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Exhibit 10.303
LOAN AGREEMENT
THIS LOAN AGREEMENT
(hereinafter, as it may be from time to time amended, modified,
extended, renewed, refinanced and/or supplemented, referred to as
this " Loan Agreement "), is made this 12 th day of October, 2006 (the "
Loan Closing Date "), by and between
LIGAND PHARMACEUTICALS
INCORPORATED, a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
having a mailing address located at 10275 Science Center Drive, San
Diego, California 92121, (hereinafter referred to as the "
Borrower "),
AND
KING PHARMACEUTICALS, INC.
, a corporation duly organized and validly existing under the laws
of the State of Tennessee and having a mailing address located at
501 Fifth Street, Bristol, Tennessee 37620 (hereinafter referred to
as the " Lender ").
WITNESSETH :
WHEREAS , the Borrower has
requested that the Lender make available to the Borrower, and the
Lender has agreed to make available to the Borrower, a commercial
loan in an original principal amount of Thirty-Seven Million Seven
Hundred Fifty Thousand Dollars ($37,750,000) (hereinafter, as it
may be from time to time amended, modified, extended, renewed,
refinanced and/or supplemented, referred to as the " Loan
Facility ") solely for the purposes of the Permitted Use (as
defined herein).
NOW, THEREFORE , in
consideration of these premises and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Lender and the Borrower hereby covenants and
agrees as follows:
ARTICLE I
DEFINITIONS
The following terms, as used in this Loan Agreement, shall have
the following meanings, unless the context clearly indicates,
provides or requires otherwise:
1. " Base Rate
" shall mean nine hundred fifty basis points (9.5%) per annum.
2. " Base Rate
Loan " shall mean a borrowing and advance of all or any
portion of the Loan Facility which bears interest based upon the
Base Rate.
3. " Borrower "
shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
4. " Business
Day " and " Business Days " shall mean for
all purposes, any day other than Saturday, Sunday or a legal
holiday on which commercial banks are authorized or required to be
closed for business in New York, New York.
5. " Code "
shall mean the Internal Revenue Code of 1986, as amended and/or
modified from time to time, and any corresponding regulations
promulgated with respect thereto.
6. " Debt " shall
mean all principal, interest, fees and other sums, liabilities and
obligations
of any nature whatsoever which shall or may become due and
payable by the Borrower to the Lender pursuant to the terms,
conditions and provisions of this Loan Agreement, the Note, and all
of the other Loan Documents.
7. " Default
Rate " shall mean a rate of interest equal to two hundred
basis points (2.0%) over and above the Base Rate.
8. " Deposit Account
Control Agreement " shall mean that certain Deposit Account
Control Agreement dated of even date herewith executed by Comerica
Bank, Borrower and Lender, or such successor deposit account
control agreement agreed to between Borrower and Lender.
9. " Encumbrance
" shall mean any lien (statutory or otherwise), claim, charge,
option, security interest, pledge, mortgage, restriction, financing
statement or similar encumbrance of any kind or nature whatsoever
(including any conditional sale or other title retention agreement
and any lease having substantially the same effect as any of the
foregoing and any assignment or deposit arrangement in the nature
of a security device).
10. " Event of
Default " or " Events of Default " shall have
the meaning assigned and ascribed to such terms as set forth in
Article IV of this Loan Agreement.
11. " GAAP "
shall mean United States generally accepted accounting principles
as are in effect from time to time, applied on a consistent basis
both as to classification of items and amounts.
12. " Governmental
Authority " or " Governmental Authorities "
shall mean all Federal, state, county and local governmental
authorities having jurisdiction over the Loan Facility, the
Borrower and/or the Property.
13. "
Indebtedness " shall mean, as to any Person at any
time, any and all indebtedness, obligations or liabilities (whether
matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, or joint or several) of such
Person, for, or in respect of: (i) borrowed money,
(ii) amounts raised under or liabilities in respect of any
note purchase or acceptance credit facility,
(iii) reimbursement obligations (contingent or otherwise)
under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate
management device, (iv) any other transaction (including,
without limitation forward sale or purchase agreements, capitalized
leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including
trade payables and accrued expenses incurred in the ordinary course
of business which are not represented by a promissory note or other
evidence of indebtedness and which are not more than thirty
(30) days past due), or (v) any guaranty of indebtedness
for borrowed money.
14. " King Purchase
Agreement " shall mean that certain Purchase Agreement,
dated September 6, 2006, entered into by Lender, King
Pharmaceuticals Research and Development, Inc. and Borrower.
15. " Lender "
shall have the meaning assigned and ascribed to such term as set
forth in the preamble to this Loan Agreement.
16. " Loan
Agreement " shall have the meaning ascribed and assigned to
such term as set forth in the preamble of this Loan Agreement.
17. " Loan Closing
Date " shall have the meaning ascribed and assigned to such
term as set forth
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in the preamble of this Loan Agreement.
18. " Loan
Documents " shall mean the collective reference to this
Loan Agreement, the Note, the Security Agreement, the Deposit
Account Control Agreement, the UCC-1 Financing Statements, and any
other agreements, instruments, documents or certificates executed
and/or delivered by the Borrower, Lender and/or any other Person
pursuant to the Loan Facility, together with all amendments,
modifications or supplements to any or all of them.
19. " Loan
Facility " shall have the meaning ascribed and assigned to
such term in the first recital of this Loan Agreement.
20. " Material Adverse
Change " shall mean any set of circumstances or events
which (i) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of
this Loan Agreement or any other Loan Document, (ii) is or
could reasonably be expected to be material and adverse to the
business, properties, assets, financial condition, results of
operations or prospects of the Borrower, taken as a whole, or
(iii) impairs materially or could reasonably be expected to
impair materially the ability of the Borrower, taken as a whole, to
duly and punctually pay its Indebtedness and perform its other
obligations.
21. " Maturity
Date " shall mean the earlier of:
(i) January 1, 2007, and
(ii) the Closing Date (as defined
in the King Purchase Agreement).
22. " Note "
shall mean that certain Secured Promissory Note dated of even date
herewith, executed by the Borrower, as maker, in favor of the
Lender, as payee, in the original principal amount of Thirty-Seven
Million Seven Hundred Fifty Thousand Dollars ($37,750,000), as said
Secured Promissory Note may be from time to time hereafter amended,
modified, extended, renewed, refinanced, substituted, and/or
supplemented.
23. " Notice "
shall have the meaning assigned and ascribed to such term as set
forth and described in Article V ,
Paragraph 8 of this Loan Agreement.
24. " Notice of
Borrowing Request " shall mean with respect to a proposed
borrowing pursuant to Article II ,
Paragraph 1(i) hereof, a written Notice of Borrowing
Request duly executed by the Borrower and delivered to the
Lender.
25. " Organon "
means Organon USA Inc.
26. " Organon
Agreement " means the Termination and Return of Rights
Agreement, dated as of January 1, 2006, by and between
Borrower and Organon.
27. " Permitted
Use " shall mean, and be limited to, the Borrower’s
use of proceeds of the Loan Facility, as may be advanced by the
Lender pursuant to the terms, conditions, and provisions of this
Loan Agreement, for the limited purpose of Borrower paying
Thirty-Seven Million Seven Hundred Fifty Thousand Dollars
($37,750,000) to Organon, which amount is due to be paid to Organon
on or before October 15, 2006 pursuant to Section 3(c)(i)
of the Organon Agreement.
28. " Permitted
Encumbrances " shall mean any statutory liens for current
Taxes of Borrower not yet due and payable or
(b) mechanics’, carriers’, workers’,
repairers’, and other similar liens arising or
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incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of
Borrower.
29. " Person "
or " Persons " shall mean any natural person, general
partnership, limited partnership, limited liability partnership,
corporation, joint stock company, trust, unincorporated
association, joint venture, limited liability company, bank or
other organization whether or not a legal entity.
30. " Potential
Default " shall mean an event, condition, or situation
which, with the giving of any required notice and/or the passage of
any required grace or cure periods, or any combination of the
foregoing, would constitute an Event of Default.
31. " Property
" shall mean the Collateral (as defined in the Security
Agreement).
32. " Requirement of
Law " and " Requirements of Law " shall mean
all Federal, state and local laws, rules, regulations, orders and
other governmental approvals, permits or requirements applicable to
the Property.
33. " Security
Agreement " shall mean that certain Security Agreement
dated of even date herewith executed by the Borrower and
Lender.
34. " Taxes "
shall have the meaning assigned and ascribed to such term as set
forth in Article V , Paragraph 14(i) of
this Loan Agreement.
35. " Transfer
" shall mean (i) any direct or indirect sale, transfer,
assignment, license or conveyance of the Property, any portion
thereof or any licenses or rights contained therein, and/or
(ii) the termination or dissolution of the Borrower.
36. " UCC-1 Financing
Statements " shall mean a collective reference to any and
all UCC-1 financing statements filed in connection with the Loan
Facility, and any UCC-3 amendments or other modifications or
supplements thereto.
ARTICLE II
LOANS AND ADVANCES
1. The Loan
Facility.
(i) Availability
.
(a) Upon the Borrower’s
compliance with the terms, conditions and provisions of
Paragraph 4 below, the Borrower may on any Business Day,
request that the Lender advance one hundred percent (100%) of the
proceeds of the Loan Facility, by delivery to the Lender of a
Notice of Borrowing Request during the day prior to the proposed
Business Day of said advance. The Notice of Borrowing Request shall
specify (x) the date of the proposed borrowing (which shall be
a Business Day). Any such Notice of Borrowing Request shall be
irrevocable and must be made for one hundred percent (100%) of the
proceeds of the Loan Facility.
(b) Pursuant to a Notice of
Borrowing Request made pursuant to Article II ,
Paragraph 1(i)(a) , the Lender shall make available to
the Borrower one hundred percent (100%) of the proceeds of the Loan
Facility which shall be used by Borrower only for the Permitted
Use. Such proceeds shall be made available in immediately available
funds directly to an account designated by Borrower. The Loan
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Facility shall be evidenced by the Note.
(c) The proceeds of the Loan
Facility shall be used by the Borrower solely for the Permitted
Use. Principal amounts prepaid or repaid shall not be available for
re-borrowing.
(d) In the event the Loan Closing
Date has not occurred on or before October 20, 2006, this
Agreement shall terminate in its entirety and neither Party shall
have any further obligation to the other with respect to the
subject matter of this Agreement.
(ii) Interest; Payments
of Principal and Interest .
(a) Interest Rates and Payment
of Interest .
(1) All interest on the
outstanding advances of principal of the Loan Facility, if due,
shall be paid on the Maturity Date.
(2) Interest shall be computed on
each advance of proceeds of the Loan Facility at the Base Rate.
(3) All computations of interest
on the Loan Facility shall be calculated on the basis of the actual
number of days elapsed over a three hundred sixty (360) day
year.
(4) Notwithstanding any provision
herein or in any instrument now or hereafter securing the Loan
Facility, the total liability for payments of interest, if due, or
in the nature of interest, shall not exceed the limits imposed by
any applicable laws. If the terms of this Loan Agreement require or
shall require the Borrower to pay interest in excess of amounts
allowed by law, the rate of interest payable shall be reduced
immediately without action by the Lender, to the applicable maximum
rate, and any excess payment made by the Borrower at any time shall
be immediately and automatically applied to the unpaid balance of
the outstanding principal due hereunder and not to the payment of
interest. In the event of acceleration of the Note, the total
charges for interest and in the nature of interest shall not exceed
the maximum allowed by law, and any excess portions of such charges
which may have been prepaid and cannot be applied to repayment of
principal shall be refunded to the Borrower. The Borrower hereby
agrees that in determining whether or not any interest payable
under this Loan Agreement and/or the Note exceeds the highest
applicable rate permitted by law, any non-principal payment
including, without limitation, fees, costs and late charges shall
be deemed to the extent permitted by law, to be an expense, fee or
penalty not deemed interest by law.
(c) Payments of Principal .
Provided that the Lender has not exercised any of the remedies set
forth and described in Article IV ,
Paragraph 2 of this Loan Agreement, there shall be no
payments of principal required during the term of the Loan
Facility.
(d) Payment on Maturity
Date . The Borrower shall repay to the Lender, the entire
remaining outstanding principal balance of the Loan Facility,
together with all accrued and unpaid interest, fees, expenses and
any other sums due and owing to the Lender in connection with the
Loan Facility, if any, on the Maturity Date.
(iii) Payments .
(a) Place for Payments .
Payments in connection with the Loan Facility, including, without
limitation, payments of principal and interest, if any, are payable
at for the benefit of the Lender
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at:
Bank of America
Dallas, Texas
ABA/Routing: 111000012
Account: 3752181591
Account Name: King Pharmaceuticals, Inc.
or such other place as the Lender shall designate to the
Borrower in writing, by wire transfer in United States Dollars. All
such payments shall be applied first to the payment of any
outstanding unpaid fees and expenses, next to the payment of
interest, if any, with any balance to the payment and reduction of
principal.
(b) Time of Payment . All
payments of principal, interest, and fees hereunder payable to the
Lender shall be made without condition or reservation or right, in
the applicable currency and in immediately available funds,
delivered to the Lender not later than 1:00 p.m. (New York, New
York time) on the date due, to such account of the Lender at the
Lender’s office. Funds received by the Lender after that time
and date shall be deemed to have been paid on the next succeeding
Business Day.
(c) Manner of Payment; Payment
Invoice; Payment and Setoff on Closing . Prior to the Maturity
Date, the Lender shall send an invoice to the Borrower reflecting
the principal, accrued interest, if any, fees, costs, and other
expenses due and owing hereunder. The payments of such principal,
accrued interest, if any, fees, costs, and expenses shall be made
without counterclaim or setoff and free and clear of, and without
any deduction or withholding for, any Taxes or other payments,
other than in the event of such Maturity Date payments being
made on the Closing Date (as defined in the King Purchase
Agreement) occurring prior to January 8, 2007 in which case
(1) the principal amount of the Debt, rather than being repaid
by Borrower, shall instead be retained by Borrower and setoff
against and reducing dollar-for-dollar the Purchase Price (as
defined in the King Purchase Agreement) that is to be paid by King
Pharmaceuticals, Inc. to Ligand Pharmaceuticals Incorporated upon
the Closing of the transactions contemplated under the King
Purchase Agreement, and (2) Lender shall waive and Borrower
shall not be obligated to pay any accrued interest, fees, costs, or
expenses relating to the Debt. Any such setoff and reduction in
such Purchase Price shall be reflected on the closing balance sheet
for the Closing (as defined in the King Purchase Agreement), and
upon such Closing, the amounts due and owing hereunder shall be
deemed to have been fully repaid by Borrower.
(d) Payments on Non-Business
Days . Whenever any payment to be made by the Borrower
hereunder shall be stated to be due on a day which is not a
Business Day, such payment shall be deemed to be due on the next
succeeding Business Day.
(iv) Prepayments .
Provided that no Event of Default shall have occurred and be
continuing, the Borrower shall have the right to prepay in full the
Loan Facility, provided that (a) the Borrower
delivers to the Lender at least one (1) Business Day prior
express written notice of its intention to prepay, and (b) any
such prepayment shall be without prepayment premium or fee.
Notwithstanding any such prepayment, interest due hereunder, if
any, shall be determined on the Maturity Date.
(v) Default Interest .
Notwithstanding the rates of interest specified in
Paragraph 1(ii)(a) above and the payment dates
specified in Paragraph 1(ii)(a)(1) ,
Paragraph 1(ii)(c) , and Paragraph 1(v)
above, effective immediately upon the occurrence of any Event of
Default, for as long thereafter as any such Event of Default shall
be continuing and to the extent permitted by law, the aggregate
principal balance of the Loan Facility then outstanding and, to the
extent permitted by applicable law, any interest payments on the
Loan Facility not paid when due, shall bear interest payable upon
demand at the Default Rate. The Borrower
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hereby acknowledges that: (a) such Default Rate is a
material inducement to the Lender to make the Loan Facility
available to the Borrower, (b) the Lender would not have made
the Loan Facility available to the Borrower in the absence of the
agreement of th
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