EXHIBIT 10.1
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CREDIT AGREEMENT
DATED AS OF OCTOBER 7, 2003
AMONG
AKORN, INC.
AS A COMPANY,
AKORN (NEW JERSEY), INC.
AS A COMPANY,
THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS,
AND
LASALLE BANK NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
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SECTION 1 DEFINITIONS.................................................................................... 1
1.1 Definitions........................................................................... 1
1.2 Other Interpretive Provisions......................................................... 24
SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.............. 25
2.1 Commitments........................................................................... 25
2.1.1 Revolving Loan Commitment.................................................... 25
2.1.2 Term Loan Commitment......................................................... 25
2.1.3 L/C Commitment............................................................... 25
2.2 Loan Procedures....................................................................... 26
2.2.1 Various Types of Loans....................................................... 26
2.2.2 Borrowing Procedures......................................................... 26
2.2.3 Conversion and Continuation Procedures....................................... 26
2.2.4 Unavailability of LIBOR...................................................... 27
2.3 Letter of Credit Procedures........................................................... 27
2.3.1 L/C Applications............................................................. 28
2.3.2 Participations in Letters of Credit.......................................... 28
2.3.3 Reimbursement Obligations.................................................... 29
2.3.4 Funding by Lenders to Issuing Lender......................................... 29
2.4 Commitments Several................................................................... 30
2.5 Certain Conditions.................................................................... 30
SECTION 3 EVIDENCING OF LOANS............................................................................ 30
3.1 Notes................................................................................. 30
3.2 Recordkeeping......................................................................... 31
SECTION 4 INTEREST....................................................................................... 31
4.1 Interest Rates........................................................................ 31
4.2 Interest Payment Dates................................................................ 31
4.3 Setting and Notice of LIBOR Rates..................................................... 31
4.4 Computation of Interest............................................................... 31
SECTION 5 FEES........................................................................................... 32
5.1 Non-Use Fee........................................................................... 32
5.2 Letter of Credit Fees................................................................. 32
5.3 Administrative Agent's Fees........................................................... 32
SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT; PREPAYMENTS....................... 32
6.1 Reduction or Termination of the Revolving Commitment Amount........................... 32
6.1.1 Voluntary Reduction or Termination of the Revolving
Commitment Amount............................................................ 32
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6.1.2 Mandatory Reductions of Revolving Commitment Amount.......................... 33
6.1.3 All Reductions of the Revolving Commitment Amount............................ 33
6.2 Prepayments........................................................................... 33
6.2.1 Voluntary Prepayments........................................................ 33
6.3 Manner of Prepayments................................................................. 34
6.4 Repayments............................................................................ 34
6.4.1 Revolving Loans.............................................................. 34
6.4.2 Term A Loans................................................................. 34
6.4.3 Term B Loans................................................................. 35
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................................................ 36
7.1 Making of Payments.................................................................... 36
7.2 Application of Certain Payments....................................................... 36
7.3 Due Date Extension.................................................................... 36
7.4 Setoff................................................................................ 36
7.5 Proration of Payments................................................................. 36
7.6 Taxes................................................................................. 37
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS............................................ 39
8.1 Increased Costs....................................................................... 39
8.2 Basis for Determining Interest Rate Inadequate or Unfair.............................. 40
8.3 Changes in Law Rendering LIBOR Loans Unlawful......................................... 40
8.4 Funding Losses........................................................................ 40
8.5 Right of Lenders to Fund through Other Offices........................................ 41
8.6 Discretion of Lenders as to Manner of Funding......................................... 41
8.7 Mitigation of Circumstances; Replacement of Lenders................................... 41
8.8 Conclusiveness of Statements; Survival of Provisions.................................. 42
SECTION 9 REPRESENTATIONS AND WARRANTIES................................................................. 42
9.1 Organization.......................................................................... 42
9.2 Authorization; No Conflict............................................................ 42
9.3 Validity and Binding Nature........................................................... 43
9.4 Financial Condition................................................................... 43
9.5 No Material Adverse Change............................................................ 43
9.6 Litigation and Contingent Liabilities................................................. 43
9.7 Ownership of Properties; Liens........................................................ 43
9.8 Equity Ownership; Subsidiaries........................................................ 44
9.9 Pension Plans......................................................................... 44
9.10 Investment Company Act................................................................ 45
9.11 Public Utility Holding Company Act.................................................... 45
9.12 Regulation U.......................................................................... 45
9.13 Taxes; Tax Shelter Registration....................................................... 45
9.14 Solvency, etc......................................................................... 45
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9.15 Environmental Matters................................................................. 46
9.16 Insurance............................................................................. 46
9.17 Real Property......................................................................... 46
9.18 Information........................................................................... 47
9.19 Intellectual Property................................................................. 47
9.20 Burdensome Obligations................................................................ 47
9.21 Labor Matters......................................................................... 47
9.22 No Default............................................................................ 47
9.23 Related Agreements, etc............................................................... 47
9.24 Subordinated Debt..................................................................... 48
9.25 Customer and Trade Relations.......................................................... 48
9.26 SEC Reports........................................................................... 49
9.27 Manufacturing......................................................................... 49
SECTION 10 AFFIRMATIVE COVENANTS.......................................................................... 49
10.1 Reports, Certificates and Other Information........................................... 49
10.1.1 Annual Report................................................................ 49
10.1.2 Interim Reports.............................................................. 50
10.1.3 Compliance Certificates...................................................... 50
10.1.4 Reports to the SEC and to Shareholders....................................... 50
10.1.5 Notice of Default, Litigation and ERISA Matters.............................. 50
10.1.6 Borrowing Base Certificates.................................................. 51
10.1.7 Management Reports........................................................... 52
10.1.8 Projections.................................................................. 52
10.1.9 Subordinated Debt Notices.................................................... 52
10.1.10 Accounts and Inventory Reports............................................... 52
10.1.11 FDA/DEA Inspections.......................................................... 52
10.1.12 Other Information............................................................ 52
10.2 Books, Records and Inspections........................................................ 52
10.3 Maintenance of Property; Insurance.................................................... 53
10.4 Compliance with Laws; Payment of Taxes and Liabilities................................ 54
10.5 Maintenance of Existence, etc......................................................... 55
10.6 Use of Proceeds....................................................................... 55
10.7 Employee Benefit Plans................................................................ 55
10.8 Environmental Matters................................................................. 55
10.9 Tax Shelter Registration.............................................................. 56
10.10 Further Assurances.................................................................... 56
10.11 Post Closing Matter................................................................... 56
10.12 Deposit Accounts...................................................................... 57
SECTION 11 NEGATIVE COVENANTS............................................................................. 57
11.1 Debt.................................................................................. 57
11.2 Liens................................................................................. 58
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11.3 Operating Leases...................................................................... 59
11.4 Restricted Payments................................................................... 60
11.5 Mergers, Consolidations, Sales........................................................ 60
11.6 Modification of Organizational Documents.............................................. 60
11.7 Transactions with Affiliates.......................................................... 60
11.8 Unconditional Purchase Obligations.................................................... 61
11.9 Inconsistent Agreements............................................................... 61
11.10 Business Activities; Issuance of Equity............................................... 61
11.11 Investments........................................................................... 61
11.12 Restriction of Amendments to Certain Documents........................................ 62
11.13 Fiscal Year........................................................................... 62
11.14 Financial Covenants................................................................... 62
11.14.1 EBITDA....................................................................... 62
11.14.2 Fixed Charge Coverage Ratio.................................................. 63
11.14.3 Senior Debt to EBITDA Ratio.................................................. 63
11.14.4 Total Debt to EBITDA Ratio................................................... 63
11.14.5 Capital Expenditures......................................................... 64
11.15 Cancellation of Debt.................................................................. 64
SECTION 12 EFFECTIVENESS; CONDITIONS OF LENDING, ETC...................................................... 64
12.1 Initial Credit Extension.............................................................. 64
12.1.2 Notes........................................................................ 65
12.1.3 Authorization Documents...................................................... 65
12.1.4 Consents, etc................................................................ 65
12.1.5 Letter of Direction.......................................................... 65
12.1.6 Guaranty and Collateral Agreement............................................ 65
12.1.7 Perfection Certificate....................................................... 65
12.1.8 Landlord/Mortgagee Waiver.................................................... 65
12.1.9 Subordination Agreements..................................................... 66
12.1.10 Opinions of Counsel.......................................................... 66
12.1.11 Insurance.................................................................... 66
12.1.12 Copies of Documents.......................................................... 66
12.1.13 Payment of Fees.............................................................. 66
12.1.14 Solvency Certificate......................................................... 66
12.1.15 Pro Forma.................................................................... 66
12.1.16 Search Results; Lien Terminations............................................ 66
12.1.17 Filings, Registrations and Recordings........................................ 67
12.1.18 Borrowing Base Certificate................................................... 67
12.1.19 Closing Certificate, Consents and Permits.................................... 67
12.1.20 Related Agreements........................................................... 67
12.1.21 Kapoor Guaranty.............................................................. 67
12.1.22 Fairness Opinion............................................................. 67
12.1.23 Deposit Account Control Agreements........................................... 67
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12.1.24 Northern Trust Release....................................................... 68
12.1.25 Kapoor Equity Group Release.................................................. 68
12.1.26 Audit Committee Approval and Stockholder Letter.............................. 68
12.1.27 Shareholder Litigation....................................................... 68
12.1.28 Transaction Costs............................................................ 68
12.1.29 Minimum Availability......................................................... 68
12.1.30 Other........................................................................ 68
12.2 Conditions............................................................................ 68
12.2.1 Compliance with Warranties, No Default, etc.................................. 69
12.2.2 Confirmatory Certificate..................................................... 69
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT............................................................. 69
13.1 Events of Default..................................................................... 69
13.1.1 Non-Payment of the Loans, etc................................................ 69
13.1.2 Non-Payment of Other Debt.................................................... 69
13.1.3 Other Material Obligations................................................... 70
13.1.4 Bankruptcy, Insolvency, etc.................................................. 70
13.1.5 Non-Compliance with Loan Documents........................................... 70
13.1.6 Representations; Warranties.................................................. 70
13.1.7 Pension Plans................................................................ 70
13.1.8 Judgments.................................................................... 71
13.1.9 Invalidity of Collateral Documents, etc...................................... 71
13.1.10 Invalidity of Subordination Provisions, etc.................................. 71
13.1.11 Change of Control............................................................ 71
13.1.12 FDA Action................................................................... 71
13.1.13 Significant Customers........................................................ 71
13.1.14 Death of Guarantor........................................................... 71
13.1.15 Kapoor Guaranty.............................................................. 71
13.1.16 Letter of Credit............................................................. 72
13.1.17 Material Adverse Effect. The occurrence of any event having a
Material Adverse Effect. .................................................... 72
13.2 Effect of Event of Default............................................................ 72
SECTION 14 THE AGENT...................................................................................... 72
14.1 Appointment and Authorization......................................................... 72
14.1.2 Issuing Lender............................................................... 73
14.1.3 Delegation of Duties......................................................... 73
14.1.4 Exculpation of Administrative Agent.......................................... 73
14.2 Reliance by Administrative Agent...................................................... 73
14.3 Notice of Default..................................................................... 74
14.4 Credit Decision....................................................................... 74
14.5 Indemnification....................................................................... 75
14.6 Administrative Agent in Individual Capacity........................................... 75
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14.7 Successor Administrative Agent........................................................ 76
14.8 Collateral Matters.................................................................... 76
14.9 Administrative Agent May File Proofs of Claim......................................... 77
SECTION 15 GENERAL........................................................................................ 77
15.1 Waiver; Amendments.................................................................... 77
15.2 Confirmations......................................................................... 78
15.3 Notices............................................................................... 78
15.4 Computations.......................................................................... 79
15.5 Costs, Expenses and Taxes............................................................. 79
15.6 Assignments; Participations........................................................... 79
15.6.1 Assignments.................................................................. 79
15.6.2 Participations............................................................... 80
15.7 Register.............................................................................. 81
15.8 GOVERNING LAW......................................................................... 81
15.9 Confidentiality....................................................................... 81
15.10 Severability.......................................................................... 82
15.11 Nature of Remedies.................................................................... 82
15.12 Entire Agreement...................................................................... 82
15.13 Counterparts.......................................................................... 83
15.14 Successors and Assigns................................................................ 83
15.15 Captions.............................................................................. 83
15.16 INDEMNIFICATION BY THE COMPANY........................................................ 83
15.17 Nonliability of Lenders............................................................... 84
15.18 FORUM SELECTION AND CONSENT TO JURISDICTION........................................... 85
15.19 WAIVER OF JURY TRIAL.................................................................. 85
15.20 Joint and Several Liability of the Companies.......................................... 86
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ANNEXES
ANNEX A Lenders and Pro Rata Shares
ANNEX B Addresses for Notices
SCHEDULES
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.7 Encumbered Equipment
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.16 Insurance
SCHEDULE 9.17 Real Property
SCHEDULE 9.21 Labor Matters
SCHEDULE 9.27 Products
SCHEDULE 11.1 Existing Debt
SCHEDULE 11.2 Existing Liens
SCHEDULE 11.11 Investments
SCHEDULE 12.1 Debt to be Repaid
EXHIBITS
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.3)
EXHIBIT C Form of Borrowing Base Certificate (Section 1.1)
EXHIBIT D Form of Assignment Agreement (Section 15.6.1)
EXHIBIT E Form of Notice of Borrowing (Section 2.2.2)
EXHIBIT F Form of Notice of Conversion/Continuation (Section 2.2.3)
EXHIBIT G Form of Kapoor Guaranty
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of October 7, 2003 (this "Agreement") is
entered into among AKORN, INC., a Louisiana corporation ("Akorn"), AKORN (NEW
JERSEY), INC., an Illinois corporation and wholly-owned subsidiary of Akorn
("Akorn New Jersey", and together with Akorn, the "Companies", each being a
"Company"), the financial institutions that are or may from time to time become
parties hereto (together with their respective successors and assigns, the
"Lenders") and LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity,
"LaSalle"), as administrative agent for the Lenders.
The Lenders have agreed to make available to the Companies term loans
and a revolving credit facility (which includes letters of credit) upon the
terms and conditions set forth herein.
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have
the following meanings:
Account Debtor is defined in the Guaranty and Collateral Agreement.
Account or Accounts is defined in the UCC.
Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of in excess of
50% of the Capital Securities of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is already a Subsidiary).
Adjusted Forced Liquidation Value means the result of (a) 90% of the
Forced M&E Liquidation Value minus (b) $1,750,000 minus (c) the outstanding
principal amount of all Term B Loans.
Administrative Agent means LaSalle in its capacity as administrative
agent for the Lenders hereunder and any successor thereto in such capacity.
Affected Loan - see Section 8.3.
Affiliate of any Person means (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person and (c) with respect to any
Lender, any entity administered or managed by such Lender or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans. A Person shall be deemed to be
"controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Unless expressly stated otherwise
herein, neither the Administrative Agent nor any Lender shall be deemed an
Affiliate of any Loan Party.
Agent Fee Letter means the Fee letter dated as of October 7, 2003
between the Companies and the Administrative Agent.
Agreement - see the Preamble.
Akorn - see the Preamble.
Akorn New Jersey - see the Preamble.
Articles of Amendment means the Articles of Amendment of the Articles
of Incorporation of Akorn, dated as of October 3, 2003.
Asset Disposition means the sale, lease, assignment or other transfer
for value (each, a "Disposition") by any Loan Party to any Person (other than a
Loan Party) of any asset or right of such Loan Party (including, the loss,
destruction or damage of any thereof or any actual or threatened (in writing to
any Loan Party) condemnation, confiscation, requisition, seizure or taking
thereof) other than (a) the Disposition of any asset which is to be replaced,
and is in fact replaced, within 75 days with another asset performing the same
or a similar function, and (b) the sale or lease of inventory in the ordinary
course of business.
Assigned Interests means all rights, title and interest of Northern
Trust (and any other lender or participant) under or in connection with the
Northern Trust Credit Agreement.
Assignee - see Section 15.6.1.
Assignment Agreement - see Section 15.6.1.
Attorney Costs means, with respect to any Person, all reasonable fees
and charges of any counsel to such Person, the reasonable allocable cost of
internal legal services of such Person, all reasonable disbursements of such
internal counsel and all court costs and similar legal expenses.
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Bank Product Agreements means those certain cash management service
agreements entered into from time to time between any Loan Party and a Lender or
its Affiliates in connection with any of the Bank Products.
Bank Product Obligations means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Loan Parties to any
Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that a Loan Party is obligated
to reimburse to the Administrative Agent or any Lender as a result of the
Administrative Agent or such Lender purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to the Loan Parties pursuant to the Bank Product Agreements.
Bank Products means any service or facility extended to any Loan Party
by any Lender or its Affiliates including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) Hedging Agreements.
Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.5% and (b) the Prime Rate.
Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.
Base Rate Margin means (a) 1.50% per annum, in the case of Revolving
Loans and (b) 1.75% per annum in the case of Term Loans.
Borrowing Base means an amount equal to the total of (a) 80% of the
unpaid amount (net of (i) such reserves and allowances as the Administrative
Agent deems necessary in its reasonable discretion and (ii) liabilities and
reserves for chargebacks, returns, rebates and discounts) of all Eligible
Accounts plus (b) the lesser of (i) 30% of the value of all Eligible Inventory
valued at the lower of cost or market or (ii) $2,500,000 plus (c) the Adjusted
Forced Liquidation Value (net of such reserves and allowances as the
Administrative Agent deems necessary in its reasonable discretion).
Borrowing Base Certificate means a certificate substantially in the
form of Exhibit C.
BSA - see Section 10.4.
Business Day means any day on which LaSalle is open for commercial
banking business in Chicago, Illinois and, in the case of a Business Day which
relates to a LIBOR Loan, on which dealings are carried on in the London
interbank eurodollar market.
Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Companies,
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including expenditures in respect of Capital Leases, but excluding expenditures
made in connection with the replacement, substitution or restoration of assets
to the extent financed (a) from insurance proceeds (or other similar recoveries)
paid on account of the loss of or damage to the assets being replaced or
restored or (b) with awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Capital Securities means, with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital, whether now outstanding or
issued or acquired after the Closing Date, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.
Cash Collateralize means to deliver cash collateral to the
Administrative Agent, to be held as cash collateral for outstanding Letters of
Credit, pursuant to documentation satisfactory to the Administrative Agent.
Derivatives of such term have corresponding meanings.
Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by a Lender or its holding company) rated at
least A-l by Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or P-l by ▇▇▇▇▇'▇ Investors Service, Inc., (c) any certificate
of deposit, time deposit or banker's acceptance, maturing not more than one year
after such time, or any overnight Federal Funds transaction that is issued or
sold by any Lender or its holding company (or by a commercial banking
institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000), (d)
any repurchase agreement entered into with any Lender (or commercial banking
institution of the nature referred to in clause (c)) which (i) is secured by a
fully perfected security interest in any obligation of the type described in any
of clauses (a) through (c) above and (ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such Lender (or other commercial banking institution) thereunder
and (e) money market accounts or mutual funds which invest exclusively in assets
satisfying the foregoing requirements, and (f) other short term liquid
investments approved in writing by the Administrative Agent.
Change of Control means the occurrence of any of the following events
after the date hereof: (a) ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Kapoor Trust shall cease
to own and control at least 25% in the aggregate of the outstanding Capital
Securities of Akorn; or (b) Akorn shall cease to, directly or indirectly, own
and control 100% of each class of the outstanding Capital Securities of each
Subsidiary; (c) any Person or group of Persons (within the meaning of Section 13
or 14
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of the Exchange Act, but excluding any Specified Person (as defined below))
shall acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated
under such Act) of more than 25% of the outstanding securities (on a fully
diluted basis and taking into account any securities or contract rights
exercisable, exchangeable or convertible into equity securities) of Akorn having
voting rights in the election of directors under normal circumstances; or (d)
the Continuing Directors cease for any reason to constitute a majority of the
members of the board of directors of Akorn then in office. As used in this
definition, "Specified Person" means ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Kapoor Trust. As
used in this definition, "Continuing Directors" means the individuals who are
members of Akorn's board of directors as of the date hereof; provided, that if
the election, or nomination for election by Akorn's shareholders, of any new
director was approved by a vote of at least a majority of the Continuing
Directors then in office, such new director shall be considered a "Continuing
Director".
Closing Date - see Section 12.1.
Code means the Internal Revenue Code of 1986.
Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Administrative Agent pursuant to which a
mortgagee or lessor of real property on which collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory or other
property owned by any Loan Party, acknowledges the Liens of the Administrative
Agent and waives any Liens held by such Person on such property, and, in the
case of any such agreement with a mortgagee or lessor, permits the
Administrative Agent reasonable access to and use of such real property
following the occurrence and during the continuance of an Event of Default to
assemble, complete and sell any collateral stored or otherwise located thereon.
Collateral Documents means, collectively, the Guaranty and Collateral
Agreement, the Kapoor Guaranty, each Collateral Access Agreement, each
Perfection Certificate, each control agreement and any other agreement or
instrument pursuant to which the Companies, any Subsidiary or any other Person
grants or purports to grant collateral to the Administrative Agent for the
benefit of the Lenders or otherwise relates to such collateral.
Commitment means, as to any Lender, such Lender's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
The initial amount of each Lender's commitment to make Loans is set forth on
Annex A.
Company or Companies - see the Preamble.
Compliance Certificate means a Compliance Certificate in substantially
the form of Exhibit B.
Computation Period means each period of twelve consecutive calendar
months ending on the last day of a calendar month; provided that for the purpose
of determining compliance with
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Section 11.14.1, the Computation Period used in such determination for the
Computation Periods ending December 31, 2003, and on the last day of each
calendar month thereafter up to and including August 31, 2004, shall be the
period beginning October 1, 2003 and ending on the last day of the applicable
calendar month.
Consolidated Net Income means, with respect to the Companies and their
Subsidiaries for any period, the net income (or loss) of the Companies and their
Subsidiaries for such period, excluding any gains from Asset Dispositions, any
extraordinary gains and any gains from discontinued operations.
Contingent Liability means, with respect to any Person, each obligation
and liability of such Person and all such obligations and liabilities of such
Person incurred pursuant to any agreement, undertaking or arrangement by which
such Person: (a) guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
dividend, obligation or other liability of any other Person in any manner (other
than by endorsement of instruments in the course of collection), including any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (b) guarantees the payment of dividends or other distributions
upon the Capital Securities of any other Person; (c) undertakes or agrees
(whether contingently or otherwise): (i) to purchase, repurchase, or otherwise
acquire any indebtedness, obligation or liability of any other Person or any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, working capital or other financial condition of any other Person, or
(iii) to make payment to any other Person other than for value received; (d)
agrees to lease property or to purchase securities, property or services from
such other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment
of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.
Controlled Group means all members of a controlled group of
corporations, all members of a controlled group of trades or businesses (whether
or not incorporated) under common control and all members of an affiliated
service group which, together with Akorn or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.
DEA means the Drug Enforcement Administration of the United States of
America, together with its successors, and comparable agencies in foreign
countries.
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Debt of any Person means, without duplication, (a) all indebtedness of
such Person, (b) all borrowed money of such Person, whether or not evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, (d) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business),
(e) all indebtedness secured by a Lien on the property of such Person, whether
or not such indebtedness shall have been assumed by such Person; provided that
if such Person has not assumed or otherwise become liable for such indebtedness,
such indebtedness shall be measured at the fair market value of such property
securing such indebtedness at the time of determination, (f) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn), bankers' acceptances and similar obligations
issued for the account of such Person (including the Letters of Credit), (g) all
Hedging Obligations of such Person, (h) all Contingent Liabilities of such
Person and (i) all Debt of any partnership of which such Person is a general
partner.
Debt to be Repaid means Debt listed on Schedule 12.1.
Decatur Mortgage Documents means (a) that certain Mortgage Note
(98021903), dated as of April 27, 1997 by and between ▇▇▇▇▇▇ Pharmaceuticals,
Inc. and Standard Mortgage Investors LLC in an original principal amount of
$1,500,000; (b) that certain Mortgage, Assignment of Rents, Security Agreement
and Fixture Filing, dated as of April 27, 1997, by and between ▇▇▇▇▇▇
Pharmaceuticals, Inc. and Standard Mortgage Investors LLC securing Mortgage Note
(98021903); (c) that certain Mortgage Note (98021904), dated as of April 27,
1997 by and between ▇▇▇▇▇▇ Pharmaceuticals, Inc. and Standard Mortgage Investors
LLC in an original principal amount of $1,500,000; (d) that certain Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing, dated as of April
27, 1997, by and between ▇▇▇▇▇▇ Pharmaceuticals, Inc. and Standard Mortgage
Investors LLC securing Mortgage Note (98021904); and (e) any related documents
executed in connection with the above, including any assignments of such
documents from ▇▇▇▇▇▇ Pharmaceuticals, Inc. to Akorn (as any of the above
documents may be amended, restated, supplemented or otherwise modified).
Designated Proceeds - see Section 6.2.2(a).
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income,
Interest Expense, income tax expense, depreciation and amortization for such
period plus non-recurring legal and consulting expenses incurred in the month of
October 2003 in connection with the Loan Documents and the Related Transactions,
in an amount not to exceed $3,400,000.
Eligible Account means an Account owing to either Company which meets
each of the following requirements:
7
(a) it arises from the sale or lease of goods or the rendering of
services which have been fully performed by the applicable Company, and if it
arises from the sale or lease of goods, (i) such goods comply with such Account
Debtor's specifications (if any) and have been delivered to such Account Debtor
and (ii) the applicable Company has possession of, or if requested by the
Administrative Agent has delivered to the Administrative Agent, delivery
receipts evidencing such delivery;
(b) it (i) is subject to a perfected, first priority Lien in favor
of the Administrative Agent and (ii) is not subject to any other assignment,
claim or Lien;
(c) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not subject to the
fulfillment of any condition whatsoever or any counterclaim, credit, allowance,
discount, rebate or adjustment by the Account Debtor with respect thereto, or to
any claim by such Account Debtor denying liability thereunder in whole or in
part and the Account Debtor has not refused to accept and/or has not returned or
offered to return any of the goods or services which are the subject of such
Account;
(d) there is no bankruptcy, insolvency or liquidation proceeding
pending by or against the Account Debtor with respect thereto;
(e) the Account Debtor with respect thereto is a resident or
citizen of, and is located within, the United States, unless the sale of goods
or services giving rise to such Account is on letter of credit, banker's
acceptance or other credit support terms reasonably satisfactory to the
Administrative Agent;
(f) it is not an Account arising from a "sale on approval," "sale
or return," "consignment" or "▇▇▇▇ and hold" or subject to any other repurchase
or return agreement;
(g) it is not an Account with respect to which possession and/or
control of the goods sold giving rise thereto is held, maintained or retained by
either Company (or by any agent or custodian of either Company) for the account
of or subject to further and/or future direction from the Account Debtor with
respect thereto;
(h) it arises in the ordinary course of business of the applicable
Company;
(i) if the Account Debtor is the United States or any department,
agency or instrumentality thereof, the applicable Company has assigned its right
to payment of such Account to the Administrative Agent pursuant to the
Assignment of Claims Act of 1940, and evidence (satisfactory to the
Administrative Agent) of such assignment has been delivered to the
Administrative Agent;
(j) if the applicable Company maintains a credit limit for an
Account Debtor, the aggregate dollar amount of Accounts due from such Account
Debtor, including such Account, does not exceed such credit limit;
8
(k) if the Account is evidenced by chattel paper or an instrument,
the originals of such chattel paper or instrument shall have been endorsed
and/or assigned and delivered to the Administrative Agent or, in the case of
electronic chattel paper, shall be in the control of the Administrative Agent,
in each case in a manner satisfactory to the Administrative Agent;
(l) such Account is evidenced by an invoice delivered to the
related Account Debtor and is not more than (i) 60 days (or 90 days, in the case
of Account Debtors that are wholesalers) past the due date thereof or (ii) 90
days (or 120 days, in the case of Account Debtors that are wholesalers) past the
original invoice date thereof, in each case according to the original terms of
sale;
(m) it is not an Account with respect to an Account Debtor that is
located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction must file a notice of business activities report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction's courts unless (i) such notice of business activities report has
been duly and timely filed or the applicable Company is exempt from filing such
report and has provided the Administrative Agent with satisfactory evidence of
such exemption or (ii) the failure to make such filings may be cured
retroactively by the applicable Company for a nominal fee;
(n) the Account Debtor with respect thereto is not Akorn or an
Affiliate of Akorn;
(o) it is not owed by an Account Debtor with respect to which 25%
or more of the aggregate amount of outstanding Accounts owed at such time by
such Account Debtor is classified as ineligible under clause (l) of this
definition;
(p) if the aggregate amount of all Accounts owed by the Account
Debtor thereon exceeds 25% of the aggregate amount of all Accounts at such time,
then all Accounts owed by such Account Debtor in excess of such amount shall be
deemed ineligible;
(q) it is not a liability nor does it constitute a reserve for any
chargeback, return, rebate or discount;
(r) the Account Debtor with respect thereto is not Medicare or
Medicaid (or any related Person), nor has the Account Debtor conditioned its
payment of such Account upon receipt of payments from Medicare or Medicaid (or
any related Person);
(s) it is otherwise not unacceptable to the Administrative Agent
in its reasonable discretion for any other reason.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account so long as such failure continues to exist. Further, with
respect to any Account, if the Administrative Agent or the Required Lenders at
any time hereafter determine in its or their discretion that the prospect of
9
payment or performance by the Account Debtor with respect thereto is materially
impaired for any reason whatsoever, such Account shall cease to be an Eligible
Account after notice of such determination is given to the applicable Company.
Eligible Inventory means Inventory of either Company which meets each
of the following requirements:
(a) (i) is subject to a perfected, first priority Lien in favor of
the Administrative Agent and (ii) is not subject to any other assignment, claim
or Lien;
(b) it is salable and not slow-moving (i.e., 12 months or less
until expiration), obsolete or discontinued;
(c) it is in the possession and control of a Company and it is
stored and held in facilities owned by a Company or, if such facilities are not
so owned, the Administrative Agent is in possession of a Collateral Access
Agreement with respect thereto;
(d) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the "hot goods" provisions contained in Title 29
U.S.C.Section 215;
(e) it is not subject to any agreement or license which would
restrict the Administrative Agent's ability to sell or otherwise dispose of such
Inventory;
(f) it is located in the United States or in any territory or
possession of the United States that has adopted Article 9 of the Uniform
Commercial Code;
(g) it is not "in transit" to a Company or held by a Company on
consignment;
(h) it is not "work-in-progress" Inventory;
(i) it is not supply items or packaging;
(j) it is not identified to any purchase order or contract to the
extent progress or advance payments are received with respect to such Inventory;
(k) it does not breach any of the representations, warranties or
covenants pertaining to Inventory set forth in the Loan Documents; and
(l) the Administrative Agent shall not have determined in its
reasonable discretion that it is unacceptable due to age, type, category,
quality, quantity and/or any other reason whatsoever.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory so long as such failure exists.
10
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative or judicial orders, consent agreements,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any governmental authority, in each case relating to any matter
arising out of or relating to public health and safety, or pollution or
protection of the environment or workplace, including any of the foregoing
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, discharge, emission, release,
threatened release, control or cleanup of any Hazardous Substance.
ERISA means the Employee Retirement Income Security Act of 1974.
Event of Default means any of the events described in Section 13.1.
Excess Cash Flow means, for any period, the remainder of (a) EBITDA for
such period, minus (b) the sum, without duplication, of (i) scheduled repayments
of principal of Term Loans made during such period, plus (ii) voluntary
prepayments of the Term Loans pursuant to Section 6.2.1 during such period, plus
(iii) cash payments made in such period with respect to Capital Expenditures,
plus (iv) all income taxes paid in cash by the Loan Parties during such period,
plus (v) cash Interest Expense of the Loan Parties during such period.
Exchange Act means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.
Excluded Taxes means taxes based upon, or measured by, the Lender's or
Administrative Agent's (or a branch of the Lender's or Administrative Agent's)
overall net income, overall net receipts, or overall net profits (including
franchise taxes imposed in lieu of such taxes), but only to the extent such
taxes are imposed by a taxing authority (a) in a jurisdiction in which such
Lender or Administrative Agent is organized, (b) in a jurisdiction which the
Lender's or Administrative Agent's principal office is located, or (c) in a
jurisdiction in which such Lender's or Administrative Agent's lending office (or
branch) in respect of which payments under this Agreement are made is located.
FDA means the Food and Drug Administration of the United States of
America and comparable agencies in foreign countries.
Federal Funds Rate means, for any day, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions
11
with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by the
Administrative Agent. The Administrative Agent's determination of such rate
shall be binding and conclusive absent manifest error.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of Akorn and its Subsidiaries, which
period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 2003") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of (a) the total for such period of EBITDA minus the sum of income taxes
paid in cash by the Loan Parties and all unfinanced Capital Expenditures to (b)
the sum for such period of (i) cash Interest Expense plus (ii) required payments
of principal of Funded Debt (including the Term Loans but excluding the
Revolving Loans); provided, that for any Computation Period ending on or before
August 31, 2004, such ratio shall be calculated by annualizing each component
thereof (including EBITDA as computed pursuant to Section 11.14.1 for such date)
as computed for the period from and after October 1, 2003, up to and including
the last day of such Computation Period.
Forced M&E Liquidation Value means, initially, $4,546,667 as set forth
in that certain machinery and equipment appraisal report dated as of August 18,
2003 by Dovebid Valuation Services, and, thereafter, such other amount as may be
determined by the Administrative Agent in its reasonable discretion, any such
amount to exclude the value of equipment encumbered by the National City Lease
or any other Capital Lease or purchase money financing.
FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.
Funded Debt means, as to any Person, all Debt of such Person that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from such
date).
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession) and the Securities and Exchange Commission, which are applicable to
the circumstances as of the date of determination.
12
Group - see Section 2.2.1.
Guarantor means each Company, any Subsidiary, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, and
any other Person party to an agreement to guarantee the Obligations.
Guaranty and Collateral Agreement means the Guaranty and Collateral
Agreement dated as of the date hereof executed and delivered by the Loan
Parties, together with any joinders thereto and any other guaranty and
collateral agreement executed by a Loan Party, in each case in form and
substance satisfactory to the Administrative Agent.
Guaranty Warrant Agreements means (a) the Guaranty Warrant Agreement,
dated as of October 7, 2003, by and between Akorn and the Kapoor Trust and (b)
the Guaranty Warrant Agreement, dated as of October 7, 2003, by and between
Akorn and Arjun Warey.
Hazardous Substances means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the definition of "hazardous
substances", "hazardous waste", "hazardous materials", "extremely hazardous
substances", "restricted hazardous waste", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the exposure to, or release of which is prohibited, limited or regulated by any
governmental authority or for which any duty or standard of care is imposed
pursuant to, any Environmental Law.
Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
Hedging Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement. The amount of any Person's obligation
in respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person in
accordance with GAAP.
Indemnified Liabilities - see Section 15.16.
Interest Expense means for any period the consolidated interest expense
of the Companies and their Subsidiaries for such period (including all imputed
interest on Capital Leases).
Interest Period means, as to any LIBOR Loan, the period commencing on
the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan
and ending on the date one, two or three months thereafter as selected by the
applicable Company pursuant to Section 2.2.2 or 2.2.3, as the case may be;
provided that:
13
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(b) any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period shall end on the last Business Day of the calendar month at the end of
such Interest Period;
(c) the Companies may not select any Interest Period for a
Revolving Loan which would extend beyond the scheduled Termination Date; and
(d) the Companies may not select any Interest Period for a Term
Loan if, after giving effect to such selection, the aggregate principal amount
of all Term Loans having Interest Periods ending after any date on which an
installment of the Term Loans is scheduled to be repaid would exceed the
aggregate principal amount of the Term Loans scheduled to be outstanding after
giving effect to such repayment.
Inventory is defined in the Guaranty and Collateral Agreement.
Investment means, with respect to any Person, any investment in another
Person, whether by acquisition of any debt or Capital Security, by making any
loan or advance, by becoming obligated with respect to a Contingent Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business) or by making an
Acquisition.
Issuing Lender means LaSalle, in its capacity as the issuer of Letters
of Credit hereunder, or any Affiliate of LaSalle that may from time to time
issue Letters of Credit, and their successors and assigns in such capacity.
Kapoor Equity Group means the "Purchasers" as defined in the Preferred
Stock and Note Purchase Agreement.
Kapoor Guaranty means that certain personal guaranty of ▇▇. ▇▇▇▇ ▇.
▇▇▇▇▇▇ in substantially the form of Exhibit G.
Kapoor Trust shall mean the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust dated September 20,
1989.
Kapoor Trust Subordinated Debt means the Debt incurred pursuant and
subject to the Kapoor Trust Subordinated Debt Documents.
Kapoor Trust Subordinated Debt Documents means that (a) certain
Convertible Promissory Note dated July 12, 2001 in the principal amount of
$3,000,000 payable by the Company in favor of the Kapoor Trust, (b) that certain
Convertible Promissory Note dated July
14
12, 2001 in the principal amount of $2,000,000 payable by the Company in favor
of the Kapoor Trust and (c) certain Convertible Bridge Loan and Warrant
Agreement, dated as of July 12, 2001 by and between Akorn and the Kapoor Trust,
as amended, together with all other documents or instruments executed in
connection therewith (as from time to time amended, modified, extended, renewed,
refinanced or restated).
Kapoor Trust Subordination Agreement means that certain Subordination
Agreement, dated as of October 7, 2003, by and among the Companies, the
Administrative Agent and the Kapoor Trust.
LaSalle - see the Preamble.
L/C Application means, with respect to any request for the issuance of
a Letter of Credit, a letter of credit application in the form being used by the
Issuing Lender at the time of such request for the type of letter of credit
requested.
L/C Fee Rate - means 1.50% per annum.
Lender - see the Preamble. References to the "Lenders" shall include
the Issuing Lender; for purposes of clarification only, to the extent that
LaSalle (or any successor Issuing Lender) may have any rights or obligations in
addition to those of the other Lenders due to its status as Issuing Lender, its
status as such will be specifically referenced. In addition to the foregoing,
for the purpose of identifying the Persons entitled to share in the Collateral
and the proceeds thereof under, and in accordance with the provisions of, this
Agreement and the Collateral Documents, the term "Lender" shall include
Affiliates of a Lender providing a Bank Product.
Lender Party - see Section 15.16.
Letter of Credit - see Section 2.1.3.
LIBOR Loan means any Loan which bears interest at a rate determined by
reference to the LIBOR Rate.
LIBOR Office means with respect to any Lender the office or offices of
such Lender which shall be making or maintaining the LIBOR Loans of such Lender
hereunder. A LIBOR Office of any Lender may be, at the option of such Lender,
either a domestic or foreign office.
LIBOR Rate means a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits in an amount comparable to the
amount of the relevant LIBOR Loan and for a period equal to the relevant
Interest Period are offered in the London Interbank Eurodollar market at 11:00
A.M. (London time) two (2) Business Days prior to the commencement of such
Interest Period (or three (3) Business Days prior to the commencement of such
Interest Period if banks in London, England were not open and dealing in
offshore United States dollars on such second preceding Business Day), as
displayed in the Bloomberg
15
Financial Markets system (or other authoritative source selected by the
Administrative Agent in its sole discretion), divided by (b) a number determined
by subtracting from 1.00 the then stated maximum reserve percentage for
determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D), such rate to remain
fixed for such Interest Period, or as the LIBOR Rate is otherwise determined by
the Administrative Agent in its sole and absolute discretion. The Administrative
Agent's determination of the LIBOR Rate shall be conclusive, absent manifest
error.
Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person (including an interest in respect of a
Capital Lease) which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, title retention lien, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Documents means this Agreement, the Notes, the Letters of Credit,
the Master Letter of Credit Agreement, the L/C Applications, the Agent Fee
Letter, the Collateral Documents, the Subordination Agreements and all
documents, instruments and agreements delivered in connection with the
foregoing.
Loan Party means the Companies and each Subsidiary.
Loan or Loans means, as the context may require, Revolving Loans,
and/or Term Loans.
Mandatory Prepayment Event - see Section 6.2.2(a).
Margin Stock means any "margin stock" as defined in Regulation U.
Master Letter of Credit Agreement means, at any time, with respect to
the issuance of Letters of Credit, a master letter of credit agreement or
reimbursement agreement in the form, if any, being used by the Issuing Lender at
such time.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Loan Parties taken as a whole or any
Guarantor, (b) a material impairment of the ability of any Loan Party or any
Guarantor to perform any of the Obligations under any Loan Document or (c) a
material adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or
enforceability against any Loan Party or any Guarantor of any Loan Document.
Mortgage means a mortgage, deed of trust, leasehold mortgage or similar
instrument granting the Administrative Agent a Lien on real property of any Loan
Party.
16
Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which a Company or any other member of the
Controlled Group may have any liability.
National City Lease means that certain Master Equipment Lease No.
08197, dated as of December 9, 1999, by and between National City Leasing
Corporation, as lessor, and Akorn, as lessee, and Equipment Schedule No. 001
dated as of December 26, 1999, by and between National City Leasing Corporation,
as lessor, and Akorn, as lessee.
NeoPharm Subordinated Debt means the Debt incurred pursuant and subject
to the NeoPharm Subordinated Debt Documents.
NeoPharm Subordinated Debt Documents means that certain Amended and
Restated Promissory Note, dated as of October 7, 2003, in the principal amount
of $3,250,000 payable by the Company in favor of NeoPharm, Inc. and all
guarantees and other documents or instruments executed in connection therewith
(as from time to time modified, extended, renewed, refinanced or restated).
NeoPharm Subordination Agreement means that certain Subordination and
Intercreditor Agreement dated as of October 7, 2003, by and among the Companies,
the Administrative Agent and NeoPharm, Inc., a Delaware corporation.
Net Cash Proceeds means:
(a) with respect to any Asset Disposition, the aggregate cash
proceeds (including cash proceeds received pursuant to policies of insurance or
by way of deferred payment of principal pursuant to a note, installment
receivable or otherwise, but only as and when received) received by any Loan
Party pursuant to such Asset Disposition net of (i) the direct costs relating to
such sale, transfer or other disposition (including sales commissions and legal,
accounting and investment banking fees), (ii) taxes paid or reasonably estimated
by Akorn to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and (iii)
amounts required to be applied to the repayment of any Debt secured by a Lien on
the asset subject to such Asset Disposition (other than the Loans);
(b) with respect to any issuance of Capital Securities, the
aggregate cash proceeds received by any Loan Party pursuant to such issuance,
net of the direct costs relating to such issuance (including sales and
underwriters' commissions); and
(c) with respect to any issuance of Debt, the aggregate cash
proceeds received by any Loan Party pursuant to such issuance, net of the direct
costs of such issuance (including up-front, underwriters' and placement fees).
Non-U.S. Participant - see Section 7.6(d).
17
Non-Use Fee Rate means 0.50% per annum.
Northern Trust means The Northern Trust Company, an Illinois banking
corporation.
Northern Trust Assignment Agreement means the Assignment and Assumption
Agreement, dated as of September 25, 2003, by and among Northern Trust, as
assignor, the Purchasers (as defined therein), as assignees, and the Companies,
pursuant to which the Purchasers agree to purchase and assume, and Northern
Trust agrees to sell its interest in and to the Assigned Interests.
Northern Trust Credit Loan Documents means (a) that certain Amended and
Restated Credit Agreement, dated as of September 15, 1999 (as amended, restated,
supplemented or otherwise modified), by and among the Companies and Northern
Trust, as lender and (b) all "Loan Documents" as defined therein.
Northern Trust Bank Group Obligations means all obligations and
liabilities owing by any of the Loan Parties to Northern Trust and any lender
under or in connection with the Northern Trust Loan Documents (and their
successors and assigns), whether direct, indirect, absolute or contingent.
Note means a promissory note substantially in the form of Exhibit A.
Note Warrant Agreements means (a) that certain Warrant Agreement, dated
as of October 7, 2003, by and between Akorn and the Kapoor Trust, (b) that
certain Warrant Agreement, dated as of October 7, 2003, by and between Akorn and
Arjun Waney and (c) that certain Warrant Agreement, dated as of October 7, 2003,
by and between Akorn and Argent Fund Management Ltd.
Notice of Borrowing - see Section 2.2.2.
Notice of Conversion/Continuation - see Section 2.2.3.
Obligations means all obligations (monetary (including post-petition
interest, allowed or not) or otherwise) of any Loan Party under this Agreement
and any other Loan Document including Attorney Costs and any reimbursement
obligations of each Loan Party in respect of Letters of Credit and surety bonds,
all Hedging Obligations permitted hereunder which are owed to any Lender or its
Affiliate, and all Bank Products Obligations, all in each case howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.
OFAC - see Section 10.4.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by any Loan Party, as lessee, other
than any Capital Lease.
18
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Participant - see Section 15.6.2.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding
standards of ERISA (other than a Multiemployer Pension Plan), and as to which
Akorn or any member of the Controlled Group may have any liability, including
any liability by reason of having been a substantial employer within the meaning
of Section 4063 of ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
Perfection Certificate means a perfection certificate executed and
delivered to the Administrative Agent by a Loan Party.
Permitted Lien means a Lien expressly permitted hereunder pursuant to
Section 11.2.
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
Preferred Stock and Note Purchase Agreement means that certain
Preferred Stock and Note Purchase Agreement, dated as of September 25, 2003, by
and among Akorn and the purchasers party thereto.
Preferred Stock Warrant Agreements means those certain Warrant
Agreements, dated as of October 7, 2003, by and among Akorn and each of the
purchasers party to the Preferred Stock and Note Purchase Agreement,
collectively.
Prime Rate means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Administrative Agent as its
prime rate (whether or not such rate is actually charged by the Administrative
Agent), which is not intended to be the Administrative Agent's lowest or most
favorable rate of interest at any one time. Any change in the Prime Rate
announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change;
provided that the Administrative Agent shall not be obligated to give notice of
any change in the Prime Rate.
Pro Rata Share means:
(a) with respect to a Lender's obligation to make Revolving Loans,
participate in Letters of Credit, reimburse the Issuing Lender, and receive
payments of principal, interest, fees, costs, and expenses with respect thereto,
(x) prior to the Revolving Commitment Amount being terminated or reduced to
zero, the percentage obtained by dividing (i) such Lender's Revolving Commitment
Amount, by (ii) the aggregate Revolving Commitment Amount of all Lenders and
19
(y) from and after the time the Revolving Commitment Amount has been terminated
or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid
principal amount of such Lender's Revolving Outstandings by (ii) the aggregate
unpaid principal amount of all Revolving Outstandings;
(b) with respect to a Lender's obligation to make a Term A Loan
and receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term A Loans, the percentage obtained by dividing (i)
such Lender's Term A Loan Commitment, by (ii) the aggregate amount of all
Lenders' Term A Loan Commitments, and (y) from and after the making of the Term
A Loans, the percentage obtained by dividing (i) the principal amount of such
Lender's Term A Loan by (ii) the principal amount of all Term A Loans of all
Lenders;
(c) with respect to a Lender's obligation to make a Term B Loan
and receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term B Loans, the percentage obtained by dividing (i)
such Lender's Term B Loan Commitment, by (ii) the aggregate amount of all
Lenders' Term B Loan Commitments, and (y) from and after the making of the Term
B Loans, the percentage obtained by dividing (i) the principal amount of such
Lender's Term B Loan by (ii) the principal amount of all Term B Loans of all
Lenders; and
(d) with respect to all other matters as to a particular Lender,
the percentage obtained by dividing (i) such Lender's Revolving Commitment plus
such Lender's Term A Loan Commitment plus such Lender's Term B Loan Commitment,
by (ii) the aggregate amount of Revolving Commitment Amount of all Lenders plus
the Term A Loan Commitment of all Lenders plus the Term B Loan Commitment of all
Lenders; provided that in the event the Commitments have been terminated or
reduced to zero, Pro Rata Share shall be the percentage obtained by dividing (A)
the principal amount of such Lender's Revolving Outstandings plus the unpaid
principal amount of such Lender's Term A Loan plus the unpaid principal amount
of such Lender's Term B Loan by (B) the principal amount of all outstanding
Revolving Outstandings plus the unpaid principal amount of all Term A Loans of
all Lenders plus the unpaid principal amount of all Term B Loans of all Lenders.
Registration Rights Agreement means that certain Registration Rights
Agreement, dated as of October 7, 2003, by and among Akorn and the purchasers
parties thereto.
Registration Rights Amendment means that certain First Amendment to
Registration Rights Agreement, by and between Akorn and the Kapoor Trust, dated
as of October 30, 1989.
Regulation D means Regulation D of the FRB.
Regulation U means Regulation U of the FRB.
Related Agreements means the Northern Trust Assignment Agreement, the
Articles of Amendment, the Guaranty Warrant Agreements, the Note Warrant
Agreements, the Preferred Stock Warrant Agreements, the Registration Rights
Agreement, the Preferred Stock and Note
20
Purchase Agreement, the Registration Rights Amendment, the NeoPharm Subordinated
Debt Documents, the Kapoor Trust Subordinated Debt Documents and the Related
Transactions Subordinated Debt Documents.
Related Transactions Subordinated Debt means the Debt incurred pursuant
and subject to the Related Transactions Subordinated Debt Documents.
Related Transactions Subordinated Debt Documents means, (a) that
Promissory Note, dated as of October 7, 2003, payable by Akorn in favor of the
Kapoor Trust in a principal amount of $2,117,139.03, (b) the Promissory Note,
dated as of October 7, 2003, payable by Akorn in favor of Argent Fund Management
Ltd. in a principal amount of $50,000, (c) the Promissory Note, dated as of
October 7, 2003, payable by Akorn in favor of Arjun Waney in a principal amount
of $600,000, (d) the Related Transactions Subordination Agreement, and (e) all
guarantees and other documents or instruments executed in connection therewith
(in each case, as from time to time modified, extended, renewed, refinanced or
restated).
Related Transactions Subordination Agreement means, collectively, (a)
that certain Subordination Agreement, dated as of October 7, 2003, by and among
the Companies, the Administrative Agent and the Kapoor Trust, (b) that certain
Subordination Agreement, dated as of October 7, 2003, by and among the
Companies, the Administrative Agent and Argent Fund Management Ltd. and (c) that
certain Subordination Agreement, dated as of October 7, 2003, by and among the
Companies, the Administrative Agent and Arjun Waney (in each case, as from time
to time modified, extended, renewed, refinanced or restated).
Related Transactions means the transactions contemplated by the Related
Agreements.
Replacement Lender - see Section 8.7(b).
Reportable Event means a reportable event as defined in Section 4043 of
ERISA and the regulations issued thereunder as to which the PBGC has not waived
the notification requirement of Section 4043(a), or the failure of a Pension
Plan to meet the minimum funding standards of Section 412 of the Code (without
regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.
Required Lenders means, at any time, Lenders whose Pro Rata Shares
exceed 66 2/3% as determined pursuant to clause (d) of the definition of "Pro
Rata Share".
Revolving Commitment Amount means $5,000,000, as reduced from time to
time pursuant to Section 6.1.
Revolving Loan - see Section 2.1.1.
Revolving Loan Availability means the lesser of (i) the Revolving
Commitment Amount and (ii) the Borrowing Base.
21
Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.
SEC means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions thereof.
Senior Debt means all Debt of the Companies and their Subsidiaries
other than Subordinated Debt.
Senior Debt to EBITDA Ratio means, as of the last day of any
Computation Period, the ratio of (a) Senior Debt as of such day to (b) EBITDA
for the Computation Period ending on such day; provided that for each
Computation Period ending on or before August 31, 2004, such ratio shall be
calculated by annualizing EBITDA as computed pursuant to Section 11.14.1 for
such date.
Senior Officer means, with respect to any Loan Party, any of the chief
executive officer, the chief financial officer, the chief operating officer or
the treasurer of such Loan Party.
Stated Amount means, with respect to any Letter of Credit at any date
of determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
Subordinated Debt means (a) the NeoPharm Subordinated Debt, (b) the
Kapoor Trust Subordinated Debt, (c) the Related Transactions Subordinated Debt,
and (d) any other unsecured Debt of the Companies which has subordination terms,
covenants, pricing and other terms which have been approved in writing by the
Required Lenders.
Subordinated Debt Documents means all documents and instruments
relating to the Subordinated Debt and all amendments and modifications thereof
approved by the Administrative Agent.
Subordination Agreements means, collectively, (a) the NeoPharm
Subordination Agreement, (b) the Kapoor Trust Subordination Agreement, and (c)
the Related Transactions Subordination Agreement, and (d) all other
subordination agreements executed by a holder of Subordinated Debt in favor of
the Administrative Agent and the Lenders from time to time after the Closing
Date.
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, such number of outstanding Capital Securities as
have more than 50% of the ordinary voting power for the election of directors or
other managers of such corporation, partnership, limited liability company or
other entity. Unless the context otherwise requires, each reference to
Subsidiaries
22
herein shall be a reference to Subsidiaries of the Companies, and Akorn New
Jersey shall be deemed a "Subsidiary" of Akorn hereunder for all purposes.
Taxes means any and all present and future taxes, duties, levies,
imposts, deductions, assessments, charges or withholdings, and any and all
liabilities (including interest and penalties and other additions to taxes) with
respect to the foregoing, but excluding Excluded Taxes.
Term A Loan Commitment means $5,500,000.
Term A Loans - see Section 2.1.2.
Term A Loan Maturity Date means the earlier of (a) October 7, 2005 or
(b) the Termination Date.
Term B Loan Commitment means $1,500,000.
Term B Loans - see Section 2.1.2.
Term B Loan Maturity Date means the earlier of (a) October 7 2005 or
(b) the Termination Date.
Term Loans means the Term A Loans and the Term B Loans.
Termination Date means the earlier to occur of (a) October 7, 2005 or
(b) such other date on which the Commitments terminate pursuant to Section 6 or
13.
Termination Event means, with respect to a Pension Plan that is subject
to Title IV of ERISA (if any), (a) a Reportable Event, (b) the withdrawal of
either Company or any other member of the Controlled Group from such Pension
Plan during a plan year in which such Company or any other member of the
Controlled Group was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the termination
of such Pension Plan, the filing of a notice of intent to terminate the Pension
Plan or the treatment of an amendment of such Pension Plan as a termination
under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to
terminate such Pension Plan or (e) any event or condition that might constitute
grounds under Section 4042 of ERISA for the termination of, or appointment of a
trustee to administer, such Pension Plan.
Total Debt means all Debt of the Companies and their Subsidiaries,
determined on a consolidated basis, excluding (a) contingent obligations in
respect of Contingent Liabilities (except to the extent constituting Contingent
Liabilities in respect of Debt of a Person other than any Loan Party), (b)
Hedging Obligations, and (c) Debt of either Company to Subsidiaries, Debt of
either Company to the other Company and Debt of Subsidiaries to a Company or to
other Subsidiaries.
23
Total Debt to EBITDA Ratio means, as of the last day of any Computation
Period, the ratio of (a) Total Debt as of such day to (b) EBITDA for the
Computation Period ending on such day; provided that for each Computation Period
ending on or before August 31, 2004, such ratio shall be calculated by
annualizing EBITDA as computed pursuant to Section 11.14.1 for such date.
Total Plan Liability means, at any time, the present value of all
vested and unvested accrued benefits under all Pension Plans (if any),
determined as of the then most recent valuation date for each Pension Plan,
using PBGC actuarial assumptions for single employer plan terminations.
type - see Section 2.2.1.
UCC is defined in the Guaranty and Collateral Agreement.
Unfunded Liability means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Pension Plans (if any)
exceeds the fair market value of all assets allocable to those benefits, all
determined as of the then most recent valuation date for each Pension Plan,
using PBGC actuarial assumptions for single employer plan terminations.
Unmatured Event of Default means any event that, if it continues
uncured, will, with lapse of time or notice or both, constitute an Event of
Default.
Withholding Certificate - see Section 7.6(d).
Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of
the Capital Securities of which (except directors' qualifying Capital
Securities) are at the time directly or indirectly owned by such Person and/or
another Wholly-Owned Subsidiary of such Person.
1.2 Other Interpretive Provisions. (a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.
(b) Section, Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) The term "including" is not limiting and means "including
without limitation."
(d) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."
(e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and the other Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, supplements and other
24
modifications thereto, but only to the extent such amendments, restatements,
supplements and other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation shall be construed as
including all statutory and regulatory provisions amending, replacing,
supplementing or interpreting such statute or regulation.
(f) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and each
shall be performed in accordance with its terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Companies, the Lenders and the other parties thereto and are the
products of all parties. Accordingly, they shall not be construed against the
Administrative Agent or the Lenders merely because of the Administrative Agent's
or Lenders' involvement in their preparation.
SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER
OF CREDIT PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of
this Agreement, each of the Lenders, severally and for itself alone, agrees to
make loans to, and to issue or participate in letters of credit for the account
of, the Companies as follows:
2.1.1 Revolving Loan Commitment. Each Lender with a Revolving Loan
Commitment agrees to make loans on a revolving basis ("Revolving Loans") from
time to time until the Termination Date in such Lender's Pro Rata Share of such
aggregate amounts as the Companies may request from all Lenders; provided that
the Revolving Outstandings will not at any time exceed Revolving Loan
Availability.
2.1.2 Term Loan Commitment. Each Lender with a Term Loan A
Commitment agrees to make a loan to the Companies (each such loan, a "Term A
Loan") on the Closing Date in such Lender's Pro Rata Share of the Term A Loan
Commitment. Each Lender with a Term Loan B Commitment agrees to make a loan to
the Companies (each such loan, a "Term B Loan") on the Closing Date in such
Lender's Pro Rata Share of the Term B Loan Commitment. The Commitments of the
Lenders to make Term Loans shall expire concurrently with the making of the Term
Loans on the Closing Date.
2.1.3 L/C Commitment. Subject to Section 2.3.1, the Issuing Lender
agrees to issue letters of credit, in each case containing such terms and
conditions as are permitted by this Agreement and are reasonably satisfactory to
the Issuing Lender (each, a "Letter of Credit"), at the request of and for the
account of the applicable Company from time to time before the scheduled
Termination Date and, as more fully set forth in Section 2.3.2, each Lender
agrees to purchase a participation in each such Letter of Credit; provided that
(a) the aggregate Stated Amount of all Letters of Credit shall not at any time
exceed $1,000,000 and (b) the Revolving Outstandings shall not at any time
exceed Revolving Loan Availability.
25
2.2 Loan Procedures.
2.2.1 Various Types of Loans. Each Revolving Loan shall be, and each
Term Loan may be divided into tranches which are, either a Base Rate Loan or a
LIBOR Loan (each a "type" of Loan), as the applicable Company shall specify in
the related notice of borrowing or conversion pursuant to Section 2.2.2 or
2.2.3. LIBOR Loans having the same Interest Period are sometimes called a
"Group" or collectively "Groups". Base Rate Loans and LIBOR Loans may be
outstanding at the same time, provided that not more than five different Groups
of LIBOR Loans shall be outstanding at any one time. All borrowings, conversions
and repayments of Revolving Loans shall be effected so that each Lender will
have a ratable share (according to its Pro Rata Share) of all types and Groups
of Loans.
2.2.2 Borrowing Procedures. The applicable Company shall give
written notice (each such written notice, a "Notice of Borrowing") substantially
in the form of Exhibit E or telephonic notice (followed immediately by a Notice
of Borrowing) to the Administrative Agent of each proposed borrowing not later
than (a) in the case of a Base Rate borrowing, 11:00 A.M., Chicago time, on the
proposed date of such borrowing, and (b) in the case of a LIBOR borrowing, 11:00
A.M., Chicago time, at least three Business Days prior to the proposed date of
such borrowing. Each such notice shall be effective upon receipt by the
Administrative Agent, shall be irrevocable, and shall specify the date, amount
and type of borrowing and, in the case of a LIBOR borrowing, the initial
Interest Period therefor. Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof. Not later than 1:00 P.M.,
Chicago time, on the date of a proposed borrowing, each Lender shall provide the
Administrative Agent at the office specified by the Administrative Agent with
immediately available funds covering such Lender's Pro Rata Share of such
borrowing and, so long as the Administrative Agent has not received written
notice that the conditions precedent set forth in Section 11 with respect to
such borrowing have not been satisfied, the Administrative Agent shall pay over
the funds received by the Administrative Agent to the applicable Company on the
requested borrowing date. Each borrowing shall be on a Business Day. Each Base
Rate borrowing shall be in an aggregate amount of at least $100,000 and an
integral multiple of $50,000, and each LIBOR borrowing shall be in an aggregate
amount of at least $1,000,000 and an integral multiple of at least $250,000.
2.2.3 Conversion and Continuation Procedures. (a) Subject to Section
2.2.1, a Company may, upon irrevocable written notice to the Administrative
Agent in accordance with clause (b) below:
(A) elect, as of any Business Day, to convert any Loans
(or any part thereof) in an aggregate amount not less than $1,000,000 and a
higher integral multiple of $250,000 into Loans of the other type; or
(B) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods expiring on such day
(or any part thereof) in an aggregate
26
amount not less than $1,000,000 or a higher integral multiple of $250,000 for a
new Interest Period;
provided that after giving effect to any prepayment, conversion or continuation,
the aggregate principal amount of each Group of LIBOR Loans shall be at least
$1,000,000 and an integral multiple of $100,000.
(b) The applicable Company shall give written notice (each such
written notice, a "Notice of Conversion/Continuation") substantially in the form
of Exhibit F or telephonic notice (followed immediately by a Notice of
Conversion/Continuation) to the Administrative Agent of each proposed conversion
or continuation not later than (i) in the case of conversion into Base Rate
Loans, 11:00 A.M., Chicago time, on the proposed date of such conversion and
(ii) in the case of conversion into or continuation of LIBOR Loans, 11:00 A.M.,
Chicago time, at least three Business Days prior to the proposed date of such
conversion or continuation, specifying in each case:
(A) the proposed date of conversion or continuation;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the type of Loans resulting from the proposed
conversion or continuation; and
(D) in the case of conversion into, or continuation of,
LIBOR Loans, the duration of the requested Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Loans, the applicable Company has failed to select timely a new Interest
Period to be applicable to such LIBOR Loans, such Company shall be deemed to
have elected to convert such LIBOR Loans into Base Rate Loans effective on the
last day of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of
its receipt of a notice of conversion or continuation pursuant to this Section
2.2.3 or, if no timely notice is provided by the applicable Company, of the
details of any automatic conversion.
(e) Any conversion of a LIBOR Loan on a day other than the last
day of an Interest Period therefor shall be subject to Section 8.4.
2.2.4 Unavailability of LIBOR. Notwithstanding anything to the
contrary in this Agreement, neither Company shall be permitted to borrow or
select LIBOR Loans or convert Base Rate Loans into LIBOR Loans.
2.3 Letter of Credit Procedures.
27
2.3.1 L/C Applications. The Companies shall execute and deliver to
the Issuing Lender the Master Letter of Credit Agreement from time to time in
effect. The applicable Company shall give notice to the Administrative Agent and
the Issuing Lender of the proposed issuance of each Letter of Credit on a
Business Day which is at least three Business Days (or such lesser number of
days as the Administrative Agent and the Issuing Lender shall agree in any
particular instance in their sole discretion) prior to the proposed date of
issuance of such Letter of Credit. Each such notice shall be accompanied by an
L/C Application, duly executed by the applicable Company and in all respects
satisfactory to the Administrative Agent and the Issuing Lender, together with
such other documentation as the Administrative Agent or the Issuing Lender may
request in support thereof, it being understood that each L/C Application shall
specify, among other things, the date on which the proposed Letter of Credit is
to be issued, the expiration date of such Letter of Credit (which shall not be
later than 25 days prior to the scheduled Termination Date (unless such Letter
of Credit is Cash Collateralized)) and whether such Letter of Credit is to be
transferable in whole or in part. Any Letter of Credit outstanding after the
scheduled Termination Date which is Cash Collateralized for the benefit of the
Issuing Lender shall be the sole responsibility of the Issuing Lender. So long
as the Issuing Lender has not received written notice that the conditions
precedent set forth in Section 12 with respect to the issuance of such Letter of
Credit have not been satisfied, the Issuing Lender shall issue such Letter of
Credit on the requested issuance date. The Issuing Lender shall promptly advise
the Administrative Agent of the issuance of each Letter of Credit and of any
amendment thereto, extension thereof or event or circumstance changing the
amount available for drawing thereunder. In the event of any inconsistency
between the terms of the Master Letter of Credit Agreement, any L/C Application
and the terms of this Agreement, the terms of this Agreement shall control.
2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Lender shall be deemed to have
sold and transferred to each Lender with a Revolving Loan Commitment, and each
such Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Lender, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Pro Rata Share, in
such Letter of Credit and the applicable Company's reimbursement obligations
with respect thereto. If such Company does not pay any reimbursement obligation
when due, such Company shall be deemed to have immediately requested that the
Lenders make a Revolving Loan which is a Base Rate Loan in a principal amount
equal to such reimbursement obligations. The Administrative Agent shall promptly
notify such Lenders of such deemed request and, without the necessity of
compliance with the requirements of Section 2.2.2, 12.2 or otherwise such Lender
shall make available to the Administrative Agent its Pro Rata Share of such
Loan. The proceeds of such Loan shall be paid over by the Administrative Agent
to the Issuing Lender for the account of the applicable Company in satisfaction
of such reimbursement obligations. For the purposes of this Agreement, the
unparticipated portion of each Letter of Credit shall be deemed to be the
Issuing Lender's "participation" therein. The Issuing Lender hereby agrees, upon
request of the Administrative Agent or any Lender, to deliver to the
Administrative Agent or such Lender a list of all outstanding Letters of Credit
issued by the Issuing Lender, together
28
with such information related thereto as the Administrative Agent or such Lender
may reasonably request.
2.3.3 Reimbursement Obligations. (a) Each Company hereby
unconditionally and irrevocably agrees to reimburse the Issuing Lender for each
payment or disbursement made by the Issuing Lender under any Letter of Credit
honoring any demand for payment made by the beneficiary thereunder, in each case
on the date that such payment or disbursement is made. Any amount not reimbursed
on the date of such payment or disbursement shall bear interest from the date of
such payment or disbursement to the date that the Issuing Lender is reimbursed
by the applicable Company therefor, payable on demand, at a rate per annum equal
to the Base Rate from time to time in effect plus the Base Rate Margin from time
to time in effect plus, beginning on the third Business Day after receipt of
notice from the Issuing Lender of such payment or disbursement, 2%. The Issuing
Lender shall notify the applicable Company and the Administrative Agent whenever
any demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided that the failure of the Issuing Lender to so notify the
applicable Company shall not affect the rights of the Issuing Lender or the
Lenders in any manner whatsoever.
(b) Each Company's reimbursement obligations hereunder
shall be irrevocable and unconditional under all circumstances, including (a)
any lack of validity or enforceability of any Letter of Credit, this Agreement
or any other Loan Document, (b) the existence of any claim, set-off, defense or
other right which any Loan Party may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative Agent,
the Issuing Lender, any Lender or any other Person, whether in connection with
any Letter of Credit, this Agreement, any other Loan Document, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between any Loan Party and the beneficiary named in any Letter of
Credit), (c) the validity, sufficiency or genuineness of any document which the
Issuing Lender has determined complies on its face with the terms of the
applicable Letter of Credit, even if such document should later prove to have
been forged, fraudulent, invalid or insufficient in any respect or any statement
therein shall have been untrue or inaccurate in any respect, or (d) the
surrender or impairment of any security for the performance or observance of any
of the terms hereof. Without limiting the foregoing, no action or omission
whatsoever by the Administrative Agent or any Lender (excluding any Lender in
its capacity as the Issuing Lender) under or in connection with any Letter of
Credit or any related matters shall result in any liability of the
Administrative Agent or any Lender to either Company, or relieve either Company
of any of its obligations hereunder to any such Person.
2.3.4 Funding by Lenders to Issuing Lender. If the Issuing Lender
makes any payment or disbursement under any Letter of Credit and (a) the
applicable Company has not reimbursed the Issuing Lender in full for such
payment or disbursement by 11:00 A.M., Chicago time, on the date of such payment
or disbursement, (b) a Revolving Loan may not be made in accordance with Section
2.3.2 or (c) any reimbursement received by the Issuing Lender from such Company
29
is or must be returned or rescinded upon or during any bankruptcy or
reorganization of such Company or otherwise, each other Lender with a Revolving
Loan Commitment shall be obligated to pay to the Administrative Agent for the
account of the Issuing Lender, in full or partial payment of the purchase price
of its participation in such Letter of Credit, its Pro Rata Share of such
payment or disbursement (but no such payment shall diminish the obligations of
such Company under Section 2.3.3), and, upon notice from the Issuing Lender, the
Administrative Agent shall promptly notify each other Lender thereof. Each other
Lender irrevocably and unconditionally agrees to so pay to the Administrative
Agent in immediately available funds for the Issuing Lender's account the amount
of such other Lender's Pro Rata Share of such payment or disbursement. If and to
the extent any Lender shall not have made such amount available to the
Administrative Agent by 2:00 P.M., Chicago time, on the Business Day on which
such Lender receives notice from the Administrative Agent of such payment or
disbursement (it being understood that any such notice received after noon,
Chicago time, on any Business Day shall be deemed to have been received on the
next following Business Day), such Lender agrees to pay interest on such amount
to the Administrative Agent for the Issuing Lender's account forthwith on
demand, for each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Base Rate from time to time in effect.
Any Lender's failure to make available to the Administrative Agent its Pro Rata
Share of any such payment or disbursement shall not relieve any other Lender of
its obligation hereunder to make available to the Administrative Agent such
other Lender's Pro Rata Share of such payment, but no Lender shall be
responsible for the failure of any other Lender to make available to the
Administrative Agent such other Lender's Pro Rata Share of any such payment or
disbursement.
2.4 Commitments Several. The failure of any Lender to make a
requested Loan on any date shall not relieve any other Lender of its obligation
(if any) to make a Loan on such date, but no Lender shall be responsible for the
failure of any other Lender to make any Loan to be made by such other Lender.
2.5 Certain Conditions. Notwithstanding any other provision of
this Agreement, no Lender shall have an obligation to make any Loan, or to
permit the continuation of or any conversion into any LIBOR Loan, and the
Issuing Lender shall not have any obligation to issue any Letter of Credit, if
an Event of Default or Unmatured Event of Default exists.
SECTION 3 EVIDENCING OF LOANS.
3.1 Notes. The Loans of each Lender shall be evidenced by a Note,
with appropriate insertions, payable to the order of such Lender in a face
principal amount equal to the sum of such Lender's Revolving Loan Commitment
plus the principal amount of such Lender's Term Loans.
30
3.2 Recordkeeping. The Administrative Agent, on behalf of each
Lender, shall record in its records, the date and amount of each Loan made by
each Lender, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttably
presumptive evidence of the principal amount of the Loans owing and unpaid. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the Obligations of the
Companies hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. Each Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full at a rate per annum equal to the sum
of the Base Rate from time to time in effect plus the Base Rate Margin from time
to time in effect; provided that at any time an Event of Default exists, unless
the Required Lenders otherwise consent, the interest rate applicable to each
Loan shall be increased by 2% (and, in the case of Obligations not bearing
interest, such Obligations shall bear interest at the Base Rate applicable to
Revolving Loans plus 2%), provided further that such increase may thereafter be
rescinded by the Required Lenders, notwithstanding Section 15.1. Notwithstanding
the foregoing, upon the occurrence of an Event of Default under Section 13.1.1
or 13.1.4, such increase shall occur automatically.
4.2 Interest Payment Dates. Accrued interest on each Base Rate
Loan shall be payable in arrears on the last day of each calendar month and at
maturity. Accrued interest on each LIBOR Loan shall be payable on the last day
of each Interest Period relating to such Loan (and, in the case of a LIBOR Loan
with an Interest Period in excess of three months, on the three-month
anniversary of the first day of such Interest Period), upon a prepayment of such
Loan, and at maturity. After maturity, and at any time an Event of Default
exists, accrued interest on all Loans shall be payable on demand.
4.3 Setting and Notice of LIBOR Rates. The applicable LIBOR Rate
for each Interest Period shall be determined by the Administrative Agent, and
notice thereof shall be given by the Administrative Agent promptly to the
Companies and each Lender. Each determination of the applicable LIBOR Rate by
the Administrative Agent shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. The Administrative Agent shall,
upon written request of either Company or any Lender, deliver to such Company or
such Lender a statement showing the computations used by the Administrative
Agent in determining any applicable LIBOR Rate hereunder.
4.4 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Base Rate Loan shall change simultaneously with each
change in the Base Rate.
31
SECTION 5 FEES.
5.1 Non-Use Fee. Each Company agrees to pay to the Administrative
Agent for the account of each Lender a non-use fee, for the period from the
Closing Date to the Termination Date, at the Non-Use Fee Rate in effect from
time to time of such Lender's Pro Rata Share (as adjusted from time to time) of
the unused amount of the Revolving Commitment Amount. For purposes of
calculating usage under this Section, the Revolving Commitment Amount shall be
deemed used to the extent of Revolving Outstandings. Such non-use fee shall be
payable in arrears on the last day of each calendar month and on the Termination
Date for any period then ending for which such non-use fee shall not have
previously been paid. The non-use fee shall be computed for the actual number of
days elapsed on the basis of a year of 360 days.
5.2 Letter of Credit Fees. (a) Each Company agrees to pay to the
Administrative Agent for the account of each Lender a letter of credit fee for
each Letter of Credit equal to the L/C Fee Rate in effect from time to time of
such Lender's Pro Rata Share (as adjusted from time to time) of the undrawn
amount of such Letter of Credit (computed for the actual number of days elapsed
on the basis of a year of 360 days); provided that, unless the Required Lenders
otherwise consent, the rate applicable to each Letter of Credit shall be
increased by 2% at any time that an Event of Default exists. Such letter of
credit fee shall be payable in arrears on the last day of each calendar month
and on the Termination Date (or such later date on which such Letter of Credit
expires or is terminated) for the period from the date of the issuance of each
Letter of Credit (or the last day on which the letter of credit fee was paid
with respect thereto) to the date such payment is due or, if earlier, the date
on which such Letter of Credit expired or was terminated.
(b) In addition, with respect to each Letter of Credit, each
Company agrees to pay to the Issuing Lender, for its own account, (i) such fees
and expenses as the Issuing Lender customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations and (ii) a letter of credit fronting fee in the amount and at
the times agreed to by the applicable Company and the Issuing Lender.
5.3 Administrative Agent's Fees. Each Company agrees to pay to the
Administrative Agent such agent's fees as are mutually agreed to from time to
time by the Company and the Administrative Agent including the fees set forth in
the Agent Fee Letter.
SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Reduction or Termination of the Revolving Commitment Amount.
6.1.1 Voluntary Reduction or Termination of the Revolving Commitment
Amount. The Companies may from time to time on at least five Business Days'
prior written notice received by the Administrative Agent (which shall promptly
advise each Lender thereof) permanently reduce the Revolving Commitment Amount
to an amount not less than the
32
Revolving Outstandings. Any such reduction shall be in an amount not less than
$100,000 or a higher integral multiple of $50,000. Concurrently with any
reduction of the Revolving Commitment Amount to zero, the Companies shall pay
all interest on the Revolving Loans, all non-use fees and all letter of credit
fees and shall Cash Collateralize in full all obligations arising with respect
to the Letters of Credit.
6.1.2 Mandatory Reductions of Revolving Commitment Amount. On the
date of any Mandatory Prepayment Event, the Revolving Commitment Amount shall be
permanently reduced by an amount (if any) equal to the Designated Proceeds of
such Mandatory Prepayment Event over the amount (if any) applied to prepay Term
Loans pursuant to Section 6.2.2.
6.1.3 All Reductions of the Revolving Commitment Amount. All
reductions of the Revolving Commitment Amount shall reduce the Commitments
ratably among the Lenders according to their respective Pro Rata Shares.
6.2 Prepayments.
6.2.1 Voluntary Prepayments. The Companies may from time to time
prepay the Loans in whole or in part; provided that the applicable Company shall
give the Administrative Agent (which shall promptly advise each Lender) notice
thereof not later than 11:00 A.M., Chicago time, on the day of such prepayment
(which shall be a Business Day), specifying the Loans to be prepaid and the date
and amount of prepayment. Any such partial prepayment shall be in an amount
equal to $100,000 or a higher integral multiple of $50,000.
6.2.2 Mandatory Prepayments.
(a) The Companies shall make a prepayment of the Term Loans until
paid in full upon the occurrence of any of the following (each a "Mandatory
Prepayment Event") at the following times and in the following amounts (such
applicable amounts being referred to as "Designated Proceeds"):
(i) Concurrently with the receipt by any Loan Party of
any Net Cash Proceeds from any Asset Disposition, in
an amount equal to 100% of such Net Cash Proceeds.
(ii) Concurrently with the receipt by any Loan Party of
any Net Cash Proceeds from any issuance of Capital
Securities of any Loan Party (excluding (x) any
issuance of Capital Securities pursuant to any
employee or director option program, benefit plan or
compensation program, (y) any issuance by a
Subsidiary to a Company or another Subsidiary and (z)
the Related Transactions), in an amount equal to 100%
of such Net Cash Proceeds.
(iii) Concurrently with the receipt by any Loan Party of
any Net Cash Proceeds from any issuance of any Debt
of any Loan Party (excluding Debt
33
permitted by clauses (a) through (e) of Section
11.1), in an amount equal to 100% of such Net Cash
Proceeds.
(iv) Within 90 days after the end of each Fiscal Year
(commencing with Fiscal Year 2004) in an amount equal
to 50% of Excess Cash Flow for such Fiscal Year.
(b) If on any day the Revolving Outstandings exceeds the Borrowing
Base, the Companies shall immediately prepay Revolving Loans and/or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.
(c) If on any day on which the Revolving Commitment Amount is
reduced pursuant to Section 6.1.2 the Revolving Outstandings exceeds the
Revolving Commitment Amount, the Companies shall immediately prepay Revolving
Loans or Cash Collateralize the outstanding Letters of Credit, or do a
combination of the foregoing, in an amount sufficient to eliminate such excess.
6.3 Manner of Prepayments. Each voluntary partial prepayment shall
be in a principal amount of $100,000 or a higher integral multiple of $50,000.
Any partial prepayment of a Group of LIBOR Loans shall be subject to the proviso
to Section 2.2.3(a). Any prepayment of a LIBOR Loan on a day other than the last
day of an Interest Period therefor shall include interest on the principal
amount being repaid and shall be subject to Section 8.4. All prepayments of Term
Loans shall be applied pro rata among the Term Loans according to the principal
amounts thereof and, as to each Term Loan, pro rata in the inverse order of
maturity to the remaining installments thereof. Except as otherwise provided by
this Agreement, all principal payments in respect of the Loans shall be applied
first, to repay outstanding Base Rate Loans and then to repay outstanding LIBOR
Rate Loans in direct order of Interest Period maturities.
6.4 Repayments.
6.4.1 Revolving Loans. The Revolving Loans of each Lender shall be
paid in full and the Revolving Commitment Amount shall terminate on the
Termination Date.
6.4.2 Term A Loans. The Term A Loan of each Lender shall be paid in
installments equal to such Lender's Pro Rata Share of the aggregate principal
amount of the installments of the Term A Loan as follows:
Payment Date Amount
------------ ------
May 31, 2004 $ 60,000
------------ ----------
June 30, 2004 $ 195,000
------------------ ----------
34
Payment Date Amount
------------ ------
July 31, 2004 $ 195,000
------------------ ----------
August 31, 2004 $ 195,000
------------------ ----------
September 30, 2004 $ 195,000
------------------ ----------
October 31, 2004 $ 195,000
------------------ ----------
November 30, 2004 $ 195,000
------------------ ----------
December 31, 2004 $ 195,000
------------------ ----------
January 31, 2005 $ 195,000
------------------ ----------
February 28, 2005 $ 195,000
------------------ ----------
March 31, 2005 $ 195,000
------------------ ----------
April 30, 2005 $ 195,000
------------------ ----------
May 31, 2005 $ 195,000
------------------ ----------
June 30, 2005 $ 195,000
------------------ ----------
July 31, 2005 $ 195,000
------------------ ----------
August 31, 2005 $ 195,000
------------------ ----------
September 30, 2005 $2,515,000
------------------ ----------
Unless sooner paid in full, the outstanding principal balance of the
Term A Loan shall be paid in full on the Term A Loan Maturity Date.
6.4.3 Term B Loans. The Term B Loan of each Lender shall be paid in
installments equal to such Lender's Pro Rata Share of the aggregate principal
amount of the installments of the Term B Loan as follows:
Payment Date Amount
------------ ------
October 31, 2003 $ 195,000
------------------ ----------
November 30, 2003 $ 195,000
------------------ ----------
December 31, 2003 $ 195,000
------------------ ----------
January 31, 2004 $ 195,000
------------------ ----------
February 29, 2004 $ 195,000
------------------ ----------
March 31, 2004 $ 195,000
------------------ ----------
April 30, 2004 $ 195,000
------------------ ----------
May 31, 2004 $ 135,000
------------------ ----------
Unless sooner paid in full, the outstanding principal balance of the
Term B Loan shall be paid in full on the Term B Loan Maturity Date.
35
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest
on the Notes, and of all fees, shall be made by the Companies to the
Administrative Agent in immediately available funds at the office specified by
the Administrative Agent not later than noon, Chicago time, on the date due; and
funds received after that hour shall be deemed to have been received by the
Administrative Agent on the following Business Day. The Administrative Agent
shall promptly remit to each Lender its share of all such payments received in
collected funds by the Administrative Agent for the account of such Lender. All
payments under Section 8.1 shall be made by the Companies directly to the Lender
entitled thereto without setoff, counterclaim or other defense.
7.2 Application of Certain Payments. So long as no Unmatured Event
of Default or Event of Default has occurred and is continuing, (a) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments and (b) voluntary and mandatory prepayments shall be applied
as set forth in Sections 6.2 and 6.3. After the occurrence and during the
continuance of an Unmatured Event of Default or Event of Default, all amounts
collected or received by the Administrative Agent or any Lender as proceeds from
the sale of, or other realization upon, all or any part of the collateral shall
be applied as the Administrative Agent shall determine in its discretion or, in
the absence of a specific determination by the Administrative Agent, as set
forth in the Guaranty and Collateral Agreement. Concurrently with each
remittance to any Lender of its share of any such payment, the Administrative
Agent shall advise such Lender as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest
with respect to any of the Loans, or of any fees, falls due on a day which is
not a Business Day, then such due date shall be extended to the immediately
following Business Day (unless, in the case of a LIBOR Loan, such immediately
following Business Day is the first Business Day of a calendar month, in which
case such due date shall be the immediately preceding Business Day) and, in the
case of principal, additional interest shall accrue and be payable for the
period of any such extension.
7.4 Setoff. Each Company agrees that the Administrative Agent and
each Lender have all rights of set-off and bankers' lien provided by applicable
law, and in addition thereto, each Company agrees that at any time any Event of
Default exists, the Administrative Agent and each Lender may apply to the
payment of any Obligations of the Companies hereunder, whether or not then due,
any and all balances, credits, deposits, accounts or moneys of the Companies
then or thereafter with the Administrative Agent or such Lender.
7.5 Proration of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset or
otherwise, on account of (a) principal of or interest on any Loan, but excluding
(i) any payment pursuant to Section 8.7 or 15.6 and (ii) payments of interest on
any Affected Loan) or (b) its participation in any Letter of Credit) in excess
of its applicable Pro Rata Share of payments and other recoveries obtained by
all Lenders
36
on account of principal of and interest on the Loans (or such participation)
then held by them, then such Lender shall purchase from the other Lenders such
participations in the Loans (or sub-participations in Letters of Credit) held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes.
(a) All payments made by the Companies hereunder or under any Loan
Documents shall be made without setoff, counterclaim, or other defense. To the
extent permitted by applicable law, all payments hereunder or under the Loan
Documents (including any payment of principal, interest, or fees) to, or for the
benefit, of any person shall be made by the Companies free and clear of and
without deduction or withholding for, or account of, any Taxes now or
hereinafter imposed by any taxing authority.
(b) If a Company makes any payment hereunder or under any Loan
Document in respect of which it is required by applicable law to deduct or
withhold any Taxes, the Companies shall increase the payment hereunder or under
any such Loan Document such that after the reduction for the amount of Taxes
withheld (and any taxes withheld or imposed with respect to the additional
payments required under this Section 7.6(b)), the amount paid to the Lenders or
the Administrative Agent equals the amount that was payable hereunder or under
any such Loan Document without regard to this Section 7.6(b). To the extent a
Company withholds any Taxes on payments hereunder or under any Loan Document,
the Companies shall pay the full amount deducted to the relevant taxing
authority within the time allowed for payment under applicable law and shall
deliver to the Administrative Agent within 30 days after it has made payment to
such authority a receipt issued by such authority (or other evidence
satisfactory to the Administrative Agent) evidencing the payment of all amounts
so required to be deducted or withheld from such payment.
(c) If any Lender or the Administrative Agent is required by law
to make any payments of any Taxes on or in relation to any amounts received or
receivable hereunder or under any other Loan Document, or any Tax is assessed
against a Lender or the Administrative Agent with respect to amounts received or
receivable hereunder or under any other Loan Document, the Companies will
indemnify such person against (i) such Tax (and any reasonable counsel fees and
expenses associated with such Tax) and (ii) any taxes imposed as a result of the
receipt of the payment under this Section 7.6(c). A certificate prepared in good
faith as to the amount of such payment by such Lender or the Administrative
Agent shall, absent manifest error, be final, conclusive, and binding on all
parties.
(d) (i) To the extent permitted by applicable law, each Lender
that is not a United States person within the meaning of Code section
7701(a)(30) (a "Non-U.S. Participant") shall
37
deliver to the Companies and the Administrative Agent on or prior to the Closing
Date (or in the case of a Lender that is an Assignee, on the date of such
assignment to such Lender) two accurate and complete original signed copies of
IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form
prescribed by the IRS) certifying to such Lender's entitlement to a complete
exemption from, or a reduced rate in, United States withholding tax on interest
payments to be made hereunder or any Loan. If a Lender that is a Non-U.S.
Participant is claiming a complete exemption from withholding on interest
pursuant to Sections 871(h) or 881(c) of the Code, the Lender shall deliver
(along with two accurate and complete original signed copies of IRS Form W-8BEN)
a certificate in form and substance reasonably acceptable to Administrative
Agent (any such certificate, a "Withholding Certificate"). In addition, each
Lender that is a Non-U.S. Participant agrees that from time to time after the
Closing Date, (or in the case of a Lender that is an Assignee, after the date of
the assignment to such Lender), when a lapse in time (or change in circumstances
occurs) renders the prior certificates hereunder obsolete or inaccurate in any
material respect, such Lender shall, to the extent permitted under applicable
law, deliver to the Companies and the Administrative Agent two new and accurate
and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or
any successor or other applicable forms prescribed by the IRS), and if
applicable, a new Withholding Certificate, to confirm or establish the
entitlement of such Lender or the Administrative Agent to an exemption from, or
reduction in, United States withholding tax on interest payments to be made
hereunder or any Loan.
(ii) Each Lender that is not a Non-U.S. Participant (other than any
such Lender which is taxed as a corporation for U.S. federal income tax
purposes) shall provide two properly completed and duly executed copies of IRS
Form W-9 (or any successor or other applicable form) to the Companies and the
Administrative Agent certifying that such Lender is exempt from United States
backup withholding tax. To the extent that a form provided pursuant to this
Section 7.6(d)(ii) is rendered obsolete or inaccurate in any material respects
as result of change in circumstances with respect to the status of a Lender,
such Lender shall, to the extent permitted by applicable law, deliver to the
Companies and the Administrative Agent revised forms necessary to confirm or
establish the entitlement to such Lender's or Agent's exemption from United
States backup withholding tax.
(iii) The Companies shall not be required to pay additional amounts
to a Lender, or indemnify any Lender, under this Section 7.6 to the extent that
such obligations would not have arisen but for the failure of such Lender to
comply with Section 7.6(d).
(iv) Each Lender agrees to indemnify the Administrative Agent and
hold the Administrative Agent harmless for the full amount of any and all
present or future Taxes and related liabilities (including penalties, interest,
additions to tax and expenses, and any Taxes imposed by any jurisdiction on
amounts payable to the Administrative Agent under this Section 7.6) which are
imposed on or with respect to principal, interest or fees payable to such Lender
hereunder and which are not paid by the Companies pursuant to this Section 7.6,
whether or not
38
such Taxes or related liabilities were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Administrative
Agent makes written demand therefor.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption
of, or any change in, any applicable law, rule or regulation, or any change in
the interpretation or administration of any applicable law, rule or regulation
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency: (A) shall impose, modify or deem
applicable any reserve (including any reserve imposed by the FRB, but excluding
any reserve included in the determination of the LIBOR Rate pursuant to Section
4), special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by any Lender; or (B) shall impose on any
Lender any other condition affecting its LIBOR Loans, its Note or its obligation
to make LIBOR Loans; and the result of anything described in clauses (i) and
(ii) above is to increase the cost to (or to impose a cost on) such Lender (or
any LIBOR Office of such Lender) of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by such Lender (or its LIBOR
Office) under this Agreement or under its Note with respect thereto, then upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to the Administrative
Agent), the Companies shall pay directly to such Lender such additional amount
as will compensate such Lender for such increased cost or such reduction, so
long as such amounts have accrued on or after the day which is 180 days prior to
the date on which such Lender first made demand therefor.
(b) If any Lender shall reasonably determine that any change in,
or the adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or the compliance by any Lender or
any Person controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's or such controlling Person's capital as a
consequence of such Lender's obligations hereunder or under any Letter of Credit
to a level below that which such Lender or such controlling Person could have
achieved but for such change, adoption, phase-in or compliance (taking into
consideration such Lender's or such controlling Person's policies with respect
to capital adequacy) by an amount deemed by such Lender or such controlling
Person to be material, then from time to time, upon demand by such Lender (which
demand shall be accompanied by a statement setting forth the basis for such
demand and a calculation of the amount thereof in reasonable detail, a copy of
which shall be furnished to the Administrative Agent), the Companies shall pay
to such Lender such additional amount as will compensate such Lender or
39
such controlling Person for such reduction so long as such amounts have accrued
on or after the day which is 180 days prior to the date on which such Lender
first made demand therefor.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
(a) the Administrative Agent reasonably determines (which
determination shall be binding and conclusive on the Companies) that by reason
of circumstances affecting the interbank LIBOR market adequate and reasonable
means do not exist for ascertaining the applicable LIBOR Rate; or
(b) the Required Lenders advise the Administrative Agent that the
LIBOR Rate as determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding LIBOR Loans
for such Interest Period (taking into account any amount to which such Lenders
may be entitled under Section 8.1) or that the making or funding of LIBOR Loans
has become impracticable as a result of an event occurring after the date of
this Agreement which in the opinion of such Lenders materially affects such
Loans;
then the Administrative Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Lender shall be under
any obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii)
on the last day of the current Interest Period for each LIBOR Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.
8.3 Changes in Law Rendering LIBOR Loans Unlawful. If any change
in, or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or other
regulatory body charged with the administration thereof, should make it (or in
the good faith judgment of any Lender cause a substantial question as to whether
it is) unlawful for any Lender to make, maintain or fund LIBOR Loans, then such
Lender shall promptly notify each of the other parties hereto and, so long as
such circumstances shall continue, (a) such Lender shall have no obligation to
make or convert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate
Loans concurrently with the making of or conversion of Base Rate Loans into
LIBOR Loans by the Lenders which are not so affected, in each case in an amount
equal to the amount of LIBOR Loans which would be made or converted into by such
Lender at such time in the absence of such circumstances) and (b) on the last
day of the current Interest Period for each LIBOR Loan of such Lender (or, in
any event, on such earlier date as may be required by the relevant law,
regulation or interpretation), such LIBOR Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan. Each Base Rate Loan made by a
Lender which, but for the circumstances described in the foregoing sentence,
would be a LIBOR Loan (an "Affected Loan") shall remain outstanding for the
period corresponding to the Group of LIBOR Loans of which such Affected Loan
would be a part absent such circumstances.
8.4 Funding Losses. Each Company hereby agrees that upon demand by
any Lender (which demand shall be accompanied by a statement setting forth the
basis for the amount being
40
claimed, a copy of which shall be furnished to the Administrative Agent), the
Companies will indemnify such Lender against any net loss or expense which such
Lender may sustain or incur (including any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain any LIBOR Loan), as reasonably determined by
such Lender, as a result of (a) any payment, prepayment or conversion of any
LIBOR Loan of such Lender on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3) or (b)
any failure of any Company to borrow, convert or continue any Loan on a date
specified therefor in a notice of borrowing, conversion or continuation pursuant
to this Agreement. For this purpose, all notices to the Administrative Agent
pursuant to this Agreement shall be deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Each Lender
may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a
foreign branch or Affiliate of such Lender to make such Loan; provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Lender and the obligation of the Companies to repay such Loan
shall nevertheless be to such Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or Affiliate.
8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Loans in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each LIBOR Loan during each Interest Period for
such Loan through the purchase of deposits having a maturity corresponding to
such Interest Period and bearing an interest rate equal to the LIBOR Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Lenders. (a) Each
Lender shall promptly notify the Companies and the Administrative Agent of any
event of which it has knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Lender's sole judgment,
otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any
obligation by the Companies to pay any amount pursuant to Section 7.6 or 8.1 or
(ii) the occurrence of any circumstances described in Section 8.2 or 8.3 (and,
if any Lender has given notice of any such event described in clause (i) or (ii)
above and thereafter such event ceases to exist, such Lender shall promptly so
notify the Companies and the Administrative Agent). Without limiting the
foregoing, each Lender will designate a different funding office if such
designation will avoid (or reduce the cost to the Companies of) any event
described in clause (i) or (ii) above and such designation will not, in such
Lender's sole judgment, be otherwise disadvantageous to such Lender.
(b) If the Companies become obligated to pay additional amounts to
any Lender pursuant to Section 7.6 or 8.1, or any Lender gives notice of the
occurrence of any circumstances described in Section 8.2 or 8.3, the Companies
may designate another bank which is acceptable to the Administrative Agent and
the Issuing Lender in their reasonable discretion (such other
41
bank being called a "Replacement Lender") to purchase the Loans of such Lender
and such Lender's rights hereunder, without recourse to or warranty by, or
expense to, such Lender, for a purchase price equal to the outstanding principal
amount of the Loans payable to such Lender plus any accrued but unpaid interest
on such Loans and all accrued but unpaid fees owed to such Lender and any other
amounts payable to such Lender under this Agreement, and to assume all the
obligations of such Lender hereunder, and, upon such purchase and assumption
(pursuant to an Assignment Agreement), such Lender shall no longer be a party
hereto or have any rights hereunder (other than rights with respect to
indemnities and similar rights applicable to such Lender prior to the date of
such purchase and assumption) and shall be relieved from all obligations to the
Companies hereunder, and the Replacement Lender shall succeed to the rights and
obligations of such Lender hereunder.
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Lenders may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive repayment of the
Obligations, cancellation of any Notes, expiration or termination of the Letters
of Credit and termination of this Agreement.
SECTION 9 REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make Loans and issue and participate in
Letters of Credit hereunder, each Company represents and warrants to the
Administrative Agent and the Lenders that, both before and after giving effect
to the Related Transactions:
9.1 Organization. Each Loan Party is validly existing and in good
standing under the laws of its jurisdiction of organization; and each Loan Party
is duly qualified to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification is required, except
for such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect.
9.2 Authorization; No Conflict. Each Loan Party is duly authorized
to execute and deliver each Loan Document to which it is a party, each Company
is duly authorized to borrow monies hereunder and each Loan Party is duly
authorized to perform its Obligations under each Loan Document to which it is a
party. The execution, delivery and performance by each Loan Party of each Loan
Document to which it is a party, and the borrowings by the Companies hereunder,
do not and will not (a) require any consent or approval of or notice to any
governmental agency or authority, including the FDA and DEA, to the extent
required for such execution, deliver and performance (other than any consent or
approval which has been obtained and is in full force and effect), (b) conflict
with (i) any provision of law, including the Federal Food, Drug and Cosmetic
Act, the Controlled Substances Act and the other United States federal statutes
and regulations, issued by the FDA and DEA, (ii) the charter, by-laws or other
42
organizational documents of any Loan Party or (iii) any agreement, indenture,
instrument or other document, or any judgment, order or decree, which is binding
upon any Loan Party or any of their respective properties or (c) require, or
result in, the creation or imposition of any Lien on any asset of any Loan Party
(other than Liens in favor of the Administrative Agent created pursuant to the
Collateral Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each
other Loan Document to which any Loan Party is a party is the legal, valid and
binding obligation of such Person, enforceable against such Person in accordance
with its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally and to general principles of
equity.
9.4 Financial Condition. The audited consolidated financial
statements of the Company and its Subsidiaries as at December 31, 2002 and the
unaudited consolidated financial statements of each Company and the Subsidiaries
as at July 31, 2003, copies of each of which have been delivered to each Lender,
were prepared in accordance with GAAP (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end adjustments) and
present fairly the consolidated financial condition of the Companies and their
Subsidiaries as at such dates and the results of their operations for the
periods then ended.
9.5 No Material Adverse Change. Since July 31, 2003, there has
been no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Loan Parties taken as a whole. No
default has occurred and is continuing (or will result from the consummation of
the transactions contemplated hereby or the Related Transactions) under the
Decatur Mortgage Documents or the National City Lease.
9.6 Litigation and Contingent Liabilities. No litigation
(including derivative actions), arbitration proceeding or governmental
investigation or proceeding is pending or, to the knowledge of either Company,
threatened against any Loan Party which might reasonably be expected to have a
Material Adverse Effect, except as set forth in Schedule 9.6. Other than any
liability incident to such litigation or proceedings, no Loan Party has any
material contingent liabilities not listed on Schedule 9.6 or permitted by
Section 11.1.
9.7 Ownership of Properties; Liens. Each Loan Party owns good and,
in the case of real property, marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens, charges and claims (including infringement claims with
respect to patents, trademarks, service marks, copyrights and the like) except
as permitted by Section 11.2. Without limitation of the foregoing, all machinery
and equipment included in the Forced M&E Liquidation Value is owned by the
Companies free and clear of all Liens, charges and adverse claim, and no other
machinery and equipment is subject to any Lien, charge or adverse claims, except
as set forth on Schedule 9.7. None of the machinery and equipment included in
the Forced M&E Liquidation Value is or will at any time in the future be affixed
or
43
attached to the real estate owned or leased by the Companies in such a manner so
that it could be or become a "fixture".
9.8 Equity Ownership; Subsidiaries. All issued and outstanding
Capital Securities of each Loan Party are duly authorized and validly issued,
fully paid, non-assessable, and free and clear of all Liens other than those in
favor of the Administrative Agent, and such securities were issued in compliance
with all applicable state and federal laws concerning the issuance of
securities. Schedule 9.8 sets forth the authorized Capital Securities of each
Loan Party as of the Closing Date. Akorn is a publicly traded company traded in
the Over-the-Counter Market and listed on the Pink Sheets and except as set
forth in Akorn's Form 10-K for the year ended December 31, 2002 and Forms 10-Q
for the quarters ended March 31, 2003 and June 30, 2003 is in good standing with
the SEC. All of the issued and outstanding Capital Securities of each
Wholly-Owned Subsidiary is, directly or indirectly, owned by Akorn. As of the
Closing Date, except as set forth on Schedule 9.8, there are no pre-emptive or
other outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Capital
Securities of any Loan Party.
9.9 Pension Plans. (a) The Unfunded Liability of all Pension Plans
(if any) does not in the aggregate exceed twenty percent of the Total Plan
Liability for all such Pension Plans. Each Pension Plan (if any) complies in all
material respects with all applicable requirements of law and regulations. No
contribution failure under Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan (if any) has occurred with respect to any Pension
Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA, or
otherwise to have a Material Adverse Effect. There are no pending or, to the
knowledge of either Company, threatened, claims, actions, investigations or
lawsuits against any Pension Plan (if any), any fiduciary of any Pension Plan
(if any), or either Company or any other member of the Controlled Group with
respect to a Pension Plan (if any) or a Multiemployer Pension Plan (if any)
which could reasonably be expected to have a Material Adverse Effect. Neither
either Company nor any other member of the Controlled Group has engaged in any
prohibited transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) in connection with any Pension Plan (if any) or Multiemployer Pension
Plan (if any) which would subject that Person to any material liability. Within
the past five years, neither Company nor any other member of the Controlled
Group has engaged in a transaction which resulted in a Pension Plan with an
Unfunded Liability being transferred out of the Controlled Group, which could
reasonably be expected to have a Material Adverse Effect. No Termination Event
has occurred or is reasonably expected to occur with respect to any Pension Plan
(if any), which could reasonably be expected to have a Material Adverse Effect.
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan (if any) that are required to be made by the Companies or any other
member of the Controlled Group under the terms of the plan or of any collective
bargaining agreement or by applicable law; neither Company nor any other member
of the Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Pension Plan (if any), incurred any withdrawal liability with
44
respect to any such plan or received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, could result in a withdrawal or
partial withdrawal from any such plan; and neither Company nor any other member
of the Controlled Group has received any notice that any Multiemployer Pension
Plan (if any) is in reorganization, that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of any excise tax, that
any such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or that any
such plan is or may become insolvent.
9.10 Investment Company Act. No Loan Party is an "investment
company" or a company "controlled" by an "investment company" or a "subsidiary"
of an "investment company," within the meaning of the Investment Company Act of
1940.
9.11 Public Utility Holding Company Act. No Loan Party is a
"holding company", or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935.
9.12 Regulation U. No Loan Party is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
9.13 Taxes; Tax Shelter Registration.
(a) Each Loan Party has timely filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges due and payable with respect to such return, except any such taxes or
charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books. The Loan Parties have made adequate reserves on
their books and records in accordance with GAAP for all taxes that have accrued
but which are not yet due and payable. No Loan Party has participated in any
transaction that relates to a year of the taxpayer (which is still open under
the applicable statute of limitations) which is a "reportable transaction"
within the meaning of Treasury Regulation section 1.6011-4(b)(2) (irrespective
of the date when the transaction was entered into).
(b) No Loan Party intends to treat any of the transactions
contemplated by any Loan Document as being a "reportable transaction" within the
meaning of Treasury Regulation Section 1.6011-4.
9.14 Solvency, etc. On the Closing Date, and immediately prior to
and after giving effect to the issuance of each Letter of Credit and each
borrowing hereunder and the use of the proceeds thereof, with respect to each
Loan Party, individually, (a) the fair value of its assets is greater than the
amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated, (b) the
present fair saleable value
45
of its assets is not less than the amount that will be required to pay the
probable liability on its debts as they become absolute and matured, (c) it is
able to realize upon its assets and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in
the normal course of business, (d) it does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (e) it is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which its property
would constitute unreasonably small capital.
9.15 Environmental Matters. The on-going operations of each Loan
Party comply in all respects with all Environmental Laws, except such
non-compliance which could not (if enforced in accordance with applicable law)
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. Each Loan Party has obtained, and maintained in good
standing, all licenses, permits, authorizations, registrations and other
approvals required under any Environmental Law and required for their respective
ordinary course operations, and for their reasonably anticipated future
operations, and each Loan Party is in compliance with all terms and conditions
thereof, except where the failure to do so could not reasonably be expected to
result in material liability to any Loan Party and could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect. No Loan Party or any of its properties or operations is subject
to, or reasonably anticipates the issuance of, any written order from or
agreement with any Federal, state or local governmental authority, nor subject
to any judicial or docketed administrative or other proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Substance. There are no
Hazardous Substances or other conditions or circumstances existing with respect
to any property, arising from operations prior to the Closing Date, or relating
to any waste disposal, of any Loan Party that would reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect.
No Loan Party has any underground storage tanks that are not properly registered
or permitted under applicable Environmental Laws or that at any time have
released, leaked, disposed of or otherwise discharged Hazardous Substances.
9.16 Insurance. Set forth on Schedule 9.16 is a complete and
accurate summary of the property and casualty insurance program of the Loan
Parties as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention, and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving any Loan Party). Each
Loan Party and its properties are insured with financially sound and reputable
insurance companies which are not Affiliates of the Loan Parties, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where such Loan Parties operate.
9.17 Real Property. Set forth on Schedule 9.17 is a complete and
accurate list, as of the Closing Date, of the address of all real property owned
or leased by any Loan Party, together with, in the case of leased property, the
name and mailing address of the lessor of such property.
46
9.18 Information. All information heretofore or contemporaneously
herewith furnished in writing by any Loan Party to the Administrative Agent or
any Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which made (it being recognized by the
Administrative Agent and the Lenders that any projections and forecasts provided
by either Company are based on good faith estimates and assumptions believed by
such Company to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted results).
9.19 Intellectual Property. Each Loan Party owns and possesses or
has a license or other right to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service ▇▇▇▇
rights and copyrights as are necessary for the conduct of the businesses of the
Loan Parties, without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.
9.20 Burdensome Obligations. No Loan Party is a party to any
agreement or contract or subject to any restriction contained in its
organizational documents which could reasonably be expected to have a Material
Adverse Effect.
9.21 Labor Matters. Except as set forth on Schedule 9.21, no Loan
Party is subject to any labor or collective bargaining agreement. There are no
existing or threatened strikes, lockouts or other labor disputes involving any
Loan Party that singly or in the aggregate could reasonably be expected to have
a Material Adverse Effect. Hours worked by and payment made to employees of the
Loan Parties are not in violation of the Fair Labor Standards Act or any other
applicable law, rule or regulation dealing with such matters.
9.22 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurrence by any Loan Party of any Debt
hereunder or under any other Loan Document.
9.23 Related Agreements, etc. (a) The Companies have heretofore
furnished the Administrative Agent a true and correct copy of the Related
Agreements.
(b) Each Loan Party and, to the knowledge of each Company, each
other party to the Related Agreements, has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution, delivery
and performance of the Related Agreements and the consummation of transactions
contemplated thereby.
47
(c) The Related Transactions will comply with all applicable legal
requirements, and all necessary governmental, regulatory, creditor, shareholder,
partner and other material consents, approvals and exemptions required to be
obtained by the Loan Parties and, to the knowledge of each Company, each other
party to the Related Agreements in connection with the Related Transactions will
be, prior to consummation of the Related Transactions, duly obtained and will be
in full force and effect. As of the date of the Related Agreements, all
applicable waiting periods with respect to the Related Transactions will have
expired without any action being taken by any competent governmental authority
which restrains, prevents or imposes material adverse conditions upon the
consummation of the Related Transactions.
(d) The execution and delivery of the Related Agreements did not,
and the consummation of the Related Transactions will not, violate any statute
or regulation of the United States (including any securities law) or of any
state or other applicable jurisdiction, or any order, judgment or decree of any
court or governmental body binding on any Loan Party or, to the knowledge of
each Company, any other party to the Related Agreements, or result in a breach
of, or constitute a default under, any material agreement, indenture, instrument
or other document, or any judgment, order or decree, to which any Loan Party is
a party or by which any Loan Party is bound or, to the knowledge of each
Company, to which any other party to the Related Agreements is a party or by
which any such party is bound.
(e) No statement or representation made in the Related Agreements
by any Loan Party or, to the knowledge of each Company, any other Person,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading.
9.24 Subordinated Debt. The subordination provisions of the
Subordinated Debt are enforceable against the holders of the Subordinated Debt
by the Administrative Agent and the Lenders. All Obligations constitute senior
Debt entitled to the benefits of the subordination provisions contained in the
Subordinated Debt. Each Company acknowledges that the Administrative Agent and
each Lender are entering into this Agreement and are extending the Commitments
and making the Loans in reliance upon the subordination provisions of the
Subordinated Debt and this Section 9.24.
9.25 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 either Company or any Subsidiary
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 either Company or any Subsidiary with any supplier material to the operations
of such Company or such Subsidiary which has resulted in or is reasonably likely
to result in a Material Adverse Effect.
48
9.26 SEC Reports. The Companies have filed all proxy statements,
reports and other documents required to be filed by them under the Exchange Act
and made available to the Administrative Agent complete copies of all annual
reports, quarterly reports, proxy statements and other reports filed by the
Companies under the Exchange Act, each as filed with the SEC. The Company's
annual report filed on form 10-K for the year ended December 31, 2002 was, on
the date of its filing, in compliance in all material respects with the
requirements of its respective report form and the Exchange Act and did not, on
the date of filing, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
9.27 Manufacturing. Schedule 9.27 lists the top thirteen products
of the Companies (by revenue) and the manufacturers thereof. All written
agreements with third parties relating to the manufacture of such products have
been provided to the Administrative Agent and have been assigned to the
Administrative Agent pursuant to the Guaranty and Collateral Agreement, and all
consents required for assignment of such agreements (if any) have been obtained.
SECTION 10 AFFIRMATIVE COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all Obligations hereunder and under the other Loan Documents are paid in
full and all Letters of Credit have been terminated, each Company agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the
Administrative Agent and each Lender:
10.1.1 Annual Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year: (a) a copy of the annual audit
report of the Companies and their Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets and statements of earnings and cash flows of
the Companies and their Subsidiaries as at the end of such Fiscal Year,
certified without adverse reference to going concern value and without
qualification by independent auditors of recognized standing selected by the
Companies and reasonably acceptable to the Administrative Agent, together with
(i) a written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe that
either Company was not in compliance with any provision of Section 11.1, 11.3,
11.4 or 11.14 of this Agreement insofar as such provision relates to accounting
matters or, if something has come to their attention that caused them to believe
that a Company was not in compliance with any such provision, describing such
non-compliance in reasonable detail and (ii) a comparison with the previous
Fiscal Year; and (b) a consolidating balance sheet of the Companies and their
Subsidiaries as of the end of such Fiscal Year and consolidating statement of
earnings and cash
49
flows for the Companies and their Subsidiaries for such Fiscal Year, certified
by a Senior Officer of the Companies.
10.1.2 Interim Reports. Promptly when available and in any event
within 30 days after the end of each calendar month, unaudited consolidated
balance sheets of the Companies and their Subsidiaries as of the end of such
calendar month, together with unaudited consolidated statements of earnings and
cash flows for such calendar month and for the period beginning with the first
day of such Fiscal Year and ending on the last day of such calendar month,
together with a comparison with the corresponding balance sheets and statements
of earnings and cash flows for the corresponding calendar month of the previous
Fiscal Year and a comparison with the budget for such period of the current
Fiscal Year, in each case, certified by a Senior Officer of Akorn.
10.1.3 Compliance Certificates. Within 45 days of the end of (a) each
Fiscal Year of the Companies and (b) each calendar month with respect to interim
reports pursuant to Section 10.1.2, a duly completed Compliance Certificate in
the form of Exhibit B, with appropriate insertions, dated the date of such
annual report or such interim statements and signed by a Senior Officer of
Akorn, containing (i) a computation of each of the financial ratios and
restrictions set forth in Section 11.14 and to the effect that such officer has
not become aware of any Event of Default or Unmatured Event of Default that 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 (ii) a written statement of the
Companies' management setting forth a discussion of the Companies' financial
condition, changes in financial condition and results of operations, together
with a discussion of the balance sheets and statements of earnings and cash
flows delivered pursuant to Section 10.1.2 as compared against (a) the
corresponding balance sheets and statements of earnings and cash flows for the
previous Fiscal Year's year to date and (b) the projected year to date budget
for the current year.
10.1.4 Reports to the SEC and to Shareholders. (a) Within 45 days
after the end of each Fiscal Quarter of the Companies, a copy of Form 10-Q as
filed by or on behalf of the Companies with the SEC, (b) within ninety (90) days
after the end of each Fiscal Year of the Companies, a copy of form 10-K as filed
by or on behalf of the Companies with the SEC and (c) promptly upon the filing
or sending thereof, copies of all other regular, periodic or special reports of
any Loan Party filed with the SEC; copies of all registration statements of any
Loan Party filed with the SEC (other than on Form S-8); and copies of all proxy
statements or other communications made to security holders generally;
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the applicable Company or Subsidiary affected thereby
with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured
Event of Default;
50
(b) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by either Company
to the Lenders which has been instituted or, to the knowledge of either
Company, is threatened against any Loan Party or to which any of the
properties of any thereof is subject which might reasonably be expected
to have a Material Adverse Effect;
(c) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan (if
any), or the failure of any member of the Controlled Group to make a
required contribution to any Pension Plan (if any) (if such failure is
sufficient to give rise to a Lien under Section 302(f) of ERISA) or to
any Multiemployer Pension Plan (if any), or the taking of any action
with respect to a Pension Plan (if any) which could result in the
requirement that either Company furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect
to any Pension Plan (if any) or Multiemployer Pension Plan (if any)
which could result in the incurrence by any member of the Controlled
Group of any material liability, fine or penalty (including any claim
or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan (if any)), or any material increase in the
contingent liability of either Company with respect to any
post-retirement welfare benefit plan or other employee benefit plan of
either Company or another member of the Controlled Group, or any notice
that any Multiemployer Pension Plan (if any) is in reorganization, that
increased contributions may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, that any such plan is or
has been funded at a rate less than that required under Section 412 of
the Code, that any such plan is or may be terminated, or that any such
plan is or may become insolvent;
(d) any cancellation or material change in any insurance
maintained by any Loan Party;
(e) receipt of any notice or communication that the
operations of any Loan Party are not in compliance in all material
respects with requirements of any applicable governmental authority,
including the FDA and DEA; or
(f) any other event (including (i) any violation of any
Environmental Law or the assertion of any Environmental Claim or (ii)
the enactment or effectiveness of any law, rule or regulation) which
might reasonably be expected to have a Material Adverse Effect.
10.1.6 Borrowing Base Certificates. Within 3 Business Days of the end
of each calendar week and concurrently with delivery of any Notice of Borrowing,
a Borrowing Base Certificate dated as of the last day of the related calendar
week or the date of such Notice of Borrowing, as applicable, and executed by a
Senior Officer of Akorn on behalf of the Companies (provided that (a) the
Companies may deliver a Borrowing Base Certificate more frequently if they
choose and
51
(b) at any time an Event of Default exists, the Administrative Agent may require
the Companies to deliver Borrowing Base Certificates more frequently).
10.1.7 Management Reports. Promptly upon receipt thereof, copies of
all detailed financial and management reports submitted to either Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of either Company.
10.1.8 Projections. As soon as practicable, and in any event not
later than 30 days prior to the commencement of each Fiscal Year, monthly
financial projections for Akorn and its Subsidiaries for such Fiscal Years
(including monthly operating and cash flow budgets and balance sheets) prepared
in a manner consistent with the projections delivered by Akorn to the Lenders
prior to the Closing Date or otherwise in a manner reasonably satisfactory to
the Administrative Agent, accompanied by a certificate of a Senior Officer of
Akorn on behalf of Akorn to the effect that (a) such projections were prepared
by Akorn in good faith, (b) Akorn has a reasonable basis for the assumptions
contained in such projections and (c) such projections have been prepared in
accordance with such assumptions; provided that the requirement to deliver
monthly financial projections prior to the commencement of Fiscal Year 2004
shall also include the concurrent requirement to deliver income statements,
balance sheets and cash flow statements of the Companies for Fiscal Year 2004
and Fiscal Year 2005, prepared by the Companies and giving effect to the Loans
and Related Transactions and the use of proceeds therefrom, in form and
substance satisfactory to the Administrative Agent.
10.1.9 Subordinated Debt Notices. Promptly following receipt, copies
of any notices (including notices of default or acceleration) received from any
holder or trustee of, under or with respect to any Subordinated Debt or in
connection with the Related Transactions.
10.1.10 Accounts and Inventory Reports. Within 30 days of the end of
each calendar month, copies of accounts receivable and accounts payable aging
reports together with monthly inventory reports.
10.1.11 FDA/DEA Inspections. Within 30 days of receipt of any report
of inspection or evaluation by the DEA, FDA or any other third party of the
facilities or operations of any Company or any Subsidiary, a copy of such report
together with a written summary of such inspection or evaluation.
10.1.12 Other Information. Promptly from time to time, such other
information concerning the Loan Parties as any Lender or the Administrative
Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each other
Loan Party to keep, its books and records in accordance with sound business
practices sufficient to allow the preparation of financial statements in
accordance with GAAP; permit, and cause each other Loan Party to permit, any
Lender or the Administrative Agent or any representative thereof to inspect the
properties and operations of the Loan Parties; and permit, and cause each other
Loan Party to
52
permit, at any reasonable time and with reasonable notice (or at any time
without notice if an Event of Default exists), any Lender or the Administrative
Agent or any representative thereof to visit any or all of its offices, to
discuss its financial matters with its officers and its independent auditors
(and each Company hereby authorizes such independent auditors to discuss such
financial matters with any Lender or the Administrative Agent or any
representative thereof), and to examine (and, at the expense of the Loan
Parties, photocopy extracts from) any of its books or other records; and permit,
and cause each other Loan Party to permit, the Administrative Agent and its
representatives to inspect the Inventory and other tangible assets of the Loan
Parties, to perform appraisals of the equipment of the Loan Parties, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts and any other collateral. All such
inspections or audits by the Administrative Agent shall be at the Companies'
expense.
10.3 Maintenance of Property; Insurance. (a) Keep, and cause each
other Loan Party to keep, all property useful and necessary in the business of
the Loan Parties in good working order and condition, ordinary wear and tear
excepted.
(b) Maintain, and cause each other Loan Party to maintain, with
responsible insurance companies, such insurance coverage as may be required by
any law or governmental regulation or court decree or order applicable to it and
such other insurance, to such extent and against such hazards and liabilities,
as is customarily maintained by companies similarly situated, but which shall
insure against all risks and liabilities of the type identified on Schedule 9.16
(including business interruption) and shall have insured amounts no less than,
and deductibles no higher than, those set forth on such schedule; and, upon
request of the Administrative Agent or any Lender, furnish to the Administrative
Agent or such Lender a certificate setting forth in reasonable detail the nature
and extent of all insurance maintained by the Loan Parties. The Companies shall
cause each issuer of an insurance policy to provide the Administrative Agent
with an endorsement (i) showing the Administrative Agent as loss payee with
respect to each policy of property or casualty insurance and naming the
Administrative Agent and each Lender as an additional insured with respect to
each policy of liability insurance, (ii) providing that 30 days' notice will be
given to the Administrative Agent prior to any cancellation of, material
reduction or change in coverage provided by or other material modification to
such policy and (iii) reasonably acceptable in all other respects to the
Administrative Agent. Each Company shall execute and deliver to the
Administrative Agent a collateral assignment, in form and substance satisfactory
to the Administrative Agent, of each business interruption insurance policy and
each key man insurance policy, if any, maintained by such Company.
(c) UNLESS THE COMPANY PROVIDES THE ADMINISTRATIVE AGENT
WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE
ADMINISTRATIVE AGENT MAY PURCHASE INSURANCE AT THE COMPANY'S EXPENSE TO PROTECT
THE ADMINISTRATIVE AGENT'S AND THE LENDERS' INTERESTS IN THE COLLATERAL. THIS
INSURANCE MAY, BUT
53
NEED NOT, PROTECT ANY LOAN PARTY'S INTERESTS. THE COVERAGE THAT THE
ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST ANY
LOAN PARTY IN CONNECTION WITH THE COLLATERAL. THE COMPANY MAY LATER CANCEL ANY
INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING THE
ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS
REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR
THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT
OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF
THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE PRINCIPAL AMOUNT
OF THE LOANS OWING HEREUNDER. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE
COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO OBTAIN ON THEIR OWN.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each other Loan Party to comply, in all material respects with
all applicable laws, rules, regulations, decrees, orders, judgments, licenses
and permits, including (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, except where failure to comply could not reasonably be
expected to have a Material Adverse Effect; (b) without limiting clause (a)
above, ensure, and cause each other Loan Party to ensure, that no person who
owns a controlling interest in or otherwise controls a Loan Party is or shall be
(i) listed on the Specially Designated Nationals and Blocked Person List
maintained by the Office of Foreign Assets Control ("OFAC"), Department of the
Treasury, and/or any other similar lists maintained by OFAC pursuant to any
authorizing statute, Executive Order or regulation or (ii) a person designated
under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar Executive Orders,
(c) without limiting clause (a) above, comply, and cause each other Loan Party
to comply, compliance with all applicable Bank Secrecy Act ("BSA") laws,
regulations and government guidance on BSA compliance and on the prevention and
detection of money laundering violations and (d) pay, and cause each other Loan
Party to pay, prior to delinquency, all taxes and other governmental charges
against it or any collateral, as well as claims of any kind which, if unpaid,
could become a Lien on any of its property; provided that the foregoing shall
not require any Loan Party to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and, in the case of a claim which could become a Lien on any collateral,
such contest proceedings shall stay the foreclosure of such Lien or the sale of
any portion of the collateral to satisfy such claim.
54
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 11.5) cause each other Loan Party to maintain and preserve,
(a) its existence and good standing in the jurisdiction of its organization and
(b) its qualification to do business and good standing in each jurisdiction
where the nature of its business makes such qualification necessary (other than
such jurisdictions in which the failure to be qualified or in good standing
could not reasonably be expected to have a Material Adverse Effect).
10.6 Use of Proceeds. Use the proceeds of the Loans, and the
Letters of Credit, solely to finance a portion of the Related Transactions, to
pay non-recurring legal and consulting expenses incurred in October 2003 in
connection with the Loan Documents and the Related Transactions, for working
capital purposes, Capital Expenditures and other general business purposes; and
not use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying" any Margin Stock.
10.7 Employee Benefit Plans.
(a) Maintain, and cause each other member of the Controlled Group
to maintain, each Pension Plan (if any) in substantial compliance with all
applicable requirements of law and regulations.
(b) Make, and cause each other member of the Controlled Group to
make, on a timely basis, all required contributions to any Multiemployer Pension
Plan (if any).
(c) Not, and not permit any other member of the Controlled Group
to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate
or withdraw from any Pension Plan or Multiemployer Pension Plan (if any) or
(iii) take any other action with respect to any Pension Plan (if any) that would
reasonably be expected to entitle the PBGC to terminate, impose liability in
respect of, or cause a trustee to be appointed to administer, any Pension Plan,
unless the actions or events described in clauses (i), (ii) and (iii)
individually or in the aggregate would not have a Material Adverse Effect.
10.8 Environmental Matters. If any release or threatened release or
other disposal of Hazardous Substances shall occur or shall have occurred on any
real property or any other assets of any Loan Party, each Company shall, or
shall cause the applicable Loan Party to, cause the prompt containment and
removal of such Hazardous Substances and the remediation of such real property
or other assets as necessary to comply with all Environmental Laws and to
preserve the value of such real property or other assets. Without limiting the
generality of the foregoing, each Company shall, and shall cause each other Loan
Party to, comply with any Federal or state judicial or administrative order
requiring the performance at any real property of any Loan Party of activities
in response to the release or threatened release of a Hazardous Substance. To
the extent that the transportation of Hazardous Substances is permitted by this
Agreement, each Company shall, and shall cause its Subsidiaries to, dispose of
such Hazardous Substances, or of
55
any other wastes, only at licensed disposal facilities operating in compliance
with Environmental Laws.
10.9 Tax Shelter Registration. Notify the Administrative Agent of
any action (or the intention to take an action) inconsistent with the
representation in Section 9.13(b). If either Company so notifies the
Administrative Agent, such Company acknowledges and agrees that the
Administrative Agent and the Lenders may treat the transactions contemplated
hereby (or any single transaction contemplated hereby) as part of a transaction
that is subject to Treasury Regulation Section 301.6112-1, and the
Administrative Agent and such Lender, as applicable, may maintain the lists and
other regulations required by such Treasury Regulation. To the extent the
Administrative Agent or a Lender determines to maintain such list, each Loan
Party shall cooperate with the Administrative Agent and Lenders in obtaining the
information required under such Treasury Regulation. Within 10 days after
notifying the Administrative Agent under this Section 10.9, the Company shall
deliver to the Administrative Agent a duly completed copy of IRS Form 8886 or
any successor form.
10.10 Further Assurances. Take, and cause each other Loan Party to
take, such actions as are necessary or as the Administrative Agent or the
Required Lenders may reasonably request from time to time to ensure that the
Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of each Company and each domestic Subsidiary (as
well as all Capital Securities of each domestic Subsidiary and 65% of all
Capital Securities of each direct foreign Subsidiary) and guaranteed by each
domestic Subsidiary (including, upon the acquisition or creation thereof, any
Subsidiary acquired or created after the Closing Date), in each case as the
Administrative Agent may determine, including (a) the execution and delivery of
guaranties, security agreements, pledge agreements, mortgages, deeds of trust,
financing statements and other documents, and the filing or recording of any of
the foregoing and (b) the delivery of certificated securities and other
collateral with respect to which perfection is obtained by possession.
10.11 Post Closing Matters. Without limitation on Section 10.10,
Akorn agrees (a) upon the request of the Administrative Agent, to execute and
deliver a Mortgage on Akorn's Decatur, Illinois property, together with such
title, survey, environmental, appraisal and other requirements as the
Administrative Agent may require in connection with such Mortgage, all in form
and substance satisfactory to the Administrative Agent, (b) to diligently pursue
all necessary corrective action with respect to the FDA inspection disclosed in
Schedule 9.7 and to hire a Director of Regulatory Affairs within 180 days after
the Closing Date, (c) to use its reasonable best efforts to settle or cause the
dismissal of the claims identified as the last three items on Schedule 9.7
promptly and in any event within 30 days after the Closing Date (with payment
thereunder not to exceed the amounts identified in Schedule 9.7 for such
matters), (d) to use its reasonable best efforts to enter into a manufacturing
agreement with SP Pharmaceuticals for the manufacturing of "IC Green" within 30
days after the Closing Date on terms reasonably satisfactory to the
Administrative Agent and which permits the assignment of such manufacturing
agreement to the Administrative Agent and its successors or assignors, (e) to
56
cause its property, general liability, automobile, workers compensation product
liability and umbrella insurance policies to be renewed on or before January 15,
2003 and updated insurance certificates to be delivered to the Administration
Agent naming the Administration Agent as the lender loss payee and additional
insured, (f) to hire a qualified independent consultant acceptable to the SEC
staff and direct such consultant to prepare its findings, in each case in
accordance within the time and other requirements of the consent order described
in the first item on Schedule 9.6, (g) to take all action as may be reasonably
necessary to comply with the consent decree described in the second item on
Schedule 9.6, (h) to cause SP Pharmaceutical to deliver a bailee letter or
Collateral Access Agreement within 30 days of the Closing Date in form and
substance satisfactory to the Administrative Agent regarding any "IC Green" raw
material inventory held at SP Pharmaceuticals' facility in New Mexico, (i) to
use its reasonable best efforts to obtain a mortgage waiver from the holder of
the mortgage on Akorn's Decatur, Illinois facility in form and substance
satisfactory to the Administrative Agent within 30 days after the Closing Date
and (j) to take all action (including the execution and delivery of all
assignments and other documents) requested by the Administrative Agent to cause
all patents and trademarks of the Companies to be assigned to the Administrative
Agent (and to cause the Administrative Agent's security interest therein to be
properly perfected), within 30 days after the Closing Date.
10.12 Deposit Accounts. Unless the Administrative Agent otherwise
consents in writing, in order to facilitate the Administrative Agent's and the
Lenders' maintenance and monitoring of their security interests in the
collateral, not later than 30 days after the Closing Date, (a) maintain all of
their principal deposit and cash management accounts with the Administrative
Agent and enter into blocked account agreements satisfactory in form and
substance to the Administrative Agent with respect to such accounts and (b)
establish with the Administrative Agent lockbox arrangements satisfactory to the
Administrative Agent for receipt of payment on the Accounts of the Companies and
any Subsidiaries.
10.13 Interest Rate Protection. Enter into, not later than 90 days
after the Closing Date, a Hedging Agreement with a term of at least one year
from the Closing Date on an ISDA standard form with the Administrative Agent or
its Affiliates or with counterparties reasonably acceptable to the
Administrative Agent to hedge the interest rate with respect to not less than
50% of the principal amount of the Term Loans in form and substance reasonably
satisfactory to the Administrative Agent.
SECTION 11 NEGATIVE COVENANTS
Until the expiration or termination of the Commitments and thereafter
until all Obligations hereunder and under the other Loan Documents are paid in
full and all Letters of Credit have been terminated, each Company agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:
11.1 Debt. Not, and not permit any other Loan Party to, create,
incur, assume or suffer to exist any Debt, except:
57
(a) Obligations under this Agreement and the other Loan
Documents;
(b) Debt secured by Liens permitted by Section 11.2(d),
and extensions, renewals and refinancings thereof; provided that the
aggregate amount of all such Debt at any time outstanding shall not
exceed $150,000;
(c) Debt of either Company to any domestic Wholly-Owned
Subsidiary or Debt of any domestic Wholly-Owned Subsidiary to either
Company or another domestic Wholly-Owned Subsidiary; provided that such
Debt shall be evidenced by a demand note in form and substance
reasonably satisfactory to the Administrative Agent and pledged and
delivered to the Administrative Agent pursuant to the Collateral
Documents as additional collateral security for the Obligations, and
the obligations under such demand note shall be subordinated to the
Obligations of the Companies hereunder in a manner reasonably
satisfactory to the Administrative Agent;
(d) Subordinated Debt;
(e) Hedging Obligations approved by Administrative Agent
and incurred in favor of the Administrative Agent or an Affiliate
thereof for bona fide hedging purposes and not for speculation;
(f) Debt in existence on the Closing Date as described on
Schedule 11.1 and any extension, renewal or refinancing thereof so long
as the principal amount thereof is not increased;
(g) the Debt to be Repaid (so long as such Debt is repaid
on the Closing Date with the proceeds of the initial Loans hereunder);
(h) Contingent Liabilities arising with respect to
customary indemnification obligations in favor of purchasers in
connection with dispositions permitted under Section 11.5;
(i) Debt under the Decatur Mortgage Documents not to
exceed $1,415,000;
(j) Subordinated Debt, in addition to the Debt listed
above, in an aggregate outstanding amount not at any time exceeding
$150,000; and
(k) Debt under the National City Lease not to exceed
$2,800,000.
11.2 Liens. Not, and not permit any other Loan Party to, create or
permit to exist any Lien on any of its real or personal properties, assets or
rights of whatsoever nature (whether now owned or hereafter acquired), except:
58
(a) Liens for taxes or other governmental charges not at
the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in each case,
for which it maintains adequate reserves;
(b) Liens arising in the ordinary course of business
(such as (i) Liens of carriers, warehousemen, mechanics and materialmen
and other similar Liens imposed by law and (ii) Liens in the form of
deposits or pledges incurred in connection with worker's compensation,
unemployment compensation and other types of social security (excluding
Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not
involving any advances or borrowed money or the deferred purchase price
of property or services and, in each case, for which it maintains
adequate reserves;
(c) Liens in existence on the Closing Date as described
on Schedule 11.2 as of the Closing Date;
(d) subject to the limitation set forth in Section
11.1(b), (i) Liens arising in connection with Capital Leases (and
attaching only to the property being leased), (ii) Liens existing on
property at the time of the acquisition thereof by any Loan Party (and
not created in contemplation of such acquisition) and (iii) Liens that
constitute purchase money security interests on any property securing
debt incurred for the purpose of financing all or any part of the cost
of acquiring such property, provided that any such Lien attaches to
such property within 60 days of the acquisition thereof and attaches
solely to the property so acquired;
(e) attachments, appeal bonds, judgments and other
similar Liens, for sums not exceeding $150,000 arising in connection
with court proceedings, provided the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are
being actively contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects
or irregularities in title and other similar Liens not interfering in
any material respect with the ordinary conduct of the business of any
Loan Party;
(g) Liens arising under the Loan Documents; and
(h) the replacement, extension or renewal of any Lien
permitted by clause (c) above upon or in the same property subject
thereto arising out of the extension, renewal or replacement of the
Debt secured thereby (without increase in the amount thereof).
11.3 Operating Leases. Not permit the aggregate amount of all
rental payments under Operating Leases made (or scheduled to be made) by the
Loan Parties (on a consolidated basis) to exceed $1,750,000 in any Fiscal Year.
59
11.4 Restricted Payments. Not, and not permit any other Loan Party
to, (a) make any cash payment to any holders of its Capital Securities, (b)
purchase or redeem any of its Capital Securities, (c) pay any management fees,
consulting fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance, repurchase or any
other payment in respect of any Subordinated Debt or (e) set aside funds for any
of the foregoing. Notwithstanding the foregoing, (w) any Subsidiary may pay
dividends or make other distributions to either Company or to a domestic
Wholly-Owned Subsidiary, (x) as long as no Unmatured Event of Default or Event
of Default has occurred and is continuing (or would occur as a result thereof),
(i) after March 31, 2004, the Companies may pay past-due consulting fees to ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇ in an amount not to exceed $50,000 per Fiscal Quarter and in no
event to exceed $325,000 in the aggregate and (ii) the Companies may pay current
consulting fees to ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ in an amount not to exceed $50,000 in the
aggregate in each Fiscal Year, (y) the Companies may reimburse ▇▇. ▇▇▇▇ ▇.
▇▇▇▇▇▇ and Arjun Warey for actual fees paid by him in respect of the Related
Transactions; provided that (i) such payments do not exceed $150,000 in the
aggregate and (ii) after giving effect to such reimbursement, total transaction
costs and expense (including such reimbursement) do not exceed the limitations
set forth in Section 12.1.28, and (z) the Companies may pay reasonable and
customary salaries, bonuses and benefits to employees in the ordinary course of
business.
11.5 Mergers, Consolidations, Sales. Not, and not permit any other
Loan Party to, (a) be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any Capital
Securities of any class of, or any partnership or joint venture interest in, any
other Person, (b) sell, transfer, convey or lease all or any substantial part of
its assets or Capital Securities (including the sale of Capital Securities of
any Subsidiary) except for sales of inventory in the ordinary course of
business, or (c) sell or assign with or without recourse any receivables, except
for (i) any such merger, consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into either Company or into any
other domestic Wholly-Owned Subsidiary; (ii) any such purchase or other
acquisition by either Company or any domestic Wholly-Owned Subsidiary of the
assets or Capital Securities of any Wholly-Owned Subsidiary; and (iii) sales and
dispositions of assets (including the Capital Securities of Subsidiaries) for at
least fair market value (as determined by the Board of Directors of Akorn) so
long as the net book value of all assets sold or otherwise disposed of in any
Fiscal Year does not exceed $200,000 in the aggregate.
11.6 Modification of Organizational Documents. Not permit the
charter, by-laws or other organizational documents of any Loan Party to be
amended or modified in any way which could reasonably be expected to materially
adversely affect the interests of the Lenders.
11.7 Transactions with Affiliates. Not, and not permit any other
Loan Party to, enter into, or cause, suffer or permit to exist any transaction,
arrangement or contract with any of its other Affiliates (other than the Loan
Parties) which is on terms which are less favorable than are obtainable from any
Person which is not one of its Affiliates.
60
11.8 Unconditional Purchase Obligations. Not, and not permit any
other Loan Party to, enter into or be a party to any contract for the purchase
of materials, supplies or other property or services if such contract requires
that payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.
11.9 Inconsistent Agreements. Not, and not permit any other Loan
Party to, enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by either Company hereunder or by the
performance by any Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit any Loan Party from granting to the
Administrative Agent and the Lenders, a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
either Company or any other Subsidiary, or pay any Debt owed to either Company
or any other Subsidiary, (ii) make loans or advances to any Loan Party or (iii)
transfer any of its assets or properties to any Loan Party, other than (A)
customary restrictions and conditions contained in agreements relating to the
sale of all or a substantial part of the assets of any Subsidiary pending such
sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and (C)
customary provisions in leases and other contracts restricting the assignment
thereof.
11.10 Business Activities; Issuance of Equity. Not, and not permit
any other Loan Party to, engage in any line of business other than the
businesses engaged in on the date hereof and businesses reasonably related
thereto. Not, and not permit any other Loan Party to, issue any Capital
Securities other than (a) Capital Securities issued pursuant to the Related
Transactions, (b) any issuance of shares of Akorn's common Capital Securities
pursuant to any employee or director option program, benefit plan or
compensation program or (c) any issuance by a Subsidiary to either Company or
another Subsidiary in accordance with Section 11.4.
11.11 Investments. Not, and not permit any other Loan Party to, make
or permit to exist any Investment in any other Person, except the following:
(a) contributions by either Company to the capital of any
Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any
other domestic Wholly-Owned Subsidiary, so long as the recipient of any
such capital contribution has guaranteed the Obligations and such
guaranty is secured by a pledge of all of its Capital Securities and
substantially all of its real and personal property, in each case in
accordance with Section 10.10;
(b) Investments constituting Debt permitted by Section
11.1;
(c) Contingent Liabilities constituting Debt permitted by
Section 11.1 or Liens permitted by Section 11.2;
61
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business,
provided that the aggregate amount of all such deposits which are
maintained with any bank other than a Lender shall not at any time
exceed $50,000; provided further that for 30 days after the Closing
Date, the Loan Parties may maintain deposit accounts at The Northern
Trust Company and Bank One, N.A. so long as such deposit accounts are
subject to the Deposit Account Control Agreements required by Section
12.1.21;
(f) Investments in securities of Account Debtors received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such account debtors; and
(g) Investments listed on Schedule 11.11 as of the
Closing Date.
provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b), or
(c) shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Unmatured Event of Default exists.
11.12 Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under the Related Agreements or the
Subordinated Debt Documents if, in any case, such amendment, modification or
waiver could be adverse to the interests of the Lenders.
11.13 Fiscal Year. Not change its Fiscal Year.
11.14 Financial Covenants.
11.14.1 EBITDA. (a) Not Permit EBITDA for any Computation
Period to be less than the applicable amount set forth below for such
Computation Period:
COMPUTATION
PERIOD ENDING EBITDA
------------- ------
December 31, 2003 $2,000,000
January 31, 2004 $2,000,000
February 29, 2004 $2,000,000
March 31, 2004 $3,350,000
April 30, 2004 $3,350,000
May 31, 2004 $3,350,000
June 30, 2004 $4,600,000
62
July 31, 2004 $4,600,000
August 31, 2004 $4,600,000
September 30, 2004 $6,700,000
October 31, 2004 $6,700,000
November 30, 2004 $6,700,000
December 31, 2004, and the last day of each $8,000,000
Computation Period thereafter
11.14.2 Fixed Charge Coverage Ratio. (a) Not permit the Fixed
Charge Coverage Ratio for any Computation Period to be less than the applicable
ratio set forth below for such Computation Period:
COMPUTATION FIXED CHARGE
PERIOD ENDING COVERAGE RATIO
------------- --------------
June 30, 2004; July 31, 2004; and August
31, 2004 1.15
September 30, 2004; October 31, 2004;
and November 30, 2004 1.20
December 31, 2004 and the last day of
each Computation Period thereafter 1.25
11.14.3 Senior Debt to EBITDA Ratio. Not permit the Senior
Debt to EBITDA Ratio as of the last day of any Computation Period to exceed the
applicable ratio set forth below for such Computation Period:
COMPUTATION SENIOR DEBT TO
PERIOD ENDING EBITDA RATIO
------------- ------------
June 30, 2004; July 31, 2004; and August
31, 2004 2.00
September 30, 2004; October 31, 2004;
and November 30, 2004 1.75
December 31, 2004 and the last day of
each Computation Period thereafter
ending on or before May 31, 2005 1.50
June 30, 2005 and the last day of each
Computation Period thereafter 1.25
11.14.4 Total Debt to EBITDA Ratio. Not permit the Total Debt
to EBITDA Ratio as of the last day of any Computation Period to exceed the
applicable ratio set forth below for such Computation Period:
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COMPUTATION TOTAL DEBT TO
PERIOD ENDING EBITDA RATIO
------------- ------------
June 30, 2004; July 31, 2004; and August
31, 2004 4.25
September 30, 2004; October 31, 2004;
and November 30, 2004 3.75
December 31, 2004 and the last day of
each Computation Period thereafter 3.00
11.14.5 Capital Expenditures. Not permit the aggregate amount
of all Capital Expenditures made by the Loan Parties in Fiscal Year 2003 to
exceed $1,700,000 and in any Fiscal Year thereafter to exceed $3,200,000.
11.15 Cancellation of Debt. Not, and not permit any other Loan Party
to, cancel any claim or debt owing to it, except for reasonable consideration or
in the ordinary course of business, and except for the cancellation of debts or
claims not to exceed $50,000 in any Fiscal Year.
SECTION 12 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Lender to make its Loans and of the Issuing
Lender to issue Letters of Credit is subject to the following conditions
precedent:
12.1 Initial Credit Extension. The obligation of the Lenders to
make the initial Loans and the obligation of the Issuing Lender to issue its
initial Letter of Credit (whichever first occurs) is, in addition to the
conditions precedent specified in Section 12.2, subject to the conditions
precedent that:
(a) the parties thereto have executed and delivered the
Northern Trust Assignment Agreement pursuant to which the Kapoor Equity
Group shall have purchased with equity proceeds the Assigned Interests
for an amount not to exceed $33,958,201 (which amount shall be
deposited with the Administrative Agent for payment at the direction of
the Kapoor Equity Group to Northern Trust);
(b) the Related Agreement shall have been executed and
delivered, and the Administrative Agent shall have received evidence,
reasonably satisfactory to the Administrative Agent, that all
transactions contemplated therein shall have been (or concurrently with
the initial Loans hereunder, will be) consummated, including repayment
and defeasance in full of the Northern Trust Bank Group Obligations in
an amount not to exceed $33,958,201 by Akorn for consideration
consisting of (i) an aggregate of 257,172 shares of Akorn's Series A
6.0% Participating Convertible Preferred Stock, par value $1.00 per
share, having the terms set forth in the Articles of Amendment to
Articles of Incorporation, dated as of October 7, 2003 having an
exchange value of
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$25,717,199.97, (ii) the Related Transaction Subordinated Notes in an
aggregate principal amount of $2,767,139.03, (iii) warrants to purchase
an aggregate of 8,572,400 shares of common stock of Akorn on the terms
set forth in the Preferred Stock Warrant Agreements and (iv) proceeds
from the Term Loans in an amount not to exceed $5,473,862;
(c) the Administrative Agent and the Lenders shall have
received all of the following, each duly executed and dated the Closing
Date (or such earlier date as shall be satisfactory to the
Administrative Agent), in form and substance satisfactory to the
Administrative Agent (and the date on which all such conditions
precedent have been satisfied or waived in writing by the
Administrative Agent and the Lenders is called the "Closing Date"):
12.1.2 Notes. A Note for each Lender.
12.1.3 Authorization Documents. For each Loan Party, such Person's
(a) charter (or similar formation document), certified by the appropriate
governmental authority; (b) good standing certificates in its state of
incorporation (or formation) and in each other state requested by the
Administrative Agent; (c) bylaws (or similar governing document); (d)
resolutions of its board of directors (or similar governing body) approving and
authorizing such Person's execution, delivery and performance of the Loan
Documents to which it is party and the transactions contemplated thereby; and
(e) signature and incumbency certificates of its officers executing any of the
Loan Documents (it being understood that the Administrative Agent and each
Lender may conclusively rely on each such certificate until formally advised by
a like certificate of any changes therein), all certified by its secretary or an
assistant secretary (or similar officer) as being in full force and effect
without modification.
12.1.4 Consents, etc. Certified copies of all documents evidencing
any necessary corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and performance by the
Loan Parties of the documents referred to in this Section 12.
12.1.5 Letter of Direction. A letter of direction containing funds
flow information with respect to the proceeds of the Loans on the Closing Date.
12.1.6 Guaranty and Collateral Agreement. A counterpart of the
Guaranty and Collateral Agreement executed by each Loan Party, together with all
instruments, transfer powers and other items required to be delivered in
connection therewith.
12.1.7 Perfection Certificate. A Perfection Certificate completed and
executed by each Loan Party.
12.1.8 Landlord/Mortgagee Waiver. (a) In the case of any leased real
property, a Collateral Access Agreement from the owner waiving any landlord's
Lien in respect of personal
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property kept at the premises subject to such lease and (b) in the case of any
mortgaged real property, a waiver from the mortgagee thereof waiving any Lien in
respect of personal property kept at the premises subject to such Mortgage.
12.1.9 Subordination Agreements. Subordination Agreements with
respect to all Subordinated Debt.
12.1.10 Opinions of Counsel. Opinions of counsel for each
Loan Party, including local counsel reasonably requested by the Administrative
Agent.
12.1.11 Insurance. (a) Evidence of the existence of insurance
required to be maintained pursuant to Section 10.3(b), together with evidence
that the Administrative Agent has been named as a lender's loss payee and an
additional insured on all related insurance policies.
12.1.12 Copies of Documents. Copies of the Related Agreements
certified by the secretary or assistant secretary (or similar officer) of Akorn
as being true, accurate and complete.
12.1.13 Payment of Fees. Evidence of payment by the Companies
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with all Attorney Costs of the
Administrative Agent to the extent invoiced prior to the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute the Administrative
Agent's reasonable estimate of Attorney Costs incurred or to be incurred by the
Administrative Agent through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Companies and the Administrative Agent).
12.1.14 Solvency Certificate. A Solvency Certificate executed
by a Senior Officer of each Company.
12.1.15 Pro Forma. A consolidated pro forma balance sheet of
the Companies as at the Closing Date, in form and substance satisfactory to the
Administrative Agent, adjusted to give effect to the consummation of the Related
Transactions and the financings contemplated hereby as if such transactions had
occurred on such date, consistent in all material respects with the sources and
uses of cash as previously described to the Lenders and the forecasts previously
provided to the Lenders.
12.1.16 Search Results; Lien Terminations. Certified copies
of Uniform Commercial Code search reports dated a date reasonably near to the
Closing Date, listing all effective financing statements which name any Loan
Party (under their present names and any previous names) as debtors, together
with (a) copies of such financing statements, (b) payoff letters evidencing
repayment in full of all Debt to be Repaid, the termination of all agreements
relating thereto and the release of all Liens granted in connection therewith,
with Uniform Commercial Code or other appropriate termination statements and
documents effective to
66
evidence the foregoing (other than Liens permitted by Section 11.2) and (c) such
other Uniform Commercial Code termination statements as the Administrative Agent
may reasonably request.
12.1.17 Filings, Registrations and Recordings. The
Administrative Agent shall have received each document (including Uniform
Commercial Code financing statements) required by the Collateral Documents or
under law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of the Lenders, a perfected Lien on the collateral described
therein, prior to any other Liens (subject only to Liens permitted pursuant to
Section 11.2), in proper form for filing, registration or recording.
12.1.18 Borrowing Base Certificate. A Borrowing Base
Certificate dated as of the Closing Date.
12.1.19 Closing Certificate, Consents and Permits. A
certificate executed by a Senior Officer of each Company on behalf of such
Company certifying (a) the matters set forth in Section 12.2.1 as of the Closing
Date and (b) the occurrence of the closing of the Related Transactions and that
such closing has been consummated in accordance with the terms of the Related
Agreements without waiver of any material condition thereof; together with
evidence that (i) all necessary governmental, regulatory, creditor, shareholder,
partner and other material consents, approvals and exemptions required to be
obtained by each Company in connection with the Related Transactions have been
duly obtained and are in full force and effect and (ii) all material permits
necessary for the operation of any business(es) acquired in connection with the
Related Transactions have been obtained.
12.1.20 Related Agreements. Certified fully executed copies
of each of the Related Agreements.
12.1.21 Kapoor Guaranty. The personal guaranty of the
Obligations executed by ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Kapoor Trust secured by one
or more standby letters of credit in a stated amount not less than $5,500,000.
12.1.22 Fairness Opinion. An opinion of Leerink ▇▇▇▇▇ &
Company, financial advisor to the board of directors and the independent
committee of Akorn, delivered to the board of directors and independent
committee, to the effect that, as of the date of such opinion, the transactions
contemplated by the Preferred Stock and Note Purchase Agreement are fair, from a
financial point of view to Akorn and its public stockholders, other than the
purchasers under the Preferred Stock and Note Purchase Agreement.
12.1.23 Deposit Account Control Agreements. Deposit account
control agreements, in form and substance satisfactory to the Administrative
Agent, granting the Administrative Agent control over the deposit accounts of
the Loan Parties maintained at institutions other than the Administrative Agent.
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12.1.24 Northern Trust Release. An unconditional release
executed by Northern Trust (and all lenders under the Northern Trust Loan
Documents) in connection with the Northern Trust Assignment Agreement (upon
which the Administrative Agent shall be entitled to rely) releasing the Loan
Parties from all Northern Trust Bank Group Obligations and all other claims by
Northern Trust and all lenders under the Northern Trust Loan Documents.
12.1.25 Kapoor Equity Group Release. A termination and
unconditional release of the Companies from any and all obligations under the
Northern Trust Loan Documents, executed by the Kapoor Equity Group, together
with delivery of promissory notes marked "paid in full", and release or
termination of all Liens, Mortgages or other similar interests relating to the
Companies' obligations under the Northern Trust Credit Agreement.
12.1.26 Audit Committee Approval and Stockholder Letter. (a)
Resolutions of Akorn's audit committee (the "Resolutions") determining that
delaying the Closing (as defined in the Preferred Stock and Note Purchase
Agreement) in anticipation of stockholder approval would seriously jeopardize
the financial viability of the enterprise of the Companies, which Resolutions
shall be in full force and effect and not withdrawn and the audit committee
shall not have made any determinations contrary to its determinations in the
Resolutions, and (b) a letter mailed to all of Akorn's stockholders not later
than ten days prior to the Closing (as defined in the Preferred Stock and Note
Purchase Agreement) alerting them to Akorn's omission to seek stockholder
approval and indicating that the audit committee has expressly approved the
issuance of the preferred shares, warrants and guaranty warrants and the other
transactions contemplated by the Preferred Stock and Note Purchase Agreement
without seeking shareholder approval.
12.1.27 Shareholder Litigation. There shall be no legal
actions, suits, arbitrations or other proceedings brought by one or more
shareholders of the Companies pending or threatened by which the Related
Transactions could be materially delayed or prevented.
12.1.28 Transaction Costs. Evidence that non-recurring legal
and consulting costs and expenses in connection with the Related Transactions
and this Agreement shall not exceed $2,600,000.
12.1.29 Minimum Availability. Evidence that after giving
effect to the Related Transactions and the transactions contemplated by this
Agreement (including the initial borrowing hereunder) there shall be not less
than $750,000 of Revolving Credit Availability.
12.1.30 Other. Such other documents as the Administrative
Agent or any Lender may reasonably request.
12.2 Conditions. The obligation (a) of each Lender to make each
Loan and (b) of the Issuing Lender to issue each Letter of Credit is subject to
the following further conditions precedent that:
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12.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of Credit,
the following statements shall be true and correct:
(a) the representations and warranties of each Loan Party
set forth in this Agreement and the other Loan Documents shall be true
and correct in all respects with the same effect as if then made
(except to the extent stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and
correct as of such earlier date); and
(b) no Event of Default or Unmatured Event of Default
shall have then occurred and be continuing.
12.2.2 Confirmatory Certificate. If requested by the Administrative
Agent or any Lender, the Administrative Agent shall have received (in sufficient
counterparts to provide one to each Lender) a certificate dated the date of such
requested Loan or Letter of Credit and signed by a duly authorized
representative of each Company as to the matters set out in Section 12.2.1 (it
being understood that each request by any Company for the making of a Loan or
the issuance of a Letter of Credit shall be deemed to constitute a
representation and warranty by each Company that the conditions precedent set
forth in Section 12.2.1 will be satisfied at the time of the making of such Loan
or the issuance of such Letter of Credit), together with such other documents as
the Administrative Agent or any Lender may reasonably request in support
thereof.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
13.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
13.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five days,
in the payment when due of any interest, fee, reimbursement obligation with
respect to any Letter of Credit or other amount payable by the Companies
hereunder or under any other Loan Document.
13.1.2 Non-Payment of Other Debt. Any default shall occur under any
Subordinated Debt Document or any default shall occur under the terms applicable
to any other Debt of either Company or any Guarantor in an aggregate amount (for
all such Debt so affected and including undrawn committed or available amounts
and amounts owing to all creditors under any combined or syndicated credit
arrangement) exceeding $50,000 and such default shall (a) consist of the failure
to pay such Debt when due, whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable (or require either Company or any Guarantor to purchase or
redeem such Debt or post cash collateral in respect thereof) prior to its
expressed maturity.
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13.1.3 Other Material Obligations. Default in the payment when due,
or in the performance or observance of, any material obligation of, or condition
agreed to by, either Company or any Guarantor with respect to any material
purchase or lease of goods or services where such default, singly or in the
aggregate with all other such defaults, might reasonably be expected to have a
Material Adverse Effect.
13.1.4 Bankruptcy, Insolvency, etc. Either Company or any Guarantor
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or either Company or any Guarantor
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for such Person or any property thereof, or makes a
general assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for either Company or any Guarantor or for a substantial part of the
property of any thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is
commenced in respect of either Company or any Guarantor, and if such case or
proceeding is not commenced by such Person, it is consented to or acquiesced in
by such Person, or remains for 60 days undismissed; or either Company or any
Guarantor takes any action to authorize, or in furtherance of, any of the
foregoing.
13.1.5 Non-Compliance with Loan Documents. (a) Failure by either
Company or any Guarantor to comply with or to perform (to the extent applicable
to such Person) any covenant set forth in Section 10.1.5, 10.3(b), 10.5 or 10.9
or Section 11; or (b) failure by either Company or any Guarantor to comply with
or to perform any other provision of this Agreement or any other Loan Document
other than the Kapoor Guaranty (and not constituting an Event of Default under
any other provision of this Section 13) and continuance of such failure
described in this clause (b) for 30 days.
13.1.6 Representations; Warranties. Any representation or warranty
made by either Company or any Guarantor herein or any other Loan Document is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
either Company or any Guarantor to the Administrative Agent or any Lender in
connection herewith is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified.
13.1.7 Pension Plans. (a) Any Person institutes steps to terminate a
Pension Plan if as a result of such termination either Company or any member of
the Controlled Group could be required to make a contribution to such Pension
Plan, or could incur a liability or obligation to such Pension Plan, in excess
of $150,000; (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; (c) the
Unfunded Liability exceeds twenty percent of the Total Plan Liability, or (d)
there shall occur any withdrawal or partial withdrawal from a Multiemployer
Pension Plan and the withdrawal liability (without unaccrued interest) to
Multiemployer Pension Plans as a result of such withdrawal
70
(including any outstanding withdrawal liability that either Company or any
member of the Controlled Group have incurred on the date of such withdrawal)
exceeds $150,000.
13.1.8 Judgments. Final judgments which exceed an aggregate of
$250,000 shall be rendered against either Company or any Guarantor and shall not
have been paid, discharged or vacated or had execution thereof stayed pending
appeal within 30 days after entry or filing of such judgments.
13.1.9 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect; or either Company or any
Guarantor (or any Person by, through or on behalf of either Company or any
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.
13.1.10 Invalidity of Subordination Provisions, etc. Any
subordination provision in any document or instrument governing Subordinated
Debt, or any subordination provision in any guaranty by any Subsidiary of any
Subordinated Debt, shall cease to be in full force and effect, or either Loan
Party or any Guarantor or any other Person (including the holder of any
applicable Subordinated Debt) shall contest in any manner the validity, binding
nature or enforceability of any such provision.
13.1.11 Change of Control. A Change of Control shall occur.
13.1.12 FDA Action. (a) The FDA or DEA shall have taken any
action which results in a partial or total suspension of either Company's
production or shipment of products or seizure of either Company's products; (b)
the Companies shall have failed to make a written response, within 10 days, to
the FDA, with a copy to the Administrative Agent, to any written communication
received from the FDA that raises any deficiencies in either Company's
operations; (c) the FDA or DEA shall have imposed fines against the Companies in
an aggregate amount greater than $250,000; or (d) the FDA or DEA shall have
taken any other material adverse action based on an alleged failure to comply
with governmental laws or regulations.
13.1.13 Significant Customers. Any of the three largest third
party contract customers (by aggregate revenue to the Companies) of either
Company terminates its business relationship with either Company or advises
either Company that it is terminating its business relationship with either
Company, or materially reduces or advises the Companies that it is planning to
materially reduce its future purchases from either Company.
13.1.14 Death of Guarantor. The death of ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
at any time while ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ is a Guarantor, and the failure of the
estate of ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ or the Kapoor Trust to pay any amounts owing under
the Kapoor Guaranty as a result thereof.
13.1.15 Kapoor Guaranty. Any Guarantor under the Kapoor
Guaranty shall fail to comply with or to perform any provision of the Kapoor
Guaranty.
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13.1.16 Letter of Credit. The Letter of Credit (as defined in
the Kapoor Guaranty) shall fail at any time to be in full force and effect.
13.1.17 Material Adverse Effect. The occurrence of any event
having a Material Adverse Effect.
13.2 Effect of Event of Default. If any Event of Default described
in Section 13.1.4 shall occur in respect of either Company, the Commitments
shall immediately terminate and the Loans and all other Obligations hereunder
shall become immediately due and payable and the Companies shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Administrative Agent may (and, upon
the written request of the Required Lenders shall) declare the Commitments to be
terminated in whole or in part and/or declare all or any part of the Loans and
all other Obligations hereunder to be due and payable and/or demand that the
Companies immediately Cash Collateralize all or any Letters of Credit, whereupon
the Commitments shall immediately terminate (or be reduced, as applicable)
and/or the Loans and other Obligations hereunder shall become immediately due
and payable (in whole or in part, as applicable) and/or the Companies shall
immediately become obligated to Cash Collateralize the Letters of Credit (all or
any, as applicable), all without presentment, demand, protest or notice of any
kind. The Administrative Agent shall promptly advise the Companies of any such
declaration, but failure to do so shall not impair the effect of such
declaration. Any cash collateral delivered hereunder shall be held by the
Administrative Agent (without liability for interest thereon) and applied to the
Obligations arising in connection with any drawing under a Letter of Credit.
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by the Administrative Agent to any remaining
Obligations hereunder and any excess shall be delivered to the Companies or as a
court of competent jurisdiction may elect.
SECTION 14 THE AGENT.
14.1 Appointment and Authorization. (a) Each Lender hereby
irrevocably (subject to Section 14.9) appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Without limiting the
generality of the foregoing sentence, the use of the term "agent" herein and in
other Loan Documents with reference to the Agent is not intended to connote any
fiduciary or other implied
72
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
14.1.2 Issuing Lender. The Issuing Lender shall act on behalf of the
Lenders (according to their Pro Rata Shares) with respect to any Letters of
Credit issued by it and the documents associated therewith. The Issuing Lender
shall have all of the benefits and immunities (a) provided to the Administrative
Agent in this Section 14 with respect to any acts taken or omissions suffered by
the Issuing Lender in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Administrative
Agent", as used in this Section 14, included the Issuing Lender with respect to
such acts or omissions and (b) as additionally provided in this Agreement with
respect to the Issuing Lender.
14.1.3 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
14.1.4 Exculpation of Administrative Agent. None of the
Administrative Agent nor any of its directors, officers, employees or agents
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except to the extent resulting from its own
gross negligence or willful misconduct in connection with its duties expressly
set forth herein as determined by a final, nonappealable judgment by a court of
competent jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or Affiliate of the Companies, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of either Company or any other party to any Loan Document to perform its
Obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of either Company or any Company's Subsidiaries or Affiliates.
14.2 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, communication, signature,
73
resolution, representation, notice, consent, certificate, electronic mail
message, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Companies), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, confirmation
from the Lenders of their obligation to indemnify the Administrative Agent
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders and such request and any action taken or failure
to act pursuant thereto shall be binding upon each Lender. For purposes of
determining compliance with the conditions specified in Section 12, each Lender
that has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received written notice from
such Lender prior to the proposed Closing Date specifying its objection thereto.
14.3 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent for
the account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or a Company referring to this Agreement,
describing such Event of Default or Unmatured Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Event of Default or Unmatured Event of Default
as may be requested by the Required Lenders in accordance with Section 13;
provided that unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default or Unmatured Event of Default as it shall deem advisable or in the best
interest of the Lenders.
14.4 Credit Decision. Each Lender acknowledges that the
Administrative Agent has not made any representation or warranty to it, and that
no act by the Administrative Agent hereafter taken, including any consent and
acceptance of any assignment or review of the affairs of the Loan Parties, shall
be deemed to constitute any representation or warranty by the Administrative
Agent to any Lender as to any matter, including whether the Administrative Agent
has disclosed material information in its possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and
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other condition and creditworthiness of the Loan Parties, and made its own
decision to enter into this Agreement and to extend credit to the Companies
hereunder. Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Companies.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, property,
financial or other condition or creditworthiness of the Companies which may come
into the possession of the Administrative Agent.
14.5 Indemnification. Whether or not the transactions contemplated
hereby are consummated, each Lender shall indemnify upon demand the
Administrative Agent and its directors, officers, employees and agents (to the
extent not reimbursed by or on behalf of the Companies and without limiting the
obligation of the Companies to do so), according to its applicable Pro Rata
Share, from and against any and all Indemnified Liabilities (as hereinafter
defined); provided that no Lender shall be liable for any payment to any such
Person of any portion of the Indemnified Liabilities to the extent determined by
a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from the applicable Person's own gross negligence or willful
misconduct. No action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender shall
reimburse the Administrative Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs and Taxes) incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Companies. The undertaking in this Section shall survive repayment
of the Loans, cancellation of the Notes, expiration or termination of the
Letters of Credit, any foreclosure under, or modification, release or discharge
of, any or all of the Collateral Documents, termination of this Agreement and
the resignation or replacement of the Administrative Agent.
14.6 Administrative Agent in Individual Capacity. LaSalle and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan
Parties and Affiliates as though LaSalle were not the Administrative Agent
hereunder and without notice to or consent of any Lender. Each Lender
acknowledges that, pursuant to such activities, LaSalle or its Affiliates may
receive information regarding the
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Companies or their Affiliates (including information that may be subject to
confidentiality obligations in favor of such Company or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to their Loans (if any), LaSalle
and its Affiliates shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though LaSalle were not the
Administrative Agent, and the terms "Lender" and "Lenders" include LaSalle and
its Affiliates, to the extent applicable, in their individual capacities.
14.7 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall,
with (so long as no Event of Default exists) the consent of the Companies (which
shall not be unreasonably withheld or delayed), appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Companies, a successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor agent, and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 14 and
Sections 15.5 and 15.16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
14.8 Collateral Matters. The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, (a) to release any
Lien granted to or held by the Administrative Agent under any Collateral
Document (i) upon termination of the Commitments and payment in full of all
Loans and all other obligations of the Companies hereunder and the expiration or
termination of all Letters of Credit; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; or (iii) subject to Section 15.1, if approved, authorized or ratified
in writing by the Required Lenders; or (b) to subordinate its interest in any
collateral to any holder of a Lien on such collateral which is permitted by
Section 11.2(d)(i) or (d)(iii) (it being understood that the Administrative
Agent may conclusively rely on a certificate from the Companies in determining
whether the Debt secured by any such Lien is permitted by Section 11.1(b)). Upon
request by the Administrative Agent at any time, the Lenders will confirm in
writing the Administrative Agent's authority to release, or subordinate its
interest in, particular types or items of collateral pursuant to this Section
14.8. Each Lender hereby authorizes the Administrative Agent to give blockage
notices in connection with any
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Subordinated Debt at the direction of Required Lenders and agrees that it will
not act unilaterally to deliver such notices.
14.9 Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Companies) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Sections 5, 15.5 and 15.16) allowed in such
judicial proceedings; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5, 15.5 and 15.16.
Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.
SECTION 15 GENERAL.
15.1 Waiver; Amendments. No delay on the part of the Administrative
Agent or any Lender in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
other Loan Documents shall in any event be effective unless the same shall be in
writing and
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acknowledged by Lenders having an aggregate Pro Rata Shares of not less than the
aggregate Pro Rata Shares expressly designated herein with respect thereto or,
in the absence of such designation as to any provision of this Agreement, by the
Required Lenders, and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment, modification, waiver or consent shall (a) change
the Pro Rata Share of any Lender without the written consent of such Lender, (b)
extend or increase the Commitment of any Lender without the written consent of
such Lender, (c) extend the date scheduled for payment of any principal
(excluding mandatory prepayments) of or interest on the Loans or any fees
payable hereunder without the written consent of each Lender directly affected
thereby, (d) reduce the principal amount of any Loan, the rate of interest
thereon or any fees payable hereunder, without the consent of each Lender
directly affected thereby; or (e) release any party from its obligations under
the Guaranty or all or any substantial part of the collateral granted under the
Collateral Documents, change the definition of Required Lenders, any provision
of this Section 15.1 or reduce the aggregate Pro Rata Share required to effect
an amendment, modification, waiver or consent, without, in each case, the
written consent of all Lenders. No provision of Sections 6.2.2 or 6.3 with
respect to the timing or application of mandatory prepayments of the Loans shall
be amended, modified or waived without the consent of Lenders having a majority
of the aggregate Pro Rata Shares of the Term Loans affected thereby. No
provision of Section 14 or other provision of this Agreement affecting the
Administrative Agent in its capacity as such shall be amended, modified or
waived without the consent of the Administrative Agent. No provision of this
Agreement relating to the rights or duties of the Issuing Lender in its capacity
as such shall be amended, modified or waived without the consent of the Issuing
Lender.
15.2 Confirmations. Each Company and each holder of a Note agree
from time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to the
Administrative Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.
15.3 Notices. Except as otherwise provided in Sections 2.2.2 and
2.2.3, all notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address shown on
Annex B or at such other address as such party may, by written notice received
by the other parties, have designated as its address for such purpose. Notices
sent by facsimile transmission shall be deemed to have been given when sent;
notices sent by mail shall be deemed to have been given three Business Days
after the date when sent by registered or certified mail, postage prepaid; and
notices sent by hand delivery or overnight courier service shall be deemed to
have been given when received. For purposes of Sections 2.2.2 and 2.2.3, the
Administrative Agent shall be entitled to rely on telephonic instructions from
any person that the Administrative Agent in good faith believes is an authorized
officer or employee of the applicable Company, and the Companies shall hold the
Administrative Agent and each other Lender harmless from any loss, cost or
expense resulting from any such reliance.
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15.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Companies
notify the Administrative Agent that the Companies wish to amend any covenant in
Section 10 (or any related definition) to eliminate or to take into account the
effect of any change in GAAP on the operation of such covenant (or if the
Administrative Agent notifies the Companies that the Required Lenders wish to
amend Section 10 (or any related definition) for such purpose), then the
Company's compliance with such covenant shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant (or related definition) is
amended in a manner satisfactory to the Companies and the Required Lenders.
15.5 Costs, Expenses and Taxes. Each Company agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent (including Attorney Costs and any Taxes) in connection with the
preparation, execution, syndication, delivery and administration (including
perfection and protection of any collateral and the costs of Intralinks (or
other similar service), if applicable) of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), whether or not the transactions
contemplated hereby or thereby shall be consummated, and all reasonable
out-of-pocket costs and expenses (including Attorney Costs and any Taxes)
incurred by the Administrative Agent and each Lender after an Event of Default
in connection with the collection of the Obligations or the enforcement of this
Agreement the other Loan Documents or any such other documents or during any
workout, restructuring or negotiations in respect thereof. In addition, each
Company agrees to pay, and to save the Administrative Agent and the Lenders
harmless from all liability for, any fees of the Companies' auditors in
connection with any reasonable exercise by the Administrative Agent and the
Lenders of their rights pursuant to Section 10.2. All Obligations provided for
in this Section 15.5 shall survive repayment of the Loans, cancellation of the
Notes, expiration or termination of the Letters of Credit and termination of
this Agreement.
15.6 Assignments; Participations.
15.6.1 Assignments. (a) Any Lender may at any time assign to one or
more Persons (any such Person, an "Assignee") all or any portion of such
Lender's Loans and Commitments, with the prior written consent of the
Administrative Agent, the Issuing Lender (for an assignment of the Revolving
Loans and the Revolving Commitment Amount). Except as the Administrative Agent
may otherwise agree, any such assignment shall be in a minimum aggregate amount
equal to $1,000,000 or, if less, the remaining Commitment and Loans held by the
assigning Lender. The Companies and the Administrative Agent shall be entitled
to continue to deal solely and directly with such Lender in connection with the
interests so assigned to an Assignee until the
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Administrative Agent shall have received and accepted an effective assignment
agreement in substantially the form of Exhibit D hereto (an "Assignment
Agreement") executed, delivered and fully completed by the applicable parties
thereto and a processing fee of $3,500. No assignment may be made to any Person
if at the time of such assignment the Companies would be obligated to pay any
greater amount under Section 7.6 or 8 to the Assignee than the Companies are
then obligated to pay to the assigning Lender under such Sections (and if any
assignment is made in violation of the foregoing, the Companies will not be
required to pay such greater amounts). Any attempted assignment not made in
accordance with this Section 15.6.1 shall be treated as the sale of a
participation under Section 15.6.2.
(b) From and after the date on which the conditions described
above have been met, (i) such Assignee shall be deemed automatically to have
become a party hereto and, to the extent that rights and obligations hereunder
have been assigned to such Assignee pursuant to such Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment Agreement, shall be released from its rights
(other than its indemnification rights) and obligations hereunder. Upon the
request of the Assignee (and, as applicable, the assigning Lender) pursuant to
an effective Assignment Agreement, the Companies shall execute and deliver to
the Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee's Pro Rata
Share of the Revolving Commitment Amount plus the principal amount of the
Assignee's Term Loans (and, as applicable, a Note in the principal amount of the
Pro Rata Share of the Revolving Commitment Amount retained by the assigning
Lender plus the principal amount of the Term Loans retained by the assigning
Lender). Each such Note shall be dated the effective date of such assignment.
Upon receipt by the assigning Lender of such Note, the assigning Lender shall
return to the applicable Company any prior Note held by it.
(c) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
15.6.2 Participations. Any Lender may at any time sell to one or more
Persons participating interests in its Loans, Commitments or other interests
hereunder (any such Person, a "Participant"). In the event of a sale by a Lender
of a participating interest to a Participant, (a) such Lender's obligations
hereunder shall remain unchanged for all purposes, (b) the Companies and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations hereunder and (c) all
amounts payable by the Companies shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any event described in Section 15.1 expressly requiring the
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unanimous vote of all Lenders or, as applicable, all affected Lenders. Each
Lender agrees to incorporate the requirements of the preceding sentence into
each participation agreement which such Lender enters into with any Participant.
Each Company agrees that if amounts outstanding under this Agreement are due and
payable (as a result of acceleration or otherwise), each Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement and with respect to any Letter of Credit to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided that such right of
set-off shall be subject to the obligation of each Participant to share with the
Lenders, and the Lenders agree to share with each Participant, as provided in
Section 7.5. Each Company also agrees that each Participant shall be entitled to
the benefits of Section 7.6 or 8 as if it were a Lender (provided that on the
date of the participation no Participant shall be entitled to any greater
compensation pursuant to Section 7.6 or 8 than would have been paid to the
participating Lender on such date if no participation had been sold and that
each Participant complies with Section 7.6(d) as if it were an Assignee).
15.7 Register. The Administrative Agent shall maintain a copy of
each Assignment Agreement delivered and accepted by it and register (the
"Register") for the recordation of names and addresses of the Lenders and the
Commitment of each Lender from time to time and whether such Lender is the
original Lender or the Assignee. No assignment shall be effective unless and
until the Assignment Agreement is accepted and registered in the Register. All
records of transfer of a Lender's interest in the Register shall be conclusive,
absent manifest error, as to the ownership of the interests in the Loans. The
Administrative Agent shall not incur any liability of any kind with respect to
any Lender with respect to the maintenance of the Register.
15.8 GOVERNING LAW. THIS AGREEMENT AND EACH NOTE SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
15.9 Confidentiality. The Administrative Agent and each Lender
agree to use commercially reasonable efforts (equivalent to the efforts the
Administrative Agent or such Lender applies to maintain the confidentiality of
its own confidential information) to maintain as confidential all information
provided to them by any Loan Party and designated as confidential, except that
the Administrative Agent and each Lender may disclose such information (a) to
Persons employed or engaged by the Administrative Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this
Section 15.9 (and any such assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by them
as described in clause (a) above); (c) as required or requested by any federal
or state regulatory authority or examiner, or any insurance industry
association, or as reasonably believed by the Administrative Agent or such
Lender to be compelled by any court decree, subpoena or legal or administrative
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order or process; (d) as, on the advice of the Administrative Agent's or such
Lender's counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any litigation to
which the Administrative Agent or such Lender is a party; (f) to any nationally
recognized rating agency that requires access to information about a Lender's
investment portfolio in connection with ratings issued with respect to such
Lender; (g) to any Affiliate of the Administrative Agent, the Issuing Lender or
any other Lender who may provide Bank Products to the Loan Parties; or (h) that
ceases to be confidential through no fault of the Administrative Agent or any
Lender. Notwithstanding the foregoing, each Company consents to the publication
by the Administrative Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and the Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements. Notwithstanding anything in this Agreement or any other Loan
Document to the contrary, any information with respect to the "tax treatment" or
"tax structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby shall not be confidential and
the Administrative Agent and the Lenders and other parties hereto may disclose
without limitation of any kind any information that is provided to the
Administrative Agent or the Lenders with respect to the "tax treatment" or "tax
structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4); provided, that to the extent any Loan Document contains information
that relates to the "tax treatment" or "tax structure" and contains other
information, this paragraph shall only apply to the information regarding the
"tax treatment" or "tax structure."
15.10 Severability. Whenever possible each provision of this
Agreement shall be interpreted in such 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. All obligations of each
Company and rights of the Administrative Agent and the Lenders expressed herein
or in any other Loan Document shall be in addition to and not in limitation of
those provided by applicable law.
15.11 Nature of Remedies. All Obligations of each Company and rights
of the Administrative Agent and the Lenders expressed herein or in any other
Loan Document shall be in addition to and not in limitation of those provided by
applicable law. No failure to exercise and no delay in exercising, on the part
of the Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
15.12 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof (except as relates to the fees described in Section
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5.4) and any prior arrangements made with respect to the payment by each Company
of (or any indemnification for) any fees, costs or expenses payable to or
incurred (or to be incurred) by or on behalf of the Administrative Agent or the
Lenders.
15.13 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
of an executed signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof. Electronic records of
executed Loan Documents maintained by the Lenders shall deemed to be originals.
15.14 Successors and Assigns. This Agreement shall be binding upon
each Company, the Lenders and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of each Company, the
Lenders and the Administrative Agent and the successors and assigns of the
Lenders and the Administrative Agent. No other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
Neither Company may assign or transfer any of its rights or Obligations under
this Agreement without the prior written consent of the Administrative Agent and
each Lender.
15.15 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
15.16 INDEMNIFICATION BY THE COMPANY. IN CONSIDERATION OF THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT AND THE
LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, EACH
COMPANY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVE AGENT,
EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND
AGENTS OF THE ADMINISTRATIVE AGENT AND EACH LENDER (EACH A "LENDER PARTY") FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS
(COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"), INCURRED BY THE LENDER PARTIES OR
ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TENDER
OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS (INCLUDING THE
RELATED TRANSACTIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE
FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY
OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,
TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY
PROPERTY OWNED OR LEASED BY ANY
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LOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO
CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS
CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE
LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED
TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A
COURT OF COMPETENT JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING
UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH COMPANY HEREBY AGREES TO
MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE
INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL
OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.16 SHALL SURVIVE REPAYMENT OF THE
LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF
CREDIT, ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY
OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.
15.17 Nonliability of Lenders. The relationship between the
Companies on the one hand and the Lenders and the Administrative Agent on the
other hand shall be solely that of borrower and lender. Neither the
Administrative Agent nor any Lender has any fiduciary relationship with or duty
to any Loan Party arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Loan Parties, on the
one hand, and the Administrative Agent and the Lenders, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor. Neither
the Administrative Agent nor any Lender undertakes any responsibility to any
Loan Party to review or inform any Loan Party of any matter in connection with
any phase of any Loan Party's business or operations. Each Company agrees, on
behalf of itself and each other Loan Party, that neither the Administrative
Agent nor any Lender shall have liability to any Loan Party (whether sounding in
tort, contract or otherwise) for losses suffered by any Loan Party in connection
with, arising out of, or in any way related to the transactions contemplated and
the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM
THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH
INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH
THIS AGREEMENT, NOR
84
SHALL ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND EACH COMPANY ON
BEHALF OF ITSELF AND EACH OTHER LOAN PARTY, HEREBY WAIVES, RELEASES AND AGREES
NOT TO ▇▇▇ FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN
CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).
Each Company acknowledges that it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents to which it is a party. No joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Grantors and the Lenders
15.18 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. EACH COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
EACH COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
15.19 WAIVER OF JURY TRIAL. EACH COMPANY, THE ADMINISTRATIVE AGENT
AND EACH LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING,
85
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
15.20 Joint and Several Liability of the Companies.
(a) Each Company shall be jointly and severally liable hereunder
and under each of the other Loan Documents with respect to all Obligations,
regardless of which of the Companies actually receives the proceeds of the Loans
or the benefit of any other extensions of credit hereunder, or the manner in
which the Companies, the Administrative Agent, the Lenders or the Issuing Lender
accounts therefore in their respective books and records. In furtherance and not
in limitation of the foregoing, (i) each Company's obligations and liabilities
with respect to proceeds of Loans which it receives or Letters of Credit issued
for its account, and related fees, costs and expenses, and (ii) each Company's
obligations and liabilities arising as a result of the joint and several
liability of the Companies hereunder with respect to proceeds of Loans received
by, or Letters of Credit issued for the account of, the other Company, together
with the related fees, costs and expenses, shall be separate and distinct
obligations, both of which are primary obligations of such Company. Neither the
joint and several liability of, nor the Liens granted to the Administrative
Agent under the Collateral Documents by, either of the Companies shall be
impaired or released by (A) the failure of the Administrative Agent, any Lender
or the Issuing Lender, any successors or assigns thereof, or any holder of any
Note or any of the Obligations to assert any claim or demand or to exercise or
enforce any right, power or remedy against either Company, any Subsidiary, any
other Person, any collateral or otherwise; (B) any extension or renewal for any
period (whether or not longer than the original period) or exchange of any of
the Obligations or the release or compromise of any obligation of any nature of
any Person with respect thereto; (C) the surrender, release or exchange of all
or any part of any property (including any collateral) securing payment,
performance and/or observance of any of the Obligations or the compromise or
extension or renewal for any period (whether or not longer than the original
period) of any obligations of any nature of any Person with respect to any such
property; (D) any action or inaction on the part of the Administrative Agent,
any Lender or any Issuing Lender, or any other event or condition with respect
to the other Company, including any such action or inaction or other event or
condition, which might otherwise constitute a defense available to, or a
discharge of, such Company, or a Guarantor of any or all of the Obligations; and
(E) any other act, matter or thing (other than payment or performance of the
Obligations) which would or might, in the absence of this provision, operate to
release, discharge or otherwise prejudicially affect the obligations of such
Company or the other Company.
(b) Notwithstanding any provision to the contrary contained herein
or in any other of the Loan Documents, to the extent the joint obligations of a
Company shall be adjudicated to be invalid or unenforceable for any reason
(including because of Section 548 of Chapter 11 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law) then the joint and several
Obligations of each Company hereunder shall be limited to the maximum amount
that is
86
permissible under applicable law (whether federal or state and including the
federal Bankruptcy Code).
(c) To the extent that any Company shall make a payment under this
Section 15.20(c) of all or any of the Obligations (other than Loans made to that
Company for which it is primarily liable) (a "Guarantor Payment") that, taking
into account all other Guarantor Payments then previously or concurrently made
by the other Company, exceeds the amount that such Company would otherwise have
paid if each Company had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Company's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Companies as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Company shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, the other Company for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment. As of any date of
determination, the "Allocable Amount" of either Company shall be equal to the
maximum amount of the claim that could then be recovered from such Company under
this Section 15.20(c) without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law. This Section 15.20(c) is intended only to define the
relative rights of the Companies and nothing set forth in this Section 15.20(c)
is intended to or shall impair the obligations of the Companies, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement, including Section 15.20(a).
Nothing contained in this Section 15.20(c) shall limit the liability of any
Company to pay the Loans made directly or indirectly to that Company and accrued
interest, fees and expenses with respect thereto for which such Company shall be
primarily liable. The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of the Company to which
such contribution and indemnification is owing. The rights of each Company
against the other Company under this Section 15.20(c) shall not be exercisable
until the full and indefeasible payment of the Obligations and the termination
of the Commitments.
(d) The liability of the Companies under this Section 15.20 is in
addition to and shall be cumulative with all liabilities of each Company to
Administrative Agent and Lenders under this Agreement and the other Loan
Documents to which such Company is a party, without any limitation as to amount.
[signature pages follow]
87
The parties hereto have caused this Credit Agreement to be duly
executed and delivered by their duly authorized officers as of the date first
set forth above.
AKORN, INC., A LOUISIANA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Title: Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
AKORN (NEW JERSEY), INC., AN ILLINOIS
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Title: Chief Financial Officer
--------------------------------------
LASALLE BANK NATIONAL ASSOCIATION,
as Administrative Agent, as Issuing Lender
and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------------------------
Title: Vice President
--------------------------------------
Signature Page to Credit Agreement
ANNEX A
LENDERS AND PRO RATA SHARES
Revolving Pro Pro Pro
Commitment Rata Term A Loan Rata Term B Loan Rata
Lender Amount Share Commitment Share Commitment Share
------ ------ ----- ---------- ----- ---------- -----
LaSalle Bank
National Association $5,000,000 100% $5,500,000 100% $1,500,000 100%
TOTALS $5,000,000 100% $5,500,000 100% $1,500,000 100%
i
ANNEX B
ADDRESSES FOR NOTICES
AKORN, INC., a Louisiana corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
AKORN (NEW JERSEY), INC., an Illinois corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender and a
Lender
Notices of Borrowing , Conversion, Continuation and Letter of Credit Issuance
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All Other Notices
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
FORM OF
NOTE
October 7, 2003
$__________________ Chicago, Illinois
The undersigned, for value received, promise, joint and severally, to
pay to the order of ______________ (the "Lender") at the principal office of
LaSalle Bank National Association (the "Administrative Agent") in Chicago,
Illinois the aggregate unpaid amount of all Loans made to the undersigned by the
Lender pursuant to the Credit Agreement referred to below (as shown on the
schedule attached hereto (and any continuation thereof) or in the records of the
Lender), such principal amount to be payable on the dates set forth in the
Credit Agreement.
The undersigned further promise, joint and severally, to pay interest
on the unpaid principal amount of each Loan from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of October 7, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"; terms not otherwise defined herein are used herein as
defined in the Credit Agreement), among the undersigned, certain financial
institutions (including the Lender) and the Administrative Agent, to which
Credit Agreement reference is hereby made for a statement of the terms and
provisions under which this Note may or must be paid prior to its due date or
its due date accelerated.
This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.
AKORN, INC., A LOUISIANA CORPORATION
By:____________________________________
Title:_________________________________
AKORN (NEW JERSEY), INC., AN ILLINOIS
CORPORATION
By:____________________________________
Title:_________________________________
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
To: LaSalle Bank National Association, as Administrative Agent
Please refer to the Credit Agreement dated as of October ___, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Akorn, Inc., a Louisiana corporation (the "Company"),
Akorn (New Jersey), Inc., an Illinois corporation, various financial
institutions and LaSalle Bank National Association, as Administrative Agent.
Terms used but not otherwise defined herein are used herein as defined in the
Credit Agreement.
I. Reports. Enclosed herewith is a copy of the [ANNUAL AUDITED/MONTHLY]
report of the Company as at _____________, ____ (the "Computation
Date"), which report fairly presents in all material respects the
financial condition and results of operations [(SUBJECT TO THE ABSENCE
OF FOOTNOTES AND TO NORMAL YEAR-END ADJUSTMENTS)] of the Company as of
the Computation Date and has been prepared in accordance with GAAP
consistently applied.
II. Financial Tests. The Company hereby certifies and warrants to you that
the following is a true and correct computation as at the Computation
Date of the following ratios and/or financial restrictions contained in
the Credit Agreement:
A. SECTION 11.14.1 - MINIMUM EBITDA
1. Consolidated Net Income $________
2. Plus: Interest Expense $________
income tax expense $________
depreciation $________
amortization $________
For computing EBITDA
that includes Q4 2003:
Lesser of (a) October 2003
non-recurring legal
and consulting expenses or
(b) $3,400,000 $________
3. Total (EBITDA) $________
4. Minimum required $________
B. SECTION 11.14.2 - MINIMUM FIXED CHARGE COVERAGE RATIO
1. EBITDA $________
2. Income taxes paid in cash $________
3. Unfinanced Capital Expenditures $________
4. Sum of (2) and (3) $________
5. Remainder of (1) minus (4) $________
6. Cash Interest Expense $________
7. Required payments of
principal of Funded Debt
(including Term Loans but
excluding Revolving Loans) $________
8. Sum of (6) and (7) $________
9. Ratio of (5) to (8) ____ to 1
10. Minimum Required ____ to 1
C. SECTION 11.14.3 - MAXIMUM SENIOR DEBT TO EBITDA RATIO
1. Senior Debt $________
2. EBITDA $________
(from Item A(3) above)
3. Ratio of (1) to (2) ____ to 1
4. Maximum allowed ____ to 1
D. SECTION 11.14.4 - MAXIMUM TOTAL DEBT TO EBITDA RATIO
1. Total Debt $________
2. EBITDA $________
(from Item A(3) above)
3. Ratio of (1) to (2) ____ to 1
4. Maximum allowed ____ to 1
E. SECTION 11.14.5 - CAPITAL EXPENDITURES
1. Capital Expenditures for the
Fiscal Year $________
2. Maximum Permitted Capital
Expenditures $________
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
The Company has caused this Compliance Certificate to be executed and
delivered by a duly authorized officer on _________, ____.
AKORN, INC., A LOUISIANA CORPORATION
By:_____________________________________
Title:__________________________________
AKORN (NEW JERSEY), INC., AN ILLINOIS
CORPORATION
By:_____________________________________
Title:__________________________________
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
To: LaSalle Bank National Association, as Administrative Agent
Please refer to the Credit Agreement dated as of October ___, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Akorn, Inc., a Louisiana corporation (the "Company"),
Akorn (New Jersey), Inc., an Illinois corporation, various financial
institutions and LaSalle Bank National Association, as Administrative Agent.
This certificate (this "Certificate"), together with supporting calculations
attached hereto, is delivered to you pursuant to the terms of the Credit
Agreement. Capitalized terms used but not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
The Company hereby certifies and warrants to the Administrative Agent
and the Lenders, on behalf of itself and Akorn (New Jersey), Inc., that at the
close of business on ______________, ____ (the "Calculation Date"), the
Borrowing Base was $_____________, computed as set forth on the schedule
attached hereto.
The Company has caused this Borrowing Base Certificate to be executed
and delivered by its officer thereunto duly authorized on ___________, ______.
AKORN, INC., A LOUISIANA CORPORATION
By:_____________________________________
Title:__________________________________
SCHEDULE TO BORROWING BASE CERTIFICATE
Dated as of [_________________]
1. Gross Accounts $_________
2. Less Ineligibles (without duplication)
- Administrative Agent's Lien Not Perfected $_________
- Subject to other Lien $_________
- Subject to Offset, etc. $_________
- Account Debtor not in U.S. $_________
- Sale on Approval, Sale or
Return, ▇▇▇▇ and Hold or
Consignment $_________
- Over 60 (or 90, as applicable) days past
due or over 90 (or 120, as applicable)
days past invoice date $_________
- Affiliate Receivables $_________
- Exceeds 25% concentration limit
- Non-assignable $_________
- Liabilities* $_________
- Returns* $_________
- Rebates* $_________
- Chargebacks* $_________
- Discounts* $_________
- Other $_________
- Total $_________
3. Eligible Accounts [ITEM 1 MINUS ITEM 2] $_________
4. Item 3 times 80% $_________
5. Gross Inventory $_________
6. Less Ineligibles
- Administrative Agent's Lien Not Perfected $_________
- Subject to other Lien $_________
- Not Salable $_________
- Located off-site and no
Collateral Access Agreement $_________
- Not located in U.S. $_________
- Supply items; packaging $_________
- Advance payments received $_________
- Other $_________
- Total $_________
7. Eligible Inventory [ITEM 5 MINUS ITEM 6] $_________
* Inclusive of reserves, such reserves to be calculated on a
basis consistent with the Companies' past practices
8. Item 7 times 30% $_________
9. Lesser of Item 8 and $2,500,000 $_________
10. Forced M&E Liquidation Value $_________
11. Item 10 times 90% $_________
12. Item 11 minus $1,750,000 $_________
13. Item 12 minus outstanding principal amount of Term B Loans $_________
14. Borrowing Base
[ITEM 4 PLUS ITEM 9 PLUS ITEM 13] $_________
17. Lesser of Item 14 and
the Revolving Commitment Amount $_________
18. Revolving Outstandings (includes Stated Amount of Letters of Credit) $_________
19. Revolving Loan Availability
[EXCESS OF ITEM 15 OVER ITEM 16] $_________
14. Required Prepayment
[EXCESS OF ITEM 16 OVER ITEM 15] $_________
EXHIBIT D
THIS ASSIGNMENT AND ACCEPTANCE (as from time to time amended,
modified, restated, supplemented and in effect, this "Assignment and
Acceptance") is entered into as of [__________] by and between [__________]
("Assignor") and [__________] ("Assignee"). Reference is made to the Credit
Agreement dated as of October 7, 2003 (the "Agreement"), among Akorn, Inc., a
Louisiana Corporation and Akorn (New Jersey), Inc., an Illinois corporation and
wholly-owned subsidiary of Akorn, Inc. ("Companies"), the financial institutions
party to the Credit Agreement ("Lenders") and LASALLE BANK NATIONAL ASSOCIATION,
as administrative agent for the Lenders (in such capacity, the "Administrative
Agent"). Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
Assignor and Assignee agree as follows:
1. Assignor hereby sells and assigns to Assignee, and
Assignee hereby purchases and assumes from Assignor the interests set forth on
Schedule 1 hereto, in and to Assignor's rights and obligations under the
Agreement as of the Effective Date (as defined below). Such purchase and sale is
made without recourse, representation or warranty except as expressly set forth
herein.
2. Assignor (i) represents that as of the date hereof,
that it is the legal and beneficial owner of the interests assigned hereunder
free and clear of any adverse claim or security interest, (ii) makes no other
representation or warranty and assumes no responsibility with respect to any
statement, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, any Loan Documents or any other
instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or any other Person or the performance or
observance by any Loan Party of its obligations under the Agreement or the Loan
Documents or any other instrument or document furnished pursuant thereto.
3. Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 10.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon Administrative
Agent, Assignor or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Agreement; (iv) appoints and
authorizes Administrative Agent to take such action as administrative agent on
its behalf and to exercise such powers under the Agreement as are delegated to
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all obligations which by the terms of the Agreement are
required to be performed by it as a Lender; (vii) represents that on the date of
this Assignment and Acceptance it is not presently aware of any facts that would
cause it to make a claim under the Agreement[; and (viii) if organized under the
laws of a jurisdiction outside the United States, attaches the forms prescribed
by the Internal Revenue Service of the United States, which have been duly
executed, certifying as to Assignee's exemption from United States withholding
taxes with respect to all payments to be made to Assignee under the Agreement or
such other documents as are necessary to indicate that all such payments are
subject to such tax at a rate reduced by an applicable tax treaty.]
4. The effective date for this Assignment and Acceptance
shall be [________] (the "Effective Date"). Following the execution of this
Agreement and Acceptance, it will be delivered to
Administrative Agent for acceptance and recording by Administrative Agent
pursuant to Section 15.6 & Section 15.7 of the Agreement.
5. Upon such acceptance and recording, from and after
the Effective Date, (i) Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement.
6. Upon such acceptance and recording, from and after
the Effective Date, Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to Assignee. Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by
Administrative Agent or with respect to the making of this assignment directly
between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first written above.
ASSIGNOR:
[__________________________________]
By: _______________________________
Title: ____________________________
ASSIGNEE:
[__________________________________]
By: _______________________________
Title: ____________________________
Accepted [__________]
LASALLE BANK NATIONAL ASSOCIATION
as Administrative Agent
By:_______________________
Title:_____________________
SCHEDULE 1
Assignor: [__________]
Assignee: [__________]
Effective Date: [__________]
Credit Agreement: Credit Agreement dated as of October 7, 2003, among
Akorn, Inc., Akorn (New Jersey), Inc., certain
Lenders and LaSalle Bank National Association, as
administrative agent.
Interests Assigned:
Term Loan [A] [Term Loan B
Facility/Commitment Revolving Credit Facility Facility]
Commitment of Assignor $ $ $
Amounts Assigned $ $ $
Commitment of Assignee
(after assignment) $ $ $
ASSIGNEE INFORMATION
ADDRESS FOR NOTICES PAYMENT INSTRUCTIONS:
___________________ _____________________
___________________ _____________________
___________________ _____________________
___________________ _____________________
EXHIBIT E
FORM OF NOTICE OF BORROWING [AKORN, INC.]
To: LaSalle Bank National Association, as Administrative Agent
Please refer to the Credit Agreement dated as of October ___, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Akorn, Inc., a Louisiana corporation (the "Company"),
Akorn (New Jersey), Inc., an Illinois corporation, various financial
institutions and LaSalle Bank National Association, as Administrative Agent.
Terms used but not otherwise defined herein are used herein as defined in the
Credit Agreement.
The undersigned hereby gives irrevocable notice, pursuant to Section
2.2.2 of the Credit Agreement, of a request hereby for a borrowing as follows:
(i) The requested borrowing date for the proposed borrowing (which
is a Business Day) is _______________, ____.
(ii) The aggregate amount of the proposed borrowing is
$______________.
(iii) The type of Revolving Loans comprising the proposed borrowing
are Base Rate Loans.
The undersigned hereby certifies that on the date hereof and on the
date of borrowing set forth above, and immediately after giving effect to the
borrowing requested hereby: (i) there exists and there shall exist no Unmatured
Event of Default or Event of Default under the Credit Agreement; and (ii) each
of the representations and warranties contained in the Credit Agreement and the
other Loan Documents is true and correct as of the date hereof, except to the
extent that such representation or warranty expressly relates to another date
and except for changes therein expressly permitted or expressly contemplated by
the Credit Agreement.
The Company has caused this Notice of Borrowing to be executed and
delivered by its officer thereunto duly authorized on ___________, ______.
AKORN, INC., A LOUISIANA CORPORATION
By:___________________________________
Title:________________________________
FORM OF NOTICE OF BORROWING [AKORN (NEW JERSEY), INC.]
To: LaSalle Bank National Association, as Administrative Agent
Please refer to the Credit Agreement dated as of October ___, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Akorn, Inc., a Louisiana corporation, Akorn (New
Jersey), Inc., an Illinois corporation (the "Company"), various financial
institutions and LaSalle Bank National Association, as Administrative Agent.
Terms used but not otherwise defined herein are used herein as defined in the
Credit Agreement.
The undersigned hereby gives irrevocable notice, pursuant to Section
2.2.2 of the Credit Agreement, of a request hereby for a borrowing as follows:
(i) The requested borrowing date for the proposed borrowing (which
is a Business Day) is _________________, ______.
(ii) The aggregate amount of the proposed borrowing is
$______________.
(iii) The type of Revolving Loans comprising the proposed borrowing
are Base Rate Loans.
The undersigned hereby certifies that on the date hereof and on the
date of borrowing set forth above, and immediately after giving effect to the
borrowing requested hereby: (i) there exists and there shall exist no Unmatured
Event of Default or Event of Default under the Credit Agreement; and (ii) each
of the representations and warranties contained in the Credit Agreement and the
other Loan Documents is true and correct as of the date hereof, except to the
extent that such representation or warranty expressly relates to another date
and except for changes therein expressly permitted or expressly contemplated by
the Credit Agreement.
The Company has caused this Notice of Borrowing to be executed and
delivered by its officer thereunto duly authorized on ___________, ______.
AKORN (NEW JERSEY), INC., AN ILLINOIS
CORPORATION
By:_____________________________________
Title:___________________________
EXHIBIT F(1)
FORM OF NOTICE OF CONVERSION/CONTINUATION
To: LaSalle Bank National Association, as Administrative Agent
Please refer to the Credit Agreement dated as of October ___, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among [Akorn, Inc., a Louisiana corporation/Akorn (New
Jersey), Inc.] (the "Company"), [Akorn, Inc., a Louisiana corporation/Akorn (New
Jersey), Inc.], various financial institutions and LaSalle Bank National
Association, as Administrative Agent. Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.
The undersigned hereby gives irrevocable notice, pursuant to Section
2.2.3 of the Credit Agreement, of its request to:
(a) on [ date ] convert $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
[________] Rate, into a(n) [________] Loan [and, in the case of a LIBOR Loan,
having an Interest Period of [_____] month(s)];
[(b) on [ date ] continue $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
LIBOR Rate, as a LIBOR Loan having an Interest Period of [_____] month(s)].
The undersigned hereby represents and warrants that all of the
conditions contained in Section 12.2 of the Credit Agreement have been satisfied
on and as of the date hereof, and will continue to be satisfied on and as of the
date of the conversion/continuation requested hereby, before and after giving
effect thereto.
The Company has caused this Notice of Conversion/Continuation to be
executed and delivered by its officer thereunto duly authorized on ___________,
______.
[AKORN, INC., A LOUISIANA
CORPORATION/AKORN (NEW JERSEY), INC.,
AN ILLINOIS CORPORATION]
BY:___________________________________
Title:________________________________
-------------------
(1) LIBOR Loans not permitted unless permitted by Administrative Agent and
the Required Lenders.
SCHEDULE 9.27
Products
1. IC Green --
2. Cyanide Kits --
3. Gentak Ointment --
4. AK Fluor --
5. BAL in Oil --
6. Sublimaze --
7. Akwa Tears --
8. AK Dilate --
9. Fluress --
10. Alfenta --
11. Sodium Chloride --
12. Indigo ▇▇▇▇▇▇▇ --
13. Lidocaine Jelly --