-eight (48)
hours (excluding Saturdays, Sundays and Holidays) thereof
prepay the Advances to the extent necessary to reduce the sum
of the outstanding principal balance of the Advances with
respect to the Note to the Borrowing Base. Any payment
received by the Lender under this Section 2.5 or under Section
2.4 may be applied to the Advances under the Revolving Credit
Facility, including interest thereon and any fees,
commissions, costs and expenses due and unpaid hereunder and
under the Security Documents, in such order and in such
amounts as the Lender, in its discretion, may from time to
time determine, and, if a Default or Event of Default has
occurred and is continuing, to the Advances under the Term
Credit Facility, including interest thereon.
15. USE OF PROCEEDS. Section 2.8 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
Section 2.8 Use of Proceeds. The proceeds of Advances
with respect to the Revolving Credit Facility shall be used by
the Borrower for ordinary working capital purposes and the
proceeds of Advances with respect to the Term Credit Facility
shall be used by the Borrower for capital expenditures,
product development costs, brand purchase contracts, licensing
agreements and other purposes
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mutually agreed upon in writing by Borrower and Lender in
their sole and absolute discretion.
16. FEES. (a) Section 2.11(a) of the Credit Agreement is hereby deleted
in its entirety and the following inserted therefor:
(a) The Borrower hereby agrees to pay Lender a fully
earned and non-refundable origination fee of $50,000 upon the
execution of the First Amendment to Credit and Security
Agreement dated as of May 29, 1996 between Borrower and Lender
(the "First Amendment").
(b) Section 2.11(b) of the Credit Agreement is hereby deleted in its entirety
and the following inserted therefor:
(b) INTENTIONALLY DELETED
and (c) Section 2.11(c) of the Credit Agreement is hereby deleted in its
entirety and the following inserted therefor:
(c) Provided that no Default or Event of Default has
occurred and is continuing, Lender shall not undertake more
than two (2) collateral audits or inspections of the
operations or business of the Borrower in any Fiscal Year and
Borrower shall not be required to pay any audit fees or
out-of-pocket costs and expenses incurred by Lender in
connection with any such audits or inspections by the Lender
of any collateral or the corresponding operations or business
of the Borrower after May 29, 1996. Upon the occurrence of a
Default or Event of Default and during the continuance
thereof, Lender may undertake such collateral audits and
inspections of the operations or business of the Borrower as
Lender deems necessary in its sole and absolute discretion and
the Borrower hereby agrees to pay the Lender, on demand, audit
fees of $50 per hour (or the then applicable rate charged by
Lender) per auditor in connection with any such audits or
inspections by the Lender of any collateral or the
corresponding operations or business of the Borrower, together
with all actual out-of-pocket costs and expenses incurred in
conducting any such audit or inspection.
17. AMORTIZATION OF TERM CREDIT FACILITY. Article 2 of the Credit
Agreement is hereby amended to add the following:
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Section 2.13 Amortization of Term Credit Facility.
Provided that no Default or Event of Default has occurred and
is continuing, on the Termination Date, all of the accrued and
unpaid interest and other fees and charges shall be due and
payable and, at Borrower's election to be made in writing on
or prior to the Termination Date, (a) the then outstanding
principal balance of the Term Credit Facility shall be
amortized over a forty-eight month period and paid in equal
principal payments, plus interest at the Floating Rate, on the
last day of each month, commencing August 31, 1997 and
continuing on the last day of each month thereafter until the
Maturity Date, at which time the entire outstanding principal
balance of the Term Credit Facility, all accrued and unpaid
interest and all other fees and charges shall be due and
payable, or (b) the then outstanding principal balance of the
Term Credit Facility shall be amortized over a forty-eight
month period, with interest calculated at the Treasury Bill
Constant, and paid in level principal and interest payments on
the last day of each month, commencing August 31, 1997 and
continuing on the last day of each month thereafter until the
Maturity Date, at which time the entire outstanding principal
balance of the Term Credit Facility, all accrued and unpaid
interest and all other fees and charges shall be due and
payable. At the request of Lender, Borrower shall execute and
deliver a replacement promissory note for the Term Note. In
the event that Borrower fails to make an election on or prior
to the Termination Date, Borrower shall be deemed to have
elected clause (a) above.
18. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. Section 4.1 of the
Credit Agreement is hereby amended to add the following:
(u) A certificate of the Secretary or an
Assistant Secretary of the Borrower, certifying as to the
resolutions of the directors and, if required, the
shareholders of the Borrower, authorizing the execution,
delivery and performance of the First Amendment, the Term Note
and the other documents and all documents and instruments
incident thereto and to the transactions contemplated thereby,
satisfactory to Lender and its counsel.
(v) An opinion of counsel to the Borrower,
addressed to Lender, with respect to the transactions
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contemplated by the First Amendment, in form and substance
satisfactory to Lender and its counsel.
19. FINANCIAL CONDITION; NO ADVERSE CHANGE. Section 5.5 of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:
Section 5.5 Financial Condition; No Adverse Change.
The Borrower has heretofore furnished to the Lender audited
financial statements of the Borrower for its Fiscal Year ended
June 30, 1995 and unaudited financial statements of the
Borrower for the months ended through March 31, 1996, and
those statements fairly present the financial condition of the
Borrower on the dates thereof and the results of its
operations and cash flows for the periods then ended and were
prepared in accordance with generally accepted accounting
principles. Since the date of the most recent financial
statements of the Borrower, there has been no material adverse
change in the business, properties or condition (financial or
otherwise) of the Borrower.
20. REPORTING REQUIREMENTS. (a) Section 6.1(l) of the Credit Agreement
is hereby deleted in its entirety and the following inserted therefor:
(c) within 15 days after the end of each month,
agings of the Borrower's accounts receivable and its accounts
payable and a Borrowing Base Certificate as at the end of such
month;
Section 6.1(l) of the Credit Agreement is hereby deleted in its entirety and the
following inserted therefor:
(l) promptly after the sending or filing thereof,
copies of all regular and periodic financial reports and
special reports which the Borrower shall file with the
Securities and Exchange Commission or any national securities
exchange, including, without limitation, reports on Form 10-Q,
Form 10-K and Form 8-K.
21. INCOME TAX RETURNS. Section 6.1 of the Credit Agreement is hereby
amended to add the following:
(o) as soon as available and in any event within
thirty (30) days following the filing of Borrower's federal
income tax return, a copy of such federal income tax return
and, if such federal income tax return is not filed on or
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before October 15, then on or before November 15, a copy of
the completed request for extension delivered to the Internal
Revenue Service followed by the federal income tax return when
filed.
22. LOCKBOX; COLLATERAL ACCOUNT. Section 6.10 of the Credit Agreement
is hereby deleted in its entirety and the following inserted therefor:
Section 6.10 Lockbox; Collateral Account.
(a) The Borrower will irrevocably direct all present
and future Account debtors and other Persons obligated to make
payments constituting Collateral to make such payments
directly to the Lockbox. All of the Borrower's invoices,
account statements and other written or oral communications
directing, instructing, demanding or requesting payment of any
Account or any other amount constituting Collateral shall
conspicuously direct that all payments be made to the Lockbox
and shall include the Lockbox address. Upon confirmation of
good, collected funds, all payments made to the Lockbox shall
be processed to Borrower's operating account no. 6438801379
maintained with Lender. In Lender's sole and absolute
discretion, all payments received in the Lockbox may be
processed to the Collateral Account.
(b) Upon the written request of Lender, the Borrower
agrees to deposit in the Collateral Account or, at the
Lender's option, to deliver to the Lender all collections on
Accounts, contract rights, chattel paper and other rights to
payment constituting Collateral, and all other cash proceeds
of Collateral, which the Borrower may receive directly
notwithstanding its direction to Account debtors and other
obligors to make payments to the Lockbox, immediately upon
receipt thereof, in the form received, except for the
Borrower's endorsement when deemed necessary. Until delivered
to the Lender or deposited in the Collateral Account, all
proceeds or collections of Collateral shall be held in trust
by the Borrower for and as the property of the Lender and
shall not be commingled with any funds or property of the
Borrower. Amounts deposited in the Collateral Account shall
not bear interest and shall not be subject to withdrawal by
the Borrower, except after full payment and discharge of all
Obligations. All such collections shall constitute proceeds of
Collateral and shall
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not constitute payment of any Obligation. Collected funds from
the Collateral Account shall be transferred to the Lender's
general account, and the Lender may deposit in its general
account or in the Collateral Account any and all collections
received by it directly from the Borrower. The Lender may
commingle such funds with other property of the Lender or any
other person. The Lender from time to time at its discretion
shall, after allowing two (2) Banking Days after deposit in
the Collateral Account, apply such funds to the payment of any
or all Obligations, in any order or manner of application
satisfactory to the Lender. All items delivered to the Lender
or deposited in the Collateral Account shall be subject to
final payment. If any such item is returned uncollected, the
Borrower will immediately pay the Lender, the amount of that
item, or Lender at its discretion may charge any uncollected
item to the Borrower's operating account or other account. The
Borrower shall be liable as an endorser on all items deposited
in the Collateral Account, whether or not in fact endorsed by
the Borrower.
23. MINIMUM NET INCOME. Section 6.12 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
Section 6.12 Tangible Net Worth. Borrower shall
maintain on a consolidated basis Tangible Net Worth in the
following amounts as of the following dates:
===========================================================
FISCAL QUARTER END TANGIBLE NET WORTH
-----------------------------------------------------------
June 30, 1996 $5,700,000
-----------------------------------------------------------
September 30, 1996 $7,000,000
-----------------------------------------------------------
December 31, 1996 $8,800,000
-----------------------------------------------------------
March 31, 1997 $10,500,000
-----------------------------------------------------------
June 30, 1997 and thereafter $12,500,000
during the term of this
Agreement
===========================================================
24. NET WORTH INCREASE. Section 6.13 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
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Section 6.13 INTENTIONALLY DELETED
25. BEECHAM LOAN. Section 6.16 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
Section 6.16 Total Liabilities to Tangible Net Worth.
Borrower shall maintain on a consolidated basis, measured
quarterly as of the last day of March, June, September and
December, a ratio of total liabilities under GAAP to Tangible
Net Worth of no more than 1.50:1 as of June 30, 1996,
September 30, 1996 and December 31, 1996; a ratio of total
liabilities under GAAP to Tangible Net Worth of no more than
1.25:1 as of March 31, 1997; and a ratio of total liabilities
under GAAP to Tangible Net Worth of no more than 1:1 from and
including June 30, 1997 through the remaining term of this
Agreement.
26. CURRENT RATIO. Article 6 of the Credit Agreement is hereby amended
to add the following:
Section 6.18 Current Ratio. During the term of this
Agreement, Borrower shall maintain on a consolidated basis,
measured monthly as of the last day of each month commencing
June 30, 1996, a Current Ratio of no less than 1.7:1.
27. INVESTMENTS AND SUBSIDIARIES. Section 7.4(a) of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:
(a) The Borrower will not purchase or hold
beneficially any stock or other securities or evidences of
indebtedness of, make or permit to exist any loans or advances
to, or make any investment or acquire any interest whatsoever
in, any other Person, including specifically, but without
limitation, any partnership or joint venture, except for the
following:
(i) Permitted Investments;
(ii) advances in the form of progress
payments, prepaid rent or security deposits;
(iii) loans to employees in an aggregate
amount outstanding at any time not to exceed
$25,000; and
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(iv) other uses mutually agreed upon in
writing by Borrower and Lender in their sole and
absolute discretion.
28. CAPITAL EXPENDITURES. Section 7.10 of the Credit Agreement is
hereby deleted in its entirety and the following inserted therefor:
Section 7.10 Capital Expenditures. The Borrower will
not expend, or contract to expend, to purchase Capital Assets
more than $100,000 in Fiscal Year 1996 (excluding Borrower's
purchase of modular furniture having an approximate value of
$60,000); more than $500,000 in Fiscal Year 1997; and,
thereafter, during the term this Agreement, more than $200,000
in any Fiscal Year.
29. ADDRESS FOR NOTICES, ETC. (a) For purposes of Section 9.3 of the
Credit Agreement, the address for notices, requests, demands or other
communications provided for under the Loan Documents to Lender shall be as
follows:
Norwest Bank Arizona, National Association
64 East Broadway
Tempe, Arizona 85282
Attn: Mr. Jeffrey R. Wentzel, Vice President
Telecopier: (602) 644-8392
(b) Copies of all notices, requests, demands or other communications provided
for under Section 9.3 of the Credit Agreement or other communications provided
for under the Loan Documents to Borrower shall be delivered as follows:
Brown & Bain, P.A.
2901 North Central Avenue
P.O. Box 400
Phoenix, Arizona 85001-0400
Attn: Frank M. Placenti, Esq.
Telecopier: (602) 351-8516
30. FINANCING STATEMENT. For purposes of Section 9.4 of the Credit
Agreement, the name and address of the Secured Party shall be as follows:
Norwest Bank Arizona, National Association
64 East Broadway
Tempe, Arizona 85282
Attn: Mr. Jeffrey R. Wentzel, Vice President
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31. COSTS AND EXPENSES. Section 9.7 of the Credit Agreement is hereby
deleted in its entirety and the following inserted therefor:
Section 9.7 Costs and Expenses. Borrower agrees to
pay to Lender on demand any and all costs, expenses and fees
(including reasonable attorneys' fees) incurred in enforcing
or attempting to recover payment of the amount due under this
Agreement, including, without limitation, negotiating,
documenting and otherwise pursuing or consummating any
modifications, extensions, compositions, renewals or other
similar transactions pertaining to this Agreement,
irrespective of the existence of a default, and including
costs, expenses and fees incurred before, after or
irrespective of whether suit is commenced and including costs,
expenses and fees incurred by Lender in any bankruptcy
proceedings (including, without limitation, efforts to modify
or vacate any automatic stay or injunction) or appellate
proceeding, and in the event suit or arbitration is brought to
enforce payment hereof, such costs, expenses and fees and all
other issues in such suit shall be determined by a court
sitting without a jury or by the arbitrator(s), as applicable.
32. GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY TRIAL. Section
9.12 of the Credit Agreement is hereby deleted in its entirety and the following
inserted therefor:
Section 9.12 Arbitration; Waiver of Jury Trial.
EXCEPT FOR "CORE PROCEEDINGS" UNDER THE UNITED STATES
BANKRUPTCY CODE, THE PARTIES AGREE TO SUBMIT TO BINDING
ARBITRATION ALL CLAIMS, DISPUTES AND CONTROVERSIES BETWEEN
THEM, WHETHER IN TORT, CONTRACT OR OTHERWISE (AND THEIR
RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS, AND
OTHER AGENTS) ARISING OUT OF OR RELATING TO IN ANY WAY THIS
CREDIT AGREEMENT. ANY ARBITRATION PROCEEDING WILL (A) PROCEED
IN PHOENIX, ARIZONA; (B) BE GOVERNED BY THE FEDERAL
ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE); AND (C)
BE CONDUCTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA"). THIS
ARBITRATION REQUIREMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY
TO (I) FORECLOSE
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AGAINST REAL OR PERSONAL PROPERTY COLLATERAL OR SUE FOR AND
OBTAIN A DEFICIENCY JUDGMENT AFTER FORECLOSURE; (II) EXERCISE
SELF-HELP REMEDIES RELATING TO COLLATERAL OR PROCEEDS OF
COLLATERAL SUCH AS SETOFF OR REPOSSESSION; OR (III) OBTAIN
PROVISIONAL ANCILLARY REMEDIES SUCH AS REPLEVIN, INJUNCTIVE
RELIEF, ATTACHMENT OR THE APPOINTMENT OF A RECEIVER, BEFORE,
DURING OR AFTER THE PENDENCY OR ANY ARBITRATION PROCEEDING.
THIS EXCLUSION DOES NOT CONSTITUTE A WAIVER OF THE RIGHT OR
OBLIGATION OF ANY PARTY TO SUBMIT ANY DISPUTE TO ARBITRATION,
INCLUDING THOSE DISPUTES ARISING FROM THE EXERCISE OF THE
ACTIONS DETAILED IN CLAUSES (I), (II) AND (III) ABOVE. ANY
ARBITRATION PROCEEDING WILL BE BEFORE A SINGLE ARBITRATOR. THE
PARTIES SHALL USE REASONABLE EFFORTS TO AGREE UPON A SINGLE
ARBITRATOR WITHIN TEN (10) DAYS AFTER WRITTEN NOTICE FROM ONE
PARTY TO THE OTHER REQUESTING ARBITRATION. IF THE PARTIES ARE
UNABLE TO AGREE UPON AN ARBITRATOR WITHIN SUCH TEN (10) DAY
PERIOD, AT ANY TIME THEREAFTER EITHER PARTY MAY REQUIRE THAT
THE ARBITRATOR BE SELECTED ACCORDING TO THE COMMERCIAL
ARBITRATION RULES OF THE AAA. THE ARBITRATOR WILL BE A NEUTRAL
ATTORNEY WHO PRACTICES IN THE AREA OF COMMERCIAL OR BUSINESS
LAW. THE ARBITRATOR WILL DETERMINE WHETHER OR NOT AN ISSUE IS
ARBITRABLE AND WILL GIVE EFFECT TO THE STATUTES OF LIMITATION
IN DETERMINING ANY CLAIM. JUDGMENT UPON THE AWARD RENDERED BY
THE ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. IN ANY ARBITRATION PROCEEDING, THE ARBITRATOR
WILL DECIDE (BY DOCUMENTS ONLY OR WITH A HEARING AT THE
ARBITRATOR'S DISCRETION) ANY PRE-HEARING MOTIONS WHICH ARE
SIMILAR TO MOTIONS TO DISMISS FOR FAILURE TO STATE A CLAIM OR
MOTIONS FOR SUMMARY ADJUDICATION. IN ANY ARBITRATION
PROCEEDING, DISCOVERY WILL BE PERMITTED AND WILL BE GOVERNED
BY THE ARIZONA RULES OF CIVIL PROCEDURE. ALL
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DISCOVERY MUST BE COMPLETED NO LATER THAN 20 DAYS BEFORE THE
HEARING DATE AND WITHIN 180 DAYS OF THE COMMENCEMENT OF
ARBITRATION PROCEEDINGS. ANY REQUESTS FOR AN EXTENSION OF THE
DISCOVERY PERIODS, OR ANY DISCOVERY DISPUTES, WILL BE SUBJECT
TO FINAL DETERMINATION BY THE ARBITRATOR UPON A SHOWING THAT
THE REQUEST FOR DISCOVERY IS ESSENTIAL FOR THE PARTY'S
PRESENTATION AND THAT NO ALTERNATIVE MEANS FOR OBTAINING
INFORMATION IS AVAILABLE. THE ARBITRATOR SHALL AWARD COSTS AND
EXPENSES OF THE ARBITRATION PROCEEDING IN ACCORDANCE WITH THE
PROVISIONS OF THE CREDIT AGREEMENT. EXCEPT AS OTHERWISE
PROVIDED HEREIN, THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA,
WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES. IN THE EVENT
THAT LENDER EXERCISES ITS RIGHTS TO FORECLOSE AGAINST REAL OR
PERSONAL PROPERTY COLLATERAL OR OBTAIN PROVISIONAL ANCILLARY
REMEDIES SUCH AS REPLEVIN, INJUNCTIVE RELIEF, ATTACHMENT OR
THE APPOINTMENT OF A RECEIVER, THE PARTIES AGREE THAT ANY
LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.
------------ ------------
Initial Initial
33. COMPLIANCE CERTIFICATE. Exhibit E to the Credit Agreement is hereby
deleted in its entirety and replaced by Exhibit E attached to the First
Amendment, which is incorporated in the Agreement by this reference.
34. PATENT APPLICATIONS. Exhibit F to the Credit Agreement is hereby
deleted in its entirety and replaced by Exhibit F attached to the First
Amendment, which is incorporated in the Agreement by this reference.
35. MISCELLANEOUS.
(a) Arbitration Agreement; Waiver of Right to Jury Trial. The
Agreement contains an arbitration provision and waiver of right to jury trial.
In the
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event of any dispute arising out of or related to this Amendment, the provisions
of Section 9.12 of the Agreement shall apply.
(b) Voluntary Agreement. Borrower represents and warrants to
Lender that (i) it is, or has had the opportunity to be, represented by legal
counsel of its choice in regard to the transaction provided for by this
Amendment and that such counsel (if engaged) has explained the significance of
the terms, and the meaning and effect of this Amendment; (ii) it is fully aware
and clearly understands all of the terms and provisions contained in this
Amendment; (iii) it has voluntarily, with full knowledge and without coercion or
duress of any kind, entered into this Amendment and the documents executed in
connection with this Amendment; (iv) it is not relying on any representations,
either written or oral, express or implied, made to it by Lender other than as
set forth in this Amendment; and (v) the consideration received by Borrower to
enter into this Amendment and the arrangement contemplated by this Amendment has
been actual and adequate.
(c) Entire Agreement. This Amendment and the Loan Documents
constitute the entire agreement among the parties as to the agreements and
understandings contemplated by this Amendment. All parties to this Amendment
acknowledge that there are no agreements, understandings, warranties or
representations among the parties except as set forth in the Loan Documents and
this Amendment.
(d) Counterpart Execution. This Amendment may be executed in
counterparts, each of which shall be deemed an original document, and all of
which combined shall constitute a single document.
(e) Waiver. Neither this Amendment nor any of the provisions
hereof may be changed, waived, discharged or terminated, except by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(f) Headings. Paragraph or other headings contained in this
Amendment are for reference purposes only and are not intended to affect in any
way the meaning or interpretation of this Amendment.
(g) Severability. If any clause or provision of this Amendment
is determined to be illegal, invalid, or unenforceable under any present or
future law by the final judgement of a court of competent jurisdiction, such
clause or provision shall be ineffective, but the remainder of this Amendment
will not be affected thereby.
(h) Binding Effect. All of the provisions of this Amendment
shall be binding upon and shall inure to the benefit of Borrower and Lender and
their permitted successors and assigns, including, without limitation, any
successor holder of any Note and any successor mortgagee/beneficiary under any
security document.
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(i) Time of the Essence. Time is of the essence of each and
every provision under this Amendment.
(j) Amendment. Except as specifically set forth herein, the
Agreement and the other Loan Documents shall remain in full force and effect. In
the event of a conflict between the terms and provisions of this Amendment and
the terms and provisions of the Agreement, the terms and provisions of this
Amendment shall govern and control. This Amendment replaces and supersedes in
its entirety those certain letter agreements dated March 6, 1996 and April 11,
1996 between NBCI and Borrower. Nothing contained in this Amendment is intended
to or shall be construed as relieving any person or entity, whether a party to
this Amendment or not, of any of such person's or entity's obligations to
Lender.
(k) Power of Attorney. For purposes of compliance with Arizona
Revised Statutes Section 14-5503, Sections 3.2 and 6.11 of the Credit Agreement
and any other provisions in the Credit Agreement or Loan Documents granting a
power of attorney by Borrower to Lender are incorporated herein by this
reference.
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IN WITNESS WHEREOF, this Amendment is executed to be effective as of
the date first above written.
BORROWER:
MEDICIS PHARMACEUTICAL
CORPORATION, a Delaware corporation
- ----------------------------------
Witness
By:
-------------------------------------
Name: Jonah Shacknai
-----------------------------------
Title: Chairman of the Board
----------------------------------
Execution Date: May 29, 1996
LENDER:
NORWEST BANK ARIZONA, NATIONAL
ASSOCIATION, a national banking
association
By:
-------------------------------------
Name: Jeffrey R. Wentzel
-----------------------------------
Title: Vice President
----------------------------------
Execution Date: May 29, 1996
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STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me, the
undersigned notary public, this 29th day of May, 1996, by Jonah Shacknai, the
Chairman of the Board of MEDICIS PHARMACEUTICAL CORPORATION, a Delaware
corporation, on behalf of the corporation.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me, the
undersigned notary public, this 29th day of May, 1996, by Jeffrey R. Wentzel,
the Vice President of NORWEST BANK ARIZONA, NATIONAL ASSOCIATION, a national
banking association, on behalf of the banking association.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
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EXHIBIT E
COMPLIANCE CERTIFICATE
In accordance with our Credit and Security Agreement dated as of August
3, 1995, as amended (the "Credit Agreement"), attached are the financial
statements of Medicis Pharmaceutical Corporation (the "Borrower") as of and for
the month and year-to-date period ended ______________ __, 199_ (the "Current
Financials")
I certify that the Current Financials have been prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
the accounting practices reflected in the financial statements referred to in
Section 5.5 of the Credit Agreement, subject to year-end audit adjustments, if
applicable.
Defaults and Events of Default (check one)
/ / I have no knowledge of the occurrence of any Default or Event
of Default under the Credit Agreement which has not previously
been reported to you and remedied.
/ / Attached is a detailed description of all Defaults and Events
of Default of which I have knowledge and which have not
previously been reported to you and remedied.
For the date and periods covered by the Current Financials, the
Borrower is in compliance with the covenants set forth in Sections 6.12, 6.16,
6.18 and 7.10 of the Credit Agreement, except as indicated below. The
calculations made to determine compliance are as follows:
Covenant Actual Requirement
6.12 Tangible Net Worth $__________ $________
6.16 Total Liabilities to
Tangible Net Worth ___________ _________
6.18 Current Ratio ___________ _________
7.10 Capital Expenditures $__________ Maximum $________
27
Date:____________________________, 199__
MEDICIS PHARMACEUTICAL
CORPORATION, a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________