EXHIBIT 10.25
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 30, 2001
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
SALIX PHARMACEUTICALS, INC.
AS BORROWER
INDEX OF EXHIBITS AND SCHEDULES
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Schedule A - Definitions
Schedule B - Lender's and Borrower's Addresses for Notices
Schedule C - Letters of Credit (Not Used)
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.9) - Taxes
Disclosure Schedule (3.11) - ERISA
Disclosure Schedule (3.12) - Litigation
Disclosure Schedule (3.13) - Intellectual Property
Disclosure Schedule (3.15) - Environmental Matters
Disclosure Schedule (3.16) - Insurance
Disclosure Schedule (3.18) - Contracts (Offset Risk)
Disclosure Schedule (5(b)) - Indebtedness
Disclosure Schedule (5(e)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit C-1 - Inventory Rollforward and Reconciliation
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - [Intentionally Left Blank]
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Landlord's Waiver and Consent
Exhibit M - [Intentionally Left Blank]
Exhibit N - Form of Guarantee
Exhibit O - Form of Opinion of Counsel to Borrower
Exhibit P - Intercreditor and Subordination Agreement
Exhibit Q - [Intentionally Left Blank]
Exhibit R - Form of U.C.C. Schedule
Exhibit S - Form of Payment of Proceeds Letter
Exhibit T - Form of Borrower Authorized Representative Letter
Exhibit U - Form of Post-Closing Letter
GE Capital
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
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REVOLVING CREDIT LOAN
Maximum Amount: $7,000,000
--------------
Term: 2 years plus three optional one-year
---- renewals
Revolving Credit Rate: Index Rate plus 4%
---------------------
Letter of Credit Subfacility: n/a
----------------------------
Borrowing Base: The sum of (a) 85% of the value (as determined by
-------------- Lender) of Borrower's Eligible Accounts arising on and
after February 1, 2001 that remain unpaid for less than
ninety (90) days after invoice date plus (b) the lesser
----
of (i) $6,000,000 or (ii) 70% of the value (as
determined by Lender) of Borrower's Eligible Accounts
arising in December 2000 and January 2001 that remain
unpaid for less than one hundred twenty (120) days after
invoice date; provided that, Lender shall reduce the
foregoing percentages by one percentage point for each
percentage point that the dilution of Borrower's
Accounts (calculated by Lender as the average dilution
over the most recent 3 months) exceeds 5%.
FEES
Closing Fee: $17,500
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Collateral Monitoring Fee: $12,000 per annum.
-------------------------
Letter of Credit Fee: n/a
--------------------
Prepayment Fee: 3% in year one and 2% in year two
--------------
The Loans described generally here are established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
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This LOAN AND SECURITY AGREEMENT is dated as of March 30, 2001, and agreed to by
and between SALIX PHARMACEUTICALS, INC., a California corporation ("Borrower"),
any other Credit Party executing this Agreement, and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender").
RECITALS
A. Borrower desires to obtain the Loans and other financial accommodations from
Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
B. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth in Schedule A shall govern. All schedules,
attachments, addenda and exhibits hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, constitute but a single agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loans. (a) Subject to the terms and conditions of this Agreement, from the
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Closing Date and until the Commitment Termination Date (i) Lender agrees (A) to
make available advances (each, a "Revolving Credit Advance") and (B) to incur
Letter of Credit Obligations, in an aggregate outstanding amount not to exceed
the Borrowing Availability, and (ii) Borrower may at its request from time to
time borrow, repay and reborrow, and may cause Lender to incur Letter of Credit
Obligations, under this Section 1.1.
(b) Borrower shall request each Revolving Credit Advance by written
notice to Lender substantially in the form of Exhibit A (each a "Notice of
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Revolving Credit Advance") given no later than 11:00 A.M. (New York City time)
on-the Business Day of the proposed advance. Lender shall be fully protected
under this Agreement in relying upon, and shall be entitled to rely upon, (i)
any Notice of Revolving Credit Advance believed by Lender to be genuine, and
(ii) the assumption that the Persons making electronic requests or executing and
delivering a Notice of Revolving Credit Advance were duly authorized, unless the
responsible individual acting thereon for Lender shall have actual knowledge to
the contrary. As an accommodation to Borrower, Lender may permit telephonic,
electronic or facsimile requests for a Revolving Credit Advance and electronic
or facsimile transmittal of instructions, authorizations, agreements or reports
to Lender by Borrower. Unless Borrower specifically directs Lender in writing
not to accept or act upon telephonic, facsimile or electronic communications
from Borrower, Lender shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Lender's honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically, by facsimile or electronically and purporting
to have been sent to Lender by Borrower and Lender shall have no duty to verify
the origin of any such communication or the identity or authority of the Person
sending it. The Revolving Credit Loan shall be evidenced by, and be repayable in
accordance with the terms of, the Revolving Credit Note and this Agreement.
(c) In making any Loan hereunder Lender shall be entitled to rely upon
the most recent Borrowing Base Certificate delivered to Lender by Borrower and
other information available to Lender. Lender shall be under no obligation to
make any further Revolving Credit Advance or incur any other Obligation if
Borrower shall have failed to deliver a Borrowing Base Certificate to Lender by
the time specified in Section 4.1(b).
(d) Letters of Credit Notwithstanding anything to the contrary contained
in this Agreement, including Schedule C, Lender shall have no obligations to
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incur Letter of Credit Obligations for the account of Borrower.
1.2 Term and Prepayment. (a) Upon the Commitment Termination Date the obligation
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of Lender to make Revolving Credit Advances and extend other credit hereunder
shall immediately terminate and Borrower shall pay to Lender in full, in cash:
(i) all outstanding Revolving Credit Advances and all accrued but unpaid
interest thereon;
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(ii) an amount sufficient to enable Lender to hold cash collateral as specified
in Schedule C; and (iii) all other non-contingent Obligations due to or incurred
by Lender.
(b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall immediately repay the Revolving Credit Loan in
the amount of such excess.
(c) Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to (i) terminate voluntarily Borrower's right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations, and (ii) prepay all of the
Obligations. The effective date of termination of the Revolving Credit Loan
specified in such notice shall be the Commitment Termination Date. If Borrower
exercises its right of termination and prepayment, or if Lender's obligation to
make Loans is terminated for any reason prior to the Stated Expiry Date then in
effect (including as a result of the occurrence of a Default), Borrower shall
pay to Lender the applicable Prepayment Fee.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Loans for working
----------------
capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of Borrower to
------------
Lender shall constitute one general obligation of Borrower secured by all of the
Collateral.
1.5 Interest. (a) Borrower shall pay interest to Lender on the aggregate
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outstanding Revolving Credit Advances at a floating rate equal to the Index Rate
plus four percent (4%) per annum, (the "Revolving Credit Rate"). All
computations of interest, and all calculations of the Letter of Credit Fee,
shall be made by Lender on the basis of a three hundred sixty (360) day year, in
each case for the actual number of days occurring in the period for which such
interest or fee is payable. Each determination by Lender of an interest rate
hereunder shall ` be conclusive and binding for all purposes, absent manifest
error. In no event will Lender charge interest at a rate that exceeds the
highest rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
(b) Interest shall be payable on the outstanding Revolving Credit
Advances (i) in arrears for the preceding calendar month on the first day of
each calendar month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment Termination Date, upon
demand by Lender.
(c) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, the Revolving Credit Rate and
the Letter of Credit Fee shall automatically be increased by two percentage
points (2%) per annum (such increased rate, the "Default Rate").
(d) If any interest or any other payment (including Collateral
Monitoring Fees) to Lender under this Agreement becomes due and payable on a day
other than a Business Day, such payment date shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension.
(e) If, at any time after the conditions to the initial Loan contained
in Section 2.1 of this Agreement are met or waived by Lender in writing, the
aggregate outstanding Revolving Credit Advances at any one time are less than
$1,575,000, Borrower shall pay interest to Lender in accordance with the terms
of this Agreement as if such Revolving Credit Advances were $1,575,000.
1.6 Cash Management System. On or prior to the Closing Date and until the
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Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
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be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.
1.7 Fees. Borrower agrees to pay to Lender the Fees set forth in Schedule E.
----
1.8 Receipt of Payments. Borrower shall make each payment under this Agreement
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(not otherwise made pursuant to Section 1.9) without set-off, counterclaim or
deduction and free and clear of all Taxes not later than
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11:00 A.M. (New York City time) on the day when due in lawful money of the
United States of America in immediately available funds to the Collection
Account. If Borrower shall be required by law to deduct any Taxes from any
payment to Lender under any Loan Document, then the amount payable to Lender
shall be increased so that, after making all required deductions, Lender
received an amount equal to that which it would have received had no such
deductions been made. For purposes of computing interest and Fees, all payments
shall be deemed received by Lender two (2) Business Days following receipt of
immediately available funds in the Collection Account. For purposes of
determining the Borrowing Availability, payments shall be deemed received by
Lender upon receipt of immediately available funds in the Collection Account.
1.9 Application and Allocation of Payments. Borrower irrevocably agrees that
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Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for: (a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents, (b) the payment, performance or satisfaction
of any of Borrower's obligations with respect to preservation of the Collateral,
or (c) any premium in whole or in part required in respect of any of the
policies of insurance required by this Agreement, even if the making of any such
Revolving Credit Advance causes the outstanding balance of the Revolving Credit
Loan to exceed the Borrowing Availability, and Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan exceeds the
Borrowing Availability.
1.10 Accounting. Lender is authorized to record on its books and records the
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date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay any of the Obligations. Except to the extent that Borrower
shall, within 30 days after such statement and accounting is sent, notify Lender
in writing of any objection Borrower may have thereto (stating with
particularity the basis for such objection), such statement and accounting shall
be deemed final, binding and conclusive upon Borrower, absent manifest error.
1.11 Indemnity. Borrower and each other Credit Party executing this Agreement
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jointly and severally agree to indemnify and hold Lender and its Affiliates, and
their respective employees, attorneys and agents (each, an "Indemnified
Person"), harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses of any kind or nature
whatsoever (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities, Taxes and
legal costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Loan Documents (collectively,
"Indemnified Liabilities"), except to the extent that any such Indemnified
Liability is finally determined by a court of competent jurisdiction to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY CREDIT
PARTY, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT
UNDER ANY POWER OF ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
1.12 Borrowing Base; Reserves. The Borrowing Base shall be determined by Lender
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(including the eligibility of Accounts and Inventory) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 4.1(b)
and such other information available to Lender. The Revolving Credit Loan shall
be subject to
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Lender's continuing right to withhold from Borrowing Availability reserves, and
to increase and decrease such reserves from time to time, if and to the extent
that in Lender's good faith credit judgment such reserves are necessary,
including to protect Lender's interest in the Collateral or to protect Lender
against possible non-payment of Accounts for any reason by Account Debtors or
possible diminution of the value of any Collateral or possible non-payment of
any of the Obligations or for any Taxes or in respect of any state of facts
which could constitute a Default. Lender may, at its option, implement reserves
by designating as ineligible a sufficient amount of Accounts which would
otherwise be Eligible Accounts so as to reduce the Borrowing Base by the amount
of the intended reserves. Without in any way limiting Lender's rights to
establish reserves as described in this Section 1. 12, Lender shall withhold a
reserve of $2,000,000 from Borrowing Availability until such time as Salix Ltd.,
Borrower and the other Subsidiaries of Salix Ltd. have achieved a net profit on
a consolidated basis in five (5) consecutive months, as evidenced by Borrower's
financial statements delivered to Lender in accordance with Section 4.1(d).
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. Lender shall not be obligated to make any
--------------------------------
of the Loans or to perform any other action hereunder, until the following
conditions have been satisfied in a manner satisfactory to Lender in its sole
discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
------------
(b) the insurance policies provided for in Section 3.16 are in full
force and effect, together with appropriate evidence showing loss payable or
additional insured clauses or endorsements in favor of Lender as required under
such Section;
(c) as of the Closing Date Net Borrowing Availability shall be not less
than $5,000,000 after giving effect to the initial Revolving Credit Advance and
Letter of Credit Obligations (on a pro forma basis, with trade payables being
paid currently, and expenses and liabilities being paid in the ordinary course
of business and without acceleration of sales);
(d) Lender shall have received an opinion of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to Lender;
(e) no event or circumstance has occurred since the date of the
Agreement which has had or reasonably could be expected to have a Material
Adverse Effect; and
(f) Lender shall have received satisfactory results of Lender's
pre-funding field examination of Borrower and the Collateral.
2.2 Further Conditions to the Loans. Lender shall not be obligated to fund any
--------------------------------
Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any of the other Loan Documents shall be untrue or incorrect as of such
date, except to the extent that any such representation or warranty is expressly
stated to relate to a specific earlier date, in which case, such representation
and warranty shall be true and correct as of such earlier date; or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
(d) after giving effect to such Loan, the Revolving Credit Loan would
exceed the Borrowing Availability.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a restatement by Borrower of each
of the representations and warranties made by it in any Loan Document and a
reaffirmation by Borrower of the granting and continuance of Lender's Liens
pursuant to the Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
and each other Credit Party executing this Agreement represent and warrant to
Lender (each of which representations and warranties shall
4
survive the execution and delivery of this Agreement), and promise to and agree
with Lender until the Termination Date as follows:
3.1 Corporate Existence; Compliance with Law. Each Corporate Credit Party: (a)
------------------------------------------
is, as of the Closing Date, and will continue to be (i) a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (b) has and will continue to have (i) the
requisite corporate power and authority and the legal fight to execute, deliver
and perform its obligations under the Loan Documents, and to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
powers, consents or approvals from or by all Persons or Governmental Authorities
having jurisdiction over such Corporate Credit Party which are necessary or
appropriate for the conduct of its business.
3.2 Executive Offices; Corporate or Other Names. The location of each Corporate
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Credit Party's chief executive office, corporate offices, warehouses, other
locations of Collateral and locations where records with respect to Collateral
are kept (including in each case the county of such locations) are as set forth
in Disclosure Schedule (3.2) and, except as set forth in such Disclosure
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Schedule, such locations have not changed during the preceding twelve months. As
of the Closing Date, during the prior Five years, except as set forth in
Disclosure Schedule (3.2), no Corporate Credit Party has been known as or
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conducted business in any other name (including trade names).
3.3 Corporate Power; Authorization Enforceable Obligations. The execution,
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delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party except to the extent the failure to
comply therewith could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Encumbrances) upon
any of the Collateral; and (e) do not and will not require the consent or
approval of any Governmental Authority or any other Person except to the extent
the failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, each Loan Document shall have been duly executed and delivered on behalf
of each Credit Party party thereto, and each such Loan Document upon such
execution and delivery shall be and will continue to be a legal, valid and
binding obligation of such Credit Party, enforceable against it in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
3.4 Financial Statements and Projections, Books and Records. (a) The Financial
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Statements delivered by Borrower to Lender for its most recently ended Fiscal
Year and Fiscal Month, are true, correct and complete and reflect fairly and
accurately the financial condition of Salix, Ltd., Borrower and Glycyx as of the
date of each such Financial Statement in accordance with GAAP. The Projections
most recently delivered by Borrower to Lender have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such assumptions are disclosed in the Projections.
(b) Borrower and each other Corporate Credit Party shall keep adequate
Books and Records with respect to the Collateral and its business activities in
which proper entries, reflecting all consolidated and consolidating financial
transactions, and payments and credits received on, and all other dealings with,
the Collateral, will be made in accordance with GAAP and all Requirements of Law
and on a basis consistent with the Financial Statements except to the extent the
failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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3.5 Material Adverse Change. Between the date of the most recently audited
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Financial Statements delivered by Borrower to Lender and the Closing Date: (a)
no Corporate Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred which alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect. No Requirement of Law or Contractual
Obligation of any Credit Party has or have had or could reasonably be expected
to have a Material Adverse Effect. No Credit Party is in default, and to such
Credit Party's knowledge no third party is in default, under or with respect to
any of its Contractual Obligations, which alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.
3.6 Real Estate; Property. The real estate listed in Disclosure Schedule (3.6)
---------------------- -------------------------
constitutes all of the real property owned, leased, or used by each Corporate
Credit Party in its business, and such Credit Party will not execute any
material agreement or contract in respect of such real estate after the date of
this Agreement without giving Lender prompt written notice thereof. Each
Corporate Credit Party holds and will continue to hold good and marketable fee
simple title to all of its owned real estate, and good and marketable title to
all of its other properties and assets, and valid and insurable leasehold
interests in all of its leases (both as lessor and lessee, sublessee or
assignee), and none of the properties and assets of any Corporate Credit Party
are or will be subject to any Liens, except Permitted Encumbrances. With respect
to each of the premises identified in Disclosure Schedule (3.2)on or prior to
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the Closing Date a bailee, landlord or mortgagee agreement acceptable to Lender
has been obtained.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
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Except as set forth in Disclosure Schedule (3.7), as of the Closing Date no
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Corporate Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. All
of the issued and outstanding Stock of each Corporate Credit Party (including
all fights to purchase, options, warrants or similar rights or agreements
pursuant to which any Corporate Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock) as of the Closing Date is owned by each
of the Stockholders (and in the amounts) set forth on Disclosure Schedule (3.7).
--------------------------
All outstanding Indebtedness of each Corporate Credit Party as of the Closing
Date is described in Disclosure Schedule (5(b)).
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3.8 Government Regulation; Margin Regulations. No Corporate Credit Party is
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subject to or regulated under any Federal or state statute, rule or regulation
that restricts or limits such Person's ability to incur Indebtedness, pledge its
assets, or to perform its obligations under the Loan Documents. The making of
the Loans, the application of the proceeds and repayment thereof, and the
consummation of the transactions contemplated by the Loan Documents do not and
will not violate any Requirement of Law. No Corporate Credit Party is engaged,
nor will it engage, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" as such terms are defined in
Regulation U of the Federal Reserve Board as now and hereafter in effect (such
securities being referred to herein as "Margin Stock"). No Corporate Credit
Party owns any Margin Stock, and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock or reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
Margin Stock. No Corporate Credit Party will take or permit to be taken any
action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.9 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.9) all tax
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returns, reports and statements required by any Governmental Authority to be
filed by Borrower or any other Credit Party have, as of the Closing Date, been
filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority and no tax Lien has been filed against any Credit Party
or any Credit Party's property. Proper and accurate amounts have been and will
be withheld by Borrower and each other Credit Party from their respective
employees for all periods in complete compliance with all Requirements of. Law
and such withholdings have and will be timely paid to the appropriate
Governmental Authorities. Disclosure Schedule (3.9) sets forth as of the Closing
-------------------------
Date those taxable years for which any Credit Party's tax returns are currently
being audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Disclosure Schedule
(3.9), none of the Credit Parties and their respective predecessors are liable
for any Charges: (a) under any agreement (including any tax sharing agreements
or agreement extending the period of assessment of any Charges) or (b) to each
Credit Party's knowledge, as a
6
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481 (a), by reason of a change in
accounting method or otherwise, which could reasonably be expected to have a
Material Adverse Effect.
3.10 Payment of Obligations. Each Credit Party will pay, discharge or otherwise
----------------------
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Charges and other obligations of whatever nature, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral is or could reasonably be expected to become subject to any Lien or
forfeiture or loss as a result of such contest.
3.11 ERISA. No ERISA Event has occurred or is reasonably expected to occur that,
-----
when taken together with all other existing ERISA Events, could reasonably be
expected to result in a liability of any Credit Party of more than the Minimum
Actionable Amount. The present value of all accumulated benefit obligations of
the Credit Parties under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent Financial Statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by more than the Minimum Actionable
Amount, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Account Standards No. 87) did not, as of the date of the most recent
Financial Statements reflecting such amounts, exceed the fair market value of
the assets of such underfunded Plans by more than the Minimum Actionable Amount.
No Credit Party or ERISA Affiliate has incurred or reasonably expects to incur
any Withdrawal Liability in excess of the Minimum Actionable Amount.
3.12 Litigation. No Litigation is pending or, to the knowledge of any Credit
----------
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect. Except as set forth on Disclosure
----------
Schedule (3.12), as of the Closing Date there is no Litigation pending or
---------------
threatened against any Credit Party which seeks damages in excess of $50,000 or
injunctive relief or alleges criminal misconduct of any Credit Party. Each
Credit Party shall notify Lender promptly in writing upon learning of the
existence, threat or commencement of any Litigation against any Credit Party,
any ERISA Affiliate or any Plan or any allegation of criminal misconduct against
any Credit Party.
3.13 Intellectual Property. Each Corporate Credit Party owns, or is licensed to
---------------------
use, all Intellectual Property necessary to conduct its business as currently
conducted except for such Intellectual Property the failure of which to own or
license could not reasonably be expected to have a Material Adverse Effect. Each
Corporate Credit Party will maintain the patenting and registration of all
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or other appropriate Governmental Authority and
each Corporate Credit Party will promptly patent or register, as the case may
be, all of its new Intellectual Property.
3.14 Full Disclosure. No information contained in any Loan Document, the
----------------
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, when taken together, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.
3.15 Hazardous Materials. Except as set forth on Disclosure Schedule (3.15), as
------------------- --------------------------
of the Closing Date, (a) each real property location owned, leased or occupied
by each Corporate Credit Party (the "Real Property") is maintained free of
contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Credit Party's knowledge,
potential Environmental Liabilities, in excess of $50,000 in the aggregate, (c)
no notice has been received by any Corporate Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in any Corporate Credit Party
being identified as a "potentially responsible party" under CERCLA or analogous
state statutes; and (d) each Corporate Credit Party has provided to Lender
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Corporate Credit Party. Each Corporate Credit Party: (i)
shall comply in all material respects with all applicable Environmental Laws and
7
environmental permits; (ii) shall notify Lender in writing within seven days if
and when it becomes aware of any Release, on, at, in, under, above, to, from or
about any of its Real Property; and (iii) shall promptly forward to Lender a
copy of any order, notice, permit, application, or any communication or report
received by it or any other Credit Party in connection with any such Release.
3.16 Insurance. As of the Closing Date, Disclosure Schedule (3.16) lists all
--------- ---------------------------
insurance of any nature maintained for current occurrences by Borrower and each
other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender certified copies
and endorsements to all of its and those of its Subsidiaries (a) "All Risk" and
business interruption insurance policies naming Lender loss payee, and (b)
general liability and other liability policies naming Lender as an additional
insured. All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished to
Lender, will provide that the insurance companies will give Lender at least 30
days prior written notice before any such policy or policies of insurance shall
be altered or canceled and that no act or default of Borrower or any other
Person shall affect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Each Corporate Credit Party shall direct
all present and future insurers under its "All Risk" policies of insurance to
pay all proceeds payable thereunder directly to Lender. If any insurance
proceeds are paid by check, draft or other instrument payable to any Credit
Party and Lender jointly, Lender may endorse such Credit Party's name thereon
and do such other things as Lender may deem advisable to reduce the same to
cash. Lender reserves the right at any time, upon review of each Credit Party's
risk profile, to require additional forms and limits of insurance. Each
Corporate Credit Party shall, on each anniversary of the Closing Date and from
time to time at Lender's request, deliver to Lender a report by a reputable
insurance broker, satisfactory to Lender, with respect to such Person's
insurance policies.
3.17 Deposit and Disbursement Accounts. Attachment I to Schedule D lists all
----------------------------------- ----------
banks and other financial institutions at which Borrower or any other Corporate
Credit Party, maintains deposits and/or other accounts, including the
Disbursement Account, and such Attachment correctly identifies the name, address
and telephone number of each such depository, the name in which the account is
held, a description of the purpose of the account, and the complete account
number.
3.18 Accounts. As of the date of each Borrowing Base Certificate delivered to
--------
Lender, each Account listed thereon as an Eligible Account shall be an Eligible
Account. Borrower has not made, and will not make, any agreement with any
Account Debtor for any extension of time for the payment of any Account, any
compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a
discount or allowance for prompt or early payment allowed by Borrower in the
ordinary course of its business consistent with historical practice and as
previously disclosed to Lender in writing. Disclosure Schedule (3.18) sets forth
each Contract of the Borrower with any Account Debtor which gives such Account
Debtor the right (under such Contract, under common law or otherwise) to offset
any Accounts for Borrower's failure to perform under such Contract and Borrower
has obtained an offset waiver for each such Contract in form and substance
satisfactory to Lender. With respect to the Accounts pledged as collateral
pursuant to any Loan Document (a) the amounts shown on all invoices, statements
and reports which may be delivered to the Lender with respect thereto are
actually and absolutely owing to the relevant Credit Party as indicated thereon
and are not in any way contingent; (b) no payments have been or shall be made
thereon except payments immediately delivered to the applicable accounts
described in paragraph 1 to Schedule D or the Lender as required hereunder; and
(c) to Borrower's knowledge all Account Debtors have the capacity to contract.
Borrower shall notify Lender promptly of any event or circumstance which to
Borrower's knowledge would cause Lender to consider any then existing Account as
no longer constituting an Eligible Account.
3.19 Conduct of Business. Each Corporate Credit Party (a) shall conduct its
-------------------
business substantially as now conducted or as otherwise permitted hereunder, and
(b) shall at all times maintain, preserve and protect all of the Collateral and
such Credit Party's other property, used or useful in the conduct of its
business and keep the same in good repair, working order and condition, ordinary
wear and tear excepted, and make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices.
3.20 CORD Internet Access. At such time as access by Borrower may become
----------------------
available to CORD's computer system via the internet, Borrower shall use its
best efforts to cause CORD to provide Lender, at Borrower's sole cost
8
and expense, access to such system for the purpose of Lender accessing CORD's
records regarding Borrower's Accounts and Inventory.
3.21 Further Assurances. At any time and from time to time, upon the written
-------------------
request of Lender and at the sole expense of Borrower, Borrower and each other
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable (a) to obtain the full benefits of this Agreement and
the other Loan Documents, (b) to protect, preserve and maintain Lender's rights
in any Collateral, or (c) to enable Lender to exercise all or any of the rights
and powers herein granted.
4. FINANCIAL MATTERS; REPORTS
4.1 Reports and Notices. From the Closing Date until the Termination Date,
--------------------
Borrower shall deliver to Lender:
(a) within 15 days following the end of each Fiscal Month, an aged trial
balance by Account Debtor and as soon as available but in no event later than 30
days following the end of each Fiscal Month, a reconciliation of the aged trial
balance to the Borrower's general ledger and from the general ledger to the
Financial Statements for such Fiscal Month accompanied by supporting detail and
documentation as Lender may request;
(b) as frequently as Lender may request and in any event no later than
15 days following the end of each Fiscal Month, a Borrowing Base Certificate in
the form of Exhibit C as of the last day of the previous Fiscal Month detailing
ineligible Accounts for adjustment to the Borrowing Base, certified as true and
correct by the Chief Financial Officer of Borrower or such other officer as is
acceptable to Lender;
(c) within 15 days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together with an accounts payable
---------
aging) and an Accounts Receivable Roll Forward Analysis in the Form of Exhibit
-------
E, each certified as true and correct by the Chief Financial Officer of Borrower
-
or such other officer as is acceptable to Lender;
(d) within 30 days following the end of each Fiscal Month, the Financial
Statements for such Fiscal Month, which shall provide comparisons to budget and
actual results for the corresponding period during the prior Fiscal Year, both
on a monthly and year-to-date basis, and accompanied by a certification in the
form of Exhibit J by the Chief Executive Officer or Chief Financial Officer of
Borrower that such Financial Statements are complete and correct, that there was
no Default (or specifying those Defaults of which he or she was aware), and
showing in reasonable detail the calculations used in determining compliance
with the financial covenants hereunder;
(e) within 90 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by an
independent certified accounting firm acceptable to Lender, which shall provide
comparisons to the prior Fiscal Year, and shall be accompanied by (i) a
statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants hereunder, (ii) a report from Borrower's
accountants to the effect that in connection with their audit examination
nothing has come to their attention to cause them to believe that a Default has
occurred or specifying those Defaults of which they are aware, and (iii) any
management letter that may be issued;
(f) not less than 30 days prior to the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with care and
diligence, and using assumptions which are reasonable under the circumstances at
the time such Projections are delivered to Lender and disclosed therein when
delivered; and
(g) all the reports and other information set forth on Exhibit B in the
time frames set forth therein.
4.2 Financial Covenants. Borrower shall not breach any of the financial
--------------------
covenants set forth in Schedule G.
----------
4.3 Other Reports and Information. Borrower shall advise Lender promptly, in
------------------------------
reasonable detail, of: (a) any Lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence causing
a material loss or decline in value of any Collateral and the estimated (or
actual, if available) amount of such loss or decline; (b) any material change in
the composition of the Collateral; and (c) the occurrence of any Default or
9
other event which has had or could reasonably be expected to have a Material
Adverse Effect. Borrower shall, upon request of Lender, furnish to Lender such
other reports and information in connection with the affairs, business,
financial condition, operations, prospects or management of Borrower or any
other Credit Party or the Collateral as Lender may request, all in reasonable
detail.
5. NEGATIVE COVENANTS
Borrower and each Credit Party executing this Agreement covenants and agrees
(for itself and each other Credit Party) that, without Lender's prior written
consent, from the Closing Date until the Termination Date, neither Borrower nor
any other Corporate Credit Party shall, directly or indirectly, by operation of
law or otherwise:
(a) form any Subsidiary or merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with
or make any investment in or, except as provided in clause 5(c) below, loan or
advance to, any Person, except that Salix Ltd. and Glycyx may be domesticated in
Delaware;
(b) cancel any debt owing to it or create, incur, assume or permit to
exist any Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing
as of the Closing Date set forth on Disclosure Schedule 5(b), (iii) deferred
taxes, (iv) by endorsement of instruments or items of payment for deposit to the
general account of such Credit Party, (v) for Guaranteed Indebtedness incurred
for the benefit of Borrower if the primary obligation is permitted by this
Agreement, (vi) the Salix Ltd. Subordinated Debt provided the repayment thereof
is subject to the Salix Ltd. Subordination Agreement, and (vii) additional
Indebtedness (including Purchase Money Indebtedness) incurred after the Closing
Date in an aggregate outstanding amount for all such Corporate Credit Parties
combined not exceeding $50,000.
(c) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) other than loans or advances to employees in the
ordinary course of business in an aggregate outstanding amount not exceeding
$50,000;
(d) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date;
(e) create or permit any Lien on any of its properties or assets, except
for Permitted Encumbrances;
(f) sell, transfer, issue, convey, assign or otherwise dispose of any of
its assets or properties, including its Accounts or any shares of its Stock or
engage in any sale-leaseback, synthetic lease or similar transaction (provided,
that the foregoing shall not prohibit the sale of Inventory or obsolete or
unnecessary Equipment in the ordinary course of its business);
(g) change its name, chief executive office, corporate offices,
warehouses or other Collateral locations, or location of its records concerning
the Collateral, or acquire, lease or use any real estate after the Closing Date
without such Person, in each instance, giving twenty (20) days prior written
notice thereof to Lender and taking all actions deemed necessary or appropriate
by Lender to continuously protect and perfect Lender's Liens upon the
Collateral;
(h) establish any depository or other bank account of any kind with any
financial institution (other than the accounts set forth on Attachment I to
Schedule D); or
(i) make or permit any Restricted Payment.
6. SECURITY INTEREST
10
6.1 Grant of Security Interest. (a) As collateral security for the prompt and
---------------------------
complete payment and performance of the Obligations, each of the Borrower and
any other Credit Party executing this Agreement hereby grants to the Lender a
security interest in and Lien upon all of the following property and assets of
the Borrower, whether now owned or hereafter acquired, or in which it now has or
at any time in the future may acquire any right, title, or interest: all
Accounts; all bank and deposit accounts and all funds on deposit therein; all
Inventory; all Books and Records related any of the foregoing; and to the extent
not otherwise included, all Proceeds and products of all and any of the
foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing, but excluding in all events Hazardous Waste
(all of the foregoing, together with any other collateral pledged to the Lender
pursuant to any other Loan Document, collectively, the "Collateral").
(b) Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Borrower and each
other Credit Party executing this Agreement represents, warrants and promises to
Lender that: (i) Borrower and each other Credit Party granting a Lien in
Collateral is the sole owner of each item of the Collateral upon which it
purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon completion of the filings and other actions
listed on Disclosure Schedule (6.1) (which, in the case of all filings and other
-------------------------
documents referred to in said Schedule, have been delivered to the Lender in
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Lender as security for the prompt and complete
payment and performance of the Obligations, enforceable in accordance with the
terms hereof against any and all creditors of and purchasers from any Credit
Party (other than purchasers of Inventory in the ordinary course of business)
and such security interests are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances which have
priority by operation of law; and (iii) no effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Encumbrances.
Borrower and each other Credit Party executing this Agreement promise to defend
the right, title and interest of Lender in and to the Collateral against the
claims and demands of all Persons whomsoever, and each shall take such actions,
including (x) the prompt delivery of all original Instruments, Chattel Paper and
certificated Stock owned by Borrower and each other Credit Party granting a Lien
on Collateral to Lender, (y) notification of Lender's interest in Collateral at
Lender's request, and (z) the institution of litigation against third parties as
shall be prudent in order to protect and preserve each Credit Party's and
Lender's respective and several interests in the Collateral. Borrower (and any
other Credit Party granting a Lien in Collateral) shall ▇▇▇▇ its Books and
Records pertaining to the Collateral to evidence the Loan Documents and the
Liens granted under the Loan Documents. All Chattel Paper shall be marked with
the following legend: "This writing and the obligations evidenced or secured
hereby are subject to the security interest of General Electric Capital
Corporation."
6.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's own name or in
---------------
the name of Borrower, communicate with Account Debtors, parties to Contracts,
and obligors in respect of Instruments, Chattel Paper or other Collateral to
verify to Lender's satisfaction, the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper or other Collateral, and (ii)
at any time and without prior notice to Borrower or any other Credit Party,
notify Account Debtors, parties to Contracts, and obligors in respect of Chattel
Paper, Instruments, or other Collateral that the Collateral has been assigned to
Lender and that payments shall be made directly to Lender. Upon the request of
Lender, Borrower shall so notify such Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other Collateral. Borrower
hereby constitutes Lender or Lender's designee as Borrower's attorney with power
to endorse Borrower's name upon any notes, acceptance drafts, money orders or
other evidences of payment or Collateral.
(b) Borrower shall remain liable under each Contract, Instrument and
License to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, and Lender shall have no obligation or liability
whatsoever to any Person under any Contract, Instrument or License (between
Borrower or any other Credit Party and any Person other than Lender) by reason
of or arising out of the execution, delivery or performance of this Agreement,
and Lender shall not be required or obligated in any manner (i) to perform or
fulfill any of the obligations of Borrower, (ii) to make any payment or inquiry,
or (iii) to take any action of any kind to collect, compromise or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times under or pursuant to any
Contract, Instrument or License.
11
(c) Borrower and each other Credit Party shall, with respect to each
owned, leased, or controlled property, during normal business hours and upon
reasonable advance notice (unless a Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times): (i) provide access to such property to Lender and
any of its officers, employees and agents, as frequently as Lender determines to
be appropriate; (ii) permit Lender and any of its officers, employees and agents
to inspect, audit and make extracts and copies (or take originals if reasonably
necessary) from all of Borrower's and such Credit Party's Books and Records; and
(iii) permit Lender to inspect, review, evaluate and make physical verifications
and appraisals of the Inventory and other Collateral in any manner and through
any medium that Lender considers advisable, and Borrower and such Credit Party
agree to render to Lender, at Borrower's and such Credit Party's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto.
(d) After the occurrence and during the continuance of a Default,
Borrower, at its own expense, shall cause the certified public accountant then
engaged by Borrower to prepare and deliver to Lender at any time and from time
to time, promptly upon Lender's request, the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts-, (iii) trial
balances; and (iv) test verifications of such Accounts as Lender may request.
Borrower, at its own expense, shall cause its certified independent public
accountants to deliver to Lender the results of any physical verifications of
all or any portion of the Inventory made or observed by such accountants when
and if such verification is conducted. Lender shall be permitted to observe and
consult with Borrower's accountants in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date, Borrower and
----------------------------------------
each other Credit Party executing this Agreement shall execute and deliver a
Power of Attorney in the form attached as Exhibit 1. The power of attorney
granted pursuant to the Power of Attorney and all powers granted under any Loan
Document are powers coupled with an interest and shall be irrevocable until the
Termination Date. The powers conferred on Lender under the Power of Attorney are
solely to protect Lender's interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. Lender agrees not to exercise any
power or authority granted under the Power of Attorney unless an Event of
Default has occurred and is continuing. Borrower and each other Credit Party
executing this Agreement authorizes Lender to file any financing or continuation
statement without the signature of Borrower or such Credit Party to the extent
permitted by applicable law.
6.4 Grant of License to Use Intellectual Property Collateral. Borrower and each
--------------------------------------------------------
other Credit Party executing this Agreement hereby grants to Lender an
irrevocable, non-exclusive license (exercisable upon the occurrence and during
the continuance of an Event of Default without payment of royalty or other
compensation to Borrower or such Credit Party) to use, transfer, license or
sublicense any Intellectual Property now owned, licensed to, or hereafter
acquired by Borrower or such Credit Party, and wherever the same may be located,
and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof, and represents, promises and agrees
that any such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following events
-----------------
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder which shall be deemed to be continuing until waived in writing by
Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) Borrower or any other Credit Party (whether or not such Credit Party
has signed this Agreement) shall fail or neglect to perform, keep or observe any
of the covenants, promises, agreements, requirements, conditions or other terms
or provisions contained in this Agreement or any of the other Loan Documents; or
(c) an event of default shall occur under any Contractual Obligation of
the Borrower or any other Credit Party (other than this Agreement and the other
Loan Documents), and such event of default (i) involves the failure to make any
payment (whether or not such payment is blocked pursuant to the terms of an
intercreditor agreement or otherwise), whether of principal, interest or
otherwise, and whether due by scheduled maturity, required prepayment,
acceleration, demand or otherwise, in respect of any Indebtedness (other than
the Obligations) of such Person in an
12
aggregate amount exceeding the Minimum Actionable Amount, or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness, or a portion thereof, in an aggregate amount exceeding the Minimum
Actionable Amount to become due prior to its stated maturity or prior to its
regularly scheduled date of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower or any other Credit Party shall be untrue or incorrect as of the date
when made or deemed made, regardless of whether such breach involves a
representation or warranty with respect to a Credit Party that has not signed
this Agreement; or
(e) there shall be commenced against the Borrower or any other Credit
Party any Litigation seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which remains
unstayed or undismissed for sixty (60) consecutive days; or Borrower or any
other Credit Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property with intent to hinder, delay or defraud any of
its creditors or made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or
(f) a case or proceeding shall have been commenced involuntarily against
Borrower or any other Credit Party in a court having competent jurisdiction
seeking a decree or order: (i) under the United States Bankruptcy Code or any
other applicable Federal, state or foreign bankruptcy or other similar law, and
seeking either (x) the appointment of a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Person or of
any substantial part of its properties, or (y) the reorganization or winding up
or liquidation of the affairs of any such Person, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding; or (ii) invalidating or denying any Person's right, power, or
competence to enter into or perform any of its obligations under any Loan
Document or invalidating or denying the validity or enforceability of this
Agreement or any other Loan Document or any action taken hereunder or
thereunder; or
(g) Borrower or any other Credit Party shall (i) commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it or seeking appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for it or
any substantial part of its properties, (ii) make a general assignment for the
benefit of creditors, (iii) consent to or take any action in furtherance of, or,
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in paragraphs (e) or (f) of this Section 7.1 or clauses (i) and (ii) of
this paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess of
the Minimum Actionable Amount in the aggregate shall be rendered against
Borrower or any other Credit Party, unless the same shall be (i) fully covered
by insurance and the issuer(s) of the applicable policies shall have
acknowledged full coverage in writing within fifteen (15) days of judgment, or
(ii) vacated, stayed, bonded, paid or discharged within a period of fifteen (15)
days from the date of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect; or
(j) any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral (or any
Credit Party shall so assert any of the foregoing); or
(k) a Change of Control shall have occurred with respect to any
Corporate Credit Party; or
(1) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred and
are then continuing, could reasonably be expected to result in liability of any
Credit Party in an aggregate amount exceeding the Minimum Actionable Amount.
7.2 Remedies. (a) If any Default shall have occurred and be continuing, then
--------
Lender may terminate or suspend its obligation to make further Revolving Credit
Advances and to incur additional Letter of Credit Obligations. In addition, if
any Event of Default shall have occurred and be continuing, Lender may, without
notice, take any one or more of the following actions: (i) declare all or any
portion of the Obligations to be forthwith due and payable, including contingent
liabilities with respect to Letter of Credit Obligations, whereupon such
Obligations shall become and be due and payable; (ii) require that all Letter of
Credit Obligations be fully cash collateralized pursuant
13
to Schedule C; or (iii) exercise any rights and remedies provided to Lender
----------
under the Loan Documents or at law or equity, including all remedies provided
under the Code; provided, that upon the occurrence of any Event of Default
specified in Sections 7.1 (e), (f) or (g), the Obligations shall become
immediately due and payable (and any obligation of Lender to make further Loans,
if not previously terminated, shall immediately be terminated) without
declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower and each
other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default that is continuing, Lender may collect,
receive, assemble, process, appropriate and realize upon the Collateral, or any
part thereof, and may forthwith sell, lease, assign, give an option or options
to purchase or otherwise dispose of and deliver said Collateral (or contract to
do so), or any part thereof, in one or more parcels at public or private sale or
sales, at any exchange at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Lender shall have
the right upon any such public sale, to the extent permitted by law, to purchase
for the benefit of Lender the whole or any part of said Collateral so sold, free
of any right of equity of redemption, which equity of redemption Borrower and
each other Credit Party executing this Agreement hereby releases. Such sales may
be adjourned or continued from time to time with or without notice. Lender shall
have the right to conduct such sales on any Credit Party's premises or elsewhere
and shall have the right to use any Credit Party's premises without rent or
other charge for such sales or other action with respect to the Collateral for
such time as Lender deems necessary or advisable.
(c) Upon the occurrence and during the continuance of an Event of
Default and at Lender's request, Borrower and each other Credit Party executing
this Agreement agrees to assemble the Collateral and make it available to Lender
at places which Lender shall reasonably select, whether at its premises or
elsewhere. Until Lender is able to effect a sale, lease, or other disposition of
the Collateral, Lender shall have the right to complete, assemble, use or
operate the Collateral or any part thereof, to the extent that Lender deems
appropriate, for the purpose of preserving such Collateral or its value. Lender
shall have no obligation to any Credit Party to maintain or preserve the rights
of any Credit Party as against third parties with respect to any Collateral
while such Collateral is in the possession of Lender. Lender may, if it so
elects, seek the appointment of a receiver or keeper to take possession of any
Collateral and to enforce any of Lender's remedies with respect thereto without
prior notice or hearing. To the maximum extent permitted by applicable law,
Borrower and each other Credit Party executing this Agreement waives all claims,
damages, and demands against Lender, its Affiliates, agents, and the officers
and employees of any of them arising out of the repossession, retention or sale
of any Collateral except such as are determined in a final judgment by a court
of competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
Borrower and each other Credit Party shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Credit Parties. Except as otherwise provided for in this
----------------------------
Agreement and to the fullest extent permitted by applicable law, Borrower and
each other Credit Party executing this Agreement waives: (a) presentment, demand
and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, Accounts, Contracts, Documents, Instruments,
Chattel Paper and guaranties at any time held by Lender on which such Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Lender
may do in this regard; (b) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or levy
upon, any Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws. Borrower and each other
Credit Party executing this Agreement acknowledges that it has been advised by
counsel of its choices and decisions with respect to this Agreement, the other
Loan Documents and the transactions evidenced hereby and thereby.
14
7.4 Proceeds. The Proceeds of any sale, disposition or other realization upon
--------
any Collateral shall be applied by Lender upon receipt to the Obligations in
such order as Lender may deem advisable in its sole discretion (including the
cash collateralization of any Letter of Credit Obligations), and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law, including Section 9-504(l)(c) of the Code (but only after Lender has
received what Lender considers reasonable proof of a subordinate party's
security interest), the surplus, if any, shall be paid to Borrower or its
representatives or to whomsoever may be lawfully entitled to receive the same,
or as a court of competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein or
therein. Neither Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender, except for the domestication of Salix Ltd. and Glycyx in Delaware. Any
such purported conveyance by Borrower or such Credit Party without the prior
express written consent of Lender shall be void. There shall be no third party
beneficiaries of any of the terms and provisions of any of the Loan Documents.
Lender reserves the-right at any time to create and sell participations in the
Loans and the Loan Documents and to sell, transfer or assign any or all of its
rights in the Loans and under the Loan Documents.
9. MISCELLANEOUS
9.1 Complete Agreement, Modification of Agreement. This Agreement and the other
----------------------------------------------
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied). No Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, and each other Credit Party a
party to such Loan Document. Borrower and each other Credit Party executing this
Agreement or any other Loan Document shall have all duties and obligations under
this Agreement and such other Loan Documents from the date of its execution and
delivery, regardless of whether the initial Loan has been funded at that time.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
--------
expenses (including the fees and expenses of all counsel, `advisors, consultants
(including environmental and management consultants) and auditors retained in
connection therewith) incurred in connection with: (a) the preparation,
negotiation, execution, delivery, performance and enforcement of the Loan
Documents and the preservation of any rights thereunder; (b) collection,
including deficiency collections; (c) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of the proceeds of any Loan (including a
wire transfer fee of $25 per wire transfer); (d) any amendment, waiver or other
modification with respect to any Loan Document or advice in connection with the
administration of the Loans or the rights thereunder; (e) any litigation,
dispute, suit, proceeding or action (whether instituted by or between any
combination of Lender, Borrower or any other Person), and an appeal or review
thereof, in any way relating to the Collateral, any Loan Document, or any action
taken or any other agreements to be executed or delivered in connection
therewith, whether as a party, witness or otherwise; and (f) any effort (i) to
monitor the Loans, (ii) to evaluate, observe or assess Borrower or any other
Credit Party or the affairs of such Person, and (iii) to verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral.
9.3 No Waiver. Neither Lender's failure, at any time, to require strict
----------
performance by Borrower or any other Credit Party of any provision of any Loan
Document, nor Lender's failure to exercise, nor any delay in exercising, any
right, power or privilege hereunder, shall operate as a waiver thereof or waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. Any suspension or waiver of a
Default or other provision under the Loan Documents shall not suspend, waive or
affect any other Default or other provision under any Loan Document, and shall
not be construedas a bar to any right or remedy which Lender would otherwise
have had on any future occasion. None of the undertakings, indemnities,
agreements, warranties, covenants and representations of Borrower or any other
Credit
15
Party to Lender contained in any Loan Document and no Default by Borrower or any
other Credit Party under any Loan Document shall be deemed to have been
suspended or waived by Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer or other authorized employee of
Lender and directed to Borrower specifying such suspension or waiver (and then
such waiver shall be effective only to the extent therein expressly set forth),
and Lender shall not, by any act (other than execution of a formal written
waiver), delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder.
9.4 Severability; Section Titles. Wherever possible, each provision of the Loan
-----------------------------
Documents shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of any Loan Document 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 such Loan Document. Except as
otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under the Loan Documents shall in any way affect or impair the Obligations,
duties, covenants, representations and warranties, indemnities, and liabilities
of Borrower or any other Credit Party or the rights of Lender relating to any
unpaid Obligation, (due or not due, liquidated, contingent or unliquidated), or
any transaction or event occurring prior to such termination, or any transaction
or event, the performance of which is not required until after the Commitment
Termination Date, all of which shall not terminate or expire, but rather shall
survive such termination or cancellation and shall continue in full force and
effect until the Termination Date; provided, that all indemnity obligations of
the Credit Parties under the Loan Documents shall survive the Termination Date.
The Section titles contained in any Loan Document are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
9.5 Authorized Signature. Until Lender shall be notified in writing by Borrower
--------------------
or any other Credit Party to the contrary, the signature upon any document or
instrument delivered pursuant hereto and believed by Lender or any of Lender's
officers, agents, or employees to be that of an officer of Borrower or such
other Credit Party shall bind Borrower and such other Credit Party and be deemed
to be the act of Borrower or such other Credit Party affixed pursuant to and in
accordance with resolutions duly adopted by Borrower's or such other Credit
Party's Board of Directors, and Lender shall be entitled to assume the authority
of each signature and authority of the person whose signature it is or appears
to be unless the person acting in reliance thereon shall have actual knowledge
to the contrary.
9.6 Notices. Except as otherwise provided herein, whenever any notice, demand,
-------
request or other communication shall or may be given to or served upon any party
by any other party, or whenever any party desires to give or serve upon any
other party any communication with respect to this Agreement, each such
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
days after deposit in the United States Mail, registered or certified mail,
return receipt requested, with proper postage prepaid, (b) upon transmission,
when sent by telecopy or other similar facsimile transmission (with such
telecopy or facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this Section 9.6), (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid or (d) when hand-delivered, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Schedule B or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. Failure or delay in delivering
copies of any such communication to any Person (other than Borrower or Lender)
designated in Schedule B to receive copies shall in no way adversely affect the
----------
effectiveness of such communication.
9.7 Counterparts. Any Loan Document may be executed in any number of separate
------------
counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
9.8 Time of the Essence. Time is of the essence for performance of the
----------------------
Obligations under the Loan Documents.
9.9 GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
-------------
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS.
16
9.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) BORROWER AND EACH
--------------------------------------------------
OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE THAT THE
STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND SUCH CREDIT PARTY
AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT LENDER, BORROWER AND SUCH CREDIT PARTY ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER AND EACH OTHER CREDIT PARTY
EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER AND
SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER AND
EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY WAIVE PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER OR SUCH CREDIT PARTY AT
THE ADDRESS SET FORTH IN SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S OR SUCH CREDIT PARTY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.11 Press Releases. Neither any Credit Party nor any of its Affiliates will in
--------------
the future issue any press release or other public disclosure using the name of
General Electric Capital Corporation or its affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days'
prior notice to Lender and without the prior written consent of Lender unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with Lender before issuing such press release or other public disclosure.
9.12 Reinstatement. This Agreement shall continue to be effective, or be
-------------
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Borrower or any other Credit Party, or otherwise, all as though such payments
had not been made.
9.13 Confidentiality. Lender agrees to use its best efforts to maintain the
---------------
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process; (d) to any other party to this Agreement;
(e) in connection with the exercise of any remedies this Agreement or any suit,
action or proceeding relating to the Loan Agreement or the enforcement of rights
thereunder; (f) with the consent of the Borrower; (g) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section 9.13; or (i) to the National Association of Insurance Commissioners
or any other similar organization or any nationally recognized rating
17
agency that requires access to information about Lender's or its affiliates'
investment portfolio in connection with ratings issued with respect to Lender or
its affiliates. For the purposes of this Section 9.13, "Information" means all
information received from Borrower relating to Borrower or its business, other
than any such information that is available to Lender on a nonconfidential basis
prior to disclosure by Borrower.
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
SALIX PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇ ▇. Derbyshire
---------------------------------
Name: ▇▇▇▇ ▇. Derbyshire
Title: Secretary
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Duly Authorized Signatory
18
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the Code); (ii) all of such Person's rights in,
to and under all purchase orders or receipts for goods or services; (iii) all of
such Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit D
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the form
of Exhibit E.
"Affiliate" shall mean, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Agreement including all appendices, exhibits or
schedules attached or otherwise identified thereto, restatements and
modifications and supplements thereto, and any appendices, exhibits or schedules
to any of the foregoing, each as in effect at the time such reference becomes
operative; provided, that except as specifically set forth in this Agreement,
any reference to the Disclosure Schedules to this Agreement shall be deemed a
reference to the Disclosure Schedules as in effect on the Closing Date or in a
written amendment thereto executed by Borrower and Lender.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or Borrower's business.
"Borrower" shall mean the Person identified as such in the preamble of this
Agreement.
"Borrowing Availability" shall mean, at any time, the lesser of (i) the Maximum
Amount or (ii) the Borrowing Base, in each case less reserves established by
Lender from time to time.
"Borrowing Base" shall mean at any time an amount equal to the sum at such time
of (a) eighty five percent (85%) of the value (as determined by Lender) of
Borrower's Eligible Accounts arising on and after February 1, 2001 that remain
unpaid for less than ninety (90) days after invoice date plus (b) the lesser of
(i) $6,000,000 or (ii) seventy percent (70%) of the value (as determined by
Lender) of Borrower's Eligible Accounts arising in December 2000 and January
2001 that remain unpaid for less than one hundred twenty (120) days after
invoice date plus; provided that Lender shall reduce the foregoing percentages
by one percentage point for each percentage point that the
Schedule A: Page 1
dilution of Borrower's Accounts (calculated by Lender as the average dilution
over the most recent 3 months) exceeds 5%.
"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit C.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in Schedule C.
"Change of Control" shall mean, with respect to any Person on ` or after the
Closing Date, that any change in the composition of its stockholders as of the
Closing Date shall occur which would result in any stockholder or group
acquiring 49.9% or more of any class of Stock of such Person, or that any Person
(or group of Persons acting in concert) shall otherwise acquire, directly or
indirectly (including through Affiliates), the power to elect a majority of the
Board of Directors of such Person or otherwise direct the management or affairs
of such Person by obtaining proxies, entering into voting agreements or trusts,
acquiring securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, customs or other duties, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of any Credit Party, (iv) the ownership or use
of any assets by any Credit Party, or (v) any other aspect of any Credit Party's
business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent set
forth in Section 2 have been satisfied or specifically waived in writing by
Lender, and the initial Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
"Collection Account" shall mean that certain account of Lender, account number
▇▇-▇▇▇-▇▇▇ in the name of GECC CAF Depository at Bankers Trust Company, I
Bankers Trust Plaza, New York, New York, ABA number ▇▇▇-▇▇▇-▇▇▇.
Schedule A: Page 2
"Commitment Termination Date" shall mean the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated pursuant
to Section 7.2, and (iii) the date of indefeasible prepayment in full by
Borrower of the Obligations in accordance with the provisions of Section 1.2(c).
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all copyrights in any original work of authorship fixed in any
tangible medium of expression, now known or later developed, all registrations
and applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications, and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all Proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to ▇▇▇ for past, present
and future infringements, all rights corresponding thereto throughout the world
and all renewals and extensions thereof.
"CORD" shall mean CORD Logistics, Inc., an Ohio corporation.
"Corporate Credit Party" shall mean any Credit Party that is a corporation,
partnership or limited liability company.
"Credit Party" shall mean Borrower, and each other Person (other than Lender)
that is or may become a party to this Agreement [or any other Loan Document).
"Default" shall mean any Event of Default or any event which, with the passage
of time or notice or both, would, unless cured or waived, become an Event of
Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(c).
"Documents" shall mean all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.
"Eligible Accounts" shall mean as at the date of determination, all Accounts of
the Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of Borrower's business;
(b) upon which (i) Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii)
Borrower is not able to bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process;
(c) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted or which is a "contra" Account;
(d) that is not a true and correct statement of a bona fide indebtedness
incurred in the amount of the Account for merchandise sold or services performed
and accepted by the Account Debtor obligated upon such Account;
(e) with respect to which an invoice, acceptable to Lender in form and
substance, has not been sent;
(f) that is not owned by Borrower or is subject to any right, claim, or
interest of another Person, other than the Lien in favor of Lender;
Schedule A: Page 3
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of Borrower or any other Credit
Party, or an entity which has common officers or directors with Borrower or any
other Credit Party;
(h) that is the obligation of an Account Debtor that is the Federal (or
local) government or a political subdivision thereof, unless Lender has agreed
to the contrary in writing and Borrower has complied with the Federal Assignment
of Claims Act of 1940 (or the state equivalent thereof, if any) with respect to
such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country unless such Account is supported by a letter of credit in which Lender
has a first priority perfected security interest by possession or credit
insurance acceptable to Lender (and naming Lender as loss payee);
(j) that is the obligation of an Account Debtor to whom Borrower is or
may become liable for goods sold or services rendered by the Account Debtor to
Borrower, to the extent of Borrower's liability to such Account Debtor;
(k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor may be conditional;
(1) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts, to the extent of
such excess;
(m) that is not paid within 60 days from its due date or that are
Accounts of an Account Debtor if 50% or more of the Accounts owing from such
Account Debtor remain unpaid within such time periods;
(n) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable to pay its
debts as they become due or as to which a petition has been filed (voluntary or
involuntary) under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors;
(o) that arises from any ▇▇▇▇-and-hold or other sale of goods which
remain in Borrower's possession or under Borrower's control;
(p) as to which Lender's interest therein is not a first priority
perfected security interest;
(q) to the extent that such Account exceeds any credit limit established
by Lender in Lender's good faith credit judgment;
(r) as to which any of Borrower's representations or warranties
pertaining to Accounts are untrue;
(s) that represents interest payments, late or finance charges, or
service charges owing to Borrower; or
(t) that is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in its good faith
credit judgment.
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation).
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of whatever
nature, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person and
which relate to any health or safety condition regulated under any Environmental
Law, environmental permits or in connection with any Release, threatened
Release, or the presence of a Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
Schedule A: Page 4
"ERISA Affiliate" shall mean any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under
Section 414(b), (c), (in) or (o) of the IRC, or, solely for the purposes of
Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer
under Section 414 of the IRC.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any ERISA Affiliate of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or to appoint a trustee to administer any Plan; (f) the incurrence by any Credit
Party or any ERISA Affiliate of any liability with respect to any withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
any Credit Party or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of Salix Ltd., Borrower and
the other Subsidiaries of Salix Ltd., internally prepared for each Fiscal Month,
and audited for each Fiscal Year, prepared in accordance with GAAP.
"Fiscal Month" shall mean any of the monthly accounting periods of Salix Ltd.
and Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of Salix
Ltd. and Borrower.
"Fiscal Year" shall mean the 12 month period of Salix Ltd. and Borrower ending
December 31 of each year. Subsequent changes of the fiscal year of Salix Ltd. or
Borrower shall not change the term "Fiscal Year" unless Lender shall consent in
writing to such change.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all fight, title and interest which such Person may now or hereafter have in or
under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all fights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible fights or intangible fights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit
accounts, fights to receive tax refunds and other payments and fights of
indemnification.
"Glycyx" shall mean Glycyx Pharmaceuticals, Ltd., a company organized and
existing under the laws of Bermuda.
"Goods" shall mean all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
Schedule A: Page 5
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guarantor" shall mean Glycyx, Salix. Ltd. and each other Person which executes
a guaranty or a support, put or other similar agreement in favor of Lender in
connection with the transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and in
form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as the
same may be in effect at the time such reference becomes operative.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 U.S.C.ss.ss.6901 et. seq.).
"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not more than 45 days past due); (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments; (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are
"limited to repossession or sale of such property); (iv) all Capital Lease
Obligations; (v) all Guaranteed Indebtedness; (vi) all Indebtedness referred to
in clauses (i), (ii), (iii), (iv) or (v) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; (vii) the Obligations; and (viii)
all liabilities under Title IV of ERISA.
"Indemnified Liabilities" and "Indemnified Person" shall have the meaning
assigned to such terms in Section 1.11.
"Index Rate" shall mean the latest rate for 30-day dealer placed commercial
paper (which for purposes hereof shall mean high grade unsecured notes sold
through dealers by major corporations in multiples of $1,000), which normally is
published in the "Money Rates" section of The Wall Street Journal (or if such
rate ceases to be so published, as quoted from such other generally available
and recognizable source as Lender may select). The Index
Schedule A: Page 6
Rate shall be determined (i) on the first Business Day immediately prior to the
Closing Date and (ii) thereafter, on the last Business Day of each calendar
month for calculation of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
"Inventory" shall mean all "inventory," as such term is defined in the Code, now
or hereafter owned or acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property which are held by or
on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in such Person's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter acquired by any Person, wherever located.
"IRC" and "IRS" shall mean respectively, the Internal Revenue Code of 1986 and
the Internal Revenue Service, and any successors thereto.
"Lender" shall mean General Electric Capital Corporation and, if at any time
Lender shall decide to assign or syndicate all or any of the Obligations, such
term shall include such assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of Borrower for which Lender
has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations (including
all duty, freight, taxes, costs, insurance and any other charges and expenses)
incurred by Lender, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance or guarantee, by Lender or another, of
Letters of Credit, all as further set forth in Schedule C.
"License" shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Notes, the Financial Statements,
each Guaranty, the Power of Attorney, the Lock Box Account Agreements, and the
other documents and instruments listed in Schedule F, and all security
agreements, mortgages and all other documents, instruments, certificates, and
notices at any time delivered by any Person (other than Lender) in connection
with any of the foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations.
Schedule A: Page 7
"Lock Box Account" and "Lock Box Account Agreement" shall have the meaning
assigned to such terms in Schedule D.
"Material Adverse Effect" shall mean: a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrower or any other Credit Party or the industry within which Borrower or any
other Credit Party operates, (b) Borrower's or any other Credit Party's ability
to pay or perform the Obligations under the Loan Documents to which such Credit
Party is a party in accordance with the terms thereof, (c) the Collateral or
Lender's Liens on the Collateral or the priority of any such Lien, or (d)
Lender's rights and remedies under this Agreement and the other Loan Documents.
"Maximum Amount" shall mean $7,000,000.
"Minimum Actionable Amount" shall mean $50,000.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001 (a) (3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean at any time the Borrowing Availability
less the Revolving Credit Loan.
"Notes" shall mean the Revolving Credit Note.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1 (b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing by
Borrower and any other Credit Party to Lender, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other instrument,
arising under any of the Loan Documents, and all covenants and duties regarding
such amounts. This term includes all principal, interest (including interest
accruing at the then applicable rate provided in this Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in this Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to Borrower under any of the Loan Documents, and all principal and
interest due in respect of the Loans and all obligations and liabilities of any
Guarantor under any Guaranty.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of Section 3.10; (ii) pledges or deposits securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of
Schedule A: Page 8
any Credit Party; (v) inchoate and unperfected workers', mechanics', or similar
liens arising in the ordinary course of business so long as such Liens attach
only to Equipment, fixtures or real estate; (vi) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business and securing indebtedness not yet due and payable in an outstanding
aggregate amount not in excess of $25,000 at any time so long as such Liens
attach only to Inventory; (vii) deposits of money securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (viii) zoning restrictions, easements, licenses, or other restrictions on
the use of real property or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such real estate; (ix) Purchase Money Liens securing
Purchase Money Indebtedness (or rent) to the extent permitted under Section
5(b)(vii); (x) Liens in existence on the Closing Date as disclosed on Disclosure
Schedule 5(e) provided that no such Lien is spread to cover additional property
after the Closing Date and the amount of Indebtedness secured thereby is not
increased.; and (xi) Liens in favor of Lender securing the Obligations.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person's successors and assigns.
"Plan" shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the IRC
or Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Post-Closing Letter" shall mean the letter agreement executed by Lender and
Borrower on the date of this Agreement in the form of Exhibit U to this
Agreement.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower or any other Credit Party from time to
time with respect to any Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to Borrower or any other Credit Party from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any Collateral by any governmental body, authority,
bureau or agency (or any person acting under color of governmental authority);
(iii) any recoveries by Borrower or any other Credit Party against third parties
with respect to any litigation or dispute concerning any Collateral; and (iv)
any and all other amounts from time to time paid or payable under or in
connection with any Collateral, upon disposition or otherwise.
"Projections" shall mean as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for Salix Ltd., Borrower and
the other Subsidiaries of Salix Ltd. (including forecasted Capital Expenditures
and Net Borrowing Availability) (i) by month for the next Fiscal Year, and (ii)
by year for the following three Fiscal Years, in each case prepared in a manner
consistent with GAAP and accompanied by senior management's discussion and
analysis of such plan.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the- asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
"Real Property" shall have the meaning assigned to it in Section 3.15.
Schedule A: Page 9
"Release" shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payment" shall mean: (i) the declaration or payment of any dividend
or the incurrence of any liability to make any other payment or distribution of
cash or other property or assets on or in respect of Borrower's or any other
Credit Party's Stock; (ii) any payment or distribution made in respect of any
subordinated Indebtedness of Borrower or any other Credit Party in violation of
any subordination or other agreement made in favor of Lender; (iii) any payment
on account of the purchase, redemption, defeasance or other retirement of
Borrower's or any other Credit Party's Stock or Indebtedness or any other
payment or distribution made in respect of any thereof, either directly or
indirectly; other than (a) that arising under this Agreement or (b) interest and
principal, when due without acceleration or modification of the amortization as
in effect on the Closing Date, under Indebtedness (not including subordinated
Indebtedness, payments of which shall be permitted only in accordance with the
terms of the relevant subordination agreement made in favor of Lender) described
in Disclosure Schedule (5(b)) or otherwise permitted under Section 5(b)(vi); or
(iv) any payment, loan, contribution, or other transfer of funds or other
property to any Stockholder of such Person which is not expressly and
specifically permitted in this Agreement; provided, that no payment to Lender
shall constitute a Restricted Payment.
"Revolving Credit Advance" shall have the meaning assigned to it in Section 1.1
(a).
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total Letter
of Credit Obligations incurred by Lender and outstanding at such time, plus
(iii) the amount of accrued but unpaid interest thereon and Letter of Credit
Fees with respect thereto.
"Revolving Credit Note" shall mean the promissory note of Borrower dated the
Closing Date, substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section 1.5(a).
"Salix Ltd." shall mean Salix Pharmaceuticals, Ltd., a company organized and
existing under the laws of the British Virgin Islands.
"Salix Ltd. Subordinated Debt" shall mean the Indebtedness owing by Borrower to
Salix Ltd.
"Salix Subordination Agreement" shall mean the intercreditor and subordination
agreement substantially in the form of Exhibit P hereto, to be executed on or
before the Closing Date between Salix Ltd. and Lender, and to be acknowledged by
Borrower, subordinating the payment of the Salix Ltd. Subordinated Debt to the
payment of the Obligations.
"Stated Expiry Date" shall mean March 30, 2003; provided that the Stated Expiry
-------- ----
Date shall automatically be extended for three (3) consecutive one (1) year
periods, the first of which shall commence on the third (P) anniversary of the
date of this Agreement and, if so extended for such first one year period, the
second of which shall commence on the fourth (4th) anniversary of the date of
this Agreement and, if so extended for such second one year period, the third of
which shall commence on the fifth (5th) anniversary of the date of this
Agreement, unless, in each case, prior to the then-current Stated Expiry Date
(a) Borrower provides written notice to Lender not less than ninety (90) days
prior to the then current Stated Expiry Date that Borrower has elected not to
extend the then current Stated Expiry Date, or (b) Lender provides written
notice to Borrower not less than ninety (90) days prior to the then current
Stated Expiry Date that Lender has elected not to extend the then current Stated
Expiry Date. The foregoing notwithstanding, the Stated Expiry Date shall not be
extended if, as of the then current Stated Expiry Date, a Default
Schedule A: Page 10
shall have occurred and is continuing. Nothing contained herein shall be deemed
to be a commitment by Lender to extend the Stated Expiry Date at any time in
effect. The Stated Expiry Date shall in no event be later than the sixth (6th)
anniversary of the date of this Agreement.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3all-I of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"Stockholder" shall mean each holder of Stock of Borrower or any other Credit
Party.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or manager or may exercise the powers of a general partner or manager.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Lender.
"Termination Date" shall mean the date on which all Obligations under this
Agreement are indefeasibly paid in full, in cash (other than amounts in respect
of Letter of Credit Obligations if any, then outstanding, provided that Borrower
shall have funded such amounts in cash in full into the Cash Collateral
Account), and Borrower shall have no further right to borrow any moneys or
obtain ~other credit extensions or financial accommodations under this
Agreement.
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof, and (ii) all reissues, extensions
or renewals thereof.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein, in
accordance with GAAP consistently applied; provided, that all financial
covenants and calculations in the Loan Documents shall be made in accordance
with GAAP as in effect on the Closing Date unless Borrower and Lender shall
otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing. All other undefined terms contained in this
Agreement or the other Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code. The words "herein,"
"hereof' and "hereunder" or other words of similar import refer to this
Schedule A: Page 11
Agreement as a whole, including the exhibits and schedules thereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural,; (b) the term "or" is not exclusive; (c) the term "including" (or any
form thereof) shall not be limiting or exclusive; (d) all references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations; and (e) all references to any instruments or
agreements, including references to any of the Loan Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof.
Schedule A: Page 12
Schedule B
LENDER'S AND BORROWER'S ADDRESS FOR NOTICES
Lender's Address
Name: General Electric Capital Corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: SALIX PHARMACEUTICALS, INC. Account Manager
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Borrower's Address
Name: SALIX PHARMACEUTICALS, INC.
Address: (through April 30, 2001)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(after April 30, 2001)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Schedule B: Page 1
SCHEDULE C - LETTERS OF CREDIT
1. Lender agrees, subject to the terms and conditions hereinafter set forth, to
incur Letter of Credit Obligations in respect of the issuance of Letters of
Credit issued on terms acceptable to Lender and supporting obligations of
Borrower incurred in the ordinary course of Borrower's business, in order to
support the payment of Borrower's inventory purchase obligations, insurance
premiums, or utility or other operating expenses and obligations, as Borrower
shall request by written notice to Lender that is received by Lender not less
than five Business Days prior to the requested date of issuance of any such
Letter of Credit; provided, that: (a) that the aggregate amount of all Letter of
Credit Obligations at any one time outstanding (whether or not then due and
payable) shall not exceed $ [n/a]; (b) no Letter of Credit shall have an expiry
date which is later than the Stated Expiry Date or one year following the date
of issuance thereof-, and (c) Lender shall be under no obligation to incur any
Letter of Credit Obligation if after giving effect to the incurrence of such
Letter of Credit Obligation, the Net Borrowing Availability would be less than
zero. The maximum amount payable in respect of each Letter of Credit requested
by Borrower will be guaranteed by Lender in favor of the issuing bank under
terms of a separate agreement between Lender and the issuing bank. Borrower will
enter into an application and agreement for such Letter of Credit with the
issuing bank selected by Lender (which may be an Affiliate of Lender). The bank
that issues any Letter of Credit pursuant to this Agreement shall be determined
by Lender in its sole discretion.
2. The notice to be provided to Lender requesting that Lender incur Letter of
Credit Obligations shall be in the form of a Letter of Credit application in the
form customarily employed by the issuing bank, together with a written request
by Borrower and the bank that Lender approve Borrower's application. Upon
receipt of such notice Lender shall establish a reserve against the Borrowing
Availability in the amount of 100% of the face amount of the Letter of Credit
Obligation to be incurred. Approval by Lender in the written form agreed upon
between Lender and the issuing bank (a) will authorize the bank to issue the
requested Letter of Credit, and (b) will conclusively establish the existence of
the Letter of Credit Obligation as of the date of such approval.
3. In the event that Lender shall make any payment on or pursuant to any Letter
of Credit Obligation, Borrower shall be unconditionally obligated to reimburse
Lender therefor, and such payment shall then be deemed to constitute a Revolving
Credit Advance. For purposes of computing interest under Section 1.5, a
Revolving Credit Advance made in satisfaction of a Letter of Credit Obligation
shall be deemed to have been made as of the date on which the issuer or endorser
makes the related payment under the underlying Letter of Credit.
4. In the event that any Letter of Credit Obligations, whether or not then due
or payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower will either (a) cause the underlying Letter of Credit to be
returned and canceled and each corresponding Letter of Credit Obligation to be
terminated, or (b) pay to Lender, in immediately available funds, an amount
equal to 105% of the maximum amount then available to be drawn under all Letters
of Credit not so returned and canceled to be held by Lender as cash collateral
in an account under the exclusive dominion and control of Lender (the "Cash
Collateral Account").
5. In the event that Lender shall incur any Letter of Credit Obligations,
Borrower agrees to pay the Letter of Credit Fee to Lender as compensation to
Lender for incurring such Letter of Credit Obligations. In addition, Borrower
shall reimburse Lender for all fees and charges paid by Lender on account of any
such Letters of Credit or Letter of Credit Obligations to the issuing bank.
6. Borrower's Obligations to Lender with respect to any Letter of Credit or
Letter of Credit Obligation shall be evidenced by Lender's records and shall be
absolute, unconditional and irrevocable and shall not be affected, modified or
impaired by (a) any lack of validity or enforceability of the transactions
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (b) any amendment or waiver of or consent to depart from all or any
of the terms of the transactions contemplated by or related to such Letter of
Credit or Letter of Credit Obligation; (c) the existence of any claim, set-off,
defense or other right which Borrower or any other Credit Party may have against
Lender, the issuer or beneficiary of such Letter of Credit, or any other Person,
whether in connection with this Agreement, any other Loan Document or such
Letter of Credit or the transactions contemplated thereby or any unrelated
transactions; or (d) the fact that any draft, affidavit, letter, certificate,
invoice, ▇▇▇▇ of lading or other document presented under or delivered in
connection with such Letter of Credit or any other Letter of Credit proves to
have been forged, fraudulent, invalid or insufficient in any respect or any
statement therein proves to have been untrue or incorrect in any respect.
Schedule C: Page 1
7. In addition to any other indemnity obligations which Borrower may have to
Lender under this Agreement and without limiting such other indemnification
provisions, Borrower hereby agrees to indemnify Lender from and to hold Lender
harmless against any and all claims, liabilities, losses, costs and expenses
(including, attorneys' fees and expenses) which Lender may (other than as a
result of its own gross negligence or willful misconduct) incur or be subject to
as a consequence, directly or indirectly, of (a) the issuance of or payment of
or failure to pay under any Letter of Credit or Letter of Credit Obligation or
(b) any suit, investigation or proceeding as to which Lender is or may become a
party as a consequence, directly or indirectly, of the issuance of any Letter of
Credit, the incurring of any Letter of Credit Obligation or any payment of or
failure to pay under any Letter of Credit or Letter of Credit Obligation. The
obligations of Borrower under this paragraph shall survive any termination of
this Agreement and the payment in full of the Obligations.
8. Borrower hereby assumes all risks of the acts, omissions or misuse of each
Letter of Credit by the beneficiary or issuer thereof and, in connection
therewith, Lender shall not be responsible (a) for the validity, sufficiency,
genuineness or legal effect of any document submitted in connection with any
drawing under any Letter of Credit even if it should in fact prove in any
respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged;
(b) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or any fights or
benefits thereunder or any proceeds thereof, in whole or in part, even if it
should prove to be invalid or ineffective for any reason; (c) for the failure of
any issuer or beneficiary of any Letter of Credit to comply fully with the terms
thereof, including the conditions required in order to effect or pay a drawing
thereunder; (d) for any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, telecopy, telex or otherwise;
(e) for any loss or delay in the transmission or otherwise of any document or
draft required in order to make a drawing under any Letter of Credit; or (f) for
any consequences arising from causes beyond the direct control of Lender.
Schedule C: Page 2
SCHEDULE D - CASH MANAGEMENT
Borrower agrees to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. No Corporate Credit Party: (i) shall (nor shall it permit any of its
Subsidiaries to) open or maintain any deposit, checking, operating or other bank
account, or similar money handling account, with any bank or other financial
institution except for those accounts identified in Attachment I hereto (to
include a ▇▇▇▇▇ cash account not to exceed $5,000 during any Fiscal Month, and a
payroll account not to exceed an amount equal to one regular payroll at any
time); and (ii) shall close or permit to be closed any of the accounts listed in
Attachment I hereto, in each case without Lender's prior written consent, and
-------------------
then only after such Credit Party has implemented agreements with such bank or
financial institution and Lender acceptable to Lender.
2. Commencing on the Closing Date and until the Termination Date, each Corporate
Credit Party shall cause to be deposited directly all cash, checks, notes,
drafts or other similar items relating to or constituting proceeds of or
payments made in respect of any and all Collateral into lock boxes or lock box
accounts in such Credit Party's or Lender's name (collectively, the "Lock Box
--------
Accounts") set forth in paragraph 1 of Attachment I hereto.
--------- -------------------
3. On or before the Closing Date, each bank at which the Lock Box Accounts are
held shall have entered into tri-party lock box agreements (the "Lock Box
--------
Account Agreements") with Lender and the applicable Credit Party, in form and
--------------------
substance substantially similar to Exhibit K to this Agreement or as otherwise
acceptable to Lender. Each such Lock Box Account Agreement shall provide, among
other things, that (a) such bank executing such agreement has no rights of
setoff or recoupment or any other claim against such Lock Box Account, other
than for payment of its service fees and other charges directly related to the
administration of such account, and (b) such bank agrees to sweep on a daily
basis all amounts in the Lock Box Account to the Collection Account.
4. On the Closing Date, (a) the lock box and blocked account arrangements shall
immediately become operative at the banks at which the Lock Box Accounts are
maintained, and (b) amounts outstanding under the Revolving Credit Loan for
purposes of the Borrowing Availability) shall be reduced through daily sweeps,
by wire transfer, of the Lock Box Accounts into the Collection Account. Borrower
acknowledges that it shall have no right to gain access to any of the moneys in
the Lock Box Accounts until after the Termination Date.
5. Borrower may maintain, in its name, accounts (the "Disbursement Accounts") at
----------------------
a bank or banks acceptable to Lender into which Lender shall, from time to time,
deposit proceeds of Revolving Credit Advances made pursuant to Section 1.1 for
use solely in accordance with the provisions of Section 1.3. All of the
Disbursement Accounts as of the Closing Date are listed in paragraph 2 of
Attachment I hereto.
------------
6. Upon the request of Lender, each Corporate Credit Party shall forward to
Lender, on a daily basis, evidence of the deposit of all items of payment
received by such Credit Party into the Lock Box Accounts and copies of all such
checks and other items, together with a statement showing the application of
those items relating to payments on Accounts to outstanding Accounts and a
collection report with regard thereto in form and substance satisfactory to
Lender.
Schedule D: Page 1
ATTACHMENT I TO SCHEDULE D
--------------------------
LIST OF BANK ACCOUNTS
1. Lock Box Accounts. Centura Bank Account No. 0700147687
2. Disbursement Accounts. Centura Bank Account No. 0700147492
3. ▇▇▇▇▇ Cash Account (not to exceed $5,000). None
------------------
4. Payroll Account (not to exceed one regular payroll). None
---------------
Schedule D: Page 2
SCHEDULE E - FEES
1. RESERVED
2. LETTER OF CREDIT FEE: For each day for which Lender maintains Letter of
Credit Obligations outstanding, an amount equal to the amount of the Letter of
Credit Obligations outstanding on such day, multiplied by [n/a] %, the product
of which is then divided by 360. `Me Letter of Credit Fee incurred for each
month is payable on the first day of each calendar month following the Closing
Date; the final monthly installment of the Letter of Credit Fee is payable on
the Termination Date Notwithstanding the foregoing, any unpaid Letter of Credit
Fee is immediately due and payable on the Commitment Termination Date.
3. CLOSING FEE; COLLATERAL MONITORING FEE: A closing fee of $17,500, payable and
fully earned at closing (the "Closing Fee"), but subject to refund pursuant to
the terms of the Post-Closing Letter. A fully earned and non-refundable
collateral monitoring fee of $12,000 per annum, payable in advance on the date
that Borrower satisfies the conditions described in Section 2.1 of the Agreement
or Lender waives satisfaction of such conditions in writing and on each
anniversary thereof.
4. PREPAYMENT FEE: For the Revolving Credit Loan, an amount equal to the Maximum
Amount multiplied by:
3% if Lender's, obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon Default or otherwise) on or after the Closing Date and on or
before the first anniversary of the Closing Date, payable on the Commitment
Termination Date; or
2% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon Default or otherwise) after the first anniversary of the Closing
Date and on or before the second anniversary of the Closing Date, payable on the
Commitment Termination Date.
Borrower acknowledges and agrees that (i) it would be difficult or impractical
to calculate Lender's actual damages from early termination of Lender's
obligation to make further Revolving Credit Advances and incur additional Letter
of Credit Obligations for any reason pursuant to Section 1.2(c) or Section 7.2,
(ii) the Prepayment Fees provided above are intended to be fair-and reasonable
approximations of such damages, and (iii) the Prepayment Fees are not intended
to be penalties.
5. AUDIT FEES: Borrower will reimburse Lender at the rate of $750 per person per
day, plus out of pocket expenses, for the audit reviews, field examinations and
collateral examinations conducted by Lender; provided, however, so long as no
-------- -------
Event of Default exists, the fees and expenses payable by Borrower under this
paragraph 5 shall not exceed the sum of $15,000 in the twelve-month period
commencing on the Closing Date and any successive twelve-month period
thereafter.
Schedule E: Page 1
Schedule F
SCHEDULE OF DOCUMENTS
The obligation of Lender to make the initial Revolving Credit Advances and
extended other credit is subject to satisfaction of the condition precedent that
Lender shall have received the following, each, unless otherwise specified below
or the context otherwise requires, dated the Closing Date, in form and substance
satisfactory to Lender and its counsel:
PRINCIPAL LOAN DOCUMENTS
1. Agreement. The Loan and Security Agreement duly executed by Borrower(s).
---------
2. Note(s). Duly executed Note(s) to the order of Lender evidencing the Loan(s).
------
3. Borrowing Base Certificate. An original Borrowing Base Certificate duly
---------------------------
executed by a responsible officer of Borrower(s).
4. Notice of Revolving Credit Advance. An origial Notice of Revolving Credit
------------------------------------
Advance duly executed by a responsible officer of Borrower(s).
COLLATERAL DOCUMENTS.
1. Acknowledgment Copies of Financing Statements. Acknowledgment copies of
------------------------------------------------
proper Financing Statements (Form UCC-1) (the "Financing Statements") duly filed
under the Code in all jurisdictions as may be necessary or, in the opinion of
Lender, desirable to perfect Lender's Lien on the Collateral.
2. UCC Searches. Certified copies of UCC Searches, or other evidence
-------------
satisfactory to Lender, listing all effective financing statements which name
Borrower(s) (under present name, any previous name or any trade or doing
business name) as debtor and covering all jurisdictions referred to in paragraph
(1) immediately above, together with copies of such other financing statements.
3. Intellectual Property Documents. Agreements relating to the granting to
---------------------------------
Lender of a security interest in Intellectual Property of Borrower(s) to the
extent applicable in a form suitable for filing with the appropriate Federal
filing office.
4. Other Recordings and Filings. Evidence of the completion of all other
-------------------------------
recordings and filings (including UCC-3 termination statements and other Lien
release documentation) as may be necessary or, in the opinion of and at the
request of Lender, desirable to perfect Lender's Lien on the Collateral and
ensure such Collateral is free and clear of other Liens
5. Power of Attorney. Powers of Attorney duly executed by each Credit Party
------------------
executing the Agreement.
THIRD PARTY AGREEMENTS.
1. Landlord, Warehouseman/Bailee and Mortgagee Consents. Unless otherwise agreed
----------------------------------------------------
to in writing by Lender, duly executed landlord, warehouseman/bailee and
mortgagee waivers and consents from the landlords and mortgagees of all of
(each) Borrower's leased or owned locations where Collateral is held, in each
case, in form and substance satisfactory to Lender.
2. Cash Management System. Duly executed Lock Box Account Agreements and, if
----------------
required by Lender, pledged account agreements in respect of the Disbursement
Accounts as contemplated by Schedule D.
3. Salix Ltd. Subordination Agreement. The Salix Ltd. Subordination Agreement
-----------------------------------
duly executed by Salix Ltd. and Lender and acknowledged by Borrower.
OTHER DOCUMENTS.
1. Secretary Certificate. A Secretary Certificate in the form of Exhibit H to
----------------------
the Agreement duly completed and executed by the Secretary of each Credit Party
executing the Agreement, together with all attachments thereto.
2. Environmental Audit. Copies of all existing environmental reviews and audits
-------------------
and other information pertaining to actual or potential environmental claims
relating to the Collateral and Borrower(s), as Lender may require.
3. Financial Statements and Projections. Copies of the Financial Statements and
------------------------------------
Projections, which Projections shall include a capital expenditures budget for
Borrower(s) in form and substance satisfactory to Lender.
4. Insurance Policies. Certified copies of insurance policies described in
-------------------
Section 3.16, together with evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender.
5. Existing Lease Agreements. Copies of any existing real property leases and
--------------------------
equipment leases to which (each) Borrower is a party and any other document or
instrument evidencing or relating to existing Indebtedness of Borrower(s),
together with all certificates, opinions, instruments, security documents and
other documents relating thereto, all of which shall be satisfactory in form and
substance to Lender, certified by an authorized officer of Borrower(s) as true,
correct and complete copies thereof
Schedule F: Page 1
Schedule G
FINANCIAL COVENANTS
1. Fixed Charge Coverage Ratio. Salix Ltd., Borrower and the other Subsidiaries
---------------------------
of Salix Ltd. shall maintain a Fixed Charge Coverage Ratio on a consolidated
basis of not less than 1.5:1 for each Fiscal Quarter commencing with the Fiscal
Quarter ending December 31, 2001.
2. Net Income (Loss). Salix Ltd., Borrower and the other Subsidiaries of Salix
-----------------
Ltd. shall achieve Net Income (Loss) on a consolidated basis of no I t less than
the amount shown below for the period corresponding thereto:
Period Net Income (Loss)
------ -----------------
Each Fiscal Quarter ($4,500,000)
ending March 31, 2001
and June 30, 2001
Fiscal Quarter ($500,000)
ending September 30, 2001
As used in this Agreement (including this Schedule G covenant), the following
terms shall have the following meanings:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Salix Ltd.,
------
Borrower and the other Subsidiaries of Salix Ltd. on a consolidated basis for
such period, plus interest expense, income tax expense, amortization expense,
depreciation expense and extraordinary losses and minus extraordinary gains, in
each case, of Salix Ltd., Borrower and the other Subsidiaries of Salix Ltd. on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss).
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of the
------------------------------
following for Salix Ltd., Borrower and the other Subsidiaries of Salix Ltd. on a
consolidated basis determined in accordance with GAAP: (a) EBIT7DA for such
period less Capital Expenditures for such period which are not financed through
the incurrence of any Indebtedness (excluding the Revolving Credit Loan) to (b)
the sum of (i) interest expense paid or accrued in respect of any Indebtedness
during such period, plus (ii) taxes to the extent accrued or otherwise payable
----
with respect to such period plus (iii) regularly scheduled payments of principal
----
paid or that were required to be paid on Funded Debt (excluding the Revolving
Credit Loan) during such period.
"Funded Debt" shall mean, for any Person, all of such Person's Indebtedness
------------
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one year from, or is directly or indirectly
renewable or extendible at the option of such Person under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof, including
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of such Person.
"Net Income (Loss)" shall mean with respect to any Person and for any period,
------------------
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
2. Minimum Tangible Net Worth. Salix Ltd., Borrower and the other Subsidiaries
--------------------
of Salix Ltd. shall maintain Tangible Net Worth of Borrower and its Subsidiaries
on a consolidated basis of not less than the amount shown below at the end of
the period corresponding thereto:
Minimum Tangible
Period Net Worth
------ ---------
Fiscal Quarter ending $7,000,000
March 31, 2001
Schedule G: Page 1
Minimum Tangible
Period Net Worth
------ ---------
Fiscal Quarters ending $5,000,000
June 30, 2001 and
September 30, 2001
Fiscal Quarter ending $7,000,000
December 31, 2001 and
each Fiscal Quarter
thereafter
For purpose of this covenant, in Schedule G the following terms shall have the
meanings set forth below:
"Tangible Net Worth" shall mean, with respect to any Person, at any date, the
------------------
total assets (excluding any assets attributable to any issuances by such Person
of any Stock after the Closing Date and excluding any intangible assets) minus
the total liabilities, in each case, of such Person at such date determined in
accordance with GAAP.
3. Capital Expenditures. Salix Ltd., Borrower and the other Subsidiaries of
---------------------
Salix Ltd. on a consolidated basis shall not make aggregate Capital
Expenditures, other than Capital Expenditures financed through the incurrence of
Indebtedness (excluding the Revolving Credit Loan), in any Fiscal Year in excess
of the amount shown below for the period corresponding thereto:
Period Capital Expenditures
------ --------------------
Fiscal Year ending $750,000
December 31, 2001
Fiscal Year ending $600,000
December 31, 2002
Fiscal Year ending $500,000
December 31, 2002
Schedule G: Page 2
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
--------------------------
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated as of this 4th day of October, 2001, is made by and between
SALIX PHARMACEUTICALS, INC., a California corporation (the "Borrower");
and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (the
"Lender"),
to the Loan and Security Agreement, dated as of March 30, 2001 (as
amended, modified, restated or supplemented from time to time, the "Loan
Agreement"), between the Lender and the Borrower. All capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Loan Agreement.
RECITALS
A. Pursuant to the Loan Agreement, the Lender has agreed to make loans
and extend credit to the Borrower in the amounts, upon the terms and subject to
the conditions contained therein.
B. The Lender and the Borrower have agreed to amend the Loan Agreement
as set forth in this Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the Borrower and the Lender hereby agree as follows:
ARTICLE I
AMENDMENTS TO LOAN AGREEMENT
The Loan Agreement is hereby amended as follows:
1.1 Interest. Section 1.5(e) is amended by adding the following sentence
--------
to the end thereof.
"If Borrowing Availability is not sufficient in any month for
Lender to make a Loan to Borrower for the purpose of paying interest as
required by this Section 1.5(e), Lender shall so notify Borrower, and
Borrower shall pay Lender the sum of $6,000 by wire transfer to such
account as directed by Lender by no later than the next Business Day
after receipt of such notification."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Lender that:
2.1 Compliance With the Loan Agreement. As of the execution of this
------------------------------------
Amendment, the Borrower is in compliance with all of the terms and provisions
set forth in the Loan Agreement and the other Loan Documents to be observed or
performed by the Borrower.
2.2 Representations in Loan Agreement. The representations and
------------------------------------
warranties of the Borrower set forth in the Loan Agreement and the other Loan
Documents are true and correct in all material respects except to the extent
that such representations and warranties relate solely to or are specifically
expressed as of a particular date or period which is past or expired as of the
date hereof.
2.3 No Event of Default. No Default or Event of Default exists.
-------------------
ARTICLE III
GENERAL
3.1 Full Force and Effect. As expressly amended hereby, the Loan
------------------------
Agreement and the other Loan Documents shall continue in full force and effect
in accordance with the provisions thereof. As used in the Loan Agreement and the
other Loan Documents, "hereinafter", "hereto", "hereof", or words of similar
import, shall, unless the context otherwise requires, mean the Loan Agreement or
the other Loan Documents, as the case may be, as amended by this Amendment.
3.2 Applicable Law. This Amendment shall be governed by and construed in
--------------
accordance with the internal laws and judicial decisions of the State of North
Carolina.
3.3 Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one and the same instrument.
3.4 Further Assurances. The Borrower shall execute and deliver to the
-------------------
Lender such documents, certificates and opinions as the Lender may reasonably
request to effect the amendments contemplated by this Amendment.
3.5 Headings. The headings of this Amendment are for the purpose of
--------
reference only and shall not effect the construction of this Amendment.
3.6 Expenses. The Borrower shall reimburse the Lender for the Lender's
--------
legal fees and expenses (whether in-house or outside) incurred in connection
with the preparation, negotiation, execution and delivery of this Amendment and
all other agreements and documents contemplated hereby.
2
3.7 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
--------------------
LAW, THE BORROWER AND THE LENDER EACH WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AMENDMENT, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers to be effective on the
day and year first above written.
BORROWER:
SALIX PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇ ▇. Derbyshire
-----------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
LENDER:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President
--------------------------------------------
3
FIRST WAIVER TO THE LOAN AND SECURITY AGREEMENT
-----------------------------------------------
This First Waiver dated as of November 12, 2001 (this "Waiver") to the Loan and
Security Agreement, between GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation ("Lender") and SALIX PHARMACEUTICALS, INC., a California corporation
("Borrower").
WITNESSETH:
-----------
WHEREAS, Borrower and Lender are parties to that certain Loan and Security
Agreement, dated as of March 30, 2001 (as it may be amended, restated, modified
or supplemented from time to time, the "Loan Agreement") under which Lender
agreed to make certain loans and extensions of credit to Borrower; and
WHEREAS, Borrower has requested that Lender waive certain Event(s) of Default
under Loan Agreement, as more fully set forth herein, and Lender is agreeable to
such request only on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties do hereby agree that all
capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Agreement and do hereby further agree as follows:
STATEMENT OF TERMS
------------------
1. Waiver of Default. Lender hereby waives the Event of Default arising
-----------------
solely out of Borrower's failure to meet the maximum loss covenant for the
quarter ending September 2001, set at $500,000 vs. actual results of $5,056,000
in the period.
2. Representations and Warranties. To induce Lender to enter into this
------------------------------
Waiver, each Credit Party hereto hereby warrants, represents and covenants to
Lender that: (a) each representation and warranty of the Credit Parties set
forth in the Loan Agreement is hereby restated and reaffirmed as true and
correct on and as of the date hereof after giving affect to this Waiver as if
such representation or warranty were made on and as of the date hereof (except
to the extent that any such representation or warranty expressly relates to a
prior specific date or period in which case it is true and correct as of such
prior date or period), and no Default or Event of Default has occurred and is
continuing as of this date under the Loan Agreement after giving effect to this
Waiver; and (b) each Credit Party hereto has the power and is duly authorized to
enter into, deliver and perform this Waiver, and this Waiver is the legal, valid
and binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3. Conditions Precedent to Effectiveness of this Waiver. The
-------------------------------------------------------------
effectiveness of this Waiver is subject to the fulfillment of the following
conditions precedent:
(a) Lender shall have received one or more counterparts of this Waiver
duly executed and delivered by the Credit Parties hereto;
(b) Any and all Guarantors of the Obligations shall have consented to
the execution, delivery and performance of this Waiver and all of the
transactions contemplated hereby by signing one or more counterparts of this
Waiver in the appropriate space indicated below and returning same to Lender;
and
(c) Lender shall have received a Waiver Fee of $2,500 and a
Documentation Fee of $500.
4. Continuing Effect of Loan Agreement. Except as expressly modified
------------------------------------
hereby, the provisions of the Loan Agreement, and the Liens granted thereunder,
are and shall remain in full force and effect and this Waiver shall be limited
precisely as drafted and shall not constitute a waiver of any Event of Default
or a modification of any terms and conditions of the Loan Agreement other than
as expressly set forth herein. The granting of the Waiver shall not impose or
imply an obligation on Lender to grant a waiver on any future occasion
(including without limitation any future waiver of the maximum loss covenant).
5. Counterparts. This Waiver may be executed in multiple counterparts
------------
each of which shall be deemed to be an original and all of which when taken
together shall constitute one and the same instrument.
6. Governing Law. THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN
--------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICT OF LAWS.
2
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be
duly executed and delivered as of the day and year first specified above.
SALIX PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇ ▇. Derbyshire
-----------------------------------
Name: ▇▇▇▇ ▇. Derbyshire
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
3