AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT
Exhibit 10.1
Execution Copy
AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT
THIS AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT (this “Amendment”) is executed
and delivered as of this 1st day of March, 2006 among LASALLE BANK NATIONAL ASSOCIATION, as
administrative agent (the “Administrative Agent”), the financial institutions party hereto
(the “Lenders”), AKORN, INC., a Louisiana corporation (“Akorn”) and AKORN (NEW
JERSEY), INC., an Illinois corporation (“Akorn New Jersey”).
WITNESSETH :
A. The Administrative Agent, Akorn, Akorn New Jersey and the Lenders entered into a Credit
Agreement dated as of October 7, 2003 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”). Capitalized terms used but not defined herein
shall have the meanings attributed to them in the Credit Agreement.
B. Akorn intends to (i) enter into that certain Securities Purchase Agreement dated as of
March 1, 2006 (the “Purchase Agreement”, a copy of which is attached hereto as Exhibit
A) with the investors named therein pursuant to which Akorn will issue Capital Securities in
Akorn and (ii) issue the Capital Securities (including warrants (the “Warrants”), the form
of which is attached hereto as Exhibit B) as contemplated thereunder (the foregoing
referred to herein in as the “Transaction”).
C. The Companies have requested that the Administrative Agent and the Required Lenders consent
to the action to be taken by the Companies in connection with the Transaction with respect to the
Credit Agreement, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
hereby agree as follows:
1. Amendment. Upon the Effective Date (as defined below), the Credit Agreement shall
be amended as follows:
(a) EBITDA. The definition of “EBITDA” set forth in Section 1.1 of the Credit
Agreement is hereby amended by inserting the clause “plus, solely for determining
EBITDA for the Computation Periods ending December 31, 2005 and March 31, 2006, research and
development expenditures during such Computation Periods in an amount not to exceed
$3,000,000” immediately following the phrase “the Decatur Add Back and the Refinancing
Expense Add Back”.
(b) Interest Expense. The definition of “Interest Expense” set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:
“‘Interest Expense’ means for any period the consolidated interest
expense of the Companies and their Subsidiaries for such period (including
all imputed interest on Capital Leases); provided that for purposes
of
determining Interest Expense for the Computation Periods ending December 31,
2005 and March 31, 2006, Interest Expense shall be reduced by the amount of
cash interest paid in connection with the repayment and termination of the
NeoPharm Subordinated Debt on May 16, 2005 (such reduction not to exceed
$315,000).”
2. Waiver and Consent. Subject to the terms and conditions herein, the Required
Lenders hereby (a) consent to Akorn’s the issuance of the Capital Securities, including the
Warrants and the Capital Securities issuable upon exercise of the Warrants, in accordance with the
Purchase Agreement and (b) waive any Event of Default which, if not for the execution of this
Amendment, would arise under Sections 13.1.1, 13.1.5(a) or 13.1.5(b) of the Credit Agreement
resulting solely from (A) the failure or inability to reduce the Revolving Commitment Amount in
violation of Section 6.1.2 of the Credit Agreement and (B) the Company’s issuance of Capital
Securities, the Warrants and the Capital Securities issuable upon exercise of the Warrants in
violation of Sections 11.5(b) and 11.10 of the Credit Agreement; provided, that the
foregoing clauses (a) and (b) are expressly conditioned upon the satisfaction of the conditions to
effectiveness set forth in Section 4 hereof, including, without limitation, receipt by the
Administrative Agent of the Loan Payment Amount (if any) referenced in clause (b) of Section 4
hereof.
3. Representations and Warranties. To induce the Administrative Agent and the Lenders
to execute this Amendment, each Company jointly and severally represents and warrants to the
Administrative Agent and the Lenders as follows:
(a) Each Company is in good standing under the laws of its jurisdiction of formation
and in each jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for such jurisdictions where the failure to so qualify
would not have a Material Adverse Effect.
(b) Each Company is duly authorized to execute and deliver this Amendment and is duly
authorized to perform its obligations hereunder.
(c) The execution, delivery and performance by the Companies of this Amendment do not
and will not (i) require any consent or approval of any governmental agency or authority
(other than any consent or approval which has been obtained and is in full force and
effect), (ii) conflict with (A) any provision of law, (B) the charter, by-laws or other
organizational documents of any Company or (C) any agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon any Company or any of its
properties or (iii) require, or result in, the creation or imposition of any Lien on any
asset of any Company.
(d) This Amendment is the legal, valid and binding obligation of each Company,
enforceable against such Company in accordance with its terms, subject to bankruptcy,
insolvency and similar laws affecting enforceability of creditors’ rights generally and to
general principals of equity.
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(e) The representations and warranties in the Loan Documents (including but not limited
to Section 9 of the Credit Agreement) are true and correct in all material respects with the
same effect as though made on and as of the date of this Amendment (except to the extent
stated to relate to a specific earlier date, in which case such representations and
warranties were true and correct as of such earlier date).
(f) Except as specifically waived in this Amendment, no Event of Default or Unmatured
Event of Default has occurred and is continuing.
4. Conditions to Effectiveness. The effectiveness of this Amendment is expressly
conditioned upon delivering to the Administrative Agent all of the following in form and substance
acceptable to the Administrative Agent: (a) this Amendment executed by each Company, the
Administrative Agent and the Required Lenders; (b) receipt by the Administrative Agent in
accordance with Section 6.2.2(a)(ii) of the Credit Agreement of an irrevocable payment in an amount
sufficient to reduce the outstanding Revolving Loans to zero (such payment referred to as the
“Loan Payment Amount”); (c) an executed copy of the Purchase Agreement certified by the
secretary of Akorn as true, accurate and complete; and (d) a certificate of the Secretary or
Assistant Secretary of each Company evidencing that all corporate proceedings required to authorize
the execution and delivery of this Amendment and all other documents relating hereto on behalf of
each Company have been duly taken and setting forth the names, offices and specimen signatures of
the officers of each Company who are authorized to execute this Amendment and such other documents
on behalf of each Company. The date on which such events have occurred is the “Effective Date”.
5. Affirmation. Except as specifically provided in this Amendment, the execution,
delivery and effectiveness of this Amendment shall not operate as a waiver or forbearance of any
Unmatured Event of Default or Event of Default or any right, power or remedy of the Administrative
Agent or any Lender under the Credit Agreement or any of the other Loan Documents, or constitute a
consent, waiver or modification with respect to any provision of the Credit Agreement or any of the
other Loan Documents, and the Company hereby fully ratifies and affirms each Loan Document to which
it is a party. Reference in any of this Amendment, the Credit Agreement or any other Loan Document
to the Credit Agreement shall be a reference to the Credit Agreement as modified hereby and as
further amended, modified, restated, supplemented or extended from time to time. This Amendment
shall constitute a Loan Document for purposes of the Credit Agreement and the other Loan Documents.
In addition, each of the Companies hereby reaffirms and acknowledges that, notwithstanding
anything contained in the Purchase Agreement or any other document executed in connection with the
Transaction, each is prohibited from making any redemptions, purchases, re-purchases or any other
form of payment with respect to their Capital Securities except as specifically permitted by
Section 11.4 of the Credit Agreement. For the avoidance of doubt, the Companies hereby
acknowledges that any warrants for its Capital Securities, including the Warrants, constitute
Capital Securities under the Credit Agreement.
6. Warrants. The Companies hereby agree to deliver executed copies of the Warrants to
the Administrative Agent within 30 days of the Effective Date.
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7. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original, but all of which when taken together shall constitute one
instrument. Delivery of an executed counterpart of this Amendment by facsimile shall be effective
as delivery of an original counterpart.
8. Headings. The headings and captions of this Amendment are for the purposes of
reference only and shall not affect the construction of, or be taken into consideration in
interpreting, this Amendment.
9. Further Assurances. Each Company agrees to execute and deliver, or cause to be
executed and delivered, in form and substance satisfactory to the Administrative Agent and the
Lenders, such further documents, instruments, amendments and financing statements and to take such
further action, as may be necessary from time to time to perfect and maintain the liens and
security interests created by the Loan Documents.
10. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ILLINOIS CHOICE OF LAW DOCTRINE.
11. Acknowledgment. Each Company hereby waives, discharges and forever releases the
Administrative Agent and each of the Lenders, and each of said Person’s employees, officers,
directors, attorneys, stockholders and successors and assigns, from and of any and all claims,
causes of action, allegations or assertions that either Company has or may have had at any time
through (and including) the date of this Amendment, against any or all of the foregoing, regardless
of whether any such claims, causes of action, allegations or assertions are known to either Company
or whether any such claims, causes of action, allegations or assertions arose as a result of the
Administrative Agent’s or any Lender’s actions or omissions in connection with the Credit
Agreement, including any amendments or modifications thereto, or otherwise.
[signature pages follow]
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the day and year
first above written.
| AKORN, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx
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| Title: | CFO
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| AKORN (NEW JERSEY), INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx
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| Title: | CFO
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| LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent and Lender | ||||||
| By: | /s/ Xxxxxxx X. X’Xxxxx | |||||
| Title: | First Vice President | |||||
