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EXHIBIT 10.6
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Loan Agreement") is made this 29th day of
January, 1997, by and between MONARCH PHARMACEUTICALS, INC., a Tennessee
corporation whose address is 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (the
"Borrower"), KING PHARMACEUTICALS, INC., a Tennessee corporation whose address
is 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (the "Guarantor") and FIRST
TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association organized
and existing under the statutes of the United States of America, whose address
is P. O. Xxx 0000, Xxxxxxx, Xxxxxxxxx 00000 (the "Bank").
Recitals of Fact
The Borrower has requested that the Bank commit to loan the Borrower
the principal sum of One Million Seven Hundred Fifty Thousand and No/100
Dollars ($1,750,000.00), with said extension of credit to be structured as a
term loan. The proceeds of the term loan shall be used by the Borrower to
finance the acquisition, development and marketing of the PROCTOCORT(TM)
Product Line.
Furthermore, the Guarantor desires that the Bank commit to loan the
Borrower the principal sum of One Million Seven Hundred Fifty Thousand and
No/100 Dollars ($1,750,000.00) for the purposes recited hereinabove. In
consideration of Bank's commitment, the Guarantor has agreed to guarantee
repayment of the loan contemplated by this Loan Agreement.
NOW, THEREFORE, incorporating the Recitals of Fact set forth above and
in consideration of the mutual agreements herein contained, the parties agree
as follows:
AGREEMENTS
SECTION 1: DEFINITIONS AND ACCOUNTING TERMS.
1.1 CERTAIN DEFINED TERMS. For purposes of this Loan Agreement, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of such terms) unless
the context otherwise requires:
"ANDA" shall mean an Abbreviated New Drug Application as described in
the Federal Food, Drug and Cosmetic Act, as amended, and regulations
promulgated thereunder.
"Closing Date" means the date set out in the first paragraph of this
Loan Agreement.
"Collateral" means the tangible and/or intangible personal property of
the Borrower that is intended to secure the loan contemplated under this Loan
Agreement, said personal property being specifically described in Section 3.1
of this Loan Agreement.
"Conditional PROCTOCORT(TM) Assignment" means the conditional or
contingent Assignment described in Section 3.3 of this Loan Agreement.
"Equipment" means collectively two (2) 1965 Xxxxx-Xxxxx Tube Fillers
(Kalix Fillers), model number KX60 with serial numbers 2391 and 3123.
"Event of Default" has the meaning assigned to that phrase in Section
14 of this Loan Agreement.
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"FDA" means the Food and Drug Administration, a agency of the
government of the United States of America.
"Guaranty" means the guaranty agreement described in Section 4.2 of
this Loan Agreement.
"Loan Agreement" means this Loan Agreement between the Borrower,
Guarantor and the Bank.
"NDA" shall mean a New Drug Application as described in the Federal
Food, Drug and Cosmetic Act, as amended, and regulations promulgated
thereunder.
"PROCTOCORT(TM) Product Line" shall refer to the preparation
PROCTOCORT(TM) (Hydrocortisone Cream, USP) 1%, as well as any enhancements,
extensions, variations or improvements in said preparation, its manufacture,
packaging or use developed or owned by Borrower, all applications and dosage
forms, and any other products that make use of the PROCTOCORT(TM) tradename
and/or trademark, or any variation thereof whether or not it is registered or
pending with the United States Patent and Trademark Office or a common law
trademark or tradename.
"Security Agreement" means the Security Agreement described in Section
3.2 of this Loan Agreement.
"Solvay" means Solvay Pharmaceuticals, Inc.
"Solvay Agreement" shall mean that certain contract dated January 22,
1997, by and between Solvay and Borrower, entitled Asset Disposition and
Royalty Agreement, hereby Borrower acquired Solvay's interest in
PROCTOCORT(TM).
"Solvay Supply Agreement" shall mean that certain contract dated
January 22, 1997, by and between Solvay and Borrower, entitled Supply Agreement
pertaining to the manufacture of PROCTOCORT(TM) (Hydrocortisone Cream, USP) 1%.
"Term Loan" means the Borrower's term indebtedness to the Bank
pursuant to Section 2 of this Loan Agreement,
"Term Note" means the promissory note as described in Section 2.2 of
this Loan Agreement.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent to those applied in the preparation of the financial
statements required to be delivered from time to time pursuant to Section 11.1
of this Loan Agreement.
SECTION 2: COMMITMENT, FUNDING AND TERMS OF TERM LOAN.
2.1 THE COMMITMENT. Subject to the terms and conditions herein set
out, the Bank agrees and commits to loan the Borrower the principal sum of One
Million Seven Hundred Fifty Thousand and No/100 Dollars ($1,750,000.00), to be
used for the purpose of financing the borrower's acquisition, development and
marketing of PROCTOCORT(TM).
2.2 THE TERM NOTE AND INTEREST. The Term Loan shall be evidenced by
the Term Note of Borrower, payable to the order of the Bank, in the principal
amount of One Million Seven Hundred Fifty Thousand and No/100 Dollars
($1,750,000.00). The unpaid principal balance of the Term Note shall bear
interest at the rate specified in the Term Note and shall be payable as
provided in the Term Note.
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SECTION 3. COLLATERAL.
3.1 DESCRIPTION OF COLLATERAL. The Term Note shall be secured by a
first lien on the following:
(a) The PROCTOCORT(TM) Product Line, and the goodwill associated
therewith, as well as any patents; trademarks or service marks (or
applications therefor) or any tradenames, trade dress, trade secrets,
service marks, proprietary data, or other intellectual property rights
of any nature associated or used therewith, along with all
presentations, product codes, strengths, and formulations associated
with the PROCTOCORT(TM) Product Line and Borrower's ANDA #83-011, as
well as any future ANDA's or NDA's related to the PROCTOCORT(TM)
Product Line, and any other present or future regulatory filing
wheresoever occurring, whether issued or pending, and any and all
changes, amendments, periodic reports, supplements, authorizations,
documentation, or permits relative thereto, for the production of all
or a portion of the PROCTOCORT(TM) Product Line, including without
limitation, ANDA's and NDA's, formulations, annual product reviews.
FDA annual reports, copies of completed batch records, copies of all
manufacturing and packaging control procedures and specifications, all
validation and protocol reports, stability protocols and reports, dose
ranging study reports and protocols, product complaint files and
protocols, adverse drug experience reports and protocols, supplier
audit reports and protocols, field alert reports, and all other
registrations, certifications, approvals, records, reports or
correspondence, from or to the FDA or any other governmental
authorities in the U.S, or elsewhere which relate in any way to the
PROCTOCORT(TM) Product Line or to any related ANDA or NDA. Any
registered trademark shall include, but is not limited to, the
trademark, together with any improvements or change reflected in
continuations or separate filings:
(b) (i) Any and all customer lists, marketing information,
documentation, data, clinical data, research and development, or other
information, from any source whatsoever, related solely or primarily
to the PROCTOCORT(TM) Product Line, including, but not limited to all
information relating to the sales or sampling of the PROCTOCORT(TM)
Product Line, all available records in any format pertaining to
wholesalers, distributors and other customers who have purchased or
sampled all or any portion of the PROCTOCORT(TM) Product Line in the
past or who have placed unfilled purchase orders, records pertaining
to suppliers of the PROCTOCORT(TM) Product Line components and labels
and to manufacturers of all or any portion of the PROCTOCORT(TM)
Product Line, and reports and information regarding past and current
litigation relating to the PROCTOCORT(TM) Product Line; (ii) any and
all production technology or know-how including batch records,
protocols, validation and analytical methods and methodology,
stability protocol and procedures, Standard Operating Procedures
related to the production, manufacturing, packaging, release, sale or
distribution of all or any portion of the PROCTOCORT(TM) Product Line,
(iii) any and all ANDA and NDA documentation for all product codes and
strengths and all other regulatory filings related to all or any
portion of the PROCTOCORT(TM) Product Line, and (iv) any and all data,
documents, charts, information and records (whether written or
electronically or magnetically archived) related to any of the
foregoing in subsections (i) through (iii) inclusive;
(c) Borrower's contract rights under the Solvay Agreement and the
Solvay Supply Agreement;
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(d) In addition to the trademark PROCTOCORT(TM), the right to use any
names, logos, and trademarks used by Borrower on all or any portion of
the PROCTOCORT(TM) Product Line and the packaging thereof, and in
connection with the sale and distribution of all or any portion of the
PROCTOCORT(TM) Product Line to wholesale and retail distributors;
provided that the PROCTOCORT(TM) Product Line shall not be
manufactured bearing any such name and logos other than PROCTOCORT(TM)
after eighteen months from the date this interest is sold to enforce
the security interest created under the Security Agreement;
(e) Manufacturing technology consisting of all current and future
know-how, trade secrets, processes, formulae (secret or otherwise),
supplier audit reports, specifications, molds or forms and technical
data directly relating to or usable in the manufacture, packaging,
marketing, distribution, sale or use of the PROCTOCORT(TM) Product
Line, including but not limited to the specifications, manufacturing
and quality control data, test methods and validation data;
(f) Any and all agreements of Borrower, whether oral or written, that
relate to the Collateral (including, without exception and without
limitation, all contracts or agreements with any customer for the
purchase of the PROCTOCORT(TM) Product Line products or any agreements
with any party relative to the manufacture, marketing or distribution
of all or any portion of the PROCTOCORT(TM) Product Line);
(g) The Equipment; and
all products and proceeds of the foregoing.
3.2 GRANTING AND PERFECTION OF SECURITY INTERESTS. In order to provide
the Bank with the security contemplated by Section 3.1 of this Loan Agreement,
the Borrower shall execute a security agreement granting the Bank a security
interest in the Collateral and Borrower shall execute such financing statements
as the Bank deems reasonably necessary to perfect said security interest. The
Security Agreement and the financing statements shall be in a form acceptable
to the Bank. Furthermore, so long as the Borrower continues to owe any sum
whatsoever under this Loan Agreement, the Term Note or Security Agreement, the
Borrower shall execute such other documents as the Bank From time to time
reasonably deems necessary to perfect and maintain the perfection of its
security interest in and lien against the Collateral under both the laws of the
United States of America, State of Tennessee, and any other state or locality
the bank deems reasonably necessary.
3.3 PROCTOCORT(TM) TRADEMARK. Section 9.10 of this Loan Agreement
contemplates that the Borrower will be filing an application for registration
of the trademark PROCTOCORT(TM) with the United States Patent and Trademark
Office. For the purpose of further perfecting the Bank's security interest in
the Collateral, the Borrower shall execute a conditional assignment of the
trademark covered by said application referencing the security interest created
by the Security Agreement. Said conditional assignment shall be in a form
substantially similar to that which is attached hereto as Exhibit "A". Said
conditional assignment shall be executed with the application number and the
date the application was filed left blank. The Bank or its designee is
authorize to fill in the application number and the date the application was
filed when that information becomes available. The conditional assignment may
be filed with the United States Patent and Trademark office, together with such
other documents as necessary for the purpose of perfecting the Bank's security
interest in said trademark with a notice and copy to the Borrower. Within one
week after said conditional assignment has been filed with the United States
Patent and Trademark Office, the Borrower shall cause Xxx X. Xxxxxxx,
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Xxxxxxx & Xxxxxxxx, L.L.C. to deliver to the Bank his opinion letter which
shall provide that (i) he has reviewed the records of the United States Patent
and Trademark Office, (ii) the Borrower has filed an application for
registration of the trademark PROCTOCORT(TM), (iii) the Borrower's right to
said trademark and its exclusive use is not presently subject to any
challenges, and (iv) the Bank has a first lien on said trademark.
3.4 PATENTS AND TRADEMARKS GENERALLY. The Collateral includes certain
patents and trademarks which may presently be pending or registered with the
United States Patent and Trademark Office or may come to be pending or
registered with that office at some time in the future. In order to provide the
Bank with the security contemplated by Section 3.1 of this Loan Agreement and
so long as the Borrower continues to owe any sum whatsoever under this Loan
Agreement, the Term Note or Security Agreement, the Borrower shall execute such
conditional or contingent assignments as the Bank may from time to time
reasonably request for the purpose of perfecting its security interest in said
patents and trademarks in the United States Patent and Trademark Office. The
Borrower's obligations under this section are in addition to those set out in
Sections 3.2 and 3.3 of this Loan Agreement.
SECTION 4. GUARANTY.
4.1 GUARANTY OF PAYMENT. The Guarantor agrees to guaranty the payment
of all sums at any time owing to the Bank under this Loan Agreement, the Term
Note, and/or Security Agreement.
4.2 GUARANTY AGREEMENT. In order to provide the Bank with the guaranty
contemplated by Section 4.1 of this Loan Agreement, the Guarantor shall execute
the guaranty agreement that is attached hereto as Exhibit "B".
4.3 SECURITY FOR GUARANTY. The Guarantor acknowledges that the
security interest created by means of that certain Security Agreement dated
April 30, 1996, whereby Guarantor granted the Bank a security interest securing
the payment of certain promissory notes of even date therewith and any other
indebtedness then existing or thereafter arising, due or to become due,
absolute or contingent, and whether several, joint, or joint and several, of
the Guarantor to the Bank secures, and was intended to secure the Term Loan,
the obligations of the Guarantor under this Loan Agreement, as well as other
obligations.
SECTION 5. CONDITIONS OF LENDING.
5.1 CONDITIONS PRECEDENT TO FUNDING THE TERM NOTE. The obligation of
the Bank to fund the Term Note is subject to the following conditions precedent
that the Bank shall have received in a form and substance satisfactory to the
Bank:
(a) This Loan Agreement.
(b) The Term Note.
(c) The Security Agreement, together with such financing statements
and other documents as the Bank deems necessary to perfect its
security interest in and lien against the Collateral.
(d) The Conditional PROCTOCORT(TM) Assignment.
(e) Lien searches from such recording offices as the Bank shall
specify, evidencing the priority of the Bank's lien under the Security
Agreement.
(f) The Guaranty.
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(g) Certified corporate resolutions of the Borrower, authorizing this
Loan Agreement, the Term Note, and the Security Agreement.
(h) Certified corporate resolutions of the Guarantor, authorizing this
Loan Agreement and the Guaranty.
(i) Certificate(s) of good standing for the Borrower from the state of
its incorporation and such other states as the Bank shall require.
(j) Certificate(s) of good standing for the Guarantor from the state
of its incorporation and such other states as the Bank shall require.
(k) Written proof satisfactory to the Bank that 21 CFR 314.72(a)(1)
has been fully complied with respect to the assets acquired by the
Borrower under the Solvay Agreement.
(l) Such other information and documentation as the Bank shall
reasonably require in connection with the funding of the Term Note.
(m) The opinion of the Borrower's counsel that (i) the Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee; it has the power and
authority to own its properties and assets and is duly qualified to
carry on its business in every jurisdiction wherein such qualification
is necessary; (ii) the transactions herein contemplated have been duly
authorized by all requisite corporate authority, (iii) this Loan
Agreement and the other instruments and documents herein referred to
have been duly authorized, validly executed and are in full force and
effect. (iv) the execution, delivery and performance of this Loan
Agreement, the Term Note, and the Security Agreement have been duly
authorized by all requisite action and will not violate any provision
of law, any order of any court or other agency of government, the
Charter and By-Laws of the Borrower, any provision of any indenture,
agreement or other instrument to which the Borrower is a party, or by
which the Borrower's respective properties or assets are bound, or be
in conflict, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower, (v) the Borrower is a wholly
owned subsidiary of the Guarantor, and (vi) pertaining to such other
matters as the Bank may reasonably require.
(n) The opinion of the Guarantor's counsel that (i) the Guarantor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee; it has the power and
authority to own its properties and assets and is duly qualified to
carry on its business in every jurisdiction wherein such qualification
is necessary: (ii) the guaranty herein contemplated has been duly
authorized by all requisite corporate authority and is fully
enforceable against the Guarantor under the laws of the State of
Tennessee, (iii) this Loan Agreement, the Guaranty and any other
instrument and document herein referred to have been duly authorized,
validly executed and are in full force and effect, (iv) the execution,
delivery and performance of this Loan Agreement and the Guaranty have
been duly authorized by all requisite action and will not violate any
provision of law, any order of any court or other agency of
government, the Charter and By-Laws of the Borrower, any provision of
any indenture, agreement or other instrument to which the Borrower is
a party, or by which the Borrower's respective properties or assets
are bound, or be in conflict, result in a breach of, or
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constitute (with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the
Borrower, (v) the Borrower is a wholly owned subsidiary of the
Guarantor, and (vi) pertaining to such other matters as the Bank may
reasonably require.
The obligation of the Bank to fund the Term Note is further subject to each of
the warranties and representations of Borrower and Guarantor set out in
Sections 6, 7 and 8 of this Loan Agreement being and remaining true and correct
in all material respects.
SECTION 6: BORROWER'S REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
6.1 INCORPORATION. It is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee; it has
the power and authority to own its properties and assets and is duly qualified
to carry on its business in every jurisdiction wherein such qualification is
necessary.
6.2 POWER AND AUTHORITY. The execution, delivery and performance of
this Loan Agreement, the Term Note, and the Security Agreement have been duly
authorized by all requisite action and will not violate any provision of law,
any order of any court or other agency of government, the Charter and By-Laws
of the Borrower, any provision of any indenture, agreement or other instrument
to which the Borrower is a party, or by which the Borrower's respective
properties or assets are bound, or be in conflict, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Borrower.
6.3 LITIGATION. There is no suit, claim, action, cause or proceeding
now pending or, to the knowledge of Borrower, threatened before any court,
administrative, or regulatory body, arbitrator, or any governmental agency, or
any grounds therefor which may result in any judgment, order, decree,
liability, or other determination which will, or could, have a materially
adverse effect upon all or any portion of the PROCTOCORT(TM) Product Line, or
Borrower's compliance with and performance under the terms of this Loan
Agreement, the Term Note or the Security Agreement. No such judgment, order, or
decree has been entered or any such liability incurred which has or could have
such effect. No party has tendered to Borrower, nor has Borrower accepted the
tender of the defense of any claim, action, or proceeding which has or could
have such effect.
6.4 TAXES. Borrower has filed or caused to be filed all federal, state
or local tax returns which are required to be filed, and has paid all taxes due
and owing to all such taxing authorities.
6.5 CONTRACTS OR RESTRICTIONS AFFECTING BORROWER. Borrower is not a
party to any agreement or instrument or subject to any charter or other
corporate restrictions materially adversely affecting its business, properties
or assets, operations or conditions (financial or otherwise) taken as a whole.
6.6 NO DEFAULT. Borrower is nor in material default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default if not cured would materially and substantially affect the
financial condition, property or operations of the Borrower.
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6.7 21 CFR 314.72(A)(i). All requirements of 21 CFR 314.72(a)(1) that
relate to the transfer of assets to Borrower by Solvay under the Solvay
Agreement have been satisfied.
6.8 WITHDRAWAL. There exists no set of facts which could reasonably be
expected to furnish a basis for the total withdrawal of all or any portion of
the PROCTOCORT(TM) Product Line from the marker or the suspension of said
products registration, product license, manufacturing license, wholesale
dealers license, export license or other governmental license, approval or
consent of any governmental regulatory agency with respect to all or any
portion of the PROCTOCORT(TM) Product Line.
6.9 NO VIOLATION OF LAW. Neither the Borrower or any of its employees
with respect to all or any portion of the PROCTOCORT(TM) Product Line is or has
been in violation of or in default with respect to any applicable law, rule,
regulation, order, writ, or decree of any court or any governmental commission,
board, bureau, agency, or instrumentality, which violation or default might
have a materially adverse effect on all or any portion of the PROCTOCORT(TM)
Product Line, the PROCTOCORT(TM) Product Line business, or Borrower's
compliance with and performance under the terms of this Loan Agreement, the
Term Note, or Security Agreement.
6.10 TITLE TO COLLATERAL. Borrower has good and marketable title to
all of the Collateral, free and clear of all mortgages, liens, security
interests, charges, claims, restrictions, and other encumbrances of every kind,
wheresoever situated other than the liens and security interests contemplated
by this loan agreement to secure the obligations of Borrower to the Bank.
6.11 PATENTS AND TRADEMARKS. The trademark PROCTOCORT(TM) is subject
to the sole use and control of Borrower and its licensees. Borrower is not
aware of any state of facts that indicate a possible present use or
infringement of the trademark PROCTOCORT(TM) by any party other than Borrower,
not including any third parties using the trademark PROCTOCORT(TM) under
license from the Borrower.
SECTION 7: GUARANTOR'S REPRESENTATIONS AND WARRANTIES
Guarantor represents and warrants that:
7.1 INCORPORATION. It is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee; it has
the power and authority to own its properties and assets and is duly qualified
to carry on its business in every jurisdiction wherein such qualification is
necessary.
7.2 POWER AND AUTHORITY. The execution, delivery and performance of
this Loan Agreement and the Guaranty have been duly authorized by all requisite
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter and By-Laws of the Guarantor, any
provision of any indenture, agreement or other instrument to which the
Guarantor is a party, or by which the Guarantor's respective properties or
assets are bound, or be in conflict, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Guarantor.
7.3 LITIGATION. There is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency now
pending, or, to the knowledge of the Guarantor, threatened against or affecting
the Guarantor, or any properties or rights of the Guarantor, which, if
adversely determined, would materially adversely affect the financial or any
other condition of the Guarantor.
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7.4 TAXES. Guarantor has filed or caused to be filed all federal,
state or local tax returns which are required to be filed, and has paid all
taxes due and owing to all such taxing authorities.
7.5 CONTRACTS OR RESTRICTIONS AFFECTING GUARANTOR. Guarantor is not a
party to any agreement or instrument or subject to any charter or other
corporate restrictions materially adversely affecting its business, properties
or assets, operations or conditions (financial or otherwise) taken as a whole.
7.6 NO DEFAULT. Guarantor is not in material default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default if not cured would materially and substantially affect the
financial condition, property or operations of the Guarantor.
7.7 BEST INTEREST OF GUARANTOR. Considering that the Bank would not
extend the Term Loan to the Borrower but for the Guaranty, Guarantor's
execution of the Guaranty is in the best interest of the Guarantor.
SECTION 8: JOINT REPRESENTATIONS AND WARRANTIES.
Borrower and Guarantor represent and warrant that:
8.1 FINANCIAL CONDITION. The consolidated financial statements of the
Guarantor and its wholly owned subsidiaries, copies of which are attached
hereto, are correct and complete and fairly present the financial condition of
the Guarantor and its subsidiaries as of the date of said financial statements
and the results of their operations for said periods and as of the Closing Date
in all material respects. All such financial statements have been prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis, maintained through the period involved.
8.2 TITLE TO ASSETS. Guarantor and its subsidiaries, have good and
marketable title to all their properties and assets as reflected on the balance
sheet which is a part of the financial statements referred to in Section 8.1 of
this Loan Agreement.
8.3 NO FALSE OR MISLEADING STATEMENTS OF FACT. To the knowledge of
Borrower and Guarantor, neither this Loan Agreement nor any schedule or exhibit
hereto (including without limitation the Term Note, Security Agreement and
Guaranty), nor any written statement or certificate furnished in connection
herewith or any of the transactions contemplated hereby, contain or will
contain an untrue statement of a fact or omits or will omit to state a fact
that is necessary in order to make the statements contained herein and therein,
in the light of the circumstances under which they are made, not materially
misleading.
8.4 BORROWER SUBSIDIARY OF GUARANTOR. The Borrower is a wholly owned
subsidiary of the Guarantor.
SECTION 9: AFFIRMATIVE COVENANTS OF BORROWER.
The Borrower covenants and agrees that from the date hereof and until
payment in full of the principal of and interest on the indebtedness evidenced
by the Term Note, unless the Bank shall otherwise in its sole discretion
consent in writing, the Borrower will:
9.1 BUSINESS AND EXISTENCE. Perform all things reasonably necessary to
preserve and keep in full force and effect its existence, rights and
franchises, comply with all laws applicable to it and continue to conduct and
operate its business substantially as conducted and operated during the present
and preceding calendar years.
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9.2 MAINTAIN PROPERTY. Maintain, preserve, and protect all material
leases, franchises, patents, trademarks, trade names, and copyrights, and
preserve all the remainder of its properties used or useful in the conduct of
its business substantially as conducted and operated during the present and
preceding fiscal year. As part of this obligation, Borrower shall take all
action necessary to respond to and satisfy any issues raised by any FDA Form
483 or other notice of a governmental agency so as to prevent any action which
could result in the withdrawal of all or any portion of the PROCTOCORT(TM)
Product Line, or the suspension of said product's registration, product
license, manufacturing license, wholesale dealers license, export license or
other governmental license, approval or consent of any governmental regulatory
agency with respect to all or any portion of the PROCTOCORT(TM) Product Line or
any facility manufacturing any of said product. Furthermore, Borrower shall
comply with all reporting requirements of any governmental agency related to
all or any portion of the PROCTOCORT(TM) Product Line.
9.3 INSURANCE. At all times maintain with insurance companies rated
"A" or better or otherwise acceptable to the Borrower and the Bank, hazard
insurance and such other insurance, for such amounts as is customarily
maintained by companies in the same or substantially similar business. The Bank
shall be named as loss payee on the Borrower's principle hazard insurance
policies and any policy covering the Collateral.
9.4 OBLIGATIONS, TAXES AND LIENS. Pay all of its indebtednesses and
obligations promptly in accordance with normal terms and practices of its
business and pay and discharge or cause to be paid and discharged promptly all
taxes, assessments, and governmental charges or levies imposed upon it or upon
any of its income and profits, or upon any of its properties, real, personal or
mixed, or upon any part thereof, before the same shall become in default.
9.5 COMPLIANCE CERTIFICATE. Furnish within thirty (30) days from the
end of each calendar quarter a Compliance Certificate, in the form of Exhibit
"C" attached hereto.
9.6 NOTICE OF DEFAULT. At the time of the Borrower's first knowledge
or notice, furnish the Bank with written notice of the occurrence of any event
or the existence of any condition which constitutes or upon written notice or
lapse of time or both would constitute an Event of Default under the terms of
this Loan Agreement.
9.7 LIENS AGAINST PERSONAL PROPERTY. Only the Bank shall have liens
against the Collateral. If any other such liens exist that have not been
released of record, Borrower will obtain the immediate release of any such
liens.
9.8 DEPOSIT ACCOUNTS. Maintain its primary deposit relationship with
the Bank.
9.9 SUPPLY. The Borrower shall at all times during the term of this
Loan Agreement secure and maintain a ready source of supply, whether by means
of manufacture or inventory, of PROCTOCORT(TM) (Hydrocortisone Cream, USP) 1%
sufficient to meet reasonably anticipated market demand for said product for a
one year period of time.
9.10 REGISTRATION OF TRADEMARK. The Borrower shall diligently pursue
all steps necessary to register the trademark PROCTOCORT(TM) with the United
States Patent and Trademark Office, which steps shall include but not be
limited to the preparation of an application for registration of said trademark
(the "Application"). Within four weeks from the closing Date, the Borrower
shall file the Application with the United States Patent and Trademark Office.
The Borrower shall provide the Bank with a copy of the Application as filed.
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SECTION 10: AFFIRMATIVE COVENANTS OF GUARANTOR.
The Guarantor covenants and agrees that from the date hereof and until
payment in full of the principal of and interest on the indebtedness evidenced
by the Term Note, unless the Bank shall otherwise in its sole discretion
consent in writing, the Guarantor will:
10.1 BUSINESS AND EXISTENCE. Perform all things reasonably necessary
to preserve and keep in full force and effect its existence, rights and
franchises, comply with all laws applicable to it and continue to conduct and
operate its business substantially as conducted and operated during the present
and preceding calendar years.
10.2 OBLIGATIONS, TAXES AND LIENS. Pay all of its indebtednesses and
obligations promptly in accordance with normal terms and practices of its
business and pay and discharge or cause to be paid and discharged promptly all
taxes, assessments, and governmental charges or levies imposed upon it or upon
any of its income and profits, or upon any of its properties, real, personal or
mixed, or upon any part thereof, before the same shall become in default.
10.3 COMPLIANCE CERTIFICATE. Furnish within thirty (30) days from the
end of each calendar quarter a Compliance Certificate, in the form of Exhibit
"D" attached hereto.
10.4 NOTICE OF DEFAULT. At the time of the Borrower's first knowledge
or notice, furnish the Bank with written notice of the occurrence of any event
or the existence of any condition which constitutes or upon written notice or
lapse of time or both would constitute an Event of Default under the terms of
this Loan Agreement.
10.5 DEPOSIT ACCOUNTS. Maintain its primary deposit relationship with
the Bank.
SECTION 11: JOINT AFFIRMATIVE COVENANTS.
The Borrower and Guarantor, jointly and severally, covenant and agree
that from the date hereof and until payment in full of the principal of and
interest on the indebtedness evidenced by the Term Note, unless the Bank shall
otherwise in its sole discretion consent in writing, the Borrower and Guarantor
will:
11.1 FINANCIAL REPORTS AND OTHER DATA. Furnish to the Bank: (a) as
soon as available and in any event within ninety (90) days after the end of
each fiscal year of the Guarantor, an unqualified audit of the Guarantor's and
its wholly owned subsidiaries' consolidated financial statements as of the
close of such fiscal year of the Guarantor, which financial statements shall
including a consolidated balance sheet and consolidated statement of income and
surplus of the Guarantor and its subsidiaries, together with the unqualified
audit report and opinion of an independent Certified Public Accountant
reasonably acceptable to the Bank, showing the financial condition of the
Guarantor and its subsidiaries at the close of such year and the results of
operations during such year: (b) within forty-five (45) days after the end of
each fiscal quarter, except the last fiscal quarter of the year, financial
statements similar to those described above for the Guarantor and its
subsidiaries, not audited but certified as to accuracy and content by the Chief
Financial Officer or President or Controller of the Guarantor (the "Certifying
Officer"), such consolidated balance sheets to be as of the end of such quarter
and such consolidated statements of income and surplus to be for the period
from the beginning of said year to the end of such quarter, in each case
subject only to audit and year-end adjustment.
11.2 ADDITIONAL INFORMATION. Furnish such other relevant information
regarding the operations, business affairs and financial condition of the
Guarantor and its subsidiaries as the Bank may reasonably request, including
but not limited to true and exact copies of
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Guarantor's and its subsidiaries' books of account and tax returns, and all
information furnished to shareholders or any governmental authority, and permit
the copying of the same.
11.3 RIGHT OF INSPECTION. Permit any person designated by the Bank, at
the Bank's expense, to visit and inspect any of the properties, books and
financial reports of the Guarantor and its subsidiaries and to discuss its
affairs, finances and accounts with the principal officers of the Guarantor and
its subsidiaries, at all such reasonable times during regular business hours of
the Bank and on reasonable advance notice and as often as the Bank may
reasonably request. This right of inspection shall include, but not be limited
to, the right to inspect all premises, properties, books, records, contracts,
and documents related to all or any portion of the PROCTOCORT(TM) Product Line
(including, without limitation, access to raw data in support of product lost
approvals and stability reports) and such other information concerning all or a
portion of the PROCTOCORT(TM) Product Line as may be relevant to the protection
of the Bank's rights and interests in and to the PROCTOCORT(TM) Product Line.
The Bank shall keep confidential any information it or its agents obtain as a
result of this right of inspection. However, if the Bank enforces it security
interest under the Security Agreement it shall be free to share any such
information that is related to its Collateral with such persons it deems
necessary for purposes of liquidating or selling the Collateral. Furthermore,
the Bank and its agents may disclose any such information as required by a
subpoena or order of any court of law.
11.4 MINIMUM NET WORTH. The Guarantor and its wholly owned
subsidiaries shall maintain a minimum consolidated net worth of Fourteen
Million Eight Hundred Thousand and No/100 Dollars ($14,800,000.00), as
determined by generally accepted accounting principles including intangible
assets, with assets valued at historical costs less allowances taken for
depreciation and depletion. The minimum consolidated net worth to be maintained
the Guarantor and its wholly owned subsidiaries shall increase at the end of
each fiscal quarter, beginning with the quarter ending December 31, 1996, by an
amount equal to Fifty Percent (50%) of the consolidated net profit for that
fiscal quarter. There shall, however, be no adjustment to the minimum
consolidated net worth requirement in the event of a net loss for a fiscal
quarter.
11.5 DEBT TO EQUITY RATIO. The Guarantor and its wholly owned
subsidiaries shall maintain a maximum consolidated debt to equity ratio (total
debt divided by total equity) as established by this section. The maximum debt
to equity ratio as of the Closing Date shall be 1.75. Thereafter, the maximum
debt to equity ratio shall be redetermined at the end of each of Guarantor's
fiscal quarters based on the following formula:
(a) In the event the Guarantor's and its wholly owned subsidiaries'
consolidated net worth is less than Eighteen Million Five Hundred
Thousand No/100 Dollars ($18,500,000.00), the maximum debt to equity
ratio shall be 1.75;
(b) In the event the Guarantor's and its wholly owned subsidiaries'
consolidated net worth is equal to or greater than Eighteen Million
Five Hundred Thousand and No/100 Dollars ($18,500,000.00), but is less
than Twenty Million and No/100 Dollars ($20,000,000.00), the maximum
debt to equity ratio shall be 1.65; and
(c) In the event the Guarantor's and its wholly owned subsidiaries'
consolidated net worth is equal to or greater than Twenty Million and
No/100 Dollars ($20,000,000.00), the maximum debt to equity ratio
shall be 1.55.
11.6 CASH FLOW-TO-DEBT SERVICE RATIO. The Guarantor and its wholly
owned subsidiaries shall maintain a consolidated ratio of cash flow-to-debt
service of not less than
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1.25 (total cash flow divided by total debt service) to be measured quarterly
based on the consolidated audited financial statements required by Section
11.1(a). For purposes of this requirement, "Cash Flow" shall be defined as
Guarantor's and its wholly owned subsidiaries' consolidated net profits plus
consolidated allowances for depreciation, interest and equity injections
consisting of cash for the past 365 calendar days; and "Debt Service" shall be
defined as all scheduled payments of principal, interest and equipment lease
financing payable by the Guarantor and its wholly owned subsidiaries within the
next 365 calendar days.
11.7 CURRENT RATIO. The Guarantor and its wholly owned subsidiaries
shall maintain a consolidated current ratio of 1.50. For purposes of this
Section, "Current Ratio" shall be defined as the Guarantor's and its wholly
owned subsidiaries' consolidated current assets divided by their consolidated
current liabilities.
SECTION 12: NEGATIVE COVENANTS OF BORROWER.
12.1 The Borrower covenants and agrees that at all times from and
after the closing date, unless the Bank shall otherwise consent in writing,
which consent shall not be unreasonably withheld, it will not, either directly
or indirectly, sell, lease, transfer, (except within the Borrower's own
organization) or dispose (other than in the normal course of business) of all
or a substantial part of its business or assets.
12.2 The Borrower covenants and agrees that at all times from and
after the Closing Date, it will not grant anyone other than the Bank a lien
against any of Borrower's assets. Borrower shall be permitted, however, to
grant purchase money liens for the purpose of financing assets acquired after
the Closing Date, which may include the acquisition of product lines (any such
lien shall not extend to the Collateral). Furthermore, this provision shall not
impair the ability of the Borrower to acquire property after the Closing Date
by means of leases, or sale and lease back transactions.
SECTION 13: NEGATIVE COVENANTS OF GUARANTOR.
13.1 The Borrower covenants and agrees that at all times from and
after the closing date, unless the Bank shall otherwise consent in writing,
which consent shall not be unreasonably withheld, it will not, either directly
or indirectly, sell, lease, transfer, (except within the Borrower's own
organization) or dispose (other than in the normal course of business) of all
or a substantial part of its business or assets.
13.2 The Guarantor covenants and agrees that at all times from and
after the Closing Date, it will not grant anyone other than the Bank a lien
against any of Guarantor's assets. Guarantor shall be permitted, however, to
grant purchase money liens for the purpose of financing assets acquired after
the Closing Date, which may include the acquisition of product lines (any such
lien shall not extend to the Collateral). Furthermore, this provision shall not
impair the ability of the Guarantor to acquire property after the Closing Date
by means of leases, or sale and lease back transactions.
SECTION 14: EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following shall occur:
14.1 PAYMENT OF PRINCIPAL, INTEREST. The Borrower defaults in the
prompt payment as and when due of principal or interest on the Term Note or any
fees due under said note, this Loan Agreement or the Security Agreement; or in
the prompt payment when due of any other indebtedness, liabilities, or
obligations to the Bank, whether now existing or hereafter created or arising;
direct or indirect, absolute or contingent; or
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14.2 OTHER OBLIGATIONS. The Borrower or Guarantor defaults with
respect to any other material agreement to which it is a party or with respect
to any other material indebtedness when due or the performance of any other
obligation incurred in connection with any material indebtedness for borrowed
money ("material" as used herein meaning indebtedness or obligations in excess
of $50,000.00) if the effect of such default is to accelerate the maturity of
such indebtedness, or if the effect of such default is to permit the holder
thereof to cause such indebtedness to become due prior to its stated maturity
and the holder has not waived its right to accelerate payment of such
indebtedness; or
14.3 REPRESENTATION OR WARRANTY. Any representation or warranty made
by the Borrower and/or Guarantor herein, or in any report, certificate,
financial statement or other writing furnished in connection with or pursuant
to this Loan Agreement shall prove to be false, misleading or incomplete in any
material respect on the date as of which made; or
14.4 BANKRUPTCY, ETC. The Borrower and/or Guarantor shall make an
assignment for the benefit of creditors, file a petition in bankruptcy,
petition or apply to any tribunal for the appointment of a custodian, receiver
or any trustee for it or a substantial part of its assets, or shall commence
any proceeding under any bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or if there shall have been filed any such petition
or application, or any such proceeding shall have been commenced against the
Borrower and/or Guarantor, in which an order for relief is entered or which
remains undismissed for a period of sixty (60) days or more; or the Borrower
and/or Guarantor by any act or omission shall indicate its consent to, approval
of or acquiescence in any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver or any trustee for it or any
substantial part of any of its properties, or shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a
period of sixty (60) days or more; or Borrower and/or Guarantor shall generally
not pay its debts as such debts become due; or
14.5 CONCEALMENT OF PROPERTY, ETC. The Borrower and/or Guarantor shall
have concealed, removed, or permitted to be concealed or removed, any part of
its property, with intent to hinder, delay or defraud its creditors or any of
them, or made or suffered a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall
have made any transfer of its property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or shall have
suffered or permitted, while insolvent, any creditor to obtain a lien upon any
of its property through legal proceedings or distraint which is not vacated
within sixty (60) days from the date thereof; or
14.6 CHANGE IN OWNERSHIP. There shall occur any change in the
ownership that results in Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxxxx X.
Xxxxxxx owning a combined fifty percent (50%) or less of the capital stock of
the Guarantor, or fifty percent (50%) or less of the voting power related to
the capital stock.
14.7 COVENANTS. The Borrower and/or Guarantor defaults in the
performance or observance of any other covenant, agreement or undertaking on
its or their part to be performed or observed, contained herein, or in any
other instrument or document which now or hereafter evidences or secures all or
any part, of the Term Loan.
14.8 WITHDRAWAL OR SUSPENSION. The total withdrawal of the
PROCTOCORT(TM) Product Line from the market, or the suspension of said
product's registration, product license, manufacturing license, wholesale
dealers license, export license or other governmental license, the approval or
consent of any governmental regulatory agency with respect to the
PROCTOCORT(TM) Product Line.
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14.9 REMEDY. Upon the occurrence of any Event of Default, as specified
herein, and the expiration of any applicable cure period, the Bank shall, at
its option, thereupon declare the entire unpaid principal balance of the Term
Note, all interest accrued and unpaid thereon and all other amounts payable
under this Loan Agreement to be immediately due and payable for all purposes,
and may exercise all rights and remedies available to it under any other
instrument or document which evidences, secures or guaranties the Term Note, or
available at law or in equity, including the right to the appointment of a
receiver to take possession of the Borrower's and/or Guarantor's property.
SECTION 15: MISCELLANEOUS
15.1 AMENDMENTS. The provisions of this Loan Agreement, the Term Note,
or any instrument or document executed pursuant hereto or securing or
guarantying the indebtednesses, may be amended or modified only by an
instrument in writing signed by the parties to said document or instrument.
Guarantor need only be a party to an amendment of the Guaranty, and waives
notice of any amendment, modification or renewal of the Term Note, this Loan
Agreement, or any other instrument or document executed pursuant hereto other
than the Guaranty.
15.2 NOTICES. All notices and other communications provided for
hereunder shall be in writing and shall be mailed, certified mail, return
receipt requested, or delivered by hand. Any such notices and other
communications to the Borrower shall be addressed as follows:
Xxxx X. Xxxxxxx
Chairman of the Board & CEO
Monarch Pharmaceuticals, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
WITH A COPY TO:
Xxxx X. X. Xxxxxxx
Executive Vice President and General Counsel
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
All such notices and other communications to the Guarantor shall be addressed
as follows:
Xxxx X. Xxxxxxx
Chairman of the Board & CEO
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxx X. X. Xxxxxxx
Executive Vice President and General Counsel
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
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All such notices and other communications to the Bank shall be addressed as
follows:
Xxxxx X. Xxxxxx
Community Bank President
First Tennessee Bank National Association
P. O. Box 3189
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000,
or as to any such person at such other address as shall be designated by such
person in a written notice to the other parties hereto complying as to the
delivery with the terms of this Section 15.2. All such notices and other
communications shall be effective (i) if mailed when received or three (3)
business days after mailing, whichever is earlier; or (ii) if delivered by
hand, upon delivery.
15.3 NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
15.4 INDEMNIFICATION. The Borrower and Guarantor agree to indemnify
the Bank from and against any and all claims, losses and liabilities,
including, without limitation, reasonable attorneys' fees and expenses, growing
out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
solely and directly from the Bank's negligence or willful misconduct. The
indemdification provided for in this Section shall survive the payment in full
of the Term Note.
15.5 SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein shall survive the delivery of the Term Note. This Loan
Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns, except that Borrower shall
not have the right to assign its rights hereunder or any interest therein.
15.6 GOVERNING LAW. This Loan Agreement shall be governed and
construed in accordance with the laws of the State of Tennessee.
15.7 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute
but one and the same instrument.
15.8 TERMINOLOGY: SECTION HEADINGS. All personal pronouns used in this
Loan Agreement, whether used in the masculine, feminine, or neuter gender,
shall include all other genders; the singular shall include the plural, and
vice versa. Section headings are for convenience only and neither limit nor
amplify the provisions of this Loan Agreement.
15.9 ENFORCEABILITY OF AGREEMENT. Should any one or more of the
provisions of this Loan Agreement be determined to be illegal or unenforceable,
all other provisions, nevertheless, shall remain effective and binding on the
parties hereto.
15.10 NON-CONTROL. In no event shall the Bank's rights hereunder be
deemed to indicate that the Bank is in control of the business, management or
properties of the Borrower and/or Guarantor or has power over the daily
management functions and operating decisions made by the Borrower and/or
Guarantor.
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15.11 FEES AND EXPENSES. Except as otherwise expressly provided
herein, the Borrower agrees to reimburse the Bank for all legal fees and
expenses, and recording fees and taxes incurred by the Bank in connection with
the loan contemplated by this Loan Agreement. Furthermore, the Borrower agrees
to pay, or reimburse the Bank for, the actual out-of-pocket expenses, including
but not limited to counsel fees and expenses, court costs, accountants fees and
expenses, and fees and expenses of similar experts as deemed necessary by the
Bank, incurred by the Bank in connection with the enforcement of, or the
preservation of any rights under this Loan Agreement, the Term Note, and any
instrument or document now or hereafter securing or guarantying said note. The
Guaranty shall guaranty the obligations of the Borrower set forth in this
section, in addition to the other obligations that may be owing under the terms
of this Loan Agreement, the Term Note and the Security Agreement.
15.12 TIME OF ESSENCE. Time is of the essence in this Loan Agreement
the Term Note, and the other instruments and documents executed and delivered
in connection herewith.
15.13 LIENS: SETOFF OF BANK. Upon the occurrence of any Event of
Default as specified above, the Bank may apply any and all deposits (general or
special, matured or unmatured) and other credits of the Borrower against any
and all indebtednesses of the Borrower to the Bank. The Borrower acknowledges
the Bank's legal and equitable rights to setoff, appropriate. Furthermore, upon
the occurrence of any Event of Default as specified above, the Bank may apply
any and all deposits (general or special, matured or unmatured) and other
credits of the Guarantor against any and all indebtednesses of the Borrower to
the Bank covered by the Guaranty. The Guarantor acknowledges the Bank's legal
and equitable rights to setoff, appropriate.
15.14 VENUE OF ACTIONS. As an integral part of the consideration for
the making of this Loan Agreement, it is expressly understood and agreed that
no suit or action shall be commenced by the Borrower, or by any successor,
personal representative or assignee with respect to the Term Note, or this Loan
Agreement or any other document or instrument which now or hereafter evidences,
secures or guaranties all or any part of the Term Loan, other than in a state
court of competent jurisdiction in Xxxxxxxx County, Tennessee, or in the United
States District Court for the Eastern District of Tennessee, and not elsewhere.
As a further integral part of the consideration for the making of this Loan
Agreement, it is expressly understood and agreed that no suit or action shall
be commenced by the Guarantor, or by any successor, personal representative or
assignee with respect to the this Loan Agreement, or any other document or
instrument which now or hereafter evidences, secures or guaranties all or any
part of the Term Loan, other than in a state court of competent jurisdiction in
Xxxxxxxx County, Tennessee, or in the United States District Court for the
Eastern District of Tennessee, and not elsewhere. Nothing in this paragraph
contained shall prohibit the Bank from instituting suit in any court of
competent jurisdiction for the enforcement of its rights hereunder or in any
other document or instrument which evidences, secures or guaranties the
obligations of Borrower and/or Guarantor contemplated by this Loan Agreement.
15.15 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
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WHETHER NOW EXISTING OR HEREAFTER ARISING AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
15.16 ENTIRE AGREEMENT. This written agreement, the related written
documents referred to herein, and any other agreements executed
contemporaneously herewith set forth the complete and exclusive statement of
the terms of the agreement between the Borrower, Guarantor and the Bank with
respect to the loans contemplated by this Loan Agreement. Therefore, no prior
written agreements or contemporaneous or prior oral agreements between the
parties shall be of any effect with respect to the loan contemplated by this
Loan Agreement.
IN WITNESS WHEREOF, the Borrower, Guarantor and the Bank have caused this
Loan Agreement to be executed by their duly authorized officers, all as of the
day and year first above written.
MONARCH PHARMACEUTICALS, INC.
By /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
Chairman of the Board & CEO
KING PHARMACEUTICALS, INC.
By /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
Chairman of the Board & CEO
FIRST TENNESSEE BANK,
NATIONAL ASSOCIATION
By /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx
Community Bank President
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PROMISSORY NOTE
(Business or Commercial Loan)
/s/ Xxxxx X. Xxxxxx
------------------------------------
Approval
$1,750,000.00 BRISTOL , Tennessee
--------------------- -------------------------
JANUARY 29 , 19 97
------------------------- -------
FOR VALUE RECIEVED, the undersigned (jointly and severally, if more than one)
promise(s) to pay to the order of First Tennessee Bank National Association
(hereinafter referred to as the "Bank") at any lending office in the state
mentioned above or at such other place as the holder hereof may designate in
writing, in current local funds, the sum of: ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS AND NO/100*********************************************Dollars
[ ] DISCOUNTED: Including interest, due on __________, 19 ____.
[X] INTEREST BEARING: Plus interest from date until maturity on the unpaid
principal balance of this Note at the rate of:
[ ] FIXED RATE: ____% per annum
[X] VARIABLE RATE: A variable rate per annum ("Variable Rate") which
shall be equal to the lesser of (a) the maximum rate of
interest ("Maximum Rate") which Bank may lawfully charge, or (b) a
rate which is ___% per annum higher than the base commercial rate of
interest ("Base Rate") established from time to time by Bank. Each
change in the Variable Rate which results from a change in the
Maximum Rate shall become effective, without notice to the
undersigned, on the same date that the Maximum Rate changes. Each
change in the Variable Rate which results from a change in the Base
Rate shall become effective, without notice to the undersigned, on [ ]
the same date that the Base Rate changes; [ ] the first day of the
calendar month following any chagne in the Base Rate; [ ] the first
day of the calendar quarter following any change in the Base Rate; [ ]
other The Base Rate is one of several interst rate indices employed
by the Bank. The undersigned acknowledge(s) that the Bank has made,
and may hereafter make, loans bearing interest at rates which are
higher or lower than the Base Rate.
Such principal and interst shall be payable as shown below:
[ ] SINGLE PRINCIPAL PAYMENT: One single principal payment of the
balance, due on ____________________________________, 19_____
plus interest payable
[ ] at maturity.
[ ] at beginning _____________, 19 __ an dcontinuing on the same
day of each successive [ ] monthly or [ ] quarterly calendar
period, except that the final interest installment shall be
payable on the date the principal is due.
[X] MULTIPLE PRINCIPAL PAYMENTS: 35 payments of $48,611.11 each,
plus a final payment for the balance then owing, beginning LAST
DAY OF FEBRUARY, 1997, and continuing on the same day of each
successive [X] monthly or [ ] quarterly calendar period. Accrued
interest is [ ] included in each of the above payments; or X
payable in addition to such payments on the above payment dates.
[ ] OTHER:
---------------------------------------------------------
---------------------------------------------------------------
SECURITY: Except as otherwise provided herein, as of the date hereof,
[ ] This Note is secured by a mortgage(s) or deed(s) of trust dated
----------------------------------------------------------------
[X] This Note is secured by security agreements(s) dated JANUARY 29,
1997
----------------------------------------------------------------
Other Terms and Conditions: Unless otherwise provided herein, all payments shall
be applied first to pay the accrued interest to date on the unpaid balance and
next to the unpaid principal of the Indebtedness.
Any payment not made when due hereunder (whether by acceleration or
otherwise) shall bear interest after maturity at the maximum effective contract
rate of Interest which the Bank may lawfully charge on the date such payment
became due.
If this Note is placed in the hands of an attorney for collection, by suit
or otherwise, or to protect any security given for its payment, or to enforce
its collection, the undersigned will pay all the costs of collection and
litigation, together with a reasonable attorney's fee, all of which shall be
secured by any collateral pledged as security herefor. The undersigned also
agrees to pay any and all actual expenses including reasonable attorney's fees
incurred by Bank in (i) successfully defending any action or inaction in
connection with any aspect of the transaction evidenced by this instrument, or
(ii) any action, whether or not successful, taken to protect or enforce Bank's
rights in any collateral related to the transaction evidenced by this
instrument.
The maker(s) and any endorsers or guarantors hereof waive protest, demand,
presentment, and notice of dishonor, and agree that this Note may be extended,
in whole or in part, without limit as to the number of such extensions, or the
period or periods thereof, and without notice to or further assent from them or
any other party liable hereon, all of whom will remain bound upon this Note
notwithstanding any such extension(s); and further agree that all or any
collateral given, now or hereafter, as security herefor may be released (with or
without substitution) without notice and without affecting their liability
hereon; and that additional makers, endorsers, guarantors, or sureties may
become parties hereto, and that any present or figure party may be released from
liability hereunder, without notice, and without affecting the liability hereon;
and that additional maker, endorser, or guarantor.
In the event of any default in the prompt and punctual payment, when due,
of this Note (or any installment hereof) whether of principal, interest, or
principal and interest), or if the undersigned, or any other party libale
hereon, should become insolvent,(as defined in the Uniform Commercial Code), or
if a petition in bankruptcy be filed by or against any of the undersigned or
any other party liable hereon, or if a reciver be appointed for any part of the
property or assets of the undersigned or any other party liable hereon, or if
any assignment for the benefit of creditor(s) be made by the undersigned or any
other party liable hereon, however defined, or make an assignment for the
benefit of creditors, or if a judgment be entered against the undersigned or
other parties liable hereon, or upon the issuance of any writ, levy or process,
valid or invalid which purports to restrict the undersigned or other parties
liable hereon, with respect to any of his/her or their funds of property on
deposit with or in the possession or custody or under the control of the Bank,
or upon the death or dissolution of any party liable hereon, or in the event of
any default in the prompt and punctual payment when due, or any other
indebtedness or obligation to the Bank owed, now or hereafter, by any party
liable hereon, or upon any default in any deed of trust, mortgage, security
agreement, assignment or other security document given, now or hereafter, to
secure the indebtedness evidenced hereby, or if any representation or warranty
made by the undersigned or other parties pertaining to this credit shall prove
to be false, untrue, or materially misleading, or in the event of termination
or any or in the event that the Bank shall deem itself insecure, then and in
any of such events, this Note shall, at Bank's option, without notice or demand
for payment (the same being expressly waived), be and become immediately due,
payable and enforceable for all purposes, of the option of the Bank.
Any money or other property at any time in the possession of the Bank
belonging to parties liable hereon, and any deposits or other sums at any time
credited by or due from the Bank to the undersigned or any other parties liable
hereon, may at all times, at the option of the Bank, be held and treated as
collateral security for the payment of this Note or any other liability of any
of the undersigned, or any other party in any manner liable hereon to the Bank,
whether due or not due. The Bank may, at any time, at its option, and without
notice, set off the amount due or to become due hereon against the claim of any
of said parties against the Bank. To effect these rights, the undersigned and
all other parties liable heron agree, upon request by the Bank, immediately to
endorse, sign, and execute all necessary instruments, and do hereby appoint the
Bank (acting through any then officer thereof) as attorney-in-fact for them with
authority to endorse any instrument requiring endorsement and to effect any
transfer, and this appointment shall be irrevocable as long as the undersigned,
or any other party liable hereon, shall be indebted to the Bank.
The undersigned agrees to furnish a current financial statement upon the
request of Bank from time to time, and further agrees to execute and deliver all
other instruments and take such other actions as Bank may from time to time
reasonably request in order to carry out the provision and intent hereof.
In the event of any renewal or extension of the loan indebtedness evidenced
hereby, unless the parties otherwise agree to a lower rate, the Bank shall have
the right to charge interest at the highest of the following rates: (i) the
maximum rate permissible at the time the contract to make the loan was executed;
or (ii) the maximum rate permissible at the time the loan was made; or (iii) the
maximum rate permissible at the time of such renewal or extension; or (iv) the
maximum rate permitted by applicable federal law; it being intended that those
statutes and laws, state or federal, from time to time in effect, which permit
the charging of the higher rate of interest shall govern the maximum rate which
may be charged hereunder. In the event that for any reason the foregoing
provisions hereof shall not contain a valid, enforceable designation for a rate
of interest prior to maturity or method of determining the same, then (unless
this Note is a discounted, single-payment note) the indebtedness hereby
evidenced shall bear interest prior to maturity at the maximum effective rate
which may be lawfully charged by the Bank under applicable law.
Regardless of any provision herein, or in any other document executed in
connection herewith, the holder hereof shall never be entitled to receive,
collect, or apply, as interest hereon, any amount in excess of the maximum
contract rate which may be lawfully charged by the holder hereof under
applicable law; and in the event the holder hereof ever receives, collect, or
applies as interest, any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and treated hereunder
as such; and, if the principal hereof is paid in full, any remaining excess
shall forthwith be paid to the undersigned. In determining whether or not the
interest paid of payable, under any specific contingency, exceeds the maximum
lawful contract rate, the undersigned and the holder hereof shall, to the
maximum extent permitted by applicable law, (a) characterize any non-principal
payment as a reasonable loan charge, rather than as interest; (b) exclude
voluntary repayments and the effects thereof; and (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of interest throughout
the entire contemplated term hereof, so that the Interest accrue throughout the
entire term contemplated hereby shall at no time exceed the maximum lawful
contract rate.
The undersigned jointly and severally waive(s) any right to a trial by jury
in any action or proceeding to enforce or defend any rights under this agreement
or under any amendment, instrument, document or agreement delivered (or which
may in the future be delivered) in connection herewith or arising from any
banking relationship existing in connection with this agreement. The undersigned
agree(s) that any such action or proceeding shall be tried before a court and
not before a jury.
KING PHARMACEUTICALS, INC.
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BY: /s/ Xxxx X. Xxxxxxx
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Chairman and CEO
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20
ALLONGE TO PROMISSORY NOTE DATED JANUARY 29, 1997
IN THE AMOUNT OF $1,750,000.00 (THE "NOTE") EXECUTED BY THE UNDERSIGNED
TO THE ORDER OF FIRST TENNESSEE BANK NATIONAL ASSOCIATION ("BANK")
(FOR USE WITH BLUE, GREEN AND WHITE NOTES ONLY - NEW LOAN)
1. The undersigned understands and agrees that the terms of the Note
relating to the interest rate shall be modified by deleting the paragraph of the
Note entitled Variable Rate in its entirety and replacing it with the following:
[X] Variable Rate: A variable rate per annum ("Variable Rate")
based on a [ ] three hundred and sixty (360) [X] three hundred and
sixty-five (365) day year which shall be equal to the lesser of (i)
the maximum rate of interest ("Maximum Rate") which Bank may lawfully
charge, or (ii) a rate which is 1.75 percent (1.75%) per annum higher
than the LIBOR Rate (as hereinafter defined), adjusted and determined
as of the opening of business on January 29, 1997 (the "Initial
Pricing Date") and on the 29 day of every third month hereafter (each
an "Interest Rate Change Date"). The LIBOR Rate shall mean the London
Interbank Offered Rate of interest for an interest period of three (3)
months, as reported in The Wall Street Journal published on each
Interest Rate Change Date. Each change in the Variable Rate which
results from a change in the LIBOR Rate shall become effective,
without notice to the undersigned, on each Interest Rate Change Date;
provided, however, that if The Wall Street Journal is not published on
such date, the LIBOR Rate shall be determined by reference to The Wall
Street Journal last published immediately preceding such date. In the
event that at any time prior to maturity the rate of interest
specified in clause (ii) above (determined as of the dates when
changes become effective above) shall exceed the Maximum Rate, Bank
may, at its option and without notice to the undersigned, charge
interest at the Maximum Rate for the entire term of the loan and all
unpaid interest then accrued at said Maximum Rate shall be due and
payable ten (10) days following the date upon which Bank notifies the
undersigned of the amount of such accrued but unpaid interest. (The
three (3) month LIBOR Rate quoted in The Wall Street Journal published
on the Initial Pricing Date is 5.5625 percent ( __%) per annum.)
The privilege is reserved to prepay this Note in whole or in
part, prior to maturity, without premium or penalty.
Notwithstanding any other provisions herein, if any Change in Law
(as hereinafter defined) shall make it unlawful for the Bank to make
or maintain a LIBOR Rate loan as contemplated by this Note, the
principal outstanding hereunder shall, if required by law and if the
Bank so requests, be converted on the date required to make the loan
evidenced by this Note legal to a loan accruing interest at the lesser
of the Maximum Rate or the base commercial rate of interest ("Base
Rate") established from time to time by the Bank. Each change in the
Base Rate shall become effective, without notice to the undersigned,
on the same date that the Base Rate changes. The undersigned hereby
agrees promptly to pay the Bank, upon demand, any costs incurred by
the Bank in making any conversion in accordance with this paragraph,
including any interest or fees payable by the Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate loans.
The undersigned acknowledges that the Base Rate is one of several
interest rate indices employed by the Bank and that the Bank has made,
and may hereafter make, loans bearing interest at rates which are
higher or lower than the Base Rate.
The undersigned hereby indemnifies the Bank and holds the Bank
harmless from any loss or expense which the Bank may sustain or incur
as a consequence of (i) a default by the undersigned in payment of the
principal amount of or interest on the loan evidenced hereby,
including any such loss or expense arising from interest or fees
payable by the Bank to lenders of funds obtained by it in order to
make or maintain its LIBOR Rate loans, or (ii) a Change in Law that
results in the imposition on the Bank of reserve requirements in
connection with LIBOR Rate loans made by the Bank. The undersigned
will make any payments under this indemnity to Bank, upon demand. The
undersigned further agrees to enter into a modification of this Note,
at the request of the Bank, to bring this Note into compliance with
any Change in Law.
"Change in Law" shall mean the adoption of any law, rule,
regulation, policy, guideline or directive (whether or not having the
force of law) or any change therein or in the interpretation or
application thereof, in all cases by any Governmental Authority having
jurisdiction over the Bank, in each case after the date hereof.
21
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
regulatory functions of or pertaining to government.
2. The provisions hereof shall be binding upon the undersigned,
his/her heirs, executors, administrators, personal representatives, successors
and assigns, and shall inure to the benefit of the Bank, its successors and
assigns.
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INDIVIDUAL BORROWER
MONARCH PHARMACEUTICAL, INC.
By: /s/ Xxxx X. Xxxxxxx
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Title: CHAIRMAN & CEO
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BUSINESS ENTITY BORROWER
