Certificate of Suspension of Loan Covenants between RBS Citizens, N.A. and Caraco Pharmaceutical Laboratories, Ltd.

Contract Categories: Business Finance › Forbearance Agreements
Summary

RBS Citizens, N.A. (doing business as Charter One) and Caraco Pharmaceutical Laboratories, Ltd. have agreed to temporarily suspend certain loan agreement covenants due to FDA enforcement actions and Caraco's voluntary halt of manufacturing. The bank will not enforce specific financial and operational covenants or pursue remedies for these violations until October 9, 2010, provided Caraco secures its debt with cash collateral. After this date, all rights and remedies under the original loan agreement will resume. This suspension does not waive any other current or future violations.

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EX-10.34 2 ex10_34.htm EXHIBIT 10.34 ex10_34.htm
Exhibit 10.34

CERTIFICATE OF SUSPENSION OF LOAN COVENANTS

THIS CERTIFICATE OF SUSPENSION OF LOAN COVENANTS is given by RBS CITIZENS, N.A. (d/b/a CHARTER ONE), a national association (“Bank”) to CARACO PHARMACEUTICAL LABORATORIES, LTD., a Michigan corporation (“Borrower”), concerning the enforcement efforts by the Food and Drug Administration, and the voluntary cessation of all manufacturing operations by Borrower.   Bank has issued a notice of the foregoing violations by letter dated July 7, 2009 (the “Notice Letter”).  Borrower acknowledges the receipt of the Notice Letter on July 13, 2009, and acknowledges that the conditions concerning the enforcement efforts by the Food and Drug Administration stated therein are viola tions of the Loan Agreement between Borrower and Bank dated February 27, 2009, as amended by First Amendment to Loan Agreement dated August 11, 2009, and Second Amendment to Loan Agreement dated October 9, 2009 (collectively, the “Loan Agreement”).
 
Notwithstanding the foregoing, Bank hereby certifies to Borrower that Bank hereby agrees to suspend the required compliance with the covenants in the Loan Agreement pertaining to the violations noted in the Notice Letter until October 9, 2010 and the financial covenants described in Sections 6.7, 6.8 and 6.9 of the Loan Agreement, and forbears from pursuing any and all rights and remedies provided under the terms of the Loan Agreement until such date for those specific violations, at which time Bank reserves the right to review Borrower’s compliance with the covenants of the Loan Agreement hereby suspended, and upon such date all suspension and forbearance of rights and remedies of Bank shall be rescinded and all rights and remedies under the Loan Agreement shall be resumed and enforceable as if this Certificate was never issued .  Nothing herein shall be deemed a waiver of any present conditions that may continue to persist on or after October 9, 2010, nor be deemed to a waiver or suspension of Bank’s rights and remedies with respect to any other current or future violations by Borrower of all covenants in the Loan Agreement.

The effectiveness of this Certificate is contingent on Borrower having executed and delivered to Bank such other documents as deemed necessary by Bank and its counsel to secure Borrower’s Indebtedness (as defined in the Loan Agreement) to Bank with cash collateral, and such cash being deposited with and remaining in possession of Bank while such Indebtedness remains outstanding.

NOW WHEREFORE, the undersigned have executed this Certificate as of February 26, 2010.

 
BANK:
  
 
RBS CITIZENS, N.A.
  
 
(d/b/a CHARTER ONE)
  
       
 
By:
/s/ John Sherman
  
 
Name:
John Sherman
  
 
Its:
Senior Vice President
  
 
 
 
 
 
 
BORROWER:
  
 
CARACO PHARMACEUTICAL
  
 
LABORATORIES, LTD.
  
       
 
By:
/s/ Jitendra Doshi
  
 
Name:
Jitendra Doshi
  
 
Its:
Chief Executive Officer
  
       
 
By:
/s/ Mukul Rathi
  
 
Name:
Mukul Rathi
  
 
Its:
Interim Chief Financial Officer