LIBOR Addendum to Loan and Security Agreement
EXHIBIT 10.2
LIBOR Addendum
to Loan and Security Agreement
to Loan and Security Agreement
This LIBOR Addendum to Loan and Security Agreement (this “Addendum”) is entered into as of
July 28, 2006, by and between COMERICA BANK (“Bank”) and SANTARUS, INC. (“Borrower”). This
Addendum supplements the terms of the Loan and Security Agreement (the “Loan Agreement”) of even
date herewith.
1. Definitions.
(a) Advance. As used herein, “Advance” means a borrowing requested by Borrower and
made by Bank under the Loan Agreement, including a LIBOR Option Advance and/or a Prime Rate Option
Advance (as hereafter defined).
(b) Business Day. As used herein, “Business Day” means any day that is not a
Saturday, Sunday, or other day on which banks in the State of California are authorized or required
to close.
(c) LIBOR. As used herein, “LIBOR” means the rate per annum (rounded upward if
necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula:
| LIBOR = | Base LIBOR | |||||||
| 100% — LIBOR Reserve Percentage |
||||||||
(1) “Base LIBOR” means the rate per annum determined by Bank at which deposits for the
relevant LIBOR Period would be offered to Bank in the approximate amount of the relevant LIBOR
Option Advance in the interbank LIBOR market selected by Bank, upon request of Bank at 10:00 a.m.
California time, on the day that is the first day of such LIBOR Period.
(2) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable LIBOR Period.
(d) LIBOR Business Day. As used herein, “LIBOR Business Day” means a Business Day on
which dealings in Dollar deposits may be carried out in the interbank LIBOR market.
(e) LIBOR Period. As used herein, “LIBOR Period” means, with respect to a LIBOR
Option Advance:
(1) initially, the period commencing on, as the case may be, the date the Advance is made or
the date on which the Advance is converted to a LIBOR Option Advance, and continuing for, in every
case, a 30-, 60-, or 90-day period thereafter so long as the LIBOR Option is quoted for such period
in the applicable interbank LIBOR market, as such period is selected by Borrower in the Loan
Advance/Paydown Request Form as provided in the Loan Agreement or in the Prime Rate/Libor Rate
Advance Request Form as provided in this Addendum; and
(2) thereafter, each period commencing on the last day of the next preceding LIBOR Period
applicable to such LIBOR Option Advance and continuing for, in every case, a 30-, 60-, or 90-day
period thereafter so long as the LIBOR Option is quoted for such period in the applicable interbank
LIBOR market, as such period is selected by Borrower in the Prime Rate/Libor Rate Advance Request
Form as provided in this Addendum.
(f) Regulation D. As used herein, “Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System as amended or supplemented from time to time.
(g) Regulatory Development. As used herein, “Regulatory Development” means any or all
of the following: (i) any change in any law, regulation or interpretation thereof by any public
authority (whether or not having the force of law); (ii) the application of any existing law,
regulation or the interpretation thereof by any public authority
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(whether or not having the force of law); and (iii) compliance by Bank with any request or
directive (whether or not having the force of law) of any public authority.
2. Interest Rate Options. Borrower shall have the following options regarding the
interest rate to be paid by Borrower on Advances under the Loan Agreement:
(a) A rate equal to two and two quarters percent (2.25%) above Bank’s LIBOR, (the “LIBOR
Option”), which LIBOR Option shall be in effect during the relevant LIBOR Period; or
(b) A rate equal to the Prime Rate as defined in the Loan Agreement and quoted from time to
time by Bank as such rate may change from time to time (the “Prime Rate Option”).
3. LIBOR Option Advance. The minimum LIBOR Option Advance will not be less than Five
Hundred Thousand Dollars ($500,000) for any LIBOR Option Advance.
4. Payment of Interest on LIBOR Option Advances. Interest on each LIBOR Option
Advance shall be payable pursuant to the terms of the Loan Agreement. Interest on such LIBOR
Option Advance shall be computed on the basis of a 360-day year and shall be assessed for the
actual number of days elapsed from the first day of the LIBOR Period applicable thereto but not
including the last day thereof.
5. Bank’s Records Re: LIBOR Option Advances. With respect to each LIBOR Option
Advance, Bank is hereby authorized to note the date, principal amount, interest rate and LIBOR
Period applicable thereto and any payments made thereon on Bank’s books and records (either
manually or by electronic entry) and/or on any schedule attached to the Loan Agreement, which
notations shall be prima facie evidence of the accuracy of the information so noted.
6. Selection/Conversion of Interest Rate Options. At the time any Advance is
requested under the Loan Agreement and/or Borrower wishes to select the LIBOR Option for all or a
portion of the outstanding principal balance of the Loan Agreement, and at the end of each LIBOR
Period, Borrower shall give Bank notice specifying (a) the interest rate option selected by
Borrower; b) the principal amount subject thereto; and (c) if the LIBOR Option is selected, the
length of the applicable LIBOR Period. Any such notice may be given by email so long as, with
respect to each LIBOR Option selected by Borrower, (i) Bank receives written confirmation from
Borrower not later than three (3) LIBOR Business Days after such email notice is given; and (ii)
such notice is given to Bank prior to 10:00 a.m., California time, on the first day of the LIBOR
Period. For each LIBOR Option requested hereunder, Bank will quote the applicable fixed LIBOR Rate
to Borrower at approximately 10:00 a.m., California time, on the first day of the LIBOR Period. If
Borrower does not immediately accept the rate quoted by Bank, any subsequent acceptance by Borrower
shall be subject to a redetermination of the rate by Bank; provided, however, that if Borrower
fails to accept any such quotation given, then the quoted rate shall expire and Bank shall have no
obligation to permit a LIBOR Option to be selected on such day. If no specific designation of
interest is made at the time any Advance is requested under the Loan Agreement or at the end of any
LIBOR Period, Borrower shall be deemed to have selected the Prime Rate Option for such Advance or
the principal amount to which such LIBOR Period applied. At any time the LIBOR Option is in
effect, Borrower may, at the end of the applicable LIBOR Period, convert to the Prime Rate Option.
At any time the Prime Rate Option is in effect, Borrower may convert to the LIBOR Option, and shall
designate a LIBOR Period.
7. Default Interest Rate. From and after the maturity date of the Loan Agreement, or
such earlier date as all principal owing hereunder becomes due and payable by acceleration or
otherwise, the outstanding principal balance of the Loan Agreement shall bear interest until paid
in full at an increased rate per annum (computed on the basis of a 360-day year, actual days
elapsed) equal to three percent (3.00%) above the rate then in effect.
8. Prepayment. In the event that the LIBOR Option is the applicable interest rate for
all or any part of the outstanding principal balance of the Loan Agreement, and any payment or
prepayment of any such outstanding principal balance of the Loan Agreement shall occur on any day
other than the last day of the applicable LIBOR Period (whether voluntarily, by acceleration,
required payment, or otherwise), or if Borrower elects the LIBOR Option as the applicable interest
rate for all or any part of the outstanding principal balance of the Loan Agreement in accordance
with the terms and conditions hereof, and, subsequent to such election, but prior to the
commencement of the applicable LIBOR Period,
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Borrower revokes such election for any reason whatsoever, or if the applicable interest rate
in respect of any outstanding principal balance of the Loan Agreement hereunder shall be changed,
for any reason whatsoever, from the LIBOR Option to the Prime Rate Option prior to the last day of
the applicable LIBOR Period, or if Borrower shall fail to make any payment of principal or interest
hereunder at any time that the LIBOR Option is the applicable interest rate hereunder in respect of
such outstanding principal balance of the Loan Agreement, Borrower shall reimburse Bank, on demand,
for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or
redeploying deposits from third parties. Such amount payable by Borrower to Bank may include,
without limitation, an amount equal to the excess, if any, of (a) the amount of interest which
would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the
period from the date of such prepayment or of such failure to borrow, refund or convert, through
the last day of the relevant LIBOR Period, at the applicable rate of interest for such outstanding
principal balance of the Loan Agreement, as provided under this Loan Agreement, over (b) the amount
of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by
placing such amount on deposit for a comparable period with leading banks in the interbank LIBOR
market. Calculation of any amounts payable to Bank under this paragraph shall be made as though
Bank shall have actually funded or committed to fund the relevant outstanding principal balance of
the Loan Agreement hereunder through the purchase of an underlying deposit in an amount equal to
the amount of such outstanding principal balance of the Loan Agreement and having a maturity
comparable to the relevant LIBOR Period; provided, however, that Bank may fund the outstanding
principal balance of the Loan Agreement hereunder in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts payable under this
paragraph. Upon the written request of Borrower, Bank shall deliver to Borrower a certificate
setting forth the basis for determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error. Any prepayment hereunder shall also be
accompanied by the payment of all accrued and unpaid interest on the amount so prepaid. Any
outstanding principal balance of the Loan Agreement which is bearing interest at such time at the
Prime Rate Option may be prepaid without penalty or premium. Partial prepayments hereunder shall
be applied to the installments hereunder in the inverse order of their maturities.
BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS NO RIGHT TO
PREPAY ANY LIBOR OPTION ADVANCE , IN WHOLE OR IN PART, WITHOUT PAYING THE PREPAYMENT AMOUNT, EXCEPT
AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE FOR PAYMENT OF THE
PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE PAYMENT OF ANY LIBOR OPTION ADVANCE AS
PART OR ALL OF THE OBLIGATIONS OWING UNDER THE LOAN AGREEMENT, INCLUDING WITHOUT LIMITATION,
ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER WAIVE ANY RIGHTS UNDER SECTION 2954.10 OF
THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH LIBOR OPTION
ADVANCE PURSUANT TO THE LOAN AGREEMENT IN RELIANCE ON THESE AGREEMENTS.
| /s/ dpc | ||||
| BORROWER’S INITIALS | ||||
9. Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and to hold
Bank harmless from, and to reimburse Bank on demand for, all losses and expenses which Bank
sustains or incurs as a result of (i) any payment of a LIBOR Option Advance prior to the last day
of the applicable LIBOR Period for any reason, including, without limitation, termination of the
Loan Agreement, whether pursuant to this Addendum or the occurrence of an Event of Default; (ii)
any termination of a LIBOR Period prior to the date it would otherwise end in accordance with this
Addendum; or (iii) any failure by any Borrower, for any reason, to borrow any portion of a LIBOR
Option Advance.
10. Funding Losses. The indemnification and hold harmless provisions set forth in
this Addendum shall include, without limitation, all losses and expenses arising from interest and
fees that Bank pays to lenders of funds it obtains in order to fund the loans to Borrower on the
basis of the LIBOR Option(s) and all losses incurred in liquidating or re-deploying deposits from
which such funds were obtained and loss of profit for the period after termination. A written
statement by Bank to Borrower of such losses and expenses shall be conclusive and binding, absent
manifest
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error, for all purposes. This obligation shall survive the termination of this Addendum and
the payment of the Loan Agreement.
11. Regulatory Developments Or Other Circumstances Relating To Illegality or
Impracticality of LIBOR. If any Regulatory Development or other circumstances relating to the
interbank Euro-dollar markets shall, at any time, in Bank’s reasonable determination, make it
unlawful or impractical for Bank to fund or maintain, during any LIBOR Period, to determine or
charge interest rates based upon LIBOR, Bank shall give notice of such circumstances to Borrower
and:
(i) In the case of a LIBOR Period in progress, Borrower shall, if requested by Bank, promptly
pay any interest which had accrued prior to such request and the date of such request shall be
deemed to be the last day of the term of the LIBOR Period; and
(ii) No LIBOR Period may be designated thereafter until Bank determines that such would be
practical.
12. Additional Costs. Borrower shall pay to Bank from time to time, upon Bank’s
request, such amounts as Bank reasonably determines are needed to compensate Bank for any costs it
incurred which are attributable to Bank having made or maintained a LIBOR Option Advance or to
Bank’s obligation to make a LIBOR Option Advance, or any reduction in any amount receivable by Bank
hereunder with respect to any LIBOR Option or such obligation (such increases in costs and
reductions in amounts receivable being herein called “Additional Costs”), to the extent resulting
from any Regulatory Developments, which (i) change the basis of taxation of any amounts payable to
Bank hereunder with respect to taxation of any amounts payable to Bank hereunder with respect to
any LIBOR Option Advance (other than taxes imposed on the overall net income of Bank for any LIBOR
Option Advance by the jurisdiction where Bank is headquartered or the jurisdiction where Bank
extends the LIBOR Option Advance; (ii) impose or modify any reserve, special deposit, or similar
requirements relating to any extensions of credit or other assets of, or any deposits with or other
liabilities of, Bank (including any LIBOR Option Advance or any deposits referred to in the
definition of LIBOR); or (iii) impose any other condition affecting this Addendum (or any of such
extension of credit or liabilities). Bank shall notify Borrower of any event occurring after the
date hereof which entitles Bank to compensation pursuant to this paragraph as promptly as
practicable after it obtains knowledge thereof and determines to request such compensation.
Determinations by Bank for purposes of this paragraph, shall be conclusive, provided that such
determinations are made on a reasonable basis.
13. Legal Effect. Except as specifically modified hereby, all of the terms and
conditions of the Loan Agreement remain in full force and effect.
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IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date first set forth above.
| SANTARUS, INC. | ||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||
| Title: | SVP & CFO | |||
| COMERICA BANK | ||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President | |||
[Signature Page to LIBOR Addendum to Loan and Security Agreement]
PRIME RATE/LIBOR RATE ADVANCE REQUEST FORM
The undersigned hereby certifies as follows:
I, , am the duly elected and acting
of
SANTARUS, INC. (“Borrower”).
This Prime Rate/LIBOR Rate Advance Request Form is delivered on behalf of Borrower to Comerica
Bank, pursuant to that certain Loan and Security Agreement among Borrower and Comerica Bank, dated
as of July 28, 2006 (the “Agreement”). The terms used herein which are defined in the Agreement
have the same meaning herein as ascribed to them therein.
Borrower hereby request on , 20___, an Advance/conversion from one rate to
another, as follows:
(a) The date on which the Advance is to be made/converted is , 20___.
(b) The amount of the Advance/conversion is to be ($ ), in the
form of a Prime Rate Advance of $ ; and/or a LIBOR Rate Advance of
$
for a LIBOR Interest Period of ___ days.
All representations and warranties (including any updates thereto in accordance with Section
3.2(b) of the Loan Agreement) of Borrower stated in the Agreement (as amended from time to time)
are true, correct and complete in all material respects as of the date of this Request; provided,
however, that those representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of such date.
IN WITNESS WHEREOF, this Prime Rate/LIBOR Rate Advance Request Form is executed by the
undersigned as of this ___day of , 20___.
| SANTARUS, INC. | ||||
| By: | ||||
| Title: | ||||