AMENDMENT NO. 5 TO BUSINESS LOAN AGREEMENT
This Amendment No.5 (the "Amendment") dated as of October 12, 1998 is
between Dura Pharmaceuticals, Inc. (the "Borrower") and Bank of America National
Trust and Savings Association (the "Bank").
RECITALS
A. The Bank and the Borrower entered into that certain Business Loan
Agreement dated as of April 14, 1997, as modified by amendments of May 8, 1997,
July 30, 1997, October 28, 1997, and June 25, 1998 (as amended, the
"Agreement").
B. The Bank and the Borrower desire to amend the Agreement on the terms
and conditions set forth below:
AGREEMENT
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 In Paragraph 6.3 of the Agreement, the period is deleted
from the end of subparagraph (g) and is replaced with "; MINUS" and the
following is added as a new subparagraph (h):
"(h) the amount of treasury stock held by the
Borrower not to exceed Fifty Million Dollars ($50,000,000)."
2.2 Paragraph 6.11 of the Agreement is amended in full to read
as follows:
"6.11 Dividends. Not to declare or pay any dividends
on any of its shares except dividends payable in capital stock
of the Borrower, and not to purchase, redeem or otherwise
acquire for value any of its shares, or create any sinking
fund in relation thereto; provided, however, that the Borrower
may acquire treasury stock in an amount not to exceed Fifty
Million Dollars ($50,000,000)."
2.3 The form of compliance certificate appearing as Exhibit A
to Amendment No. 3 to the Agreement as referenced in Paragraph 6.2(d)
is amended to read as set forth on Exhibit A to this Amendment.
3. REPRESENTATIONS AND WARRANTIES. When the Borrower signs this
Amendment, the Borrower represents and warrants to the Bank that: (a) except as
disclosed to the Bank by the Borrower in its letter dated October __, 1998,
there is no event which is, or with notice or lapse of time or both would be, a
default under the Agreement (b) except as disclosed to the Bank by the Borrower
in its letter dated October __, 1998, the representations and warranties in the
Agreement are true as of the date of this Amendment as if made on the date of
this Amendment, (c) this Amendment is within the Borrower's powers, has been
duly authorized, and does not conflict with any of the Borrower's organizational
papers, and
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(d) this Amendment does not conflict with any law, agreement, or obligation
by which the Borrower is bound.
4. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date stated at the beginning of
the Amendment.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: /s/ Susan J. Pepping
-------------------------------
Name: Susan J. Pepping
Title: Vice President
DURA PHARMACEUTICALS, INC.
By: /s/ Erle Mast
-------------------------------
Name: Erle Mast
Title: Vice President, Finance
By: /s/ Mitchell R. Woodbury
Name: Mitchell R. Woodbury
Title: Senior V.P., General Counsel and Secretary
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EXHIBIT "A"
COMPLIANCE CERTIFICATE
To: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Reference is made to that certain Business Loan Agreement dated as of
April 14, 1997, as amended, between Bank of American National Trust and Savings
Association and Dura Pharmaceuticals, Inc., (the "Business Loan Agreement").
Capitalized terms not otherwise defined in this Certificate shall have the
meanings ascribed to them in the Business Loan Agreement. This Certificate is
delivered in accordance with Paragraph 6.2(d) of the Business Loan Agreement.
I. COMPLIANCE WITH FINANCIAL COVENANTS
Computations showing compliance with certain paragraphs of the Business
Loan Agreement are as follows:
Paragraph 6.3; Net Worth.. As of the date of the attached financial
statements, the Borrower and Domestic Subsidiaries' Net Worth, on a consolidated
and cumulative basis, is at least the sum of:
Calculated Net Worth from the immediately preceding
fiscal quarter. Net Worth amount as of the 6/30/97
fiscal quarter shall begin with $450,000,000. $____________
PLUS, in each quarterly accounting period, commencing with the
quarter ended 6-30-97 the sum of:
50% of net income after income taxes
(without subtracting losses), $_____________
PLUS the net proceeds from the issuance of any equity
securities (including shares issued upon exercise
of stock options), $_____________
PLUS any increase in stockholders' equity resulting
from the conversion of debt securities to equity securities $_____________
PLUS any increase in stockholders equity resulting from
the transactions as described in the Form S-3 dated
October 10, 1997 $_____________
MINUS, cash and noncash charges for in-process technology
purchased from Spiros Development Corporation and for any
contribution to Spiros Development Corporation II, Inc., as
described in the Form S-3 ( the "Spiros Charges"), up to a
maximum of One Hundred Twenty Five Million
Dollars ($125,000,000) in the aggregate; $_____________
Compliance Certificate
Page 2
MINUS any decrease in stockholders' equity resulting from the
acquisition by the Borrower of Spiros Development Corporation or
a cash contribution from the Borrower to Spiros Development
Corporation II,
Inc. as described in the Form S-3, $____________
MINUS the amount of treasury stock held by the
Borrower not to exceed $50,000,000. $_____________
minimum permitted $_____________
actual Net Worth $_____________
PARAGRAPH 6.4; ADJUSTED FUNDED DEBT TO ADJUSTED EBITDA. As of the date of
the attached financial statements for Borrower and its Domestic Subsidiaries,
the ratio of funded debt to adjusted EBITDA was calculated as follows:
(a) The sum of:
All funded debt (including interest bearing obligations) $_____________
MINUS obligations owing to Procter & Gamble Pharmaceuticals, Inc.
for Entex Products (maximum $20,000,000) less domestic cash and
domestic cash equivalents up to an amount equal the face amount of
the Notes issued pursuant to
and as defined in the Indenture. $_____________
adjusted funded debt $_____________
DIVIDED by
(b) For the current fiscal quarter and each of the three immediately
preceding quarters, the sum of :
net income $_____________
MINUS interest income $(____________)
PLUS interest expense $_____________
PLUS depreciation $_____________
PLUS depletion $____________
PLUS amortization $_____________
PLUS all federal, state, local and foreign income taxes $_____________
Compliance Certificate
Page 3
PLUS Spiros Charges (up to maximum of $125,000,000
in aggregate) $_____________
Adjusted EBITDA $_____________
EQUALS (EXPRESSED AS A RATIO) __________:1.00
maximum permitted:
Up to and including August 31, 1997 2.00 to 1.00
From and including September 1, 1997 and thereafter 1.75 to 1.00
PARAGRAPH 6.5; MINIMUM EBIT. For the fiscal quarter ended as of the
date of the attached financial statements, EBIT was calculated as
follows:
(a) the sum of:
net income $____________
minus interest income $(____________)
plus interest expense $____________
plus all federal, state, local and foreign income
taxes $____________
plus the Spiros Charges (maximum of $125,000,000
in aggregate) $_____________
equals $_____________
minimum permitted: $(1,000,000)
Paragraph 6.7; Other Indebtedness. As of the date of the attached
financial statements for the Borrower and its subsidiaries, the
outstanding amount of debts for acquisition of fixed or capital assets
permitted under Paragraph 6.7 (e) was $_______________.
maximum permitted in any single fiscal year: $5,000,000
(excludes debt pursuant to that certain Indenture
dated as of July 30, 1997)
PARAGRAPH 6.8; LIENS. As of the date of the attached financial
statements for the Borrower and its subsidiaries, the amount of
obligations secured by a lien under the last provision of Paragraph 6.8
was $___________.
maximum permitted in any fiscal year: $5,000,000
Compliance Certificate
Page 4
Paragraph 6.9; Capital Expenditures. As of the date of the attached
financial statements for the Borrower and its subsidiaries, the total
amount expended year to date to acquire fixed or capital assets was
$_____________.
maximum permitted during 1997 fiscal year: $30,000,000
maximum permitted during 1998 fiscal year: $55,000,000
PARAGRAPH 6.11, DIVIDENDS. As of the date of the attached
financial statements for the Borrower and its subsidiaries, the total
amount of treasury stock was $____________
maximum permitted $50,000,000
PARAGRAPH 6.12; LOANS TO AFFILIATED COMPANIES. Since the date of
the Business Loan Agreement, the total amount of loans or other
extensions of credit made by the Borrower or any Domestic Subsidiary
(including subsidiaries of the Borrower) to its affiliates was
$________________; and the total investments in Foreign Subsidiaries was
$___________; and the total Loans to Dura (Bermuda) Trading Company,
Ltd.was $________________.
maximum permitted: $10,000,000
Investments in Foreign Subsidiaries permitted $90,000,000
Loans to Dura (Bermuda) Trading Company, Ltd.
permitted $190,000,000
Paragraph 6.21 (h); Asset Acquisitions. Since the date of the
Business Loan Agreement, the total amount of asset acquisitions,
including license agreements and product rights, permitted under
Paragraph 6.21 (h) was $__________________.
Maximum permitted in aggregate $100,000,000
II PERFORMANCE OF OBLIGATIONS
A review of the activities of Borrower during the fiscal period
covered by this Certificate has been made under the supervision of the
undersigned with a view to determining whether during such fiscal period
Borrower performed and observed all of its obligations. The best
knowledge of the undersigned, during the fiscal period covered by this
Certificate, all covenants and conditions have been so performed and
observed by Borrower and no Event of Default or event which with notice
or lapse of time or both would be an Event of Default has occurred based
on the activities of Borrower and is continuing, with any exceptions set
forth below, in response to which Borrower has taken or propose to take
the following actions (if none, so state). Without limiting the
foregoing, the Borrower has no Significant Subsidiaries except those that
have executed and delivered to Bank a guaranty as required under
paragraph 6.6 of the Business Loan Agreement.
Compliance Certificate
Page 5
III. COMPLIANCE WITH INDENTURE
To the best knowledge of the undersigned, no event or circumstance has
occurred that constitutes violation of the Indenture Agreement, as
evidenced by the attached copy of the most recent Indenture compliance
certificate .
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IV. NO MATERIAL ADVERSE CHANGE
To the best knowledge of the undersigned, no event or circumstance
has occurred that constitutes a Material Adverse Effect regarding
Borrower under Paragraph 8.7 of the Business Loan Agreement since the
date the most recent Certificate was executed and delivered, with any
exceptions being set forth below (if none, so state):
This Certificate is executed on _________, 19___, by a responsible
officer of Borrower. the undersigned hereby certify that each and every
matter contained herein is derived from Borrower's books and records and
is, to the best knowledge of the undersigned, true and correct.
Dated: ____________, 19___
Dura Pharmaceuticals, Inc.
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By: