1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
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COMMISSION FILE #0-4829-03
NABI
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(Exact name of registrant as specified in its charter)
DELAWARE 59-1212264
- -------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5800 Park of Commerce Boulevard N.W., Boca Raton, FL 33487
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (561) 989-5800
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES (X) NO ( )
The number of shares outstanding of registrant's common stock at May 12, 1998
was 34,893,917 shares.
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
Nabi
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INDEX
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PART I. FINANCIAL INFORMATION PAGE
----
ITEM 1. FINANCIAL STATEMENTS.............................................................................3
Consolidated Balance Sheets, March 31, 1998 and December 31, 1997.........................................3
Consolidated Statements of Operations for the three-month periods ended
March 31, 1998 and 1997..............................................................................4
Consolidated Statements of Cash Flows for the three-month periods ended
March 31, 1998 and 1997..............................................................................5
Notes to Consolidated Financial Statements................................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................................................................................9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...............................................................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................12
Exhibit 10.30 - Amendment No. 2 and Waiver dated as of March 30, 1998 to
Loan and Security Agreement dated as of September 12, 1997...........................14
27 - Financial Data Schedule (for S.E.C. use only)........................................27
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Nabi
PART I Financial Information
Item 1 Financial Statements
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CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
-------------------------------
(In Thousands) 1998 1997
- ----------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,225 $ 3,397
Trade accounts receivable, net 35,086 36,060
Inventories, net 40,526 43,387
Prepaid expenses and other assets 18,666 16,128
---------- ----------
TOTAL CURRENT ASSETS 95,503 98,972
PROPERTY AND EQUIPMENT, NET 91,943 89,187
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 16,866 17,123
Intangible assets, net 7,827 8,104
Other, net 12,289 12,520
---------- ----------
TOTAL ASSETS $224,428 $225,906
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 12,380 $ 11,390
Accrued expenses 18,771 17,396
Notes payable 2,154 6,253
---------- ----------
TOTAL CURRENT LIABILITIES 33,305 35,039
NOTES PAYABLE 116,930 114,828
OTHER 381 376
---------- ----------
TOTAL LIABILITIES 150,616 150,243
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STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $.10 per share:
5,000 shares authorized; no shares outstanding -- --
Common stock, par value $.10 per share: 75,000 shares
authorized; 34,889 and 34,801 shares issued and
outstanding, respectively 3,489 3,480
Capital in excess of par value 137,882 137,780
Accumulated deficit (66,895) (64,977)
Accumulated other comprehensive income (loss) (664) (620)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 73,812 75,663
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $224,428 $225,906
========== ==========
The accompanying notes are an integral part of these financial statements.
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Nabi
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CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
----------------------------
(In Thousands, Except Per Share Data) 1998 1997
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SALES $ 58,614 $ 56,377
COSTS AND EXPENSES:
Costs of products sold 44,589 43,185
Selling, general and administrative expense 7,995 4,400
Research and development expense 4,767 3,798
Royalty expense 2,745 1,209
Other operating expense, principally freight
and amortization 582 934
-------- --------
OPERATING INCOME (LOSS) (2,064) 2,851
INTEREST INCOME 9 185
INTEREST EXPENSE (1,776) (976)
OTHER, NET (140) (9)
-------- --------
INCOME (LOSS) BEFORE BENEFIT (PROVISION) FOR INCOME TAXES (3,971) 2,051
BENEFIT (PROVISION) FOR INCOME TAXES 2,053 (701)
-------- --------
NET INCOME (LOSS) ($ 1,918) $ 1,350
======== ========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE ($ 0.06) $ 0.04
======== ========
The accompanying notes are an integral part of these financial statements.
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Nabi
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
----------------------------
(In Thousands) 1998 1997
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CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) ($ 1,918) $ 1,350
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization 2,671 2,130
Provision for doubtful accounts 62 100
Other 102 (16)
Deferred income taxes (2,053) --
Change in assets and liabilities:
Decrease (increase) in trade accounts receivable 911 505
Decrease (increase) in inventories 2,861 (5,863)
Decrease (increase) in prepaid expenses and other assets (485) 486
Decrease (increase) in other assets 27 (2,049)
Increase (decrease) in accounts payable and accrued liabilities 2,327 (8,863)
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Total adjustments 6,423 (13,570)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 4,505 (12,220)
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CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from maturity of short-term investments -- 8,850
Capital expenditures (4,765) (7,332)
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NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (4,765) 1,518
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CASH FLOW FROM FINANCING ACTIVITIES:
Borrowing (repayments) under line of credit, net 2,126 10,000
Other debt (4,149) 2,209
Proceeds from the exercise of options and warrants 111 309
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NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,912) 12,518
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,172) 1,816
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,397 18,513
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,225 $ 20,329
========== ==========
The accompanying notes are an integral part of these financial statements.
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Nabi
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
Nabi is a fully integrated research and development driven biopharmaceutical
company that develops and commercializes products for the prevention and
treatment of infectious diseases and immunological disorders, and supplies
human-blood plasma.
The consolidated financial statements include the accounts of Nabi and its
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation. These statements should be read in conjunction with
the consolidated financial statements and notes thereto included in Nabi's
Annual Report to Stockholders for the year ended December 31, 1997.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly Nabi's consolidated
financial position at March 31, 1998 and the consolidated results of its
operations for the three months ended March 31, 1998 and 1997. The interim
results of operations are not necessarily indicative of the results which may
occur for the fiscal year.
NOTE 2 -- INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market, are
as follows:
MARCH 31, DECEMBER 31,
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(In thousands) 1998 1997
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Finished goods $36,593 $40,029
Work in process 316 212
Raw materials 4,789 3,787
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41,698 44,028
Less: reserves (1,172) (641)
================== ====================
TOTAL $40,526 $43,387
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NOTE 3 -- PROPERTY AND EQUIPMENT
Property and equipment and related allowances for depreciation and amortization
are summarized below:
MARCH 31, DECEMBER 31,
------------------------------------------
(In thousands) 1998 1997
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Information systems $19,335 $19,066
Leasehold improvements 18,683 18,077
Machinery and equipment 17,028 16,882
Land and buildings 8,634 8,634
Furniture and fixtures 4,632 4,568
Construction in progress 50,113 46,776
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Total property and equipment 118,425 114,003
Less: accumulated depreciation and
amortization (26,482) (24,816)
================== ====================
TOTAL $91,943 $89,187
================== ====================
Construction in progress consists primarily of costs incurred in connection with
construction of Nabi's biopharmaceutical facility and includes capitalized
interest of $5,903 and $5,149 at March 31, 1998 and December 31, 1997,
respectively.
NOTE 4 -- EARNINGS PER SHARE
The following is a reconciliation between basic and diluted earnings per share
for the quarters ending March 31, 1998 and 1997:
EFFECT OF
BASIC DILUTIVE SECURITIES: DILUTED
EPS STOCK OPTIONS EPS
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THREE MONTHS ENDED MARCH 31, 1998
Net loss ($1,918) - ($1,918)
Shares 34,852 - 34,852 (1)
Per share ($0.06) ($0.06)
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THREE MONTHS ENDED MARCH 31, 1997
Net income $1,350 - $1,350
Shares 34,677 713 35,390
Per share $0.04 $0.04
(1) AT MARCH 31, 1998, STOCK OPTIONS FOR SHARES OF COMMON STOCK WERE NOT
INCLUDED IN THE CALCULATION OF DILUTED EARNINGS PER SHARE BECAUSE THE
EFFECTS WERE ANTI-DILUTIVE.
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NOTE 5 -- COMPREHENSIVE INCOME
Effective January 1, 1998, Nabi adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income" which establishes
new rules for the reporting of comprehensive income.
The components of comprehensive income for the first quarter of 1998 and 1997
are as follows:
QUARTER ENDED MARCH 31,
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(In thousands) 1998 1997
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Net income (loss) ($1,918) $1,350
Other comprehensive income (loss) (44) (336)
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TOTAL ($1,962) $1,014
================= ====================
NOTE 6 -- RECLASSIFICATIONS
Certain items in the consolidated financial statements for the 1997 period have
been reclassified for comparative purposes.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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The following is a discussion and analysis of the major factors contributing to
Nabi's financial condition and results of operations for the three month periods
ended March 31, 1998 and 1997. The discussion and analysis should be read in
conjunction with the condensed consolidated financial statements and notes
thereto. All dollar amounts are expressed in thousands, except per share
amounts.
RESULTS OF OPERATIONS
The following table sets forth Nabi's results of operations expressed as a
percentage of sales:
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1998 1997
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Sales 100.0% 100.0%
Cost of products sold 76.1 76.6
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Gross profit margin 23.9 23.4
Selling, general and administrative expense 13.6 7.8
Research and development expense 8.1 6.7
Royalty expense 4.7 2.1
Other operating expense 1.0 1.7
-------------- --------------
Operating income (loss) (3.5) 5.1
Interest income -- 0.3
Interest expense (3.0) (1.8)
Other, net (0.3) --
-------------- --------------
Income (loss) before benefit (provision) for income taxes (6.8) 3.6
Benefit (provision) for income taxes 3.5 (1.2)
============== ==============
Net income (loss) (3.3)% 2.4%
============== ==============
Information concerning Nabi's sales by operating segments for the respective
periods, is set forth in the following table:
THREE MONTHS ENDED MARCH 31,
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(In thousands) 1998 1997
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Segment
Plasma - Source $34,008 58.0% $33,896 60.2%
- Specialty 10,700 18.3 16,256 28.8
- Other (includes diagnostic products and
services) 1,254 2.1 1,317 2.3
---------------------------- -------------- --------------
45,962 78.4 51,469 91.3
Drugs 12,652 21.6 4,908 8.7
============================ ============== ==============
TOTAL $58,614 100.0% $56,377 100.0%
============================ ============== ==============
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THREE-MONTHS ENDED MARCH 31, 1998 AND 1997
SALES. Sales for the first quarter of 1998 increased by $2.2 million to $58.6
million compared to $56.4 million for the first quarter of 1997. The increase
was primarily attributable to a substantial increase in the sales of drug
products, partially offset by a decline in specialty plasma sales.
GROSS PROFIT MARGIN. Gross profit and related margin for the first quarter of
1998 was $14 million, or 23.9% of sales, compared to $13.2 million, or 23.4% of
sales, in the first quarter of 1997. The increase in gross profit and related
margin resulted from increased sales of high-margin drug products, offset by the
effects of reduced margins on plasma product sales. Gross profits and related
margins on plasma product sales were adversely affected by under absorption of
fixed overhead as a result of reduced production levels in response to the
general disruption in the plasma industry and certain expenses associated with
process improvement initiatives within plasma operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense was $8.0 million, or 13.6% of sales, for the first quarter of 1998
compared to $4.4 million, or 7.8% of sales, in the first quarter of 1997. The
increase resulted primarily from costs associated with Nabi's restructuring
measures, sales and marketing expenses associated with increased drug product
sales and expenses associated with the implementation and ongoing support of new
information systems.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $4.8
million, or 8.1% of sales, for the first quarter of 1998 compared to $3.8
million, or 6.7% of sales, in the first quarter of 1997. The increase in
expenses related primarily to costs associated with the advancement of clinical
trials for Nabi-H-BIG(R), Nabi-Altastaph(TM) and Nabi-StaphVAX(TM).
INTEREST EXPENSE. Interest expense for the first quarter of 1998 was $1.8
million, or 3% of sales, compared to $1.0 million, or 1.8% of sales, in the
first quarter of 1997. The increase was primarily attributable to interest
expense associated with higher average outstanding borrowings in the first
quarter of 1998 when compared to 1997.
OTHER FACTORS. Benefit for income taxes was $2.1 million or an effective rate of
52%, in the first quarter of 1998 compared to a $.7 million provision, or an
effective rate of 34%, in the first quarter of 1997. The 52% effective tax rate
for the first quarter of 1998 differs from the statutory rate of 35% primarily
due to foreign losses, non-deductible goodwill and alternative minimum taxes.
The 34% effective tax rate for the first quarter of 1997 differs from the
statutory rate of 35% primarily due foreign trade income, offset by the effects
of non-deductible goodwill and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, Nabi's credit agreement provided for a $45 million revolving
credit facility subject to certain borrowing base restrictions as defined in the
agreement which matures in September 2002, and a $5.0 million term loan due
March 1999. Borrowings under the agreement were $36.4 million and additional
availability was approximately $9.7 million at March 31, 1998. The credit
agreement is secured by substantially all of Nabi's assets, contains covenants
requiring the maintenance of certain financial covenants and prohibits the
payment of dividends.
As of March 31, 1998, Nabi's current assets exceeded current liabilities by
$62.2 million as compared to a net working capital position of $63.9 million at
December 31, 1997.
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Projected capital expenditures for 1998 include deferred validation costs,
including capitalized interest for manufacturing facilities, development of
information systems, and plasma center renovations. Nabi believes that cash flow
from operations and its available bank credit facilities will be sufficient to
meet its anticipated cash requirements for 1998.
FACTORS TO BE CONSIDERED
The parts of this Quarterly Report on Form 10-Q captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Legal Proceedings" contain certain forward-looking statements which involve
risks and uncertainties. Readers should refer to a discussion under "Factors to
be Considered" contained in Nabi's Annual Report on Form 10-K for the year ended
December 31, 1997 concerning certain factors that could cause Nabi's actual
results to differ materially from the results anticipated in such
forward-looking statements. Said discussion is hereby incorporated by reference
into this Quarterly Report.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nabi is a party to litigation in the ordinary course of business. There have
been no material developments in any of the legal proceedings reported in Nabi's
Annual Report on Form 10-K for the year ended December 31, 1997. Nabi does not
believe that any such litigation will have a material adverse effect on its
business, financial position or results of operations.
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\
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit
10.30 Amendment No. 2 and Waiver dated as of March 30, 1998 to
Loan and Security Agreement dated as of September 12, 1997............................14
27 Financial Data Schedule (for SEC use only)............................................27
b. Reports on Form 8-K:
None
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Nabi
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Nabi
DATE: May 13, 1998 By: /s/ David J. Gury
-------------------------------------
DAVID J. GURY
Chairman of the Board,
President and Chief Executive Officer
By: /s/ Lorraine M. Breece
-------------------------------------
LORRAINE M. BREECE
Chief Accounting Officer,
Controller
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EXHIBIT 10.30
[EXECUTION COPY]
AMENDMENT NO. 2 AND WAIVER
DATED AS OF MARCH 30, 1998
TO
LOAN AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 12, 1997
THIS AMENDMENT NO. 2 AND WAIVER dated as of March 30, 1998
(this "Amendment") is made between NABI, a Delaware corporation (the
"Borrower"), the financial institutions party from time to time to the Loan
Agreement referred to below (the "Lenders"), and NATIONSBANK, N.A., a national
banking association, as agent for the Lenders (in that capacity, together with
any successors in that capacity, the "Agent").
Preliminary Statements
----------------------
The Borrower, the Lenders, and the Agent are parties to a Loan
and Security Agreement dated as of September 12, 1997, as amended by Amendment
No. 1 and Waiver dated as of November 14, 1997 (as so amended, the "Loan
Agreement"; terms defined in the Loan Agreement and not otherwise defined herein
being used herein as therein defined).
Defaults have occurred and are continuing under the Loan
Agreement by reason of the Borrower's failure provide copies of the monthly
unaudited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries for the months of January and February, 1998, as required under
Section 9.1(b) of the Loan Agreement, and the Borrower's failure to maintain (i)
a minimum consolidated Fixed Charge Coverage Ratio of at least .36 to 1 and (ii)
a Minimum Consolidated Net Worth of not less than $79,000,000, each for the
Fiscal Quarter ending on December 31, 1997, as required under Section 10.1 of
the Loan Agreement (the "Existing Defaults"), as a result of which the Lenders
are entitled to exercise the rights and remedies provided for in the Loan
Agreement.
The Borrower has requested that the Lenders provide a
temporary term loan facility to create borrowing availability under the
Revolving Credit Facility, waive the Existing Defaults, modify certain financial
covenants and amend certain other provisions of the Loan Agreement, and the
Lenders have agreed, upon and subject to the terms, conditions and provisions of
this Amendment.
Statement Of Agreement
----------------------
NOW, THEREFORE, in consideration of the Loan Agreement, the
Loans made by the Lenders and outstanding thereunder, the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement is
hereby amended, subject to the provisions of Section 3 of this Amendment,
(a) by amending Section 1.1 DEFINITIONS thereof
(i) by amending the definition "APPLICABLE MARGIN" by deleting
the figure "0.00%" appearing therein and substituting therefor the
figure "1.00%";
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(ii) by amending the definition "COLLATERAL" by redesignating
subsection (m) appearing therein as subsection (n) and by inserting a
new subsection (m) to read in its entirety as follows:
"(m) all Real Estate,"
(iii) by amending the definition "COMMITMENT" in its entirety
to read as follows:
"COMMITMENT" means, as to each Lender, the amount set
forth opposite such Lender's name on ANNEX A hereto representing such
Lender's obligation, upon and subject to the terms and conditions of
this Agreement (including the applicable provisions of SECTION 11.1),
to make or maintain its Proportionate Share of Loans under the
Revolving Credit Facility and the Term Loan Facility or, from and after
the date hereof, as set forth in the Register representing such
Lender's obligation to make or maintain its Proportionate Share of
Loans under the Revolving Credit Facility and the Term Loan Facility.
(iv) by amending the definition "EFFECTIVE INTEREST RATE" by
deleting the phrase "Revolving Credit" appearing therein;
(v) by amending the definition "EURODOLLAR RATE LOAN" by
inserting the phrase "Revolving Credit" immediately before the term
"Loan" appearing therein;
(vi) by amending the definition "FIXED CHARGE COVERAGE RATIO"
by inserting the phrase "plus any amount received in respect of federal
or state income tax refunds," immediately after the term "EBITDA"
appearing in subsection (i) thereof;
(vii) by amending the definition "LOAN" by inserting the
phrase "or Term Loan" immediately after the phrase "Revolving Credit
Loan" appearing therein;
(viii) by amending the definition "NOTE" by inserting the
phrase "or the Term Notes" immediately after the phrase "Revolving
Credit Notes" appearing therein;
(ix) by amending the definition "PRIME RATE LOAN" by deleting
the phrase "Prime Rate Revolving Credit" appearing therein;
(x) by amending the definition "REVOLVING CREDIT FACILITY" by
deleting the figure "$50,000,000" appearing therein and substituting
therefor the figure "$45,000,000";
(xi) by amending the definition "SECURITY DOCUMENTS" by
redesignating subsections (f), (g) and (h) appearing therein as
subsections (g), (h) and (i) and by inserting a new subsection (f) to
read in its entirety as follows:
"(f) the Mortgage,"
(xii) by adding the following additional definitions to read
as follows:
"EURODOLLAR AVAILABILITY DATE" means April 1, 1999.
"MORTGAGE" means and includes any mortgage, deed of
trust, deed to secure debt, assignment or other instruments executed
and delivered by the Borrower to or for the benefit of the Agent by
which the Agent, on behalf of the Lenders, acquires a Lien on the
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Borrower's Real Estate or a collateral assignment of the Borrower's
interest under leases of Real Estate, and all amendments, modifications
and supplements thereto.
"OPERATING CASH FLOW" means, for any specified
period, the sum of the Net Income or Net Loss before provision for
interest expense, income taxes, depreciation and amortization expense,
plus any amount received in respect of federal or state income tax
refunds, minus cash outlays for income taxes, minus Maintenance Capex
and minus Other Included Expenditures of the Borrower and its
Consolidated Subsidiaries for such period. For the purposes of this
definition "Other Included Expenditures" means any expenditures during
the computation period for a Permitted Repurchase or for Excess
Permitted Capital Expenditures or for Permitted Investments listed on
Schedule 1.1A (other than the 1st, 4th and 5th items listed on such
Schedule) made after the Effective Date that are not included in the
Capital Expenditures budgeted by the Borrower for such period and
subject to the limitations of SECTION 10.5.
"TERM LOAN DATE" has the meaning set forth in SECTION
2B.6.
"TERM LOAN FACILITY" means the credit facility
providing for Term Loans described in SECTION 2B.1 in the aggregate
principal amount of $5,000,000.
"TERM LOANS" means Loans made to the Borrower
pursuant to SECTION 2B.1 outstanding on the Term Loan Date.
"TERM NOTE" means each Term Note made by the Borrower
payable to the order of a Lender evidencing the obligation of the
Borrower to pay the aggregate unpaid principal amount of the Loans made
to it by such Lender under the Term Loan Facility (and any promissory
note or notes that may be issued from time to time in substitution,
renewal, extension, replacement or exchange therefor whether payable to
such Lender or to a different Lender in connection with a Person
becoming a Lender after the Term Loan Date or otherwise) in form and
substance satisfactory to the Agent either as originally executed or as
the same may from time to time be supplemented, modified, amended,
renewed, extended or refinanced.
(b) by amending Section 2.1 REVOLVING CREDIT LOANS by inserting the
phrase "AND PROVIDED FURTHER, HOWEVER, that no Eurodollar Rate Loans shall be
requested or made prior to the Eurodollar Availability Date" immediately before
the period at the end of the first sentence thereof.
(c) by amending Section 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS
by deleting the phrase "Effective Date" appearing in subsection (a)(ii) thereof
and substituting therefor the phrase "Eurodollar Availability Date".
(d) by inserting a new Article 2B TERM LOAN FACILITY to read in its
entirety as follows:
ARTICLE 2B
TERM LOAN FACILITY
------------------
SECTION 2B.1 TERM LOAN. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees severally, but not jointly, to advance
to the Borrower on the Term Loan Date a Term Loan (which shall be a Prime Rate
Loan) in a principal amount equal to such Lender's Proportionate Share of the
Term Loan Facility.
SECTION 2B.2 MANNER OF BORROWING TERM LOAN. The Borrower shall
give the Agent at least two Business Days' prior written notice of the
occurrence of the Term Loan Date. Upon receipt of
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such notice, the Agent shall promptly notify each Lender thereof. Each Lender
will make an amount equal to such Lender's Proportionate Share of the Term Loan
Facility available to the Agent for the account of the Borrower, at the office
of the Agent, prior to 12:00 noon on the Term Loan Date, in funds immediately
available to the Agent. Upon the satisfaction of the conditions of SECTIONS 2B.2
and 2B.6, the Agent shall make the advance to the Borrower pursuant to SECTION
2B.1.
SECTION 2B.3 REPAYMENT OF TERM LOAN. The outstanding principal
balance of the Term Loan is due and payable, and shall be repaid in full by the
Borrower on March 31, 1999; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, in the event the Termination Date shall occur before March 31, 1999,
the then unpaid principal balance of the Term Loan shall be due and payable on
said Termination Date.
SECTION 2B.4 TERM NOTE. Each Lender's Term Loans and the
obligation of the Borrower to repay such Term Loans shall also be evidenced by a
Term Note payable to the order of such Lender. Each Term Note shall be dated the
Term Loan Date (or later "effective date" under any Assignment and Acceptance)
and be duly and validly executed and delivered by the Borrower.
SECTION 2B.5 PREPAYMENT OF TERM LOAN.
(a) VOLUNTARY PREPAYMENT. The Borrower shall have the right at
any time and from time to time, upon at least 30 days' prior written notice to
the Agent in the case of a prepayment in full and upon at least five days' prior
written notice to the Agent in the case of a partial prepayment, to prepay the
Term Loan in whole or in part on any Business Day. Each partial prepayment of
the Term Loan shall be in a principal amount equal to $50,000 or any integral
multiple thereof and shall be applied to the then outstanding principal amount
of the Term Loan. On the prepayment date, the Borrower shall pay interest on the
amount prepaid, accrued to the prepayment date. Any notice of prepayment given
by the Borrower hereunder shall be irrevocable, and the amount to be prepaid
(including accrued interest and any prepayment fees) shall be due and payable on
the date designated in the notice.
(b) MANDATORY PREPAYMENT ON ASSET DISPOSITION. Any and all
amounts received by the Borrower as Net Proceeds from any Asset Disposition
(subject to such restrictions and consents as may be required in the Loan
Documents), shall be paid by the Borrower within one month following receipt
thereof to the Agent for application to the Term Loans, after first applying
such proceeds to reduce amounts outstanding under the Revolving Credit Facility
pursuant to SECTION 2.4, to the extent such Net Proceeds exceed all amounts then
outstanding under the Revolving Credit Facility. The Borrowers shall also be
obligated to prepay the Term Loan in full together with accrued and unpaid
interest thereon upon any termination of this Agreement pursuant to SECTION 3.6
or otherwise or upon any acceleration of the Term Loan pursuant to ARTICLE 13.
SECTION 2B.6 TERM LOAN DATE. The date on which the Lenders
shall advance their Proportionate Share of the Term Loan Facility (the "TERM
LOAN DATE") shall occur on the first date on or before April 30, 1998 on which
the Lenders shall have received each of the following documents, each in form
and substance satisfactory to the Lenders:
(a) the Term Notes in the form attached hereto as EXHIBIT D,
with all blanks properly completed, dated the Term Loan Date and duly
executed and delivered by the Borrower in favor of each Lender;
(b) a certificate of the Secretary of the Borrower having
attached thereto the articles or certificate of incorporation and
bylaws of the Borrower as in effect on the Term Loan Date attached
thereto (or containing the certification of such Secretary that no
amendment or modification of such articles or certificate or bylaws has
become effective since the last date on which such documents were
delivered to the Lenders pursuant to the Loan Agreement), corporate
17
5
action, if any, taken in connection with the Term Loan Date, and to the
further effect that the incumbency certificate delivered in connection
with the occurrence of the Effective Date remains in effect, unchanged;
(c) a certificate of the president or any vice-president of
the Borrower stating that, to the best of his knowledge and based on an
examination reasonably believed by him to be sufficient to enable him
to make an informed statement,
(i) as of the Term Loan Date, all of the
representations and warranties made or deemed to be made under
the Loan Agreement are true and correct as of the date hereof,
and
(ii) as of the Term Loan Date, no Default or Event
of Default exists, and the Agent shall be satisfied as to the
truth and accuracy thereof;
(d) the Mortgage duly executed and delivered by the Borrower
and evidencing the recording of such instrument in the appropriate
jurisdiction for the recording thereof on the Real Estate subject
thereto (the Boca Raton facility) or, at the option of the Agent, in
proper form for recording in such jurisdiction;
(e) a fully paid mortgagee title insurance policy or, at the
option of the Agent, unconditional commitment for the issuance thereof
with all requirements and conditions to the issuance of the final
policy deleted or marked satisfied, issued by a title insurance company
satisfactory to the Agent, in an amount equal to not less than the fair
market value of the Real Estate subject to the Mortgage, insuring that
such Mortgage creates a valid first lien on, and security title to, all
Real Estate described therein, with no survey exceptions and no other
exceptions which the Agent shall not have approved in writing;
(f) such materials and information concerning the Real Estate
as the Agent may require, including, without limitation, (A) current
and accurate surveys satisfactory to the Agent of all of the owned Real
Estate, certified to the Agent and showing the location of the 100-year
and 50-year flood plains thereon, (B) zoning letters as to the zoning
status of all of the owned Real Estate, (C) certificates of occupancy
covering all of the Real Estate, and (D) owner's affidavits as to such
matters relating to the owned Real Estate as the Agent may request; and
(g) such other documents and instruments as the Agent or any
Lender may reasonably request.
(e) by amending Section 3.8 SETTLEMENT AMONG LENDERS by redesignating
subsection (c) appearing therein as subsection (d) and by inserting a new
subsection (c) to read in its entirety as follows:
(c) TERM LOANS. The Agent shall pay to each Lender its Ratable
Share (based on the principal amount of the Term Loans owing to such Lender) of
all payments received by the Agent hereunder in immediately available funds in
respect of the principal of, or interest on, the Term Loans, net of any amounts
payable by such Lender to the Agent, by wire transfer of same day funds, on the
same day received by the Agent, if received prior to 1:00 p.m. (Atlanta time),
otherwise on the following Business Day.
(f) by amending Section 3.13 CONVERSION OR CONTINUATION by inserting
the phrase "(other than a Term Loan)" immediately after the phrase "Prime Rate
Loan" appearing therein.
(g) by amending Section 10.1 FINANCIAL RATIOS in its entirety to read
as follows:
18
6
SECTION 10.1 FINANCIAL RATIOS. Permit:
(a) MAXIMUM OPERATING LOSS. The negative Operating Cash Flow
of the Borrower and its Consolidated Subsidiaries for the Fiscal Quarter ending
March 31, 1998 to be greater than $(4,575,000).
(b) MINIMUM FIXED CHARGE COVERAGE. The consolidated Fixed
Charge Coverage Ratio of the Borrower and its Consolidated Subsidiaries as of
the end of any Fiscal Quarter ending during any period described below to be
less than the ratio set forth below opposite such period:
Period Ratio
------ -----
the two consecutive Fiscal Quarters ending
June 30, 1998 0.33 to 1;
the three consecutive Fiscal Quarters ending
September 30, 1998 .70 to 1;
the four consecutive Fiscal Quarters ending
December 31, 1998 .89 to 1;
each four consecutive Fiscal Quarter period
ending during Fiscal Year 1999 1.1 to 1; or
each four consecutive Fiscal Quarter period
ending thereafter 1.25 to 1.
(c) MINIMUM EBITDA Consolidated EBITDA of the Borrower and its
Consolidated Subsidiaries for each Fiscal Year set forth below to be less than
the amount set forth opposite such Fiscal Year:
Fiscal Year Amount
----------- ------
December 31, 2000 $32,000,000
December 31, 2001 $36,000,000
(d) MINIMUM CONSOLIDATED NET WORTH. Permit consolidated Net
Worth of the Borrower and its Consolidated Subsidiaries calculated at the end of
any Fiscal Quarter ending on or after December 31, 1997 to be less than an
amount equal to the sum of $62,000,000 PLUS 50% of the consolidated Net Income
(without deduction for losses) of the Borrower and its Consolidated
Subsidiaries, on a cumulative basis, for the period beginning on October 1, 1997
and ending on the last day of such Fiscal Quarter.
(h) by amending SECTION 14.2 EXPENSES by
(a) amending subsection (a) thereof in its entirety to read as
follows:
(a) the negotiation, preparation, execution,
delivery, enforcement and termination of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and
delivered, including, without limitation
19
7
(i) the out-of-pocket costs and expenses
incurred in connection with the administration and
interpretation of this Agreement and the other Loan Documents;
(ii) the costs and expenses of appraisals of
the Collateral;
(iii) the costs and expenses of lien and
title searches and title insurance;
(iv) taxes, fees and other charges for
recording the Mortgage, the Negative Pledge Agreements and
filing the Financing Statements filed in connection with the
occurrence of the Effective Date,
(b) by deleting the phrase "if a Default has occurred
and is continuing," appearing in subsection (e) thereof, and
(c) by deleting the phrase ", after the occurrence of
a Default or Event of Default," appearing in subsection (h) thereof.
Section 2. WAIVER OF DEFAULTS. On the Amendment Effective Date
(as hereinafter defined) the Lenders hereby waive the Existing Defaults.
Section 3. EFFECTIVENESS OF AMENDMENT. This Amendment shall
become effective as of the first date (the "Amendment Effective Date") on which
the Lenders shall have received each of the following documents (except that on
the Amendment Effective Date, the effectiveness of Section 2 of this Amendment
shall be retroactive to March 27, 1998:
(a) four copies of this Amendment duly executed and delivered
by the Borrower, each Lender and the Agent;
(b) the Amended and Restated Revolving Credit Notes in the
form attached hereto as ANNEX A, dated the Amendment Effective Date and
duly executed and delivered by the Borrower in favor of each Lender;
(c) a certificate of the Secretary of the Borrower having
attached thereto the articles or certificate of incorporation and
bylaws of the Borrower as in effect on the Amendment Effective Date
attached thereto (or containing the certification of such Secretary
that no amendment or modification of such articles or certificate or
bylaws has become effective since the last date on which such documents
were delivered to the Lenders pursuant to the Loan Agreement), all
corporate action, taken by the Borrower to authorize the execution,
delivery and performance of this Amendment, and to the further effect
that the incumbency certificate delivered in connection with the
occurrence of the Effective Date remains in effect, unchanged;
(d) a certificate of the president or any vice-president of
the Borrower stating that, to the best of his knowledge and based on an
examination reasonably believed by him to be sufficient to enable him
to make an informed statement,
(i) after giving effect to the waiver set forth in
Section 2 of this Amendment, all of the representations and
warranties made or deemed to be made under the Loan Agreement
are true and correct as of the date hereof, and
(ii) after giving effect to the waiver set forth in
Section 2 of this Amendment, no Default or Event of Default
exists, and the Agent shall be satisfied as to the truth and
accuracy thereof;
20
8
(e) the Confirmation of Guarantors in the form attached hereto
as ANNEX B duly executed and delivered by each Guarantor;
(f) the payment of an amendment fee in the amount of $250,000;
and
(g) such other documents and instruments as the Agent or any
Lender may reasonably request.
Section 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
makes the following representations and warranties to the Agent and the Lenders,
which representations and warranties shall survive the delivery of this
Amendment and the making of additional Loans under the Loan Agreement as amended
hereby:
(a) AUTHORIZATION OF AGREEMENTS. The Borrower has the right and power,
and has taken all necessary action to authorize it, to execute, deliver and
perform this Amendment and each other agreement contemplated hereby to which it
is a party in accordance with their respective terms. This Amendment and each
other agreement contemplated hereby to which it is a party have been duly
executed and delivered by the duly authorized officers of the Borrower and each
is, or each when executed and delivered in accordance with this Amendment will
be, a legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(b) COMPLIANCE OF AGREEMENTS WITH LAWS. The execution, delivery and
performance of this Amendment and each other agreement contemplated hereby to
which the Borrower is a party in accordance with their respective terms do not
and will not, by the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any
Applicable Law relating to the Borrower or any of its
Subsidiaries,
(ii) conflict with, result in a breach of or constitute a
default under the articles or certificate of incorporation or
by-laws or any shareholders' agreement of the Borrower or any
of its Subsidiaries, any material provisions of any indenture,
agreement or other instrument to which the Borrower, any of
its Subsidiaries or any of Borrower's or such Subsidiaries'
property may be bound or any Governmental Approval relating to
the Borrower or any of its Subsidiaries, or
(iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower other than the Security
Interest.
Section 5. EXPENSES. The Borrower agrees to pay or reimburse
on demand all costs and expenses, including, without limitation, reasonable fees
and disbursements of counsel, incurred by the Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment.
Section 6. EFFECT OF AMENDMENT. From and after the Amendment
Effective Date, all references in the Loan Agreement and in any other Loan
Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and
words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment. Except as
expressly amended hereby, the Loan Agreement and all terms, conditions and
provisions thereof remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
21
9
Section 7. COUNTERPART EXECUTION; GOVERNING LAW.
(a) EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed signature page of any party hereto by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof.
(b) GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Georgia.
22
10
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
NABI
[CORPORATE SEAL]
By: /s/ Alfred J. Fernandez
-----------------------------
Alfred J. Fernandez
Senior Vice President and
Attest: Chief Financial Officer
By:
-----------------------------
Name:
----------------------------
Title:
---------------------------
AGENT
NATIONSBANK, N.A.
By: /s/ Brian O. Fallon
---------------------------
Name: Brian O. Fallon
---------------------------
Title: Senior Vice President
---------------------------
LENDERS
NATIONSBANK, N.A.
By: /s/ Brian O. Fallon
---------------------------
Name: Brian O. Fallon
---------------------------
Title: Senior Vice President
---------------------------
BANKBOSTON, N.A.
By: /s/ Andrew A. Doherty
---------------------------
Name: Andrew A. Doherty
---------------------------
Title: Vice President
---------------------------
23
11
ANNEX A
FORM OF AMENDED AND RESTATED
REVOLIVNG CREDIT NOTE
$ Atlanta, GA
------------------------- March , 1998
FOR VALUE RECEIVED, the undersigned, NABI, a Delaware corporation (the
"Borrower"), hereby unconditionally promises to pay to the order of (the
"Lender") at the offices of NationsBank, N.A., a national banking association,
as agent for the Lenders (together with its successor agents the "Agent")
located at 600 Peachtree Street, N.E., Atlanta, Georgia, 30308, or at such other
place within the United States as shall be designated from time to time by the
Agent on the Termination Date, the principal amount of
($ ), or such lesser principal amount as may then constitute the
aggregate unpaid balance of all Revolving Credit Loans made by the Lender to the
Borrower pursuant to the Loan Agreement (as hereinafter defined), in lawful
money of the United States of America in federal or other immediately available
funds.
The Borrower also unconditionally promises to pay interest on the
unpaid principal amount of this Note outstanding from time to time for each day
from the date of disbursement until such principal amount is paid in full at the
rates per annum and on the dates specified in the Loan Agreement applicable from
time to time in accordance with the provisions thereof. Nothing contained in
this Note or in the Loan Agreement shall be deemed to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by any
Applicable Law. In the event that any rate of interest required to be paid
hereunder exceeds the maximum rate permitted by Applicable Law, the provisions
of the Loan Agreement relating to the payment of interest under such
circumstances shall control.
This Amended and Restated Revolving Credit is delivered in exchange and
substitution for, but not in extinguishment of the Indebtedness outstanding
under, the Revolving Credit Note dated September 12, 1997 in the original
principal amount of $25,000,000.00 made by the Borrower in favor of the Lender.
This Note is one of the Revolving Credit Notes referred to in that
certain Loan and Security Agreement dated as of September 12, 1997 (as amended,
modified, supplemented or restated from time to time, the "Loan Agreement";
terms defined therein being used in this Note as therein defined) between the
Borrower, the financial institutions party thereto from time to time (the
"Lenders") and the Agent, is subject to, and entitled to, all provisions and
benefits of the Loan Documents, is secured by the Collateral and other property
as provided in the Loan Documents, is subject to optional and mandatory
prepayment in whole or in part and is subject to acceleration prior to maturity
upon the occurrence of one or more Events of Default, all as provided in the
Loan Documents.
Presentment for payment, demand, protest and notice of demand, notice
of dishonor, notice of non-payment and all other notices are hereby waived by
the Borrower, except to the extent expressly provided in the Loan Agreement. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
The Borrower hereby agrees to pay on demand all costs and expenses
incurred in collecting the Secured Obligations hereunder or in enforcing or
attempting to enforce any of the Lender's rights hereunder, including, but not
limited to, reasonable attorneys' fees and expenses if collected by or through
an attorney, whether or not suit is filed, all as provided in the Loan
Agreement.
The provisions of Section 14.5 of the Loan Agreement are hereby
expressly incorporated by reference herein.
24
12
This Revolving Credit Note shall be governed by, and construed in
accordance with, the laws of the State of Georgia without giving effect to the
conflict of laws principles thereof.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
day and year first above written.
NABI
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
(CORPORATE SEAL)
- ----------------
Attest:
By:
------------------------------
Name:
----------------------------
25
13
ANNEX B
CONSENT AND CONFIRMATION OF GUARANTORS
The undersigned, each in their capacity as a Guarantor under
the Subsidiary Guaranty dated as of September 12, 1997 (as modified or amended
to date, the "Subsidiary Guaranty"), in favor of the Lenders, hereby confirms,
for the benefit of the Borrower and the Lenders, that (1) such Guarantor is a
Subsidiary of Borrower, (2) such Guarantor has received a copy of Amendment No.
2 and Waiver dated as of March 30, 1998 and consents thereto and (3) the
Subsidiary Guaranty of which such Guarantor is the maker constitutes a
continuing unconditional, guaranty of the Secured Obligations under and as
defined in the Subsidiary Guaranty. Each of the undersigned is and continues to
be liable under the Subsidiary Guaranty in accordance with the terms thereof,
notwithstanding the execution and delivery of the aforesaid Amendment.
Dated: March , 1998
BIOMUNE CORPORATION
[Corporate Seal] By:/s/ Alfred J. Fernandez
----------------------------------
Alfred J. Fernandez
Treasurer
NABI FINANCE, INC.
[Corporate Seal] By:/s/ Alfred J. Fernandez
----------------------------------
Alfred J. Fernandez
President
NABIMED, LTD.
[Corporate Seal] By:/s/ Alfred J. Fernandez
----------------------------------
Alfred J. Fernandez
Secretary
UNIVAX PLASMA, INC.
[Corporate Seal] By:/s/ Alfred J. Fernandez
----------------------------------
Alfred J. Fernandez
Treasurer and Chief Financial Officer
26
5
1,000
3-MOS
DEC-31-1998
JAN-01-1998
MAR-31-1998
1,225
0
35,086
0
40,526
95,503
91,943
0
224,428
33,305
116,930
0
0
3,489
70,323
73,812
58,614
58,614
44,589
44,589
16,089
0
1,776
(3,971)
(2,053)
(1,918)
0
0
0
(1,918)
(0.06)
0
RECEIVABLES, INVENTORY AND PP&E REPRESENT NET AMOUNTS.
LOSS PROVISION INCLUDED IN OTHER EXPENSES.
