|
EXHIBIT 10.1
THIS
LOAN AND SECURITY AGREEMENT IS SUBJECT TO AN INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED AS OF MAY ___, 2008, AMONG NPIL
PHARMA INC., RXELITE, INC. AND CASTLERIGG MASTER INVESTMENTS
LTD.
LOAN AND SECURITY AGREEMENT
THIS
AGREEMENT, made this ___ day of May, 2008, is by and between
NPIL PHARMA INC., a Delaware corporation (the “
Lender ”)
and RXELITE, INC., a Delaware corporation (the “
Borrower ”).
RECITALS
Borrower
has requested that the Lender make a term loan available to
Borrower, and the Lender is willing to make such loan
available to Borrower on the terms and conditions set forth in
this Agreement.
SECTION 1. DEFINITIONS
As
used herein:
“Accounts”, “Chattel Paper”,
Documents”, “Equipment”, “General
Intangibles”, “Inventory”
and
“Instruments” shall
have the same respective meanings as are given to those terms in
the UCC.
“Affiliates” means
as to any Person (A) any Person which, directly, or indirectly
through one or more intermediaries, controls, is controlled by or
is under common control with such Person, or (B) any Person who is
a director or executive officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in
clause (A) above. For purposes of this definition,
“control” of a Person shall mean the power, direct or
indirect, (i) to vote or direct the voting of more than twenty five
percent (25%) of the outstanding shares of voting stock of such
Person, or (ii) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise. In no
event shall the Lender be deemed to be an Affiliate of the
Borrower.
“Agreement” means
this Loan and Security Agreement, as it may be amended, restated,
renewed or extended from time to time.
“Borrower Distributions” means
(i) any dividend or other distribution, whether in cash, in kind,
or otherwise, on account of or with respect to, or (ii) the
application of any funds, property or assets to the purchase,
redemption or other retirement of, any of Borrower’s equity
interests or any warrants, options or other rights with respect to
any of Borrower’s equity interests.
“Business Day” means
any day on which the state banks and national banking associations
in New York, New York are open for the conduct of ordinary
business.
“Capitalized Lease” means
a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
“Capitalized Lease Obligation”
means
Indebtedness represented by obligations under a Capitalized Lease,
and the amount of such Indebtedness shall be the capitalized amount
of such obligations determined in accordance with
GAAP.
“Closing” means
the valid execution and delivery of the Note, this Agreement, and
the other Loan Documents to the Lender.
“Collateral” has
the meaning set forth in
Section 4.1 .
“Constituent Documents” means,
with respect to any Person, the governing legal documents of such
Person, such as Person’s charter, certificate of
incorporation, articles of organization, operating agreement,
certificate of limited partnership, or Partnership
Agreement.
“Default Rate” means
a rate per annum equal to the Term Rate plus two percent
(2%).
“Event of Default” has
the meaning set forth in
Section 8.1 .
“Financial Statements” means
any financial statements submitted to Lender in connection with the
Loan.
“Financing Statements” means
any one or more filings made pursuant to the UCC to perfect the
security interests in the Collateral granted to Lender pursuant
to
Section 4 hereof.
“Fiscal Year” means,
with respect to the Borrower, the calendar year period of January 1
through December 31.
“GAAP” means
generally accepted accounting principles as used in the United
States applied on a consistent basis as in effect from time to
time.
“Indebtedness” means,
as to any Person, all items of indebtedness whether matured or
unmatured, liquidated or unliquidated, direct or contingent, joint
or several, including without limitation:
(a)
All
indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in
the ordinary course of business) or discounted with
recourse;
(b)
All
indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise: (1) to purchase
such indebtedness; or (2) to purchase, sell or lease (as
lessee or lessor) property, products, materials or supplies or
to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to
assure the owner of the indebtedness against loss; or (3) to
supply funds to or in any other manner invest in the
debtor;
(c)
All
indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be
secured by) any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed;
and
(d)
All
indebtedness incurred as the lessee of facilities, goods or
services under leases that, in accordance with generally
accepted accounting principles consistently applied, should be
reflected on such Person’s balance sheet.
“Interest Rate” means
the Term Rate.
“Laws” means
all ordinances, statutes, rules, regulations, order, injunctions,
writs or decrees of any government or political subdivision or
agency thereof, or any court of similar entity established by any
thereof.
“Loan” means
the term loan in the amount equal to the Loan Commitment made to
Borrower by Lender hereunder.
“Loan Commitment” means
an amount equal to $3,000,000.00;
provided
that ,
so long as no Unmatured Default or Event of Default has occurred
and is continuing and subject to Lender’s sole discretion,
the Loan Commitment may be increased, upon the written request of
Borrower, by $2,000,000.00; provided that the Loan Commitment shall
at no time exceed $5,000,000.00.
“Loan Documents” means
this Agreement, the Subordination Agreement, the Note and any other
document executed or delivered by or on behalf of the Borrower
evidencing or securing the Obligations.
“Loan Termination Date” means
the earlier of (a) six (6) months after the maturity date of the
Senior Notes, or (b) immediately after redemption of 100% of the
Senior Note pursuant to the terms set forth in the Senior
Note.
“Long Term Debt” means
any Indebtedness which, by its terms, matures more than one (1)
year from the date of any calculation thereof, and/or which is
renewable or extendable at the option of the obligor to a date more
than one (1) year from the date of such calculation.
“Material Adverse Change” means
a material adverse change in the business or conditions (financial
or otherwise) in the result of operations or prospects of the
Borrower taken as a whole, or in the value of the
Collateral.
“Material Adverse Effect” means,
when referring to the taking of an action or the omission to take
an action, that such action, if taken, or omission, would have a
material adverse effect on the business, condition (financial or
otherwise) results of operations or prospects of such Person, taken
as a whole, or would materially impair the value of the
Collateral.
“Minrad Contract” means
that certain Exclusive Manufacturing and Distribution Agreement,
dated as of June 9, 2004, by and between RxElite Holdings Inc. and
Minrad International, Inc., as amended to date.
“Note” means
one or more promissory notes substantially in the form of
Exhibit A attached
hereto, duly executed and delivered to Lender by Borrower, as the
same may be renewed, extended or modified from time to
time.
“Obligations” means
all of the obligations of the Borrower:
(a)
To
pay the principal of and interest on the Note in accordance
with the terms thereof and to satisfy all the Borrower’s
other liabilities to the Lender hereunder, whether now
existing or hereafter incurred, matured or unmatured, direct
or contingent, joint or several, including any extension,
modifications, amendments, restatements and renewals thereof
and substitutions therefor;
(b)
To
repay the Lender all amounts advanced by the Lender hereunder
on behalf of the Borrower, including without limitation
advances for overdrafts, principal or interest payments to
prior secured parties, mortgagees, or lienors, or for taxes,
levies, insurance, rent, repairs to or maintenance or storage
of any of the Collateral; and
(c)
To
reimburse the Lender, on demand, for all of the Lender’s
reasonable out-of-pocket expenses and costs, including the
reasonable fees and expenses of its counsel, in connection
with the enforcement of this Agreement and the documents
required hereunder, including, without limitation, any
proceeding brought or threatened to enforce payment of any of
the obligations referred to in the foregoing paragraphs (a)
and (b), or any suits or claims against Lender whatsoever as a
result of Lender’s execution of this Agreement and
making of its Loan, all as more specifically set forth
in
Sections 9.4 and 9.7 hereof;
and in addition, to reimburse the Lender for its expenses and
reasonable attorneys’ fees in connection with the
preparation, administration, amendment, modification or waiver of
the Agreement and the other Loan Documents.
“Permitted Liens” means:
(a)
Liens
in favor of Lender;
(b)
Liens
for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not
delinquent;
(c)
Pledges
or deposits made in the ordinary course of business to secure
payment of workmen’s compensation, or to participate in
any fund in connection with workmen’s compensation,
unemployment insurance, old-age pensions or other social
security programs;
(d)
Liens
of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations in the ordinary course of
business that are not delinquent;
(e)
Good
faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or
to secure statutory obligations, or surety, appeal, indemnity,
performance or other similar bonds required in the ordinary
course of business;
(f)
Encumbrances
consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which
materially impairs the use of such property by the Borrower in
the operations of its business, and none of which is violated
in any material respect by existing or proposed structures or
land use;
(g)
Existing
liens set forth or described on
Schedule 5.6 ,
attached hereto and made a part hereof, and renewals
thereof;
(h)
Statutory
and common law landlord’s liens arising under any
lease;
(i)
The
interests of lessees of any property of Borrower;
(j)
The
following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings,
so long as levy and execution thereon have been stayed and
continue to be stayed; if Borrower has posted such security as
may be required by Laws or as is reasonably satisfactory to
Lender:
(i)
Claims
or liens for taxes, assessments or charges due and payable and
subject to interest or penalty;
(ii)
Claims,
liens and encumbrances upon, and defects of title to, real or
personal property, including any attachment of personal or
real property or other legal process prior to adjudication of
a dispute on the merits;
(iii)
Claims
or liens of mechanics, materialmen, warehousemen, carriers, or
other like liens; and
(iv)
Adverse
judgments on appeal;
(k)
Purchase
Money Liens securing Purchase Money Indebtedness incurred in
compliance with
Section 7.4 ;
and
(l)
Liens
granted to Castlerigg Master Investments Ltd. (as collateral
agent for the holders of the Senior Note) to secure the
obligations of Borrower under the Senior Note and the other
documents relating thereto.
“Person” means
any individual, corporation, partnership, association, joint-stock
company, estate, trust, unincorporated organization, limited
liability company, joint venture, court or government or political
subdivision or agency thereof.
“Purchase Money Indebtedness”
means
(a)
Indebtedness
created to secure the payment of all or any part of the
purchase price of any property,
(b)
any
Indebtedness incurred at the time of or within 30 days prior
to or after the acquisition of any property for the purpose of
financing all or any part of the purchase price thereof,
and
(c)
any
renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the
time of any such renewal, extension or
refinancing.
“Purchase Money Lien” means
any lien securing Purchase Money Indebtedness, but only if such
lien shall at all times be confined solely to the property the
purchase price of which was financed through the incurrence of the
Purchase Money Indebtedness secured by such lien.
“Records” means
correspondence, memoranda, tapes, books, discs, paper, magnetic
storage and other documents or information of any type, whether
expressed in ordinary or machine language.
“Senior Note” means
that certain senior secured promissory note, dated December 31,
2007, issued by the Borrower to Castlerigg Master Investments Ltd.
in the principal amount of $10,500,000, as amended, restated or
otherwise modified, including, without limitation, any replacement
notes.
“Subordination Agreement” means
that certain Subordination Agreement of even date herewith, by and
among the Borrower, the Lender and Castlerigg Master Investments
Ltd., as amended, restated or otherwise modified.
“Subsidiary” of
a Person means any Person of which more than 50% of the outstanding
voting securities or other equity interests in such Person shall,
at the time of determination, be owned directly or indirectly
through one or more Persons, and
“Subsidiaries” means
more than one of such Persons.
“Term Rate” means
a fixed rate of interest equal to 15% per annum.
“Vaporizers” means
those certain anesthetic vaporizers purchased after the date hereof
and owned by Borrower with the proceeds of the Loan
hereunder.
“UCC” means
the Uniform Commercial Code as in effect on the date hereof in the
State of Delaware, as it may be amended from time to time; provided
that if by reason of mandatory provisions of law, the perfection or
the effect of perfection or non-perfection of a security interest
in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than Delaware,
“UCC” means
the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
“Unmatured Default” means
an event which but for the lapse of time or the giving of notice,
or both, would constitute an Event of Default
SECTION 2. THE LOAN.
Concurrently
with the execution of this Agreement, Lender shall make the
Loan available to Borrower under the following
terms:
2.1
Loan .
Upon the Closing Date, the Lender shall make available to Borrower
a term loan with a principal amount of $3,000,000 to be paid at
Closing. Amounts re-paid hereunder shall not be permitted to be
re-borrowed.
2.2
Use of Proceeds .
The Loan shall be used only for the purchase of the
Vaporizers.
2.3
Term Note .
The obligations of Borrower under the Loan shall be evidenced by
one or more Notes in the form attached hereto as
Exhibit A .
2.4
Interest Rates and Payments .
(a)
Interest
shall be charged and paid on the Loan from the date of the
initial advance until the Loan is paid at the Term
Rate.
(b)
Interest
shall be computed on the basis of a 360-day year counting the
actual number of days elapsed, and shall be due and payable,
subject to the Subordination Agreement, upon the earlier of
(i) each December 31 occurring after the date hereof, or (ii),
upon demand by the Lender.
(c)
Notwithstanding
the foregoing, upon the occurrence of an Event of Default and
during the continuation thereof, interest may be charged at
the Default Rate if the Lender so elects, regardless of
whether the Lender has elected to exercise any other remedies
under
Section 8 hereof,
including, without limitation, acceleration of the maturity of the
outstanding principal of the Note. All such interest shall be paid
at the time of and as a condition precedent to the curing of any
such default to the extent any right to cure is given.
(d)
From
time to time, the Lender shall send the Borrower statements of
all amounts due hereunder which statements, absent manifest
error, shall be considered correct and conclusively binding on
the Borrower unless the Borrower notifies the Lender to the
contrary within one hundred eighty (180) days of its receipt
of any statement to which it objects. All sums payable to the
Lender hereunder shall be paid in immediately available funds
prior to 12:00 noon eastern standard time on the date when
such sums are due and payable. Any amounts received by the
Lender after 12:00 noon eastern standard time on any Business
Day shall be deemed to have been received on the next Business
Day.
(e)
Subject
to Section 2.6, the entire principal balance of the Loan,
together with all interest accrued thereon and all other
amounts owing which constitute the Obligations, shall be due
and payable in full on the earlier of (1) the Loan Termination
Date, or (2) demand by the Lender.
(f)
All
agreements herein made are expressly limited so that in no
event whatsoever shall the interest and loan charges agreed to
be paid to the Lender for the use of the money advanced or to
be advanced pursuant to this Agreement exceed the maximum
amounts collectible under applicable laws in effect from time
to time. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the Loan
shall exceed the maximum amounts collectible under applicable
laws in effect from time to time, then,
ipso
facto ,
the obligation to pay such interest and/or loan charges shall be
reduced to the maximum amounts collectible under applicable laws in
effect from time to time, and any amounts collected by the Lender
that exceeds such maximum amounts shall be applied to the reduction
of the principal balance of the Loan and/or refunded to Borrower so
that at no time shall the interest or loan charges paid or payable
in respect of the Loan exceed the maximum amounts permitted from
time to time by applicable law. This provision shall control every
other provision herein and in any and all other agreements and
instruments now existing or hereafter arising between Borrower and
the Lender with respect to the Loan.
2.5
Prepayment .
Subject to the Subordination Agreement, the Borrower may, upon two
(2) Business Day’s prior written notice to the Lender, prepay
the Loan in whole or in part.
2.6
Subordination .
Notwithstanding
anything to the contrary herein, payment of the Obligations shall,
to the extent set forth in the Subordination Agreement, be
subordinate and junior in right of payment to the prior payment in
full of all obligations under the Senior Note, the provisions of
which Subordination Agreement are incorporated herein by reference
and made a part hereof.
SECTION 3. CONDITIONS PRECEDENT
The
obligation of the Lender to fund the Loan is subject to the
following conditions precedent:
3.1
Conditions to Initial Advance .
The Borrower shall have delivered to the Lender prior to the
initial disbursement of the Loan the following:
(a)
This
Agreement;
(b)
The
Note;
(c)
UCC-1
Financing Statement to be filed at the office of the Delaware
Secretary of State and such other offices as Lender may
require;
(d)
Copies
of the resolutions of the Board of Directors of the Borrower,
certified by the Borrower’s secretary as of the date of
Closing, authorizing the execution, delivery and performance
of this Agreement and, as applicable, the Loan Documents and
each other document to be delivered pursuant
hereto;
(e)
A
copy, certified as of the most recent date practicable, by the
Delaware Secretary of State of Borrower’s certificate of
incorporation together with a certificate dated the date of
the Closing of Borrower’s secretary to the effect that
such documents have not been amended since the date of the
Secretary of State’s certification;
(f)
A
copy of Borrower’s Bylaws certified by Borrower’s
secretary as of the date of the Closing;
(g)
A
certificate dated as of the date of the Closing of the
secretary of the Borrower as to the incumbency and signatures
of its officers executing the Loan Documents;
(h)
A
Certificate, as of the most recent date practicable, of the
Delaware Secretary of State as to the existence and good
standing of Borrower;
(i)
The
Subordination Agreement, in form and substance satisfactory to
Lender, executed by Borrower, Lender and Castlerigg Master
Investments Ltd.
(j)
A
certificate, dated the date of the Closing, signed by the
president, vice president, chief financial officer, or
corporate controller of the Borrower to the effect
that:
(i)
The
representations and warranties set forth within
Section 5 are
true as of the date of the Closing;
(ii)
No
Event of Default or Unmatured Default has occurred as of such
date; and
(iii)
All
of the Loan Documents are in full force and
effect.
3.2
Legal Matters .
At the time of the Closing and thereafter, all legal matters
incidental to the Loan shall be satisfactory to Lender and its
counsel.
SECTION 4. COLLATERAL SECURITY
4.1
Composition of the Collateral .
The property in which a security interest is granted pursuant to
the provisions of
Sections 4.2 and 4.3 shall
constitute the “Collateral”. The Collateral, together
with all of the Borrower’s other property of any kind, both
real and personal, held by, assigned to, mortgaged to or conveyed
in favor of the Lender, shall stand as one general, continuing
collateral security for all Obligations and m
| 
