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SECOND-LIEN LOAN AND GUARANTY AGREEMENT

Guarantee Agreement

SECOND-LIEN LOAN AND GUARANTY AGREEMENT | Document Parties: GOLDMAN SACHS CREDIT PARTNERS LP | RELIANT PHARMACEUTICALS, INC | RP SUB NO 1, INC | SILVER POINT FINANCE, LLC You are currently viewing:
This Guarantee Agreement involves

GOLDMAN SACHS CREDIT PARTNERS LP | RELIANT PHARMACEUTICALS, INC | RP SUB NO 1, INC | SILVER POINT FINANCE, LLC

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Title: SECOND-LIEN LOAN AND GUARANTY AGREEMENT
Governing Law: New York     Date: 5/20/2005
Law Firm: Latham Watkins    

SECOND-LIEN LOAN AND GUARANTY AGREEMENT, Parties: goldman sachs credit partners lp , reliant pharmaceuticals  inc , rp sub no 1  inc , silver point finance  llc
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Exhibit 10.22

 

EXECUTION COPY

 

SECOND-LIEN LOAN AND GUARANTY AGREEMENT

 

dated as of April 13, 2005

 

among

 

RELIANT PHARMACEUTICALS, INC.,

 

CERTAIN SUBSIDIARIES OF RELIANT PHARMACEUTICALS, INC.,

as Guarantor Subsidiaries,

 

VARIOUS LENDERS,

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

Lender, Lead Arranger, Sole Bookrunner,

and Syndication Agent

 

and

 

SILVER POINT FINANCE, LLC

 

Administrative Agent and Collateral Agent

 


 

$30,000,000 Senior Secured Credit Facility

 


 


TABLE OF CONTENTS

 

         Page

SECTION 1.   DEFINITIONS AND INTERPRETATION    1

  1.1.

  Definitions    1

  1.2.

  Accounting Terms    23

  1.3.

  Interpretation, etc    23
SECTION 2.   LOANS    23

  2.1.

  Term Loans    23

  2.2.

  PIK Loans    24

  2.3.

  [RESERVED]    24

  2.4.

  [RESERVED]    24

  2.5.

  Pro Rata Shares; Availability of Funds    24

  2.6.

  Use of Proceeds    25

  2.7.

  Evidence of Debt; Register; Lenders’ Books and Records; Notes    25

  2.8.

  Interest on Loans    26

  2.9.

  [RESERVED]    26

  2.10.

  Default Interest    26

  2.11.

  Fees    27

  2.12.

  [RESERVED]    27

  2.13.

  Voluntary Prepayments    27

  2.14.

  Mandatory Prepayments    28

  2.15.

  Application of Prepayments    30

  2.16.

  General Provisions Regarding Payments    30

  2.17.

  Ratable Sharing    31

  2.18.

  [RESERVED]    32

  2.19.

  Increased Costs; Capital Adequacy    32

  2.20.

  Taxes; Withholding, etc    33

  2.21.

  Obligation to Mitigate    35

  2.22.

  Defaulting Lenders    35

  2.23.

  Removal or Replacement of a Lender    35
SECTION 3.   CONDITIONS PRECEDENT    36

  3.1.

  Closing Date    36
SECTION 4.   REPRESENTATIONS AND WARRANTIES    40

  4.1.

  Organization; Requisite Power and Authority; Qualification    40

  4.2.

  Capital Stock and Ownership    40

  4.3.

  Due Authorization    40

  4.4.

  No Conflict, Violation, Default    40

  4.5.

  Governmental Consents    41

  4.6.

  Binding Obligation    41

 

i

 


  4.7.

  Historical Financial Statements    41

  4.8.

  Projections    41

  4.9.

  No Material Adverse Change    41

  4.10.

  Schedule 3.1(e)    42

  4.11.

  Adverse Proceedings, etc    42

  4.12.

  Payment of Taxes    42

  4.13.

  Properties    42

  4.14.

  Environmental Matters    43

  4.15.

  No Defaults    44

  4.16.

  Material Contracts    44

  4.17.

  Governmental Regulation    44

  4.18.

  Margin Stock    45

  4.19.

  Employee Matters    45

  4.20.

  Employee Benefit Plans    45

  4.21.

  Certain Fees    45

  4.22.

  Solvency    45

  4.23.

  [RESERVED]    45

  4.24.

  Permits, Compliance with Statutes, etc    45

  4.25.

  Disclosure    46

  4.26.

  New Drug Applications    46

  4.27.

  Quality of Inventory    46

  4.28.

  Non-disclosure and Confidentiality Policies    46

  4.29.

  Non-compliance with Governmental Regulation    46
SECTION 5.   AFFIRMATIVE COVENANTS    47

  5.1.

  Financial Statements and Other Reports    47

  5.2.

  Existence    50

  5.3.

  Payment of Taxes and Claims    50

  5.4.

  Maintenance of Properties    51

  5.5.

  Insurance    51

  5.6.

  Inspections    51

  5.7.

  Lenders Meetings    52

  5.8.

  Compliance with Laws    52

  5.9.

  Environmental    52

  5.10.

  Subsidiaries    53

  5.11.

  Additional Material Real Estate Assets    53

  5.12.

  Segregated Account for Working Capital Collateral    54

  5.13.

  [RESERVED]    54

  5.14.

  Further Assurances    54

  5.15.

  Personal Property Collateral Access Agreement    54
SECTION 6.   NEGATIVE COVENANTS    54

  6.1.

  Indebtedness    54

  6.2.

  Liens    56

 

ii

 


  6.3.

  Equitable Lien    58

  6.4.

  No Further Negative Pledges    58

  6.5.

  Restricted Junior Payments    59

  6.6.

  Restrictions on Subsidiary Distributions    59

  6.7.

  Investments    59

  6.8.

  [RESERVED]    60

  6.9.

  Fundamental Changes; Disposition of Assets; Acquisitions    60

  6.10.

  Disposal of Subsidiary Interests    61

  6.11.

  Sales and Lease-Backs    61

  6.12.

  Transactions with Shareholders and Affiliates    62

  6.13.

  Conduct of Business    62

  6.14.

  [RESERVED]    62

  6.15.

  Provisions Related to Joint Ventures    62

  6.16.

  Amendments or Waivers with Respect to Certain Indebtedness    62

  6.17.

  Fiscal Year    62

  6.18.

  RP Sub No. 1    63
SECTION 7.   GUARANTY    63

  7.1.

  Guaranty of the Obligations    63

  7.2.

  Contribution by Guarantor Subsidiaries    63

  7.3.

  Payment by Guarantor Subsidiaries    63

  7.4.

  Liability of Guarantor Subsidiaries Absolute    64

  7.5.

  Waivers by Guarantor Subsidiaries    65

  7.6.

  Guarantor Subsidiaries’ Rights of Subrogation, Contribution, etc    66

  7.7.

  Subordination of Other Obligations    67

  7.8.

  Continuing Guaranty    67

  7.9.

  Authority of Guarantor Subsidiaries or Company    67

  7.10.

  Financial Condition of Company    67

  7.11.

  Bankruptcy, etc    67

  7.12.

  Discharge of Guaranty Upon Sale of Guarantor Subsidiary    68
SECTION 8.   EVENTS OF DEFAULT    68

  8.1.

  Events of Default    68
SECTION 9.   AGENTS    70

  9.1.

  Appointment of Agents    70

  9.2.

  Powers and Duties    71

  9.3.

  General Immunity    71

  9.4.

  Agents Entitled to Act as Lender    72

  9.5.

  Lenders’ Representations, Warranties and Acknowledgment    72

  9.6.

  Right to Indemnity    72

  9.7.

  Successor Administrative Agent    72

  9.8.

  Collateral Documents and Guaranty    73

 

iii

 


SECTION 10.

  MISCELLANEOUS    74

  10.1.

  Notices    74

  10.2.

  Expenses    74

  10.3.

  Indemnity    75

  10.4.

  Set-Off    75

  10.5.

  Amendments and Waivers    75

  10.6.

  Successors and Assigns; Participations    76

  10.7.

  Independence of Covenants    79

  10.8.

  Survival of Representations, Warranties and Agreements    80

  10.9.

  No Waiver; Remedies Cumulative    80

  10.10.

  Marshalling; Payments Set Aside    80

  10.11.

  Severability    80

  10.12.

  Obligations Several; Independent Nature of Lenders’ Rights    80

  10.13.

  Headings    80

  10.14.

  APPLICABLE LAW    81

  10.15.

  CONSENT TO JURISDICTION    81

  10.16.

  WAIVER OF JURY TRIAL    81

  10.17.

  Confidentiality    82

  10.18.

  Usury Savings Clause    82

  10.19.

  Counterparts    82

  10.20.

  Effectiveness    83

 

iv

 


APPENDICES:   A   Commitments
    B   Notice Addresses
SCHEDULES:   2.14(c)   Outstanding Warrants
    3.1(e)   Liquidity Option Agreements
    4.1   Jurisdictions of Organization and Qualification
    4.2   Capital Stock and Ownership
    4.7   Certain Liabilities
    4.9   Certain Changes
    4.11   Adverse Proceedings
    4.12   Taxes
    4.13   Title; Real Estate Assets
    4.13(c)   Intellectual Property Rights
    4.16   Material Contracts
    4.17(b)   Non-compliance with Governmental Regulation
    4.24   Legal Compliance
    6.1 (p)   Leased and Financed Vehicles
    6.2 (l)   Certain Liens
    6.7   Certain Investments
    6.12   Certain Affiliate Transactions
EXHIBITS:   A   Form of Funding Notice
    B-1   Form of Note
    B-2   Form of PIK Note
    C   Form of Compliance Certificate
    D   Form of Opinion of Counsel
    E   Form of Assignment Agreement
    F   Form of Certificate Re Non-bank Status
    G-1   Form of Closing Date Certificate
    G-2   Form of Solvency Certificate
    H   Form of Counterpart Agreement
    I   [RESERVED]
    J   [RESERVED]
    K   Form of Personal Property Collateral Access Agreement

 

v

 


SECOND-LIEN LOAN AND GUARANTY AGREEMENT

 

This SECOND-LIEN LOAN AND GUARANTY AGREEMENT , dated as of April 13, 2005, is entered into by and among RELIANT PHARMACEUTICALS, INC. , a corporation organized under the laws of the state of Delaware ( “Company” ), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantor Subsidiaries, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ( “GSCP” ), as Lender, Lead Arranger, Sole Bookrunner and Syndication Agent, and SILVER POINT FINANCE, LLC ( “Silver Point” ) as Administrative Agent and Collateral Agent.

 

RECITALS:

 

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

 

WHEREAS, Lenders have agreed to make a term loan to Company, in an amount not to exceed an aggregate principal amount of $30 million, the proceeds of which will be used for general corporate purposes, working capital and Permitted Acquisitions;

 

WHEREAS, Company has agreed to secure all of its Obligations by granting to Collateral Agent, for the benefit of Secured Parties, (1) a Second Priority Lien on substantially all of its assets, including a pledge of all of the Capital Stock of each of its Domestic Subsidiaries, if any, and 65% of all of the Capital Stock of each of its Foreign Subsidiaries, if any, but excluding the accounts receivable that comprise the Working Capital Collateral, and (2) a third priority lien on the Working Capital Collateral; and

 

WHEREAS, Guarantor Subsidiaries have agreed to guarantee the obligations of Company hereunder and, except in the case of RP Sub No. 1, to secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a Second Priority Lien on substantially all of their respective assets, including a pledge of all of the Capital Stock of each of their respective Domestic Subsidiaries, if any, and 65% of all the Capital Stock of each of their respective Foreign Subsidiaries, if any.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

SECTION 1. DEFINITIONS AND INTERPRETATION

 

1.1. Definitions . The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

 

“Administrative Agent” as defined in the preamble hereto.

 

“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Company or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the Knowledge of Company or any of its Subsidiaries, threatened in writing against or adversely affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries.

 

“Affected Lender” as defined in Section 2.18(b).

 


“Affected Loans” as defined in Section 2.18(b).

 

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors (or individuals performing comparable functions) of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

 

“Agent” means each of GSCP, Syndication Agent, Administrative Agent, and Collateral Agent.

 

“Aggregate Amounts Due” as defined in Section 2.17.

 

“Aggregate Payments” as defined in Section 7.2.

 

“Aggregate Proceeds Threshold” means the greater of (x) $7,500,000 and (y) the net proceeds from the sale or disposition of Axid ® OS. For purposes of calculating the Aggregate Proceeds Threshold, any amounts paid or required to be paid after the Closing Date to Eli Lilly and Company in connection with Axid ® OS shall be deducted from the proceeds of the sale or disposition of Axid ® OS, whether or not such amounts have already been paid at the time of the Axid ® OS sale.

 

“Agreement” means this Second-Lien Loan and Guaranty Agreement, dated as of April 13, 2005, as it may be amended, restated, supplemented or otherwise modified from time to time.

 

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale-and-leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Company or any Guarantor Subsidiary, excluding RP Sub No. 1), in one transaction or a series of transactions, of all or any part of Company’s or any of its Subsidiaries’ businesses, assets (other than Cash or Cash Equivalents sold for the fair market value thereof) or properties of any kind, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the Capital Stock of any of Company’s Subsidiaries, other than (i) inventory sold, leased or otherwise disposed of in the ordinary course of business (excluding any such sales by operations or divisions discontinued or to be discontinued) and obsolete, worn out or surplus property, (ii) licenses and sublicenses granted by Company in the ordinary course of business to enable third parties to manufacture inventory for sale by Company or its Subsidiaries, or otherwise provide goods or services to Company or its Subsidiaries, provided , that such licenses and sublicenses do not permit the manufacture of products for, or the provision of services to, Persons other than the Company or its Subsidiaries and Persons providing services to Company and its Subsidiaries, and (iii) any transfer of a Product to a PSF Joint Venture or any receipt of funds from a PSF Counterpart pursuant to the terms of an Eligible Product-Specific Financing.

 

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent.

 

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“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), and such Person’s chief financial officer, treasurer or controller.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled Bankruptcy, as now and hereafter in effect, or any successor statute.

 

“Beneficiary” means each Agent and each Lender.

 

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

 

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

 

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, any preferred interests and preferred shares, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

 

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

 

“Cash Equivalents” means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least adequately capitalized (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s.

 

“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.

 

cGMPs ” means the regulatory requirements for current good manufacturing practices promulgated by the United States FDA under the Food and Drug Act, including at 21 C.F.R. § 210 et seq ., and under the Public Health Service Act, Biological Products, 21 C.F.R. §§ 610-10, as the same may be amended from time to time.

 

3

 


“Change of Control” means, at any time,

 

(i) any Person or group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Specified Holders (a) shall have acquired beneficial ownership of 50% or more on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Company or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Company; or

 

(ii) any change of control or similar event under the documentation evidencing the Third-Lien Term Loan shall have occurred; or

 

(iii) prior to the consummation of an initial public offering of the Capital Stock of Company, the Specified Holders fail to hold at least 25% of the Capital Stock of the Company.

 

“Closing Date” means the date of this Agreement, which shall be the date on which the Loans are made pursuant to Section 2.1.

 

“Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit G-1.

 

“Collateral” means, collectively, all of the owned real property, personal property, mixed property (including Capital Stock) and the Interest Reserve Fund (as defined under the First-Lien Term Loan Agreement) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

 

“Collateral Agent” as defined in the preamble hereto.

 

Collateral Documents ” means the Pledge and Security Agreement and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any owned real property, personal property or mixed property of that Credit Party as security for the Obligations.

 

“Collateral Questionnaire” means a certificate in form satisfactory to Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party.

 

“Commitment” means the commitment of a Lender to make or otherwise fund a Loan pursuant to Section 2.1 and “Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Commitment is set forth on Appendix A or in the applicable Assignment Agreement. The aggregate amount of the Commitments as of the Closing Date is $30,000,000 before giving effect to the Loans made on the Closing Date. For the avoidance of doubt, the making of a Loan under Section 2.1 and the consequent termination of such Lender’s Commitment do not limit the obligation of such Lender to make a PIK Loan under Section 2.8(b)(i).

 

“Company” as defined in the preamble hereto.

 

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.

 

4

 


“Consolidated Adjusted EBITDA” means, for any period, an amount determined for Company and its Subsidiaries on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes based on income, (d) total depreciation expense, (e) total amortization expense, and (f) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period), minus (ii) other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period).

 

“Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of Company and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of Company and its Subsidiaries.

 

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for such period, excluding any amount not payable in Cash.

 

“Consolidated Current Assets” means, as at any date of determination, the total assets of Company and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.

 

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of Company and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long-term debt.

 

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) the Consolidated Working Capital Adjustment, minus (ii) the sum, without duplication, of the amounts for such period of (a) repayments of Consolidated Total Debt, (b) Consolidated Capital Expenditures (net of any proceeds of (y) any related financings with respect to such expenditures and (z) any sales of assets used to finance such expenditures), (c) Consolidated Cash Interest Expense, (d) provisions for current taxes based on income of Company and its Subsidiaries and payable in cash with respect to such period, and (e) Cash payments made by the Company and its consolidated subsidiaries as part of the purchase price for a Permitted Acquisition and expenses incurred to consummate such Permitted Acquisition.

 

“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest hereunder or otherwise) of Company and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Company and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in Section 2.11 payable before the Closing Date.

 

“Consolidated Net Income” means, for any period, (i) the net income (or loss) of Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any Person (other than a Subsidiary of Company) in which any other Person (other than Company or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Company or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any

 

5

 


Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or that Person’s assets are acquired by Company or any of its Subsidiaries, (c) the income of any Subsidiary of Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses.

 

“Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Working Capital” means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities.

 

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.

 

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

 

“Contributing Guarantors” as defined in Section 7.2.

 

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Credit Party pursuant to Section 5.10.

 

“Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Term Loan Intercreditor Agreement, the Working Capital Intercreditor Agreement and all other documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, or any Lender in connection herewith, and including, for the avoidance of doubt, any Counterpart Agreement.

 

“Credit Extension” means the making of the Loans.

 

“Credit Party” means each Person (other than any Agent or any Lender or any other representative thereof) from time to time party to a Credit Document.

 

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Company’s and its Subsidiaries’ operations and not for speculative purposes.

 

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

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“Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender.

 

“Default Period” means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (i) the date on which the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.13 or Section 2.14 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to Company and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitment, and (iii) the date on which Company, Administrative Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing.

 

“Defaulted Loan” as defined in Section 2.22.

 

“Defaulting Lender” as defined in Section 2.22.

 

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

 

“Dollars” and the sign “$” mean the lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

 

“Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an accredited investor (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; provided , no Person that is or intends to be a competitor of the Company (except any Person that is described in clauses (i) or (ii) and is or may be deemed to be a competitor of the Company solely by virtue of being a lender to, or Non-Controlling Equity Investor (as defined below) with respect to such a competitor), other than an Affiliate of Company or its Subsidiaries, shall be an Eligible Assignee. For purposes of the preceding sentence, “Non-Controlling Equity Investor” means, with respect to the relevant entity, a Person that (i) is not an Affiliate of such entity, (ii) does not possess a seat on the board of directors (or individuals performing comparable functions) of such entity and (iii) does not possess, directly or indirectly, the power to elect a member of the board of directors (or individuals performing comparable functions) of such entity.

 

“Eligible Product-Specific Financing” means any financing or Joint Venture arrangement that conforms to the following criteria:

 

(i) the Company has given the Administrative Agent and the Lenders notice of any such financing or arrangement at least 10 Business Days prior to the closing date of any

 

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such financing or arrangement together with a reasonably detailed description of such transaction, and the Requisite Lenders shall have approved in writing such transaction prior to the closing date of such transaction;

 

(ii) such financing or arrangement is between (a) a Person that is not an Affiliate of Company (such Person, the “PSF Counterpart” ), and (b) Company or any of its Guarantor Subsidiaries (other than RP Sub No. 1), with respect to a specific pharmaceutical product or pharmaceutical product family or pharmaceutical formulation in the development phase (collectively, a “Product” ) (including line extensions and improvements to approved products) pursuant to which the PSF Counterpart agrees to lend, reimburse or pay a portion of the development costs of such Product in exchange for any one or a combination of the following: (1) rights of the PSF Counterpart to share in the profits from the ultimate sale or exploitation of such Product, (2) royalties payable to the PSF Counterpart on the sale of such Product, (3) repayment to the PSF Counterpart of development costs and agreed upon premiums upon achievement of certain milestone events, or (4) repayment to the PSF Counterpart of borrowed principal plus interest and fees thereon, provided , however , that the Company and its applicable Subsidiaries, taken as a whole, shall not enter into more than two separate such arrangements, each involving a single Product, during the term of this Agreement;

 

(iii) if such arrangement involves the establishment of a Joint Venture (a “PSF Joint Venture” ) in which the PSF Counterpart acquires Capital Stock of the PSF Joint Venture, (a) the Company or its applicable Subsidiary shall grant to the Collateral Agent, pursuant to the Pledge and Security Agreement, a Second Priority Lien on all of the Capital Stock in the PSF Joint Venture owned by the Company or such Subsidiary, (b) the PSF Joint Venture shall engage in no business other than entering into such arrangement, shall have no Indebtedness other than the Indebtedness to the PSF Counterpart contemplated in subparagraph (i) above and shall not grant a Lien on any of its assets other than a Lien on the Product and related rights in favor of the PSF Counterpart, and (c) the PSF Joint Venture shall not be required to be a Guarantor Subsidiary or grant a Lien on its assets in favor of the Collateral Agent;

 

(iv) copies of the final documentation relating to each such arrangement or financing shall be furnished reasonably promptly to the Administrative Agent and no payments or distributions will be made to the PSF Counterpart in respect of such arrangement other than pursuant to the terms of such documentation; and

 

(v) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such financing or arrangement.

 

“Employee Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Company, any of its Subsidiaries or any of their respective ERISA Affiliates.

 

“Environmental Claim” means any written communication regarding any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

 

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“Environmental Laws” means any and all current or future applicable foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments and Governmental Authorizations relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto, and the regulations thereunder.

 

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Internal Revenue Code, of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control, within the meaning of Section 414(c) of the Internal Revenue Code, of which that Person is a member; and (iii) any member of an affiliated service group, within the meaning of Section 414(m) or (o) of the Internal Revenue Code, of which that Person is a member. Any former ERISA Affiliate of Company or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Company or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Company or such Subsidiary and with respect to liabilities for which Company or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

 

“ERISA Event” means (i) a reportable event within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code); (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Company, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Company, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the occurrence of an act or omission which could give rise to the imposition on Company, or any of its Subsidiaries of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (viii) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Company or any of its Subsidiaries in connection with any Employee Benefit Plan; (ix) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

 

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“Event of Default” means each of the conditions or events set forth in Section 8.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Company or any of its Subsidiaries or any of their respective predecessors or Affiliates.

 

“Fair Share Contribution Amount” as defined in Section 7.2.

 

“Fair Share” as defined in Section 7.2.

 

“FDA” as defined in Section 4.17(b).

 

“FDA Regulation” means any rule, regulation or administrative order promulgated or issued by the FDA.

 

“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the principal financial officer of Company that such financial statements fairly present, in all material respects, the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

 

“Financial Plan” as defined in Section 5.1(i).

 

First-Lien Collateral Agent ” means the collateral agent under the First-Lien Security Agreement.

 

First-Lien Lenders ” means the lender(s) under the First-Lien Term Loan Agreement.

 

First-Lien Security Agreement ” means the pledge and security agreement securing the collateral relating to the Indebtedness under the First-Lien Term Loan Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“First-Lien Term Loan Agreement” means the First-Lien Term Loan and Guaranty Agreement, dated as of the date hereof, between Company and certain lenders and agents, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“First-Lien Term Loan” means the term borrowing in an amount, not to exceed an initial amount of $120 million, on the terms and conditions set forth in the First-Lien Term Loan Agreement.

 

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year” means the fiscal year of Company and its Subsidiaries ending on December 31 of each calendar year.

 

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“Food and Drug Act” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. § 301 et seq . and any successor act.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“Funding Default” as defined in Section 2.22.

 

“Funding Guarantor” as defined in Section 7.2.

 

“Funding Notice” means a notice substantially in the form of Exhibit A.

 

“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, accounting principles generally accepted in the United States in effect as of the date of determination thereof.

 

“Governmental Acts” means any act (including any order or decree) or omission, of any present or future Governmental Authority.

 

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

 

“Governmental Authorization” means any permit, license, authorization, directive, consent order or consent decree of or from any Governmental Authority.

 

“Grantor” as defined in the Pledge and Security Agreement.

 

“Guaranteed Obligations” as defined in Section 7.1.

 

“Guarantor Subsidiary” means each Domestic Subsidiary of Company, excluding any PSF Joint Venture.

 

“Guaranty” means the guaranty of each Guarantor Subsidiary set forth in Section 7.

 

“Hazardous Material” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.

 

“Hazardous Materials Activity” means any past or current activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

 

“Hedge Agreement” means an interest rate agreement or a currency agreement entered into in the ordinary course of Company’s or any of its Subsidiaries’ businesses.

 

11

 


“HHS” means the United States Department of Health and Human Services, or any successor agency thereof.

 

“HHS Regulation” means any rule, regulations or administrative order promulgates or issued by the HHS.

 

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are now in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

 

“Historical Financial Statements” means, collectively, (i) the audited financial statements of Company for the 2001, 2002 and 2003 Fiscal Years, each consisting of a balance sheet and the related statement of operations, member’s deficit and cash flows for such Fiscal Year and notes thereto, (ii) the unaudited financial statements of Company for the Fiscal Year ended December 31, 2004, consisting of a balance sheet as of December 31, 2004 and the related statements of operations and cash flows for such Fiscal Year and a statement of stockholders’ equity from the prior fiscal year end through December 31, 2004 and notes thereto, and (iii) the unaudited financial statements of Company for the months ending January 31, 2005 and February 28, 2005, consisting of a balance sheet as of January 31, 2005 and as of February 28, 2005 and the related statements of operations and cash flows for such month and a statement of stockholders’ equity from the prior fiscal year end through February 28, 2005, and, in the case of clause (ii), together with a Financial Officer Certification with respect thereto.

 

“Increased-Cost Lenders” as defined in Section 2.23.

 

“Indebtedness” as applied to any Person, means, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) that portion of obligations of such Person with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted by such Person representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed by such Person for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof to the extent classified as a liability on a balance sheet in conformity with GAAP or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit (whether or not drawn) issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclause (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including any Hedge Agreement.

 

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“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any reasonable fees or reasonable expenses incurred by Indemnitees in enforcing the indemnity under Section 10.3 herein), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the use or intended use of the proceeds thereof, or any proper enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); or (ii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Company or any of its Subsidiaries.

 

“Indemnitee” as defined in Section 10.3(a).

 

“Intellectual Property Rights” as defined in Section 4.13(c).

 

“Interest Compounding Date” means each March 31, June 30, September 30, and December 31 of each year commencing on the first such date to occur after the Closing Date and ending on the last such date to occur prior to the Maturity Date. If such date is not a Business Day, such Interest Compounding Date will be the next succeeding Business Day.

 

“Interest Period” means an interest period of three months, (i) initially, commencing on the Closing Date and ending on June 30, 2005 and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with Company’s and its Subsidiaries’ operations and not for speculative purposes.

 

“Interest Rate” as defined in Section 2.8(a).

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute, and the regulations thereunder.

 

“Investment” means (i) any direct or indirect purchase or other acquisition by Company or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Guarantor Subsidiary); (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Company from any Person (other than Company or any

 

13

 


Guarantor Subsidiary), of any Capital Stock of such Person; and (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Company or any of its Subsidiaries to any other Person (other than Company or any Guarantor Subsidiary), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. 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 to such Investment. For purposes of this definition, RP Sub No. 1 shall not be considered a Guarantor Subsidiary.

 

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided , in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

 

“Knowledge” means, with respect to any Credit Party, the actual knowledge of any Responsible Officer of such Credit Party.

 

“Lender” means each lender listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.

 

“Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing (other than an agreement to grant a Lien on any Collateral that does not result in attachment of the Lien within the meaning of 9-203 of the UCC until after the payment in full of the Obligations and termination of all of the Commitments), any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third-party with respect to such Securities.

 

“Loan” means a loan made by a Lender to Company pursuant to Section 2.1 or a PIK Loan deemed to have been made by a Lender in the form of PIK Interest pursuant to Section 2.8(b)(i).

 

“Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Loans of such Lender; provided , at any time prior to the making of the Loans, the Loan Exposure of any Lender shall be equal to such Lender’s Commitment.

 

“Loan-to-Value Ratio” means the ratio as of the date of determination of (i) Consolidated Total Debt, on a pro forma basis as of such date, to (ii) (x) the net present value, at a 10% discount rate, of all future promotional revenues and/or reimbursements received for Lescol ® projected to be received from Novartis AG, plus (y) three times the net sales revenue of all pharmaceutical products marketed for the four-Fiscal Quarter period ending on the last day of the most recent Fiscal Quarter for which financial statements have been delivered pursuant to Sections 5.1(b) or 5.1(c).

 

“Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

“Material Adverse Effect” means any effect, event, change or state of fact that, individually or in the aggregate, has resulted in, or would be reasonably likely to result in, a material adverse effect with respect to (i) the business operations, properties, assets or condition (financial or otherwise) of Company and its Subsidiaries taken as a whole; (ii) the industry taken as a whole or the

 

14

 


business segment taken as a whole in which Company or its Subsidiaries operate or rely upon if such effect or development is reasonably likely to have a material adverse effect on Company and its Subsidiaries taken as a whole; (iii) the ability of any Credit Party to fully and timely perform its Obligations; (iv) the legality, validity, binding effect or enforceability against a Credit Party of a Credit Document to which it is a party; or (v) the rights, remedies and benefits available to, or conferred upon, any Agent, any Lender or any Secured Party under any Credit Document.

 

“Material Contract” means any contract or other arrangement to which Company or any of its Subsidiaries is a party (other than the Credit Documents) of which breach, nonperformance or cancellation could reasonably be expected to have a Material Adverse Effect.

 

“Material Real Estate Asset” means any fee-owned Real Estate Asset having a fair market value in excess of $2,000,000 as of the date of the acquisition thereof.

 

“Maturity Date” means the earlier of (i) September 30, 2008, and (ii) the date that all Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

 

“Merrill Lynch” means Merrill Lynch Capital, Inc., as lender under the Permitted Working Capital Facility, or any other lender thereunder.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means any Employee Benefit Plan that is a multiemployer plan as defined in Section 3(37) of ERISA.

 

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

 

“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a management’s discussion and analysis of financial condition and results of operations of Company and its Subsidiaries for the applicable Fiscal Year to which such financial statements relate.

 

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Company or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale and (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Company or any of its Subsidiaries in connection with such Asset Sale.

 

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or proceeds received by Company or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder or (b) as a result of the taking of any assets of Company or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a

 

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taking, minus (ii) (a) any actual and reasonable costs incurred by Company or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Company or such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith.

 

“Non-Consenting Lender” as defined in Section 2.23.

 

“Non-US Lender” as defined in Section 2.20(c).

 

“Note” means a promissory note in the form of Exhibit B-1 (in the case of a Loan made pursuant to Section 2.1) or Exhibit B-2 (in the case of a PIK Loan deemed made pursuant to Section 2.8(b)(i)), as it may be amended, supplemented or otherwise modified from time to time.

 

“Obligations” means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), the Lenders (including former Lenders or their affiliates) or any of them under any Credit Document, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), fees, expenses, indemnification or otherwise.

 

Obligee Guarantor” as defined in Section 7.7.

 

“Organizational Documents” means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its certificate of formation or comparable documents, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such Organizational Document shall only be to a document of a type customarily certified by such governmental official.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Title IV or Section 302 of ERISA.

 

“Permitted Acquisition” means (a) any acquisition by Company or any Guarantor Subsidiary (other than RP Sub No. 1, Inc.), whether by purchase, merger or otherwise, of all or substantially all of (1) the assets, (2) the Capital Stock, or (3) a business line, product line (regardless of the stage of development) or unit or a division, of any Person whose primary business is the research, development, testing, marketing, distribution or manufacture of pharmaceuticals, or (b) a Permitted Minority Investment (any of (a) or (b), an “Acquisition” ); provided ,

 

(i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

 

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(ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;

 

(iii) in the case of the Acquisition of Capital Stock, the Capital Stock (except for any such Securities in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Company in connection with such acquisition shall be owned by Company or a Guarantor Subsidiary thereof, if applicable, and Company shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of Company, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable;

 

(iv) the aggregate amount of purchase price (as distinct from royalty fees, licensing fees, promotional and marketing investments and similar payments) by Company and its Subsidiaries in all such Acquisitions shall not (A) exceed $30 million during the period from the Closing Date through December 31, 2005 or (B) exceed $50 million during the period from the Closing Date through the Maturity Date;

 

(v) after giving effect to the purchase price of each Acquisition, the sum of Company’s Cash on hand, Company’s Cash Equivalents on hand and the remaining undrawn availability under the Permitted Working Capital Facility following any such Acquisition shall be at least $20 million;

 

(vi) all assets acquired shall become Collateral and shall be subject to a Second Priority Lien pursuant to the Pledge and Security Agreement; and

 

(vii) Company shall have delivered to Administrative Agent at least five Business Days prior to such proposed Acquisition all information with respect to such acquired assets reasonably requested by the Administrative Agent, including, without limitation, the aggregate consideration for such Acquisition and pro forma financial projections.

 

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.

 

“Permitted Minority Investment” means any acquisition by Company or any Guarantor Subsidiary, whether by purchase or otherwise, of less than all or substantially all of (1) the assets, (2) the Capital Stock, or (3) a business line, product line (regardless of the stage of development) or unit or a division, of any Person; provided , that the primary business of such Person is the research, development, testing, marketing, distribution or manufacture of pharmaceuticals, and provided , further , that the aggregate amount invested by Company and its Guarantor Subsidiaries in all such acquisitions from and after September 3, 2004 does not exceed $2,000,000. For purposes of this definition, RP Sub No. 1 shall not be considered a Guarantor Subsidiary.

 

“Permitted Working Capital Facility” means the Indebtedness of the Company evidenced by the Credit Agreement, dated as of August 19, 2004, as amended by the First Amendment dated as of October 20, 2004, among Company and Merrill Lynch and other lenders from time to time party thereunder, the Second Amendment dated as of the date hereof and as further amended, restated, supplemented and otherwise modified from time to time, pursuant to which Company may borrow up to a principal amount of $25 million at any time outstanding, subject to the terms and conditions thereof.

 

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“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

 

“Personal Property Collateral Access Agreement” means an agreement substantially in the form of Exhibit K, with such amendments or modifications as may be approved by Collateral Agent in its reasonable discretion, permitting Collateral Agent to access personal property of the Company or its Subsidiaries, held by a third-party.

 

“PIK Interest” as defined in Section 2.8(b)(i).

 

“PIK Loan” as defined in Section 2.2.

 

“PIK Note” as defined in Section 2.7(d).

 

“Pledge and Security Agreement” means the Pledge and Security Agreement, dated as of the date hereof, among the Collateral Agent, Company and Guarantor Subsidiaries (other than RP Sub No. 1) from time to time party thereto, as it may be amended, supplemented or otherwise modified from time to time.

 

“Principal Office” means, for Administrative Agent, its Principal Office as set forth on Appendix B, or such other office as it may from time to time designate in writing to Company and each Lender.

 

Product ” as defined in the definition of “Eligible Product-Specific Financing”, except that for the purposes of Sections 4.26, 4.27 and 4.29, Products means the products currently being developed, marketed, sold and/or offered for sale in the Territory under the following trademarks/tradenames: DynaCirc ® (including DynaCirc ® IR and DynaCirc CR ® ), Rythmol ® , InnoPran ® (including InnoPran XL ® ), Antara , Omacor ® and Lescol ® and all successor products thereto.

 

“Product Recall Notice” means any written notice from the FDA stating that any product or product line of any Credit Party or any of its Subsidiaries has been or will be recalled.

 

Productive Assets ” as defined in Section 2.14(a).

 

“Projections” as defined in Section 4.8.

 

“Pro Rata Share” means, (i) with respect to all payments, computations and other matters relating to the Loan Exposure of any Lender, the percentage obtained by dividing (a) the Loan Exposure of that Lender by (b) the aggregate Loan Exposure of all Lenders; and (ii) with respect to the Commitment of any Lender, the percentage obtained by dividing (a) the Commitment of that Lender by (b) the aggregate Commitment of all Lenders.

 

“PSF Counterpart” as defined in the definition of Eligible Product-Specific Financing.

 

“PSF Joint Venture” as defined in the definition of Eligible Product-Specific Financing.

 

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Purchase Option ” means each of the Lenders’ option and each of the Third-Lien Lenders’ option, as the case may be, under the Term Loan Intercreditor Agreement, to purchase the First-Lien Term Loan and/or the Loans after an Event of Default and acceleration.

 

“Real Estate Asset” means, at any time of determination, any fee interest then held by any Credit Party in any real property.

 

“Receivables” as defined in the Pledge and Security Agreement.

 

“Receivables-Related Assets” means (i) all rights of enforcement and collection, remedies, guarantees, supporting obligations, letter-of-credit rights and security interests, in each case, to the extent relating to the Receivables, (ii) all books and records, information and data evidencing or describing the Receivables, whether compiled or derived by Borrower or any of its Subsidiaries or to which Borrower or any of its Subsidiaries is entitled, in whatever form or medium, that at any time evidence or contain information relating to any of the Receivables, (iii) all lockboxes and other depositary accounts where the proceeds of Receivables are deposited to the extent constituting proceeds of Receivables, (iv) all accessions and additions to, and substitutions and replacements of, any and all of the foregoing, and (v) all proceeds and products of the foregoing (including, without limitation, payment intangibles, as such term is defined in the UCC).

 

“Receivables Records” as defined in the Pledge and Security Agreement.

 

“Register” as defined in Section 2.7(b).

 

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

Regulatory Approvals ” as defined in Section 4.17(b).

 

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in or originates commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

 

“Replacement Lender” as defined in Section 2.23.

 

“Required Prepayment Date” as defined in Section 2.15(c).

 

“Requisite Lenders” means one or more Lenders having or holding Loan Exposures representing more than 50% of the aggregate Loan Exposure of all Lenders; provided , however , that for purposes of this definition, Company, any Specified Holder or any Affiliate of Company or of a Specified Holder that has become a Lender shall not be considered a Lender, unless the Third-Lien Lenders have exercised their Purchase Option and hold 100% of the Loans under this Agreement.

 

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“Responsible Officer” means, as applied to any Person, any individual holding the position of chief executive officer, president, chief financial officer, vice president-finance, treasurer, controller or general counsel.

 

“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of Company now or hereafter outstanding, except (a) a dividend payable solely in shares of any class of Capital Stock to the holders of that class or (b) any dividend, distribution or other payment by a PSF Joint Venture to a PSF Counterpart; (ii) any redemption, retirement, sinking fund or similar payment (including redemptions and payments under any liquidity option agreements), purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of Company now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of Company now or hereafter outstanding; (iv) management or similar fees payable to a Specified Holder or any of its Affiliates (excluding Guarantor Subsidiaries); and (v) any payment or prepayment of principal, cash interest, premium (other than pursuant to the Third-Lien Term Loan Agreement, as provided therein), if any, or redemption, purchase, retirement, defeasance (including in substance or legal defeasance), sinking fund or similar payment with respect to the Third-Lien Term Loan.

 

“RP Sub No. 1” means RP Sub No. 1, Inc., a Delaware corporation, and its successors.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.

 

“Second Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.

 

“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

 

“Securities” means any stock, shares, partnership interests, limited liability company interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement (e.g., stock appreciation rights), options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

 

“Silver Point” as defined in the preamble hereto and each of its Affiliates.

 

“Solvency Certificate” means a Solvency Certificate of the principal financial officer of Company substantially in the form of Exhibit G-2.

 

“Solvent” means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party’s debt (including contingent liabilities, but excluding liabilities from mandatorily redeemable preferred shares that are not redeemable prior to the Maturity Date) does

 

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not exceed the present fair saleable value of such Credit Party’s assets at such date of determination; (b) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Closing Date and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Closing Date; and (c) such Credit Party has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Credit Party is solvent within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances in Delaware, Florida, Massachusetts, Nebraska, New Jersey, New York and Ohio, and relating to federal fraudulent conveyance law as set forth in § 548 of the Bankruptcy Code. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“Special Purpose Entity” means a corporation or limited liability company whose organizational documents contain limitations on business activities, incurrence of Indebtedness and creation of Liens.

 

“Specified Holders” means collectively PharmBay Investors, L.L.C., The Bay City Capital Fund II, L.P. and The Bay City Capital Fund III, L.P and their respective Affiliates.

 

Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person, or the accounts of which would be consolidated with those of such Person in its consolidated financial statements in accordance with GAAP, if such statements were prepared as of such date, or one or more of the other Subsidiaries of that Person or a combination thereof; provided , in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding.

 

“Syndication Agent” as defined in the preamble hereto.

 

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called (including interest and penalties), by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided , Tax on the overall net income of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is located on all or part of the net income (whether worldwide, or only insofar as such income is considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office).

 

“Terminated Lender” as defined in Section 2.23.

 

Term Loan Intercreditor Agreement ” means an intercreditor and lien subordination agreement, dated as of the date hereof, between the Collateral Agent, the First-Lien Collateral Agent and the Third-Lien Collateral Agent, that provides for the subordination of the Third-Lien Collateral Agent’s lien on the Collateral to the Lien of the Collateral Agent and the subordination of the Lien of the Collateral Agent on the Collateral to the First-Lien Collateral Agent’s lien, each on terms reasonably satisfactory to the Collateral Agent and the Requisite Lenders.

 

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Territory ” means the United States.

 

Third-Lien Collateral Agent ” means the collateral agent under the Third-Lien Security Agreement.

 

Third-Lien Lenders ” means the Lender(s) under the Third-Lien Term Loan Agreement.

 

Third-Lien Security Agreement ” means the pledge and security agreement securing the collateral relating to the Indebtedness under the Third-Lien Term Loan Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Third-Lien Term Loan Agreement” means the Third-Lien Term Loan and Guaranty Agreement, dated as of the date hereof, between Company and certain lenders and agents, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Third-Lien Term Loan” means the term borrowing on the terms and conditions set forth in the Third-Lien Term Loan Agreement, provided , that (a) the aggregate amount of such loan facility shall not exceed an initial amount of $49.625 million, exclusive of interest permitted to be capitalized thereunder; (b) the maturity date of such loan shall be not earlier than three months after the Maturity Date; (c) no payments of principal or cash interest prior to maturity of such loan shall be permitted so long as any Obligations are outstanding; and (d) the security interest of the Third-Lien Collateral Agent shall rank junior to the security interest of the Collateral Agent hereunder.

 

“Transaction Costs” means (i) the fees, and (ii) the reasonable costs and expenses payable by Company or any of Company’s Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents.

 

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

“Waivable Prepayment” as defined in Section 2.15(c).

 

“Working Capital Collateral” means the collateral, including (i) all accounts receivable for goods sold and services rendered by Company or any of Company’s Subsidiaries, and rents license fees, and “payment intangibles” (as that term is defined in the UCC now or hereafter in effect) in respect of the foregoing and all proceeds or any of the foregoing (“Accounts”) (including, without limitation, all Accounts constituting proceeds of inventory); (ii) all rights of enforcement and collection, remedies, guarantees, supporting obligations, letter-of-credit rights and security interests, in each case, in respect of the Accounts; (iii) all books and records, information and data evidencing or describing the Accounts, whether compiled or derived by Company or any of its subsidiaries or to which the Company or any of its subsidiaries is entitled, in whatever form or medium, that at any time evidence or contain information relating to any of the Accounts or are otherwise necessary or helpful in the collection thereof or realization thereon; (iv) the lockbox where the proceeds of Accounts are deposited (including any and all funds and other payments deposited therein); (v) all accessions and additions to, and substitutions and

 

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replacements of, any and all of the foregoing; and (vi) all proceeds and products of the foregoing (including, without limitation, payment intangibles, as such term is defined in the UCC), securing the Permitted Working Capital Facility, on which Merrill Lynch has a Lien pursuant to the Working Capital Facility Security Agreement.

 

Working Capital Facility Security Agreement” means the Second Amended and Restated Security Agreement, dated as of April 13, 2005, between Company and Merrill Lynch as agent.

 

“Working Capital Intercreditor Agreement” means an intercreditor and lien subordination agreement, dated as of the date hereof, among the Collateral Agent, the First-Lien Collateral Agent, the Third-Lien Collateral Agent and Merrill Lynch, pursuant to which the Lenders, the First-Lien Lenders, and the Third-Lien Lenders shall agree not to take enforcement action with respect to the Working Capital Collateral until the Working Capital Facility shall be paid in full; and otherwise in a form reasonably satisfactory to the Collateral Agent and the Requisite Lenders.

 

1.2. Accounting Terms . Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Company to Lenders pursuant to Section 5.1(a), 5.1(b) and 5.1(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation. Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements.

 

1.3. Interpretation, etc . Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word include or including , when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not limiting language (such as without limitation or but not limited to or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter.

 

SECTION 2. LOANS

 

2.1. Term Loans.

 

(a) Loans and Commitments . Subject to the terms and conditions hereof, each Lender severally agrees to make, on the Closing Date, a Loan to Company in an amount equal to such Lender’s Commitment, such that the total Loans of all Lenders made on the Closing Date shall be $30 million. Any amount borrowed under this Section 2.1(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Loans shall be paid in full no later than the Maturity Date. Each Lender’s Commitment shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender’s Commitment on such date. For the avoidance of doubt, the making of a Loan under this Section 2.1 and the consequent termination of such Lender’s Commitment on the Closing Date do not limit the obligation of such Lender to make a PIK Loan under Section 2.8(b)(i).

 

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(b) Borrowing Mechanics for Term Loans .

 

(i) Company shall deliver to Administrative Agent a fully executed Funding Notice not later than 1:00 p.m. (New York City time) on the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing.

 

(ii) Upon satisfaction or waiver of the conditions precedent specified in Section 3.1, each Lender shall make its Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the Closing Date, by wire transfer of same day funds in Dollars, at the Principal Office. Upon satisfaction or waiver of the conditions precedent specified in Section 3.1, Administrative Agent shall make the proceeds of the Loan available to Company on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Company as designated in the Funding Notice by Company.

 

2.2. PIK Loans . Subject to the terms hereof and Section 2.8(b)(ii), each Lender severally agrees to make, pursuant to Section 2.8(b)(i), on each Interest Compounding Date, a PIK Loan to Company in an amount equal to the Lender’s respective Pro Rata Share of all interest accrued on Loans during the Interest Period ending on such Interest Compounding Date (such loans, “PIK Loans” ). An amount borrowed under this Section 2.2 and subsequently repaid or prepaid may not be reborrowed. Subject to Section 2.13(a) and 2.14, all amounts owed hereunder with respect to the Loans shall be paid in full no later than the Maturity Date.

 

2.3. [RESERVED].

 

2.4. [RESERVED].

 

2.5. Pro Rata Shares; Availability of Funds.

 

(a) Pro Rata Shares . All Loans shall be made, and all participations purchased under Section 2.17, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested under this Agreement or purchase a participation required hereby under Section 2.17 nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested under this Agreement or purchase a participation required hereby under Section 2.17.

 

(b) Availability of Funds . Unless Administrative Agent shall have been notified by any Lender prior to the Closing Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on the Closing Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on the Closing Date or Administrative Agent shall make available to Company a corresponding amount on the Closing Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender but Administrative Agent has made such amount available to Company, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from the Closing Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Interest Rate. If Administrative Agent has made such amount available to Company but such Lender does not pay such corresponding amount forthwith upon

 

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Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Company and Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from the Closing Date until the date such amount is paid to Administrative Agent, at the Interest Rate. Nothing in this Section 2.5(b) shall be deemed to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder.

 

2.6. Use of Proceeds . The proceeds of the Loans made pursuant to Section 2.1 shall be used by Company for general corporate purposes, working capital and Permitted Acquisitions, and to pay fees and expenses related thereto. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

 

2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

 

(a) Lenders’ Evidence of Debt . Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Company to such Lender, including the amounts of the Loans made or deemed made by it, accrued and capitalized interest and fees thereon and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Company, absent manifest error; provided , that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Commitment or Company’s Obligations in respect of any applicable Loans; and provided , further , in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register (if applicable) shall govern.

 

(b) Register . Administrative Agent shall maintain at the Principal Office a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the “Register” ). The Register shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record in the Register the Commitments and the Loans, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; provided , failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Commitment or Company’s Obligations in respect of any Loan. Company hereby designates Silver Point to serve as Company’s agent solely for purposes of maintaining the Register as provided in this Section 2.7, and Company hereby agrees that, to the extent Silver Point serves in such capacity, Silver Point and its officers, directors, employees, agents and affiliates shall constitute Indemnitees.

 

(c) Notes . If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Company’s receipt of such notice) a Note or Notes to evidence such Lender’s Loans.

 

(d) PIK Notes . If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to an Interest Compounding Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on such Interest Compounding Date (or, if such notice is delivered after such Interest Compounding Date,

 

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promptly after Company’s receipt of such notice) a PIK Note, substantially in the form of Exhibit B-2 attached hereto (each, a “PIK Note” ) and pursuant to Section 2.8(b)(i), to evidence such Lender’s PIK Loans. No Note or PIK Note shall be issued for interest paid in cash on an Interest Compounding Date pursuant to the option in Section 2.8(b)(ii).

 

2.8. Interest on Loans.

 

(a) Except as otherwise set forth herein, each Loan (including, for the avoidance of doubt, each PIK Loan) shall bear interest on the unpaid principal amount thereof from the date made or deemed made through repayment (whether by acceleration or otherwise) thereof at a rate per annum equal to 17.00% (the “Interest Rate”) . Such interest shall accrue on each Loan during each Interest Period.

 

(b) (i) On each Interest Compounding Date, interest accrued during the immediately preceding Interest Period on any Loan shall automatically be deemed to be a PIK Loan made by the applicable Lender hereunder evidenced by an entry in accordance with Section 2.7(a) and, if so elected in writing by such Lender pursuant to Section 2.7(d), through the issuance to such Lender, on or prior to such Interest Compounding Date, of a PIK Note with an aggregate principal amount equal to 100% of the amount of interest accrued on the Loan Exposure of such Lender during the Interest Period ending on the Business Day immediately preceding such Interest Compounding Date (such interest, “ PIK Interest ”); provided , however , (ii) that in the event Company shall have paid in full 50% or more of the initial principal amount under the First-Lien Term Loan, Company may, at its option and upon two-Business Days’ notice to the Administrative Agent, on each Interest Compounding Date, pay in cash all of the interest accrued during the immediately preceding Interest Period. For the avoidance of doubt, interest paid pursuant to the option contained in this Section 2.8(b)(ii) on the applicable Interest Compounding Date, will not be deemed a PIK Loan, or any other Loan, and will not be capitalized.

 

(c) Each PIK Loan representing PIK Interest shall be due and payable on the Maturity Date in cash unless earlier prepaid pursuant to Section 2.13 or 2.14.

 

(d) Interest accrued pursuant to Section 2.8(a) shall be computed on the basis of a 365-day or 366-day year, as the case may be, for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making or deemed making of such Loan or the first day of an Interest Period applicable to such Loan shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan shall be excluded; provided , if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

 

(e) Except as otherwise set forth herein, interest on each Loan shall be payable in arrears (i) upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid and (ii) on the Maturity Date. The interest payable on any prepayment of a PIK Loan shall equal the interest accrued on the principal amount thereof paid or prepaid from and including the most recent Interest Compounding Date to but excluding the date of payment.

 

2.9. [RESERVED].

 

2.10. Default Interest . Upon the occurrence and during the continuance of an Event of Default, (i) the principal amount of all Loans outstanding, and (ii) to the extent permitted by applicable law, any interest, fees or other amounts (other than principal) which are not paid, or in the case of interest, accrued, when due, whether by acceleration or otherwise, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws

 

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(including any such interest which, but for the filing of a petition in bankruptcy, would have accrued, whether or not a claim is allowed for such interest in the related bankruptcy proceeding)) and be payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder, with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder), it being understood that PIK Interest does not constitute a default. Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.

 

2.11. Fees . Company agrees to pay to Agents such fees and expenses in the amounts and at the times separately agreed upon in writing.

 

2.12. [RESERVED].

 

2.13. Voluntary Prepayments.

 

(a) Voluntary Prepayments .

 

(i) The Company may not voluntarily prepay Loans prior to the first anniversary of the Closing Date.

 

(ii) Any time and from time to time after the first anniversary of the Closing Date, provided , there are no amounts outstanding under the First-Lien Term Loan, and any permitted refinancings thereof: Company may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount.

 

(iii) All such prepayments shall be made upon not less than one Business Day’s prior written or telephonic notice, given to Administrative Agent by 11:00 a.m. (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will notify each Lender). Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

 

(iv) [Reserved].

 

(b) [Reserved].

 

(c) [Reserved].

 

(d) Prepayment Premium . In the event that for any reason any Loans are prepaid in whole or in part after the first anniversary of the Closing Date and prior to the Maturity Date, whether pursuant to this Section 2.13 or otherwise, except as provided in Sections 2.14 and 2.23, Company shall pay to Lenders having Loan Exposure a call premium equal to (i) four percent of the principal amount prepaid, for all prepayments made at any time after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, and (ii) two percent of the principal amount prepaid, for all prepayments made at any time after the second anniversary of the Closing Date but on or prior to the third anniversary of the Closing Date. Prepayments after the third anniversary of the Closing Date through the Maturity Date shall not have any call premiums.

 

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2.14. Mandatory Prepayments . In the event that there are no amounts outstanding under the First-Lien Term Loan, and any permitted refinancings thereof, or the First-Lien Lenders decline an offer of prepayment in accordance with the terms of the First-Lien Term Loan Agreement, and subject to each Lender’s option to waive such payment pursuant to Section 2.15(c), the Company shall make mandatory payments as follows:

 

(a) Asset Sales . No later than the second Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Company shall prepay the Loans in an aggregate amount equal to such Net Asset Sale Proceeds; provided , so long as no Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Guarantor Subsidiaries (other than RP Sub No. 1), to invest, within 180 Business Days after receipt thereof, any Net Asset Sale Proceeds, up to an aggregate amount for all such invested Net Asset Sale Proceeds after the Closing Date not to exceed the Aggregate Proceeds Threshold, in productive assets of the general type used in the business of Company and its Subsidiaries (“ Productive Assets ”); provided , further , that if aggregate Net Asset Sale Proceeds plus Cash proceeds relating to Capital Stock referenced in Sections 2.14(c)(ii) and 2.14(c)(iii) from the Closing Date through the applicable date of determination do not exceed $3,000,000, Company shall have no obligation to prepay the Loans or reinvest the proceeds thereof; provided , further , that for the first two Fiscal Quarters following the Closing Date, all proceeds from a sale of Axid ® OS that shall not require a mandatory prepayment pursuant to the foregoing shall (i) be held in escrow until such time that Company has delivered a duly executed and completed Compliance Certificate certifying compliance with the covenants under this Agreement for the first two Fiscal Quarters following the Closing Date, and (ii) upon delivery of such Compliance Certificates, such escrowed proceeds shall be released to Company for reinvestment in Productive Assets. Otherwise, in the event such Compliance Certificate prerequisite has not been satisfied, the escrowed proceeds shall remain in escrow pending Requisite Lender request for the application of such proceeds to the payment of Loans or a waiver permitting proceeds to be released from escrow and returned to Company.

 

(b) Insurance/Condemnation Proceeds . No later than the second Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Company shall prepay the Loans in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided , so long as no Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest, within 180 Business Days after receipt thereof, any Net Insurance/Condemnation Proceeds, up to an aggregate amount for all such invested Net Insurance/Condemnation Proceeds after the Closing Date not to exceed $7,500,000, in Productive Assets, which investment may include the repair, restoration or replacement of the applicable assets thereof.

 

(c) Issuance of Equity Securities . Company shall prepay the Loans no later than the second Business Day following receipt by Company or any of its Subsidiaries of all Cash proceeds (net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses) received from a capital contribution to, or the issuance of any Capital Stock, except for (i) equity securities issued in an initial public offering, provided , that any net Cash proceeds from an initial public offering not applied towards prepayment of the Loans are invested in Productive Assets; (ii) Capital Stock issued in connection with warrants outstanding as of December 31, 2004 (as specified on Schedule 2.14(c)) of Company or any of its Subsidiaries; (iii) Capital Stock or options issued pursuant to any employee stock, arrangement, stock option compensation plan, employment agreement or similar such plans; and (iv) Capital Stock and warrants issued to Third-Lien

 

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Lenders under the Third-Lien Term Loan Agreement; provided , further , that if net Cash proceeds from Capital Stock referenced in subclause (ii) and (iii) in this clause (c) plus the aggregate Net Asset Sales Proceeds exceed $3,000,000, all net Cash proceeds from Capital Stock referenced in subclause (ii) and (iii) in this clause (c) in excess of such $3,000,000 threshold shall be invested in Productive Assets or applied towards a prepayment of the Loans.

 

(d) Issuance of Debt . On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of any Indebtedness of Company or any of its Subsidiaries (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1), Company shall prepay the Loans in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

 

(e) Consolidated Excess Cash Flow . In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year, Company shall, no later than 105 days after the end of such Fiscal Year, prepay the Loans in an aggregate amount equal to 50% of such Consolidated Excess Cash Flow.

 

(f) Prepayment Certificate . Concurrently with any prepayment of the Loans pursuant to Sections 2.14(a) through 2.14(d), Company shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds. In the event that Company shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Company shall promptly make an additional prepayment of the Loans in the amount of such excess, and Company shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.

 

(g) Prepayment Premium . No mandatory prepayments shall be made prior to the first anniversary of the Closing Date or prior to the payment in full of all amounts under the First-Lien Term Loan. In the event that for any reason any Loans are prepaid in whole or in part after the first anniversary of the Closing Date and prior to the Maturity Date, whether pursuant to this Section 2.14 or otherwise, except as provided in Section 2.23, Company shall pay to Lenders having Loan Exposure a call premium equal to (i) four percent of the principal amount prepaid, for all prepayments made at any time after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, and (ii) two percent of the principal amount prepaid, for all prepayments made at any time after the second anniversary of the Closing Date but on or prior to the third anniversary of the Closing Date. Prepayments after the third anniversary of the Closing Date through the Maturity Date shall not have any call premiums.

 

(h) First-Year Proceeds . Notwithstanding the foregoing in clauses (a) – (e) above, in the event the Company would, but for the requirement in the first sentence of Section 2.14(g), be required to prepay the Loans pursuant to Sections 2.14(a) through 2.14(e) above prior to the first anniversary of the Closing Date, Company shall not make any prepayments and shall instead transfer the proceeds otherwise required to be prepaid to the Administrative Agent, who shall hold all such funds sufficient to pay the principal amount of such prepayment in escrow in an interest-bearing account until (i) the first Business Day after the first anniversary of the Closing Date or (ii) such date that a Lender requests payment, in writing, of the proceeds; and on that date Administrative Agent shall apply all amounts (or the requested amounts, as applicable) as mandatory prepayments pursuant to Section 2.15(b) with the applicable call premiums pursuant to Section 2.14(g) to be paid by the Company as if such prepayments were made on the first Business Day after the first anniversary of the Closing Date. Any interest earned on amounts held in escrow shall be credited to the Company and Company may apply such interest towards any call premiums or interest due on any prepayments. Pending the Administrative Agent’s application of funds

 

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to make such prepayment, such funds shall be held as part of the Collateral. The Administrative Agent shall give Company and each lender three (3) Business Days’ prior written or telephonic notice of the date on which such funds will be applied to prepayments of the Loans. Company shall pay interest on the amount so prepaid (until applied to the Loans) pursuant to Sections 2.16(a) and (b).

 

2.15. Application of Prepayments.

 

(a) Application of Voluntary Prepayments . Any prepayment of any Loan pursuant to Section 2.13 shall be applied to prepay Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

(b) Application of Mandatory Prepayments . Any amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied to prepay Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

(c) Waivable Mandatory Prepayment . Anything contained herein to the contrary notwithstanding, so long as any Loans are outstanding, in the event the Company is required to make a mandatory prepayment (a “Waivable Prepayment” ) of the Loans whether pursuant to Section 2.14 herein or as a result of an exercise by any First-Lien Lenders of their rights to waive a mandatory prepayment pursuant to the First-Lien Term Loan Agreement, then Company shall, within two Business Days of knowledge of such Waivable Prepayment, notify Administrative Agent in writing of the amount of such prepayment, and Administrative Agent shall promptly thereafter notify each Lender holding an outstanding Loan of the amount of such Lender’s Pro Rata Share of such Waivable Prepayment and such Lender’s option to refuse such amount. Each such Lender may exercise such option by giving written notice, or telephonic notice followed within one Business Day with written notice, to Company and Administrative Agent of its election to do so, on or before noon New York time on the second Business Day following receipt of the Company’s notice (the “Required Prepayment Date” ), it being understood that any Lender that does not notify Company and Administrative Agent of its election to exercise such option by noon New York time on the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option. On the Required Prepayment Date, Company shall pay to Administrative Agent an amount equal to that portion of the Waivable Prepayment payable to those Lenders that have elected not to exercise such option, to prepay the Loans of such Lenders in accordance with Section 2.15(b). Such portion of the Waivable Prepayment not payable due to the election by any Lender to waive rights to the Waivable Prepayment shall be offered to any Lender, who shall have the right to receive such Lender’s pro rata share (as between those non-waiving Lenders) of any additional amount of the Waivable Prepayment waived by other Lenders; provided , however , that no Lender shall receive or be paid any amount in excess of such Lender’s Loan Exposure`. In the event all Lenders have waived their rights to receive the Waivable Prepayment, the Company shall offer to the Third-Lien Lenders any remaining, unpaid portion of the Waivable Prepayment not payable due to the election by all Lenders to waive rights to the Waivable Prepayment.

 

(d) [Reserved].

 

2.16. General Provisions Regarding Payments.

 

(a) All payments by Company of principal of the Loans, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 1:00 p.m. (New York City time) on the date due at the Principal Office for the account of Lenders.

 

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(b) All payments in respect of the principal amount of any Loan shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid.

 

(c) Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent.

 

(d) [Reserved].

 

(e) [Reserved].

 

(f) Company hereby authorizes Administrative Agent to charge Company’s accounts (if any) with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).

 

(g) Administrative Agent may deem, at Administrative Agent’s sole discretion, any payment by or on behalf of Company hereunder that is not made in same day funds prior to 1:00 p.m. (New York City time) on the due date thereof at the Principal Office to be a nonconforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Company and each applicable Lender (confirmed in writing) if any payment is nonconforming. Any nonconforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a nonconforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.

 

(h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied first , to the payment of all reasonable costs and expenses of such sale, collection or other realization, including reasonable compensation to the Collateral Agent and its agents and counsel, and all other reasonable expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith, and all amounts for which the Collateral Agent is entitled to indemnification hereunder (in its capacity as the Collateral Agent and not as a Lender) and all advances made by the Collateral Agent hereunder for the account of the applicable Grantor, and to the payment of all costs and expenses paid or incurred by the Collateral Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second , to the extent of any excess of such proceeds, to the payment of all other Obligations for the ratable benefit of the Lenders; and third , to the extent of any excess of such proceeds, to the payment to, or upon the order of, Company or Guarantor Subsidiary or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

2.17. Ratable Sharing . Lenders hereby agree among themselves that, except as otherwise provided in Section 2.16(h), if any of them shall, whether by voluntary payment, through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral

 

31

 


under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided , if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.

 

2.18. [RESERVED].

 

2.19. Increased Costs; Capital Adequacy.

 

(a) Compensation For Increased Costs and Taxes . Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office); and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

 

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(b) Capital Adequacy Adjustment . In the event that any Lender shall have reasonably determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or other obligations hereunder with respect to the Loans to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

 

2.20. Taxes; Withholding, etc.

 

(a) Payments to Be Free and Clear . All sums payable by any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment.

 

(b) Withholding of Taxes . If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender under any of the Credit Documents: (i) Company shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as practicable after Company becomes aware of it; (ii) Company shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Company shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided , no such additional amount shall be required to

 

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be paid to any Lender under clause (iii) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof on the Closing Date) or after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date hereof or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender.

 

(c) Evidence of Exemption From U.S. Withholding Tax . Each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “Non-US Lender” ) shall deliver to Administrative Agent for transmission to Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a bank or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8 (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of Unite


 
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