1
EXHIBIT 10.5
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 15, 1999
Among
AKORN, INC.
And
AKORN NEW JERSEY, INC.
as Borrowers,
and
THE NORTHERN TRUST COMPANY,
as Lender
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TABLE OF CONTENTS
PAGE
SECTION
1. DEFINITIONS AND OTHER TERMS.....................................1
1.1. Definitions...................................................1
1.2. Other Definitional Provisions................................16
1.3. Interpretation of Agreement..................................16
2. AMOUNT AND TERMS OF CREDIT.....................................16
2.1. Advances.....................................................16
2.2. Letters of Credit............................................18
2.3. Prepayment, Commitment Reduction.............................21
2.4. Use of Proceeds..............................................21
2.5. Interest on Loans............................................21
2.6. Fees.........................................................22
2.7. Charging of Accounts.........................................23
2.8. Application and Allocation of Payments.......................23
2.9. Loan Account and Accounting..................................23
2.10. Indemnity....................................................24
2.11. Access.......................................................25
2.12. Taxes........................................................26
2.13. Capital Adequacy; Increased Costs; Illegality................26
2.14. Conversion and Continuation Elections........................27
3. CONDITIONS PRECEDENT...........................................28
3.1. Conditions to the Initial Advance............................28
3.2. Further Conditions...........................................29
4. REPRESENTATIONS AND WARRANTIES.................................30
4.1. Corporate Existence; Compliance with Law.....................30
4.2. Executive Offices............................................30
4.3. Corporate Power Authorization, Enforceable Obligations.......31
4.4. Financial Statements.........................................31
4.5. Material Adverse Effect......................................31
4.6. Title and Liens..............................................31
4.7. Restrictions; No Default.....................................31
4.8. Labor Matters................................................32
4.9. Ventures, Subsidiaries and Affiliates; Outstanding Stock.....32
4.10. Government Regulation........................................32
4.11. Margin Regulations...........................................33
4.12. Taxes........................................................33
4.13. ERISA........................................................33
4.14. No Litigation................................................34
4.15. Patents, Trademarks, Copyrights and Licenses.................35
4.16. Full Disclosure..............................................35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.17. Hazardous Materials.............................................35
4.18. Insurance Policies..............................................35
4.19. Deposit and Disbursement Accounts...............................36
4.20. Customer and Trade Relations....................................36
4.21. Indebtedness....................................................36
5. FINANCIAL STATEMENTS AND INFORMATION..............................36
5.1. Reports and Notices.............................................36
5.2. Communication with Accountants..................................37
6. AFFIRMATIVE COVENANTS.............................................37
6.1. Maintenance of Existence and Conduct of Business................37
6.2. Payment of Obligations..........................................38
6.3. Books and Records...............................................38
6.4. Audits..........................................................38
6.5. Litigation......................................................38
6.6. Insurance.......................................................38
6.7. Compliance with Laws............................................39
6.8. Supplemental Disclosure.........................................40
6.9. Employee Plans..................................................40
6.10. Environmental Matters...........................................40
6.11. Landlords' Agreements, Bailee Letters and Mortgagee Agreements..40
6.12. Leased Locations of Collateral..................................41
7. NEGATIVE COVENANTS................................................41
7.1. Mergers, Subsidiaries, Etc......................................41
7.2. Investments; Loans and Advances.................................42
7.3. Indebtedness....................................................42
7.4. Employee Loans and Affiliate Transactions.......................42
7.5. Capital Structure and Business..................................43
7.6. Guaranteed Indebtedness.........................................43
7.7. Liens...........................................................43
7.8. Sale of Assets..................................................44
7.9. ERISA...........................................................44
7.10. Financial Covenants.............................................44
7.11. Hazardous Materials.............................................45
7.12. Sale Leasebacks.................................................45
7.13. Cancellation of Indebtedness....................................45
7.14. Restricted Payments.............................................45
7.15. Fiscal Year.....................................................45
7.16. Change of Corporate Name or Location............................45
7.17. Year 2000 Compliance............................................46
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES............................47
8.1. Events of Default...............................................47
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.2. Remedies.......................................................49
8.3. Waivers by Borrowers...........................................50
9. SUCCESSORS AND ASSIGNS............................................50
9.1. Successors and Assigns.........................................50
10. MISCELLANEOUS.....................................................50
10.1. Setoff.........................................................50
10.2. Complete Agreement; Modification of Agreement..................50
10.3. Amendments and Waivers.........................................51
10.4. Fees and Expenses..............................................51
10.5. No Waiver......................................................52
10.6. Remedies.......................................................52
10.7. Survival of Obligations upon Termination of Financing
Agreements.....................................................52
10.8. Severability...................................................53
10.9. Conflict of Terms..............................................53
10.10. Authorized Signature...........................................53
10.11. GOVERNING LAW..................................................53
10.12. Notices........................................................54
10.13. Section Titles.................................................55
10.14. Counterparts...................................................56
10.15. WAIVER OF JURY TRIAL...........................................56
10.16. Reinstatement..................................................56
11. CROSS-GUARANTY....................................................56
11.1. Cross-Guaranty.................................................56
11.2. Obligations Absolute...........................................56
11.3. WAIVER.........................................................57
11.4. Recovery.......................................................57
11.5. Liability Cumulative...........................................57
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INDEX OF SCHEDULES AND EXHIBITS
Exhibit A - Form of Notice of Advance
Exhibit B - Form of Note
Exhibit C - Form of Security Agreement
Exhibit D - Form of Notice of Conversion/Continuation
Schedule 4.2 - Executive Offices
Schedule 4.8 - Labor Matters
Schedule 4.9 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 4.13 - ERISA Plans
Schedule 4.15 - Intellectual Property and Trade Names
Schedule 4.17 - Hazardous Materials
Schedule 4.18 - Insurance Policies
Schedule 4.19 - Deposit and Disbursement Accounts
Schedule 7.3 - Indebtedness
Schedule 7.4(a)- Transactions with Affiliates
Schedule 7.7 - Liens
Schedule 10.10 - Authorized Signatures
Schedule A - Letters of Credit
Schedule B - Schedules of Additional Closing Documents
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FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER'S CAPITAL
(DOLLARS IN THOUSANDS)
Unamortized
Value of
General General
Partner General Partner Limited
Preferred Partner Restricted Partners
Total Units Units Units Units
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1996 ............ $ 535,232 $ -- $ 496,169 $ -- $ 39,063
Contributions ....................... 458,860 144,290 199,340 -- 115,230
Issuance of General Partner
Restricted Units .............. -- -- (3,655) -- 3,655
Amortization of General Partner
Restricted Units .............. 238 -- -- -- 238
Distributions ....................... (81,772) (7,936) (65,322) -- (8,514)
Unit Conversions .................... -- -- 3,395 -- (3,395)
Net Income .......................... 53,619 7,936 40,371 -- 5,312
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 ............ 966,177 144,290 677,608 (3,417) 147,696
Contributions ....................... 279,208 192,700 37,095 -- 49,413
Issuance of General Partner
Restricted Units .................. -- -- 2,345 (2,345) --
Amortization of General Partner
Restricted Units ............. 2,450 -- -- -- 2,450
Distributions ....................... (123,555) (26,691) (82,316) -- (14,548)
Unit Conversions .................... -- -- 5,150 -- 5,150
Net Income .......................... 85,279 26,691 8,547 -- 50,041
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 ............ 1,209,559 336,990 689,923 (3,312) 185,958
Contributions ....................... 5,115 -- 840 -- 4,275
Issuance of General Partner
Restricted Units .................. -- -- 2,008 (2,008) --
Amortization of General Partner
Restricted Units ............. 1,233 -- -- 1,233 --
Distributions ....................... (138,534) (28,924) (92,151) -- (17,459)
Unit Conversions .................... -- -- 2,618 -- (2,618)
Net Income .......................... 137,977 28,924 91,661 -- 17,392
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 ............ $ 1,215,350 $ 336,990 $ 694,899 $ (4,087) $ 187,548
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
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"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (c) each of such Person's officers,
directors, joint venturers and partners. For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise; provided,
however, that the term "Affiliate" shall specifically exclude Lender.
"Applicable Percentage" shall mean at any time of determination, with
respect to LIBOR Loans or Federal Funds Rate Loans, the applicable percentage
set forth below based on the ratio of Funded Debt to EBITDA on a consolidated
basis of the Borrowers at such time:
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LIBOR Loan and Federal
Level Funded Debt to EBITDA Ratio Funds Rate Loan*
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1 Less than or equal to 1.25x 1.125%
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2 > 1.25x but <= 2.00x 1.25%
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3 > 2.00x but <= 2.50x 1.50%
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4 > 2.50x 1.625%
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For purposes of the foregoing, (a) from the Closing Date until September
30, 1999, the Applicable Percentages shall be determined in accordance with
Level 2, (b) from and after such date, the Applicable Percentages shall be
determined at any time by reference to the ratio of Funded Debt to EBITDA
on a consolidated basis of the Borrowers in effect at the time, (c) any
change in the Applicable Percentages based on a change in such ratio shall
be effective for all purposes five (5) Business Days from delivery to the
Lender of an officer's certificate of Akorn with respect to the Financial
Statements to be delivered pursuant to Section 5.1, (i) setting forth in
reasonable detail the calculation of such ratio for such fiscal period and
(ii) stating that such officer has reviewed the terms of this Agreement and
has made, or caused to be made under his or her supervision, a review in
reasonable detail of the transactions and condition of Akorn and its
Subsidiaries during the accounting period covered by the related Financial
Statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that such officer does not have
knowledge of the existence as at the date of such officer's certificate, of
any condition or event that constitutes a Default or an Event of Default
and (d) notwithstanding the foregoing provisions of clauses (b) and (c), no
reduction in the Applicable Percentages shall be effective if a Default or
Event of Default shall have occurred and be continuing. It is understood
that the foregoing officer's certificate shall be permitted to be delivered
prior to, but in no event later than, the time of the actual
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* For Federal Funds Loans also add 1/8 % per definition of Federal Funds Rate.
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delivery of the financial statements required to be delivered pursuant to
Section 5.1 for the applicable fiscal period. Any change in the Applicable
Percentages due to a change in the applicable Level shall be effective on
the effective date of such change in the applicable Level and shall apply
to all LIBOR Loans made on or after the commencement of the period (and to
Federal Funds Rate Loans that are outstanding at any time during the
period) commencing on the effective date of such change in the applicable
Level and ending on the date immediately preceding the effective date of
the next such change in applicable Level.
"Business Day" shall mean any day that is (a) not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
Illinois and (b) a Eurodollar Business Day.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than any such lease
under which such Person is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation, Taxes
and taxes owed to the PBGC at the time due and payable), levies, assessments,
charges, liens, claims or encumbrances upon or relating to (a) the Collateral,
(b) the Obligations, (c) the employees, payroll, income or gross receipts of any
Borrower or any of their Subsidiaries, (d) any Borrower's or any of their
Subsidiaries' ownership or use of any properties or other assets, or (e) any
other aspect of any Borrower's or any of their Subsidiaries' businesses.
"Closing Date" shall mean the date on which the conditions set forth
in Section 3 shall have been satisfied in a manner satisfactory to the Lender.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Lender's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Illinois, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction solely for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Security
Agreements and any other personal property, tangible or intangible, now existing
or hereafter acquired, that may at
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any time be or become subject to a security interest or Lien in favor of Lender
to secure the Obligations.
"Commitment" shall mean the aggregate commitment of the Lender to make
Advances and issue Letters of Credit, which aggregate commitment shall be
Twenty-Five Million United State Dollars ($25,000,000) on the Closing Date, as
such amount may be adjusted, if at all, from time to time in accordance with
Section 2.3 of the Agreement.
"Conversion/Continuation Date" shall mean any date on which, under
Section 2.14, any Borrower (a) converts Loans of one type to another type, or
(b) continues as Loans of the same type, but with a new LIBOR Period, Loans
having LIBOR Periods expiring on such date.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement designed to protect the Person entering into same
against fluctuations in currency values.
"DEA" shall mean the Drug Enforcement Agency, together with its
successors, and comparable agencies in foreign countries.
"Debt Service" shall mean, with respect to any Person for any period,
an amount equal to the sum of (a) the Interest Charges and Letter of Credit fees
for such period, measured at the end of each Fiscal Quarter for the four
immediately preceding Fiscal Quarters then ended, and (b) the scheduled
amortization of any outstanding current maturities on Indebtedness, measured at
the end of each Fiscal Quarter for the four immediately following Fiscal
Quarters.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section
2.5(d).
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"EBITDA" means for any period of determination, Akorn's consolidated
net earnings (or loss) after provision for taxes, plus cash charges against
income for foreign, federal and state income taxes for such period, plus
depreciation and amortization expenses for such period, plus Akorn's
consolidated aggregate interest expense for such period, plus any extraordinary
losses arising outside of the ordinary course of business during such period
which have been included in the calculation of net earnings, minus extraordinary
gains arising outside the ordinary course of business during such period which
have been included in the calculation of net earnings, all determined on a
consolidated basis, in accordance with GAAP.
"EBIT" shall mean, with respect to Borrowers for any period, the
consolidated net earnings (or loss) after provision for taxes, plus charges
against income for foreign, federal and
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state income taxes for such period, plus interest expense for such period of
Borrowers and their consolidated Subsidiaries, all determined in accordance with
GAAP.
"Environmental Laws" shall mean all federal, state, local and foreign
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree or judgment, relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
"Environmental Laws" include, but are not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601 et seq.); the Hazardous Material Transportation Act, as
amended (49 U.S.C. Sections 1801 et seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended (7 U.S.C. Sections 136 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 et seq.); the
Toxic Substance Control Act, as amended (15 U.S.C. Sections 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. Sections 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. Sections 1251 et seq.); the
Occupational Safety and Health Act, as amended (29 U.S.C. Sections 651 et seq.);
and the Safe Drinking Water Act, as amended (42 U.S.C.Sections 300(f) et seq.),
and any and all regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, removal actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including any thereof arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate to any health or
safety condition regulated under any Environmental Law or in connection with any
other environmental matter or Release, threatened Release or the presence of a
Hazardous Material or threatened Release of a Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Borrower or any
Subsidiary thereof, any trade or business (whether or not incorporated) under
common control with such Borrower or such Subsidiary and which, together with
such Borrower or such Subsidiary, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any of the Borrowers
or any Subsidiary thereof or ERISA Affiliate, (a) a Reportable Event with
respect to a Title IV Plan or a
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Multiemployer Plan; (b) the withdrawal of any Borrower or any Subsidiary thereof
or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during
a plan year in which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Borrower or
Subsidiary thereof or ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a
plan amendment as a termination under Section 4041 of ERISA; (e) the institution
of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC;
(f) the failure to make required contributions to a Qualified Plan; or (g) any
other event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA.
"Eurodollar Business Day" shall mean a Business Day on which banks in
the city of London are generally open for interbank or foreign exchange
transactions.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"FDA" shall mean the Federal Food and Drug Administration and
comparable agencies in foreign countries.
"Federal Funds Rate" shall mean, for any day, (a) an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions, with members of the Federal Reserve System only, arranged by
Federal funds brokers, plus (b) one-eighth of one percent (1/8%) plus (c) the
Applicable Percentage. The Federal Funds Rate shall be determined by the Lender
on the basis of reports by Federal funds brokers to, and published daily by, the
Federal Reserve Bank of New York in the Composite Closing Quotations for U.S.
Government Securities. If such publication is unavailable or the Federal Funds
Rate is not set forth therein, the Federal Funds Rate shall be determined on the
basis of any other source reasonably selected by the Lender. The Federal Funds
Rate applicable each day shall be the Federal Funds Rate reported as applicable
to Federal Funds transactions on that date. In the case of Saturday, Sunday or
legal holiday, the Federal Funds Rate shall be the rate applicable to Federal
funds transactions on the immediately preceding day for which the Federal Funds
Rate is reported.
"Federal Funds Rate Loan" shall mean a portion of an Advance bearing
interest by reference to the Federal Funds Rate.
"Federal Reserve Board" shall have the meaning assigned to it in
Section 4.11.
"Fees" shall mean any and all fees payable to Lender pursuant to the
Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the financial statements referred to
in Section 4.4.
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"Fiscal Quarter" shall mean any of the quarterly accounting periods of
a Borrower of each Fiscal Year.
"Fiscal Year" shall mean any of the annual accounting periods of a
Borrower ending on December 31, of each year.
"Floating Rate Loans" shall mean Prime Rate Loans and Federal Funds
Rate Loans.
"Funded Debt" shall mean, with respect to Borrowers, all Indebtedness
for borrowed money evidenced by notes, bonds, debentures, or similar evidences
of Indebtedness, including, but not limited to, the Obligations (including, but
not limited to, Letter of Credit Obligations), and unsecured financing by a
seller of product lines to Borrowers which by its terms matures less than
eighteen months from the date of determination thereof, but excluding
Indebtedness of Borrowers secured by the real estates owned by Borrowers and
their Subsidiaries.
"Funding Arrangements" shall have the meaning assigned to it in
Section 2.10(b).
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the Closing Date, consistently applied.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner, including any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (y) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made or (z) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
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"Hazardous Material" shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by or
forms the basis of liability now or hereafter under, to any Government Authority
in any jurisdiction in which any Borrower or any Subsidiary thereof has owned,
leased, or operated real property or disposed of hazardous materials, or to any
Federal Government Authority, including, without limitation, any material or
substance which is (a) defined as a "solid waste," "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" or other similar term or phrase under any Environmental Laws,
(b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCBs), any radioactive substance, methane, volative hydrocarbons or
any industrial solvent, (c) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C.ss.ss.1251 et seq. (33 U.S.C.
Sections 1321) or listed pursuant to Section 307 of the Clean Water Act (33
U.S.C. Sections 1317), (d) defined as a "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq. (42 U.S.C. Section 6903), or (e) defined as a "hazardous substance"
pursuant to Section 1012 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C.
Section 9601).
"Indebtedness" of any Person shall mean (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property payment
for which is deferred six (6) months or more, but excluding obligations to trade
creditors incurred in the ordinary course of business that are not overdue by
more than six (6) months unless being contested in good faith, (b) reimbursement
and all other obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar Instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations, (f) all obligations of such Person under Interest
Rate Agreements, Currency Agreements, commodity purchase or option agreements or
other interest or exchange rate or commodity price hedging arrangements, (g) all
Indebtedness referred to in clause (a), (b), (c), (d), (e) or (f) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property or other
assets (including accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness, and (h) with respect to any Borrower or any Subsidiary thereto,
the Obligations.
"Indemnified Person" shall have the meaning assigned to it in Section
2.10(a).
"Interest Charges" shall mean, with respect to any Person for any
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" (or any like caption) on a consolidated income
statement of such Person and all other Persons with which such Person's
financial statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date.
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"Interest Payment Date" means (a) as to any Prime Rate Loan or any
Federal Funds Rate Loan, the last Business Day of each month to occur while such
Loan is outstanding, and (b) as to any LIBOR Loan, the last day of the LIBOR
Period applicable thereto; provided, however, that, in addition to the
foregoing, each of (x) the date upon which both the Commitment has been
terminated and the Loans have been paid in full and (y) the Termination Date
shall be deemed to be an "Interest Payment Date" with respect to any interest
which is then accrued hereunder.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which any Borrower or any Subsidiary thereof is a party, designed
to protect such Borrower or such Subsidiary against fluctuations in interest
rates.
"Investments" shall have the meaning assigned to it in Section 7.2.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Issuance Request" shall mean a request and certificate duly executed
by an authorized officer of any Borrower, in form and substance satisfactory to
the Lender, for the issuance by the Lender of a Letter of Credit.
"Leases" shall mean all leasehold estates in real property now owned
or hereafter acquired by any Borrower, or any of its Subsidiaries, as lessee.
"Letter of Credit Obligation" shall mean any outstanding obligation
incurred by Lender at the request of Akorn, for the account of any Borrower,
whether direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance by Lender of the Letter of Credit. The amount of
such Letter of Credit Obligation shall equal the maximum amount which may be
payable by Lender thereupon or pursuant thereto.
"Letter of Credit" shall mean a standby letter of credit issued from
time to time before, on or after the Closing Date at the request of Akorn and
for the account of any Borrower in the aggregate maximum face amount not
exceeding the Commitment for which Lender has incurred any Letter of Credit
Obligation pursuant thereto.
"Level" means any of the ranges applicable to the Funded Debt to
EBITDA ratio as set forth in the table contained in the definition of
"Applicable Percentage."
"LIBOR Loan" shall mean a portion of an Advance bearing interest by
reference to the LIBOR Rate.
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"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on the last day of the next preceding LIBOR Period applicable to such
LIBOR Loan and ending one (1), two (2) or three (3) months thereafter, as
selected by Akorn's irrevocable notice to Lender as set forth in Section 2.1(a)
hereof; provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period pertaining to a LIBOR Loan would otherwise end
on a day that is not a Eurodollar Business Day, such LIBOR Period shall be
extended to the next succeeding Eurodollar Business Day unless the result
of such extension would be to carry such LIBOR Period into another calendar
month in which event such LIBOR Period shall end on the immediately
preceding Eurodollar Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Termination Date shall end two (2) Eurodollar Business Days prior to the
Termination Date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the
last Eurodollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such LIBOR Period) shall end on the last Eurodollar Business Day of a
calendar month;
(d) Akorn shall select LIBOR Periods so as not to require a payment or
prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and
(e) Akorn shall select LIBOR Periods so that there shall be no more
than eight (8) separate LIBOR Loans which are Advances in existence at any
one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by the Lender equal to (a) that fixed rate of interest per year for
deposits with maturity periods of one (1), two (2) or three (3) months (which
-maturity period Akorn shall select subject to the terms stated herein), in
United States dollars offered to the Lender in or through the London interbank
market at or about 11:00 A.M., London time, two (2) Eurodollar Business Days
before the first (1st) day of each LIBOR Period and for the London deposit
maturity requested, divided by one minus any applicable reserve requirement
(expressed as a decimal) on Eurodollar deposits of the same amount and maturity
as determined by Lender, plus (b) the Applicable Percentage.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
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"Loan" shall mean, as the context may require, the aggregate amount of
Advances outstanding at any time to any Borrower or to all Borrowers.
"Loan Account" shall have the meaning assigned to it in Section 2.9.
"Loan Documents" shall mean the Agreement, the Note, the Security
Agreements, the Letters of Credit, and all other agreements, instruments,
documents and certificates identified in the Schedule of Documents in favor of
Lender and including (without limitation) all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Borrower or any of
its Affiliates, or any employee of any Borrower or any of its Affiliates, and
delivered to Lender in connection with the Agreement or the transactions
contemplated hereby.
"Margin Stock" shall have the meaning assigned to it in Section 4.11.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrowers and their Subsidiaries considered as a whole, (b) Borrowers' ability
to pay the Loans or any of the other Obligations in accordance with the terms
thereof, (c) the Collateral or Lender's Liens on the Collateral or the priority
of any such Lien, or (d) Lender's rights and remedies under the Agreement or any
of the other Loan Documents.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
2.5(e).
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Borrower or any of the
Subsidiaries thereof or ERISA Affiliate is making, is obligated to make, has
made or been obligated to make, contributions on behalf of participants who are
or were employed by any of them.
"Net Income" shall mean, with respect to any period, the aggregate of
the net income (loss) of the Person in question for such period, determined in
accordance with GAAP on a consolidated basis, provided that (a) the net income
(loss) of any Person which is not a Subsidiary shall be included only to the
extent of the amount of cash dividends or distributions paid to the Person in
question or to a consolidated Subsidiary of such Person and (b) the net income
(loss) of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded. There shall be
excluded in computing Net Income the excess (but not the deficit), if any, of
(x) any gain which must be treated as an extraordinary item under GAAP or any
gain realized upon the sale or other disposition of any real property or
equipment that is not sold in the ordinary course of business or of any capital
stock of the Person or a Subsidiary of the Person over (y) any loss which must
be treated as an extraordinary item under GAAP or any loss realized upon the
sale or other disposition of any real property or equipment that is not sold in
the ordinary course of business or of any capital stock of the Person or a
Subsidiary of the Person.
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"Net Worth" shall mean the book value of the assets of Borrowers on a
consolidated basis (inclusive of goodwill, patents, trademarks, tradenames,
copyrights, organization expenses, treasury stock, debt discount and expense,
deferred charges and other like intangibles), minus (a) reserves applicable
thereto, and (b) all of Borrowers' liabilities on a consolidated basis
(including accrued and deferred income taxes).
"Non-Use Fee" shall have the meaning assigned to it in Section 2.6.
"Note" shall have the meaning assigned to it in Section 2.1(b) and
shall be substantially in the form of Exhibit B.
"Notice of Advance" shall have the meaning assigned to it in Section
2.1.
"Notice of Conversion/Continuation" shall mean a notice in
substantially the form of Exhibit D.
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, including, without limitation, the Loans and Letter of Credit
Obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing by any Borrower or
any Subsidiary thereof to Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including,
without limitation, all interest which accrues after the commencement of any
case or proceedings in bankruptcy after the insolvency of, or for the
reorganization of, any Borrower or any Subsidiary thereof, whether or not
allowed in such proceeding), Fees, Charges, expenses, attorneys' fees and any
other sum chargeable to any Borrower or any Subsidiary thereof under the
Agreement or any of the other Loan Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan) , which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which any
Borrower or any Subsidiary thereof or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges or levies, not yet
due and payable; (b) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Borrower or any Subsidiary thereof is a party as lessee made in the ordinary
course of business; (d) deposits securing statutory obligations of any Borrower
or any Subsidiary thereof;
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(e) inchoate and unperfected workers', mechanics', suppliers' or similar liens
arising in the ordinary course of business; (f) carriers', warehousemen's or
other similar possessory liens arising in the ordinary course of business and
securing liabilities in an outstanding aggregate amount not in excess of
$100,000 at any time; (g) deposits securing, or in lieu of, surety, appeal or
customs bonds in proceedings to which any Borrower or any Subsidiary thereof is
a party; (h) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay; (i) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
property, lease or leasehold estate; (j) Liens existing on the Closing Date and
listed on Schedule 7.7 hereto; and (k) other Liens securing Indebtedness
permitted pursuant to the terms of this Agreement, including but not limited to,
under Section 7.3 hereof.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, with respect to any Borrower, any Subsidiary
thereof or any ERISA Affiliate, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Borrower or any Subsidiary thereof
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Prime Rate" shall mean a rate per year equal to that rate of interest
per year announced from time to time by Lender called its prime rate, which rate
at any time may not be the lowest rate charged by Lender. Changes in the Prime
Rate shall take effect on the date set forth in each announcement for a change
in the Prime Rate.
"Prime Rate Loan" shall mean a portion of an Advance bearing interest
by reference to the Prime Rate.
"Qualified Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which any Borrower, any Subsidiary thereof or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.
"Reimbursement Obligation" shall have the meaning assigned to it in
Section 2.2(e).
"Release" shall mean, as to any Person, any material release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or
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migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
"Reportable Event" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance or other
retirement of a Person's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly, or (c) any payment, loan,
contribution, or other transfer of funds or other property to any stockholder of
such Person, except salary and cash bonuses paid to such Person.
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with this Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Schedule B.
"Security Agreements" shall mean the Amended and Restated Security
Agreement dated as of December 29, 1997 entered into among Lender and Borrowers
substantially in the form of Exhibit C, and that certain Intellectual Property
Security Agreement dated even date herewith entered into between Lender and
Akorn, including all amendments, restatements, modifications and supplements
thereto, as the same may be in effect at the time such reference becomes
operative.
"Solvent" shall mean, with respect to any Person, that (a) the fair
salable value of its assets exceeds the fair present value of its liabilities
(including all liabilities whether reflected on a balance sheet prepared in
accordance with GAAP or otherwise and whether direct, indirect, fixed,
contingent, disputed or undisputed); (b) such Person is able to pay its debts
when due; and (c) such Person has capital sufficient to carry on its current
business and all businesses in which it is about to engage.
"Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.
"Stated Expiry Date" shall have the meaning assigned to it in Section
2.2.
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"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy agreement, operation of law or otherwise and (b) any
partnership in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or of which
any such Person is a general partner or may exercise the powers of a general
partner.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Lender by the jurisdictions under the laws
of which Lender is organized or any political subdivision thereof.
"Termination Date" shall mean the earliest of (a) December 29, 2000,
(b) the date of termination of Lender's obligations to advance funds or permit
existing Advances to remain outstanding pursuant to Section 8.2, and (c) the
date of indefeasible prepayment in full by Borrowers of the Loans, and the
permanent reduction of the Commitment to zero dollars ($0) in accordance with
the provisions of Section 2.3.
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions in effect under such Title IV
Plan, and (b) for a period of five (5) years following a transaction reasonably
likely to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by any Borrower, any Subsidiary thereof or any
ERISA Affiliate as a result of such transaction.
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"Welfare Plans" shall mean any welfare plan, as defined in Section
3(1) of ERISA, which is maintained or contributed to by any Borrower, any
Subsidiary thereof or any ERISA Affiliate.
"Withdrawal Liability" shall mean, at any time, the aggregate amount
of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase
in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
1.2. Other Definitional Provisions. Unless otherwise defined or the context
otherwise requires, all financial and accounting terms used herein or in any
certificate or other document made or delivered pursuant hereto shall be defined
in accordance with GAAP. Unless otherwise defined therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note or in any
certificate or other document made or delivered pursuant hereto. Terms used in
this Agreement which are defined in any Exhibit hereto shall, unless the context
otherwise indicates, have the meanings given them in such Exhibit. Other terms
used in this Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the UCC to the extent the same are used or defined
therein.
1.3. Interpretation of Agreement. A Section, an Exhibit or a Schedule is,
unless otherwise stated, a reference to a section hereof, an exhibit hereto or a
schedule hereto, as the case may be. Section captions used in this Agreement are
for convenience only, and shall not affect the construction of this Agreement.
The words "hereof," "herein," "hereto" and "hereunder" and words of similar
purport when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
2. AMOUNT AND TERMS OF CREDIT.
2.1. Advances. (a) Subject to the terms and conditions of this Agreement,
the Lender agrees to make advances (the "Advance(s)") to the Borrowers, from
time to time from the date of this Agreement until the Termination Date, at such
times and in such amounts as the Borrowers may request, not to exceed in the
aggregate at any one time outstanding the difference of (i) the Commitment,
minus (ii) the Letter of Credit Obligations. Until all amounts outstanding in
respect of the Loans shall become due and payable on the Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
2.1(a). Each Advance to a Borrower shall be made on notice by such Borrower to
the Lender at its principal banking office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, given no later than 11:00 a.m. (Chicago time) on (ix) the
Business Day of the proposed Advance, or (x) in the case of a request for an
Advance that is a LIBOR Loan, two (2) Business Days prior to the date of the
proposed Advance; provided, however, that any Advance requested as a LIBOR Loan
shall be in a minimum amount of $250,000 and integral multiples of $50,000 in
excess of such amount. Each such notice (a "Notice of Advance") shall be
substantially in the form of Exhibit A hereto, specifying therein the requested
date, the amount and type of such Advance, and such other information as may be
required by Lender and shall be given in writing (by telecopy or overnight
courier) or by telephone confirmed immediately in writing if requested by the
Lender. Lender
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shall be entitled to rely upon, and shall be fully protected under this
Agreement in relying upon, any Notice of Advance believed by Lender to be
genuine and to assume that each Person executing and delivering the same was
duly authorized unless the responsible individual acting thereon for Lender
shall have, at the time of reliance thereon, actual knowledge to the contrary.
(b) Prior Obligations Restructuring. On the date that all of the
conditions precedent to the effectiveness of this Agreement have been
satisfied (herein, the "Restructuring Date"), and at the time on such date
that the restructuring contemplated by this Agreement occurs (herein, the
"Restructuring Time"), (i) the outstanding principal balance of the Prior
Loans at the Restructuring Time shall be restated and continue as Loans
under this Agreement, (ii) the security interests and liens granted by, and
guaranties given by, the Borrowers to the Lender under the Original Loan
Agreement and the documents delivered in connection therewith shall
continue in full force and effect under this Agreement and the Loan
Documents, as applicable, and (iii) any Prior Reimbursement Obligations
outstanding at the Restructuring Time shall be restated and continue as
Letter of Credit Obligations under this Agreement. None of the Prior
Obligations shall be deemed to have been repaid as a result of the
restructuring described in this Section 2.1(b).
(c) Note. Borrowers shall execute and deliver to the Lender a note to
evidence the Loans, such note to be in the principal amount of the
Commitment, dated the date hereof and substantially in the form of Exhibit
B hereto (the "Note"). The Note shall represent the joint and several
obligation of each Borrower to pay the amount of the Commitment or, if
less, the aggregate unpaid principal amount of all Advances made by the
Lender to Borrowers and all other Obligations with interest thereon as
prescribed in Section 2.5. The date and amount of each Advance and each
payment of principal with respect thereto shall be recorded on the books
and records of the Lender, which books and records shall constitute prima
facie evidence of the accuracy of the information therein recorded. The
entire unpaid balance of the Loans shall be immediately due and payable on
the Termination Date.
(d) Akorn. Each Borrower hereby designates Akorn as its sole agent for
the purposes of issuing Notices of Advances, requesting an issuance of a
Letter of Credit, selecting interest rate options and receiving notices and
consents hereunder.
2.2. Letters of Credit.
(a) Requests. By delivering to Lender an Issuance Request
substantially in the form of Schedule A hereto, on or before 3:00 p.m.,
Chicago time, Borrowers may request, from time to time prior to the
Termination Date and on not less than two Business Days' notice, that the
Lender issue a standby letter of credit, and for such purposes described in
the Issuance Request (as used herein, the term "issue" when referring to
Letters of Credit shall include any increase in the amount of or extension
of the term of any Letter of Credit). The Stated Amount of any Letter of
Credit requested to
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be issued pursuant to such Issuance Request shall be denominated in U.S.
dollars. Each Letter of Credit shall by its terms:
(i) be issued in a Stated Amount which, together with all Letter of
Credit Obligations and the Loans, in the aggregate does not exceed (or
would not exceed) the Commitment;
(ii) be stated to expire on a date (its "Stated Expiry Date") no later
than the Termination Date; and
(iii) on or prior to its Stated Expiry Date:
(A) terminate immediately upon notice to the Lender from the
beneficiary thereunder that all obligations covered thereby have been
terminated, paid, or otherwise satisfied in full, or
(B) reduce in part immediately and to the extent the beneficiary
thereunder has notified the Lender thereof that the obligations
covered thereby have been paid or otherwise satisfied in part.
By delivery to the Lender of an Issuance Request at least two Business Days
prior to the Stated Expiry Date of any Letter of Credit, Borrowers may request
the Lender to extend the Stated Expiry Date of such Letter of Credit for an
additional period not to exceed the period ending on the Termination Date.
(b) Issuances and Extensions. Subject to the terms and conditions of
this Agreement, the Lender shall issue Letters of Credit, and extend the
Stated Expiry Dates of outstanding Letters of Credit, in accordance with
the Issuance Requests made therefor. If the Issuance Request consists of,
or is supplemented by, the Lender's standard letter of credit application
form, the terms of such application shall apply with respect to such Letter
of Credit, but only to the extent such terms are not inconsistent with the
provisions hereof.
(c) Fees and Expenses. Borrowers agree to pay to the Lender (i) in
respect of each standby Letter of Credit, a fee equal to 1.00% per annum
(calculated from and including the date of issuance (or date of renewal or
extension, if any) thereto to the Stated Expiry Date thereof) on the Stated
Amount of each such Letter of Credit, payable in advance on the last
Business Day of each Fiscal Quarter and on the Termination Date, and (ii)
upon demand from time to time, Lender's standard issuance, administrative,
operating and other fees and charges in effect from time to time in
connection with the fronting, issuance, maintenance, modification (if any)
and administration of each Letter of Credit.
(d) Disbursements. The Lender will notify Akorn promptly of the
presentment for payment of any Letter of Credit, together with notice of
the date (the
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"Disbursement Date") such payment shall be made. Subject to the terms and
provisions of such Letter of Credit, the Lender shall make such payment to
the beneficiary (or its designee) of such Letter of Credit. Prior to 12:00
noon, Chicago time, on the Disbursement Date, Borrower will reimburse the
Lender for all amounts which it has disbursed under such Letter of Credit.
To the extent the Lender is not reimbursed in full in accordance with this
subsection, Borrower's Reimbursement Obligation shall accrue interest at a
fluctuating rate determined by reference to the Prime Rate, plus a margin
of two percent (2%) per annum, payable on demand. In the event the Lender
is not reimbursed by Borrower on the Disbursement Date, or if the Lender
must for any reason return or disgorge such reimbursement, the Lender shall
fund the Reimbursement Obligation therefor by making Loans as provided in
Section 2.1 (Borrowers being deemed to have given a timely request therefor
for such amount); provided, however, for the purpose of determining the
availability of the Advances immediately prior to giving effect to the
application of the proceeds of such Loans, such Reimbursement Obligations
shall be deemed not to be outstanding at such time.
(e) Reimbursement. Borrowers' obligation (a "Reimbursement
Obligation") under subsection (d) of this Section 2.2 to reimburse the
Lender with respect to each Disbursement (as defined below) (including
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim, or defense to
payment which Borrowers may have or have had against the Lender or any
beneficiary of a Letter of Credit, including any defense based upon the
occurrence of any Event of Default or Default, any draft, demand, or
certificate, or other document presented under a Letter of Credit proving
to be forged, fraudulent, invalid, or insufficient, the failure of any
Disbursement to conform to the terms of the applicable Letter of Credit
(if, in the Lender's good faith opinion, such Disbursement is determined to
be appropriate) or any non-application or misapplication by the beneficiary
of the proceeds of such Disbursement, or the legality, validity, form,
regularity, or enforceability of such Letter of Credit. "Disbursement"
means any payment made under a Letter of Credit by the Lender to the
beneficiary thereunder.
(f) Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default, an amount equal to that portion of
Letter of Credit Obligations attributable to outstanding and undrawn
Letters of Credit shall, at the option of the Lender, and without demand
upon or notice to Akorn, be deemed to have been paid or disbursed by the
Lender under such Letters of Credit (notwithstanding that such amount may
not in fact have been so paid or disbursed), and, upon notification by the
Lender to Akorn of its obligations under this subsection, Borrowers shall
be immediately obligated to reimburse the Lender the amount deemed to have
been so paid or disbursed by the Lender. Any amounts so received by the
Lender from Borrowers pursuant to this subsection shall be held as
collateral security for the repayment of Borrowers' Obligations in
connection with the Letters of Credit. At any time when such Letters of
Credit shall terminate and all Reimbursement Obligations to the Lender are
either terminated or paid or reimbursed to the Lender in full, the
obligations of Borrowers under
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this subsection shall be reduced accordingly (subject, however, to
reinstatement in the event any payment in respect of such Letters of Credit
is recovered in any manner from any Lender), and if no Event of Default
shall be continuing, the Lender will return to Borrowers the excess, if
any, of
(i) the aggregate amount deposited by Borrowers with the Lender and
not theretofore applied by the Lender to any Reimbursement Obligation; over
(ii) the aggregate amount of all Reimbursement Obligations to the
Lender pursuant to this subsection, as so adjusted.
At such time when all Events of Default shall have been cured or waived, the
Lender shall return to Borrower all amounts then on deposit with the Lender
pursuant to this subsection. All amounts on deposit pursuant to this subsection
shall, until their application to any Reimbursement Obligation or their return
to Borrowers, as the case may be, bear interest at the daily average Federal
Funds Rate (without taking into account the Applicable Percentage) from time to
time in effect (net of the costs of any reserve requirements, in respect of
amounts on deposit pursuant to this Section, pursuant to Federal Reserve Board
Regulation D), which interest shall be held by the Lender as additional
collateral security for the repayment of the Letter of Credit Obligations in
connection with the Letters of Credit issued by the Lender.
(g) Nature of Reimbursement Obligations. Borrowers shall assume all
risks of the acts, omissions, or misuse of any Letter of Credit by the
beneficiary thereof. The Lender (except to the extent of its own gross
negligence or willful misconduct) shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for an issuance of a Letter of Credit, even
if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged;
(ii) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason;
(iii) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(iv) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; or
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(v) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit
or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted the Lender hereunder.
2.3. Prepayment, Commitment Reduction. Borrowers shall have the right at
any time on three (3) days' prior written notice to the Lender to voluntarily
prepay all or part of the Loans and permanently reduce or terminate the
Commitment, and no prepayment fee, premium or penalty shall be payable in
connection with any such voluntary prepayment, except LIBOR funding breakage
costs in accordance with Section 2.10(b). Upon any such prepayment and permanent
reduction or termination of the Commitment, Borrowers' right to receive Advances
shall simultaneously terminate or be permanently reduced, as the case may be.
2.4. Use of Proceeds. Borrowers shall utilize the proceeds of Advances for
working capital financing for the Borrowers and funding for acquisitions and
other general corporate purposes of the Borrowers.
2.5. Interest on Loans.
(a) Borrowers shall pay interest to Lender, in arrears on each
applicable Interest Payment Date, based on the amounts outstanding from
time to time under the Loan, at a rate equal to (i) the Prime Rate, (ii)
the applicable LIBOR Rate or (iii) the Federal Funds Rate.
(b) If any payment on the Loans becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
(c) All computations of interest shall be made by the Lender on the
basis of a three hundred sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest is payable.
The Prime Rate and the Federal Funds Rate shall be determined each day
based upon the Prime Rate and the Federal Funds Rate, respectively, as in
effect each day. Each determination by the Lender of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error or bad faith.
(d) So long as any Event of Default shall have occurred and be
continuing, and after written notice from the Lender to Akorn, the interest
rates applicable to the Loans and any other Obligations shall be increased
by two percent (2%) per annum above the rate of interest otherwise
applicable hereunder ("Default Rate").
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(e) Notwithstanding anything to the contrary set forth in this Section
2.5, if, at any time until payment in full of all of the Obligations, the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto (the "Maximum Lawful Rate"),
then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time thereafter the
rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrowers shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Lender from the
making of such Advances hereunder is equal to the total interest which
would have been received had the interest rate payable hereunder been (but
for the operation of this paragraph) the interest rate payable since the
Closing Date as otherwise provided in this Agreement. Thereafter, the
interest rate payable hereunder shall be the rate of interest provided in
Sections 2.5(a) through (d) of this Agreement, unless and until the rate of
interest again exceeds the Maximum Lawful Rate, in which event this
paragraph shall again apply. In no event shall the total interest received
by Lender pursuant to the terms hereof exceed the amount which Lender could
lawfully have received had the interest due hereunder been calculated for
the full term hereof at the Maximum Lawful Rate. In the event the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall
be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. In the
event that a court of competent jurisdiction, notwithstanding the
provisions of this Section 2.5(e), shall make a final determination that
Lender has received interest hereunder or under any of the other Loan
Documents in excess of the Maximum Lawful Rate, Lender shall, to the extent
permitted by applicable law, promptly apply such excess first to any
interest due and not yet paid hereunder in respect of the Loans, then to
the outstanding principal of the Loans, then to Fees and any other unpaid
Obligations and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
2.6. Fees. As compensation for Lender's costs and risks in making the Loan
available to Borrowers, Borrowers agree to pay to Lender, in arrears, on the
last Business Day of each month prior to the Termination Date and on the
Termination Date, a fee for Borrowers' non-use of available funds (the "Non-Use
Fee") in an amount equal to one quarter of one percent (0.25%) per annum
(calculated on the basis of a 360 day year for actual days elapsed) of the
difference between the respective daily averages of (a) the Commitment (as it
may be adjusted from time to time hereunder) and (b) the sum of (i) the amount
of the Loan outstanding, plus (ii) the Letter of Credit Obligations during the
period for which the Non-Use Fee is due.
2.7. Charging of Accounts. The Borrowers hereby authorize the Lender, and
the Lender may, in its sole and absolute discretion charge to the Borrowers at
any time all or any portion of any of the Obligations then due and owing (and
interest, if any, thereon) including but not limited to any Fees and other costs
and expenses of the Lender for which the Borrowers are liable pursuant to the
terms of this Agreement or any other Loan Document, by charging Akorn's
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demand deposit account or any other bank account with the Lender; provided,
however that the provisions of this Section 2.7 shall not affect the Borrowers'
obligation to pay when due all amounts payable by the Borrowers under this
Agreement, the Note or any other Loan Document, whether or not there are
sufficient funds therefor in the demand deposit account or any other bank
account of Akorn with the Lender.
2.8. Application and Allocation of Payments. Lender is authorized to, and
at its option may, make or cause to be made Advances on behalf of Borrowers for
payment of all Fees, expenses, Charges, costs, principal, interest, or other
Obligations owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent any such Borrower fails to promptly pay any such
amounts as and when due, even if such Advance would cause total Advances to
exceed the Commitment. At Lender's option and to the extent permitted by law,
any advances so made shall be deemed Advances constituting part of the Loans
hereunder. Following the occurrence and during the continuance of an Event of
Default, Borrowers hereby irrevocably waive the right to direct the application
of any and all payments at any time or times hereafter received from or on
behalf of any such Borrower, and each Borrower hereby irrevocably agrees that
Lender shall have the continuing exclusive right to apply any and all such
payments against the then due and payable Obligations of Borrowers and in
repayment of the Loan as Lender may deem advisable notwithstanding any previous
entry by Lender upon the Loan Account or any other books and records. In the
absence of a specific determination by Lender with respect thereto, the same
shall be applied in the following order: (a) to then due and payable interest
payments on the Loans; (b) to principal payments on the Loans; (c) to then due
and payable Fees and expenses; (d) to then due and payable Obligations other
than Fees, expenses and interest and principal payments; and (e) to all other
then due and payable Obligations.
2.9. Loan Account and Accounting. Lender shall maintain a loan account (the
"Loan Account") on its books to record: (a) all Advances, (b) all payments made
by Borrowers and (c) all other appropriate debits and credits as provided in
this Agreement with respect to the Loans or any other Obligations. All entries
in the Loan Account shall be made in accordance with Lender's customary
accounting practices as in effect from time to time. Borrowers shall pay all
Obligations as such amounts become due or are declared due pursuant to the terms
of this Agreement.
The balance in the Loan Account shall be presumptive evidence of the
amounts due and owing to Lender by Borrower; provided, that any failure to so
record or any error in so recording shall not limit or otherwise affect
Borrowers' obligations to pay the Obligations. Any accounting provided by Lender
to Akorn regarding the Loan Account shall (absent manifest error) be deemed
final, binding and conclusive upon Borrowers in all respects as to all matters
reflected therein, unless Akorn, within thirty (30) days after the date any such
accounting is rendered, shall notify Lender in writing of any objection which
Borrowers may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by Borrowers.
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Lender's determination, based upon the facts available, of any item objected to
by Akorn in such notice shall (absent manifest error) be final, binding and
conclusive on Borrowers.
2.10. Indemnity. (a) Each Borrower shall indemnify and hold each of Lender
and its Affiliates, and each of Lender's and its Affiliates' respective
officers, directors, employees, attorneys, agents and representatives (each an
"Indemnified Person") harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended under this Agreement and the other Loan Documents or in
connection with or arising out of the transactions contemplated hereunder and
thereunder or any actions or failures to act in connection therewith, including
any and all Environmental Liabilities and Costs; provided, that no Borrower
shall be liable for any indemnification to such Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results solely from such Indemnified Person's gross negligence or
willful misconduct, as finally determined by a court of competent jurisdiction
after exhaustion of all available appeals. NEITHER LENDER NOR ANY OTHER
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED OR TERMINATED UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(b) Borrowers understand that in connection with Lender's arranging to
provide the LIBOR Rate interest option, Lender may enter into funding
arrangements with third parties ("Funding Arrangements") on terms and
conditions which could result in losses to Lender if such LIBOR Rate funds
do not remain outstanding at the interest rates provided herein for the
entire LIBOR Period with respect to which the LIBOR Rate has been fixed.
Consequently, in order to induce Lender to provide such options on the
terms provided herein and in consideration of Lender entering into such
Funding Arrangements from time to time, if any LIBOR Loans are repaid in
whole or in part prior to the last day of any such LIBOR Period therefor,
whether such repayment is made pursuant to any provision of this Agreement
or any other Loan Document or is the result of acceleration, by operation
of law or otherwise, Borrowers shall indemnify and hold harmless Lender
from and against and in respect of any and all losses, costs and expenses
resulting from, or arising out of or imposed upon or incurred by Lender by
reason of the liquidation or reemployment of funds acquired or committed to
be acquired by Lender to fund such LIBOR Loans, pursuant to the Funding
Arrangements. The amount of any losses, costs or expenses resulting in an
obligation of Borrowers to make a payment pursuant to the foregoing
sentence shall not include any losses attributable to lost profit to Lender
but shall represent the excess, if any, of (A) Lender's cost of borrowing
the LIBOR Rate funds, pursuant to the Funding Arrangements over (B) the
return to Lender
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on its reinvestment of such funds; provided, however, that if Lender
terminates any Funding Arrangements in respect of the LIBOR Loans, the
amount of such losses, costs and expenses shall include the cost to Lender
of such termination. In reinvesting any funds borrowed by Lender pursuant
to the Funding Arrangements, Lender shall take into consideration the
remaining maturity of such borrowings. As promptly as practicable under the
circumstances, Lender shall provide Akorn with its written calculation of
all amounts payable pursuant to the next preceding sentence, and such
calculation shall be binding on the parties hereto unless Akorn shall
object thereto in writing within ten (10) Business Days of receipt thereof.
2.11. Access. (a) Each Borrower shall provide full access during normal
business hours, from time to time upon one (1) Business Day's prior notice, to
Lender and any of its officers, employees and agents, as frequently as Lender
determines, in its reasonable discretion, to be appropriate (unless a Default or
Event of Default shall have occurred and be continuing, in which event Lender
and its officers, employees, designees, agents and representatives shall have
access at any and all times and without any advance notice), to the properties,
facilities, books, and records of Borrowers and their Subsidiaries, to the
Collateral, to the accountants of Borrowers and the Subsidiaries thereof and to
the work papers of such accountants, and in addition, (b) while any Default or
Event of Default shall have occurred and be continuing, (i) at any time for
purposes of inspection, audit or verification of accounts, or (ii) upon the
consent of Akorn, to such Borrower's suppliers, customers, advisors and
employees (including officers). Without limiting the generality of the
foregoing, each Borrower shall (x) permit Lender, and any of its officers,
employees, agents and representatives, to inspect, audit and make extracts from
all of such Borrower's and its Subsidiaries' records, files and books of account
and (y) permit Lender, and any of its officers, employees, agents and
representatives, to inspect, review and evaluate the accounts at such Borrower's
and its Subsidiaries, locations and at premises not owned by or leased to such
Borrower or any Subsidiary of such Borrower. Each Borrower shall make available
to Lender and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books, records, board minutes, contracts, insurance
policies, environmental audits, business plans, files, financial statements
(actual and pro forma), filings with federal, state and local regulatory
agencies, and other instruments and documents which Lender may request. Each
Borrower shall deliver any document or instrument necessary for Lender, as it
may from time to time request, to obtain records from any service bureau or
other Person which maintains records for such Borrower, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Borrower. Borrowers shall instruct their certified
public accountants to make available to Lender such information and records as
Lender may request.
(b) A fee of $500 per day per individual or Lender's then standard
rate, whichever is greater, (plus all reasonable out-of-pocket costs and
expenses) in connection with Lender's field examinations permitted under
Section 2.11(a) above and Section 5(g) of the Amended and Restated Security
Agreement referred to in the definition of
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"Security Agreements" shall be paid promptly by Borrowers in connection
with each field audit conducted after the Closing Date.
2.12. Taxes. (a) Any and all payments by any Borrower hereunder or under
the Note shall be made, in accordance with this Section 2.12, free and clear of
and without deduction for any and all present or future Taxes. If any Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Note, (a) the sum payable shall be increased as
much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) Lender shall receive an amount equal to the sum Lender would have received
had no such deductions been made, (b) such Borrower shall make such deductions,
and (c) such Borrower shall pay the full amount deducted to the relevant taxing
or other authority in accordance with applicable law.
(b) Borrowers shall indemnify and pay, within ten (10) days of demand
therefor, Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 2.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
2.13. Capital Adequacy; Increased Costs; Illegality. (a) In the event that
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by Lender and thereby reducing
the rate of return on Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time within fifteen (15) days after
notice and demand on Akorn by Lender (together with the certificate referred to
in the next sentence) pay to Lender additional amounts sufficient to compensate
Lender for such reduction. A certificate as to the amount of such cost and
showing the basis of the computation of such cost submitted by Lender to
Borrowers shall, absent manifest error, be final, conclusive and binding for all
purposes.
(b) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), including, without limitation,
any requirement that Lender hold reserves with respect to the Loan or the
Commitment, there shall be any increase in the cost to Lender of agreeing
to make or making, funding or maintaining of any Loan, then Borrowers shall
from time to time, upon demand by Lender, pay to Lender for the account of
Lender additional amounts sufficient to compensate Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to Akorn by Lender, shall be
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conclusive and binding on Borrowers for all purposes, absent manifest
error. Lender agrees that, as promptly as practicable after it becomes
aware of any circumstances referred to in clause (i) or (ii) above which
would result in any such increased cost to Lender, it shall, to the extent
not inconsistent with Lender's internal policies of general application,
use reasonable commercial efforts to minimize costs and expenses incurred
by it and payable to it by Borrowers pursuant to this Section 2.13(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for Lender to
agree to make or to make or to continue to fund or maintain any LIBOR Loan,
then, unless Lender is able to agree to make or to make or to continue to
fund or to maintain such LIBOR Loan at another branch or office of Lender
without, in Lender's opinion, adversely affecting it or its Loans or the
income obtained therefrom, on notice thereof and demand therefor by Lender
to Borrowers, (i) the obligation of Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii)
Borrowers shall forthwith prepay in full all outstanding LIBOR Loans,
together with interest accrued thereon, unless Borrowers, within five (5)
Business Days after the delivery of such notice and demand, convert all
such Loans into a Loan bearing interest based on the Prime Rate.
(d) Upon Lender obtaining actual knowledge of the occurrence of any of
the events set forth in this Section 2.13, Lender shall promptly notify
Akorn of the occurrence of such event. Borrowers shall have the right
within five (5) days of receipt of such notice to convert any outstanding
LIBOR Loans to Prime Rate Loans.
2.14. Conversion and Continuation Elections.
(a) Borrowers may, upon irrevocable written notice (or telephonic
notice promptly confirmed in writing) to Lender in accordance with Section
2.14(b):
(i) elect, as of any Business Day, in the case of Floating Rate Loans,
or as of the last day of the applicable LIBOR Period, in the case of LIBOR
Loans, to convert any such Loans (or any part thereof in an aggregate
minimum amount of $50,000, or integral multiples of $10,000 in excess
thereof, in the case of Floating Rate Loans, and $250,000, or integral
multiples of $50,000 in excess thereof, in the case of LIBOR Loans) into
Loans of any other type; or
(ii) elect as of the last day of the applicable LIBOR Period, to
continue any LIBOR Loans having LIBOR Periods expiring on such day (or any
part thereof in an amount not less than $250,000, or that is in an integral
multiple of $50,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Loans in
respect of any borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less
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than $250,000, such LIBOR Loans shall automatically convert into
Floating Rate Loans, and on and after such date the right of Borrower
to continue such LIBOR Loans as, and convert such LIBOR Loans into,
LIBOR Loans shall terminate.
(b) Borrower shall deliver a Notice of Conversion/Continuation to be
received by Lender not later than 10:00 a.m. (Chicago time) at least (i)
two Business Days in advance of the Conversion/ Continuation Date, if the
Loans are to be converted into or continued as LIBOR Loans and (ii) on the
date of the Conversion/Continuation Date, if the Loans are to be converted
into Floating Rate Loans, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) other than in the case of conversions into Floating Rate Loans,
the duration of the requested LIBOR Period.
(c) If upon the expiration of any LIBOR Period applicable to LIBOR
Loans, Borrowers have failed to select a new LIBOR Period to be applicable
to such LIBOR Loans by the time specified in Section 2.14(b), or if any
Event of Default then exists, Borrowers shall be deemed to have elected to
convert such LIBOR Loans into Federal Funds Rate Loans effective as of the
expiration date of such LIBOR Period.
3. CONDITIONS PRECEDENT.
3.1. Conditions to the Initial Advance. Notwithstanding any other provision
of this Agreement and without affecting in any manner the rights of Lender
hereunder, Borrowers shall have no rights under this Agreement (but shall have
all applicable obligations hereunder), and Lender shall not be obligated to make
any Advance or to incur any Letter of Credit Obligation, or to take, fulfill, or
perform any other action hereunder, until the following conditions have been
satisfied, in Lender's sole discretion, or waived in writing by Lender:
(a) Credit Agreement. This Agreement or counterparts hereof shall have
been duly executed by, and delivered to, Borrowers and Lender.
(b) Loan Documents. Lender shall have received such guaranties,
documents, instruments, agreements and legal opinions as Lender shall
request in connection with the transactions contemplated by this Agreement
and the other Loan Documents, including all guaranties, documents,
instruments, agreements and legal opinions listed in the Schedule of
Documents attached hereto as Schedule B, each in form and substance
satisfactory to Lender.
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(c) Governmental Approvals. Evidence satisfactory to Lender that
Borrowers have obtained consents and acknowledgments of all Persons whose
consents and acknowledgments may be required, including, but not limited
to, all requisite Governmental Authorities, to the terms, and to the
execution and delivery, of this Agreement, the other Loan Documents, and
the consummation of the transactions contemplated hereby and thereby.
(d) Insurance. Evidence satisfactory to Lender that the insurance
policies provided for in Section 6.6 are in full force and effect, together
with appropriate evidence showing loss payable and/or additional insured
clauses or endorsements, as requested by Lender, in favor of Lender, and in
form and substance satisfactory to Lender.
(e) Officer's Certificate. Lender shall have received duly executed
originals of a certificate of the chief executive officer or chief
financial officer of Akorn, dated the date hereof, certifying, to the best
of his knowledge after diligent inquiry, to the fulfillment of all
conditions precedent to closing of this Agreement and to the truth and
accuracy, as of such date, of the representations and warranties of
Borrowers contained in this Agreement and each other Loan Document.
(f) Compliance with Laws. Lender shall have received evidence
satisfactory to Lender and its counsel that each Borrower and each of its
Subsidiaries are in compliance in all material respects, with all
applicable foreign, federal, state and local laws and regulations,
including those relating to labor and environmental matters and ERISA.
(g) Participant Consent. The Lender shall have received the written
consent of its participant to this Agreement.
3.2. Further Conditions. It shall be a further condition to the initial and
each subsequent Advance and to the incurrence of any Letter of Credit Obligation
that the following statements shall be true on the date of each such Advance or
funding, as the case may be:
(i) All of each Borrower's representations and warranties contained
herein or in any of the other Loan Documents shall be true and correct on
and as of the Closing Date and the date on which each such Advance is made
(or such Letter of Credit Obligation is incurred) as though made on and as
of such date, except, to the extent that any such representation or
warranty expressly relates to an earlier date and except for changes
therein expressly permitted or expressly contemplated by this Agreement.
(ii) No Material Adverse Effect shall have occurred since the date
hereof.
(iii) No event shall have occurred and be continuing, or would result
from the making of any Advance (or the incurrence of any Letter of Credit
Obligation), which constitutes or would constitute a Default or an Event of
Default.
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The request and acceptance by any Borrower of the proceeds of any Advance
or the incurrence of any Letter of Credit Obligation shall be deemed to
constitute, as of the date of such request or acceptance, a representation and
warranty by Borrowers that the conditions in this Section 3.2 have been
satisfied.
4. REPRESENTATIONS AND WARRANTIES.
To induce Lender to make the Loans and to incur any Letter of Credit
Obligation, Borrowers make the following representations and warranties to
Lender, each and all of which shall survive the execution and delivery of this
Agreement:
4.1. Corporate Existence; Compliance with Law. Each Borrower and each
Subsidiary thereof (a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has been
duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualifications; (b) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease and to
conduct its business as now, heretofore and proposed to be conducted; (c) has
all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities,
including but not limited to, FDA and DEA, having jurisdiction, to the extent
required for such ownership, operation and conduct; (d) is in compliance with
its certificate or articles of incorporation and by-laws; and (e) is in
compliance with all applicable provisions of law, including but not limited to,
the Federal Food, Drug and Cosmetic Act, the Controlled Substances Act and other
United States federal statutes and regulations, issued by the FDA and DEA. On or
prior to the Closing Date, ▇▇▇▇▇▇ has merged into Akorn; Akorn is the surviving
corporation and has assumed all the rights and obligations of ▇▇▇▇▇▇, including
any Prior Obligations. Akorn NJ is a wholly-owned Subsidiary of Akorn.
4.2. Executive Offices. The current location of each Borrower's chief
executive office and principal place of business is set forth in Schedule 4.2
and, as of the Closing Date, none of such locations have changed within the past
three (3) months.
4.3. Corporate Power Authorization, Enforceable Obligations. The execution,
delivery and performance by each Borrower of` the Loan Documents and all
instruments and documents to be delivered by such Person and the creation of all
Liens provided for therein: (a) are within such Person's corporate power; (b)
have been duly authorized by all necessary or proper corporate and shareholder
action; (c) are not in contravention of any provision of such Person's
certificate or articles or incorporation or bylaws; (d) will not violate any law
or regulation, or any order or decree of any court or governmental
instrumentality; (e) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (f) will not result in the creation or imposition of any Lien
upon any of the property of such Person other than those in favor of Lender
pursuant to the Loan Documents; and (g) do not
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require the consent or approval of any Governmental Authority or any other
Person. On or prior to the Closing Date, each of the Loan Documents shall have
been duly executed and delivered for the benefit of or on behalf of each
Borrower and each Loan Document shall then constitute a legal, valid and binding
obligation of such Borrower, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting the rights of creditors generally or by application
of general principles of equity.
4.4. Financial Statements. All financial statements (the "Financial
Statements"), of the Borrowers and their respective Subsidiaries which have been
delivered to the Lender, have been prepared in accordance with GAAP consistently
applied throughout the periods involved (except as disclosed therein and except,
with respect to unaudited financial statements, for the absence of footnotes and
normal year-end audit adjustments) and do present fairly in all material
respects the financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
4.5. Material Adverse Effect. Since September 30, 1998, none of the
Borrowers and no Subsidiary thereof has incurred any obligations, contingent
liabilities, or liabilities for Charges, long-term leases or unusual forward or
long-term commitments which are not reflected in the Financial Statements of
Borrowers and their Subsidiaries and which could, alone or in the aggregate,
have or result in a Material Adverse Effect. No Material Adverse Effect has
occurred between September 30, 1998 and the Closing Date.
4.6. Title and Liens. All Collateral is and will continue to be owned by
the Borrowers. None of the Collateral or other property or assets of the
Borrowers or any Subsidiary is subject to any Lien (including but not limited to
Liens pursuant to Capitalized Leases under which any Borrower or any Subsidiary
is a lessee) except: (a) Liens in favor of the Lender and (b) Permitted
Encumbrances.
4.7. Restrictions; No Default. No contract, lease, agreement or other
instrument to which any Borrower is a party or by which it or any of its
properties or assets is bound or affected, and no provision of applicable law or
governmental regulation, has or results in a Material Adverse Effect, or could
have or result in a Material Adverse Effect. None of the Borrowers and no
Subsidiary thereof is in default, and to such Borrower's or such Subsidiary's
knowledge no third party is in default, under or with respect to any material
contract, agreement, lease or other instrument to which it is a party.
4.8. Labor Matters. No strikes or other labor disputes against any
Borrower or any Subsidiary thereof are pending or, to any Borrower's knowledge,
threatened. Hours worked by and payment made to employees of each Borrower and
the Subsidiaries thereof have not been, to any Borrower's knowledge, in
violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters. All payments due from
such Borrower or any Subsidiary thereof on account of employee health and
welfare insurance have been paid or accrued as a liability on the books of
Borrowers. Except as set forth in Schedule 4.8, there are no material
employment, consulting or management agreements covering any management employee
or Affiliate of any Borrower or any Subsidiary thereof. A true and
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complete copy of each such material agreement has been furnished to Lender.
Except as set forth in Schedule 4.8, none of the Borrowers and none of the
Subsidiaries thereof have any obligation under any collective bargaining
agreement, management agreement, consulting agreement or any employment
agreement. There is no organizing activity involving any Borrower or any
Subsidiary thereof pending or, to any Borrower's knowledge, threatened by any
labor union or group of employees. Except as set forth in Schedule 4.8, there
are no representation proceedings pending or, to any Borrower's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Borrower or any Subsidiary thereof has made a pending
demand for recognition. Except as set forth in Schedule 4.8, there are no
complaints or charges against any Borrower or any Subsidiary thereof pending or
threatened to be filed with any federal, state, local or foreign court,
governmental agency or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment by any
Borrower or any Subsidiary thereof of any individual.
4.9. Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except as
set forth in Schedule 4.9, none of the Borrowers (a) has any Subsidiaries, (b)
is engaged in any joint venture or partnership with any other Person and (c) is
an Affiliate of any other Person. Except as set forth in Schedule 4.9, there are
no outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Borrower may be required to issue or sell any
Stock or other equity security of any Subsidiary.
4.10. Government Regulation. None of the Borrowers and no Subsidiary
thereof is an "investment company" or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. None of the Borrowers
and no Subsidiary thereof is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder, and the making of the Advances by Lender, the
incurrence of any Letter of Credit Obligation, the application of the proceeds
and repayment thereof by such Borrower or such Subsidiary and the consummation
of the transactions contemplated by this Agreement and the other Loan Documents
will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.
4.11. Margin Regulations. None of the Borrowers and no Subsidiary thereof
is engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "Margin security" as such terms are defined in Regulation U of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") as now and from time to time hereafter in effect (such securities being
referred to herein as "Margin Stock"). None of the Borrowers and no Subsidiary
thereof owns any Margin Stock, and the proceeds of the Advances will not be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this
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Agreement to be considered a "purpose credit" within the meaning of Regulation
T, U or X of the Federal Reserve Board.
4.12. Taxes. All federal, state, local and foreign tax returns, reports and
statements, including, but not limited to, information returns required to be
filed by each Borrower or any Subsidiary thereof, have been filed with the
appropriate Governmental Authority and all Charges and other impositions shown
thereon to be due and payable have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), and each Borrower and each Subsidiary thereof has paid when due and
payable all Charges required to be paid by it, except such Taxes, if any, as are
being contested in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be required by GAAP have
been maintained. Proper and accurate amounts have been withheld by each Borrower
or each Subsidiary thereof from its respective employees for all periods in full
and complete compliance with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective Governmental
Authorities.
4.13. ERISA. (a) Schedule 4.13 lists all Plans maintained or contributed to
by any Borrower or any Subsidiary thereof and all Qualified Plans maintained or
contributed to by any ERISA Affiliate, and separately identifies the Title IV
Plans, Multiemployer Plans, any multiple employer plans subject to Section 4064
of ERISA, unfunded Pension Plans, Welfare Plans and Retiree Welfare Plans. Each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and to the best
knowledge of each Borrower nothing has occurred which would cause the loss of
such qualification or tax-exempt status. To any Borrower's knowledge, each Plan
is in compliance with the applicable provisions of ERISA and the IRC, including
the filing of reports required under the IRC or ERISA, and with respect to each
Plan, other than a Qualified Plan, all required contributions and benefits have
been paid in accordance with the provisions of each such Plan. None of the
Borrowers and no Subsidiary or ERISA Affiliate thereof, with respect to any
Qualified Plan, has failed to make any contribution or pay any amount due as
required by Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan. With respect to all Retiree Welfare Plans, the present value of
future anticipated expenses pursuant to the latest actuarial projections of
liabilities does not exceed $0; with respect to Pension Plans, other than
Qualified Plans, the present value of the liabilities for current participants
thereunder using PBGC interest assumptions does not exceed $0. None of the
Borrowers and no Subsidiary or ERISA Affiliate thereof has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406 of
ERISA, in connection with any Plan, which would subject any Borrower or any
Subsidiary thereof (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the IRC or any other material
liability.
(b) Except as set forth in Schedule 4.13: (i) no Title IV Plan has any
Unfunded Pension Liability; (ii) no ERISA Event or event described in Section
4062(e) of ERISA with
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respect to any Title IV Plan has occurred or is reasonably expected to occur;
(iii) there are no pending, or to the knowledge of any Borrower, threatened
claims, actions or lawsuits (other than claims for benefits in the normal
course) , asserted or instituted against (x) any Plan or its assets, (y) any
fiduciary with respect to any Plan or (z) any Borrower or any Subsidiary or
ERISA Affiliate thereof with respect to any Plan; (iv) none of the Borrowers and
no Subsidiary or ERISA Affiliate thereof has incurred or reasonably expects to
incur any withdrawal liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years neither any Borrower nor any
Subsidiary or ERISA Affiliate thereof has engaged in a transaction which
resulted in a Title IV Plan with Unfunded Liabilities being transferred outside
of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of any such entity; (vi) no Plan which is a Retiree Welfare Plan provides for
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment (except as may be
required by Section 4980B of the IRC and at the sole expense of the participant
or the beneficiary of the participant); (vii) each Borrower and each Subsidiary
and ERISA Affiliate thereof have complied with the notice and continuation
coverage requirements of Section 4980B of the IRC and the regulations thereunder
except where the failure to comply could not have or result in any Material
Adverse Effect; and (viii) no liability under any Plan has been funded, nor has
such obligation been satisfied, with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
the equivalent by another nationally recognized rating agency.
4.14. No Litigation. No action, claim or proceeding is now pending or, to
the knowledge of any Borrower, threatened against such Borrower or any
Subsidiary thereof, before any court, board, commission, agency or
instrumentality of any federal, state, local or foreign government or of any
agency or subdivision thereof, or before any arbitrator or panel of arbitrators,
(a) which challenges such Borrower's or such Subsidiary's right or power to
enter into or perform any of its Obligations under the Loan Documents, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which, if determined adversely, would have or result in a Material
Adverse Effect, nor to the best knowledge of any Borrower does a state of facts
exist which is reasonably likely to give rise to such proceedings.
4.15. Patents, Trademarks, Copyrights and Licenses. Except as otherwise set
forth in Schedule 4.15, each Borrower owns all material licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct its business as
heretofore conducted by it or proposed to be conducted by it, each of which is
listed, together with Copyright Office or Patent and Trademark Office
application or registration numbers, where applicable, on Schedule 4.15.
Schedule 4.15 also lists all tradenames or other names under which any Borrower
conducts business. To the best of Borrower's knowledge, neither the conduct of
each Borrower's business nor the conduct of any of its Subsidiary's business
infringes upon any intellectual property right of any other Person.
4.16. Full Disclosure. No information contained in this Agreement, any of
the other Loan Documents, the projections, the Financial Statements, the
collateral reports or any written
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statement furnished by or on behalf of any Borrowers or any Subsidiary thereof
pursuant to the terms of this Agreement, which has previously been delivered to
Lender, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. The Liens
granted to Lender pursuant to the Security Agreements will at the Closing Date
be fully perfected first priority Liens in and to the Collateral described
therein, subject only to Liens set forth in Schedule 7.7 and Permitted
Encumbrances.
4.17. Hazardous Materials. Except as set forth in Schedule 4.17, (a) the
real estate (the "Real Estate") owned by the Borrowers and their Subsidiaries is
free of contamination from any Hazardous Material, or (b) to any Borrower's
knowledge, the Real Estate leased by the Borrowers or their Subsidiaries is free
of contamination from any Hazardous Material. In addition, Schedule 4.17
discloses all material environmental liabilities of any Borrower or any
Subsidiary thereof of which any Borrower has knowledge (x) related to
noncompliance with the Environmental Laws, or (y) associated with the Real
Estate. None of the Borrowers and no Subsidiary thereof has caused or suffered
to occur any Release with respect to any Hazardous Material at, under, above or
upon any real property which it owns or leases. None of the Borrowers and no
Subsidiary thereof is involved in operations which are likely to result in the
imposition of any Lien on its assets or any material liability on such Borrower
or Subsidiary thereof under any Environmental Law, and none of the Borrowers and
no Subsidiary thereof has permitted any tenant or occupant of such premises to
engage in any such activity. Borrowers have provided to Lender copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities and Costs, in each
case relating to any of the Borrowers or any of the Subsidiaries thereof.
4.18. Insurance Policies. Schedule 4.18 lists all insurance of any nature
maintained for current occurrences by any Borrower or any Subsidiary thereof, as
well as a summary of the terms of such insurance.
4.19. Deposit and Disbursement Accounts. Schedule 4.19 lists all banks and
other financial institutions at which any of the Borrowers or any Subsidiary
thereof maintains deposits and/or other accounts, including any disbursement
accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.
4.20. Customer and Trade Relations. There exists no actual or threatened
termination or cancellation of, or any material adverse modification or change
in: (a) the business relationship of Borrowers with any customer or group of
customers which has resulted in or is reasonably likely to result in a Material
Adverse Effect; or (b) the business relationship of any Borrower or any
Subsidiary thereof with any supplier material to the operations of such Borrower
or such Subsidiary which has resulted in or is reasonably likely to result in a
Material Adverse Effect.
4.21. Indebtedness. As of the Closing Date, except for the Loans and the
Letter of Credit Obligations, and as set forth in Schedule 7.3, none of the
Borrowers and no Subsidiary
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thereof has any Indebtedness or has granted any security interest to any Person
other than Lender.
5. FINANCIAL STATEMENTS AND INFORMATION.
5.1. Reports and Notices. Borrowers each hereby covenant and agree that
from and after the Closing Date and until the Termination Date, they shall
deliver to Lender Financial Statements and notices as follows:
(a) Quarterly Reports of Borrowers. Within forty-five (45) days after
the end of each Fiscal Quarter of Borrowers, a copy of an unaudited
financial statement of Borrower prepared on a basis consistent with the
audited financial statements of Borrowers previously furnished to Lender
and, if requested by Lender, prepared on a consolidating and consolidated
basis, signed by an authorized officer of Akorn and consisting of at least
(i) a balance sheet as at the close of such quarter and (ii) a statement of
earnings and cash flow for such quarter and for the period from the
beginning of such fiscal year to the close of such quarter.
(b) Audit Report of Borrowers. Within one hundred twenty (120) days
after the end of each Fiscal Year of Borrowers, a copy of an annual audit
report of Borrowers prepared in conformity with GAAP on a basis consistent
with the audited financial statements of Borrowers and any Subsidiary
referred to above and, if requested by Lender, prepared on a consolidating
and consolidated basis, duly certified by independent certified public
accountants of recognized standing satisfactory to Lender, accompanied by
an opinion without significant qualification.
(c) Certificates. Contemporaneously with the furnishing of a copy of
each annual audit report and of each quarterly statement provided herein, a
certificate dated the date of such annual audit report or such quarterly
statement and signed by either the President, the Chief Financial Officer
or the Treasurer of each Borrower, to the effect that no Default or Event
of Default has occurred and is continuing, or, if there is any such event,
describing it and the steps, if any, being taken to cure it, and containing
a computation of, and showing compliance with, any financial ratio or
restriction contained in the Agreement.
(d) Notice of Default, Litigation and ERISA Matters. Immediately upon
learning of the occurrence of any of the following, written notice
describing the same and the steps being taken by Borrowers or any
subsidiary affected in respect thereof: (i) the occurrence of a Default or
an Event of Default; or (ii) the institution of, or any adverse
determination in, any litigation, arbitration or governmental proceeding
which is material to any Borrower; (iii) receipt of any notice or
communication that the operations of the Borrowers or any Subsidiary are
not in compliance in all material respects with
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requirements of any applicable Governmental Authority, including but not
limited to, FDA and DEA, or (iv) the occurrence of any ERISA Event.
(e) Other Information. Such other information, financial or otherwise,
as Lender may from time to time request in its reasonable discretion.
(f) Reports of Akorn (i) Within forty-five (45) days after the end of
each fiscal quarter of Akorn, a copy of Form 10-Q as filed by or on behalf
of Akorn with the Securities and Exchange Commission, and (ii) within one
hundred twenty (120) days after the end of each fiscal year of Akorn, a
copy of Form 10-K as filed by or on behalf of Akorn with the Securities and
Exchange Commission.
5.2. Communication with Accountants. Each Borrower authorizes Lender to
communicate directly with its independent certified public accountants and
authorizes those accountants and advisors to disclose to Lender any and all
Financial Statements and other supporting financial documents and schedules
relating to any Borrower and its Subsidiaries (including, without limitation,
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Borrower and its Subsidiaries.
6. AFFIRMATIVE COVENANTS.
Each Borrower jointly and severally covenants and agrees that, unless
Lender shall otherwise consent in writing, from and after the date hereof and
until the Termination Date:
6.1. Maintenance of Existence and Conduct of Business. Each Borrower shall,
and shall cause each Subsidiary thereof to: (a) do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) at all
times maintain, preserve and protect all of its copyrights, patents, trademarks,
trade names and all other intellectual property and rights as licensee or
licensor thereof and preserve all the remainder of its assets and properties,
used or useful in the conduct of its business, and keep the same in good repair,
working order and condition (taking into consideration ordinary wear and tear)
and from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices; and (d) transact business only in such corporate and trade names as
are set forth in Schedule 4.15.
6.2. Payment of Obligations. (a) Each Borrower shall pay and discharge or
cause to be paid and discharged promptly all (i) Charges imposed upon it, its
income and profits, or any of its property (real, personal or mixed), and (ii)
lawful claims for labor, materials, supplies and services or otherwise, before
any thereof shall become past due.
(b) Each Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims; provided,
that at the time of commencement of any such action or proceeding, and
during the pendency thereof (i) no Default or Event of Default shall have
occurred and be continuing, (ii) adequate reserves with respect
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thereto are maintained on the books of such Borrower, in accordance with
GAAP, (iii) such contest is maintained and prosecuted continuously and with
diligence, (iv) none of the Collateral becomes subject to forfeiture or
loss as a result of such Charges or claims, (v) no Lien shall be imposed to
secure payment of such Charges or claims other than inchoate tax liens, and
(vi) such Borrower shall promptly pay or discharge such contested Charges
and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Lender evidence acceptable to Lender of such compliance,
payment or discharge, if such contest is terminated or discontinued
adversely to such Borrower or the conditions set forth in this Section
6.2(b) are no longer met.
6.3. Books and Records. Borrowers shall keep adequate records and books of
account with respect to each Borrower's and each of its Subsidiaries' business
activities, in which proper entries, reflecting all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements.
6.4. Audits. Commencing with the Fiscal Year ending December 31, 1997 and
in each Fiscal Year thereafter, Borrowers will engage independent certified
public accountants of recognized standing satisfactory to Lender to perform an
audit of their respective balance sheets and related statements of operations,
shareholders' equity and cash flows and to render an opinion based upon such
audit.
6.5. Litigation. Each Borrower shall notify Lender in writing, promptly
upon learning thereof, of any litigation commenced or threatened against such
Borrower or any Subsidiary thereof and of the institution against it of any suit
or administrative proceeding that (a) seeks damages in excess of $500,000 or (b)
seeks injunctive relief.
6.6. Insurance. (a) Borrowers shall, at their sole cost and expense,
maintain the policies of insurance described on Schedule 4.18 in form and with
insurers rated AA or better by Bests. Such policies shall be in such amounts as
are set forth in Schedule 4.18. Borrowers shall notify Lender promptly of any
occurrence causing a material loss or decline in value of any real or personal
property and the estimated (or actual, if available) amount of such loss or
decline. So long as any Event of Default shall have occurred and be continuing
or if the casualty loss exceeds $500,000, each Borrower hereby directs all
present and future insurers under its "All Risk" policies of insurance to pay
all proceeds payable thereunder directly to Lender and irrevocably makes,
constitutes and appoints Lender (and all officers, employees or agents
designated by Lender) as such Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance and endorsing the name of such Borrower on
any check or other item of payment for the proceeds of such "All Risk" policies
of insurance. In the event any Borrower at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto, Lender, without waiving or
releasing any obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which Lender deems advisable. All sums so disbursed, including
attorneys, fees,
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44
court costs and other charges related thereto, shall be payable, on demand, by
Borrowers to Lender and shall be additional Obligations hereunder secured by the
Collateral, provided, that if and to the extent Borrowers fail to promptly pay
any of such sums upon demand therefor, Lender is authorized to, and at its
option may, make or cause to be made Advances on behalf of Borrowers for payment
thereof.
(b) Lender reserves the right at any time, upon any change in any
Borrower's risk profile (including, without limitation, any change in the
product mix maintained by any Borrower or any laws affecting the potential
liability of such Borrower), to require additional forms and limits of insurance
to, in Lender's reasonable opinion, adequately protect Lender's interests in all
or any portion of the Collateral and to ensure that each Borrower and each
Subsidiary thereof is protected by insurance in amounts and with coverage
customary for its industry. If requested by Lender, each Borrower shall deliver
to Lender from time to time a report of a reputable insurance broker,
satisfactory to Lender, with respect to its insurance policies.
(c) Borrowers shall deliver to Lender endorsements (i) to all "All Risk"
and business interruption insurance naming Lender as loss payee, and (ii) to all
general liability and other liability policies naming Lender as additional
insured.
(d) The loss, if any, under any property insurance required to be carried
by this Section 6.6 shall be adjusted with the insurance companies or otherwise
collected, including the filing of appropriate proceedings by Borrowers or their
Subsidiaries, subject to the reasonable approval of the Lender in the case of
claims in excess of $500,000. If the proceeds payable under any policy of
property insurance are $500,000 or less, Borrowers or their Subsidiaries shall
have the right to use such proceeds to repair or replace the damaged or
destroyed property, provided, that a Default or an Event of Default shall not
have occurred and be continuing at the time the proceeds are paid.
6.7. Compliance with Laws. Each Borrower shall, and shall cause each
Subsidiary thereof to, comply in all material respects with all federal, state
and local laws and regulations applicable to it, including but not limited to,
(i) the Federal Food, Drug and Cosmetic Act, the Controlled Substances Act and
other United States federal statutes and regulations, issued by FDA and DEA, and
(ii) those relating to licensing, ERISA and labor matters.
6.8. Supplemental Disclosure. On the request of Lender (in the event that
such information is not otherwise delivered by Borrowers to Lender pursuant to
this Agreement), so long as there are Obligations outstanding hereunder, but not
more frequently than quarterly absent the occurrence and continuance of a
Default or an Event of Default, Borrowers will supplement each schedule or
representation herein with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such schedule or as an exception to such
representation or which is necessary to correct any information in such schedule
or representation which has been rendered inaccurate thereby; provided, however,
that such supplement to such schedule or representation shall not be deemed an
amendment thereof unless expressly consented to in writing by Lender, and no
such amendments, except as the same may be consented to in a writing which
expressly
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includes a waiver, shall be or be deemed a waiver of any Default or Event of
Default disclosed therein.
6.9. Employee Plans. Each Borrower shall, and shall cause each Subsidiary
thereof to, notify Lender of (a) any and all claims, actions, or lawsuits
asserted or instituted, and of any threatened litigation or claims, against such
Borrower or against any Subsidiary or ERISA Affiliate thereof in connection with
any Plan maintained, at any time, by such Borrower or such Subsidiary or ERISA
Affiliate, or to which such Borrower or such Subsidiary or ERISA Affiliate has
or had at any time any obligation to contribute, or/and against any such Plan
itself, or against any fiduciary of or service provided to any such Plan and (b)
the occurrence of any material "Reportable Event" with respect to any Pension
Plan of such Borrower or any Subsidiary or ERISA Affiliate thereof.
6.10. Environmental Matters. Each Borrower shall, and shall cause each of
its Subsidiaries to, (a) comply in all material respects with the Environmental
Laws applicable to it, (b) notify Lender promptly after such Borrower or such
Subsidiary becomes aware of any Release upon or at any premises owned or
occupied by it, and (c) promptly forward to Lender a copy of any order, notice,
permit, application, or any communication or report received by such Borrower or
such Subsidiary in connection with any such Release or any other matter relating
to the Environmental Laws that may affect such premises or such Borrower or such
Subsidiary. The provisions of this Section 6.10 shall apply whether or not the
Environmental Protection Agency, any other federal agency or any state, local or
foreign environmental agency has taken or threatened any action in connection
with any Release or the presence of any Hazardous Materials.
6.11. Landlords' Agreements, Bailee Letters and Mortgagee Agreements. Upon
the request of Lender, each Borrower shall use its best efforts to obtain a
landlord's agreement in form and substance acceptable to Lender from the lessor
of each leased property currently being used by such Borrower or any Subsidiary
thereof where Collateral is located. Upon the request of Lender, each Borrower
shall use its best efforts to obtain a bailee letter in form and substance
acceptable to Lender and with respect to any warehouse where Collateral is
located. Upon the request of Lender, each Borrower shall use its best efforts to
obtain a mortgagee's agreement in form and substance satisfactory to Lender from
the mortgagee (if other than Lender) of each property owned by such Borrower or
any Subsidiary thereof where Collateral is located. No real property or
warehouse space shall be leased or acquired by any Borrower or any Subsidiary
thereof after the Closing Date, unless and until a landlord or mortgagee
agreement or bailee letter, as appropriate, shall first have been obtained with
respect to such location.
6.12. Leased Locations of Collateral. Each Borrower shall, and shall cause
each Subsidiary thereof to, timely and fully pay and perform its obligations
under all leases and other agreements with respect to each leased location or
public warehouse where any Collateral is or may be located. Borrowers shall, and
shall cause each Subsidiary thereof to, promptly deliver to Lender copies of (a)
any and all default notices received under or with respect to any such leased
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location or public warehouse, and (b) such other notices or documents as Lender
may request in its reasonable discretion.
7. NEGATIVE COVENANTS.
Borrowers each jointly and severally covenant and agree that, without the
prior written consent of Lender, from and after the date hereof until the
Termination Date:
7.1. Mergers, Subsidiaries, Etc. No Borrower shall, or shall permit any
Subsidiary to:
(a) be a party to any merger or consolidation;
(b) except in the normal course of its business, sell, transfer,
convey, lease or otherwise dispose of all or any substantial part of the
assets of the Borrowers and their Subsidiaries taken as a whole; or
(c) purchase or otherwise acquire any assets or capital stock of any
Person without the prior written consent of the Lender except where (i) the
purchase price of each such acquisition is not greater than $2,500,000
(including the value of any stock issued, assets exchanged or transaction
expenses incurred to consummate such acquisition) and (ii) there is no
Event of Default or Default after giving effect to such acquisition.
For purposes of this Section 7.1 only, a sale, transfer, conveyance,
lease or other disposition of assets shall be deemed to be a "substantial part"
of the assets of the Borrowers and its Subsidiaries only if the value of such
assets, when added to the value of all other assets sold, transferred, conveyed,
leased or otherwise disposed of by the Borrowers and their Subsidiaries (other
than in the normal course of business) during the same Fiscal Year, exceeds ten
percent (10%) of the Borrowers' consolidated total assets determined as of the
end of the immediately preceding Fiscal Year. As used in the preceding sentence,
the term "value" shall mean, with respect to any asset disposed of, the greater
of such asset's book or fair market value as of the date of disposition, with
"book value" being the value of such asset as would appear immediately prior to
such disposition on a balance sheet of the owner of such asset prepared in
accordance with GAAP.
7.2. Investments; Loans and Advances. Except as otherwise permitted in this
Agreement, no Borrower shall, or shall cause or permit any Subsidiary thereof
to, make any investment in, or make or accrue loans or advances of money to any
Person, through the direct or indirect lending of money, holding of securities
or otherwise; provided, that so long as no Default or Event of Default shall
have occurred or be continuing, Borrowers may make investments in (a) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (b) commercial paper maturing no more than one year from
the date of creation thereof and currently having the highest rating obtainable
from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.,
(c) certificates of deposit, maturing no more
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than one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $300,000,000
and having a senior secured rating of "A" or better by a nationally recognized
rating agency, provided, that the aggregate amount invested in such certificates
of deposit shall not at any time exceed $100,000 for any one such bank, and (d)
time deposits, maturing no more than thirty (30) days from the date of creation
thereof with commercial banks or savings banks or savings and loan associations
each having membership in the Federal Deposit Insurance Corporation and in
amounts not exceeding the maximum amounts of insurance thereunder, except that
in the case of time deposits and certificates of deposit maintained with The
Northern Trust Company or its successors so long as such successors meet the
criteria in this Section 7.3, such limitations of amounts shall not apply unless
notice thereof shall be provided by Lender to Akorn (collectively, the
"Investments").
7.3. Indebtedness. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, create, incur, assume or permit to exist any
Indebtedness, except (a) Indebtedness secured by Liens permitted under Section
7.7, (b) the Loans and the other Obligations, (c) deferred taxes, (d) unfunded
pension fund and other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable law, (e) existing
Indebtedness set forth in Schedule 7.3 and refinancings thereof on terms and
conditions acceptable to Lender, in its reasonable discretion, which shall in
any event be on terms no less favorable to any Borrower or Lender than the terms
of the Indebtedness being refinanced, (f) any financing secured by any real
estate owned by the Borrowers and their Subsidiaries, and (g) the unsecured
financing by a seller of product lines to Borrowers.
7.4. Employee Loans and Affiliate Transactions. (a) No Borrower shall, or
shall cause or permit any Subsidiary thereof to, enter into or be a party to any
transaction with an Affiliate except in the ordinary course of, and pursuant to
the reasonable requirements of, such Borrower's or such Subsidiary's business
and upon fair and reasonable terms that are fully disclosed to Lender in advance
and are no less favorable to such Borrower or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Borrower or such Subsidiary. All such transactions existing as of the
date hereof are described on Schedule 7.4(a).
(b) No Borrower shall, or shall cause or permit any Subsidiary thereof
to, enter into any lending or borrowing transaction with any of its employees,
except loans to its employees on an arm's-length basis in the ordinary course of
business consistent with past practice up to a maximum of $250,000 in the
aggregate at any one time outstanding.
7.5. Capital Structure and Business. No Borrower shall, or shall cause or
permit any Subsidiary thereof to, (a) make any changes in any of its business
objectives, purposes or operations which could in any way adversely affect the
repayment of the Loans or any of the other Obligations or could have or result
in a Material Adverse Effect, (b) make any change in its capital structure as
described on Schedule 4.9, or (c) amend its certificate or articles of
incorporation or bylaws in a manner which would adversely affect Lender or its
duty or ability to repay the Obligations or change its state of incorporation.
None of the Borrowers nor any
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Subsidiary thereof shall engage in any business other than the businesses
currently engaged in by such Borrower or such Subsidiary or businesses
reasonably related thereto.
7.6. Guaranteed Indebtedness. No Borrower shall, or shall cause or permit
any Subsidiary thereof to, incur any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Borrower, and (b) for Guaranteed Indebtedness incurred for the
benefit of any Borrower or such Subsidiary if the primary obligation is
expressly permitted by this Agreement.
7.7. Liens. No Borrower shall, or shall cause or permit any Subsidiary
thereof to, create, incur, assume or permit to exist any Lien on or with respect
to any of its properties or assets of any Borrower or any of their Subsidiaries,
whether now owned or hereafter acquired, except (a) Permitted Encumbrances, (b)
presently existing or hereinafter created Liens in favor of Lender, (c) Liens
created after the date hereof by conditional sale or other title retention
agreements (including, without limitation, Capital Leases) or in connection with
purchase money Indebtedness with respect to properties acquired by any Borrower
or any of its Subsidiaries in the ordinary course of business, involving the
incurrence of an aggregate amount of purchase money Indebtedness and Capital
Lease Obligations of not more than $1,000,000 outstanding at any one time for
all such Liens (provided that such Liens attach only to the assets subject to
such purchase money Indebtedness and such Indebtedness is incurred within twenty
(20) days following such purchase and does not exceed 100% of the purchase price
of the subject assets), (d) Liens in connection with any financing secured by
any real estate owned by the Borrowers and their Subsidiaries, (e) Liens not
otherwise permitted by the foregoing clauses of this Section securing
Indebtedness or other obligations not exceeding $250,000 in the aggregate at any
time outstanding, and (f) Liens existing on the date hereof and described in
Schedule 7.7.
In addition, no Borrower shall, or shall cause or permit any
Subsidiary thereof to, become a party to any agreement, note, indenture or
instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Lender, as additional
collateral for the Obligations, except operating leases, Capital Leases or
intellectual property licenses which prohibit liens upon the assets that are
subject thereto.
7.8. Sale of Assets. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, sell, transfer, convey, assign or otherwise dispose of
any of its properties or other assets, except in the ordinary course of its
business.
7.9. ERISA. No Borrower shall, or shall cause or permit any Subsidiary or
ERISA Affiliate thereof (without Lender's prior written consent) to, (a) acquire
any ERISA Affiliate that maintains or has an obligation to contribute to a
Pension Plan that has either an "accumulated funding deficiency," as defined in
Section 302 of ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any plan other than a Multiemployer
Plan, and in Section 4211 of ERISA in the case of a Multiemployer Plan, in
excess of $250,000, (b) permit or suffer any representation set forth in
Schedule 4.13 to cease to be met and satisfied at any time, (c) terminate any
Pension Plan that is subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in liability in excess of
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$250,000 to such Person, (d) permit any accumulated funding deficiency, as
defined in Section 302(a)(2) of ERISA, to be incurred with respect to any
Pension Plan, in excess of $250,000, (e) fail to make any material contributions
or fail to pay any amounts due and owing as required by the terms of any Plan
before such contributions or amounts become delinquent, (f) make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan, or (g) fail to promptly provide Lender with copies of any
Plan documents or governmental reports or filings, if requested by Lender.
7.10. Financial Covenants. Borrowers shall not breach or fail to comply
with any of the financial covenants set forth below:
(a) Minimum Net Income. Borrowers and their Subsidiaries on a
consolidated basis shall maintain Net Income in each Fiscal Quarter of not
less than $1.00.
(b) Minimum Net Worth. Borrowers and their Subsidiaries on a
consolidated basis shall maintain at all times Net Worth equal to or
greater than the sum of (a) $17,000,000, plus (b) an amount equal to 50% of
Net Income earned during each of its Fiscal Quarters beginning with its
Fiscal Quarter commencing October 1, 1997 (without reduction for net
losses, if any).
(c) Cash Flow Coverage Ratio. Borrowers and their Subsidiaries on a
consolidated basis shall maintain a ratio of (a) EBIT, measured at the end
of each Fiscal Quarter for the four immediately preceding Fiscal Quarters
then ended, to (b) Debt Service, measured as of the end of each Fiscal
Quarter, of at least 1.2:1.0.
(d) Ratio of Funded Debt of EBITDA. Borrowers and their Subsidiaries
on a consolidated basis shall maintain a ratio of (a) Funded Debt to (b)
EBITDA, measured at the end of each Fiscal Quarter for the four immediately
preceding Fiscal Quarters then ended, of not more than 3.0:1.0.
7.11. Hazardous Materials. No Borrower shall, or shall cause or permit any
Subsidiary thereof or any other Person within its control to, cause or permit a
Release or the presence, use, generation, manufacture, installation, Release,
discharge, storage or disposal of any Hazardous Materials on, under, in, above
or about any of its real estate or the transportation of any Hazardous Materials
to or from any real estate where such Release or such presence, use, generation,
manufacture, installation, Release, discharge, storage or disposal would violate
in any material respect, or form the basis for any material liability under, any
Environmental Laws. If a Default or Event of Default shall have occurred and be
continuing, each Borrower, at its own expense, shall cause the performance of
such environmental audits and preparation of such environmental reports as
Lender may from time to time request as to any location at which Collateral is
then located, by reputable environmental consulting firms acceptable to Lender,
and in form and substance acceptable to Lender.
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7.12. Sale Leasebacks. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, engage in any sale-leaseback or similar transaction
involving any of its assets.
7.13. Cancellation of Indebtedness. No Borrower shall, or shall cause or
permit any Subsidiary thereof to, cancel any claim or debt owing to it, except
for reasonable consideration negotiated on an arm's-length basis and in the
ordinary course of its business consistent with past practices.
7.14. Restricted Payments. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, make any Restricted Payment (including, but not limited
to, dividends), other than payments necessary to enable such Borrower (a) to
satisfy its federal, state and local income tax obligations to the extent such
obligations are the result of the net consolidated income of Borrowers and their
Subsidiaries being attributed to such Borrower for tax purposes, (b) to pay the
necessary fees and expenses to maintain its corporate existence and good
standing, (c) to pay legal and accounting fees to the extent such fees relate to
legal or accounting services provided by entities which are not Affiliates of
any Borrower and which services are directly related to any Borrowers or their
Subsidiaries, and (d) to pay any cash dividend in respect of its common stock so
long as no Event of Default or Default exists hereunder or would result after
giving effect thereto.
7.15. Fiscal Year. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, change its Fiscal Year.
7.16. Change of Corporate Name or Location. (a) No Borrower shall, or shall
cause or permit any Subsidiary thereof to, (i) change its corporate name or (ii)
change its chief executive office, principal place of business, corporate
offices or warehouses or Collateral locations, or the location of its records
concerning the Collateral, in any case without at least fifteen (15) Business
Days prior written notice to Lender and after Lender's written acknowledgment
that any reasonable action requested by Lender in connection therewith,
including, without limitation, to continue the perfection of any Liens in favor
of Lender in any Collateral has been completed or taken, and provided that any
such new location shall be in the continental United States; (b) in furtherance
of and without limiting the scope of clause (a) above, no Borrower shall, or
shall permit any of its Subsidiaries, to change its name, identity or corporate
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-402(7) of the Code or any other then applicable provision of the Code except
upon prior written notice to Lender and after Lender's written acknowledgment
that any reasonable action requested by Lender in connection therewith,
including, without limitation, to continue the perfection of any Liens in favor
of Lender in any Collateral has been completed or taken.
7.17. Year 2000 Compliance.
(a) Each Borrower and each Subsidiary has:
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(i) conducted an analysis of all of its products, services,
business and operations, including without limitation surveys of its
Systems (as defined below) and surveys of and discussions with customers,
suppliers and vendors, to determine the extent to which such Borrower or
such Subsidiary may be adversely affected by its failure to be Year 2000
Compliant (as defined below);
(ii) developed a plan (the "Year 2000 Plan") to become Year 2000
Compliant and remedy any material loss it may suffer if it fails to be Year
2000 Compliant on a timely basis; and
(iii) implemented and continues to proceed with the Year 2000
Plan materially in accordance with its terms and timetables.
(b) Each Borrower and each Subsidiary reasonably believes that the
Year 2000 Plan, if implemented in accordance with its terms, will result in it
being Year 2000 Complaint on a timely basis.
(c) Each Borrower and each Subsidiary reasonably believes that each
of its customers, suppliers and vendors whose failure to be Year 2000 Compliant
would have a material and adverse effect on such Borrower or such Subsidiary, is
Year 2000 Compliant or has developed a plan to become Year 2000 Compliant and
remedy any material loss such Person may suffer if it fails to be Year 2000
Compliant on a timely basis with respect to all of its own computer systems and
applications.
The term "Year 2000 Compliant" means that all of such Person(s) computer
systems and applications, including without limitation software and hardware
("Systems"), will function prior to, during, and after the calendar year 2000,
and that no change in or to such calendar year will have a material adverse
effect on the performance of the Systems or on the functioning of such
Borrower's or such Subsidiary's business.
Each Borrower acknowledges and agrees that the foregoing representations
and any other representation, warranty, schedule, certificate, statement,
report, notice or other writing now or hereafter furnished by or on behalf of
Borrowers or any Subsidiary to the Lender in connection with being Year 2000
Compliant or its Year 2000 Plan is material to the Lender and that the Lender
has relied and will continue to rely thereon. Each Borrower agrees and shall
cause each Subsidiary to provide such information, financial, technical, or
otherwise, concerning such Borrower's or such Subsidiary's Year 2000 Plan as the
Lender may reasonably request from time to time.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES.
8.1. Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
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(a) Any Borrower shall fail to make any payment of principal of, or
interest on, or any other amount owing in respect of the Loans or any of
the other Obligations (other than as set forth in clause (b) below) when
due and payable or declared due and payable.
(b) Any Borrower shall fail to pay any Fees, costs or expenses payable
or reimbursable by Borrowers under this Agreement or under any other Loan
Document, and such failure shall have remained unremedied for a period of
ten (10) days or more.
(c) Any Borrower shall fail or neglect to perform, keep or observe any
of the provisions of this Agreement (and not constituting an Event of
Default under any of the other subsections of this Section 8.1) and such
failure shall have remained unremedied for a period of ten (10) days or
more.
(d) Any Borrower shall fail or neglect to perform, keep or observe any
provision of any of the other Loan Documents (other than any provision
embodied in or covered by any other clause of this Section 8.1) and
continuance of such default after the grace period (if any) set forth
therein.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Borrower or any Subsidiary thereof is a
party and such default is not cured or waived within any applicable grace
period and such default or breach (i) involves the failure to make any
payment when due in respect of any Indebtedness (other than the
Obligations) of any Borrower or any Subsidiary of any Borrower in excess of
$50,000 in the aggregate, or (ii) causes such Indebtedness or a portion
thereof in excess of $100,000 in the aggregate to become due prior to its
stated maturity or prior to its regularly scheduled dates of payment, or
(iii) entitles any holder of such Indebtedness or a trustee to cause such
Indebtedness or a portion thereof in excess of $100,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such right is exercised or waived
by such holder or trustee.
(f) Any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or certificate made
or delivered to Lender by any Borrower shall be untrue or incorrect in any
material respect, as of the date when made or deemed made.
(g) Assets of any Borrower or any Subsidiary thereof with a fair
market value of $500,000 or more shall be attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors
of any Borrower or any Subsidiary thereof and shall such condition shall
continue for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Borrower or any Subsidiary thereof in a court having competent jurisdiction
seeking a decree or order
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in respect of any Borrower or any Subsidiary thereof (i) under Title 11 of
the United States Code, as now constituted or hereafter amended or any
other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Borrower or any Subsidiary
thereof or of any substantial part of such Person's assets, or (iii)
ordering the winding-up or liquidation of the affairs of any Borrower or
any Subsidiary thereof and such case or proceeding shall remain undismissed
or unstayed for forty-five (45) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.
(i) Any Borrower or any Subsidiary thereof shall (i) file a petition
seeking relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other applicable federal, State or foreign
bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of any Borrower or
any Subsidiary thereof or of any substantial part of such Person's assets,
(iii) make an assignment for the benefit of creditors, or (iv) take any
corporate action in furtherance of any such action.
(j) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate shall be rendered against any Borrower or any
Subsidiary thereof and the same shall not (i) be fully covered by
insurance, or (ii) within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall not
have been paid or otherwise discharged prior to the expiration of any such
stay.
(k) With respect to any Plan: (i) which is a defined contribution plan
or Welfare Plan, any Borrower or any Subsidiary or ERISA Affiliate thereof
or any other party-in-interest or disqualified Person shall engage in any
transactions which in the aggregate results in a final assessment to any
Borrower or any Subsidiary thereof in excess of $250,000 under Section 409
or 502 of ERISA or IRC Section 4975 which assessment has not been paid
within 30 days of final assessment and which is not being contested
pursuant to Section 6.2 hereof; (ii) any Borrower or any Subsidiary or
ERISA Affiliate thereof shall incur any accumulated funding deficiency, as
defined in IRC Section 412, in the aggregate in excess of $100,000, or
request a funding waiver from the IRS for contributions in the aggregate in
excess of $100,000; (iii) any Borrower or any Subsidiary or ERISA Affiliate
thereof shall not pay any withdrawal liability which involves annual
withdrawal liability payments which exceed $100,000 as a result of a
complete or partial withdrawal within the meaning of Section 4203 or 4205
of ERISA, within 30 days after the date such payment becomes due; (iv) any
Borrower or any Subsidiary or ERISA Affiliate thereof shall fail to make a
required contribution by the due date under Section 412 of the IRC or
Section 302 of ERISA which would result in the imposition of a Lien under
Section 412 of the IRC or Section 302 of ERISA within thirty (30) days
after the date such payment becomes due; or (v) an ERISA Event (other
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than an event described in 29 CFR Section 2615.23) with respect to a Plan
has occurred, and within thirty (30) days Borrowers have not contested such
ERISA Event by appropriate proceedings.
(l) Any material provision of any Loan Document shall for any reason
cease to be valid or enforceable in accordance with its terms (or any
Borrower or any Subsidiary thereof shall challenge the enforceability of
any Loan Document), or any security interest created under any Loan
Document shall cease to be a valid and perfected first priority security
interest or Lien (except as otherwise permitted herein or therein) in any
of the Collateral purported to be covered thereby.
(m) Lien Priority. Lender fails to have an enforceable first priority
Lien (except for any prior Liens to which Lender has consented in writing)
on, or security interest in, any property given as security for the
Obligations.
8.2. Remedies. If any Default or Event of Default shall have occurred and
be continuing, Lender may, without notice, terminate this facility with respect
to further Advances, whereupon any further Advances shall be made in Lender's
sole discretion. If any Event of Default shall have occurred and be continuing,
Lender may, without notice, (a) declare all or any portion of the Obligations to
be forthwith due and payable and require that any Letter of Credit Obligation be
cash collateralized, all without presentment, demand, protest or further notice
of any kind, all of which are expressly waived by Borrowers; (b) increase the
rate of interest applicable to the Loan to the Default Rate; and (c) exercise
any rights and remedies provided to Lender under the Loan Documents and/or at
law or equity, including all remedies provided under the Code; provided,
however, that upon the occurrence of an Event of Default specified in Sections
8.1(h) or (i) or, all of the Obligations shall become immediately due and
payable without declaration, notice or demand by Lender.
8.3. Waivers by Borrowers. Except as otherwise provided for in this
Agreement or by applicable law, each of the Borrowers, jointly and severally,
waive: (a) presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Lender on which any Borrower
may in any way be liable, and hereby ratifies and confirms whatever Lender may
do in this regard, (b) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or levy
upon, the Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal and exemption laws. Each of the Borrowers
acknowledges that it has been advised by counsel of its choice with respect to
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
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9. SUCCESSORS AND ASSIGNS.
9.1. Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of Borrowers, Lender and
their respective successors and assigns, except as otherwise provided herein or
therein. None of the Borrowers may assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder or under any of the
other Loan Documents without the prior express written consent of Lender. Any
such purported assignment, transfer, hypothecation or other conveyance by any
Borrower without the prior express written consent of Lender shall be void. The
terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of Borrowers and Lender with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other Loan
Documents.
10. MISCELLANEOUS.
10.1. Setoff. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, Lender and each
holder of any Note is hereby authorized at any time or from time to time,
without notice to any Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrowers
(regardless of whether such balances are then due to Borrowers) and any other
properties or assets any time held or owing by Lender or such holder to or for
the credit or for the account of Borrowers against and on account of any of the
Obligations which are not paid when due.
10.2. Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 10.3 below. Any letter of interest or commitment letter and/or
fee letter between Borrowers and Lender or any of their respective Affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
10.3. Amendments and Waivers. (a) Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement or any of the other Loan Documents or consent to any departure by any
Borrower or any of its Subsidiaries therefrom shall in any event be effective
unless the same shall be in writing and signed by Lender and Borrowers.
(b) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Lender to take additional Collateral pursuant to any Loan Document.
No notice to or demand on any Borrower in any case shall entitle any Borrower to
any other or further notice or demand in similar or other circumstances.
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10.4. Fees and Expenses. Borrowers shall reimburse Lender for all
reasonable out-of-pocket expenses, incurred in connection with the preparation
of the Loan Documents (including the reasonable fees and expenses of all of its
special loan counsel, advisors, consultants and auditors retained in connection
with the Loan Documents and the transactions contemplated thereby and advice in
connection therewith). In addition, Borrowers shall reimburse Lender for all
fees, costs and expenses, including the fees, costs and expenses of counsel or
other advisors (including environmental and management consultants) for advice,
assistance, or other representation in connection with:
(a) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or, advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(b) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, any Borrower or any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of
Borrowers or any other Person that may be obligated to Lender by virtue of
the Loan Documents;
(c) any attempt to enforce any rights of Lender against any or all of
Borrowers or any other Person that may be obligated to Lender by virtue of
any of the Loan Documents; and
(d) efforts to verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all reasonable attorneys' and other professional
and service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all reasonable expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this Section 10.4 shall be payable, on demand, by Borrowers to Lender.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram charges; secretarial overtime charges; and reasonable
expenses for travel, lodging and food paid or incurred in connection with the
performance of such legal or other advisory services.
10.5. No Waiver. Lender's failure at any time or times, to require strict
performance by Borrowers of any provision of this Agreement and any of the other
Loan Documents shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and
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performance therewith. Any suspension or waiver of an Event of Default under
this Agreement or any of the other Loan Documents shall not suspend, waive or
affect any other Event of Default under this Agreement and any of the other Loan
Documents whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of any Borrower contained in this Agreement or any
of the other Loan Documents and no Default or Event of Default by any Borrower
under this Agreement and no defaults by any Borrower under any of the other Loan
Documents shall be deemed to have been suspended or waived by Lender unless such
waiver or suspension is by an instrument in writing signed by an officer of or
other authorized employee of Lender and directed to Borrowers specifying such
suspension or waiver.
10.6. Remedies. Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any other agreement, including the other Loan Documents, by operation
of law or otherwise. Recourse to the Collateral shall not be required.
10.7. Survival of Obligations upon Termination of Financing Agreements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of Borrowers or the rights of Lender relating to any unpaid
portion of the Loan or any other Obligation, due or not due, liquidated,
contingent or unliquidated or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is required
after the Termination Date. Except as otherwise expressly provided herein or in
any other Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrowers, and all rights of Lender, all as
contained in the Loan Documents shall not terminate or expire, but rather shall
survive such termination or cancellation and shall continue in full force and
effect until such time as all of the obligations have been paid in full in
accordance with the terms of the agreements creating such obligations.
10.8. Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.9. Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
10.10. Authorized Signature. Until Lender shall be notified by Akorn to the
contrary, the signature upon any document or instrument delivered pursuant
hereto of an officer of any
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Borrower listed on Schedule 10.10 shall bind such Borrower and be deemed to be
the act of such Borrower affixed pursuant to and in accordance with resolutions
duly adopted by such Borrower's Board of Directors.
10.11. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
(WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS) OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH BORROWER HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇▇ COUNTY, CITY OF CHICAGO,
ILLINOIS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDER AND
BORROWERS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF ▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
BORROWER AT THE ADDRESS SET FORTH IN SECTION 10.12 OF THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
10.12. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
either of the
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parties by the other party, or whenever either of the parties desires to give or
serve upon the other party any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
10.12), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on this Section 10.12 or to such
other address (or facsimile number) as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrowers or Lender) designated
on this Section 10.12 to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
If to Lender, at
The Northern Trust Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any Borrower, at
Akorn, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President/Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.13. Section Titles. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
10.14. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
10.15. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG LENDER AND BORROWERS ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.
10.16. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Borrower for liquidation or reorganization, should any Borrower become insolvent
or make an assignment for the benefit of
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any creditor or creditors or should a receiver or trustee be appointed for all
or any significant part of any Borrower's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11. CROSS-GUARANTY.
11.1. Cross-Guaranty. Each Borrower hereby acknowledges and agrees that
such Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to each other Borrower and Lender the full and prompt
payment of, all Obligations owed or hereafter owing to Lender by each other
Borrowers.
11.2. Obligations Absolute. The liability of each Borrower to Lender
hereunder shall not be affected or impaired by any of the following acts by
Lender: (a) any acceptance of collateral security, guarantors, accommodation
parties or sureties for any or all Obligations; (b) one or more extensions or
renewals of Obligations (whether or not for longer than the original period) or
any modification of the interest rates, fees, maturities or principal amount of,
or other contractual terms applicable to any Obligations; (c) any waiver or
indulgence granted to a Borrower, any delay or lack of diligence in the
enforcement of Obligations, or any failure to institute proceedings, file a
claim, give any required notices or otherwise protect any Obligations; (d) any
full or partial release of, compromise or settlement with, or agreement not to
▇▇▇ a Borrower or any guarantor or other person liable in respect of any
Obligations; (e) any release, surrender, cancellation or other discharge of any
evidence of Obligations or the acceptance of any instrument in renewal or
substitution therefore; (f) any failure to obtain collateral security (including
rights of setoff) for Obligations, or to obtain or maintain the proper or
sufficient creation and perfection thereof, or to establish the priority
thereof, or to preserve, protect, insure, care for, exercise or enforce any
collateral security; or any modification, alteration, substitution, exchange,
surrender, cancellation, termination, release or other change, impairment,
limitation, loss or discharge of any collateral security; (g) any collection,
sale, lease or disposition of, or any other foreclosure or enforcement of or
realization on, any collateral security; (h) any assignment, pledge or other
transfer of any Obligations or any evidence thereof; or (i) any manner, order or
method of application of any payments or credits upon Obligations. Each Borrower
hereby waives any and all defenses and discharges available to a surety,
guarantor, or accommodation co-obligor.
11.3. WAIVER. EACH BORROWER HEREBY WAIVES PRESENTMENT, DEMAND FOR PAYMENT,
NOTICE OF DISHONOR OR NONPAYMENT, AND PROTEST OF ANY INSTRUMENT EVIDENCING
OBLIGATIONS.
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11.4. Recovery. If any payment is applied by Lender to the Obligations and
is thereafter set aside, recovered, rescinded or required to be returned for any
reason (including, without limitation, the bankruptcy, insolvency or
reorganization of a Borrower or any other obligor), the Obligations to which
such payment was applied shall for the purposes of this Section 11 be deemed to
have continued in existence, notwithstanding such payment and application and
this cross guaranty shall be enforceable as to such Obligations as fully as if
such payment and application had never been made.
11.5. Liability Cumulative. The liability of Borrowers under this Section
11 is in addition to and shall be cumulative with all liabilities of each
Borrower to Lender under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or Obligation of the
other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[signature page(s) follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
AKORN, INC.
By:
-----------------------------------
Title:
--------------------------------
AKORN NEW JERSEY, INC.
By:
-----------------------------------
Title:
--------------------------------
THE NORTHERN TRUST COMPANY
By:
-----------------------------------
Title:
--------------------------------
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