Exhibit (b)(6)
FIFTH AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
(the "Amendment") is entered into as of August 23, 2006 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 NIB, INC. (f/k/a ANI PHARMACEUTICALS, INC.), a Mississippi
corporation ("NIB"; 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 dated as of
December 31, 2003, a Second Amendment dated March 23, 2004, a Third Amendment
dated as of January 6, 2005 and a Fourth Amendment dated as of July 26, 2005 (as
heretofore and hereafter amended, supplemented, modified and/or restated from
time to time, collectively the "Agreement"), pursuant to which the Lenders made
Advances and Loans to the Borrowers;
B. WHEREAS, Parent desires to effect a reverse stock split that would
result in (i) stockholders receiving one new share of Parent Common Stock for
every 500 shares of Parent Common Stock that they own and (ii) stockholders
receiving cash in lieu of any fractional share they would otherwise be entitled
to receive as a result of the reverse stock split at a rate of $4.00 per share
on a pre-split basis (the "Reverse Stock Split"), and is intended to reduce the
number of record holders of Parent's Common Stock to fewer than 300 so that
Parent may terminate registration of its Common Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and suspend its reporting
obligations under Section 13 of the Exchange Act following the Reverse Stock
Split (the "Reverse Stock Split Transaction");
C. WHEREAS, Parent desires to change its legal name from Advanced
Nutraceuticals, Inc. to Bactolac Pharmaceutical, Inc. (the "Corporate Name
Change");
D. WHEREAS, in connection with the Reverse Stock Split Transaction and
Corporate Name Change, the Parent has filed with the Securities and Exchange
Commission (the "SEC") the following documents: (i) a Preliminary Proxy
Statement on Schedule 14A pursuant to Section 14(a) of the Exchange Act filed on
May 16, 2006, as amended by Amendment No. 1 filed on June 7, 2006, Amendment No.
2 filed on July 25, 2006 and Amendment No. 3 filed on August 8, 2006 (the
"Preliminary Proxy Materials"); (ii) a Definitive Proxy Statement on Schedule
14A pursuant to Section 14(a) of the Exchange Act filed on August 23, 2006,
with respect to an annual meeting of stockholders of the Parent to be held on
September 8, 2006 (the "Definitive Proxy Materials"); and (iii) a Schedule 13E-3
Transaction Statement under Section 13(e) of the Exchange Act and Rule 13e-3
thereunder filed on June 7, 2006, as amended by Amendment No. 1 filed on July
25, 2006, Amendment No. 2 filed on August 8, 2006, and Amendment No. 3 filed on
August 23, 2006 (the "Going Private Materials");
E. WHEREAS, Borrowers have requested that Agent and Lenders agree: (i) to
permit Parent to effect the 1-for-500 Reverse Stock Split, including the
repurchase of shares of its Common Stock from Persons holding fewer than 500 of
such shares at the effective time of the Reverse Stock Split Transaction
(approximately 171,200 shares of Common Stock) at a maximum price of $4.00 per
pre-split share and up to $1,000,000 in the aggregate for all shares so
repurchased including costs and expenses arising from the Reverse Stock Split
Transaction; and (ii) to permit Parent to change its legal name from "Advanced
Nutraceuticals, Inc." to "Bactolac Pharmaceutical, Inc.";
F. WHEREAS, in connection with the Reverse Stock Split Transaction,
Borrowers have requested, among other things that the Revolving Lenders agree to
increase the Facility Cap from $2,500,000 to $3,000,000 to provide financing for
ongoing working capital and to pay expenses related to the Reverse Stock Split
Transaction, if necessary, and the Revolving Lenders and Lenders, as applicable,
have agreed to do so, subject to the terms and conditions of this Amendment; and
G. WHEREAS, Borrowers have agreed with Agent and Lenders that, in
connection with the Reverse Stock Split Transaction and the transactions
contemplated thereby, other specified 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. Amendments. The sections, definitions, schedules, annexes and
exhibits, as applicable, of and to the Agreement referenced and/or set forth
below are hereby amended as follows:
(a) Amendment to Facility Cap. The first "WHEREAS" clause in the recitals
to the Agreement is deleted in the entirety and the following is substituted in
place thereof:
"WHEREAS, Borrowers have requested that Lenders make available to
Borrowers (i) a revolving credit facility (the "Revolving Facility")
in a maximum principal amount at any time outstanding of up to Three
Million Dollars ($3,000,000) (the "Facility Cap"), and (ii) a term
loan (the "Term Loan") in an aggregate maximum principal amount of up
to Four Million Dollars ($4,000,000), the proceeds of which Revolving
Facility and Term Loan shall be used solely (x) by Borrowers to
finance the working capital needs of Borrowers in connection with
their nutraceutical vitamin liquid and powder based products business
(the "Business"); and (y) by the Parent to fund the Tender Offer
Transaction and Reverse Stock Split Transaction, if necessary, in the
case of each of (x) and (y), subject to the terms and conditions
contained in this Agreement;
(b) Amendments to Permit Reverse Stock Split Transaction.
(i) Section 5.2 of the Agreement (Loan Documents and Acquisition
Documents) is amended to add the phrase "and Reverse Stock Split Transaction
Documents" after each reference to "Loan Documents" set forth therein.
(ii) Section 5.13 of the Agreement (No Default; Solvency) is amended
to add the following sentence after the end of the second sentence therein:
"Each Borrower is and, after giving effect to the transactions and the
Indebtedness contemplated by the Loan Documents (including, without
limitation, the Advance that will be made on the Reverse Stock Split
Borrowing Date), shall be solvent and able to meet its obligations and
liabilities as they become due, and the assets of such Borrower, at a
Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such
Borrower, and no unreasonably small capital base with which to engage
in its anticipated business exists with respect to such Borrower."
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(iii) Section 5.14 of the Agreement (Disclosure) is amended to add the
following in between the second and third sentences set forth therein:
"Borrowers shall deliver to Agent true and correct copies of all
Reverse Stock Split Transaction Documents, which shall be attached
as Exhibit A to the Fifth Amendment, together with all correspondence
to or from the SEC, complaints or other proceedings brought by
stockholders of Parent or other documentation in connection with the
Reverse Stock Split Transaction. No Reverse Stock Split Transaction
Document furnished to Agent by or on behalf of any Borrower, nor any
representation or warranty made by any Borrower in any Reverse Stock
Split Transaction Document, in any Loan Document or otherwise in
connection with any Reverse Stock Split Transaction Document, contains
any untrue statement of material fact or omits to state any fact
necessary to make the factual statements therein taken as a whole not
materially misleading in light of the circumstances under which it was
furnished."
(iv) Section 7.5 of the Agreement (Dividends; Redemptions; Equity) is
amended to delete subsection (b) thereof and to substitute the following in
place thereof:
"(b) apply any of its funds, property or assets to the acquisition,
redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any
of the foregoing (provided, however, that (x) such Borrower may redeem
its capital stock from terminated employees, non-employee directors
and consultants pursuant to, but only to the extent required under,
the terms of the related employment or other compensation-related
agreements as long as no Default or Event of Default has occurred and
is continuing or would be caused by or result therefrom, (y) Parent
may consummate the Tender Offer Transaction in accordance with the
terms and conditions set forth in this Agreement, which Tender Offer
Transaction must be fully consummated on or before December 31, 2005
and must be on terms and conditions and pursuant to documentation
satisfactory to Agent in its Permitted Discretion), and (z) Parent may
consummate the Reverse Stock Split Transaction in accordance with the
terms and conditions set forth in this Agreement, which Reverse Stock
Split Transaction must be fully consummated on or before March 31,
2007 and must be on terms and conditions and pursuant to documentation
satisfactory to Agent in its Permitted Discretion),"
(v) Section 7.7 of the Agreement (Charter Documents; Fiscal Year;
Dissolution; Use of Proceeds; Insurance Policies; Disposition of Collateral;
Taxes; Trade Names) is amended to delete the period at the end of the last
sentence set forth therein and to substitute the following in place thereof:
" or (k) amend, modify, restate or change any term or provision of any
Tender Offer Document or any Reverse Stock Split Transaction Document
in a manner that would be adverse to Agent or any Lender."
(vi) A new Section 7.11(B) of the Agreement (Reverse Stock Split
Transaction) is added in the appropriate location:
"7.11(B). Reverse Stock Split Transaction.
(a) On the Reverse Stock Split Borrowing Date: (i) all conditions
precedent to the consummation of the Reverse Stock Split Transaction
as set forth in the Reverse Stock Split Transaction Documents shall
have been satisfied; (ii) all consents and approvals of, and filings
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and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities (including,
without limitation, the Securities and Exchange Commission and each
applicable state securities authority) required in order to make or
consummate the Reverse Stock Split Transaction in accordance with the
terms of the Reverse Stock Split Transaction Documents shall have been
made, obtained, given, received, filed or taken by Parent (or the
appropriate Person) and shall be in full force and effect; and (iii)
Parent shall be in compliance with all applicable laws (including,
without limitation, applicable federal and state securities laws,
Texas corporate law and other applicable corporate laws) governing the
consummation or effectiveness of the Reverse Stock Split Transaction
and shall have received all necessary approvals and taken all action
necessary under such laws in order to make or consummate the Reverse
Stock Split Transaction in accordance with the Reverse Stock Split
Transaction Documents; and
(b) Within three (3) Business Days following the Reverse Stock Split
Borrowing Date (or such longer period following the Reverse Stock
Split Borrowing Date as shall be acceptable to the Agent in its sole
discretion), the Parent shall have: (i) utilized the proceeds from the
Advance made on the Reverse Stock Split Borrowing Date to repurchase
fractional shares of Parent's Common Stock that result from the
Reverse Stock Split Transaction at a purchase price of $4.00 per
pre-split share in accordance with the relevant requirements of the
Reverse Stock Split Transaction Documents and all applicable laws;
provided, however, that the amount paid or expended by the Borrowers
in connection with the Reverse Stock Split Transaction shall not
exceed $1,000,000 in the aggregate; and (ii) immediately following
such purchase, retire all of the shares of Parent's Common Stock so
repurchased."
(c) Amendments to Commitments and Financial Covenants.
(i) Schedule A of the Agreement (Lenders/Commitments) is deleted in the
entirety and Schedule A attached hereto is substituted in place thereof.
(ii) Annex I of the Agreement (Financial Covenants) is amended to delete
Paragraph 3 set forth therein and to substitute the following in place thereof:
"3) Capital Expenditures
Borrowers shall not permit Capital Expenditures in the aggregate to
exceed $900,000 in Borrowers' fiscal year ending September 30, 2006 and
$950,000 in any fiscal year of the Borrowers thereafter."
(iii) Annex I of the Agreement (Financial Covenants) is amended to delete
Paragraph 4 set forth therein and to substitute the following in place thereof:
"4) Minimum EBITDA
The EBITDA of the Borrowers on a consolidated basis for the twelve
(12) month period ending on any date set forth in the table below shall not
be less than the minimum amount set forth in the table below opposite such
date:
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Date Minimum EBITDA
---------------------------------------------------------------
June 30, 2006 $3,800,000
---------------------------------------------------------------
September 30, 2006 $4,150,000
---------------------------------------------------------------
December 31, 2006 $4,400,000
---------------------------------------------------------------
March 31, 2007 $4,600,000
---------------------------------------------------------------
June 30, 2007 $4,800,000
---------------------------------------------------------------
September 30, 2007 $5,000,000
---------------------------------------------------------------
December 31, 2007 $5,100,000
---------------------------------------------------------------
March 31, 2008 $5,200,000
---------------------------------------------------------------
June 30, 2008 and the last day of each calendar $5,300,000"
quarter thereafter
---------------------------------------------------------------
(d) Amendments to Definitions. Appendix A (Definitions) is amended to add
the following definitions in the appropriate alphabetical order:
(i) "Amended and Restated Disclosure Schedules" shall have the
meaning given such term in Section 4 of the Fifth Amendment.
(ii) "Fifth Amendment" shall mean the Fifth Amendment to Revolving
Credit, Term Loan and Security Agreement entered into as of
August 23, 2006 by and between Agent and Borrowers.
(iii) "Reverse Stock Split Approval Date" shall mean the date upon
which all of the following conditions shall have been and shall
continue to be satisfied: (a) the Reverse Stock Split Transaction
shall have been approved by Parent's Board of Directors and
stockholders in accordance with applicable law; (b) Parent shall
have obtained all consents, approvals, licenses, authorizations
from third parties or governmental authorities and shall have
made all filings, recordings and registrations with the SEC and
all applicable state governmental authorities which are necessary
in accordance with applicable law for the Reverse Stock Split
Transaction; (c) Parent shall be in compliance with all
applicable federal and state securities laws and Texas corporate
laws governing the consummation or effectiveness of the Reverse
Stock Split Transaction in accordance with the Reverse Stock
Split Transaction Documents; and (d)(i) Parent shall have taken
all action necessary for the valid execution, delivery and
performance of all Reverse Stock Split Transaction Documents and
the Reverse Stock Split Transaction; (ii) each Reverse Stock
Split Transaction Document shall be a legal, valid and binding
obligation of Parent, enforceable in accordance with its terms;
and (iii) each Reverse Stock Split Transaction Document shall be
in full force and effect.
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(iv) "Reverse Stock Split Transaction Borrowing Date" shall mean the
date upon which all of the following conditions have been and
shall continue to be satisfied and in any event on or before
September 29, 2006: (a) the Reverse Stock Split Approval Date
shall have occurred; and (b) all conditions set forth in Section
5(a) of the Fifth Amendment shall have been satisfied.
(v) "Reverse Stock Split Transaction Documents" shall mean the
Preliminary Proxy Materials (as defined in the Fifth Amendment),
the Definitive Proxy Materials (as defined in the Fifth
Amendment), the Going Private Materials (as defined in the Fifth
Amendment) and all other agreements, documents and certificates
governing, or relating to, the Reverse Stock Split Transaction,
together with all schedules, exhibits, annexes, amendments,
supplements or modifications thereto.
(vi) "Reverse Stock Split Transaction" shall have the meaning given
such term in the Recitals to the Fifth Amendment.
SECTION 2. Commitment Fee. In consideration of the Agent's and Lenders'
agreements hereunder, the Borrowers hereby agree to pay to the Agent for the
benefit of the Revolving Lenders, a commitment fee equal to $10,000, which fee
shall be fully earned and nonrefundable and shall be paid upon the Agent's and
Lenders' execution of this Amendment.
SECTION 3. Consent to Name Change. Subject to the receipt of all necessary
approvals and consents from the Board of Directors and stockholders of Parent in
accordance with applicable law, immediately following the consummation of the
Reverse Stock Split Transaction, Parent will change its legal name to "Bactolac
Pharmaceutical, Inc." pursuant to an amendment to its articles of incorporation
in form and substance satisfactory to Agent, and, subject to such review, Agent
consents to this name change. Upon the effectiveness of the name change from
"Advanced Nutraceuticals, Inc." to "Bactolac Pharmaceutical, Inc.", all
references to "Advanced Nutraceuticals, Inc." in the Agreement and other Loan
Documents shall mean "Bactolac Pharmaceutical, Inc."
SECTION 4. Conditions Precedent. Upon receipt by Agent of each of the
following, this Amendment shall be deemed to be effective:
(a) An original of this Amendment duly executed by each Borrower, and
Agent shall have accepted and executed this Amendment;
(b) Agent shall have received all fees, charges and expenses due and
payable to Agent and Lenders pursuant to this Amendment, including, without
limitation, the commitment fee described in Section 2 hereof;
(c) Agent shall have received a written opinion of counsel for the
Borrowers in form and content satisfactory to the Agent in its Permitted
Discretion, addressed to the Agent and its counsel, and covering such matters
related to the transactions contemplated hereby as the Agent may request
(including, without limitation, as to authority, existence, incumbency and
enforceability);
(d) Agent shall have received updated, true and accurate disclosure
schedules to the Agreement (the "Amended and Restated Disclosure Schedules"),
which Amended and Restated Disclosure Schedules must be in form and substance
satisfactory to Agent in its sole discretion and shall be attached hereto as
Exhibit 4(d); and
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(e) Agent shall have received a certificate of the corporate secretary or
assistant secretary of each Borrower dated as of the date of this Amendment as
to the incumbency and signature of the Persons executing this Fifth Amendment
and the Loan Documents on behalf of such Borrower, in the form attached hereto
as Exhibit 4(e).
SECTION 5. Conditions Subsequent. Borrowers shall deliver to Agent the
following documents and other items, each, satisfactory (in form and substance,
as applicable) to Agent in Agent's sole discretion, duly executed where
appropriate by authorized representatives of Borrowers and all other parties
thereto, as the case may be, on or before the dates set forth below (any failure
by the Borrowers to fully and timely satisfy any of the conditions set forth
below shall constitute an Event of Default):
(a) On the Reverse Stock Split Transaction Borrowing Date, prior to the
issuance of the Advance under the Revolving Facility in accordance with Section
2.4 of the Agreement, Borrowers shall deliver to Agent all of the following:
(i) a Borrowing Certificate in form and substance satisfactory to Agent,
and attached hereto as Exhibit 5(a)(i) and all conditions to lending set forth
in Section 4.2 of the Agreement shall have been satisfied;
(ii) a written opinion of counsel for Borrowers in form and content
satisfactory to Agent in its Permitted Discretion, addressed to the Agent and
its counsel, and covering such matters related to the transactions contemplated
by the Reverse Stock Split Transaction as the Agent may request, including,
without limitation, as to the following: (a) the validity and enforceability of
all Reverse Stock Split Transaction Documents and the Reverse Stock Split
Transaction; (b) the due authorization and approval of the Reverse Stock Split
Transaction by Parent's Board of Directors and stockholders in accordance with
applicable law; (c) Parent's receipt of all consents, approvals, licenses and
authorizations from third parties and governmental authorities and Parent's
filing of all recordings, registrations and documents with the SEC and all
applicable state securities authorities which are necessary in accordance with
applicable law for the Reverse Stock Split Transaction; (d) no actions, suits,
proceedings or other investigations pending or, to counsel's knowledge,
threatened that seek to affect the completion of the Reverse Stock Split
Transaction; and (e) that all of the Reverse Stock Split Transaction Documents
comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended and the applicable rules and
regulations of the SEC thereunder;
(iii) true and correct copies of the Reverse Stock Split Transaction
Documents, including any and all correspondence to or from the SEC, complaints
or other proceedings brought by stockholders of Parent or other documentation in
connection with the Reverse Stock Split Transaction, and all terms and
conditions thereof shall be satisfactory to the Agent; and
(iv) a compliance certificate of Borrowers' chief financial officer in the
form of Exhibit 5(a)(iv) attached hereto, together with such additional
documents and information as Agent may request, in its Permitted Discretion,
stating that such person has reviewed the relevant terms of the Loan Documents
and that before and after giving effect to the Reverse Stock Split Borrowing
Date and the Reverse Stock Split Transaction: (a) no Default or Event of Default
has occurred or is continuing; (b) Borrowers have EBITDA for the twelve (12)
consecutive months ending on such date of at least $3,800,000; and (c) the
representations and warranties contained in the Loan Documents are true and
correct in all material respects.
(b) Within 20 days of the Reverse Stock Split Transaction Borrowing Date,
Agent shall have received all amendments, modifications and supplements to
Parent's certificate of incorporation, all of which shall be in form and
substance satisfactory to Agent in its Permitted Discretion.
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(c) Within 3 days of the Reverse Stock Split Transaction Borrowing
Date, Agent shall have received all amendments, modifications and supplements to
the Reverse Stock Split Transaction Documents and any other documents, forms or
schedules required to be filed with the SEC to terminate registration under the
Exchange Act and suspend Parent's reporting obligations under Section 13 of the
Exchange Act and to terminate listing or quotation on the Over-the-Counter
Bulletin Board.
SECTION 6. 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 7. Representations. Each Borrower hereby represents and warrants to
Agent as follows as of the date hereof and as of the Reverse Stock Split
Borrowing 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, each Loan Document and each
Reverse Stock Split Transaction Document to which it is a party, and the
consummation of the transactions contemplated thereby, are within its powers,
have been duly authorized, and (A) do not contravene (1) its articles of
incorporation or other organizational documents, or (2) any applicable law, and
(B) do not result in, create or trigger any dissenters or appraisal rights under
any Borrower's articles of incorporation or other organizational documents;
(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 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, including as amended hereby, and (vii) the
representations and warranties contained in the Loan Documents are true and
correct in all material respects as of the date hereof as if made on the date
hereof, except for such representations and warranties limited by their terms to
a specific date.
SECTION 8. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM AGENT AND THE LENDERS. EACH BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT, THE LENDERS AND
EACH OF THEIR RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE "RELEASED PARTIES") FROM ALL POSSIBLE CLAIMS, DEMANDS,
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ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER,
WHETHER KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY
CASE ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED THAT ANY BORROWER MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED
PARTIES, IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT,
TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND THAT ARISE FROM ANY
LOANS, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE AGREEMENT OR OTHER LOAN
DOCUMENTS, AND/OR NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT, INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE.
SECTION 9. 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
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.
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(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 and 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]
10
SIGNATURE PAGE TO
FIFTH AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties have caused this Fifth Amendment To
Revolving Credit, Term Loan And Security Agreement to be executed by their
respective officers thereunto duly authorized, and to be effective as of the
date first written above.
BORROWERS: ADVANCED NUTRACEUTICALS, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President - Finance
BACTOLAC PHARMACEUTICAL INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
NIB, INC. (f/k/a/ ANI PHARMACEUTICALS, INC.),
a Mississippi corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
AGENT AND LENDER: CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Senior Counsel
11
EXHIBIT A
---------
(Reverse Stock Split Transaction Documents)
12
EXHIBIT 4(d)
------------
(Amended and Restated Disclosure Schedules)
13
EXHIBIT 4(e)
------------
Secretary/Assistant Secretary Certificate
[_________________________________________ ]CERTIFICATE
[INSERT NAME OF BORROWER]
The undersigned, ___________________________, hereby certifies that he is
the _________________________________ of _________________ (the "Company"), and
that he makes this certificate on behalf of the Company in connection with and
pursuant to Section 3 of the Fifth Amendment to the Revolving Credit, Term Loan
and Security Agreement, dated as of the date hereof (the "Fifth Amendment")
between the Company, as borrower thereunder, the other Borrowers, CapitalSource
Finance LLC, a Delaware limited liability company as administrative agent and
collateral agent for Lenders (in such capacities, the "Agent"), and the Lenders
(as defined therein), and further certifies to Agent and Lenders as follows:
1. The Certificate of Incorporation of the Company and all amendments
thereto (as so amended, the "Certificate of Incorporation") and Bylaws
of the Company, true and correct copies of which were previously
delivered in certified form to Agent on or about ________ pursuant to
the Revolving Credit, Term Loan, Equipment Acquisition Term Loan, and
Security Agreement dated March 21, 2003 (as amended through the date
hereof, the "Loan Agreement"), by and between Company, Agent and
Lenders have not been amended, restated, modified or revoked, and
remain in full force and effect, and no amendment or other document
relating to or affecting the Certificate of Incorporation or Bylaws of
the Company has been filed in the office of the Secretary of State of
the State of _____________________ and no action has been taken by the
Company, its Shareholders, directors, members, owners, partners,
interest holders or officers in contemplation of the filing of any
such amendment or other document or in contemplation of the
liquidation or dissolution of the Company.
2. Attached hereto as Exhibit A are true, complete and correct copies of
all resolutions adopted by the Board of Directors of the Company,
adopted by unanimous written consent on _______, 2006, relating to,
among other things, the authorization, execution, delivery and
performance of the Fifth Amendment and other Loan Documents (as
defined in the Loan Agreement) and all other agreements and documents
to be executed in connection therewith (collectively, with the other
Loan Documents, the "Documents") and the consummation of the
transactions contemplated thereby and therein. Such resolutions were
duly and validly adopted by written consent of the Board of Directors.
All such resolutions are in full force and effect on the date hereof
in the form in which adopted without amendment, modification or
revocation, and no other resolutions or action by the Board of
Directors of the Company or any committee thereof have been adopted
relating to the authorization, execution, delivery and performance of
the Documents and the consummation of the transactions contemplated
thereby and therein.
3. Each of the following named individuals is a duly elected or
appointed, qualified and acting officer of the Company, as the case
may be, who holds the office or position set forth opposite such
individual's name, and the specimen signature written opposite each
such officer's, name is such officer's genuine signature. The officers
listed below have signed the Fifth Amendment and the Loan Documents to
which the Company is a party and each of them is, as of the date
hereof, and was at the time of such signing and delivery, duly elected
or appointed and duly qualified and acting as an officer of the
Company having the power to bind the Company and duly authorized to
sign on behalf of the Company. The signature of each such person
appearing on such documents is his or her genuine signature.
14
NAME TITLE SIGNATURE
---- ----- ---------
-------------------------- ------------------------- -----------------------
-------------------------- ------------------------- -----------------------
-------------------------- ------------------------- -----------------------
4. From the date hereof until the Company notifies Agent in writing to
the contrary, each of the following named individuals shall be a duly
elected or appointed, qualified and acting officer of the Company, as
the case may be, holding the office or position set forth opposite
such individual's name. The specimen signature written opposite each
such officer's name is such officer's genuine signature. From the date
hereof until the Company notifies Agent in writing to the contrary,
the persons listed below (i) are and shall be duly authorized to sign
and deliver any and all Loan Documents and other documents,
certificates and instruments with respect to or relating to the Loans
or Obligations or transactions contemplated by the Loan Documents,
(ii) shall be, as of the date of such signing and delivery, duly
elected or appointed and duly qualified and acting as an officer of
the Company, and (iii) shall have the power and authority to bind the
Company.
NAME TITLE SIGNATURE
---- ----- ---------
-------------------------- ------------------------- -----------------------
-------------------------- ------------------------- -----------------------
-------------------------- ------------------------- -----------------------
All capitalized terms used but not defined herein shall have the meanings
given them in the Loan Agreement.
[Remainder of Page Intentionally Left Blank]
15
Signature Page to ______________ Certificate
IN WITNESS WHEREOF, the undersigned has caused this
_____________________________ Certificate to be executed as of this day _____ of
_______________, 2006.
[INSERT NAME OF BORROWER]
By:____________________________
Name:
Title:
I, ____________________, as _______________________ of the Company, do
hereby certify on behalf of the Company that ______________________ is the duly
elected or appointed, qualified and acting __________________________________ of
the Company and that the signature set forth above is the genuine signature of
such person.
IN WITNESS WHEREOF, the undersigned has caused this Incumbency Certificate
to be executed as of this day of _________, 2006.
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive Officer
EXHIBIT 5(a)(i)
---------------
Borrowing Certificate
REVERSE STOCK SPLIT TRANSACTION BORROWING CERTIFICATE
DATED AS OF _______, 200_
ADVANCED NUTRACEUTICALS, INC. a Texas corporation, BACTOLAC PHARMACEUTICAL
INC., a Delaware corporation, and NIB, INC. (f/k/a ANI PHARMACEUTICALS, INC.), a
Mississippi corporation (each sometimes referred to herein as a "Borrower" and
collectively as the "Borrowers"), by the undersigned duly authorized officer(s),
hereby certify to Agent and Lenders, in accordance with the Revolving Credit,
Term Loan, Equipment Acquisition Term Loan and Security Agreement dated as of
March 21, 2003, as amended, including as amended by a First Amendment dated as
of December 31, 2003, a Second Amendment dated as of March 23, 2004, a Third
Amendment dated as of January 6, 2005, a Fourth Amendment dated as of July 26,
2005 and a Fifth Amendment dated as of _______, 2006, between Borrowers,
CapitalSource Finance LLC, as a Lender and administrative, payment and
collateral agent for the Lenders (in such capacities, "Agent"), and certain
other Lenders party thereto from time to time (as further amended, supplemented
or modified from time to time, the "Loan Agreement"; all capitalized terms not
defined herein have the meanings given them in the Loan Agreement), and other
Loan Documents that:
A. Borrowing Base and Compliance
-----------------------------
Pursuant to the Loan Documents, each Borrower granted a lien on its
Collateral, including all of its Accounts and Inventory, to Agent, for its
benefit and the benefit of Lenders. The amounts, calculations and
representations set forth in this Reverse Stock Split Transaction Borrowing
Certificate and on the attachments hereto are true and correct in all respects
and were determined in accordance with the Loan Agreement and GAAP. All of the
Accounts and Inventory referred to (other than those entered as ineligible on
Schedule 1) are Eligible Receivables or Eligible Inventory, as applicable.
Attached are the following: (i) report with detailed aging and categorizing
of Borrowers' accounts receivable, (ii) a summary of accounts payable aging for
all Borrowers, (iii) an inventory listing for all Borrowers, (iv) a sales report
for all Borrowers, (v) a collections report for all Borrowers, (vi) a credit
memo report for all Borrowers, (vii) a reconciliation of accounts receivable,
accounts payable and inventory to Borrowers' general ledger, and (viii)
supporting documentation with respect to the amounts, calculation and
representations set forth herein, on Schedule 1 hereto and in the foregoing
attachments as required pursuant to the Loan Agreement and/or as requested by
Agent in its Permitted Discretion.
B. Borrowing Notice
----------------
(1) In accordance with Sections 2.4 and 4.2(a) of the Loan Agreement and
the terms and provisions of the Fifth Amendment, Borrowers hereby irrevocably
request from Lenders an Advance under the Revolving Facility pursuant to the
Loan Agreement in the aggregate principal amount of $_________ ("Requested
Advance") to be made on _________________, 200_, which day is a Business Day and
is the Reverse Stock Split Transaction Borrowing Date in accordance with the
Loan Agreement.
17
(2) Immediately after giving effect to the Requested Advance, the aggregate
outstanding principal amount of Advances will not exceed the lesser of (i) the
Availability and (ii) the Facility Cap in existence on the Borrowing Date.
(3) Each Borrower certifies to Agent and Lenders as of the Reverse Stock
Split Transaction Borrowing Date (I) to the solvency of each Borrower after
giving effect to the Requested Advance and the transactions contemplated by the
Loan Documents, and (II) as to each Borrower's financial resources and ability
to meet its respective obligations and liabilities as they become due, to the
effect that as of the Reverse Stock Split Borrowing Date and after giving effect
to the Requested Advance and the transactions contemplated by the Loan
Documents: (a) the assets of each Borrower, at a Fair Valuation, exceed the
total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Borrower; and (b) no unreasonably small
capital base with which to engage in its anticipated business exists with
respect to any Borrower.
(4) All conditions and provisions of Section 4.1 (if applicable), Section
4.2 and Section 7.11 of the Loan Agreement and Section 4 of the Fifth Amendment
are as of the date hereof, and will be as of the Reverse Stock Split Transaction
Borrowing Date, fully satisfied.
(5) Attached hereto are all consents, approvals and agreements from third
parties including, without limitation, all consents and approvals of, and
filings and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities (including, without
limitation, the Securities and Exchange Commission and each applicable state
securities authority) necessary or desirable with respect to the Reverse Stock
Split Transaction and the Reverse Stock Split Transaction Borrowing Date.
(6) The certifications, representations, calculations and statements herein
will be true and correct as of the date hereof and on the Reverse Stock Split
Transaction Borrowing Date.
(7) To the best of Borrower's knowledge, no recoupments and/or recoupments
of any third-party payor are being sought, requested or claimed, or, to
Borrower's knowledge, threatened against any Borrower or any Borrower's
Affiliates except the following amounts: ___________.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
Signature Page to Borrowing Base Certificate
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed as of the day first written above.
ADVANCED NUTRACEUTICALS, INC. BACTOLAC PHARMACEUTICAL INC.
By: By:
--------------------------------- -----------------------------
Name: Name:
------------------------------- ---------------------------
Title: Title:
------------------------------ --------------------------
NIB, INC.
By: _________________________________
Name:_______________________________
Title:________________________________
EXHIBIT 5(a)(iv)
----------------
COMPLIANCE CERTIFICATE
The undersigned, in connection with the Revolving Credit, Term Loan,
Equipment Acquisition Term Loan and Security Agreement dated as of March 21,
2003 as amended by a First Amendment dated as of December 31, 2003, a Second
Amendment dated March 23, 2004, a Third Amendment dated January 6, 2005, a
Fourth Amendment dated as of July 26, 2005 and a Fifth Amendment dated as of
_______, 2006 (as heretofore and hereafter amended, supplemented, modified
and/or restated from time to time, collectively the "Loan Agreement"), by and
between Advanced Nutraceuticals, Inc., Bactolac Pharmaceutical Inc. and NIB,
Inc., as Borrowers, and CapitalSource Finance LLC, as agent for itself and the
other Lenders party thereto (capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Loan Agreement), does hereby
certify that I have reviewed the relevant terms of the Loan Documents and that
before and after giving effect to the Reverse Stock Split Transaction Borrowing
Date and the Reverse Stock Split Transaction:
1. No Default or Event of Default has occurred or is continuing under the
Loan Documents;
2. Borrowers have EBITDA for the twelve (12) consecutive months ending on
the Reverse Stock Split Transaction Borrowing Date of at least $3,800,000; and
3. The representations and warranties contained in the Loan Documents are
true and correct in all material respects as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
____ day of ______, 2006.
ADVANCED NUTRACEUTICALS, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President - Finance
BACTOLAC PHARMACEUTICAL INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer
NIB, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer
SCHEDULE A
Lenders/Commitments
Revolving Lenders Revolving Commitment
--------------------------------------------------------------------------------
CapitalSource Finance LLC $3,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Wire Instructions:
Bank: Bank of America, Baltimore, MD
Account: 003930559738
ABA: ▇▇▇▇▇▇▇▇▇
Account Name: CapitalSource Funding LLC
Reference: Advanced Nutraceuticals, Inc.
--------------------------------------------------------------------------------
Total: $3,000,000
================================================================================
Term Lenders Term Loan Commitment
--------------------------------------------------------------------------------
CapitalSource Finance LLC $4,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Wire Instructions:
Bank: Bank of America, Baltimore, MD
Account: 003930559738
ABA: ▇▇▇▇▇▇▇▇▇
Account Name: CapitalSource Funding LLC
Reference: Advanced Nutraceuticals, Inc.
--------------------------------------------------------------------------------
Total: $4,000,000
================================================================================
21