Exhibit (b)(iii)
SECOND AMENDMENT TO
REVOLVING CREDIT, TERM LOAN, EQUIPMENT
ACQUISITION TERM LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT ACQUISITION
TERM LOAN AND SECURITY AGREEMENT (the "Amendment") is entered into as of March
__, 2004 to be effective as of the Effective Date (as defined herein) by and
between CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
("Agent"), the Lenders party thereto and each of ADVANCED NUTRACEUTICALS, INC.,
a Texas corporation ("Parent"), BACTOLAC PHARMACEUTICAL INC., a Delaware
corporation ("Bactolac"), and ANI PHARMACEUTICALS, INC., a Mississippi
corporation ("ANIP") and together with Parent and Bactolac, each a "Borrower"
and collectively, the "Borrowers"). Capitalized terms used and not defined
herein shall have the meanings assigned to such terms in the Agreement.
A. WHEREAS, Agent, Lenders and Borrowers are parties to that certain
Revolving Credit, Term Loan, Equipment Acquisition Term Loan and Security
Agreement dated as of March 21, 2003 as amended by a First Amendment thereto
dated December __, 2003 (as heretofore and hereafter amended, supplemented,
modified and/or restated from time to time, the "Agreement"), pursuant to which
the Lenders made Advances and Loans to the Borrowers;
B. WHEREAS, Borrowers have requested that Agent and Lenders consent to the
sale of substantially all of the assets of ANIP (the "Assets") and certain
equipment and real property owned by Bactolac (the "Bactolac Asset") as such
terms are defined in the Asset Purchase Agreement dated March __, 2003 (the
"Asset Purchase Agreement") by and among the Borrowers and ANIP Acquisition
Company, a Delaware corporation (the "Buyer"), and the documents, agreements and
instruments to be executed or delivered in connection therewith (the "Purchase
Documents");
C. WHEREAS, Borrowers have agreed with Agent and Lenders that, in
connection with the sale of the Assets and Bactolac Assets, certain terms of the
Agreement shall be amended as provided herein;
NOW, THEREFORE, in consideration of the terms and conditions, premises and
the other mutual covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Consent to Disposition of Certain Assets. The Agent (a) consents
to Borrowers' execution and delivery and performance under the Purchase
Documents attached hereto as Exhibit A hereto; and (b) agrees to release all
Liens held by or in favor of Agent in the Assets and Bactolac Assets subject to
the Paydown Letter in substantially the form attached as Exhibit B hereto.
Borrowers shall not enter into or agree to enter into any amendment,
modification or waiver of any of the Purchase Documents without the prior
written consent of Agent. Borrower shall cause a portion of the purchase price
for the Assets and Bactolac Assets in the amount of not less than $_____________
(the "Purchase Price") to be Federal funds wired transferred in immediately
available funds to the Concentration Account for application to the Term Loan to
reduce the Term Loan to $650,000 and the balance to the Revolving Loans.
SECTION 2. Amendments. Upon the Effective Date, the Agreement shall be
amended as follows:
(a) Amendment to Facility Cap. The first "WHEREAS" in the recitals to the
Agreement is amended to delete "Four Million Dollars ($4,000,000)" and to
substitute "Two Million Five Hundred Thousand Dollars ($2,500,000)" in place
thereof, thereby reducing the Facility Cap to $2,500,000. All Revolving Loans in
excess of the reduced Facility Cap shall be repaid by application of a portion
of the Purchase Price received by Agent.
(b) Amendment to Term Loan.
(i) The first "WHEREAS" in the recitals to the Agreement is amended to
delete "One Million Dollars ($1,000,000)" and to substitute "Six Hundred
Fifty Thousand Dollars ($650,000)" in place thereof thereby reducing the
principal amount of the Term Loan to $650,000. This reduction in the
principal amount of the Term Loan has been made by application of a portion
of the proceeds of the Purchase Price received by Agent.
(ii) Section 2.6 of the Agreement is amended to delete "One Million
Dollars ($1,000,000)" and to substitute Six Hundred Fifty Thousand
($650,000)" in place thereof, thereby reducing the principal amount of the
Term Loan to $650,000. This reduction in the principal amount of the Term
Loan has been made by application of a portion of the proceeds of the
Purchase Price received by Agent.
(iii) Section 2.8 of the Agreement is amended to delete "Sixteen
Thousand Six Hundred Sixty Six Dollars and Sixty Six Cents ($16,666.66)"
and to substitute "Twenty Thousand ($20,000)" in place thereof.
(iv) Borrowers agree that any funds released to Borrowers from the
escrow established under the Asset Purchase Agreement will be paid to Agent
and applied as a prepayment of the payments under the Term Loan, in the
inverse order of their maturities.
(c) Amendment to Inventory Cap. Section 2.1(b) of the Agreement is amended
to delete "$750,000" and to substitute "$500,000" in place thereof.
(d) Eligible Equipment, Eligible Inventory and Eligible Receivables. All
references to Borrower in the definitions of Eligible Equipment, Eligible
Inventory and Eligible Receivables shall exclude ANIP. None of the Equipment,
Inventory or Accounts of ANIP shall be eligible for borrowing purposes under the
Agreement.
(e) Amendments to Annex 1
(i) Section 1 to Annex I is deleted and the following is substituted
in place thereof:
"(i) Tangible Net Worth
As measured on the last day of each fiscal year of Borrowers,
the Tangible Net Worth shall not be less than the following:
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Test Date Minimum Tangible Net Worth
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September 30, 2004 $8,500,000
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September 30, 2005 $9,000,000"
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(ii) Section 2 of Annex I is deleted and the following is substituted
in place thereof:"
"2) Fixed Charge Coverage Ratio
The Fixed Charge Coverage Ratio shall be not less than (a) 1.00 to 1.00 as
of March 31, 2004 and April 30, 2004 and (b) 1.10 to 1.00 as of the last day of
each calendar month commencing with the month ending May 31, 2004."
(ii) Section 3 of Annex I is deleted and the following is substituted
in place thereof:
"3) Capital Expenditures
Borrowers shall not permit the Capital Expenditures in the aggregate to
exceed $400,000 in any fiscal year of the Borrowers."
SECTION 3. Effective Date. Upon receipt by Agent of each of the following,
this Amendment shall be deemed to be effective (the "Effective Date"):
(a) This Amendment duly executed by each Borrower;
(b) The $2,500,000 Revolving Note in substantially the form of Exhibit C
attached to this Amendment duly executed by each Borrower;
(c) The $650,000 Term Note in substantially the form of Exhibit D attached
to this Amendment duly executed by each Borrower;
(d) The Paydown Letter in substantially the form of Exhibit B attached to
this Amendment duly executed by Borrowers and Buyer; and
(e) the Purchase Price by Federal funds wire transfer of immediately
available funds in the Concentration Account.
SECTION 4. Consent to Change of Name. Immediately following the closing
under the Purchase Documents, ANIP will change its name to NIB, Inc. pursuant to
an amendment to its certificate of incorporation in form and substance
satisfactory to Agent, and, subject to such review, Agent consents to this name
change.
SECTION 5. Agreement in Full Force and Effect as Amended. Except as
specifically amended hereby, the Agreement and other Loan Documents shall remain
in full force and effect and hereby are ratified and confirmed as so amended.
This Amendment shall not constitute a novation, satisfaction and accord, cure,
release and/or satisfaction of the Agreement and/or other Loan Documents, but
shall constitute an amendment thereof. The parties hereto agree to be bound by
the terms and conditions of the Agreement and Loan Documents as amended by this
Amendment, as though such terms and conditions were set forth herein and therein
in full. Each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of similar import shall mean and be a reference to
the Agreement as amended by this Amendment, and each reference herein or in any
other Loan Document or any other document or instrument to the Agreement shall
mean and be a reference to the Agreement as amended and modified by this
Amendment. Each reference in the Agreement and/or other Loan Documents or any
other document or instrument to any Loan Documents or words of similar import
shall mean and be a reference to the Loan Documents as amended hereby
SECTION 6. Representations.
Each Borrower hereby represents and warrants to Agent and Lenders as
follows as of the date hereof and as of the Effective Date: (i) it is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization; (ii) the execution, delivery and performance by it
of this Amendment to which it is a party are within its powers, have been duly
authorized, and do not contravene (A) its articles of incorporation or other
organizational documents, or (B) any applicable law; (iii) no consent, license,
permit, approval or authorization of, or registration, filing or declaration
with any Governmental Authority or other Person is required in connection with
the execution, delivery, performance, validity or enforceability of this
Amendment by or against it; (iv) this Amendment has been duly executed and
delivered by it; (v) this Amendment constitutes its legal, valid and binding
obligations enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity; (vi) it is in
compliance with all covenants and agreements in the Loan Documents and it is not
in default under the Agreement or any other Loan Document and, except for the
actions waived under Section 1 hereof, no Default or Event of Default exists,
has occurred and is continuing or would result by the execution, delivery or
performance of this Amendment, including, without limitation, any violation or
breach of or Event of Default with respect to Annex I of the Agreement, and
(vii) the representations and warranties contained in the Loan Documents are
true and correct in all material respects as of the date hereof and as of the
Effective Date as if made on the date hereof, except for such representations
and warranties limited by their terms to a specific date.
SECTION 7. Miscellaneous.
(a) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, be deemed to be an amendment or
modification of, or operate as a waiver of, any provision of the Agreement or
any other Loan Document or any right, power or remedy of Agent, nor constitute a
waiver of any provision of the Agreement or any other Loan Document, or any
other document, instrument and/or agreement executed or delivered in connection
therewith or of any Default or Event of Default under any of the foregoing, in
each case whether arising before or after the date hereof or as a result of
performance hereunder or thereunder. This Amendment shall not preclude the
future exercise of any right, remedy, power or privilege available to Agent
whether under the Agreement, other Loan Documents, at law or otherwise.
(b) This Amendment may be executed in any number of counterparts (including
by facsimile), and by the different parties hereto or thereto on the same or
separate counterparts, each of which shall be deemed to be an original
instrument but all of which together shall constitute one and the same
agreement. Each party agrees that it will be bound by its own facsimile
signature and that it accepts the facsimile signature of each other party. The
Borrowers shall provide original signed copies of all Loan Documents. The
descriptive headings of the various sections of this Amendment are inserted for
convenience of reference only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof or thereof. Whenever the context
and construction so require, all words herein in the singular number herein
shall be deemed to have been used in the plural, and vice versa, and the
masculine gender shall include the feminine and neuter and the neuter shall
include the masculine and feminine.
(c) This Amendment may not be changed, amended, restated, waived,
supplemented, discharged, canceled, terminated or otherwise modified orally or
by any course of dealing or in any manner other than as provided in the
Agreement or the applicable Loan Document. This Amendment shall be considered
part of the Agreement and shall be a Loan Document for all purposes under the
Agreement and other Loan Documents.
(d) This Amendment, the Agreement, and the Loan Documents constitute the
final, entire agreement and understanding between the parties with respect to
the subject matter hereof and thereof and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements between the parties, and
shall be binding upon and inure to the benefit of the successors and assigns of
the parties hereto and thereto. There are no unwritten oral agreements between
the parties with respect to the subject matter hereof and thereof. If any
provision of this Amendment is adjudicated to be invalid under applicable laws
or regulations, such provision shall be inapplicable to the extent of such
invalidity without affecting the validity or enforceability of the remainder of
this Amendment which shall be given effect so far as possible.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE
SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE AGREEMENT.
(f) No Borrower may assign, delegate or transfer this Amendment or any of
its rights or obligations hereunder or thereunder and any delegation, transfer
or assignment in violation hereof shall be null and void. No rights are intended
to be created under this Amendment for the benefit of any third party donee,
creditor or incidental beneficiary of any Borrower or any other Person other
than Agent and each Lender. Nothing contained in this Amendment shall be
construed as a delegation to Agent of Borrowers' duties of performance,
including, without limitation, any duties under any account or contract in which
Agent has a security interest or Lien. This Amendment shall be binding upon
Borrowers and Agent and Lenders and their respective successors and permitted
assigns. Agent's and Lenders' ability to assign, sell or transfer all of any
part of this Amendment and shall be governed by the Agreement.
(g) Each Borrower hereby (i) consents to the execution and delivery of this
Amendment by the other Borrowers, (ii) agrees that this Amendment shall not
limit or diminish the obligations of the subject Borrower under the Loan
Documents, (iii) reaffirms its obligations under each of the Loan Documents to
which it is a party, and (iv) agrees that each of such Loan Documents remain in
full force and effect and are hereby ratified and confirmed. All representations
and warranties made in this Amendment and shall survive the execution and
delivery of this Amendment and no investigation by Agent shall affect such
representations or warranties or the right of Agent to rely upon them.
(h) Each Borrower shall execute and deliver such other documents,
certificates and/or instruments and take such other actions as Agent may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
SIGNATURE PAGE TO
SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT
ACQUISITION TERM LOAN AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties have caused this Second Amendment To
Revolving Credit, Term Loan, Equipment Acquisition Term Loan And Security
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above to be effective on and as of the Effective
Date.
BORROWERS: ADVANCED NUTRACEUTICALS, INC.,
a Texas corporation
By:_________________________________
Name:
Title:
BACTOLAC PHARMACEUTICAL, INC.,
a Delaware corporation
By:_________________________________
Name:
Title:
ANI PHARMACEUTICALS, INC.,
a Mississippi corporation
By:_________________________________
Name:
Title:
SIGNATURE PAGE TO
SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT
ACQUISITION TERM LOAN AND SECURITY AGREEMENT
AGENT AND LENDER: CAPITALSOURCE FINANCE LLC
By:
-----------------------------------
Name: Joseph Turitz
Title: Associate General Counsel