Exhibit 10.5
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the "AGREEMENT")
is dated as of March 13, 2007 by and among PENWEST PHARMACEUTICALS CO., a
Washington corporation, and any additional Borrower that may hereafter be added
to this Agreement (each individually as a "BORROWER" and collectively as
"BORROWERS"), XXXXXXX XXXXX CAPITAL, A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC., individually as a Lender, and as Administrative Agent,
and the financial institutions or other entities from time to time parties
hereto, each as a Lender.
RECITALS
Borrowers have requested that Lenders make available to Borrowers the financing
facilities as described herein. Lenders are willing to extend such credit to
Borrowers under the terms and conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrowers, Lenders and Administrative Agent
agree as follows:
ARTICLE 1 - DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
The following terms have the following meanings:
"ACCOUNT DEBTOR" means "account debtor", as defined in Article 9 of the
UCC, and any other obligor in respect of an Account.
"ACCOUNTS" means collectively (a) any right to payment of a monetary
obligation, whether or not earned by performance, (b) without duplication, any
"account" (as defined in the UCC), any accounts receivable (whether in the form
of payments for services rendered or goods sold, rents, license fees or
otherwise), any "health-care-insurance receivables" (as defined in the UCC), any
"payment intangibles" (as defined in the UCC) and all other rights to payment
and/or reimbursement of every kind and description, whether or not earned by
performance, and (c) all rights of enforcement and collection relating to the
foregoing, all books and records evidencing or related to the foregoing.
"ADMINISTRATIVE AGENT" means Xxxxxxx Xxxxx, in its capacity as
administrative agent for the Lenders hereunder, as such capacity is established
in, and subject to the provisions of, Article 11, and the successors of Xxxxxxx
Xxxxx in such capacity.
"AFFILIATE" means with respect to any Person (a) any Person that directly
or indirectly controls such Person, and (b) any Person which is controlled by or
is under common control with such controlling Person. As used in this
definition, the term "control" of a Person means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of any class of
voting securities of such Person or to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"ANTI-TERRORISM LAWS" means any Laws relating to terrorism or money
laundering, including Executive Order No. 13224 (effective September 24, 2001),
the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act,
and the Laws administered by OFAC.
"APPROVED FUND" means any (i) investment company, fund, trust,
securitization vehicle or conduit that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business or (ii) any Person
(other than a natural person) which temporarily warehouses loans for any Lender
or any entity described in the preceding clause (i) and that, with respect to
each of the preceding clauses (i) and (ii), is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) a Person (other than a natural
person) or an Affiliate of a Person (other than a natural person) that
administers or manages a Lender.
"ASSET DISPOSITION" means any sale, lease, license, transfer, assignment or
other consensual disposition by any Credit Party of any asset.
"ASSIGNMENT AGREEMENT" means an agreement in form and substance
satisfactory to Administrative Agent.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as the same may be amended, modified or supplemented from time to
time, and any successor statute thereto.
"BASE RATE" means the LIBOR Rate.
"BASE RATE MARGIN" means five percent (5%) per annum with respect to the
Term Loan and other Obligations.
"BLOCKED PERSON" means any Person: (a) listed in the annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224, (b) owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law, (d) that commits,
threatens or conspires to commit or supports "terrorism" as defined in Executive
Order No. 13224, or (e) that is named a "specially designated national" or
"blocked person" on the most current list published by OFAC or other similar
list or is named as a "listed person" or "listed entity" on other lists made
under any Anti-Terrorism Law.
"BORROWER" and "BORROWERS" mean the entity(ies) described in the first
paragraph of this Agreement and each of their successors and permitted assigns.
"BORROWER REPRESENTATIVE" means Penwest Pharmaceuticals Co., in its
capacity as Borrower Representative pursuant to the provisions of Section 2.9,
or any successor Borrower Representative selected by Borrowers and approved by
Administrative Agent.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which either the New York Stock Exchange is closed, or on which commercial banks
in Chicago and New York City are authorized by law to close.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.A. Section 9601 et seq., as the same may be
amended from time to time.
"CHANGE IN CONTROL" means any of the following events: (a) any Person or
two or more Persons (other than Persons holding, as of the date hereof, ten
percent (10%) or more of the outstanding shares of the Principal Borrower)
acting in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will result in
its or their acquisition of or control over, voting stock of Principal Borrower
(or other securities convertible into such voting stock) representing 35% or
more of the combined voting power of all voting stock of Principal Borrower or
(b) Principal Borrower ceases to own, directly or indirectly, all of the
outstanding capital stock of any other Borrower. As used herein, "beneficial
ownership" shall have the meaning provided in Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
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"COLLATERAL" means all property, now existing or hereafter acquired, that
is mortgaged or pledged to, or purported to be subjected to a Lien in favor of,
Administrative Agent, for the benefit of Administrative Agent and Lenders,
pursuant to this Agreement and the Security Documents, including, without
limitation, all of the property described in Schedule 9.1 hereto.
"COMMITMENT ANNEX" means Annex A to this Agreement.
"COMMITMENT EXPIRY DATE" means September 15, 2008.
"COMMODITY ACCOUNT" means a "commodity account" as defined in Article 9 of
the UCC.
"COMPLIANCE CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of Borrower Representative, appropriately completed and
substantially in the form of Exhibit B hereto.
"CONTINGENT OBLIGATION" means, with respect to any Person, any direct or
indirect liability of such Person: (a) with respect to any Debt of another
Person (a "THIRD PARTY OBLIGATION") if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such Third Party Obligation that such Third Party Obligation will be
paid or discharged, or that any agreement relating thereto will be complied
with, or that any holder of such Third Party Obligation will be protected, in
whole or in part, against loss with respect thereto; (b) with respect to any
undrawn portion of any letter of credit issued for the account of such Person or
as to which such Person is otherwise liable for the reimbursement of any
drawing; (c) under any Swap Contract, to the extent not yet due and payable; (d)
to make take-or-pay or similar payments if required regardless of nonperformance
by any other party or parties to an agreement; or (e) for any obligations of
another Person pursuant to any Guarantee or pursuant to any agreement to
purchase, repurchase or otherwise acquire any obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to preserve the solvency, financial condition or level of
income of another Person. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so Guaranteed or otherwise supported or, if not
a fixed and determinable amount, the maximum amount so Guaranteed or otherwise
supported.
"CONTROLLED GROUP" means all members of any group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"CREDIT EXPOSURE" means any period of time during which the Term Loan
Commitment is outstanding or any Obligation remains unpaid or outstanding;
provided, however, that no Credit Exposure shall be deemed to exist solely due
to the existence of contingent indemnification liability, absent the assertion
of a claim, or the known existence of a claim reasonably likely to be asserted,
with respect thereto.
"CREDIT PARTY" means any Guarantor under a Guarantee of the Obligations or
any part thereof, any Borrower and any other Person (other than Administrative
Agent, a Lender or a participant of a Lender), whether now existing or hereafter
acquired or formed, that becomes obligated as a borrower, guarantor, surety,
indemnitor, pledgor, assignor or other obligor under any Financing Document; and
"CREDIT PARTIES" means all such Persons, collectively.
"DEBT" of a Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising and paid on a timely basis and
in the Ordinary Course of Business, (d) all capital leases of such Person, (e)
all non-contingent obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit, banker's acceptance
or similar instrument, (f) all equity securities of such Person subject to
repurchase or redemption otherwise than at the sole option of such Person, (g)
all obligations secured by a Lien on any asset of such Person, whether or not
such obligation is otherwise an obligation of such Person, (h) all Debt of
others guaranteed by such Person, (i) all Debt of others Guaranteed by such
Person, and (j) off balance sheet liabilities of such Person. Without
duplication of any of the foregoing, Debt of Borrowers shall include any and all
Loans.
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"DEFAULT" means any condition or event which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"DEFAULTED LENDER" means, so long as such failure shall remain in existence
and uncured, any Lender which shall have failed to make any Loan or other credit
accommodation, disbursement, settlement or reimbursement required pursuant to
the terms of any Financing Document.
"DEPOSIT ACCOUNT" means a "deposit account" (as defined in Article 9 of the
UCC), an investment account, or other account in which funds are held or
invested for credit to or for the benefit of any Borrower.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means an agreement, in form and
substance reasonably satisfactory to Administrative Agent, among Administrative
Agent, any applicable Borrower and each bank or financial institution in which
such Borrower maintains a Deposit Account, which agreement provides that (a)
such bank or financial institution acknowledges the security interest of
Administrative Agent in such Deposit Account, (b) such bank or financial
institution shall comply with instructions originated by Administrative Agent
directing disposition of the funds in such Deposit Account without further
consent by the applicable Borrower, and (c) such bank or financial institution
shall agree that it shall have no Lien on, or right of setoff or recoupment
against, such Deposit Account or the contents thereof, other than in respect of
usual and customary service fees and of returned items for which Administrative
Agent has been given value, in each such case expressly consented to by
Administrative Agent, and containing such other or different terms and
conditions as Administrative Agent may require.
"DOLLARS" or "$" means the lawful currency of the United States of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary that is a "U.S. person" under
and as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) an Affiliate of a Lender,
(iii) an Approved Fund, and (iv) any other Person (other than a natural person)
approved by (a) Administrative Agent, and (b) Borrower (unless an Event of
Default has occurred and is continuing) (such approval of Borrower not to be
unreasonably withheld or delayed, and shall be deemed provided unless expressly
withheld by Borrower within five (5) Business Days of receipt of request
therefor); provided that notwithstanding the foregoing, (x) "Eligible Assignee"
shall not include any Borrower or any Affiliates or Subsidiaries of any Borrower
and (y) no proposed assignee intending to assume any unfunded portion of the
Term Loan Commitment shall be an Eligible Assignee unless such proposed assignee
either already holds a portion of such Term Loan Commitment, or has been
approved as an Eligible Assignee by Administrative Agent.
"ELIGIBLE SWAP COUNTERPARTY" means Administrative Agent, any Affiliate of
Administrative Agent, any Lender and/or any Affiliate of any Lender, that (a) at
any time it occupies such role or capacity enters into a Permitted Swap Contract
with any Borrower or any Guarantor who has pledged Collateral in respect of the
Obligations or such Guarantee of the Obligations, and (b) in the case of a
Lender or an Affiliate of a Lender other than Administrative Agent, is expressly
identified by Administrative Agent as maintaining a reporting system acceptable
to Administrative Agent with respect to Swap Contract exposure and agrees with
Administrative Agent to provide regular reporting to Administrative Agent, in
form and content reasonably satisfactory to Administrative Agent, with respect
to such exposure.
"ENVIRONMENTAL LAWS" means any applicable present and future federal, state
and local laws, statutes, ordinances, rules, regulations, standards, policies
and other governmental directives or requirements, as well as common law,
pertaining to the environment, natural resources, pollution, health (including
any environmental clean up statutes and all regulations adopted by any local,
state, federal or other Governmental Authority, and any statute, ordinance,
code, order, decree, law rule or regulation all of which pertain to or impose
liability or standards of conduct concerning medical waste or medical products,
equipment or supplies), safety or clean-up that apply to any Borrower and relate
to Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
Section 5101 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
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seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section
136 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Section 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42
U.S.C. Section 4851 et seq.), any analogous state or local laws, any amendments
thereto, and the regulations promulgated pursuant to said laws, together with
all amendments from time to time to any of the foregoing and judicial
interpretations thereof.
"ENVIRONMENTAL LIENS" means all Liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of any
Borrower or any other Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended, modified or supplemented from time to time, and any
successor statute thereto, and any and all rules or regulations promulgated from
time to time thereunder.
"ERISA PLAN" means any "employee benefit plan", as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), which any Borrower
maintains, sponsors or contributes to, or, in the case of an employee benefit
plan which is subject to Section 412 of the Code or Title IV of ERISA, to which
any Borrower or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five (5)
years, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.
"EVENT OF DEFAULT" has the meaning set forth in Section 10.1.
"EXCLUDED PROPERTY" has the meaning set forth in Schedule 9.1.
"FINANCING DOCUMENTS" means this Agreement, any Notes, the Security
Documents, any fee letter among Xxxxxxx Xxxxx and any of the Borrowers relating
to the transactions contemplated hereby, any subordination or intercreditor
agreement pursuant to which any Debt and/or any Liens securing such Debt is
subordinated to all or any portion of the Obligations and all other documents,
instruments and agreements related to the Obligations and heretofore executed,
executed concurrently herewith or executed at any time and from time to time
hereafter, as any or all of the same may be amended, supplemented, restated or
otherwise modified from time to time.
"FOREIGN LENDER" has the meaning set forth in Section 2.8(c).
"FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the United States
accounting profession), which are applicable to the circumstances as of the date
of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, department or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other Person owned or controlled
(through stock or capital ownership or otherwise) by any of the foregoing,
whether domestic or foreign.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation, or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in part)
(in each case under clause (a) or (b) whether arising by virtue of partnership
arrangements, by agreement to keep-well or to make capital contributions or
loans, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise), provided, however, that
the term Guarantee shall not include endorsements for collection or deposit in
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the Ordinary Course of Business. The term "GUARANTEE" used as a verb has a
corresponding meaning.
"GUARANTOR" means any Credit Party that has executed or delivered, or shall
in the future execute or deliver, any Guarantee of any portion of the
Obligations.
"HAZARDOUS MATERIALS" means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials; underground or above-ground storage tanks, whether empty or
containing any substance; toxic mold, any substance that requires special
handling; and any other material or substance now or in the future defined as a
"hazardous substance," "hazardous material," "hazardous waste," "toxic
substance," "toxic pollutant," "contaminant," "pollutant" or other words of
similar import within the meaning of any Environmental Law, including: (a) any
"hazardous substance" defined as such in (or for purposes of) CERCLA, or any
so-called "superfund" or "superlien" Law, including the judicial interpretation
thereof; (b) any "pollutant or contaminant" as defined in 42 U.S.C.A. Section
9601(33); (c) any material now defined as "hazardous waste" pursuant to 40
C.F.R. Part 260; (d) any petroleum or petroleum by-products, including crude oil
or any fraction thereof; (e) natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel; (f) any "hazardous chemical" as defined
pursuant to 29 C.F.R. Part 1910; (g) any toxic or harmful substances, wastes,
materials, pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls ("PCB'S"), flammable explosives, radioactive
materials, infectious substances, materials containing lead-based paint or raw
materials which include hazardous constituents); and (h) any other toxic
substance or contaminant that is subject to any Environmental Laws or other past
or present requirement of any Governmental Authority.
"HAZARDOUS MATERIALS CONTAMINATION" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"INDEMNITEES" has the meaning set forth in Section 12.17.
"INTELLECTUAL PROPERTY" means, with respect to any Person, all patents,
patent applications and like protections, including improvements divisions,
continuation, renewals, reissues, extensions and continuations in part of the
same, trademarks, trade names, trade styles, trade dress, service marks, logos
and other business identifiers and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of such Person connected with and symbolized thereby, copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative works, whether published or unpublished,
technology, know-how and processes, operating manuals, trade secrets, computer
hardware and software, rights to unpatented inventions and all applications and
licenses therefor, used in or necessary for the conduct of business by such
Person and all claims for damages by way of any past, present or future
infringement of any of the foregoing.
"INTEREST-ONLY PERIOD" means the period commencing on the funding date of
the applicable Tranche and ending on the date that is nine months from such
funding date; provided, that with respect to the Tranche B Advance, the Interest
Only Period will end no later than September 30, 2008.
"INVESTMENT" means any investment in any Person, whether by means of
acquiring (whether for cash, property, services, securities or otherwise) or
holding securities, capital contributions, loans, time deposits, advances,
Guarantees or otherwise. The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect thereto.
"IP PROCEEDS" has the meaning set forth in Schedule 9.1.
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"JOINT VENTURE CONTRIBUTION" means any payment made in cash or in capital
stock of the Principal Borrower, in the form of up front fees, milestone
payments or investments to a third party or joint venture the purpose of which
is consistent with the Principal Borrower's current business strategy of
developing and commercializing pharmaceutical technologies and products. "Joint
Venture Contribution" shall expressly include payments made to a third party or
joint venture as funding for research and development costs of such third party
or joint venture.
"LAWS" means any and all xxxxxxx, xxxxx, xxxxxxxxxx, xxxxxxxxxxx, local and
foreign statutes, laws, judicial decisions, regulations, guidances, guidelines,
ordinances, rules, judgments, orders, decrees, codes, plans, injunctions,
permits, concessions, grants, franchises, governmental agreements and
governmental restrictions, whether now or hereafter in effect, which are
applicable to any Credit Party in any particular circumstance. "LAWS" includes,
without limitation, Healthcare Laws and Environmental Laws.
"LENDER" means each of (a) Xxxxxxx Xxxxx, in its capacity as a lender
hereunder, (b) each other Person party hereto in its capacity as a lender
hereunder, (c) each other Person that becomes a party hereto as Lender pursuant
to Section 12.6, and (d) the respective successors of all of the foregoing, and
"Lenders" means all of the foregoing. In addition to the foregoing, for the
purpose of identifying the Persons entitled to share in the Collateral and the
proceeds thereof under, and in accordance with the provisions of, this Agreement
and the Security Documents, the term "LENDER" shall include Eligible Swap
Counterparties.
"LIBOR RATE" means, with respect to each respective individual advance made
under the Term Loan, a fixed rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) equal to (a) the rate of interest which is identified
and normally published by Bloomberg Professional Service Page BBAM 1 as the
offered rate for loans in United States dollars for the period of one (1) month
under the caption British Bankers Association LIBOR Rates as of 11:00 a.m.
(London time) on the second full Business Day prior to the date such advance was
made; divided by (b) the sum of one minus the daily average during the preceding
month of the aggregate maximum reserve requirement (expressed as a decimal) then
imposed under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor thereto) for "Eurocurrency Liabilities" (as defined
therein). If Bloomberg Professional Service (or another nationally-recognized
rate reporting source acceptable to Administrative Agent) no longer reports the
LIBOR or Administrative Agent determines in good faith that the rate so reported
no longer accurately reflects the rate available to Administrative Agent in the
London Interbank Market or if such index no longer exists or if Page BBAM 1 no
longer exists or accurately reflects the rate available to Administrative Agent
in the London Interbank Market, Administrative Agent may select a comparable
replacement index or replacement page, as the case may be.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement and the
other Financing Documents, any Borrower or any Subsidiary shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"LITIGATION" means any action, suit or proceeding before any court,
mediator, arbitrator or Governmental Authority.
"LOAN ACCOUNT" has the meaning set forth in Section 2.6(b).
"LOAN(S)" means the Term Loan and each and every advance under the Term
Loan, or any combination of the foregoing, as the context may require. All
references herein to the "making" of a Loan or words of similar import shall
mean, with respect to the Term Loan, the making of any advance in respect of a
Term Loan.
"MARKET CAP CONDITION" means that the Principal Borrower's Market
Capitalization is greater than or equal to the greater of (A) seventy-five
percent (75%) of the Principal Borrower's Market Capitalization on the Closing
Date and (B) Two Hundred Fifty Million Dollars ($250,000,000),
"MARKET CAPITALIZATION" means an amount determined by multiplying the
number of shares of the
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Principal Borrower's common stock outstanding on the applicable date by the then
current market price of the Principal Borrower's common stock on the NASDAQ
Global National Market as reported on the Internet website "xxx.xxxxxx.xxx" or
if such website is unavailable, as reported in The Wall Street Journal as of
such date.
"MATERIAL ADVERSE EFFECT" means with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, (a) a material
adverse change in, or a material adverse effect upon, any of (i) the financial
condition, operations, business, or properties of any of the Credit Parties,
(ii) the material rights and remedies of Administrative Agent or Lenders under
any Financing Document, or the ability of any Credit Party to perform any of its
material obligations under any Financing Document to which it is a party, (iii)
the legality, validity or enforceability of any Financing Document, (iv) the
existence, perfection or priority of any security interest granted in any
Financing Document, or (v) the value of any material Collateral.
"MATERIAL CONTRACTS" means (a) the Amended and Restated Strategic Alliance
Agreement, dated as of April 2, 2002, by and between Principal Borrower and Endo
Pharmaceuticals Inc., a Delaware corporation ("ENDO"), as amended by that
certain Amendment Agreement, dated January 7, 2007, by and between Principal
Borrower and Endo (as the same may from time to time be further amended,
modified, supplemented or restated), or (b) any other agreements or instruments
to which any Credit Party is a party, and the breach, nonperformance or
cancellation of which, or the failure of which to renew, could reasonably be
expected to have a Material Adverse Effect.
"MAXIMUM LAWFUL RATE" has the meaning set forth in Section 2.7.
"XXXXXXX XXXXX" means Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx
Business Financial Services Inc., and its successors.
"MULTIEMPLOYER PLAN" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA to which any Borrower or any other member of the
Controlled Group (or any Person who in the last five years was a member of the
Controlled Group) is making or accruing an obligation to make contributions or
has within the preceding five plan years (as determined on the applicable date
of determination) made contributions.
"NOTES" shall have the meaning set forth in Section 2.3.
"NOTICE OF BORROWING" means a notice of a Responsible Officer of Borrower
Representative, appropriately completed and substantially in the form of Exhibit
D hereto.
"OBLIGATIONS" means all obligations, liabilities and indebtedness (monetary
(including post-petition interest, whether or not allowed) or otherwise) of each
Credit Party under this Agreement or any other Financing Document, in each case
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due. In addition to,
but without duplication of, the foregoing, the Obligations shall include,
without limitation, all obligations, liabilities and indebtedness arising from
or in connection with all Permitted Swap Contracts entered into with any
Eligible Swap Counterparty.
"OFAC" means the U.S. Department of Treasury Office of Foreign Assets
Control.
"OFAC LISTS" means, collectively, the Specially Designated Nationals and
Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224,
66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.
"OPANA CONDITION" shall mean the issuance of one or more valid claims
relating to the product "Opana ER", or to an indication or use of the product
"Opana ER", in either case in respect of any Opana Patent Application (or any
continuing U.S. patent application that claims priority to any Opana Patent
Application), and the subsequent listing of one or more of such valid claims in
the Orange Book.
Credit and Security Agreement
8
"OPANA PATENT APPLICATIONS" means, collectively, those U.S. Patent
Applications identified on the Patent Side Letter, dated as of the date hereof,
between the Principal Borrower and the Administrative Agent.
"ORANGE BOOK" means the Food and Drug Administration's Approved Drug
Products with Therapeutic Equivalence Evaluations, commonly called the "Orange
Book".
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving any Credit Party, the ordinary course of business of such Credit
Party, as conducted by such Credit Party in accordance with past practices.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability or members agreement).
"PAYMENT ACCOUNT" means the account specified on the signature pages hereof
into which all payments by or on behalf of each Borrower to Administrative Agent
under the Financing Documents shall be made, or such other account as
Administrative Agent shall from time to time specify by written notice to
Borrower Representative.
"PAYMENT NOTIFICATION" means a written notification substantially in the
form of Exhibit E hereto.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means any ERISA Plan that is subject to Section 412 of the
Code or Title IV of ERISA.
"PERMITS" means all governmental licenses, authorizations, provider
numbers, supplier numbers, registrations, permits, drug or device authorizations
and approvals, certificates, franchises, qualifications, accreditations,
consents and approvals required under all applicable Laws and required in order
to carry on its business as now conducted.
"PERMITTED AFFILIATE" means with respect to any Person (a) any Person that
directly or indirectly controls such Person, and (b) any Person which is
controlled by or is under common control with such controlling Person. As used
in this definition, the term "control" of a Person means the possession,
directly or indirectly, of the power to vote eighty percent (80%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"PERMITTED ASSET DISPOSITIONS" means the following Asset Dispositions: (i)
dispositions of Inventory in the Ordinary Course of Business and not pursuant to
any bulk sale, (ii) dispositions of furniture, fixtures and equipment that the
applicable Borrower determines in good faith is no longer used or useful in the
business of such Borrower and its Subsidiaries, (iii) so long as no Event of
Default exists or would result from such Asset Disposition, the granting of non
exclusive licenses (or exclusive licenses limited to a particular geographic
range or field of use), (iv) any sale or disposition of the Procardia Royalty
Payments; and (v) dispositions approved by Administrative Agent and, if the
disposition pertains to real property Collateral, by Required Lenders.
"PERMITTED CONTEST" means, with respect to any tax obligation or other
obligation allegedly or potentially owing from any Borrower to any governmental
tax authority or other third party, a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made on the books and
records and financial statements of the applicable Borrower(s); provided,
however, that (a) Borrowers' title to, and its right to use, the Collateral is
not materially and adversely affected thereby and Administrative Agent's Lien
and priority on the Collateral are not materially and adversely affected,
altered or impaired thereby; (b) the Collateral or any part thereof or any
interest therein shall not be in any danger of being sold, forfeited or lost
Credit and Security Agreement
9
by reason of such contest by Borrowers; (c) to the extent that the obligation
being contested is equal to or exceeds $250,000, Borrowers have given
Administrative Agent notice of the intent to so contest the obligation and the
commencement of such contest and upon request by Administrative Agent, from time
to time, notice of the status of such contest by Borrowers and/or confirmation
of the continuing satisfaction of this definition; and (d) upon a final
determination of such contest, Borrowers shall promptly comply with the
requirements thereof.
"PERMITTED CONTINGENT OBLIGATIONS" means: (a) Contingent Obligations
arising in respect of the Debt under the Financing Documents; (b) Contingent
Obligations resulting from endorsements for collection or deposit in the
Ordinary Course of Business; (c) Contingent Obligations arising under or with
respect to any Permitted Contest or Permitted Liens; (d) Contingent Obligations
outstanding on the date of this Agreement and set forth on Schedule 5.1; (e)
Contingent Obligations incurred in the Ordinary Course of Business with respect
to surety and appeal bonds, performance bonds and other similar obligations not
to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate at any time
outstanding and with respect to bonds provided to utilities with respect to
utility services provided to Borrowers in the Ordinary Course of Business; (f)
Contingent Obligations arising under indemnity agreements with title insurers to
cause such title insurers to issue to Administrative Agent mortgagee title
insurance policies with respect to any real estate Collateral (if any); (g)
Contingent Obligations arising with respect to customary indemnification
obligations in favor of purchasers in connection with dispositions permitted
under Section 5.6; (h) Contingent Obligations arising in the Ordinary Course of
Business of any Borrower that do not relate to Indebtedness of any Person; (i)
Contingent Obligations relating to Permitted Indebtedness of any other Borrower
or a Guarantor that has pledged its assets in compliance with Section 4.11(c) as
security for the Obligations; (j) so long as there exists no Event of Default
both immediately before and immediately after giving effect to any such
transaction, Contingent Obligations existing or arising under any Permitted Swap
Contract; and (k) other Contingent Obligations not permitted by clauses (a)
through (i) above, not to exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate at any time outstanding.
"PERMITTED INDEBTEDNESS" means: (a) Borrower's Debt to Administrative Agent
and each Lender under this Agreement and the other Financing Documents; (b) Debt
incurred as a result of endorsing negotiable instruments received in the
Ordinary Course of Business; (c) purchase money Debt and/or capital leases,
refinancings of such obligations and other equipment facilities, in an aggregate
outstanding principal amount not to exceed Three Million Dollars ($3,000,000) at
any time (whether in the form of a loan or a lease) used solely to acquire,
refinance or reimburse a Borrower for the acquisition of equipment used in the
Ordinary Course of Business and secured only by equipment and related
attachments, and proceeds thereof; (d) Debt existing on the date of this
Agreement and described on Schedule 5.1 (but not including any refinancings,
extensions, increases or amendments to such Debt other than extensions of the
maturity thereof without any other change in terms); (e) Debt, if any, arising
under Swap Contracts; (f) trade accounts payable arising in the Ordinary Course
of Business; (g) Permitted Contingent Obligations; (h) repurchase obligations
permitted under Section 5.3; (i) Debt owed by a Borrower or a Guarantor to
another Borrower or a Guarantor that has pledged its assets in compliance with
Section 4.11(c) as security for the Obligations; and (j) other Debt not to
exceed at any time $1,000,000 in an aggregate outstanding principal amount
"PERMITTED INVESTMENTS" means: (a) Investments shown on Schedule 5.7 and
existing on the Closing Date; (b) (i) cash equivalents, and (ii) any similar
short term Investments permitted by Borrowers' investment policy as in effect on
the Closing Date, as amended from time to time, provided that any such amendment
thereto has been approved by the applicable Borrower's Board of Directors; (c)
Investments consisting of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the Ordinary Course of Business; (d)
Investments consisting of (i) travel advances and employee relocation loans and
other employee loans and advances in the Ordinary Course of Business, and (ii)
loans to employees, officers or directors relating to the purchase of equity
securities of Borrowers or their Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrowers' Board of Directors (or other
governing body), but the aggregate of all such loans outstanding may not exceed
Five Hundred Thousand Dollars ($500,000) at any time; (e) Investments (including
debt obligations) received in connection with the bankruptcy or reorganization
of customers or suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the Ordinary Course of
Business; (f) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the Ordinary Course of Business; provided that this subpart (f)
shall not apply to Investments of Borrowers in any Subsidiary; (g) Investments
consisting of Deposit Accounts or Securities Accounts in which (except with
respect to any Deposit Account that is a payroll account)
Credit and Security Agreement
10
Administrative Agent has received a Deposit Account Control Agreement or
Securities Account Control Agreement; (h) Investments consisting of the
acquisition of all or substantially all of the assets or a business line or
capital stock of another Person provided that, after giving effect to such
acquisition, no Event of Default has occurred and is continuing or would exist
after giving effect to such acquisition, and such acquisition would not result
in a decrease of more than twenty percent (20%) of the Tangible Net Worth of the
Borrowers; (i) Investments by any Borrower in any other Borrower made in
compliance with Section 4.11(c); (j) Investments by a Borrower into another
Borrower; (k) Permitted Contingent Obligations; and (l) other Investments in an
amount not exceeding One Million Dollars ($1,000,000) in the aggregate, and (m)
Investments in Trust Assets in connection with the deferred compensation and
supplemental executive retirement plan of the Principal Borrower.
"PERMITTED JOINT VENTURE CONTRIBUTION" means a Joint Venture Contribution
to any Person that is not an Affiliate of any Borrower (or that is a joint
venture with a strategic partner that is not an Affiliate of any Borrower) that
constitutes any of the following:
(a) a Joint Venture Contribution made in cash (other than as described in
clause (c) below) at any time during which (i) no Default or Event of Default
then exists, and (ii) either:
(x) immediately after giving effect to the making of such Joint
Venture Contribution, the aggregate amount of the Borrowers' cash and cash
equivalents is equal to or greater than an amount equal to three (3) times
the then principal amount of the Loans then outstanding; or
(y) the aggregate amount of such Joint Venture Contribution and all
other Joint Venture Contributions made during any fiscal year of Borrowers
under this clause (b) is less than or equal to $4,000,000; or
(b) a Joint Venture Contribution made in capital stock of the Principal
Borrower which does not, alone or with any other transaction, result in a Change
of Control; or
(c) a Joint Venture Contribution to fund research and development costs of
such third party or joint venture.
"PERMITTED LIENS" means: (a) deposits or pledges of cash to secure
obligations under workmen's compensation, social security or similar laws, or
under unemployment insurance (but excluding Liens arising under ERISA which
would result in an Event of Default) pertaining to a Borrower's employees, if
any; (b) deposits or pledges of cash to secure bids, tenders, contracts (other
than contracts for the payment of money or the deferred purchase price of
property or services), leases, statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the Ordinary Course of Business;
(c) carrier's, warehousemen's, mechanic's, workmen's, materialmen's or other
like Liens on Collateral, arising in the Ordinary Course of Business with
respect to obligations which are not due, or which are being contested pursuant
to a Permitted Contest; (d) Liens on Collateral, other than Accounts, for taxes
or other governmental charges not at the time delinquent or thereafter payable
without penalty or the subject of a Permitted Contest; (e) attachments, appeal
bonds, judgments and other similar Liens on Collateral, for sums not exceeding
Five Hundred Thousand Dollars ($500,000) in the aggregate arising in connection
with court proceedings; provided, however, that the execution or other
enforcement of such Liens is effectively stayed and the claims secured thereby
are the subject of a Permitted Contest; (f) with respect to real estate,
easements, rights of way, restrictions, minor defects or irregularities of
title, none of which, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Security
Documents, materially affect the value or marketability of the Collateral,
impair the use or operation of the Collateral for the use currently being made
thereof or impair Borrowers' ability to pay the Obligations in a timely manner
or impair the use of the Collateral or the ordinary conduct of the business of
any Borrower or any Subsidiary and which, in the case of any real estate which
is part of the Collateral, are set forth as exceptions to or subordinate matters
in the title insurance policy accepted by Administrative Agent insuring the lien
of the Security Documents; (g) Liens and encumbrances in favor of Administrative
Agent under the Financing Documents; (h) Liens on Collateral existing on the
date hereof and set forth on Schedule 5.2; (i) Liens on Procardia Royalty
Payments; and (j) any Lien on any equipment securing Debt permitted under
subpart (c) of the definition of Permitted Indebtedness.
Credit and Security Agreement
11
"PERMITTED MERGERS" means a merger, consolidation or amalgamation of (a)
Principal Borrower with or into any other Person who is not a Blocked Person
provided that (i) the Principal Borrower is the surviving entity, (ii) the
holders of the equity interests in the Principal Borrower immediately prior to
such consolidation or merger or amalgamation represent more than fifty percent
(50%) of the aggregate outstanding equity interests of the Principal Borrower
immediately following such consolidation or merger or amalgamation, and (iii)
such consolidation or merger or amalgamation would not result in a decrease of
more than twenty percent (20%) of the Tangible Net Worth of the Principal
Borrower, and (b) any Borrower (other than Principal Borrower) with or into any
other Borrower.
"PERMITTED MODIFICATIONS" means (a) such amendments or other modifications
to a Borrower's Organizational Documents as are required under this Agreement or
by applicable Law and fully disclosed to Administrative Agent within thirty (30)
days after such amendments or modifications have become effective, (b) such
amendments or modifications to a Borrower's Organizational Documents (other than
those involving a change in the name of a Borrower or involving a reorganization
of the Borrower under the laws of a different jurisdiction) that would not
adversely affect the rights and interests of the Administrative Agent or Lenders
and fully disclosed to Administrative Agent within thirty (30) days after such
amendments or modifications have become effective, and (c) such modifications to
the name of a Borrower or involving a reorganization of the Borrower under the
laws of a different jurisdiction so long as the provisions of Section 9.2(d) are
fully complied with prior to the effectiveness of such amendments or
modifications.
"PERMITTED SWAP CONTRACT" means any Swap Contract by Borrower to provide
protection against fluctuations in interest or currency exchange rates in the
Ordinary Course of Business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person and not for purposes of speculation but
only to the extent Administrative Agent provides its prior written consent to
the entry into such Swap Agreement.
"PERSON" means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any Governmental Authority.
"PRINCIPAL BORROWER" means Penwest Pharmaceuticals Co., a Washington
corporation.
"PRINCIPAL REPAYMENT PERIOD" means, with respect to a Tranche, the period
commencing on the first day of the month following the end the Interest-Only
Period and ending on the Termination Date of such Tranche.
"PRO RATA SHARE" means (a) with respect to a Lender's obligation to make
advances in respect of a Term Loan and such Lender's right to receive payments
of principal and interest with respect to the Term Loans, the Term Loan
Commitment Percentage of such Lender, and (b) for all other purposes with
respect to any Lender, the percentage obtained by dividing (i) the sum of the
Term Loan Commitment Amount of such Lender (or, in the event the Term Loan
Commitment shall have been terminated, the then outstanding principal advances
of such Lender under the Term Loan), by (ii) the sum of the Term Loan Commitment
Amount (or, in the event the Term Loan Commitment shall have been terminated,
the then outstanding principal advances of such Lenders under the Term Loan) of
all Lenders.
"PROCARDIA ROYALTY PAYMENTS" means (x) any and all right, title and
interest of Borrower in that certain Product Development and Supply Agreement
dated August 17, 1994 between the Principal Borrower (formerly known as Penwest
Ltd.) and Mylan Pharmaceuticals, Inc., (ii) that certain Sales and Distribution
Agreement, dated January 3, 1997, between such parties, and (iii) that certain
Letter of Agreement, dated February 25, 2000, between such two parties, as each
of the foregoing is amended and in effect from time to time, and (y) all rights
under the foregoing, including without limitation, all "Royalties", "Additional
Royalties", "Sales Royalties" or other royalty payments, as applicable, under
such agreements, and proceeds thereof.
"REQUIRED LENDERS" means at any time Lenders holding in the aggregate (a)
sixty-six and two thirds percent (66 2/3%) or more of the Term Loan Commitment
(taken as a whole), or (b) if the Term Loan Commitment has been terminated,
sixty-six and two thirds percent (66 2/3%) or more of the aggregate outstanding
principal
Credit and Security Agreement
12
balance of the Loans; provided, however, that at any time during which there are
only two Lenders, "Required Lenders" shall mean both such Lenders, so long as
each Lender holds twenty percent (20%) or more of the Term Loan Commitment
(taken as a whole), or if the Term Loan Commitment has been terminated, twenty
percent 20%) or more of the aggregate outstanding principal balance of the
Loans. For purposes of this definition only, a Lender shall be deemed to include
itself, and any Lender that is an Affiliate or Approved Fund of such Lender.
"RESPONSIBLE OFFICER" means any of the Chief Executive Officer or Chief
Financial Officer of the applicable Borrower.
"RESTRICTED DISTRIBUTION" means as to any Person (a) any dividend or other
distribution (whether in cash, securities or other property) on any equity
interest in such Person (except those payable solely in its equity interests of
the same class), (b) any payment on account of (i) the purchase, redemption,
retirement, defeasance, surrender, cancellation, termination or acquisition of
any equity interests in such Person or any claim respecting the purchase or sale
of any equity interest in such Person or (ii) any option, warrant or other right
to acquire any equity interests in such Person, or (c) any management fees, or
other fees or compensation to any Person holding an equity interest in a
Borrower or a Subsidiary of a Borrower (other than (A) payments of salaries,
deferred compensation, bonuses, and expense reimbursements to individuals, (B)
directors fees, (C) the issuance of stock options or restricted stock to
employees, consultants and board members, and (D) advances and reimbursements to
employees or directors, all in the Ordinary Course of Business and consistent
with past practices), an Affiliate of a Borrower or an Affiliate of any
Subsidiary of a Borrower.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACCOUNT" means a "securities account" (as defined in Article 9
of the UCC), an investment account, or other account in which Investment
Property or Securities are held or invested for credit to or for the benefit of
any Borrower.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means an agreement, in form and
substance reasonably satisfactory to Administrative Agent, among Administrative
Agent, any applicable Borrower and each securities intermediary in which such
Borrower maintains a Securities Account, which agreement provides that (a) such
securities intermediary acknowledges the security interest of Administrative
Agent in such Securities Account, (b) such securities intermediary shall comply
with entitlement orders and any other instructions originated by Administrative
Agent directing disposition of the assets and funds in such Securities Account
without further consent by the applicable Borrower, and (c) such securities
intermediary shall agree that it shall have no Lien on, or right of setoff or
recoupment against, such Securities Account or the contents thereof, other than
in respect of usual and customary service fees and of returned items for which
Administrative Agent has been given value, in each such case expressly consented
to by Administrative Agent, and containing such other or different terms and
conditions as Administrative Agent may require.
"SECURITY DOCUMENT" means this Agreement and any other agreement, document
or instrument executed concurrently herewith or at any time hereafter pursuant
to which one or more Credit Parties or any other Person either (a) Guarantees
payment or performance of all or any portion of the Obligations, and/or (b)
provides, as security for all or any portion of the Obligations, a Lien on any
of its assets in favor of Administrative Agent for its own benefit and the
benefit of the Lenders, as any or all of the same may be amended, supplemented,
restated or otherwise modified from time to time.
"SOLVENT" means, with respect to any Person, that such Person (a) owns and
will own assets the fair saleable value of which are (i) greater than the total
amount of its liabilities (including Contingent Obligations) required to be
classified upon a balance sheet as liabilities in accordance with GAAP, and (ii)
greater than the amount that will be required to pay the probable liabilities of
its then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to it; (b)
has capital that is not unreasonably small in relation to its business as
presently conducted or after giving effect to any contemplated transaction; and
(c) does not intend to incur and does not believe that it will incur debts
beyond its ability to pay such debts as they become due.
"SUBORDINATION AGREEMENT" means any agreement between Administrative Agent
and another creditor of
Credit and Security Agreement
13
Borrowers, as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, pursuant to
which the Debt owing from any Borrower(s) and/or the Liens securing such Debt
granted by any Borrower(s) to such creditor are subordinated in any way to the
Obligations and the Liens created under the Security Documents, the terms and
provisions of which such Subordination Agreements have been agreed to by and are
acceptable to Administrative Agent in the exercise of its sole discretion.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, capital 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 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 more than fifty percent (50%) of such
capital stock whether by proxy, agreement, operation of law or otherwise, and
(b) any partnership or limited liability company in which such Person and/or one
or more Subsidiaries of such Person shall have an interest (whether in the form
of voting or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general partner or may
exercise the powers of a general partner. Unless the context otherwise requires,
each reference to a Subsidiary shall be a reference to a Subsidiary of a
Borrower.
"SWAP CONTRACT" means any "swap agreement", as defined in Section 101 of
the Bankruptcy Code.
"TANGIBLE NET WORTH" means, on any date, the consolidated total assets of
Borrowers and their Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
patents, trademarks and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and minus (ii) Total Liabilities.
"TAXES" has the meaning set forth in Section 2.8.
"TERM LOAN" has the meaning set forth in Section 2.1(a).
"TERM LOAN COMMITMENT" means the sum of each Lender's Term Loan Commitment
Amount, which is equal to Twenty Four Million Dollars ($24,000,000).
"TERM LOAN COMMITMENT AMOUNT" means, (i) as to any Lender that is a Lender
on the Closing Date, the dollar amount set forth opposite such Lender's name on
the Commitment Annex under the column "Term Loan Commitment Amount", as such
amount may be adjusted from time to time by any amounts assigned (with respect
to such Lender's portion of Term Loans outstanding and its commitment to make
advances in respect of the Term Loan) pursuant to the terms of any and all
effective assignment agreements to which such Lender is a party and (ii) as to
any Lender that becomes a Lender after the Closing Date, the amount of the "Term
Loan Commitment Amount(s)" of other Lender(s) assigned to such new Lender
pursuant to the terms of the effective assignment agreement(s) pursuant to which
such new Lender shall become a Lender, as such amount may be adjusted from time
to time by any amounts assigned (with respect to such Lender's portion of Term
Loans outstanding and its commitment to make advances in respect of the Term
Loan) pursuant to the terms of any and all effective assignment agreements to
which such Lender is a party.
"TERM LOAN COMMITMENT PERCENTAGE" means, as to any Lender, (a) on the
Closing Date, the percentage set forth opposite such Lender's name on the
Commitment Annex under the column "Term Loan Commitment Percentage" (if such
Lender's name is not so set forth thereon, then, on the Closing Date, such
percentage for such Lender shall be deemed to be zero), and (b) on any date
following the Closing Date, the percentage equal to the Term Loan Commitment
Amount of such Lender on such date divided by the Term Loan Commitment on such
date.
"TERM NOTE" means any note evidencing any portion of the Term Loan.
"TERMINATION DATE" means, with respect to each Tranche, the earlier to
occur of (a) the first (1st) day of the forty-second (42nd) month following the
funding date of such Tranche or (b) any date on which Administrative Agent
accelerates the maturity of the Loans pursuant to Section 10.2. For purposes of
clarification, if the funding
Credit and Security Agreement
14
date of Tranche B is May 15, 2007 then the Termination Date of Tranche B would
be November 1, 2010.
"TOTAL LIABILITIES" means, on any day, obligations that should, under GAAP,
be classified as liabilities on Borrowers' consolidated balance sheet, including
all Debt.
"TRANCHE" is defined in Section 2.1.1(a)(i).
"TRANCHE A ADVANCE" is defined in Section 2.1.1(a)(i).
"TRANCHE B ADVANCE" is defined in Section 2.1.1(a)(i).
"TRUST" means that certain rabbi trust established in connection with the
deferred compensation plan and supplemental executive retirement plan of the
Principal Borrower, as described in the Principal's most recent Form 10-K filed
with the SEC prior to the Closing Date.
"TRUST ASSETS" means those assets held and maintained by the Trust for
liabilities with respect to the deferred compensation plan and supplemental
executive retirement plan of the Principal Borrower, as described in the
Principal's most recent Form 10-K filed with the SEC prior to the Closing Date.
"UCC" means the Uniform Commercial Code of the State of Illinois or of any
other state the laws of which are required to be applied in connection with the
perfection of security interests in any Collateral.
"UNITED STATES" means the United States of America.
SECTION 1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder (including, without limitation, determinations made
pursuant to the exhibits hereto) shall be made, and all financial statements
required to be delivered hereunder shall be prepared on a consolidated basis in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of each Borrower and its consolidated
subsidiaries delivered to Administrative Agent and each of the Lenders on or
prior to the Closing Date. If at any time any change in GAAP would affect the
computation of any financial ratio or financial requirement set forth in any
Financing Document, and either Borrowers or the Required Lenders shall so
request, the Administrative Agent, the Lenders and Borrowers shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided, however, that until so amended, (a) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (b) Borrowers shall provide to the Administrative Agent and
the Lenders financial statements and other documents required under this
Agreement which include a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP. All
amounts used for purposes of financial calculations required to be made herein
shall be without duplication.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS. References in this Agreement to
"Articles", "Sections", "Annexes", "Exhibits" or "Schedules" shall be to
Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement
unless otherwise specifically provided. Any term defined herein may be used in
the singular or plural. "Include", "includes" and "including" shall be deemed to
be followed by "without limitation". Except as otherwise specified or limited
herein, references to any Person include the successors and assigns of such
Person. References "from" or "through" any date mean, unless otherwise
specified, "from and including" or "through and including", respectively.
References to any statute or act shall include all related current regulations
and all amendments and any successor statutes, acts and regulations. References
to any statute or act, without additional reference, shall be deemed to refer to
federal statutes and acts of the United States. References to any agreement,
instrument or document shall include all schedules, exhibits, annexes and other
attachments thereto. As used in this Agreement, the meaning of the term
"material" or the phrase "in all material respects" is intended to refer to an
act, omission, violation or condition which reflects or could reasonably be
expected to result in a Material Adverse Effect. References to capitalized terms
that are not defined herein, but are defined in the UCC, shall have the meanings
given them in the UCC.
Credit and Security Agreement
15
SECTION 1.4 FUNDING AND SETTLEMENT CURRENCY. Unless otherwise specified
herein, the settlement of all payments and fundings hereunder between or among
the parties hereto shall be made in lawful money of the United States and in
immediately available funds.
SECTION 1.5 RIDERS. All Riders attached hereto are hereby incorporated
herein by this reference and made a part hereof.
ARTICLE 2 - LOANS
SECTION 2.1 TERM LOANS.
(a) Term Loans.
(i) Term Loan Amounts. On the terms and subject to the conditions set
forth herein, the Lenders hereby agree to make to Borrowers a term loan in an
original principal amount equal to the Term Loan Commitment ("TERM LOAN"). Each
Lender's obligation to fund the Term Loan shall be limited to such Lender's Term
Loan Commitment Percentage, and no Lender shall have any obligation to fund any
portion of any Term Loan required to be funded by any other Lender, but not so
funded. No Borrower shall have any right to reborrow any portion of the Term
Loan that is repaid or prepaid from time to time. Subject to the terms and
conditions contained herein, the Term Loan may be funded in two advances (each
such advance being hereinafter referred to as a "TRANCHE") in an aggregate
amount not to exceed the Term Loan Commitment, but no advances under the Term
Loan shall be made after the Commitment Expiry Date. The initial Tranche of the
Term Loan (the "TRANCHE A ADVANCE") shall be advanced on the date hereof in the
amount of Twelve Million Dollars ($12,000,000). The second Tranche of the Term
Loan (the "TRANCHE B ADVANCE") may be advanced in a single advance at any time
through the Commitment Expiry Date and may not exceed Twelve Million Dollars
($12,000,000); provided, however, that the Tranche B Advance shall not be
advanced at any time that either the Market Cap Condition or the Opana Condition
has not been satisfied. Borrowers shall deliver to Administrative Agent a Notice
of Borrowing with respect to each proposed Term Loan advance, such Notice of
Borrowing to be delivered no later than noon (Chicago time) two (2) Business
Days prior to the funding date of the applicable advance.
(ii) Scheduled Repayments; Mandatory Prepayments; Optional
Prepayments.
(A) There shall become due and payable, and Borrowers shall repay
the Term Loan through, scheduled payments as set forth on Schedule 2.1 attached
hereto. Notwithstanding the payment schedule set forth above, the outstanding
principal amount of each Tranche shall become immediately due and payable in
full on the Termination Date with respect to such Tranche.
(B) There shall become due and payable and Borrowers shall prepay
the Term Loan in the following amounts and at the following times:
(i) on the date on which any Credit Party (or Administrative
Agent as loss payee or assignee) receives any net cash casualty proceeds in
excess of One Million Dollars ($1,000,000) (in the aggregate for all such
proceeds in any fiscal year) of assets upon which Administrative Agent
maintained a Lien, an amount equal to one hundred percent (100%) of such
proceeds (net of out-of-pocket expenses and repayment of secured debt permitted
under clause (c) of the definition of Permitted Indebtedness and encumbering the
property that suffered such casualty), or such lesser portion of such proceeds
as Administrative Agent (with the consent of the Required Lenders) shall elect
to apply to the Obligations;
(ii) an amount equal to any interest that is deemed to be in
excess of the Maximum Lawful Rate (as defined below) and is required to be
applied to the reduction of the principal balance of the Loans by any Lender as
provided for in Section 2.7; and
(iii) upon receipt by any Credit Party of the proceeds of
any Asset Disposition that is not a Permitted Asset Disposition, an amount equal
to one hundred percent (100%) of the net cash proceeds of such Asset Disposition
(net of out-of-pocket expenses and repayment of secured debt permitted under
clause (c)
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16
of the definition of Permitted Indebtedness and encumbering such asset), or such
lesser portion as Administrative Agent (with the consent of the Required
Lenders) shall elect to apply to the Obligations; provided that, for the
avoidance of doubt, in this Section 2.1(a)(ii)(B), "Asset Disposition" shall
include any consideration, including up-front payments and royalties or
licensing fees paid over time, received by any Credit Party in connection with
any exclusive license entered into by such Credit Party as licensor with respect
to any Intellectual Property of such Credit Party, and "Permitted Asset
Disposition" shall include any such exclusive license of the type that is
referenced in the clause (iii) of the definition of "Permitted Asset
Disposition".
Notwithstanding the foregoing and so long as no Event of Default or Default then
exists, any such casualty proceeds in excess of $1,000,000 may be used by
Borrowers within one hundred eighty (180) days from the receipt of such proceeds
to replace or repair any assets in respect of which such proceeds were paid so
long as (x) prior to the receipt of such proceeds, Borrowers have delivered to
Administrative Agent a reinvestment plan detailing such replacement or repair
acceptable to Administrative Agent in its reasonable discretion and (y) such
proceeds are deposited into an account over which Administrative Agent has
control promptly upon receipt by such Borrower.
All sums held by Administrative Agent pending reinvestment as described above
shall be deemed additional collateral for the Obligations and may be commingled
with the general funds of Administrative Agent.
(C) Borrowers may from time to time, with at least two (2)
Business Day's prior delivery to Administrative Agent of an appropriately
completed Payment Notification, prepay the Term Loan, plus all accrued interest,
in whole but not in part (other than mandatory partial prepayments required
under this Agreement); provided, however, that each such prepayment shall be
accompanied by any prepayment fees required hereunder.
(iii) All Prepayments. Except as this Agreement may specifically
provide otherwise, all prepayments of the Term Loan shall be applied by
Administrative Agent to the Obligations in inverse order of maturity; provided,
however, that upon the occurrence and during an Event of Default, all
prepayments of the Term Loan shall be applied in accordance with Section 10.6.
The monthly payments required under Schedule 2.1 shall continue in the same
amount (for so long as the Term Loan and/or (if applicable) any advance
thereunder shall remain outstanding) notwithstanding any partial prepayment,
whether mandatory or optional, of the Term Loan.
SECTION 2.2 INTEREST, INTEREST CALCULATIONS AND CERTAIN FEES.
(a) Interest. From and following the Closing Date, the Loans and the other
Obligations shall bear interest at a fixed rate equal to the sum of the Base
Rate plus the applicable Base Rate Margin (provided that, in the case of any
Obligations other than the Loans, such Obligations shall bear interest as of any
date at the highest rate applicable to any of the advances under the Loans
outstanding on such date), subject to the provisions of Section 10.4 below
regarding default rates of interest. Interest on the Loans shall be paid in
arrears on the first (1st) day of each month and on the maturity of such Loans,
whether by acceleration or otherwise. Interest on all other Obligations shall be
payable on demand and upon the Termination Date. For purposes of calculating
interest, all funds transferred from the Payment Account for application to the
Term Loan shall be subject to a two (2) Business Day clearance period.
(b) Reserved.
(c) Exit Fee. Borrowers shall pay to Administrative Agent, for the benefit
of all Lenders, as compensation for the costs of making funds available to
Borrowers under this Agreement an exit fee (the "EXIT FEE") calculated in
accordance with this subsection and upon the date or dates required under this
subsection. The Exit Fee shall be equal to three percent (3%) of the original
principal amount of the applicable Tranche. The Exit Fee with regard to a
Tranche shall be due and payable on the earlier to occur of (i) the Termination
Date of such Tranche or (ii) payment in full of the aggregate principal amount
of such Tranche (whether voluntary, involuntary or mandatory). All fees payable
pursuant to this paragraph shall be deemed fully accrued and earned as of the
Closing Date.
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17
(d) Prepayment Fee. If any advance under the Term Loan is prepaid at any
time, in whole or in part, for any reason (whether by voluntary prepayment by
Borrowers, mandatory prepayment by Borrowers (but only to the extent required
under Section 2.1(a)(ii)(B)(iii)), by reason of the occurrence of an Event of
Default or the acceleration of the Term Loan, or otherwise), or if the Term Loan
shall become accelerated and due and payable in full, Borrowers shall pay to
Administrative Agent, for the benefit of all Lenders, as compensation for the
costs of such Lenders making funds available to Borrowers under this Agreement,
a prepayment fee (the "PREPAYMENT FEE") calculated in accordance with this
subsection. If such prepayment occurs prior to the first anniversary date of the
Closing Date, the Prepayment Fee for the Term Loan shall be equal to the amount
prepaid multiplied by three percent (3.0%), if such prepayment occurs on or
after the first anniversary date of the Closing Date, but prior to the second
anniversary date of the Closing Date, the Prepayment Fee for the Term Loan shall
be equal to the amount prepaid multiplied by two percent (2.0%) and if such
prepayment occurs on or after the second anniversary date of the Closing Date
and prior to the Maturity Date, the Prepayment Fee for the Term Loan shall be
equal to the amount prepaid multiplied by one percent (1.0%). All fees payable
pursuant to this paragraph shall be deemed fully earned and non-refundable as of
the Closing Date. For the avoidance of doubt, the obligations of Borrowers under
Sections 2.2(b) and (c) are distinct and separate obligations, and Borrowers
shall be obligated to pay the Exit Fee and the Prepayment Fee in accordance with
Sections 2.2(b) and (c), respectively.
(e) Audit Fees. Borrowers shall pay to Administrative Agent, for its own
account and not for the benefit of any other Lenders, all reasonable fees and
expenses not to exceed $5,000 in each instance in connection with audits and
inspections of Borrowers' books and records, audits, valuations or appraisals of
the Collateral, audits of Borrowers' compliance with applicable Laws and such
other matters as Administrative Agent shall deem appropriate, which shall be due
and payable on the later of (i) the first Business Day of the month following
the date of issuance by Administrative Agent of a written request for payment
thereof to Borrowers, or (ii) the tenth (10th) day following the issuance of
such notice; provided, that so long as no Event of Default or Default has
occurred, Borrowers shall be liable for such fees and expenses for no more than
one (1) such audit in any given calendar year.
(e) Wire Fees. Borrowers shall pay to Administrative Agent, for its own
account and not for the account of any other Lenders, on written demand, any and
all fees, costs or expenses which Administrative Agent pays to a bank or other
similar institution (including, without limitation, any fees paid by
Administrative Agent to any other Lender) arising out of or in connection with
(i) the forwarding to Borrowers or any other Person on behalf of Borrowers, by
Administrative Agent, of proceeds of the Loans made by any Lender to Borrowers
pursuant to this Agreement, and (ii) the depositing for collection, by
Administrative Agent, of any check or item of payment received or delivered to
Administrative Agent on account of Obligations.
(f) Late Charges. If payments of principal (other than a final installment
of principal upon the Termination Date), interest due on the Obligations, or any
other amounts due hereunder or under the other Financing Documents are not
timely made and remain overdue for a period of five (5) days, Borrowers, without
notice or demand by Administrative Agent, promptly shall pay to Administrative
Agent, for the benefit of the Lenders, as additional compensation to
Administrative Agent in administering the Obligations, an amount equal to five
percent (5.0%) of each delinquent payment.
(g) Computation of Interest and Related Fees. All interest and fees under
each Financing Document shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. The date of funding of a Loan shall be
included in the calculation of interest. The date of payment of a Loan shall be
excluded from the calculation of interest. If a Loan is repaid on the same day
that it is made, one (1) day's interest shall be charged.
(h) Automated Clearing House Payments. If Borrower Representative so
directs the Administrative Agent, monthly payments of interest and amortization
shall be paid to Administrative Agent by Automated Clearing House debit of
immediately available funds from the financial institution account designated by
Borrower Representative in the Automated Clearing House debit authorization
executed by Borrowers or Borrower Representative in connection with this
Agreement, and shall be effective upon receipt. Borrowers shall execute any and
all forms and documentation necessary from time to time to effectuate such
automatic debiting. In no event shall any such payments be refunded to
Borrowers.
SECTION 2.3 NOTES. The portion of the Loans made by each Lender shall be
evidenced, if so requested by such Lender, by one or more promissory notes
executed by Borrowers on a joint and several basis (each, a
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18
"NOTE") in an original principal amount equal to such Lender's Term Loan
Commitment.
SECTION 2.4 RESERVED.
SECTION 2.5 RESERVED.
SECTION 2.6 GENERAL PROVISIONS REGARDING PAYMENT; LOAN ACCOUNT.
(a) All payments to be made by each Borrower under any Financing Document,
including payments of principal and interest made hereunder and pursuant to any
other Financing Document, and all fees, expenses, indemnities and
reimbursements, shall be made without set-off, recoupment or counterclaim, in
lawful money of the United States and in immediately available funds. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension (it being understood and agreed that,
solely for purposes of computations contained herein and determining compliance
therewith, if payment is made, in full, on any such extended due date, such
payment shall be deemed to have been paid on the original due date without
giving effect to any extension thereto). Any payments received in the Payment
Account before noon (Chicago time) on any date shall be deemed received by
Administrative Agent on such date, and any payments received in the Payment
Account after noon (Chicago time) on any date shall be deemed received by
Administrative Agent on the next succeeding Business Day.
(b) Administrative Agent shall maintain a loan account (the "LOAN ACCOUNT")
on its books to record Loans and other extensions of credit made by the Lenders
hereunder or under any other Financing Document, and all payments thereon made
by each Borrower. All entries in the Loan Account shall be made in accordance
with Administrative Agent's customary accounting practices as in effect from
time to time. The balance in the Loan Account, as recorded in Administrative
Agent's books and records at any time shall be prima facie evidence of the
amounts due and owing to Administrative Agent by each Borrower absent manifest
error; provided, however, that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower's duty to pay all
amounts owing hereunder or under any other Financing Document. Administrative
Agent shall endeavor to provide Borrowers with a monthly statement regarding the
Loan Account (but neither Administrative Agent nor any Lender shall have any
liability if Administrative Agent shall fail to provide any such statement).
Unless any Borrower notifies Administrative Agent of any objection to any such
statement (specifically describing the basis for such objection) within ninety
(90) days after the date of receipt thereof, it shall be deemed final, binding
and conclusive upon Borrowers in all respects as to all matters reflected
therein, absent manifest error.
SECTION 2.7 MAXIMUM INTEREST. In no event shall the interest charged with
respect to the Loans or any other Obligations of any Borrower under any
Financing Document exceed the maximum amount permitted under the laws of the
State of Illinois or of any other applicable jurisdiction. Notwithstanding
anything to the contrary herein or elsewhere, if at any time the rate of
interest payable hereunder or under any Note or other Financing Document (the
"STATED RATE") would exceed the highest rate of interest permitted under any
applicable law to be charged (the "MAXIMUM LAWFUL RATE"), then for so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Lawful Rate, each Borrower
shall, to the extent permitted by law, continue to pay interest at the Maximum
Lawful Rate until such time as the total interest received is equal to the total
interest which would have been received had the Stated Rate been (but for the
operation of this provision) the interest rate payable. Thereafter, the interest
rate payable shall be the Stated Rate unless and until the Stated Rate again
would exceed the Maximum Lawful Rate, in which event this provision shall again
apply. In no event shall the total interest received by any Lender exceed the
amount which it could lawfully have received had the interest been calculated
for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the
prior sentence, any Lender has received interest hereunder in excess of the
Maximum Lawful Rate, such excess amount shall be applied to the reduction of the
principal balance of the Loans or to other amounts (other than interest) payable
hereunder, and if no such principal or other amounts are then outstanding, such
excess or part thereof remaining shall be paid to Borrowers. Any such reduction
in the principal balance shall be applied to the Obligations owing to Lenders in
accordance with the Pro Rata Share of each Lender. In computing interest payable
with reference to the Maximum Lawful Rate applicable to any Lender, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made.
Credit and Security Agreement
19
SECTION 2.8 TAXES; CAPITAL ADEQUACY.
(a) All payments of principal and interest on the Loans and all other
amounts payable hereunder shall be made free and clear of and without deduction
for any present or future income, excise, stamp, documentary, payroll,
employment, property or franchise taxes and other taxes, fees, duties, levies,
assessments, withholdings or other charges of any nature whatsoever (including
interest and penalties thereon) imposed by any taxing authority, excluding taxes
imposed on or measured by Administrative Agent's or any Lender's net income by
the jurisdictions under which Administrative Agent or such Lender is organized
or conducts business (other than solely as the result of entering into any of
the Financing Documents or taking any action thereunder) (all non-excluded items
being called "TAXES"). If any withholding or deduction from any payment to be
made by any Borrower hereunder is required in respect of any Taxes pursuant to
any applicable Law, then Borrowers will: (i) pay directly to the relevant
authority the full amount required to be so withheld or deducted; (ii) promptly
forward to Administrative Agent (with a copy to the applicable Lender) an
official receipt or other documentation reasonably satisfactory to
Administrative Agent evidencing such payment to such authority; and (iii) pay to
Administrative Agent (and such applicable Lender) for the account of
Administrative Agent and Lenders such additional amount or amounts as is
necessary to ensure that the net amount actually received by Administrative
Agent and each Lender will equal the full amount Administrative Agent and such
Lender would have received had no such withholding or deduction been required.
If any Taxes are directly asserted against Administrative Agent or any Lender
with respect to any payment received by Administrative Agent or such Lender
hereunder, Administrative Agent or such Lender may pay such Taxes and Borrowers
will promptly pay such additional amounts (including any penalty, interest or
expense) as is necessary in order that the net amount received by such Person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had such Taxes not been
asserted so long as such amounts have accrued on or after the day which is one
hundred eighty (180) days prior to the date on which Administrative Agent or
such Lender first made written demand therefor.
(b) If any Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Administrative Agent, for the account of
Administrative Agent and the respective Lenders, the required receipts or other
required documentary evidence, Borrowers shall indemnify Administrative Agent
and Lenders for any incremental Taxes, interest or penalties that may become
payable by Administrative Agent or any Lender as a result of any such failure.
(c) Each Lender that (i) is organized or incorporated under the laws of a
jurisdiction other than the United States, and (ii)(A) is a party hereto on the
Closing Date or (B) purports to become an assignee of an interest as a Lender
under this Agreement after the Closing Date (unless such Lender was already a
Lender hereunder immediately prior to such assignment) (each such Lender a
"FOREIGN LENDER") shall execute and deliver to each of Borrowers and
Administrative Agent one or more (as Borrowers or Administrative Agent may
reasonably request) United States Internal Revenue Service Forms W-8ECI, W-8BEN,
W-8IMY (as applicable) and other applicable forms, certificates or documents
prescribed by the United States Internal Revenue Service or reasonably requested
by Administrative Agent certifying as to such Lender's entitlement to a complete
exemption from withholding or deduction of Taxes. Borrowers shall not be
required to pay additional amounts to any Lender pursuant to this Section 2.8
with respect to United States withholding and income Taxes to the extent that
the obligation to pay such additional amounts would not have arisen but for the
failure of such Lender to comply with this paragraph other than as a result of a
change in law.
(d) If any Lender shall determine in its commercially reasonable judgment
that the adoption or taking effect of, or any change in, any applicable Law
regarding capital adequacy, in each instance, after the Closing Date, or any
change after the Closing Date in the interpretation, administration or
application thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation, administration or application thereof,
or the compliance by any Lender or any Person controlling such Lender with any
request, guideline or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency adopted or otherwise taking effect after the Closing Date, has
or would have the effect of reducing the rate of return on such Lender's or such
controlling Person's capital as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such controlling Person
could reasonably have achieved but for such adoption, taking effect, change,
interpretation, administration, application or compliance (taking into
consideration such Lender's or such controlling Person's policies with respect
to capital adequacy) then from time to time, upon written demand by such Lender
(which demand shall be
Credit and Security Agreement
20
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to Administrative Agent), Borrowers shall promptly pay to such Lender
such additional amount as will compensate such Lender or such controlling Person
for such reduction, so long as such amounts have accrued on or after the day
which is one hundred eighty (270) days prior to the date on which such Lender
first made demand therefor.
(e) If any Lender requires compensation under Section 2.8(d), or requires
any Borrower to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.8(a), then, upon
the written request of Borrower Representative, such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder (subject to the
terms of this Agreement) to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would
eliminate or materially reduce amounts payable pursuant to any such subsection,
as the case may be, in the future, and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender (as determined in its sole discretion). Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
SECTION 2.9 APPOINTMENT OF BORROWER REPRESENTATIVE. Each Borrower hereby
designates Borrower Representative as its representative and agent on its behalf
for the purposes of issuing Notices of Borrowing, and giving instructions with
respect to the disbursement of the proceeds of the Loans, giving and receiving
all other notices and consents hereunder or under any of the other Financing
Documents and taking all other actions (including in respect of compliance with
covenants) on behalf of any Borrower or Borrowers under the Financing Documents.
Borrower Representative hereby accepts such appointment. Notwithstanding
anything to the contrary contained in this Agreement, no Borrower other than
Borrower Representative shall be entitled to take any of the foregoing actions.
The proceeds of each Loan made hereunder shall be advanced to or at the
direction of Borrower Representative and if not used by Borrower Representative
in its business (for the purposes provided in this Agreement) shall be deemed to
be immediately advanced by Borrower Representative to the appropriate other
Borrower hereunder as an intercompany loan (collectively, "INTERCOMPANY LOANS").
All proceeds of Collateral of each Borrower received by Administrative Agent and
applied to the Obligations shall be deemed to be repayments of the Intercompany
Loans owing by such Borrower to Borrower Representative. Borrowers shall
maintain accurate books and records with respect to all Intercompany Loans and
all repayments thereof. Administrative Agent and each Lender may regard any
notice or other communication pursuant to any Financing Document from Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or all
Borrowers hereunder to Borrower Representative on behalf of such Borrower or all
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
SECTION 2.10 JOINT AND SEVERAL LIABILITY. Borrowers are defined
collectively to include all Persons named as one of the Borrowers herein;
provided, however, that any references herein to "any Borrower", "each Borrower"
or similar references, shall be construed as a reference to each individual
Person named as one of the Borrowers herein. Each Person so named shall be
jointly and severally liable for all of the obligations of Borrowers under this
Agreement. Each Borrower, individually, expressly understands, agrees and
acknowledges, that the credit facilities would not be made available on the
terms herein in the absence of the collective credit of all of the Persons named
as the Borrowers herein, the joint and several liability of all such Persons,
and the cross-collateralization of the collateral of all such Persons.
Accordingly, each Borrower, individually acknowledges that the benefit to each
of the Persons named as one of the Borrowers as a whole constitutes reasonably
equivalent value, regardless of the amount of the credit facilities actually
borrowed by, advanced to, or the amount of collateral provided by, any
individual Borrower. In addition, each entity named as one of the Borrowers
herein hereby acknowledges and agrees that all of the representations,
warranties, covenants, obligations, conditions, agreements and other terms
contained in this Agreement shall be applicable to and shall be binding upon and
measured and enforceable individually against each Person named as one of the
Borrowers herein as well as all such Persons when taken together. By way of
illustration, but without limiting the generality of the foregoing, the terms of
Section 10.1 of this Agreement are to be applied to each individual Person named
as one of the Borrowers herein (as well as to all such Persons taken as a
whole), such that the occurrence of any of the events described in Section 10.1
of this
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21
Agreement as to any Person named as one of the Borrowers herein shall constitute
an Event of Default even if such event has not occurred as to any other Persons
named as the Borrowers or as to all such Persons taken as a whole.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
To induce Administrative Agent and Lenders to enter into this Agreement and
to make the Loans and other credit accommodations contemplated hereby, each
Borrower hereby represents and warrants to Administrative Agent and each Lender
that:
SECTION 3.1 EXISTENCE AND POWER. Each Credit Party is an entity as
specified on Schedule 3.1, is duly organized, validly existing and in good
standing under the laws of the jurisdiction specified on Schedule 3.1 and no
other jurisdiction, has the same legal name as it appears in such Credit Party's
Organizational Documents and an organizational identification number (if any),
in each case as specified on Schedule 3.1 (except to the extent of any change in
the foregoing information as to any Credit Party following the Closing Date so
long as such change was made and notice of such change was given to
Administrative Agent in accordance with Section 9.2(e)), and has all powers and
all Permits necessary in the operation of its business as presently conducted or
as proposed to be conducted, except where the failure to have such powers or
Permits could not reasonably be expected to have a Material Adverse Effect. Each
Credit Party is qualified to do business as a foreign entity in each
jurisdiction in which it is required to be so qualified, which jurisdictions as
of the Closing Date are specified on Schedule 3.1, except where the failure to
be so qualified could not reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 3.1, no Credit Party, over the five (5)
year period preceding the Closing Date, (a) has had any name other than its
current name, or (b) was incorporated or organized under the laws of any
jurisdiction other than its current jurisdiction of incorporation or
organization.
SECTION 3.2 ORGANIZATION AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by each Credit Party of the Financing
Documents to which it is a party are within its powers, have been duly
authorized by all necessary action pursuant to its Organizational Documents,
require no further action by or in respect of, or filing with, any Governmental
Authority and do not violate, conflict with or cause a breach or a default under
(a) any Law applicable to any Credit Party or any of the Organizational
Documents of any Credit Party, or (b) any agreement or instrument binding upon
it, except for such violations, conflicts, breaches or defaults as could not,
with respect to this clause (b), reasonably be expected to have a Material
Adverse Effect.
SECTION 3.3 BINDING EFFECT. Each of the Financing Documents to which any
Credit Party is a party constitutes a valid and binding agreement or instrument
of such Credit Party, enforceable against such Credit Party in accordance with
its respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors' rights generally and by general equitable principles.
SECTION 3.4 CAPITALIZATION. The authorized equity securities of each of the
Credit Parties as of the Closing Date is as set forth on Schedule 3.4. All
issued and outstanding equity securities of each of the Credit Parties are duly
authorized and validly issued, fully paid and nonassessable, and such equity
securities were issued in compliance with applicable Laws. All issued and
outstanding securities of each of the Credit Parties other than the Principal
Borrower are free and clear of all Liens other than those in favor of
Administrative Agent for the benefit of Administrative Agent and Lenders. The
identity of the holders of the equity securities of each of the Credit Parties
(other than the Principal Borrower) and the percentage of their fully-diluted
ownership of the equity securities of each of the Credit Parties (other than
Principal Borrower) as of the Closing Date is set forth on Schedule 3.4. No
shares of the capital stock or other equity securities of any Credit Party,
other than those described above, are issued and outstanding as of the Closing
Date. Except as set forth on Schedule 3.4, as of the Closing Date there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Credit Party of any equity securities of any such entity. Principal Borrower is,
as of the Closing Date, and will be at all times, an entity whose voting common
equity shares are traded on the NASDAQ exchange. None of the authorized and/or
issued capital stock or other equity securities of any Credit Party are subject
to any mandatory repurchase or redemption provisions or put rights in favor of
any holder thereof (not including any repurchase or redemption provisions
exercisable solely at the option of such Credit Party) or otherwise constitute
Debt under the definition set forth herein or are subject to any provisions
requiring
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22
the mandatory payment of any dividends at any time (not including any specified
dividends which accrue at specified times but which are payable only as, when
and if declared by the board of directors or other similar governance body or
manager or partner of such Credit Party and/or upon liquidation of such Credit
Party).
SECTION 3.5 FINANCIAL INFORMATION. All information delivered to
Administrative Agent and pertaining to the financial condition of any Credit
Party fairly presents in all material respects the financial position of such
Credit Party as of such date in conformity with GAAP (and as to unaudited
financial statements, subject to normal year-end adjustments and the absence of
footnote disclosures). Since December 31, 2006, there has been no material
adverse change in the business, operations, properties, prospects or condition
(financial or otherwise) of any business, assets or entities being purchased by
Borrowers pursuant to the Financing Documents.
SECTION 3.6 LITIGATION. Except as set forth on Schedule 3.6 as of the
Closing Date, and except as hereafter disclosed to Administrative Agent in
writing, there is no Litigation pending against, or to such Borrower's knowledge
threatened against or affecting, any Credit Party in which an adverse decision
could reasonably be expected to have a Material Adverse Effect or which in any
manner draws into question the validity of any of the Financing Documents.
SECTION 3.7 OWNERSHIP OF PROPERTY. Each Borrower and each of its
Subsidiaries is the lawful owner of, has good and marketable title to and is in
lawful possession of, or has valid leasehold interests in, all properties and
other assets (real or personal, tangible, intangible or mixed) purported or
reported to be owned or leased (as the case may be) by such Person.
SECTION 3.8 NO DEFAULT. No Event of Default, or to such Borrower's
knowledge, Default, has occurred and is continuing. No Credit Party is in breach
or default under or with respect to any contract, agreement, lease or other
instrument to which it is a party or by which its property is bound or affected,
which breach or default could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.9 LABOR MATTERS. As of the Closing Date, there are no strikes or
other labor disputes pending or, to any Borrower's knowledge, threatened against
any Credit Party. Hours worked and payments made to the employees of the Credit
Parties have not been in violation of the Fair Labor Standards Act or any other
applicable Law dealing with such matters, other than violations that are both
unintentional and immaterial. All payments due from the Credit Parties, or for
which any claim may be made against any of them, on account of wages and
employee and retiree health and welfare insurance and other benefits have been
paid or accrued as a liability on their books, as the case may be, except for
the unintentional failure to make immaterial payments. The consummation of the
transactions contemplated by the Financing Documents will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.
SECTION 3.10 REGULATED ENTITIES. No Credit Party is an "investment company"
or a company "controlled" by an "investment company" or a "subsidiary" of an
"investment company," all within the meaning of the Investment Company Act of
1940.
SECTION 3.11 MARGIN REGULATIONS. None of the proceeds from the Loans have
been or will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" (as defined in Regulation U of the Federal Reserve
Board), for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any "margin stock" or for any other
purpose which might cause any of the Loans to be considered a "purpose credit"
within the meaning of Regulation T, U or X of the Federal Reserve Board.
SECTION 3.12 COMPLIANCE WITH LAWS; ANTI-TERRORISM LAWS.
(a) Each Credit Party is in compliance with the requirements of all
applicable Laws, except for such Laws the noncompliance with which could not
reasonably be expected to have a Material Adverse Effect.
(b) None of the Credit Parties is (i) in violation of any Anti-Terrorism
Law, (ii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts
Credit and Security Agreement
23
to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or
(iii) is a Blocked Person. No Credit Party nor, to the knowledge of any Credit
Party, any of its Affiliates or agents acting or benefiting in any capacity in
connection with the transactions contemplated by this Agreement, (x) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person, or (y) deals in, or
otherwise engages in any transaction relating to, any property or interest in
property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law.
SECTION 3.13 TAXES. All federal, state and material local tax returns,
reports and statements required to be filed by or on behalf of each Credit Party
have been filed with the appropriate Governmental Authorities in all
jurisdictions in which such returns, reports and statements are required to be
filed and, except to the extent subject to a Permitted Contest, all Taxes
(including real property Taxes) and other charges shown to be due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for nonpayment thereof. Except to the
extent subject to a Permitted Contest, all state and material local sales and
use Taxes required to be paid by each Credit Party have been paid. All federal
and state returns have been filed by each Credit Party for all periods for which
returns were due with respect to employee income tax withholding, social
security and unemployment taxes, and, except to the extent subject to a
Permitted Contest, the amounts shown thereon to be due and payable have been
paid in full or adequate provisions therefor have been made.
SECTION 3.14 COMPLIANCE WITH ERISA.
(a) Each ERISA Plan (and the related trusts and funding agreements)
complies in form and in operation with, has been administered in compliance
with, and the terms of each ERISA Plan satisfy, the applicable requirements of
ERISA and the Code in all material respects. Each ERISA Plan which is intended
to be qualified under Section 401(a) of the Code is so qualified, and the United
States Internal Revenue Service has issued a favorable determination letter with
respect to each such ERISA Plan which may be relied on currently. No Credit
Party has incurred liability for any material excise tax under any of Sections
4971 through 5000 of the Code.
(b) During the thirty-six (36) month period prior to the Closing Date or
the making of any Loan, (i) no steps have been taken to terminate any Pension
Plan and (ii) no contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA with
respect to an aggregate amount in excess of $250,000. No condition exists or
event or transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by any Credit Party of any
material liability, fine or penalty. No Credit Party has incurred liability to
the PBGC (other than for current premiums) with respect to any employee Pension
Plan with respect to an aggregate amount in excess of $250,000. Except with
respect to amounts in an aggregate not in excess of $250,000: all contributions
(if any) have been made on a timely basis to any Multiemployer Plan that are
required to be made by any Credit Party or any other member of the Controlled
Group under the terms of the plan or of any collective bargaining agreement or
by applicable Law; no Credit Party nor any member of the Controlled Group has
withdrawn or partially withdrawn from any Multiemployer Plan, incurred any
withdrawal liability with respect to any such plan or received notice of any
claim or demand for withdrawal liability or partial withdrawal liability from
any such plan, and no condition has occurred which, if continued, could result
in a withdrawal or partial withdrawal from any such plan, and no Credit Party
nor any member of the Controlled Group has received any notice that any
Multiemployer Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than that required
under Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent.
SECTION 3.15 RESERVED.
SECTION 3.16 RESERVED.
SECTION 3.17 MATERIAL CONTRACTS. The consummation of the transactions
contemplated by the Financing Documents will not give rise to a right of
termination in favor of any party to any Material Contract (other than any
Credit Party).
SECTION 3.18 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO HAZARDOUS
MATERIALS.
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24
Except in each case as set forth on Schedule 3.18 or as would no reasonably
be expected to result in a Material Adverse Effect:
(a) no notice, notification, demand, request for information, citation,
summons, complaint or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending, or to such
Borrower's knowledge, threatened to or against any Credit Party or any Credit
Party's real or personal property (now owned or leased or previously owned or
leased) by any Governmental Authority or other Person with respect to any (i)
alleged violation by any Credit Party of any Environmental Law, (ii) alleged
failure by any Credit Party to have any Permits under any Environmental Law or
relating to any Hazardous Materials required in connection with the conduct of
its business or to comply with the terms and conditions thereof, (iii)
generation, treatment, storage, recycling, transportation or disposal of any
Hazardous Materials, or (iv) release of Hazardous Materials; and
(b) no property now owned or leased by any Credit Party and, to the
knowledge of each Borrower, no such property previously owned or leased by any
Credit Party, on which any Credit Party has generated, stored or disposed of or
to which any Credit Party has, directly or indirectly, transported or arranged
for the transportation of any Hazardous Materials, is listed or, to such
Borrower's knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar
state list or is the subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any Credit Party for
clean-up costs, remedial work, damage to natural resources or personal injury
claims, including, without limitation, claims under CERCLA.
For purposes of this Section 3.18, each Credit Party shall be deemed to include
any business or business entity (including a corporation) that is, in whole or
in part, a predecessor of such Credit Party.
SECTION 3.19 INTELLECTUAL PROPERTY. Each Credit Party owns, is licensed to
use or otherwise has the right to use, all Intellectual Property relating to the
product Opana ER and all other Intellectual Property that is used for its
business and operations. All Intellectual Property existing as of the Closing
Date relating to Opana ER and registered with any United States Governmental
Authority (including without limitation any and all applications for the
registration of any such Intellectual Property with any such United States
Governmental Authority) and all licenses under which any Borrower is the
licensee of any such registered Intellectual Property (or any such application
for the registration of Intellectual Property) owned by another Person, are set
forth on Schedule 3.19. Such Schedule 3.19 indicates in each case whether such
registered Intellectual Property (or application therefor) is owned or licensed
by such Credit Party, and in the case of any such licensed registered
Intellectual Property (or application therefor), lists the name and address of
the licensor and the name and date of the agreement pursuant to which such item
of Intellectual Property is licensed and whether or not such license is an
exclusive license and indicates whether there are any purported restrictions in
such license on the ability to such Credit Party to grant a security interest in
and/or to transfer any of its rights as a licensee under such license. The
applicable Credit Party is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each such registered
Intellectual Property (or application therefor) purported to be owned by such
Borrower, free and clear of any Liens and/or licenses in favor of third parties
or agreements or covenants not such xxx third parties for infringement. U.S.
Patent Number 5,128,143, which relates to Opana ER, is owned by the Principal
Borrower and currently expires on September 19, 2008. The Food and Drug
Administration has granted to Endo Pharmaceuticals, Inc. new dosage form
exclusivity with respect to Opana ER that expires on June 22, 2009. To the
Borrower's knowledge, each Credit Party conducts its business without
infringement or claim of infringement of any Intellectual Property rights of
others and there is no infringement or claim of infringement by others of any
Intellectual Property rights of any Credit Party, which infringement or claim of
infringement could reasonably be expected to have a Material Adverse Effect.
SECTION 3.20 SOLVENCY. Each Borrower and each additional Credit Party is
Solvent.
SECTION 3.21 FULL DISCLOSURE. None of the written information (financial or
otherwise) furnished by or on behalf of any Credit Party to Administrative Agent
or any Lender in connection with the consummation of the transactions
contemplated in connection with the Financing Documents after the Closing Date,
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 such statements were made. All
financial
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25
projections delivered to Administrative Agent and the Lenders by Borrowers (or
their agents) have been prepared on the basis of the assumptions stated therein.
Such projections represented such Borrower's good faith estimate as of the date
thereof of such Borrower's future financial performance and such assumptions
were believed by such Borrower to be fair and reasonable as of the date thereof
in light of business conditions then prevailing; provided, however, that
Borrowers can give no assurance that any such projections will be attained.
SECTION 3.22 INTEREST RATE. The rate of interest paid under the Notes and
the method and manner of the calculation thereof do not violate any usury or
other law or applicable Laws, any of the Organizational Documents or any of the
Financing Documents.
SECTION 3.23 SUBSIDIARIES. Borrowers do not own any stock, partnership
interests, limited liability company interests or other equity securities except
for Permitted Investments.
ARTICLE 4 - AFFIRMATIVE COVENANTS
Each Borrower agrees that, so long as any Credit Exposure exists:
SECTION 4.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower Representative
will deliver to Administrative Agent: (1) as soon as available, but no later
than forty five (45) days after the last day of each quarter, a company prepared
consolidated balance sheet, cash flow and income statement covering Borrower's
consolidated operations during the period, prepared under GAAP, consistently
applied, certified by a Responsible Officer and in a form reasonably acceptable
to Administrative Agent; (2) as soon as available, but no later than ninety (90)
days after the last day of Borrower's fiscal year, audited consolidated
financial statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm acceptable to Administrative Agent in its reasonable
discretion, (3) within five (5) days of delivery or filing thereof, copies of
all statements, reports and notices made available to Borrower's security
holders and copies of all reports and other filings made by Borrower with any
stock exchange on which any securities of any Borrower are traded and/or the
SEC; (4) a prompt report of any legal actions pending or threatened against any
Borrower or any of its Subsidiaries that could result in damages or costs to any
Borrower or any of its Subsidiaries of One Million Dollars ($1,000,000) or more;
(5) prompt written notice after any Borrower becomes aware of an event that
materially and adversely affects any Intellectual Property relating to Opana ER;
and (6) budgets, sales projections, operating plans and other financial
information and information, reports or statements regarding the Borrowers,
their business and the Collateral as Administrative Agent may from time to time
reasonably request. Each Borrower will, in conjunction with the delivery of each
set of financial statements required under clause (l) above, deliver to
Administrative Agent, a duly completed Compliance Certificate signed by a
Responsible Officer. Promptly upon their becoming available, Borrowers shall
deliver to Administrative Agent copies of all Swap Contracts to which any
Borrower is a party. Promptly upon Administrative Agent's receipt of any of the
foregoing in this Section 4.1, Administrative Agent shall deliver a copy to each
Lender.
SECTION 4.2 PAYMENT AND PERFORMANCE OF OBLIGATIONS. Each Borrower (a) will
pay and discharge at or prior to maturity, all of their respective obligations
and liabilities, including tax liabilities, except for such obligations and/or
liabilities (i) that may be the subject of a Permitted Contest, or (ii) the
nonpayment or nondischarge of which could not reasonably be expected to have a
Material Adverse Effect, (b) will maintain in accordance with GAAP, appropriate
reserves for the accrual of all of their respective obligations and liabilities,
and (c) will not breach or permit any Subsidiary to breach, or permit to exist
any default under, the terms of any Material Contract or any other lease,
commitment, contract, instrument or obligation to which it is a party, or by
which its properties or assets are bound, except for such breaches or defaults
which could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.3 MAINTENANCE OF EXISTENCE. Each Borrower will preserve, renew
and keep in full force and effect and in good standing their respective
existence and their respective rights, privileges and franchises necessary in
the normal conduct of business.
SECTION 4.4 MAINTENANCE OF PROPERTY; INSURANCE.
Credit and Security Agreement
26
(a) Each Borrower will keep all property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.
If all or any part of the Collateral useful or necessary in its business,
becomes damaged or destroyed, each Borrower will promptly and completely repair
and/or restore the affected Collateral in a good and workmanlike manner, to the
extent that insurance proceeds are available pursuant to Section 2.1(a)(ii)(B)
hereof.
(b) Upon completion of any Permitted Contest, Borrowers shall promptly pay
the amount due, if any, and deliver to Administrative Agent proof of the
completion of the contest and payment of the amount due, if any, following which
Administrative Agent shall return the security, if any, deposited with
Administrative Agent pursuant to the definition of Permitted Contest.
(c) Each Borrower will maintain all insurance described on Schedule 4.4,
upon the terms and with the coverages and rights in favor of Administrative
Agent and Lenders as described in Schedule 4.4; PROVIDED, HOWEVER, that, in no
event shall such insurance be in amounts or with coverage less than, or with
carriers with qualifications inferior to, any of the insurance or carriers in
existence as of the Closing Date (or required to be in existence after the
Closing Date under a Financing Document), as evidenced by the insurance
certificates attached hereto as Schedule 4.4, or such other types and amounts of
insurance as may be reasonable for other companies in the same industry that are
similarly situated. All such insurance shall be provided by insurers having an
A.M. Best policyholders rating reasonably acceptable to Administrative Agent.
(d) On or prior to the Closing Date, and at all times thereafter, each
Borrower will cause Administrative Agent, for the benefit of Lenders, to be
named as an additional insured and loss payee (which shall include, as
applicable, identification as mortgagee), as applicable, on each insurance
policy required to be maintained pursuant to this Section 4.4 pursuant to
endorsements in form and content reasonably acceptable to Administrative Agent.
Borrowers will deliver to Administrative Agent and the Lenders (i) on the
Closing Date, a certificate from Borrowers' insurance broker dated such date (or
a date reasonably close thereto) showing the amount of coverage as of such date,
and that such policies will include effective waivers (whether under the terms
of any such policy or otherwise) by the insurer of all claims for insurance
premiums against all loss payees and additional insureds and all rights of
subrogation against all loss payees and additional insureds, and that if all or
any part of such policy is canceled, terminated or expires, the insurer will
forthwith give notice thereof to each additional insured, assignee and loss
payee and that no cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least thirty (30) days after
receipt by each additional insured and loss payee of written notice thereof,
(ii) upon the request of any Lender through Administrative Agent from time to
time full information as to the insurance carried, (iii) within five (5) days of
receipt of notice from any insurer, a copy of any notice of cancellation,
nonrenewal or material change in coverage from that existing on the date of this
Agreement, and (iv) forthwith, notice of any cancellation or nonrenewal of
coverage by any Borrower.
(e) In the event any Borrower (i) fails to maintain the insurance coverage
required by this Agreement, or (ii) fails to provide Administrative Agent with
evidence of the insurance coverage required by this Agreement and such failure
to provide evidence continues for five (5) Business Days, Administrative Agent
may (but shall have no obligation to) purchase insurance at Borrowers' expense
to protect Administrative Agent's and each Lender's interests in the Collateral
and to protect Administrative Agent and Lenders from liability claims relating
to the Borrowers' operations, and the costs and expenses of Administrative Agent
in obtaining and paying the premiums on any such insurance shall constitute part
of the Obligations for which the Borrowers are jointly and severally liable
hereunder and which are secured by the Collateral.
SECTION 4.5 COMPLIANCE WITH LAWS. Each Borrower will comply with the
requirements of all applicable Laws, except to the extent that failure to so
comply could not reasonably be expected to (a) have a Material Adverse Effect,
or (b) result in any Lien (other than a Permitted Lien) upon any of the assets
of any such Person in favor of any Governmental Authority.
SECTION 4.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS. Each Borrower will
keep proper books of record substantially in accordance with GAAP in which full,
true and correct entries shall be made of all dealings and transactions in
relation to its business and activities; and will permit at the sole cost of
Borrowers (subject, however, to any limitations set forth in Section 2.2(d) and,
so long as no Event of Default then exists, at reasonable intervals),
representatives of Administrative Agent and of any Lender (but at such Lender's
expense unless such
Credit and Security Agreement
27
visit or inspection is made concurrently with Administrative Agent) to visit and
inspect any of their respective properties, to examine and make abstracts or
copies from any of their respective books and records, to conduct a collateral
audit and analysis of their respective operations and the Collateral, to verify
the amount and age of the Accounts, the identity and credit of the respective
Account Debtors, to review the billing practices of Borrower and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants as often as may reasonably be
desired. In the absence of an Event of Default, Administrative Agent or any
Lender exercising any rights pursuant to this Section 4.6 shall give the
applicable Borrower or any applicable Subsidiary commercially reasonable prior
notice of such exercise, shall attempt to schedule such audit at a reasonably
convenient time for the Borrower, and shall otherwise use reasonable efforts to
minimize disruption of the Borrowers' business in conducting such audit. No
notice shall be required during the existence and continuance of any Event of
Default or any time during which Administrative Agent reasonably believes an
Event of Default exists.
SECTION 4.7 USE OF PROCEEDS. Borrowers shall use the proceeds of the Term
Loan solely for working capital needs and general corporate purposes. No portion
of the proceeds of the Loans will be used for family, personal, agricultural or
household use.
SECTION 4.8 RESERVED.
SECTION 4.9 NOTICES OF LITIGATION AND DEFAULTS.
(a) Borrowers will give prompt written notice to Administrative Agent of
any litigation or governmental proceedings pending or threatened (in writing)
against Borrowers or other Credit Party which would reasonably be expected to
have a Material Adverse Effect with respect to Borrowers or any other Credit
Party.
(b) Without limiting or contradicting any other more specific provision of
this Agreement, promptly (and in any event within three (3) Business Days) upon
any Borrower becoming aware of the existence of any Default or Event of Default,
Borrowers shall give written notice to Administrative Agent of such occurrence,
which such notice shall include a reasonably detailed description of such
Default or Event of Default.
SECTION 4.10 HAZARDOUS MATERIALS; REMEDIATION.
(a) If any release or disposal of Hazardous Materials shall occur or shall
have occurred on any real property or any other assets of any Borrower or any
other Credit Party, such Borrower will cause, or direct the applicable Credit
Party to cause, the prompt containment and removal of such Hazardous Materials
and the remediation of such real property or other assets as is necessary to
comply with all Environmental Laws and to preserve the value of such real
property or other assets, except where the failure to do so would not reasonably
be expected to result in a Material Adverse Change. Without limiting the
generality of the foregoing, each Borrower shall, and shall cause each other
Credit Party to, comply with each Environmental Law requiring the performance at
any real property by any Borrower or any other Credit Party of activities in
response to the release or threatened release of a Hazardous Material.
(b) Borrowers will provide Administrative Agent within thirty (30) days
after written demand therefor with a bond, letter of credit or similar financial
assurance evidencing to the reasonable satisfaction of Administrative Agent that
sufficient funds are available to pay the cost of removing, treating and
disposing of any Hazardous Materials or Hazardous Materials Contamination and
discharging any assessment which may be established on any property as a result
thereof, such demand to be made, if at all, upon Administrative Agent's
reasonable business determination that the failure to remove, treat or dispose
of any Hazardous Materials or Hazardous Materials Contamination, or the failure
to discharge any such assessment could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.11 FURTHER ASSURANCES.
(a) Each Borrower will, at its own cost and expense, cause to be promptly
and duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as may from time to time be necessary
Credit and Security Agreement
28
or as Administrative Agent or the Required Lenders may from time to time
reasonably request in order to carry out the intent and purposes of the
Financing Documents and the transactions contemplated thereby, including all
such actions to (i) establish, create, preserve, protect and perfect a first
priority Lien (subject only to Permitted Liens) in favor of Administrative Agent
for the benefit of the Lenders on the Collateral (including Collateral acquired
after the date hereof), and (ii) unless Required Lenders shall agree otherwise
in writing, cause all Domestic Subsidiaries of Borrowers to be jointly and
severally obligated with the other Borrowers under all covenants and obligations
under this Agreement, including the obligation to repay the Obligations. Without
limiting the generality of the foregoing, at the request of Administrative Agent
or the Required Lenders, following the disclosure by Borrowers on any Compliance
Certificate of the acquisition by any Credit Party of any rights under a license
as a licensee with respect to any registered Intellectual Property or
application for the registration of any Intellectual Property owned by another
Person, Borrowers shall execute any documents requested by Administrative Agent
or the Required Lenders to establish, create, preserve, protect and perfect a
first priority lien in favor of Administrative Agent, to the extent legally
possible, in such Borrower's rights under such license and shall use their
commercially reasonable best efforts to obtain the written consent of the
licensor to the granting in favor of Administrative Agent of a Lien on such
Borrower's rights as licensee under such license.
(b) Upon receipt of an affidavit of an officer of Administrative Agent or a
Lender as to the loss, theft, destruction or mutilation of any Note or any other
Financing Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other applicable
Financing Document, and in the case of any such loss, an indemnity reasonably
acceptable to the Borrower Representative, Borrowers will issue, in lieu
thereof, a replacement Note or other applicable Financing Document, dated the
date of such lost, stolen, destroyed or mutilated Note or other Financing
Document in the same principal amount thereof and otherwise of like tenor.
(c) Upon the formation or acquisition of a new Subsidiary, Borrowers shall
(i) pledge, have pledged or cause or have caused to be pledged to Administrative
Agent pursuant to a pledge agreement in form and substance satisfactory to
Administrative Agent, (A) all of the outstanding equity interests of each new
Domestic Subsidiary owned directly or indirectly by any Borrower and (B) 65% of
the outstanding equity interests of each new Foreign Subsidiary owned directly
by any Borrower or by any Domestic Subsidiary of any Borrower, in each case,
along with undated stock or equivalent powers for such equity interests,
executed in blank; (ii) unless the Required Lenders shall agree otherwise in
writing, cause the new Domestic Subsidiary to take such other actions (including
entering into or joining any Security Documents) as are necessary or advisable
in the reasonable opinion of the Administrative Agent or the Required Lenders in
order to grant the Administrative Agent, acting on behalf of the Lenders, a
first priority Lien to secure the Obligations of all Credit Parties on all real
and personal property (but limited to 65% of the outstanding equity interest of
any Foreign Subsidiary of such Subsidiary) and leasehold estates of such
Subsidiary in existence as of such date and in all after acquired property,
which first priority Liens are required to be granted pursuant to this
Agreement; (iii) unless the Required Lenders shall agree otherwise in writing,
cause such new Domestic Subsidiary to either (at the election of the Required
Lenders) become a Borrower hereunder with joint and several liability for all
obligations of Borrowers hereunder and under the other Financing Documents
pursuant to a joinder agreement or other similar agreement in form and substance
satisfactory to Administrative Agent or to become a Guarantor of the obligations
of Borrowers hereunder and under the other Financing Documents pursuant to a
guaranty and suretyship agreement in form and substance satisfactory to
Administrative Agent; and (iv) cause each new Subsidiary to deliver certified
copies of such Subsidiary's certificate or articles of incorporation, together
with good standing certificates, by-laws (or other operating agreement or
governing documents), resolutions of the Board of Directors or other governing
body, approving and authorizing the execution and delivery of the Security
Documents, incumbency certificates and to execute and/or deliver such other
documents and legal opinions or to take such other actions as may be requested
by the Administrative Agent or the Required Lenders, in each case, in form and
substance satisfactory to the Administrative Agent or the Required Lenders.
(d) Upon the request of Administrative Agent or the Required Lenders,
Borrowers shall obtain a landlord's agreement or mortgagee agreement, as
applicable, from the lessor of each leased property or mortgagee of owned
property with respect to any business location where any portion of the
Collateral having a value in excess of $500,000, or the material records
relating to such Collateral and/or software and equipment relating to such
records or Collateral, is stored or located, which agreement or letter shall be
reasonably satisfactory in form and substance to Administrative Agent. Borrowers
shall timely and fully pay and perform its obligations under all leases
Credit and Security Agreement
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and other agreements with respect to each leased location where any Collateral,
or any records related thereto, is or may be located.
SECTION 4.12 UPDATES OF REPRESENTATIONS. Borrowers shall deliver to
Administrative Agent within fifteen (15) days of the written request of
Administrative Agent an Officer's Certificate updating all of the
representations and warranties contained in this Agreement and the other
Financing Documents and certifying that all of the representations and
warranties contained in this Agreement and the other Financing Documents, as
updated pursuant to such Officer's Certificate, are true, accurate and complete
as of the date of such Officer's Certificate.
SECTION 4.13 POWER OF ATTORNEY. Each of the officers of Administrative
Agent is hereby irrevocably made, constituted and appointed the true and lawful
attorney for Borrowers (without requiring any of them to act as such) with full
power of substitution to do the following after the occurrence and during the
continuance of an Event of Default: (a) endorse the name of Borrowers upon any
and all checks, drafts, money orders, and other instruments for the payment of
money that are payable to Borrowers and constitute collections on Borrowers'
Accounts; (b) so long as Administrative Agent has provided not less than three
(3) Business Days' prior written notice to Borrowers to perform the same and
Borrowers have failed to take such action, execute in the name of Borrowers any
schedules, assignments, instruments, documents, and statements that Borrowers
are obligated to give Administrative Agent under this Agreement; (c) take any
action Borrowers are required to take under this Agreement; (d) do such other
and further acts and deeds in the name of Borrowers that Administrative Agent
may deem necessary or desirable to enforce any Account or other Collateral or
perfect Administrative Agent's security interest or Lien in any Collateral; and
(e) do such other and further acts and deeds in the name of Borrowers that
Administrative Agent may deem necessary or desirable to enforce its rights with
regard to any Account or other Collateral. This power of attorney shall be
irrevocable and coupled with an interest.
SECTION 4.14 COLLATERAL ADMINISTRATION.
(a) All data and other information relating to Accounts or other intangible
Collateral shall at all times be kept by Borrowers at their respective principal
and/or chief executive offices and shall not be moved from such locations
without (i) providing prior written notice to Administrative Agent, and (ii)
obtaining the prior written consent of Administrative Agent, which consent shall
not be unreasonably withheld.
(b) Administrative Agent reserves the right, during the existence of any
Event of Default, to notify Account Debtors that Administrative Agent has been
granted a Lien upon all Accounts.
(c) Borrowers will conduct a physical count of the Inventory in accordance
with historical practices, and during the existence of any Event of Default, at
such other times as Administrative Agent requests, and Borrowers shall provide
to Administrative Agent a written accounting of such physical count in form and
substance reasonably satisfactory to Administrative Agent. Borrowers will use
commercially reasonable efforts to at all times keep its Inventory in good and
marketable condition consistent with historical practices.
ARTICLE 5 - NEGATIVE COVENANTS
Each Borrower agrees that, so long as any Credit Exposure exists:
SECTION 5.1 DEBT; CONTINGENT OBLIGATIONS. No Borrower will, or will permit
any Subsidiary to, directly or indirectly, create, incur, assume, guarantee or
otherwise become or remain directly or indirectly liable with respect to, any
Debt, except for Permitted Indebtedness. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, create, assume, incur or suffer to exist
any Contingent Obligations, except for Permitted Contingent Obligations.
SECTION 5.2 LIENS. No Borrower will, or will permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except for Permitted Liens. Without
limiting the generality of the foregoing, no Borrower will, or will permit any
Subsidiary to, directly or indirectly, create, assume or suffer to exist any
Lien on any of its or their Intellectual Property, except for Permitted Liens.
Credit and Security Agreement
30
SECTION 5.3 RESTRICTED DISTRIBUTIONS. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Distribution; provided, however, that the following
Restricted Distributions may be paid: (a) at any time, dividends may be paid by
any Subsidiary of any Borrower to such parent Borrower (and/or to any
intermediate Subsidiary who is also a Borrower); (b) any Borrower may pay
dividends solely in common stock; (c) Borrower may repurchase the stock of
former employees, directors or consultants pursuant to stock repurchase
agreements so long as an Event of Default does not exist at the time of such
repurchase and would not exist after giving effect to such repurchase, provided
that such repurchase does not exceed Five Hundred Thousand Dollars ($500,000) in
the aggregate per fiscal year; and (d) payments or distributions of Trust Assets
as required pursuant to the deferred compensation plan or supplemental executive
retirement plan of the Principal Borrower.
SECTION 5.4 RESTRICTIVE AGREEMENTS. No Borrower will, or will permit any
Subsidiary to, directly or indirectly (a) enter into or assume any agreement
(other than the Financing Documents and any agreements for purchase money debt
or capital leases permitted under clause (c) of the definition of Permitted
Indebtedness) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired (other than in
connection with the Trust and Trust Assets), or (b) create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind (except as provided by the Financing Documents) on the ability of any
Subsidiary to: (i) pay or make Restricted Distributions to any Borrower or any
Subsidiary; (ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make
loans or advances to any Borrower or any Subsidiary; or (iv) transfer any of its
property or assets to any Borrower or any Subsidiary.
SECTION 5.5 RESERVED.
SECTION 5.6 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS; CHANGE IN CONTROL.
No Borrower will, or will permit any Subsidiary to, directly or indirectly (a)
consolidate or merge or amalgamate with or into any other Person, other than
Permitted Mergers, or (b) consummate any Asset Dispositions other than Permitted
Asset Dispositions. No Borrower will suffer or permit to occur any Change in
Control with respect to itself, any Subsidiary or any Guarantor.
Notwithstanding the foregoing, the Borrowers shall be permitted to make any
Permitted Joint Venture Contribution.
SECTION 5.7 PURCHASE OF ASSETS, INVESTMENTS. No Borrower will, or will
permit any Subsidiary to, directly or indirectly (a) acquire or enter into any
agreement to acquire any assets other than (x) in the Ordinary Course of
Business, (y) as permitted under clause (h) of the definition of Permitted
Investments, or (z) in-licensing which is consistent with the business strategy
of the Borrowers, so long as any Joint Venture Contributions in connection
therewith are Permitted Joint Venture Contributions; (b) engage or enter into
any agreement to engage in any joint venture or partnership with any other
Person; or (c) acquire or own or enter into any agreement to acquire or own any
Investment in any Person other than Permitted Investments.
Notwithstanding the foregoing, the Borrowers shall be permitted to make
any Permitted Joint Venture Contribution.
SECTION 5.8 TRANSACTIONS WITH AFFILIATES. Except as otherwise disclosed on
Schedule 5.8, except for transactions between Borrowers, and except for
transactions which contain terms that are no less favorable to the applicable
Borrower or any Subsidiary, as the case may be, than those which might be
obtained from a third party not an Affiliate of any Credit Party, no Borrower
will, or will permit any Subsidiary to, directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of any
Borrower. Prior to any Borrower or any Subsidiary entering into any transaction
with any Affiliate (other than another Borrower), involving aggregate
consideration in excess of $1,000,000, Borrowers will disclose such transaction
to Administrative Agent.
SECTION 5.9 MODIFICATION OF ORGANIZATIONAL DOCUMENTS. No Borrower will, or
will permit any Subsidiary to, directly or indirectly, amend or otherwise modify
any Organizational Documents of such Person, except for Permitted Modifications.
Without limiting the generality of the provisions of Section 5.1, no Borrower
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will, or will permit any Subsidiary to, authorize and/or issue any capital stock
or other equity securities which are subject to any mandatory repurchase or
redemption provisions or put rights in favor of any holder thereof (not
including any repurchase or redemption provisions exercisable solely at the
option of such Borrower or Subsidiary) or otherwise constitute Debt under the
definition set forth herein or are subject to any provisions requiring the
mandatory payment of any dividends at any time (not including any specified
dividends which accrue at specified times but which are payable only as, when
and if declared by the board of directors or other similar governance body or
manager or partner of such Borrower or Subsidiary and/or upon liquidation of
such Borrower or Subsidiary).
SECTION 5.10 RESERVED.
SECTION 5.11 CONDUCT OF BUSINESS. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, engage in any line of business other than
those businesses engaged in on the Closing Date and described on Schedule 5.11
and businesses reasonably related thereto.
SECTION 5.12 RESERVED.
SECTION 5.13 LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. No Borrower
will, or will permit any Subsidiary to, directly or indirectly, enter into any
arrangement with any Person whereby, in a substantially contemporaneous
transaction, any Borrower or any Subsidiaries sells or transfers all or
substantially all of its right, title and interest in an asset and, in
connection therewith, acquires or leases back the right to use such asset.
SECTION 5.14 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Schedule 5.14 lists
all of the Deposit Accounts and Securities Accounts of each Borrower as of the
Closing Date. No Borrower will, or will permit any Subsidiary to, directly or
indirectly, establish any new bank account, Deposit Account or Securities
Account without prior written notice to Administrative Agent and unless
Administrative Agent, such Borrower or such Subsidiary and the bank, financial
institution or securities intermediary at which the account is to be opened
enter into a Deposit Account Control Agreement or Securities Account Control
Agreement prior to or concurrently with the establishment of such bank account,
Deposit Account or Securities Account.
SECTION 5.15 COMPLIANCE WITH ANTI-TERRORISM LAWS. Administrative Agent and
each Lender hereby notifies Borrowers that pursuant to the requirements of
Anti-Terrorism Laws, and Administrative Agent's and each Lender's policies and
practices, Administrative Agent and each Lender is required to obtain, verify
and record certain information and documentation that identifies Borrowers and
its principals, which information includes the name and address of each Borrower
and its principals and such other information that will allow Administrative
Agent to identify such party in accordance with Anti-Terrorism Laws. No Borrower
will, or will permit any Subsidiary to, directly or indirectly, knowingly enter
into any Material Contracts with any Blocked Person or any Person listed on the
OFAC Lists. Each Borrower shall immediately notify Administrative Agent and each
Lender if such Borrower has knowledge that any Borrower or any additional Credit
Party becomes a Blocked Person or becomes listed on the OFAC Lists or (a) is
convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. No Borrower will, or will permit any Subsidiary to,
directly or indirectly, (i) conduct any business or engage in any transaction or
dealing with any Blocked Person, including, without limitation, the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224, any similar executive order or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
ARTICLE 6 - [RESERVED]
ARTICLE 7 - CONDITIONS
SECTION 7.1 CONDITIONS TO CLOSING. The obligation of each Lender to make
the initial Loan shall be subject to the receipt by Administrative Agent of each
agreement, document and instrument set forth on the closing checklist prepared
by Administrative Agent or its counsel, each in form and substance satisfactory
to Administrative
Credit and Security Agreement
32
Agent, and such other closing deliverables reasonably requested by
Administrative Agent and Lenders, and to the satisfaction of the following
conditions precedent, each to the satisfaction of Administrative Agent and
Lenders and their respective counsel in their sole discretion:
(a) [Reserved]
(b) the payment of all fees, expenses and other amounts due and payable
under each Financing Document;
(c) the absence, since December 31, 2006, of any material adverse change in
any aspect of the business, operations, properties, or financial condition of
any Credit Party, or any event or condition which could reasonably be expected
to result in such a material adverse change; and
(d) the receipt by Administrative Agent of such other documents,
instruments and/or agreements as Administrative Agent may reasonably request.
SECTION 7.2 CONDITIONS TO EACH LOAN.
The obligation of the Lenders to make an advance in respect of any Loan
(including on the Closing Date) is subject to the satisfaction of the following
additional conditions:
(a) receipt by Administrative Agent of a Notice of Borrowing;
(b) the fact that, immediately before and after such advance, no Default or
Event of Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of each Credit Party
contained in the Financing Documents shall be true, correct and complete on and
as of the date of such borrowing, except to the extent that any such
representation or warranty relates to a specific date in which case such
representation or warranty shall be true and correct as of such earlier date;
and
(d) the fact that no material adverse change in the financial condition,
properties, business, or operations of Borrowers or any other Credit Party shall
have occurred and be continuing with respect to Borrowers or any Credit Party
since the date of this Agreement.
Each giving of a Notice of Borrowing hereunder and each acceptance by any
Borrower of the proceeds of any Loan made hereunder shall be deemed to be (y) a
representation and warranty by each Borrower on the date of such notice or
acceptance as to the facts specified in this Section, and (z) a restatement by
each Borrower that each and every one of the representations made by it in any
of the Financing Documents is true and correct in all material respects (except
to the extent that such representations and warranties expressly relate solely
to an earlier date).
SECTION 7.3 SEARCHES. Before the Closing Date, and thereafter (as and when
determined by Administrative Agent in its discretion), Administrative Agent
shall have the right to perform, all at Borrowers' expense, the searches
described in clauses (a), (b), (c) and (d) below against Borrowers and any other
Credit Party, the results of which are to be consistent with Borrowers'
representations and warranties under this Agreement and the satisfactory results
of which shall be a condition precedent to all advances of Loan proceeds: (a)
UCC searches with the Secretary of State of each jurisdiction in which the
applicable Person is organized, and, if applicable, local UCC fixture filings
searches in each jurisdiction where any real estate Collateral or fixtures
Collateral is located; (b) judgment, pending litigation, federal tax lien,
personal property tax lien, and corporate and partnership tax lien searches, in
the state and/or local filing offices (as applicable) of each jurisdiction where
the applicable Person maintains its executive offices, a place of business, or
assets and the jurisdiction in which the applicable Person is organized; (c)
real property title and lien searches in each jurisdiction in which any real
property Collateral is located; and (d) searches of applicable corporate,
limited liability company, partnership and related records to confirm the
continued existence, organization and good standing of the applicable Person and
the exact legal name under which such Person is organized.
Credit and Security Agreement
33
SECTION 7.4 POST CLOSING REQUIREMENTS. Borrowers shall complete each of the
post closing obligations and/or provide to Administrative Agent each of the
documents, instruments, agreements and information listed on Schedule 7.4
attached hereto on or before the date set forth for each such item thereon, each
of which shall be completed or provided in form and substance satisfactory to
Administrative Agent.
SECTION 7.5 ESTOPPEL CERTIFICATE. As an additional condition to the making
of the Tranche B Loan, Borrowers at their expense, will furnish Administrative
Agent with a statement, duly acknowledged and certified, and dated the date on
which the Tranche B Loan is requested, setting forth (a) the amount of the
original principal amount of the Notes, and the unpaid principal amount of the
Notes, (b) the rate of interest of the Notes, (c) the date payments of interest
and/or principal were last paid, (d) any offsets or defenses to the payment of
the Obligations, and if any are alleged, the nature thereof, (e) that the Notes
and this Agreement have not been modified or if modified, giving particulars of
such modification, and (f) that there has occurred and is then continuing no
Default or Event of Default or if such Default or Event of Default exists, the
nature thereof, the period of time it has existed, and the action being taken to
remedy such Default or Event of Default.
ARTICLE 8 - [RESERVED]
ARTICLE 9 - SECURITY AGREEMENT
SECTION 9.1 GENERALLY. As security for the payment and performance of the
Obligations, and without limiting any other grant of a Lien and security
interest in any Security Document, Borrowers hereby pledge and grant to
Administrative Agent, for the benefit of Lenders, a continuing first priority
Lien on and security interest in, upon, and to the personal property set forth
on Schedule 9.1 attached hereto and made a part hereof.
SECTION 9.2 REPRESENTATIONS AND WARRANTIES AND COVENANTS RELATING TO
COLLATERAL.
(a) Each Borrower has good title to, has rights in, and the power to
transfer each item of Collateral upon which it purports to xxxxx x Xxxx
hereunder, free and clear of any and all Liens except Permitted Liens. Except to
the extent that the Borrowers have notified the Administrative Agent of any
changes thereof in accordance with the terms of Section 9.2 (d) of this
Agreement and otherwise complied with the requirements of such Section 9.2(d),
Schedule 9.2 sets forth (i) each chief executive office and principal place of
business of each Borrower and each of their respective Subsidiaries and (ii) all
of the addresses (including all warehouses) at which any of the Collateral is
located and/or books and records of Borrowers regarding any of the Collateral
are kept, which such Schedule 9.2 (or such subsequent notice) indicates in each
case which Borrower(s) have Collateral and/or books and records located at such
address, and, in the case of any such address not owned by one or more of the
Borrowers(s), indicates the nature of such location (e.g., leased business
location operated by Borrower(s), third party warehouse, consignment location,
processor location, etc.) and the name and address of the third party owning
and/or operating such location; provided ,however, that no such prior written
notice shall be required with respect to any Collateral consisting of inventory
and/or equipment having a value of less than $500,000 at any location.
(b) Without limiting the generality of Section 3.2, except as indicated on
Schedule 3.19 with respect to any rights of any Borrower as a licensee under any
license of Intellectual Property owned by another Person, and except for the
filing of financing statements under the UCC and filings that may be necessary
to comply with applicable securities laws upon the exercise of any remedies in
respect of Collateral consisting of stock or other equity interests, no
authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority or consent of any other Person is required for (i) the
grant by each Borrower to Administrative Agent of the security interests and
Liens in the Collateral provided for under this Agreement and the other Security
Documents (if any), or (ii) the exercise by Administrative Agent of its rights
and remedies with respect to the Collateral provided for under this Agreement
and the other Security Documents or under any applicable Law, including the UCC
and neither any such grant of Liens in favor of Administrative Agent or exercise
of rights by Administrative Agent shall violate or cause a default under any
material agreement between any Borrower and any other Person relating to any
such Collateral, including any material license to which a Borrower is a party,
whether as licensor or licensee, with respect to any material Intellectual
Property, whether owned by such Borrower or any other Person.
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34
(c) As of the Closing Date, no Borrower has any ownership interest in any
material Chattel Paper, Letter of Credit Rights, Commercial Tort Claims,
Instruments, Documents or Investment Property (other than equity interests in
any Subsidiaries of such Borrower disclosed on Schedule 3.4 or which relate to
payroll accounts), and Borrowers shall give notice to Administrative Agent
promptly (but in any event not later than the delivery by Borrowers of the next
Compliance Certificate required pursuant to Section 4.1 above) upon the
acquisition by any Borrower of any such Chattel Paper, Letter of Credit Rights,
Commercial Tort Claims, Instruments, Documents or Investment Property. No Person
other than Administrative Agent or (if applicable) any Lender has "control" (as
defined in Article 9 of the UCC) over any Deposit Account, Investment Property
(including Securities Accounts and Commodities Account), Letter of Credit Rights
or Electronic Chattel Paper in which any Borrower has any interest (except for
such control arising by operation of law in favor of any bank or securities
intermediary or commodities intermediary with whom any Deposit Account,
Securities Account or Commodities Account of Borrowers is maintained).
(d) Borrowers shall not, and shall not permit any Credit Party to, take any
of the following actions or make any of the following changes unless Borrowers
have given at least thirty (30) days prior written notice to Administrative
Agent of Borrowers' intention to take any such action (which such written notice
shall include an updated version of any Schedule impacted by such change) and
have executed any and all documents, instruments and agreements and taken any
other actions which Administrative Agent may reasonably request after receiving
such written notice in order to protect and preserve the Liens, rights and
remedies of Administrative Agent with respect to the Collateral: (i) change the
legal name or organizational identification number of any Borrower as it appears
in official filings in the jurisdiction of its organization, (ii) change the
jurisdiction of incorporation or formation of any Borrower or Credit Party or
allow any Borrower or Credit Party to designate any jurisdiction as an
additional jurisdiction of incorporation for such Borrower or Credit Party, or
change the type of entity that it is, or (iii) change its chief executive
office, principal place of business, or the location of its records concerning
the Collateral, or move any Collateral to or place any Collateral on any
location that is not then listed on the Schedules and/or establish any business
location at any location that is not then listed on the Schedules, provided that
no such prior written notice shall be required with respect to any Collateral
constituting of inventory and/or equipment having a value of less than $500,000
at any location.
(e) Without limiting the generality of this Agreement or any other
provisions of any of the Financing Documents relating to the rights of
Administrative Agent after the occurrence and during the continuance of an Event
of Default, Administrative Agent shall have the right at any time after the
occurrence and during the continuance of an Event of Default (acting upon the
direction of the Required Lenders) to: (i) exercise the rights of Borrowers with
respect to the obligation of any Account Debtor to make payment or otherwise
render performance to Borrowers and with respect to any property that secures
the obligations of any Account Debtor or any other Person obligated on the
Collateral, and (ii) adjust, settle or compromise the amount or payment of any
of Borrowers' Accounts.
(f) Without limiting the generality of Sections 9.2(c) and 9.2(e):
(i) Borrowers shall deliver to Administrative Agent all Tangible
Chattel Paper and all Instruments and Documents owned by any Borrower upon the
request of the Administrative Agent or if the aggregate amount thereof
constituting part of the Collateral exceeds $250,000, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to Administrative Agent. Borrowers shall
provide Administrative Agent with "control" (as defined in Article 9 of the UCC)
of all Electronic Chattel Paper upon the request of the Administrative Agent or
if the aggregate amount thereof constituting part of the Collateral exceeds
$250,000, by having Administrative Agent identified as the assignee on the
records pertaining to the single authoritative copy thereof and otherwise
complying with the applicable elements of control set forth in the UCC. During
the existence of any Event of Default or at the request of the Administrative
Agent, Borrowers also shall deliver to Administrative Agent all security
agreements securing any such Chattel Paper and securing any such Instruments. At
the request of the Administrative Agent, Borrowers will xxxx conspicuously all
such Chattel Paper and all such Instruments and Documents with a legend, in form
and substance satisfactory to Administrative Agent, indicating that such Chattel
Paper and such Instruments and Documents are subject to the security interests
and Liens in favor of Administrative Agent created pursuant to this Agreement
and the Security Documents. Borrowers shall comply with all the provisions of
Section 5.14 with respect to the Deposit Accounts and Securities Accounts of
Borrowers.
Credit and Security Agreement
35
(ii) If the aggregate face amount thereof exceeds $250,000 or at
the request of the Administrative Agent, Borrowers shall deliver to
Administrative Agent all letters of credit on which any Borrower is the
beneficiary and which give rise to Letter-of-Credit Rights owned by such
Borrower which constitute part of the Collateral in each case duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Administrative Agent. Borrowers shall take any and
all actions as may be necessary or desirable, or that Administrative Agent may
request, from time to time, to cause Administrative Agent to obtain exclusive
"control" (as defined in Article 9 of the UCC) of any such Letter-of-Credit
Rights in a manner acceptable to Administrative Agent.
(iii) Borrowers shall promptly advise Administrative Agent upon
any Borrower becoming aware that it has any interests in any Commercial Tort
Claim involving an amount in controversy in excess of $1,000,000 that
constitutes part of the Collateral, which such notice shall include descriptions
of the events and circumstances giving rise to such Commercial Tort Claim and
the dates such events and circumstances occurred, the potential defendants with
respect such Commercial Tort Claim and any court proceedings that have been
instituted with respect to such Commercial Tort Claim, and Borrowers shall, with
respect to any such Commercial Tort Claim, execute and deliver to Administrative
Agent such documents as Administrative Agent shall reasonably request to
perfect, preserve or protect the Liens, rights and remedies of Administrative
Agent with respect to any such Commercial Tort Claim.
(iv) Except for Accounts and Inventory in an aggregate amount of
not more than Five Hundred Thousand Dollars ($500,000), no Accounts or Inventory
or other Collateral shall at any time be in the possession or control of any
warehouse, consignee, bailee or any of Borrowers' agents or processors without
prior written notice to Administrative Agent and the receipt by Administrative
Agent, if Administrative Agent has so requested, of warehouse receipts,
consignment agreements or bailee lien waivers (as applicable) reasonably
satisfactory to Administrative Agent prior to the commencement of such
possession or control. Borrower has notified Administrative Agent that Inventory
is currently located at the locations set forth on Schedule 9.2. Borrowers
shall, upon the request of Administrative Agent, notify any such warehouse,
consignee, bailee, agent or processor of the security interests and Liens in
favor of Administrative Agent created pursuant to this Agreement and the
Security Documents, instruct such Person to hold all such Collateral for
Administrative Agent's account subject to Administrative Agent's instructions
and shall obtain an acknowledgement from such Person that such Person holds the
Collateral for Administrative Agent's benefit.
(v) Borrowers shall cause all Equipment and other tangible
Personal Property other than Inventory to be maintained and preserved in the
same condition, repair and in working order as when new, ordinary wear and tear
excepted, and shall promptly make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end. Upon request of Administrative Agent, Borrowers shall promptly
deliver to Administrative Agent any and all certificates of title, applications
for title or similar evidence of ownership of all such tangible Personal
Property and shall cause Administrative Agent to be named as lienholder on any
such certificate of title or other evidence of ownership. Borrowers shall not
permit any such tangible Personal Property (other than leasehold improvements)
to become Fixtures to real estate unless such real estate is subject to a Lien
in favor of Administrative Agent.
(vi) Each Borrower hereby authorizes Administrative Agent to file
without the signature of such Borrower one or more UCC financing statements
relating to liens on personal property relating to all or any part of the
Collateral, which financing statements may list Administrative Agent as the
"secured party" and such Borrower as the "debtor" and which describe and
indicate the collateral covered thereby as all or any part of the Collateral
under the Financing Documents (including an indication of the collateral covered
by any such financing statement as "all assets" of such Borrower now owned or
hereafter acquired, excluding only the Excluded Property), in such jurisdictions
as Administrative Agent from time to time determines are appropriate, and to
file without the signature of such Borrower any continuations of or corrective
amendments to any such financing statements, in any such case in order for
Administrative Agent to perfect, preserve or protect the Liens, rights and
remedies of Administrative Agent with respect to the Collateral.
(vii) As of the Closing Date, no Borrower holds, and after the
Closing Date Borrowers shall promptly notify Administrative Agent in writing
upon creation or acquisition by any Borrower of, any Collateral having a value,
individually or in the aggregate, of $100,000, which constitutes a claim against
any Governmental
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Authority, including, without limitation, the federal government of the United
States or any instrumentality or agency thereof, the assignment of which claim
is restricted by any applicable Law, including, without limitation, the federal
Assignment of Claims Act and any other comparable Law. Upon the request of
Administrative Agent, Borrowers shall take such steps as may be necessary or
desirable, or that Administrative Agent may request, to comply with any such
applicable Law.
(viii) Borrowers shall furnish to Administrative Agent from time
to time any statements and schedules further identifying or describing the
Collateral and any other information, reports or evidence concerning the
Collateral as Administrative Agent may reasonably request from time to time.
SECTION 9.3 UCC REMEDIES.
(a) Upon the occurrence of and during the continuance of an Event of
Default under this Agreement or the other Financing Documents, Administrative
Agent shall, if requested by the Required Lenders, in addition to all other
rights, options, and remedies granted to Administrative Agent under this
Agreement or at law or in equity, exercise, either directly or through one or
more assignees or designees, all rights and remedies granted to it under all
Financing Documents and under the UCC in effect in the applicable
jurisdiction(s) and under any other applicable law; including, without
limitation:
(i) The right to take possession of, send notices regarding, and
collect directly the Collateral, with or without judicial process;
(ii) The right to (by its own means or with judicial assistance)
enter any of Borrowers' premises and take possession of the Collateral, or
render it unusable, or to render it usable or saleable, or dispose of the
Collateral on such premises in compliance with subsection (iii) below and to
take possession of Borrowers' original books and records, to obtain access to
Borrowers' data processing equipment, computer hardware and software relating to
the Collateral and to use all of the foregoing and the information contained
therein in any manner Administrative Agent deems appropriate, without any
liability to Borrowers for rent, storage, utilities, or other sums, and
Borrowers shall not resist or interfere with such action (if Borrowers' books
and records are prepared or maintained by an accounting service, contractor or
other third party agent, Borrowers hereby irrevocably authorize such service,
contractor or other agent, upon notice by Administrative Agent to such Person
that an Event of Default has occurred and is continuing, to deliver to
Administrative Agent or its designees such books and records, and to follow
Administrative Agent's instructions with respect to further services to be
rendered);
(iii) The right to require Borrowers at Borrowers' expense to
assemble all or any part of the Collateral and make it available to
Administrative Agent at any place designated by the Administrative Agent;
(iv) The right to notify postal authorities to change the address
for delivery of Borrowers' mail to an address designated by Administrative Agent
and to receive, open and dispose of all mail addressed to any Borrower.
(v) The right to enforce Borrowers' rights against Account
Debtors and other obligors, including, without limitation, (i) the right to
collect Accounts directly in Administrative Agent's own name (as agent for
Lenders) and to charge the collection costs and expenses, including attorneys'
fees, to Borrowers, and (ii) the right, in the name of Administrative Agent or
any designee of Administrative Agent or Borrowers, to verify the validity,
amount or any other matter relating to any Accounts by mail, telephone,
telegraph or otherwise, including, without limitation, verification of
Borrowers' compliance with applicable Laws. Borrowers shall cooperate fully with
Administrative Agent in an effort to facilitate and promptly conclude such
verification process. Such verification may include contacts between
Administrative Agent and applicable federal, state and local regulatory
authorities having jurisdiction over the Borrowers' affairs, all of which
contacts Borrowers hereby irrevocably authorize.
(b) Each Borrower agrees that a notice received by it at least ten (10)
days before the time of any intended public sale, or the time after which any
private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any
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37
perishable Collateral which threatens to speedily decline in value or which is
sold on a recognized market may be sold immediately by Administrative Agent
without prior notice to Borrowers. At any sale or disposition of Collateral,
Administrative Agent may (to the extent permitted by applicable law) purchase
all or any part of the Collateral, free from any right of redemption by
Borrowers, which right is hereby waived and released. Each Borrower covenants
and agrees not to interfere with or impose any obstacle to Administrative
Agent's exercise of its rights and remedies with respect to the Collateral.
Administrative Agent shall have no obligation to clean-up or otherwise prepare
the Collateral for sale. Administrative Agent may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral. Administrative Agent
may sell the Collateral without giving any warranties as to the Collateral.
Administrative Agent may specifically disclaim any warranties of title or the
like. This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral. If Administrative Agent sells any
of the Collateral upon credit, Borrowers will be credited only with payments
actually made by the purchaser, received by Administrative Agent and applied to
the indebtedness of the purchaser. In the event the purchaser fails to pay for
the Collateral, Administrative Agent may resell the Collateral and Borrowers
shall be credited with the proceeds of the sale. Borrowers shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Obligations.
(c) Without restricting the generality of the foregoing and for the
purposes aforesaid, each Borrower hereby appoints and constitutes Administrative
Agent its lawful attorney-in-fact with full power of substitution in the
Collateral, upon the occurrence and during the continuance of a Default, to use
unadvanced funds remaining under this Agreement or which may be reserved,
escrowed or set aside for any purposes hereunder at any time, or to advance
funds in excess of the face amount of the Notes, to pay, settle or compromise
all existing bills and claims, which may be Liens or security interests, or to
avoid such bills and claims becoming Liens against the Collateral; to execute
all applications and certificates in the name of such Borrower and to prosecute
and defend all actions or proceedings in connection with the Collateral; and to
do any and every act which such Borrower might do in its own behalf; it being
understood and agreed that this power of attorney shall be a power coupled with
an interest and cannot be revoked.
(d) Administrative Agent and each Lender is hereby granted an irrevocable,
non-exclusive, royalty-free license or other right to use, without charge,
Borrowers' labels, mask works, rights of use of any name, any other Intellectual
Property and advertising matter, and any similar property as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and, in connection with Administrative Agent's exercise of its rights
under this Article, Borrowers' rights under all licenses and all franchise
agreements inure to Administrative Agent's and each Lender's benefit.
SECTION 9.4 ROYALTY PAYMENTS; EQUIPMENT SECURING PERMITTED INDEBTEDNESS.
(a) If the Principal Borrower pledges the Procardia Royalty Payments in
favor of any lender other than the Lenders, or if the Principal Borrower sells
or otherwise disposes of the Procardia Royalty Payments, then, upon written
notice to the Administrative Agent of such pledge, sale or disposition, the
Administrative Agent's and the Lenders' Lien on such pledged Procardia Royalty
Payments shall be terminated and the Administrative Agent shall, at the
Borrowers' written request and at the Borrowers' expense, file an amendment in a
form reasonably acceptable to the Administrative Agent to the financing
statements filed by the Administrative Agent and the Lenders in connection with
the Collateral to evidence the release of the Administrative Agent's and the
Lenders' Lien on such pledged Procardia Royalty Payments. In the event that any
pledge of the Procardia Royalty Payments referenced above is rescinded,
terminated, released or otherwise no longer in effect, the Administrative
Agent's and the Lenders' Lien on the Procardia Royalty Payments shall be
reinstated and the Administrative Agent shall be authorized to file, at the
Borrowers' expense, a further amendment to the financing statements filed by the
Administrative Agent and the Lenders in connection with the Collateral to
evidence the Administrative Agent's and the Lenders' Lien on the Procardia
Royalty Payments.
(b) If any Borrower pledges any equipment, attachments thereto and proceeds
thereof as security for any equipment financing permitted under clause (c) of
the definition of Permitted Indebtedness, and in connection therewith, such
Borrower desires that the Administrative Agent and the Lenders release their
lien in such equipment, attachments thereto and proceeds thereof, then such
Borrower shall provide the Administrative Agent with a written request to
release such lien, which written request shall include a description of such
equipment and related assets to
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be released, and the Administrative Agent shall, at the Borrower's written
request and at the Borrowers' expense, file an amendment in a form reasonably
acceptable to the Administrative Agent to the financing statements filed by the
Administrative Agent and the Lenders in connection with the Collateral to
evidence the release of the Administrative Agent's and the Lenders' Lien on such
equipment, attachments thereto and proceeds thereof. In the event that the lien
in any equipment, attachments and proceeds in favor of any other Person and
securing any such financing is rescinded, terminated, released or otherwise no
longer in effect, the Administrative Agent's and the Lenders' Lien on such
equipment, attachments and proceeds shall be reinstated and the Administrative
Agent shall be authorized to file, at the Borrowers' expense, a further
amendment to the financing statements filed by the Administrative Agent and the
Lenders in connection with the Collateral to evidence the Administrative Agent's
and the Lenders' Lien on such equipment, attachments and proceeds..
ARTICLE 10 - EVENTS OF DEFAULT
SECTION 10.1 EVENTS OF DEFAULT.
For purposes of the Financing Documents, the occurrence of any of the
following conditions and/or events, whether voluntary or involuntary, by
operation of law or otherwise, shall constitute an "EVENT OF DEFAULT":
(a) any Borrower shall fail to pay when due any principal, interest,
premium or fee under any Financing Document or any other amount payable under
any Financing Document, or there shall occur any default in the performance of
or compliance with any of the following sections of this Agreement: Article 5;
Sections 4.1, 4.3 (solely as it relates to maintaining its existence), 4.4 and
4.6;
(b) any Credit Party defaults in the performance of or compliance with any
term contained in this Agreement or in any other Financing Document (other than
occurrences described in other provisions of this Section 10.1 for which a
different grace or cure period is specified or for which no grace or cure period
is specified and thereby constitute immediate Events of Default) and such
default is not remedied by the Credit Party or waived by the Required Lenders
within thirty (30) days;
(c) any representation, warranty, certification or statement made by any
Credit Party in any Financing Document or in any certificate, financial
statement or other document delivered pursuant to any Financing Document is
incorrect in any respect (or in any material respect if such representation,
warranty, certification or statement is not by its terms already qualified as to
materiality) when made (or deemed made);
(d) failure of any Credit Party to pay when due or within any applicable
grace period any principal, interest or other amount on Debt (other than the
Loans) or in respect of any Swap Contract, or the occurrence of any breach,
default, condition or event with respect to any Debt (other than the Loans) or
in respect of any Swap Contract, if the effect of such failure or occurrence is
to cause or to permit the holder or holders of any such Debt, or the
counterparty under any such Swap Contract, to cause, Debt or other liabilities
having an individual principal amount in excess of Five Hundred Thousand Dollars
($500,000) or having an aggregate principal amount in excess of One Million
Dollars ($1,000,000) to become or be declared due prior to its stated maturity;
(e) any Credit Party or any Subsidiary of a Borrower shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(f) an involuntary case or other proceeding shall be commenced against any
Credit Party or any Subsidiary of a Borrower seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of forty-five (45) days; or
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39
an order for relief shall be entered against any Credit Party or any Subsidiary
of a Borrower under applicable federal bankruptcy, insolvency or other similar
law in respect of (i) bankruptcy, liquidation, winding-up, dissolution or
suspension of general operations, (ii) composition, rescheduling,
reorganization, arrangement or readjustment of, or other relief from, or stay of
proceedings to enforce, some or all of the debts or obligations, or (iii)
possession, foreclosure, seizure or retention, sale or other disposition of, or
other proceedings to enforce security over, all or any substantial part of the
assets of such Credit Party or Subsidiary;
(g) (i) institution of any steps by any Person to terminate a Pension Plan
if as a result of such termination any Credit Party or any member of the
Controlled Group could reasonably be expected to be required to make a
contribution to such Pension Plan in an amount in excess of One Hundred Thousand
Dollars ($100,000), or could reasonably be expected to incur a liability or
obligation to such Pension Plan, in excess of One Hundred Thousand Dollars
($100,000), (ii) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA, or (iii) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Plan and
the withdrawal liability (without unaccrued interest) to Multiemployer Plans as
a result of such withdrawal (including any outstanding withdrawal liability that
any Credit Party or any member of the Controlled Group have incurred on the date
of such withdrawal) exceeds One Hundred Thousand Dollars ($100,000);
(h) one or more judgments or orders for the payment of money (not paid or
fully covered by insurance maintained in accordance with the requirements of
this Agreement and as to which the relevant insurance company has acknowledged
coverage) aggregating in excess of One Million Dollars ($1,000,000) shall be
rendered against any or all Credit Parties and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgments or
orders, or (ii) there shall be any period of twenty (20) consecutive days during
which a stay of enforcement of any such judgments or orders, by reason of a
pending appeal, bond or otherwise, shall not be in effect;
(i) any Lien created by any of the Security Documents shall at any time
fail to constitute a valid and perfected Lien on any portion of the Collateral
having a value in excess of Two Hundred Fifty Thousand Dollars ($250,000) and
purported to be encumbered thereby, subject to no prior or equal Lien except
Permitted Liens, or any Credit Party shall so assert;
(j) the institution by any Governmental Authority of criminal proceedings
involving an alleged felony against any Credit Party;
(k) a default or event of default occurs under any Guarantee of any portion
of the Obligations;
(l) any Borrower makes any payment on account of any Debt that has been
subordinated to any of the Obligations, other than payments specifically
permitted by the terms of such subordination;
(m) if any Borrower is or becomes an entity whose equity is registered with
the SEC, and/or is publicly traded on and/or registered with a public securities
exchange, such Borrower's equity fails to remain registered with the SEC in good
standing, and/or such equity fails to remain publicly traded on and registered
with a public securities exchange;
(n) the occurrence of any fact, event or circumstance that has a Material
Adverse Effect, if such default shall have continued unremedied for a period of
ten (10) days after written notice from Administrative Agent or the Required
Lenders; or
(o) if any Financing Document or any material provision thereof is deemed
null and void or any Credit Party repudiates or denies in writing any portion of
its liability or obligation for the Obligations.
All cure periods provided for in this Section shall run concurrently with
any cure period provided for in any applicable Financing Documents under which
the default occurred.
SECTION 10.2 ACCELERATION AND SUSPENSION OR TERMINATION OF TERM LOAN
COMMITMENT. Upon the
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occurrence and during the continuance of an Event of Default, Administrative
Agent shall, if requested by Required Lenders, (a) by notice to Borrower
Representative suspend or terminate the Term Loan Commitment and the obligations
of Administrative Agent and Lenders with respect thereto, in whole or in part
(and, if in part, each Lender's Term Loan Commitment shall be reduced in
accordance with its Pro Rata Share), and/or (b) by notice to Borrower
Representative declare all or any portion of the Obligations to be, and all or
such portion of the Obligations shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Borrower and Borrowers will pay the same;
provided, however, that in the case of any of the Events of Default specified in
Section 10.1(e) or 10.1(f) above, without any notice to any Borrower or any
other act by Administrative Agent or the Lenders, the Term Loan Commitment and
the obligations of Administrative Agent and the Lenders with respect thereto
shall thereupon immediately and automatically terminate and all of the
Obligations shall become immediately and automatically due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower and Borrowers will pay the same.
SECTION 10.3 RESERVED.
SECTION 10.4 DEFAULT RATE OF INTEREST. At the election of Required Lenders,
after the occurrence of an Event of Default and for so long as it continues, the
Loans and other Obligations shall bear interest at rates that are five percent
(5%) per annum in excess of the rates otherwise payable under this Agreement;
provided that, notwithstanding anything to the contrary contained in the
foregoing or otherwise in this Agreement, the increased rates of default
interest provided for in this section shall be applicable automatically and
immediately upon the occurrence and during the continuance of any Event of
Default occurring under Section 10.1(e) or 10.1(f) above without the necessity
of any further affirmative action by any party.
SECTION 10.5 SETOFF RIGHTS. During the continuance of any Event of Default,
each Lender is hereby authorized by each Borrower at any time or from time to
time, with reasonably prompt subsequent notice to such Borrower (provided that
any failure to provide any such notice shall not impair the validity of the
applicable set-off right) (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (a)
balances held by such Lender or any of such Lender's Affiliates at any of its
offices for the account of such Borrower or any of its Subsidiaries (regardless
of whether such balances are then due to such Borrower or its Subsidiaries), and
(b) other property at any time held or owing by such Lender to or for the credit
or for the account of such Borrower or any of its Subsidiaries, against and on
account of any of the Obligations; except that no Lender shall exercise any such
right without the prior written consent of Administrative Agent. Any Lender
exercising a right to set off shall purchase for cash (and the other Lenders
shall sell) interests in each of such other Lender's Pro Rata Share of the
Obligations as would be necessary to cause all Lenders to share the amount so
set off with each other Lender in accordance with their respective Pro Rata
Share of the Obligations. Each Borrower agrees, to the fullest extent permitted
by law, that any Lender and any of such Lender's Affiliates may exercise its
right to set off with respect to the Obligations as provided in this Section
10.5.
SECTION 10.6 APPLICATION OF PROCEEDS. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) each Borrower irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by Administrative Agent from or on behalf of such Borrower
or any other Credit Party of all or any part of the Obligations, and, as between
Borrowers on the one hand and Administrative Agent and Lenders on the other,
Administrative Agent shall have the continuing and exclusive right to apply and
to reapply any and all payments received against the Obligations in such manner
as Administrative Agent may deem advisable notwithstanding any previous
application by Administrative Agent, and (b) the proceeds of any sale of, or
other realization upon, all or any part of the Collateral and any payment after
an Event of Default shall be applied: first, to all fees, costs, indemnities,
liabilities, obligations and expenses incurred by or owing to Administrative
Agent, in its capacity as Administrative Agent and not in its capacity as a
Lender, with respect to this Agreement, the other Financing Documents or the
Collateral; second, to all fees, costs, indemnities, liabilities, obligations
and expenses incurred by or owing to any Lender with respect to this Agreement,
the other Financing Documents or the Collateral; third, to accrued and unpaid
interest on the Obligations (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts); fourth,
to any other indebtedness or obligations of Borrowers owing to Administrative
Agent or any Lender under the Financing Documents; and fifth, to the Obligations
owing to any Eligible Swap Counterparty in respect of any Swap Contracts. Any
balance remaining
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41
shall be delivered to Borrowers or to whoever may be lawfully entitled to
receive such balance or as a court of competent jurisdiction may direct. In
carrying out the foregoing, (x) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category, and (y) each of the Persons entitled to receive a payment
in any particular category shall receive an amount equal to its pro rata share
of amounts available to be applied pursuant thereto for such category.
SECTION 10.7 WAIVERS.
(a) Except as otherwise provided for in this Agreement and to the fullest
extent permitted by applicable law, each Borrower waives: (i) 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 Financing Documents, the Notes or
any other notes, commercial paper, Accounts, contracts, Documents, Instruments,
Chattel Paper and Guarantees at any time held by Lenders on which any Borrower
may in any way be liable; (ii) all rights to notice and a hearing prior to
Administrative Agent's or any Lender's taking possession or control of, or to
Administrative Agent's or any Lender's replevy, attachment or levy upon, any
Collateral or any bond or security which might be required by any court prior to
allowing Administrative Agent or any Lender to exercise any of its remedies; and
(iii) the benefit of all valuation, appraisal and exemption Laws. Each Borrower
acknowledges that it has been advised by counsel of its choices and decisions
with respect to this Agreement, the other Financing Documents and the
transactions evidenced hereby and thereby.
(b) Each Borrower for itself and all its successors and assigns, (i) agrees
that its liability shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver, or modification granted or consented to by
Administrative Agent or any Lender; (ii) consents to any indulgences and all
extensions of time, renewals, waivers, or modifications that may be granted by
Administrative Agent or any Lender with respect to the payment or other
provisions of the Financing Documents, and to any substitution, exchange or
release of the Collateral, or any part thereof, with or without substitution,
and agrees to the addition or release of any Borrower, endorsers, guarantors, or
sureties, or whether primarily or secondarily liable, without notice to any
other Borrower and without affecting its liability hereunder; (iii) agrees that
its liability shall be unconditional and without regard to the liability of any
other Borrower, Administrative Agent or any Lender for any tax on the
indebtedness; and (iv) to the fullest extent permitted by law, expressly waives
the benefit of any statute or rule of law or equity now provided, or which may
hereafter be provided, which would produce a result contrary to or in conflict
with the foregoing.
(c) To the extent that Administrative Agent or any Lender may have
acquiesced in any noncompliance with any requirements or conditions precedent to
the closing of the Loans or to any subsequent disbursement of Loan proceeds,
such acquiescence shall not be deemed to constitute a waiver by Administrative
Agent or any Lender of such requirements with respect to any future
disbursements of Loan proceeds and Administrative Agent may at any time after
such acquiescence require Borrowers to comply with all such requirements. Any
forbearance by Administrative Agent or any Lender in exercising any right or
remedy under any of the Financing Documents, or otherwise afforded by applicable
law, including any failure to accelerate the maturity date of the Loans, shall
not be a waiver of or preclude the exercise of any right or remedy nor shall it
serve as a novation of the Notes or as a reinstatement of the Loans or a waiver
of such right of acceleration or the right to insist upon strict compliance of
the terms of the Financing Documents. Administrative Agent's or any Lender's
acceptance of payment of any sum secured by any of the Financing Documents after
the due date of such payment shall not be a waiver of Administrative Agent's and
such Lender's right to either require prompt payment when due of all other sums
so secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other Liens or charges by
Administrative Agent as the result of an Event of Default shall not be a waiver
of Administrative Agent's right to accelerate the maturity of the Loans, nor
shall Administrative Agent's receipt of any condemnation awards, insurance
proceeds, or damages under this Agreement operate to cure or waive any Credit
Party's default in payment of sums secured by any of the Financing Documents.
(d) Without limiting the generality of anything contained in this Agreement
or the other Financing Documents, each Borrower agrees that if an Event of
Default is continuing (i) Administrative Agent and Lenders shall not be subject
to any "one action" or "election of remedies" law or rule, and (ii) all Liens
and other rights, remedies or privileges provided to Administrative Agent or
Lenders shall remain in full force and effect until Administrative Agent or
Lenders have exhausted all remedies against the Collateral and any other
properties owned by Borrowers and the Financing Documents and other security
instruments or agreements securing the Loans have
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been foreclosed, sold and/or otherwise realized upon in satisfaction of
Borrowers' obligations under the Financing Documents.
(e) Nothing contained herein or in any other Financing Document shall be
construed as requiring Administrative Agent or any Lender to resort to any part
of the Collateral for the satisfaction of any of Borrowers' obligations under
the Financing Documents in preference or priority to any other Collateral, and
Administrative Agent may seek satisfaction out of all of the Collateral or any
part thereof, in its absolute discretion in respect of Borrowers' obligations
under the Financing Documents. In addition, Administrative Agent shall have the
right from time to time during the existence of any Event of Default to
partially foreclose upon any Collateral in any manner and for any amounts
secured by the Financing Documents then due and payable as determined by
Administrative Agent in its sole discretion (acting upon the direction of the
Required Lenders), including, without limitation, the following circumstances:
(i) in the event any Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and/or interest,
Administrative Agent may foreclose upon all or any part of the Collateral to
recover such delinquent payments, or (ii) in the event Administrative Agent
elects, during the existence of any Event of Default, to accelerate less than
the entire outstanding principal balance of the Loans, Administrative Agent may
foreclose all or any part of the Collateral to recover so much of the principal
balance of the Loans as Administrative Agent may accelerate and such other sums
secured by one or more of the Financing Documents as Administrative Agent may
elect. Notwithstanding one or more partial foreclosures, any unforeclosed
Collateral shall remain subject to the Financing Documents to secure payment of
sums secured by the Financing Documents and not previously recovered.
(f) To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives in the event of foreclosure of any or all of
the Collateral any equitable right otherwise available to any Credit Party which
would require the separate sale of any of the Collateral or require
Administrative Agent or Lenders to exhaust their remedies against any part of
the Collateral before proceeding against any other part of the Collateral; and
further in the event of such foreclosure each Borrower does hereby expressly
consent to and authorize, at the option of Administrative Agent, the foreclosure
and sale either separately or together of each part of the Collateral.
SECTION 10.8 INJUNCTIVE RELIEF. The parties acknowledge and agree that, in
the event of a breach or threatened breach of any Credit Party's obligations
under any Financing Documents, Administrative Agent and Lenders may have no
adequate remedy in money damages and, accordingly, shall be entitled to an
injunction (including, without limitation, a temporary restraining order,
preliminary injunction, writ of attachment, or order compelling an audit)
against such breach or threatened breach, including, without limitation,
maintaining any cash management and collection procedure described herein.
However, no specification in this Agreement of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any other legal or
equitable remedies in the event of a breach or threatened breach of any
provision of this Agreement. Each Credit Party waives, to the fullest extent
permitted by law, the requirement of the posting of any bond in connection with
such injunctive relief. By joining in the Financing Documents as a Credit Party,
each Credit Party specifically joins in this Section as if this Section were a
part of each Financing Document executed by such Credit Party.
SECTION 10.9 MARSHALLING. Administrative Agent and Lenders shall have no
obligation to marshal any assets in favor of any Credit Party, or against or in
payment of any of the other Obligations or any other obligation owed to
Administrative Agent or Lenders by any Credit Party and each Credit Party hereby
waives any such right to marshalling (and by joining in the Financing Documents
as a Credit Party, each Credit Party specifically joins in this Section as if
this Section were a part of each Financing Document executed by such Credit
Party).
ARTICLE 11 - AGENT
SECTION 11.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints and authorizes Administrative Agent to be such Lender's agent under and
with respect to this Agreement and the other Financing Documents and the
transactions contemplated hereby and thereby to the extent provided for herein
and therein and in any separate interlender or agency agreement entered into by
Lenders and Administrative Agent in connection herewith and therewith and more
specifically (without limiting the generality of the foregoing) to enter into
each of the Financing Documents to which such Lender is a party (other than this
Agreement) on its behalf and to take such actions as Administrative Agent on
such Lender's behalf and to exercise such powers under the Financing Documents
as are delegated to Administrative Agent by the terms thereof, and/or by the
terms of any
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interlender or agency agreement entered into among Administrative Agent and
Lenders, together with all such powers as are reasonably incidental thereto.
Subject to the terms of Section 12.5 below and the other Financing Documents
and/or any such interlender or agency agreement, Administrative Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Financing Documents on behalf of Lenders. The provisions
of this Article 11 are solely for the benefit of Administrative Agent and
Lenders and neither any Borrower nor any other Credit Party shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, Administrative Agent
shall act solely as agent of Lenders and does not assume and shall not be deemed
to have assumed any obligation toward or relationship of agency or trust with or
for any Borrower or any other Credit Party. Administrative Agent may perform any
of its duties hereunder, or under the Financing Documents and/or any such
interlender or agency agreement, by or through its agents or employees.
SECTION 11.2 LIABILITY OF ADMINISTRATIVE AGENT. Neither Administrative
Agent nor any of its directors, officers, agents or employees shall be liable to
any Lender for any action taken or not taken by it in connection with the
Financing Documents, except that Administrative Agent shall be liable with
respect to its specific duties set forth hereunder but only to the extent of its
own gross negligence or willful misconduct in the discharge thereof as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Neither Administrative Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (a) any statement, warranty or representation made in
connection with any Financing Document or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements specified in any
Financing Document; (c) the satisfaction of any condition specified in any
Financing Document; (d) the validity, effectiveness, sufficiency or genuineness
of any Financing Document, any Lien purported to be created or perfected thereby
or any other instrument or writing furnished in connection therewith; (e) the
existence or non-existence of any Default or Event of Default; or (f) the
financial condition of any Credit Party. Administrative Agent shall not incur
any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile or
electronic transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties. Administrative Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them).
SECTION 11.3 INDEMNIFICATION. Each Lender shall, in accordance with its Pro
Rata Share, indemnify Administrative Agent (to the extent not reimbursed by
Borrowers) upon demand against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from Administrative Agent's gross negligence or willful misconduct as determined
by a final non-appealable judgment of a court of competent jurisdiction) that
Administrative Agent, in its capacity as Administrative Agent and not in its
capacity as a Lender, may suffer or incur in connection with the Financing
Documents or any action taken or omitted by Administrative Agent hereunder or
thereunder. If any indemnity furnished to Administrative Agent for any purpose
shall, in the opinion of Administrative Agent, be insufficient or become
impaired, Administrative Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against even if so directed by Required
Lenders until such additional indemnity is furnished.
SECTION 11.4 COLLATERAL MATTERS. Lenders irrevocably authorize
Administrative Agent, at its option and in its discretion, to (a) release any
Lien granted to or held by Administrative Agent under any Security Document (i)
upon termination of the Loan Commitment and payment in full of all Obligations,
and, to the extent required by Administrative Agent in its sole discretion, the
expiration, termination or cash collateralization (to the satisfaction of
Administrative Agent) of all Swap Contracts secured, in whole or in part, by any
Collateral; or (ii) constituting property sold or disposed of as part of or in
connection with any disposition permitted under any Financing Document (it being
understood and agreed that Administrative Agent may conclusively rely without
further inquiry on a certificate of a Responsible Officer as to the sale or
other disposition of property being made in full compliance with the provisions
of the Financing Documents); and (b) release or subordinate any Lien granted to
or held by Administrative Agent under any Security Document constituting
personal property described in Section 5.7 (it being understood and agreed that
Administrative Agent may conclusively rely without further inquiry on a
certificate of a Responsible Officer as to the identification of any personal
property described in Section 5.7). Upon
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request by Administrative Agent at any time, Lenders will confirm Administrative
Agent's authority to release and/or subordinate particular types or items of
Collateral pursuant to this Section 11.4.
SECTION 11.5 AGENCY FOR PERFECTION. Administrative Agent and each Lender
hereby appoint each other Lender as agent for the purpose of perfecting
Administrative Agent's security interest in assets which, in accordance with the
Uniform Commercial Code in any applicable jurisdiction, can be perfected by
possession or control. Should any Lender (other than Administrative Agent)
obtain possession or control of any such assets, such Lender shall notify
Administrative Agent thereof, and, promptly upon Administrative Agent's request
therefor, shall deliver such assets to Administrative Agent or in accordance
with Administrative Agent's instructions or transfer control to Administrative
Agent in accordance with Administrative Agent's instructions. Each Lender agrees
that it will not have any right individually to enforce or seek to enforce any
Security Document or to realize upon any Collateral for the Loan unless
instructed to do so by Administrative Agent (except as provided in Section
10.5), it being understood and agreed that such rights and remedies may be
exercised only by Administrative Agent.
SECTION 11.6 SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may at
any time give notice of its resignation to the Lenders and Borrowers. Upon
receipt of any such notice of resignation, Required Lenders shall have the
right, in consultation with Borrowers (provided no Event of Default has occurred
and is continuing), to appoint a successor Administrative Agent. Upon the
acceptance of a successor's appointment as Administrative Agent hereunder and
notice of such acceptance to the retiring Administrative Agent, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, the retiring
Administrative Agent's resignation shall become immediately effective and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder and under the other Financing Documents (if such
resignation was not already effective and such duties and obligations not
already discharged, as provided below in this paragraph). The fees payable by
Borrowers to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed among Borrowers and such successor.
If no such successor shall have been so appointed by Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders (but without any obligation)
appoint a successor Administrative Agent. From and following the expiration of
such thirty (30) day period, Administrative Agent shall have the exclusive
right, upon one (1) Business Days' notice to Borrower Representative and the
Lenders, and the delivery to a Lender, for the benefit of all Lenders, of all
Collateral in the possession of the retiring Administrative Agent, to make its
resignation effective immediately. From and following the effectiveness of such
notice, (a) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Financing Documents, and
(b) all payments, communications and determinations provided to be made by, to
or through Administrative Agent shall instead be made by or to each Lender
directly, until such time as Required Lenders appoint a successor Administrative
Agent as provided for above in this paragraph. The provisions of this Agreement
shall continue in effect for the benefit of any retiring Administrative Agent
and its sub-agents after the effectiveness of its resignation hereunder and
under the other Financing Documents in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting or
was continuing to act as Administrative Agent.
SECTION 11.7 PAYMENT AND SHARING OF PAYMENT.
(a) Loan Payments. Payments of principal, interest and fees in respect of
the Loan will be settled on the date of receipt if received by Administrative
Agent on a Business Day prior to noon (Chicago time) or on the Business Day
immediately following the date of receipt if received after noon (Chicago time).
All payments of principal, interest and fees (other than fees owed to
Administrative Agent, in its capacity as Administrative Agent and not as a
Lender, pursuant to the express provisions of this Agreement), shall be
allocated among the Lenders in accordance with their respective Pro Rata Shares.
(b) Return of Payments.
(i) If Administrative Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Administrative Agent from a Borrower and such related payment is
not received by Administrative Agent, then Administrative Agent will be entitled
to recover such
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amount from such Lender on demand without setoff, counterclaim or deduction of
any kind, together with interest accruing on a daily basis at the Federal Funds
Rate.
(ii) If Administrative Agent determines at any time that any
amount received by Administrative Agent under this Agreement must be returned to
any Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement
or any other Financing Document, Administrative Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Administrative Agent on demand any portion of such amount that
Administrative Agent has distributed to such Lender, together with interest at
such rate, if any, as Administrative Agent is required to pay to any Borrower or
such other Person, without setoff, counterclaim or deduction of any kind.
(c) Defaulted Lenders. The failure of any Defaulted Lender to make any
payment required by it hereunder shall not relieve any other Lender of its
obligations to make payment, but neither any other Lender nor Administrative
Agent shall be responsible for the failure of any Defaulted Lender to make any
payment required hereunder. Notwithstanding anything set forth herein to the
contrary, a Defaulted Lender shall not have any voting or consent rights under
or with respect to any Financing Document or constitute a "Lender" (or be
included in the calculation of "Required Lenders" hereunder) for any voting or
consent rights under or with respect to any Financing Document.
(d) Sharing of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff or otherwise)
on account of any Loan in excess of its Pro Rata Share of payments entitled
pursuant to the other provisions of this Section 11.7, such Lender shall
purchase from the other Lenders such participations in extensions of credit made
by such other Lenders (without recourse, representation or warranty) as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery, without
interest. Each Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this clause (d) may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
Section 10.5) with respect to such participation as fully as if such Lender were
the direct creditor of Borrowers in the amount of such participation). If under
any applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this clause (d) applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this clause (d) to share in the benefits of any recovery on such secured
claim.
SECTION 11.8 RIGHT TO PERFORM, PRESERVE AND PROTECT. If any Credit Party
fails to perform any obligation hereunder or under any other Financing Document,
Administrative Agent itself may, but shall not be obligated to, cause such
obligation to be performed at Borrowers' expense. Administrative Agent is
further authorized by Borrowers and the Lenders to make expenditures from time
to time which Administrative Agent, in its reasonable business judgment, deems
necessary or desirable to (a) preserve or protect the business conducted by
Borrowers, the Collateral, or any portion thereof, and/or (b) enhance the
likelihood of, or maximize the amount of, repayment of the Loan and other
Obligations. Each Borrower hereby agrees to reimburse Administrative Agent on
demand for any and all costs, liabilities and obligations incurred by
Administrative Agent pursuant to this Section 11.8. Each Lender hereby agrees to
indemnify Administrative Agent upon demand for any and all costs, liabilities
and obligations incurred by Administrative Agent pursuant to this Section 11.8,
in accordance with the provisions of Section 11.3.
SECTION 11.9 ADMINISTRATIVE AGENT AND AFFILIATES. Administrative Agent
shall have the same rights and powers under the Financing Documents as any other
Lender and may exercise or refrain from exercising the same as though it were
not Administrative Agent, and Administrative Agent and its Affiliates may lend
money to, invest in and generally engage in any kind of business with each
Credit Party or Affiliate of any Credit Party as if it were not Administrative
Agent hereunder.
SECTION 11.10 ACTION BY ADMINISTRATIVE AGENT. The duties of Administrative
Agent shall be mechanical and administrative in nature. Administrative Agent
shall not have by reason of this Agreement a
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fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Financing Documents is intended to or shall be construed to impose
upon Administrative Agent any obligations in respect of this Agreement or any of
the Financing Documents except as expressly set forth herein or therein.
SECTION 11.11 CONSULTATION WITH EXPERTS. Administrative Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
SECTION 11.12 RIGHT TO REQUEST AND ACT ON INSTRUCTIONS. Administrative
Agent may at any time request instructions from Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the
Financing Documents Administrative Agent is permitted or desires to take or to
grant, and if such instructions are promptly requested, Administrative Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the
Financing Documents until it shall have received such instructions from Required
Lenders or all or such other portion of the Lenders as shall be prescribed by
this Agreement. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Administrative Agent as a result of Administrative
Agent acting or refraining from acting under this Agreement or any of the other
Financing Documents in accordance with the instructions of Required Lenders (or
all or such other portion of the Lenders as shall be prescribed by this
Agreement) and, notwithstanding the instructions of Required Lenders (or such
other applicable portion of the Lenders), Administrative Agent shall have no
obligation to take any action if it believes, in good faith, that such action
would violate applicable Law or exposes Administrative Agent to any liability
for which it has not received satisfactory indemnification in accordance with
the provisions of Section 11.3.
SECTION 11.13 CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Administrative Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking any action under the
Financing Documents.
SECTION 11.14 NOTICE OF DEFAULT. Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to Administrative Agent for the account of Lenders, unless
Administrative Agent shall have received written notice from a Lender or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". Administrative
Agent will notify each Lender of its receipt of any such notice. Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by Required Lenders (or all or such other portion of the
Lenders as shall be prescribed by this Agreement) in accordance with the terms
hereof. Unless and until Administrative Agent has received any such request,
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interests of Lenders.
SECTION 11.15 ADDITIONAL TITLED AGENTS. Except for rights and powers, if
any, expressly reserved under this Agreement to any bookrunner, arranger or to
any titled agent named on the cover page of this Agreement, other than
Administrative Agent (collectively, the "Additional Titled Agents"), and except
for obligations, liabilities, duties and responsibilities, if any, expressly
assumed under this Agreement by any Additional Titled Agent, no Additional
Titled Agent, in such capacity, has any rights, powers, liabilities, duties or
responsibilities hereunder or under any of the other Financing Documents.
Without limiting the foregoing, no Additional Titled Agent shall have nor be
deemed to have a fiduciary relationship with any Lender. At any time that any
Lender serving as an Additional Titled Agent shall have transferred to any other
Person (other than any Affiliates) all of its interests in the Loan, such Lender
shall be deemed to have concurrently resigned as such Additional Titled Agent.
SECTION 11.16 RESERVED.
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SECTION 11.17 DEFINITIONS. As used in this Article 11, the following terms
have the following meanings:
"ADDITIONAL TITLED AGENTS" has the meaning set forth in Section 11.15.
"FEDERAL FUNDS RATE" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided, however, that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day, and (b) if no
such rate is so published on such next preceding Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to Administrative Agent on
such day on such transactions as determined by Administrative Agent.
ARTICLE 12 - MISCELLANEOUS
SECTION 12.1 SURVIVAL. All agreements, representations and warranties made
herein and in every other Financing Document shall survive the execution and
delivery of this Agreement and the other Financing Documents. The provisions of
Section 2.8 and Articles 10, 11 and 12 shall survive the payment of the
Obligations (both with respect to any Lender and all Lenders collectively) and
any termination of this Agreement and any judgment with respect to any
Obligations, including any final foreclosure judgment with respect to any
Security Document, and no unpaid or unperformed, current or future, Obligations
will merge into any such judgment.
SECTION 12.2 NO WAIVERS. No failure or delay by Administrative Agent or any
Lender in exercising any right, power or privilege under any Financing Document
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein and therein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law. Any reference in any Financing Document to the "continuing"
nature of any Event of Default shall not be construed as establishing or
otherwise indicating that any Borrower or any other Credit Party has the
independent right to cure any such Event of Default, but is rather presented
merely for convenience should such Event of Default be waived in accordance with
the terms of the applicable Financing Documents.
SECTION 12.3 NOTICES.
(a) All notices, requests and other communications to any party hereunder
shall be in writing (including prepaid overnight courier, facsimile transmission
or similar writing) and shall be given to such party at its address, facsimile
number or e-mail address set forth on the signature pages hereof (or, in the
case of any such Lender who becomes a Lender after the date hereof, in an
assignment agreement or in a notice delivered to Borrower Representative and
Administrative Agent by the assignee Lender forthwith upon such assignment) or
at such other address, facsimile number or e-mail address as such party may
hereafter specify for the purpose by notice to Administrative Agent and Borrower
Representative; provided, however, that notices, requests or other
communications shall be permitted by electronic means only in accordance with
the provisions of Section 12.3(b) and (c). Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such notice is
received during normal business hours to the facsimile number specified by this
Section and the sender receives a confirmation of transmission from the sending
facsimile machine, or (ii) if given by mail, prepaid overnight courier or any
other means, when received during normal business hours or when receipt is
refused at the applicable address specified by this Section 12.3(a); provided,
however, that if any such notice or other communication is not received during
normal business hours, such notice or communication shall be deemed to have been
received at the opening of business on the next Business Day.
(b) Notices and other communications to the parties hereto may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved from time to time by
Administrative Agent, provided, however, that the foregoing shall not apply to
notices sent directly to any Lender if such Lender has notified the
Administrative Agent that it is incapable of receiving notices by electronic
communication. The Administrative Agent or Borrower Representative may, in their
discretion, agree to accept notices and other communications to them hereunder
by electronic communications pursuant to procedures
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approved by it, provided, however, that approval of such procedures may be
limited to particular notices or communications.
(c) Unless the Administrative Agent otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgment from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgment), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefor, provided, however, that if any such
notice or other communication is not sent or posted during normal business
hours, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day.
SECTION 12.4 SEVERABILITY. In case any provision of or obligation under
this Agreement or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 12.5 AMENDMENTS AND WAIVERS.
(a) No provision of this Agreement or any other Financing Document may be
amended, waived or otherwise modified unless such amendment, waiver or other
modification is in writing and is signed or otherwise approved by Borrowers and
the Required Lenders; provided that
(i) no such amendment, waiver or other modification that would
have the effect of increasing or reducing a Lender's Term Loan Commitment Amount
or Term Loan Commitment Percentage shall be effective as to such Lender without
such Lender's written consent;
(ii) no such amendment, waiver or modification that would affect
the rights and duties of Administrative Agent shall be effective without
Administrative Agent's written consent or signature;
(iii) no such amendment, waiver or other modification shall,
unless signed by all the Lenders directly affected thereby, (A) reduce the
principal of, rate of interest on or any fees with respect to any Loan or
forgive any principal, interest (other than default interest) or fees (other
than late charges) with respect to any Loan (B) postpone the date fixed for, or
waive, any payment of principal of any Loan or of interest on any Loan (other
than default interest) or any fees provided for hereunder (other than late
charges or for any termination of any commitment); (C) change the definition of
the term Required Lenders or the percentage of Lenders which shall be required
for Lenders to take any action hereunder; (D) release all or substantially all
or any material portion of the Collateral, authorize any Borrower to sell or
otherwise dispose of all or substantially all or any material portion of the
Collateral, subordinate the Liens of the Administrative Agent or the Lenders
hereunder, or release any Guarantor of all or any portion of the Obligations or
its Guarantee obligations with respect thereto, except, in each case with
respect to this clause (D), as otherwise may be expressly permitted under this
Agreement or the other Financing Documents (including in connection with any
disposition permitted hereunder); (E) amend, waive or otherwise modify this
Section 12.5 or the definitions of the terms used in this Section 12.5 insofar
as the definitions affect the substance of this Section 12.5; (F) consent to the
assignment, delegation or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document or release any Borrower of
its payment obligations under any Financing Document, except, in each case with
respect to this clause (F), pursuant to a merger or consolidation permitted
pursuant to this Agreement or (G) amend any of the provisions of Section 10.6 or
11.7 or amend any of the definitions Pro Rata Share, Term Loan Commitment, Term
Loan Commitment Amount, Term Loan Commitment Percentage or that provide for the
Lenders to receive their Pro Rata Shares of any fees, payments, setoffs or
proceeds of Collateral hereunder. It is hereby understood and agreed that all
Lenders shall be deemed directly affected by an amendment, waiver or other
modification of the type described in the preceding clauses (C), (D), (E), (F)
and (G) of the preceding sentence;
(iv) the provisions of the foregoing clauses (i), (ii) and (iii)
are subject to the provisions of any interlender or agency agreement among the
Lenders and Administrative Agent pursuant to which any Lender
Credit and Security Agreement
49
may agree to give its consent in connection with any amendment, waiver or
modification of the Financing Documents only in the event of the unanimous
agreement of all Lenders.
(b) Without limitation of the provisions of the preceding clause (a), no
waiver, amendment or other modification to this Agreement shall, unless signed
by each Eligible Swap Counterparty then in existence, modify the provisions of
Section 10.6 in any manner adverse to the interests of each such Eligible Swap
Counterparty.
SECTION 12.6 ASSIGNMENTS; PARTICIPATIONS; REPLACEMENT OF LENDERS.
(a) Assignments.
(i) Any Lender may at any time assign to one or more Eligible
Assignees all or any portion of such Lender's Loans and interest in the Term
Loan Commitment, together with all related obligations of such Lender hereunder.
Except as Administrative Agent may otherwise agree, the amount of any such
assignment (determined as of the date of the applicable Assignment Agreement or,
if a "Trade Date" is specified in such Assignment Agreement, as of such Trade
Date) shall be in a minimum aggregate amount equal to $1,000,000 or, if less,
the assignor's entire interests in the Term Loan Commitment and outstanding
Loans; provided, that, in connection with simultaneous assignments to two or
more related Approved Funds, such Approved Funds shall be treated as one
assignee for purposes of determining compliance with the minimum assignment size
referred to above. Borrowers and Administrative Agent shall be entitled to
continue to deal solely and directly with such Lender in connection with the
interests so assigned to an Eligible Assignee until Administrative Agent shall
have received and accepted an effective Assignment Agreement executed, delivered
and fully completed by the applicable parties thereto, such other information
regarding such Eligible Assignee as Administrative Agent reasonably shall
require and a processing fee of $3,500; provided, only one processing fee shall
be payable in connection with simultaneous assignments to two or more related
Approved Funds.
(ii) From and after the date on which the conditions described
above have been met, (i) such Eligible Assignee shall be deemed automatically to
have become a party hereto and, to the extent of the interests assigned to such
Eligible Assignee pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender hereunder and (ii) the assigning Lender, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment Agreement, shall be released from its rights and obligations
hereunder (other than those that survive termination pursuant to Section 12.1).
Upon the request of the Eligible Assignee (and, as applicable, the assigning
Lender) pursuant to an effective Assignment Agreement, Borrower shall execute
and deliver to Administrative Agent for delivery to the Eligible Assignee (and,
as applicable, the assigning Lender) Notes in the aggregate principal amount of
the Eligible Assignee's percentage interest in the Term Loan Commitment (and, as
applicable, Notes in the principal amount of that portion of the Term Loan
Commitment retained by the assigning Lender). Upon receipt by the assigning
Lender of such Note, the assigning Lender shall return to Borrower any prior
Note held by it.
(iii) Administrative Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at its offices located in Chicago, Illinois a
copy of each Assignment Agreement delivered to it and a register for the
recordation of the names and addresses of each Lender, and the commitments of,
and principal amount of the Loans owing to, such Lender pursuant to the terms
hereof. The entries in such register shall be conclusive, and Borrower,
Administrative Agent and Lenders may treat each Person whose name is recorded
therein pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. Such register shall be
available for inspection by Borrower and any Lender, at any reasonable time upon
reasonable prior notice to Administrative Agent.
(iv) Notwithstanding the foregoing provisions of this Section
12.6(a) or any other provision of this Agreement, any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
(v) Notwithstanding the foregoing provisions of this Section
12.6(a) or any other provision of this Agreement, Administrative Agent has the
right, but not the obligation, to effectuate assignments of Loans and
Credit and Security Agreement
50
Term Loan Commitments via an electronic settlement system acceptable to
Administrative Agent as designated in writing from time to time to the Lenders
by Administrative Agent (the "SETTLEMENT SERVICE"). At any time when the
Administrative Agent elects, in its sole discretion, to implement such
Settlement Service, each such assignment shall be effected by the assigning
Lender and proposed assignee pursuant to the procedures then in effect under the
Settlement Service, which procedures shall be consistent with the other
provisions of this Section 12.6(a). Each assigning Lender and proposed Eligible
Assignee shall comply with the requirements of the Settlement Service in
connection with effecting any assignment of Loans and Term Loan Commitments
pursuant to the Settlement Service (without any cost to the Lender, except for
the processing fee referred to in clause (1) above). With the prior approval of
each of Administrative Agent and the Borrower, Administrative Agent's and the
Borrower's approval of such Eligible Assignee shall be deemed to have been
automatically granted with respect to any transfer effected through the
Settlement Service. Assignments and assumptions of the Loans and Term Loan
Commitments shall be effected by the provisions otherwise set forth herein until
Administrative Agent notifies Lenders of the Settlement Service as set forth
herein.
(b) Participations. Any Lender may at any time, without the consent of, or
notice to, Borrower or Administrative Agent, sell to one or more Persons
participating interests in its Loans, commitments or other interests hereunder
(any such Person, a "PARTICIPANT"). In the event of a sale by a Lender of a
participating interest to a Participant, (a) such Lender's obligations hereunder
shall remain unchanged for all purposes, (b) Borrower and Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations hereunder and (c) all amounts payable by
Borrower shall be determined as if such Lender had not sold such participation
and shall be paid directly to such Lender. No Participant shall have any direct
or indirect voting rights hereunder except with respect to any event described
in Section 12.5 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders. Borrower agrees that if amounts outstanding
under this Agreement are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement;
provided that such right of set-off shall be subject to the obligation of each
Participant to share with Lenders, and Lenders agree to share with each
Participant, as provided in Section 10.5.
(c) Replacement of Lenders. Within thirty (30) days after: (i) receipt by
Administrative Agent of notice and demand from any Lender for payment of
additional costs as provided in Section 2.8(d), which demand shall not have been
revoked, (ii) Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.8(a) or 2.8(b), or (iii) any Lender is a Defaulted Lender, and the
circumstances causing such status shall not have been cured or waived (each
relevant Lender in the foregoing clauses (i) through (iii) being an "AFFECTED
LENDER"), each of Borrower and Administrative Agent may, at its option, notify
such Affected Lender and, in the case of Borrower election, the Administrative
Agent, of such Person's intention to obtain, at Borrowers' expense, a
replacement Lender ("REPLACEMENT LENDER") for such Lender, which Replacement
Lender shall be an Eligible Assignee. In the event Administrative Agent obtains
a Replacement Lender within ninety (90) days following notice of its intention
to do so, the Affected Lender shall sell, at par, and assign all of its Loans
and funding commitments hereunder to such Replacement Lender in accordance with
the procedures set forth in Section 12.6(a); provided, that (i) Borrowers shall
have, as applicable, reimbursed such Lender for its increased costs and
additional payments for which it is entitled to reimbursement under Sections 2.8
of this Agreement through the date of such sale and assignment and (ii)
Borrowers shall pay to Administrative Agent the $3,500 processing fee in respect
of such assignment. In the event that a replaced Lender does not execute an
Assignment Agreement pursuant to Section 12.6(a) within five (5) Business Days
after receipt by such replaced Lender of notice of replacement pursuant to this
Section 12.6(c) and presentation to such replaced Lender of an Assignment
Agreement evidencing an assignment pursuant to this Section 12.6(c), such
replaced Lender shall be deemed to have consented to the terms of such
Assignment Agreement, and any such Assignment Agreement executed by
Administrative Agent, the Replacement Lender and, to the extent required
pursuant to Section 12.6(a), Borrower, shall be effective for purposes of this
Section 12.6(c) and Section 12.6(a). Upon any such assignment and payment, such
replaced Lender shall no longer constitute a "Lender" for purposes hereof, other
than with respect to such rights and obligations that survive termination as set
forth in Section 12.1.
(d) Credit Party Assignments. No Credit Party may assign, delegate or
otherwise transfer any of its rights or other obligations hereunder or under any
other Financing Document without the prior written consent of each Lender.
Credit and Security Agreement
51
SECTION 12.7 HEADINGS. Headings and captions used in the Financing
Documents (including the Exhibits, Schedules and Annexes hereto and thereto) are
included for convenience of reference only and shall not be given any
substantive effect.
SECTION 12.8 CONFIDENTIALITY. Administrative Agent and each Lender shall
hold all Non-Public Information regarding the Credit Parties and their
respective businesses in accordance with such Person's customary procedures for
handling information of such nature (which shall be no less stringent than
procedures for handling its own confidential information), except that
disclosure of such Non-Public Information may be made (a) to their respective
agents, employees, Subsidiaries, Affiliates, attorneys, auditors, professional
consultants, rating agencies, insurance industry associations and portfolio
management services, (b) to prospective transferees or purchasers of any
interest in the Loans, and to prospective contractual counterparties (or the
professional advisors thereto) in Permitted Swap Contracts permitted hereby,
provided, however, that any such Persons shall have agreed to be bound by the
provisions of this Section 12.8, (c) as required by Law, subpoena, judicial
order or similar order and in connection with any litigation, (d) as may be
required in connection with the examination, audit or similar investigation of
such Person, and (e) to a Person that is a trustee, investment advisor,
collateral manager, servicer, noteholder or secured party in a Securitization
(as hereinafter defined) in connection with the administration, servicing and
reporting on the assets serving as collateral for such Securitization. For the
purposes of this Section, "Securitization" shall mean a public or private
offering by a Lender or any of its Affiliates or their respective successors and
assigns, of securities which represent an interest in, or which are
collateralized, in whole or in part, by the Loans. The obligations of
Administrative Agent and Lenders under this Section 12.8 shall supersede and
replace the obligations of Administrative Agent and Lenders under any
confidentiality agreement in respect of this financing executed and delivered by
Administrative Agent or any Lender prior to the date hereof. For purposes
hereof, "NON PUBLIC INFORMATION" shall mean and include any information (whether
written or oral) that Borrower or its directors, officers, employees,
Affiliates, agents or other representatives furnish to the Administrative Agent
or any Lender in connection with this Agreement and the financing transactions
evidenced hereby, together with analysis, compilations, studies or other
documents prepared by the Administrative Agent, any Lender, or any of their
respective directors, officers, employees, Affiliates, agents, representatives,
(including attorneys, accountants and financial advisors) (collectively,
"REPRESENTATIVES") which contain or otherwise reflect such information.
Non-Public Information includes any such information furnished to the
Administrative Agent or any Lender or gathered by inspection or audit,
regardless of whether such information is specifically identified as
"confidential", and expressly includes all such information delivered to the
Administrative Agent prior to the Closing Date. Non Public Information does not
include information which (i) is or becomes generally available to the public
other than as a result of disclosure by the Administrative Agent, any Lender or
any of their Representatives as a result of a breach of confidentiality
obligations to any Borrower, (ii) was or becomes available to the Administrative
Agent, any Lender or any of their Representatives from a source other than any
of the Borrowers or their representatives, provided that such source is not
prohibited from disclosing such information to the Administrative Agent, any
Lender or any of their Representatives by a contractual, legal or fiduciary
obligation to the Borrowers or their representatives, (iii) is independently
developed by the Administrative Agent, any Lender or any of their
Representatives without violation their obligations under this Section 12.8 or
utilizing any Non-Public Information, or (iv) was in the possession of the
Administrative Agent, any Lender or any of their Representatives prior to its
disclosure to the Administrative Agent, such Lender or such Representative.
SECTION 12.9 WAIVER OF CONSEQUENTIAL AND OTHER DAMAGES. To the fullest
extent permitted by applicable law, no Borrower shall assert, and each Borrower
hereby waives, any claim against any Indemnitee (as defined below), on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of this Agreement, any other Financing Document or any agreement or
instrument contemplated hereby or thereby, the transactions contemplated hereby
or thereby, or the use of the proceeds thereof. No Indemnitee shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Financing Documents or the transactions contemplated hereby or thereby.
SECTION 12.10 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT,
EACH NOTE AND EACH OTHER FINANCING DOCUMENT, AND ALL MATTERS RELATING HERETO OR
THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
Credit and Security Agreement
52
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES. EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN CHICAGO, STATE OF ILLINOIS AND IRREVOCABLY
AGREES THAT, SUBJECT TO ADMINISTRATIVE AGENT'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER FINANCING
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH
BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
SECTION 12.11 WAIVER OF JURY TRIAL. EACH BORROWER, ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER,
ADMINISTRATIVE AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT
IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
SECTION 12.12 PUBLICATION; ADVERTISEMENT.
(a) Publication. No Credit Party will directly or indirectly publish,
disclose or otherwise use in any public disclosure, advertising material,
promotional material, press release or interview, any reference to the name,
logo or any trademark of any Lender or any Affiliate of any Lender or any
reference to this Agreement or the financing evidenced hereby, in any case
except (i) as required by Law, subpoena or judicial or similar order, in which
case the applicable Credit Party shall give such Lender prior written notice of
such publication or other disclosure, or (ii) with such Lender's prior written
consent.
(b) Advertisement. Each Credit Party hereby authorizes each Lender (and the
Affiliates of each Lender) (hereinafter referred to as the "ADVERTISING PARTY")
to publish the name of each such Lender and Credit Party, the existence of the
financing arrangements referenced under this Agreement, the primary purpose
and/or structure of those arrangements, the amount of credit extended under each
facility, the title and role of each party to this Agreement, and the total
amount of the financing evidenced hereby in any "tombstone", comparable
advertisement or press release which such Advertising Party elects to submit for
publication, provided that the Principal Borrower received and approved a copy
thereof prior to its use. In addition, each Credit Party agrees that each
Advertising Party may provide lending industry trade organizations with
information necessary and customary for inclusion in league table measurements
after the Closing Date. With respect to any of the foregoing, such Advertising
Party shall provide Borrowers with an opportunity to review and approve the
contents of any such tombstone, advertisement or information, as applicable,
prior to its submission for publication and, following such review period, such
Advertising Party may, from time to time, publish such information in any media
form desired by such other Lender (or such Affiliate), until such time that
Borrowers shall have requested such Advertising Party cease any such further
publication.
SECTION 12.13 COUNTERPARTS; INTEGRATION. This Agreement and the other
Financing Documents may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. Signatures by facsimile or by email
delivery of an electronic version of an executed signature page shall bind the
parties hereto. This Agreement and the other Financing Documents constitute the
entire agreement and understanding among the parties hereto and supersede any
and all
Credit and Security Agreement
53
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
SECTION 12.14 NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
SECTION 12.15 TIME. Time is of the essence in each Borrower's and each
other Credit Party's performance under this Agreement and all other Financing
Documents.
SECTION 12.16 LENDER APPROVALS. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Administrative Agent
or Lenders with respect to any matter that is the subject of this Agreement, the
other Financing Documents may be granted or withheld by Administrative Agent and
Lenders in their sole and absolute discretion and credit judgment.
SECTION 12.17 EXPENSES; INDEMNITY
(a) Borrowers agree to pay all reasonable legal, audit and appraisal fees
and all other reasonable out-of-pocket charges and expenses incurred by
Administrative Agent and Lenders (including the fees and expenses of
Administrative Agent's counsel, advisors and consultants) in connection with the
negotiation, preparation, legal review and execution of each of the Financing
Documents, including but not limited to UCC and judgment lien searches and UCC
filings and fees for post-closing UCC and judgment lien searches, provided that
such amount shall not exceed $40,000. In addition, Borrowers shall pay all such
reasonable fees and expenses associated with any amendments, modifications and
terminations to the Financing Documents following closing.
(b) Borrowers agree to pay all out-of-pocket charges and expenses incurred
by Administrative Agent (including the fees and expenses of Administrative
Agent's counsel, advisers and consultants) in connection with the administration
of this Agreement and the other Financing Documents and the credit facilities
provided hereunder and thereunder, the administration, enforcement, protection
or preservation of any right or claim of Administrative Agent, the termination
of this Agreement, the termination of any Liens of Administrative Agent on the
Collateral, or the collection of any amounts due under the Financing Documents,
including any such charges and expenses incurred in connection with any
"work-out" or with any proceeding under the Bankruptcy Code with respect to any
Credit Party.
(c) Borrowers hereby indemnify and agree to defend (with counsel reasonably
acceptable to Administrative Agent) and hold harmless Administrative Agent, each
Lender, and their respective shareholders, directors, partners, officers, agents
and employees (collectively in the singular, "Indemnitee") from and against any
liability, loss, cost, expense (including reasonable attorneys' fees and
expenses for both in-house and outside counsel), claim, damage, suit, action or
proceeding ever suffered or incurred by any Indemnitee or in which an Indemnitee
may ever be or become involved (whether as a party, witness or otherwise) (a)
arising from any Credit Party's failure to observe, perform or discharge any of
its covenants, obligations, agreements or duties under the Financing Documents,
(b) arising from the breach of any of the representations or warranties
contained in any Financing Document, (c) arising by reason of this Agreement,
the other Financing Documents or the transactions contemplated hereby or
thereby, or (d) relating to claims of any Person with respect to the Collateral;
provided, however, Borrower shall not be liable under this Section 12.17(c) to
the extent such loss is solely related to Indemnitee's gross negligence or
willful misconduct.
(d) Notwithstanding any contrary provision in this Agreement, the
obligations of Borrowers under this Section 12.17 shall survive the payment in
full of the Obligations and the termination of this Agreement. NO INDEMNITEE
SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWERS OR TO ANY OTHER PARTY TO ANY
FINANCING DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY
OTHER FINANCING DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
Credit and Security Agreement
54
SECTION 12.18 RESERVED.
SECTION 12.19 REINSTATEMENT. This Agreement shall remain in full force and
effect and continue to be effective should any petition or other proceeding be
filed by or against any Credit Party for liquidation or reorganization, should
any Credit Party become insolvent or make an assignment for the benefit of any
creditor or creditors or should an interim receiver, receiver, receiver and
manger or trustee be appointed for all or any significant part of any Credit
Party's assets, and shall continue to be effective or to be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a fraudulent conveyance, preference or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Obligations shall
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
Credit and Security Agreement
55
IN WITNESS WHEREOF, intending to be legally bound, and intending that this
document constitute an instrument executed and delivered under seal, the parties
hereto have caused this Agreement to be duly executed under seal by their
respective authorized officers as of the day and year first above written.
BORROWERS:
PENWEST PHARMACEUTICALS CO.
By: /s/ Xxxxxxxx X. Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: SVP & CFO
Address:
00 Xxx Xxxxxxxxx Xxxx, Xxxxx 00
Xxxxxxx, Xxxxxxxxxxx 00000
Attn:
- ----------------------------------
Facsimile: (___)
------------------------
Email:
----------------------------------
AGENT:
XXXXXXX XXXXX CAPITAL,
A DIVISION OF XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES INC.,
as Administrative Agent and a Lender
By: /s/ Xxxxxxx Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: VP
Address:
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Account Manager for MLC-HCF Penwest
Pharmaceuticals Co. transaction
Facsimile: (000) 000-0000
E-Mail: XXX_XXX_XXX0@xx.xxx
With copies to:
Xxxxxxx Xxxxx Capital
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Xxxxxxx Xxxxx Capital
0000 Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Signature Page to Credit and Security Agreement
Payment Account Designation:
LaSalle Bank
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
ABA #: 000000000
Account Name: MLBFS Healthcare Finance
Account #: 5800395088
Attention: Penwest Pharmaceuticals Co.
LENDERS:
XXXXXXX XXXXX CAPITAL,
A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.,
AS LENDER
By: /s/ Xxxxxxx Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: VP
Address:
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Account Manager for MLC-HCF
Penwest Pharmaceuticals Co. transaction
Facsimile: (000) 000-0000
E-Mail: XXX_XXX_XXX0@xx.xxx
With copies to:
Xxxxxxx Xxxxx Capital
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
and
Xxxxxxx Xxxxx Capital
0000 Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Signature Page to Credit and Security Agreement
ANNEXES, EXHIBITS, RIDERS AND SCHEDULES
ANNEXES
Annex A Commitment Annex
EXHIBITS
Exhibit A [RESERVED]
Exhibit B Compliance Certificate
Exhibit C [RESERVED]
Exhibit D Notice of Borrowing
Exhibit E Payment Notification
RIDERS
Pharma Rider
SCHEDULES
Schedule 2.1 Amortization Schedule
Schedule 3.1 Existence, Organizational ID Numbers, Foreign Qualification, Prior Names
Schedule 3.4 Capitalization
Schedule 3.6 Litigation
Schedule 3.18 Environmental Compliance
Schedule 3.19 Intellectual Property
Schedule 3.24 Pharma Regulatory Matters
Schedule 4.4 Insurance
Schedule 5.1 Permitted Indebtedness; Contingent Obligations
Schedule 5.2 Permitted Liens
Schedule 5.7 Permitted Investments
Schedule 5.8 Affiliate Transactions
Schedule 5.11 Business Description
Schedule 5.14 Deposit Accounts and Securities Accounts
Schedule 7.4 Post-Closing Obligations
Schedule 9.1 Collateral
Schedule 9.2 Location of Collateral
Annexes, Exhibits, Riders and Schedules to Credit and Security Agreement
(XXXXXXX XXXXX LOGO)
ANNEX A TO CREDIT AND SECURITY AGREEMENT (COMMITMENT ANNEX)
TERM LOAN
TERM LOAN COMMITMENT
LENDER COMMITMENT AMOUNT PERCENTAGE
------ ----------------- ----------
Xxxxxxx Xxxxx Capital $24,000,000 100%
Exhibit A to Credit and Security Agreement (Commitment Annex)
(XXXXXXX XXXXX LOGO)
EXHIBIT A TO CREDIT AND SECURITY AGREEMENT
Exhibit A to Credit and Security Agreement (Assignment Agreement)
(XXXXXXX XXXXX LOGO)
EXHIBIT B TO CREDIT AND SECURITY AGREEMENT (COMPLIANCE CERTIFICATE)
COMPLIANCE CERTIFICATE
DATE: __________, _____
This certificate is given by _____________________, a Responsible Officer
of Penwest Pharmaceuticals Co. ("BORROWER REPRESENTATIVE"), pursuant to that
certain Credit and Security Agreement dated as of March ___, 2007 among Borrower
Representative, _______________________________ and any additional Borrower that
may be a party thereto or from time to time be added thereto (collectively,
"BORROWERS"), Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx Business
Financial Services Inc., individually as a Lender and as Administrative Agent,
and the financial institutions or other entities from time to time parties
thereto, each as a Lender (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT").
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.
The undersigned Responsible Officer hereby certifies, in his or her
capacity as an officer of the Borrower Representative, to Administrative Agent
and Lenders that:
(a) the financial statements delivered with this certificate in accordance
with Section 4.1 of the Credit Agreement fairly present in all material respects
the results of operations and financial condition of Borrowers and their
Subsidiaries as of the dates and the accounting period covered by such financial
statements;
(b) I have reviewed the terms of the Credit Agreement and have made, or
caused to be made under my supervision, a review in reasonable detail of the
transactions and conditions of Borrowers and their Subsidiaries during the
accounting period covered by such financial statements;
(c) such review has not disclosed the existence during or at the end of
such accounting period, and I have no knowledge of the existence as of the date
hereof, of any condition or event that constitutes a Default or an Event of
Default, except as set forth in Schedule 1 hereto, which includes a description
of the nature and period of existence of such Default or an Event of Default and
what action Borrowers have taken, are undertaking and propose to take with
respect thereto;
(d) Except as noted on Schedule 2 attached hereto, the Credit Agreement
contains a complete and accurate list of all business locations of Borrowers and
Guarantors at which Collateral having a value in excess of $500,000 is located,
and all names under which Borrowers or Guarantors currently conduct business;
Schedule 2 specifically notes any changes in the names under which Borrowers or
Guarantors conduct business;
(e) Except as noted on Schedule 3 attached hereto, the undersigned has no
knowledge of any federal or state tax liens having been filed against the
Borrowers, Guarantors or any Collateral;
(f) Except as noted on Schedule 3 attached hereto, the undersigned has no
knowledge of any intentional or material failure of the Borrowers or Guarantors
to make required payments of withholding or other tax obligations of the
Borrowers or Guarantors during the accounting period to which the attached
statements pertain or any subsequent period.
(g) If the Credit Agreement contemplates a lien on the Deposit Accounts and
Securities Accounts of the Borrowers and/or Guarantors in favor of
Administrative Agent, Schedule 4 attached hereto contains a complete and
accurate statement of all Deposit Accounts and Securities Accounts (other than
payroll accounts) maintained by Borrowers or Guarantors;
(h) Except as described in the Credit Agreement or in Schedule 5 attached
hereto, the undersigned has no knowledge of any current, pending or threatened:
Exhibit B to Credit and Security Agreement (Compliance Certificate)
1
(i) Litigation against the Borrowers or Guarantors which could
reasonably be expected to result in an Event of Default or a Material Adverse
Effect;
(ii) inquiries, investigations or proceedings concerning the
business affairs, practices, licensing or reimbursement entitlements of
Borrowers or Guarantors which in any such case could reasonably be expected to
result in a Material Adverse Effect;
(iii) any material default by Borrowers or Guarantors under any
Material Contract to which either of them is a party; or
(iv any material adverse effect with respect to any Intellectual
Property relating to Opana ER.
(i) Except as noted on Schedule 6 attached hereto, no Borrower has
acquired, by purchase, by the approval or granting of any application for
registration (whether or not such application was previously disclosed to
Administrative Agent by Borrowers) or otherwise, any Intellectual Property
relating to Opana ER that is registered with any United States Governmental
Authority, or has filed with any such United States Governmental Authority, any
new application for the registration of any Intellectual Property relating to
Opana ER, or acquired rights under a license as a licensee with respect to any
such registered Intellectual Property (or any such application for the
registration of such Intellectual Property) owned by another Person, that has
not previously been reported to Administrative Agent on Schedule 3.19 to the
Credit Agreement or any Schedule 6 to any previous Compliance Certificate
delivered by Borrower Representative to Administrative Agent.
Exhibit B to Credit and Security Agreement (Compliance Certificate)
2
The foregoing certifications and computations are made as of
___________________, _____ (end of month) and delivered this ____ day of
_____________, 20___.
Sincerely,
PENWEST PHARMACEUTICALS CO.
By
---------------------------------
Name
-------------------------------
Title
------------------------------
SCHEDULES TO COMPLIANCE CERTIFICATE
Schedule 1 - Non-Compliance with Covenants
Schedule 2 - Business Locations and Names of Borrowers and Guarantors
Schedule 3 - Tax Liens; Unpaid Tax or Withholding Obligations
Schedule 4 - List of all Deposit Accounts and Securities Accounts of
Borrowers and Guarantors
Schedule 5 -Pending Litigation; Inquiries or Investigations; Defaults under
Material Contracts
Schedule 6 - Newly Acquired Intellectual Property and Intellectual Property
Licenses
Schedules to Compliance Certificate of Credit and Security Agreement
(XXXXXXX XXXXX LOGO)
EXHIBIT C TO CREDIT AND SECURITY AGREEMENT
[RESERVED]
Exhibit C to Credit and Security Agreement
(XXXXXXX XXXXX LOGO)
EXHIBIT D TO CREDIT AND SECURITY AGREEMENT (NOTICE OF BORROWING)
BORROWER REPRESENTATIVE
DATE: ___________, ______
This certificate is given by ____________________, a Responsible Officer of
Penwest Pharmaceuticals Co. ("BORROWER REPRESENTATIVE"), pursuant to Section
2.1(b)(i) of that certain Credit and Security Agreement dated as of March ___,
2007 among Borrower Representative, ________________________ and any additional
Borrower that may be a party thereto or from time to time be added thereto
(collectively, "BORROWERS"), the Lenders from time to time party thereto and
Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx Business Financial Services
Inc., as Administrative Agent for Lenders (as such agreement may have been
amended, restated, supplemented or otherwise modified from time to time the
"CREDIT AGREEMENT"). Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
The undersigned Responsible Officer hereby gives notice to Administrative
Agent of Borrower Representative's request to on ________________ ___, 2007
borrow _____________________ Dollars ($_____________) of the Term Loan.
The undersigned officer hereby certifies in his or her capacity as an
officer of the Borrower Representative that, both before and after giving effect
to the request above (a) each of the conditions precedent set forth in Sections
7.1 and 7.2 have been satisfied, (b) all of the representations and warranties
contained in the Credit Agreement and the other Financing Documents are true,
correct and complete in all respects (or in all material respects if such
representation, warranty, certification or statement is not by its terms already
qualified as to materiality) as of the date hereof, except to the extent such
representation or warranty relates to a specific date, in which case such
representation or warranty is true, correct and complete in all respects (or in
all material respects if such representation, warranty, certification or
statement is not by its terms already qualified as to materiality) as of such
earlier date, and (c) no Default or Event of Default has occurred and is
continuing on the date hereof.
IN WITNESS WHEREOF, the undersigned officer has executed and delivered this
certificate this ____ day of __________________ ___, 2007.
By:
--------------------------------
Name:
------------------------------
Title: Authorized Signatory for
Borrower Representative
Exhibit D to Credit and Security Agreement (Notice of Borrowing)
(XXXXXXX XXXXX LOGO)
EXHIBIT E TO CREDIT AND SECURITY AGREEMENT (PAYMENT NOTIFICATION)
BORROWER REPRESENTATIVE
DATE: ___________, ______
Reference is hereby made to the Credit and Security Agreement dated March
___, 2007 among the undersigned and Xxxxxxx Xxxxx Capital, a division of Xxxxxxx
Xxxxx Business Financial Services Inc., as Administrative Agent and the
financial institutions party thereto. Capitalized terms used here have the
meanings ascribed thereto in the Credit Agreement.
Please be advised that funds in the amount of $_____________ will be wire
transferred to Administrative Agent on _________, 200_. Such funds shall
constitute [an optional] [a mandatory] prepayment of the Term Loans, with such
prepayments to be applied in the manner specified in Section 2.1(a)(iii). [Such
mandatory prepayment is being made pursuant to Section _____________ of the
Credit Agreement.]
Fax to MLC Operations 000-000-0000 no later than noon Chicago time.
Note: Funds must be received no later than noon Chicago time for same day
application
Wire Instructions:
Bank Name: LaSalle Bank National Association
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
ABA# 000000000
Account Name: MLBFS Healthcare Finance
Account #: 5800395088
Reference: Penwest Pharmaceuticals Co.
Address: Xxxxxxx Xxxxx Capital
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
IN WITNESS WHEREOF, the undersigned officer has executed and delivered this
certificate this ____ day of ___________, ____.
By:
--------------------------------
Name:
------------------------------
Title: Authorized Signatory for
Borrower Representative
Exhibit E to Credit and Security Agreement (Payment Notification)
PHARMA RIDER
This Pharma Rider is made a part of and is incorporated by reference into that
certain Credit and Security Agreement (the "Credit Agreement") dated March 13,
2007 by and among PENWEST PHARMACEUTICALS CO., a Washington corporation, and any
additional Borrower that may hereafter be added to the Credit Agreement (each
individually as a "BORROWER" and collectively as "BORROWERS"), XXXXXXX XXXXX
CAPITAL, A DIVISION OF XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES INC.,
individually as a Lender, and as Administrative Agent, and the financial
institutions or other entities from time to time parties hereto, each as a
Lender.
In consideration of the premises and the agreements, provisions and covenants
herein contained and in the Credit Agreement, Borrowers, Lenders and
Administrative Agent agree as follows:
SECTION 1 DEFINITIONS. All capitalized terms not otherwise defined in this
Rider shall have the meanings given them in the Credit Agreement.
SECTION 1.1 ADDITIONAL DEFINED TERMS. The following additional definitions
are hereby appended to Section 1.1 of the Credit Agreement:
"DEA" means the Drug Enforcement Administration of the United States of
America and any successor agency thereof.
"FDA" means the Food and Drug Administration of the United States of
America or any successor entity thereto.
"FDCA" means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Section 301 et seq. and all regulations promulgated thereunder.
"GOOD MANUFACTURING PRACTICES" means current good manufacturing practices,
as set forth in 21 C.F.R. Parts 210 and 211.
"PRODUCT" means the product known as Opana ER.
"REQUIRED PERMIT" means a Permit issued or required to be issued or held by
Borrower in order to conduct its business, other than Permits the failure to be
so issued could reasonably be expected to have a Material Adverse Effect.
SECTION 2 ADDITIONAL REPRESENTATIONS AND WARRANTIES. The following is
hereby appended to the Credit Agreement as new Section 3.24:
SECTION 3.24 COMPLIANCE OF PRODUCTS.
(a) Each Credit Party:
(i) has obtained all Required Permits;
(ii) to its knowledge, has not used the services of any Person
debarred under the provisions of the Generic Drug Enforcement Act of 1992, 21
U.S.C. Section 335a (a) or (b), where the use of such Person to perform such
services could reasonably be expected to result in a Material Adverse Effect;
(iii) warrants and represents that, to its knowledge, none of its
officers, directors, or employees has been convicted of any crime or engaged in
any conduct for which debarment is mandated by 21 U.S.C. Section 335a (a) or
authorized by 00 X.X. Xxxxxxx 000x (b);
(iv) warrants and represents that none of its officers, directors
or employees has, on behalf of the Company, made an untrue statement of material
fact or fraudulent statement to the FDA or failed to disclose a material fact
required to be disclosed to the FDA, or committed an act, made a statement, or
failed to make a statement that, in the case of each of the foregoing, could
reasonably be expected to result in the FDA invoking its policy respecting
"Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,"
set forth in 56 Fed. Regulation 46191 (September 10, 1991);
(v) has not received any written notice from any Governmental
Authority, including without limitation the FDA, the DEA, the Office of the
Inspector General of HHS or the United States Department of Justice, that such
Governmental Authority has commenced or threatened to initiate any action to
enjoin the Borrower from conducting any material portion of its busine ss or for
any material civil penalty, injunction, seizure or criminal action material to
the business of the Borrower;
(vi) except as set forth on Schedule 3.24, has not received from
the FDA or the DEA, at any time since January 1, 2003, a Warning Letter, Form
FDA-483 or "Untitled Letter," setting forth alleged violations of laws and
regulations enforced by the FDA or the DEA, or any comparable correspondence
from any state or local authority responsible for regulating drug products and
establishments, or any comparable correspondence from any foreign counterpart of
the FDA or DEA, or any comparable correspondence from any foreign counterpart of
any state or local authority with regard to any Product or the manufacture,
processing, packing, or holding thereof, which violations could reasonably be
expected to result in a Material Adverse Effect.
(b) [RESERVED.]
SECTION 3 ADDITIONAL AFFIRMATIVE COVENANTS. The following is hereby
appended to the Credit Agreement as new Section 4.15:
SECTION 4.15 COVENANTS REGARDING PRODUCTS AND COMPLIANCE WITH REQUIRED
PERMITS Without limiting the generality of Section 4.5, in connection with the
development, testing, manufacture, marketing or sale of each and any Product by
any Borrower, Borrowers shall comply in all material respects with all Required
Permits at all times issued by any Government Authority.
SECTION 4 EVENTS OF DEFAULT. In addition to the events listed in Section
10.1, the occurrence of any of the following conditions and/or events, whether
voluntary or involuntary, by operation of law or otherwise, shall constitute an
"Event of Default" under the Credit Agreement:
(a) the institution of any proceeding by FDA or similar Governmental
Authority to order the withdrawal of any Product from the market or to enjoin
Credit Party or any representative of a Credit Party from manufacturing,
marketing, selling or distributing any Product or Product category, which
results in the Product no longer being sold for at least 60 consecutive days;
provided, however, that if on any date of determination prior to the expiration
of such 60 consecutive day period it is no longer reasonably expected that the
Product will be made available for sale prior to the expiration of such 60 day
period, an Event of Default shall be deemed to exist from the later of (x) the
date which is 30 days after the last date on which the Product was sold, and (y)
such date of determination.
(b) the institution of any action or proceeding by any DEA, FDA, or any
other Governmental Authority to revoke, suspend, reject, withdraw, limit, or
restrict any Required Permit held by a Credit Party or any representative of a
Credit Party which could reasonably be expected to result in a Material Adverse
Effect, which is not cured within thirty (30) days;
(c) the commencement of any enforcement action against any Credit Party by
DEA, FDA, or any other Governmental Authority which could reasonably be expected
to result in a Material Adverse Effect, which is not cured within thirty (30)
days; or
(d) the recall of any Products from the market, the voluntary withdrawal of
any Products from the market, or actions to discontinue the sale of any
Products, which results in the Product no longer being sold for at least 60
consecutive days; provided, however, that if on any date of determination prior
to the expiration of such 60 consecutive day period it is no longer reasonably
expected that the Product will be made available for sale prior to the
expiration of such 60 day period, an Event of Default shall be deemed to exist
from the later of (x) the date which is 30 days after the last date on which the
Product was sold, and (y) such date of determination.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
IN WITNESS WHEREOF, intending to be legally bound, and intending that this
document constitute an instrument executed and delivered under seal, the
undersigned have executed this document under seal as of the date of the Credit
Agreement.
BORROWER:
PENWEST PHARMACEUTICALS CO.
By: /s/ Xxxxxxxx X. Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: SVP & CFO
Address:
00 Xxx Xxxxxxxxx Xxxx, Xxxxx 00
Xxxxxxx, Xxxxxxxxxxx 00000
Attn:
-----------------------------------
Facsimile: (___)
------------------------
Email:
----------------------------------
AGENT:
XXXXXXX XXXXX CAPITAL,
A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.,
as Administrative Agent and a Lender
By: /s/ Xxxxxxx Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: VP
Address:
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Account Manager for MLC-HCF Penwest
Pharmaceuticals Co. transaction
Facsimile: (000) 000-0000
E-Mail: XXX_XXX_XXX0@xx.xxx
With copies to:
Xxxxxxx Xxxxx Capital
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Xxxxxxx Xxxxx Capital
0000 Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Signature Page to Pharma Rider
Payment Account Designation:
LaSalle Bank
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
ABA #: 000000000
Account Name: MLBFS Healthcare Finance
Account #: 5800395088
Attention: Penwest Pharmaceuticals Co.
LENDERS:
XXXXXXX XXXXX CAPITAL,
A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.,
AS LENDER
By: /s/ Xxxxxxx Xxxxxxxx [SEAL]
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: VP
Address:
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Account Manager for MLC-HCF Penwest
Pharmaceuticals Co. transaction
Facsimile: (000) 000-0000
E-Mail: XXX_XXX_XXX0@xx.xxx
With copies to:
Xxxxxxx Xxxxx Capital
000 X. XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
and
Xxxxxxx Xxxxx Capital
0000 Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Group Senior Transaction Attorney,
Healthcare Finance
Facsimile Number: (000) 000-0000
Signature Page to Pharma Rider
