LOAN AND SECURITY AGREEMENT
DATED AS OF July 23, 1998
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
Global Pharmaceutical Corporation
AS BORROWER
INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrower's Addresses for Notices
Schedule C - Letters of Credit [Not Used]
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (5(c)) - Indebtedness
Disclosure Schedule (5(h)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - [Intentionally Left Blank]
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - [Intentionally Left Blank]
Exhibit M - Form of Mortgage Waiver and Consent (Mortgage)
Exhibit N - [Intentionally Left Blank]
Exhibit O - Form of Opinion of Counsel to Borrower
Exhibit P - Form of Intercreditor Agreement
Exhibit Q - [Intentionally Left Blank]
Exhibit R - Form of U.C.C. Schedule
Exhibit S - Form of Payment of Proceeds Letter
i
GE Capital Commercial Finance
This LOAN AND SECURITY AGREEMENT is dated as of July 23, 1998, and agreed to by
and between GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation
("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender").
RECITALS
A. The purpose of this Agreement is to provide to Borrower revolving credit
loans (collectively, the "Loans") having the following general description:
--------------------------------------------------------------------------------
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $5,000,000
Term: 3 years
Revolving Credit Rate: Index Rate plus 4%
Letter of Credit Subfacility: n/a
Borrowing Base: 85% (less reserves established by Lender
pursuant to Section 1.13) of the value (as
determined by Lender) of Borrower's Eligible
Accounts; provided that Lender shall reduce the
foregoing percentage by one percentage point for
each percentage point that the dilution of
Borrower's Accounts (calculated as the average
dilution from the Accounts Receivable Roll
Forward Analysis over the most recent three
months) exceeds 5%, plus 50% (less reserves
established by Lender pursuant to Section 1.13)
of the value of Borrower's Eligible Inventory
consisting of finished goods and raw material, as
determined by Lender, valued on a first-in,
first-out basis (at the lower of cost or market);
provided, however, that advances against Eligible
Inventory shall not exceed an amount equal to 50%
of the Borrower's Eligible Accounts; and,
provided, further, that at all times on or prior
to December 31, 1998, advances against Eligible
Inventory shall not exceed the lesser of (i)
$750,000 and (ii) an amount equal to 50% of
Borrower's Eligible Accounts.
FEES
Closing Fee: $50,000
Collateral Monitoring Fee: $500 per month.
Unused Line Fee: .125%
Letter of Credit Fee: n/a
Prepayment Fee: 3% in year one; 2% in year two; and
1% in year three, subject to certain
exceptions.
The Loans described generally here are established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
--------------------------------------------------------------------------------
B. Borrower desires to obtain the Loans and other financial accommodations from
Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
C. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth in Schedule A shall govern. All Schedules,
Disclosure Schedules, Attachments, Addenda and Exhibits (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement,
constitute but a single agreement. These Recitals shall be construed as part of
this Agreement.
1
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loans. (a) Subject to the terms and conditions of this Agreement, from the
Closing Date and until the Commitment Termination Date (i) Lender agrees (A) to
make available advances (each, a "Revolving Credit Advance") and (B) to incur
Letter of Credit Obligations, in an aggregate outstanding amount not to exceed
the Borrowing Availability, and (ii) Borrower may at its request from time to
time borrow, repay and reborrow, and may cause Lender to incur Letter of Credit
Obligations, under this Section 1.1.
(b) Borrower shall request each Revolving Credit Advance by written
notice to Lender substantially in the form of Exhibit A (each a "Notice of
Revolving Credit Advance") given no later than 11:00 A.M. (New York City time)
on the Business Day of the proposed Revolving Credit Advance. Lender shall be
fully protected under this Agreement in relying upon, and shall be entitled to
rely upon, (i) any Notice of Revolving Credit Advance reasonably believed by
Lender to be genuine, and (ii) the assumption that the Persons making electronic
requests or executing and delivering a Notice of Revolving Credit Advance were
duly authorized, unless the responsible individual acting thereon for Lender
shall have actual knowledge to the contrary.
(c) The Revolving Credit Loan shall be evidenced by, and be repayable
in accordance with the terms of, the Revolving Credit Note and this Agreement.
(d) Borrower agrees that Lender, in making any Revolving Credit Advance
or incurring any other Obligation hereunder, shall be entitled to rely upon the
most recent Borrowing Base Certificate delivered to Lender by Borrower and other
information available to Lender. Borrower further agrees that Lender shall be
under no obligation to make any further Revolving Credit Advance or incur any
other Obligation if Borrower shall have failed to deliver a Borrowing Base
Certificate to Lender by the time specified in Section 4.1(b).
(e) Notwithstanding anything to the contrary contained in this
Agreement, including Schedule C, Lender shall have no obligations to incur
Letter of Credit Obligations for the account of Borrower.
1.2 Term and Prepayment. (a) The obligation of Lender to make Revolving Credit
Advances and extend other financial accommodations shall be in effect from the
Closing Date until the Commitment Termination Date. Upon the Commitment
Termination Date Borrower shall pay to Lender in full, in immediately available
funds: (i) all outstanding Revolving Credit Advances and all accrued but unpaid
interest thereon; (ii) an amount sufficient to enable Lender to hold cash
collateral as specified in Schedule C; and (iii) all other non-contingent
Obligations due to or incurred by Lender. Upon payment of the amounts specified
in the immediately preceding sentence, Borrower's obligation to pay the Unused
Line Fee shall simultaneously terminate.
1
(b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall immediately repay the Revolving Credit Loan in
the amount of such excess; any such excess balance outstanding shall
nevertheless constitute Obligations that are evidenced by the Revolving Credit
Note, secured by the Collateral and entitled to all of the benefits of the Loan
Documents.
(c) Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to (i) terminate voluntarily Borrower's right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations, and (ii) prepay all of the
Obligations. The effective date of termination of the Revolving Credit Loan
specified in such notice shall be the Commitment Termination Date.
(d) If Borrower exercises its right of termination and prepayment, or
if Borrower's right to receive or benefit from, and Lender's obligation to make
Loans, are terminated for any reason prior to the Stated Expiry Date (including
as a result of the occurrence of an Event of Default), Borrower shall pay to
Lender the applicable Prepayment Fee.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Loans for working
capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of Borrower to
Lender shall constitute one general obligation of Borrower secured by all of the
Collateral.
1.5 Interest. (a) Borrower shall pay interest to Lender on the aggregate
outstanding Revolving Credit Advances at a floating rate equal to the Index Rate
plus four percent (4%) per annum (the "Revolving Credit Rate").
(b) Interest shall be payable on the outstanding Revolving Credit
Advances (i) in arrears for the preceding calendar month on the first day of
each calendar month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment Termination Date, upon
demand by Lender.
(c) All computations of interest, and all calculations of the Letter of
Credit Fee, shall be made by Lender on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest or fee is payable. Each determination by Lender
of an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(d) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, upon notice to the Borrower
(except that no notice shall be required upon the occurrence of any Event of
Default specified in Sections 7.1(f) or (g)) the Revolving Credit Rate and the
Letter of Credit Fee shall automatically be increased by two percentage points
(2%) per annum (such increased rate, the "Default Rate"), and all outstanding
Obligations, including unpaid interest and Letter of Credit Fees, shall continue
to accrue interest from the date of such Event of Default at the Default Rate
applicable to such Obligations.
3
(e) If any interest or other payment (including Unused Line Fees,
Letter of Credit Fees and Collateral Monitoring Fees) to Lender under this
Agreement becomes due and payable on a day other than a Business Day, such
payment date shall be extended to the next succeeding Business Day and interest
on any principal payment so extended shall be payable at the then applicable
rate during such extension.
(f) In no event will Lender charge interest at a rate that exceeds the
highest rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
1.6 Cash Management System. On or prior to the Closing Date and until the
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.
1.7 Fees. As compensation for Lender's costs and efforts incurred and expended
in entering into this Agreement and in consideration of Lender's making the
Loans available to Borrower, Borrower agrees to pay to Lender the Fees set forth
in Schedule E.
1.8 Receipt of Payments. Borrower shall make each payment under this Agreement
(not otherwise made pursuant to Section 1.9) without set-off or counterclaim not
later than 1:00 P.M. (New York City time) on the day when due in lawful money of
the United States of America in immediately available funds to the Collection
Account. For purposes of computing interest and Fees, all payments shall be
deemed received by Lender two (2) Business Days following receipt of good funds
in the Collection Account. For purposes of determining the Borrowing
Availability, payments shall be deemed received by Lender upon receipt of good
funds in the Collection Account.
1.9 Application and Allocation of Payments. Borrower irrevocably agrees that
Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for: (a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents, (b) the payment, performance or satisfaction
of any of Borrower's obligations with respect to preservation of the Collateral
or otherwise under this Agreement, or (c) any premium in whole or in part
required in respect of any of the policies of insurance required by this
Agreement, even if the making of any such Revolving Credit Advance causes the
outstanding balance of the Revolving Credit Loan to exceed the Borrowing
Availability, and Borrower agrees to repay immediately, in cash, any amount by
which the Revolving Credit Loan exceeds the Borrowing Availability.
4
1.10 Accounting. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loans made to Borrower under
this Agreement. Except to the extent that Borrower shall, within 30 days after
such statement and accounting is sent, notify Lender in writing of any objection
Borrower may have thereto (stating with particularity the basis for such
objection), such statement and accounting shall be deemed final, binding and
conclusive upon Borrower, absent manifest error.
1.11 Indemnity. Borrower and each other Credit Party executing this Agreement
jointly and severally agree to indemnify and hold Lender and its Affiliates, and
their respective employees, attorneys and agents (each, an "Indemnified
Person"), harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses of any kind or nature
whatsoever (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities and legal
costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Loan Documents (collectively,
"Indemnified Liabilities"), except to the extent that any such Indemnified
Liability is finally determined by a court of competent jurisdiction to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWER
OR TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
5
1.12 Taxes. All payments to Lender under any Loan Document shall be made free
and clear of, and without deduction for, any Taxes. If Borrower shall be
required by law to deduct any Taxes from any payment to Lender under any Loan
Document, then the amount payable to Lender shall be increased so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.12), Lender receives an amount equal to that
which it would have received had no such deductions been made and Borrower shall
pay the full amount deducted to the relevant taxing authority, and promptly
furnish to Lender tax receipts evidencing such payment. Borrower shall pay and
indemnify Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 1.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
1.13 Borrowing Base; Reserves. The Borrowing Base shall be determined by Lender
(including the eligibility of Accounts and Inventory) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 4.1(b)
and such other information available to Lender. Without limiting any other
rights and remedies of Lender hereunder or under the other Loan Documents, the
Revolving Credit Loan shall be subject to Lender's continuing right to withhold
from Borrowing Availability reserves, and to increase and decrease such reserves
from time to time, if and to the extent that in Lender's good faith credit
judgment such reserves are necessary, including to protect Lender's interest in
the Collateral or to protect Lender against possible non-payment of Accounts for
any reason by Account Debtors or possible diminution of the value of any
Inventory or possible non-payment of any of the Obligations or for any taxes or
customs duties or in respect of any state of facts which could constitute a
Default. Lender may, at its option, implement reserves by designating as
ineligible a sufficient amount of Accounts or Inventory which would otherwise be
Eligible Accounts or Eligible Inventory, as the case may be, so as to reduce the
Borrowing Base by the amount of the intended reserves. Without limiting the
foregoing, Lender shall on a quarterly basis (or at any time after the
occurrence of a Default) establish reserves for Borrower's Inventory consisting
of partially filled or opened containers.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. Lender shall not be obligated to make any
of the Loans, or to take, fulfill, or perform any other action hereunder, until
the following conditions have been satisfied in a manner satisfactory to Lender
in its sole discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
(b) Lender shall have received evidence satisfactory to it that each
Credit Party has obtained all consents and acknowledgments of all Persons and
Governmental Authorities whose consents or acknowledgments may be required prior
to the execution and delivery of this Agreement and the other Loan Documents (or
pursuant to the terms hereof or thereof) and the consummation of the
transactions contemplated hereby and thereby and that such consents or
acknowledgments remain in full force and effect;
(c) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.17 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
6
(d) as of the Closing Date Net Borrowing Availability shall be not less
than $500,000 after giving effect to the initial Revolving Credit Advance (on a
pro forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales);
(e) Lender shall have received an opinion of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to Lender;
(f) Borrower shall have established a cash management system which
complies with Schedule D and is otherwise acceptable to Lender;
(g) payment by Borrower of that portion of the Closing Fee payable on
the Closing Date and all other fees, costs, and expenses payable by Borrower
hereunder that have accrued as of the Closing Date;
(h) Lender shall have received a lien subordination agreement executed
by PIDC and in form and substance satisfactory to Lender;
(i) Lender shall have received a Mortgage Waiver and Consent (Mortgage)
executed by PIDA; and
(j) Lender shall have received a consent and acknowledgment agreement
executed by Borrower and Eurand America, Inc. in form and substance satisfactory
to Lender.
2.2 Further Conditions to the Loans. Lender shall not be obligated to fund any
Loan (including the initial Loans) , if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any of the other Loan Documents shall be untrue or incorrect in any
material respect as of such date, except to the extent that any such
representation or warranty is expressly stated to relate to a specific earlier
date, in which case, such representation and warranty shall be true and correct
in all material respects as of such earlier date; or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
(d) after giving effect to such Loan the Revolving Credit Loan would
exceed the Borrowing Availability; or
7
(e) any action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any Governmental
Authority to enjoin, restrain or prohibit, or to obtain damages in respect of,
or which is related to or arises out of, this Agreement or any other Loan
Document or the consummation of any transaction contemplated hereby or thereby
and which, in Lender's sole and reasonable judgment, would make it inadvisable
to consummate any transaction contemplated by this Agreement or any other Loan
Document.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of the
granting and continuance of Lender's Liens pursuant to the Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
and each other Credit Party executing this Agreement represent and warrant to
Lender (each of which representations and warranties shall survive the execution
and delivery of this Agreement), and promise to and agree with Lender until the
Termination Date as follows:
3.1 Corporate Existence; Compliance with Law. Each Corporate Credit Party: (a)
is, as of the Closing Date, and will continue to be (i) a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) duly qualified to do business and in
good standing in each other jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect, and (iii) in compliance with all Requirements of Law
and Contractual Obligations, except to the extent failure to comply therewith
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (b) has and will continue to have (i) the requisite
corporate power and authority and the legal right to execute, deliver and
perform its obligations under the Loan Documents, and to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the property it
operates under lease, and to conduct its business as now, heretofore or proposed
to be conducted, and (ii) all licenses, permits, franchises, rights, powers,
consents or approvals from or by all Persons or Governmental Authorities having
jurisdiction over such Corporate Credit Party which are necessary or appropriate
for the conduct of its business.
3.2 Executive Offices; Corporate or Other Names; Conduct of Business. The
location of each Corporate Credit Party's chief executive office, corporate
offices, warehouses, other locations of Collateral and locations where records
with respect to Collateral are kept (including in each case the county of such
locations) are as set forth in Disclosure Schedule (3.2) and, except as set
forth in such Disclosure Schedule, such locations have not changed during the
preceding twelve months. As of the Closing Date, during the prior five years,
except as set forth in Disclosure Schedule (3.2), no Corporate Credit Party has
been known as or conducted business in any other name (including trade names).
No Corporate Credit Party shall change its (a) name, (b) chief executive office,
(c) corporate offices, (d) warehouses or other Collateral locations, or (e)
location of its records concerning the Collateral, or acquire, lease or use any
real estate after the Closing Date without such Person, in each instance, giving
thirty (30) days prior written notice thereof to Lender and taking all actions
deemed necessary or appropriate by Lender to continuously protect and perfect
Lender's Liens upon the Collateral.
8
3.3 Corporate Power; Authorization; Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Encumbrances) upon
any of the Collateral; and (e) do not and will not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c) (all of which will have been duly obtained, made
or complied with on or before the Closing Date and shall be in full force and
effect on such date). As of the Closing Date, each Loan Document shall have been
duly executed and delivered on behalf of each Credit Party party thereto, and
each such Loan Document upon such execution and delivery shall be and will
continue to be a legal, valid and binding obligation of such Credit Party,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally, and by general principles of equity.
3.4 Financial Statements and Projections; Books and Records. (a) The Financial
Statements delivered by Borrower to Lender for its most recently ended Fiscal
Year and Fiscal Month, are true, correct and complete in accordance with GAAP
and reflect fairly and accurately the financial condition of Borrower as of the
date of each such Financial Statement in accordance with GAAP. The Projections
most recently delivered by Borrower to Lender have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such reasonable assumptions are disclosed in the
Projections.
(b) Borrower and each other Corporate Credit Party shall keep adequate
Books and Records with respect to the Collateral and its business activities in
which proper entries, reflecting all consolidated and consolidating financial
transactions, and payments received on any and all credits granted to, and all
other dealings with, the Collateral, will be made in accordance with GAAP and
all Requirements of Law and on a basis consistent with the Financial Statements.
9
3.5 Material Adverse Change. Between the date of Borrower's most recently
audited Financial Statements delivered to Lender and the Closing Date: (a) no
Corporate Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred which alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect. No Requirement of Law or Contractual
Obligation of any Credit Party has or have had or could reasonably be expected
to have a Material Adverse Effect and no Credit Party is in default, and to such
Credit Party's knowledge no third party is in default under or with respect to
any of its Contractual Obligations, which alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.
3.6 Real Estate; Property. The real estate listed in Disclosure Schedule (3.6)
constitutes all of the real property owned, leased, or used by each Corporate
Credit Party in its business, and such Credit Party will not execute any
material agreement or contract in respect of such real estate after the date of
this Agreement without giving Lender prompt written notice thereof. Each
Corporate Credit Party holds and will continue to hold good and marketable fee
simple title to all of its owned real estate, and good and marketable title to
all of its other properties and assets, and valid and insurable leasehold
interests in all of its leases (both as lessor and lessee, sublessee or
assignee), and none of the properties and assets of any Corporate Credit Party
are or will be subject to any Liens, except Permitted Encumbrances. With respect
to each of the premises identified in Disclosure Schedule (3.2) on or prior the
Closing Date a bailee, landlord or mortgagee agreement acceptable to Lender has
been obtained.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
Except as set forth in Disclosure Schedule (3.7), as of the Closing Date no
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person;
provided, however, that the parties hereto acknowledge that Borrower shall in
the future enter into joint ventures for the purpose of purchasing raw
materials, distributing products not currently available to Borrower or any
other related business activity which adds value to Borrower's operations and
may facilitate meeting Borrower's goals and projections; and, provided, further,
that all such business relationships shall be disclosed in writing to Lender in
advance of Borrower's engagement therein and shall be permitted hereunder to the
extent such joint ventures could not reasonably be expected to have a Material
Adverse Effect. All outstanding Indebtedness of each Corporate Credit Party as
of the Closing Date is described in Disclosure Schedule (5(c)).
3.8 Government Regulation. No Credit Party is subject to or regulated under the
Investment Company Act of 1940, the Public Utility Holding Company Act of 1935,
the Federal Power Act or any other Federal or state statute, rule or regulation
that restricts or limits such Person's ability to incur Indebtedness, pledge its
assets, or to perform its obligations under the Loan Documents. The making of
the Loans, the application of the proceeds and repayment thereof, and the
consummation of the transactions contemplated by the Loan Documents do not and
will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.
3.9 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulations U or G of the Federal Reserve Board as now
and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation G, T, U or X of the Federal Reserve Board. No Credit Party will take
or permit to be taken any action which might cause any Loan Document to violate
any regulation of the Federal Reserve Board.
10
3.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.10) all tax
returns, reports and statements required by any Governmental Authority to be
filed by Borrower or any other Credit Party have, as of the Closing Date, been
filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority and no tax Lien has been filed against any Credit Party
or any Credit Party's property. Proper and accurate amounts have been and will
be withheld by Borrower and each other Credit Party from their respective
employees for all periods in complete compliance with all Requirements of Law
and such withholdings have and will be timely paid to the appropriate
Governmental Authorities. Disclosure Schedule (3.10) sets forth as of the
Closing Date those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
Schedule (3.10), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
could reasonably be expected to have a Material Adverse Effect.
3.11 Payment of Obligations. Each Credit Party will pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Charges and other obligations of whatever nature, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral is or could reasonably be expected to become subject to any Lien or
forfeiture or loss as a result of such contest.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and separately identifies all
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Lender. Each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC , including the filing of
reports required under the IRC or ERISA. No Credit Party or ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. No
Credit Party or ERISA Affiliate has engaged in a prohibited transaction, as
defined in Section 4975 of the IRC, in connection with any Plan, which would
subject any Credit Party to a material tax on prohibited transactions imposed by
Section 4975 of the IRC.
11
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan with Unfunded Pension Liabilities
has been transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; and (vi)
no liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency.
3.13 Litigation. No Litigation is pending or, to the knowledge of any Credit
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect. Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or
threatened against any Credit Party which seeks damages in excess of $250,000 or
injunctive relief or alleges criminal misconduct of any Credit Party. Each
Credit Party shall notify Lender promptly upon learning of the existence or
commencement of any Litigation commenced or to the knowledge of any Credit Party
threatened against any Credit Party that: (x) may involve an amount in excess of
$250,000; (y) could reasonably be expected to have a Material Adverse Effect
whether or not determined adversely; or (z) regardless of amount (i) is asserted
or instituted, against any Plan, its fiduciaries or its assets, or against any
Credit Party or any ERISA Affiliate in connection with any Plan, (ii) includes
any demand for injunctive relief, (iii) alleges criminal misconduct by any
Credit Party, or (iv) alleges the violation of any law regarding, or seeks
remedies in connection with, any Environmental Liabilities.
3.14 Intellectual Property. As of the Closing Date, all material Intellectual
Property owned or used by any Credit Party is listed, together with application
or registration numbers, where applicable, in Disclosure Schedule (3.14). Each
Credit Party owns, or is licensed to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such Intellectual
Property the failure of which to own or license could not reasonably be expected
to have a Material Adverse Effect. The parties hereto acknowledge that
Borrower's proprietary ANDAs and other drug formulations will be not encumbered
by Lender (except that Lender is hereby granted all licenses, Liens and
interests in such product formulations as may be necessary to perfect Lender's
security interest therein) and Borrower may, in the event no Event of Default
shall have occurred and be continuing, and at Borrower's sole discretion, sell,
encumber (provided that Borrower shall not at any time encumber (i) Accounts,
(ii) Inventory, or (iii) any other Collateral, or any proceeds of the foregoing)
or use such formulations in any manner which could not reasonably be expected to
have a Material Adverse Effect.
12
3.15 Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.16 Hazardous Materials. Except as set forth on Disclosure Schedule (3.16), as
of the Closing Date, (a) each real property location owned, leased or occupied
by each Corporate Credit Party (the "Real Property") is maintained free of
contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Credit Party's knowledge,
potential Environmental Liabilities, in excess of $250,000 in the aggregate, (c)
no notice has been received by any Corporate Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in any Corporate Credit Party
being identified as a "potentially responsible party" under CERCLA or analogous
state statutes; and (d) each Corporate Credit Party has provided to Lender
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Corporate Credit Party. Each Corporate Credit Party: (i)
shall comply in all material respects with all applicable Environmental Laws and
Environmental Permits; (ii) shall notify Lender in writing within seven days if
and when it becomes aware of any Release, on, at, in, under, above, to, from or
about any of its Real Property; and (iii) shall promptly forward to Lender a
copy of any order, notice, permit, application, or any communication or report
received by it or any other Credit Party in connection with any such Release.
3.17 Insurance. As of the Closing Date, Disclosure Schedule (3.17) lists all
insurance of any nature maintained for current occurrences by Borrower and each
other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender endorsements to
all of its and those of its Subsidiaries (a) "All Risk" and business
interruption insurance policies naming Lender loss payee, and (b) general
liability and other liability policies naming Lender as an additional insured.
All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished to
Lender, will provide that the insurance companies will give Lender at least 30
days prior written notice before any such policy or policies of insurance shall
be altered or canceled and that no act or default of Borrower or any other
Person shall affect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Each Corporate Credit Party shall direct
all present and future insurers under its "All Risk" policies of insurance to
pay all proceeds payable thereunder directly to Lender. If any insurance
proceeds are paid by check, draft or other instrument payable to any Credit
Party and Lender jointly, and if a Default shall have occurred and be
continuing, Lender may endorse such Credit Party's name thereon and do such
other things as Lender may deem advisable to reduce the same to cash. Lender
reserves the right at any time, upon review of each Credit Party's risk profile,
to require additional forms and limits of insurance to adequately protect
Lender's interests in accordance with Lender's normal practice for similarly
situated borrowers. Each Corporate Credit Party shall, on each anniversary of
the Closing Date and from time to time at Lender's request, deliver to Lender a
report by a reputable insurance broker, satisfactory to Lender, with respect to
such Person's insurance policies.
13
3.18 Deposit and Disbursement Accounts. Attachment I to Schedule D lists all
banks and other financial institutions at which Borrower or any other Corporate
Credit Party, maintains deposits and/or other accounts, including the
Disbursement Account, and such Attachment correctly identifies the name, address
and telephone number of each such depository, the name in which the account is
held, a description of the purpose of the account, and the complete account
number. No Corporate Credit Party will establish any depository or other bank
account of any kind with any financial institution (other than the accounts set
forth on Attachment 1 to Schedule D) without Lender's prior written consent;
provided, however, that Borrower may enter into other banking arrangements for
the purpose of providing employee benefits to its employees in the ordinary
cause of business (such as credit unions and 401K accounts).
3.19 Accounts. As of the date of each Borrowing Base Certificate delivered to
Lender, each Account listed thereon as an Eligible Account shall be an Eligible
Account. Borrower has not made, and will not make, any agreement with any
Account Debtor for any extension of time for the payment of any Account, any
compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a
discount or allowance for prompt or early payment allowed by Borrower in the
ordinary course of its business consistent with historical practice and as
previously disclosed to Lender in writing. With respect to the Accounts pledged
as collateral pursuant to any Loan Document (a) the amounts shown on all
invoices, statements and reports which may be delivered to the Lender with
respect thereto are actually and absolutely owing to the relevant Credit Party
as indicated thereon and are not in any way contingent; (b) no payments have
been or shall be made thereon except payments immediately delivered to the
applicable Bank Accounts or the Lender as required hereunder; and (c) to
Borrower's knowledge all Account Debtors have the capacity to contract. Borrower
shall notify Lender promptly of any event or circumstance which to Borrower's
knowledge would cause Lender to consider any then existing Account as no longer
constituting an Eligible Account. No Account Debtor has a right of offset
against Borrower under any agreement with Borrower.
3.20 Inventory. As of the date of each Borrowing Base Certificate delivered to
Lender, all Inventory listed thereon as Eligible Inventory shall be Eligible
Inventory. Borrower shall promptly notify Lender of any event or circumstance
which, to Borrower's knowledge, would cause Lender to consider any then existing
Inventory as no longer constituting Eligible Inventory. Not later than March 31,
1999, Borrower shall keep its books and records with respect to its raw material
inventory on a computerized perpetual inventory record-keeping system and shall
continuously maintain such computerized perpetual inventory system up to and
including the Termination Date.
14
3.21 Conduct of Business; Maintenance of Existence. Each Corporate Credit Party
(a) shall conduct its business substantially as now conducted or as otherwise
permitted hereunder and preserve all of its rights, privileges and franchises
necessary and desirable in connection therewith, and (b) shall at all times
maintain, preserve and protect all of the Collateral and such Credit Party's
other property, used or useful in the conduct of its business and keep the same
in good repair, working order and condition (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices.
3.22 Further Assurances. At any time and from time to time, upon the written
request of Lender and at the sole expense of Borrower, Borrower and each other
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable (a) to obtain the full benefits of this Agreement and
the other Loan Documents, (b) to protect, preserve and maintain Lender's rights
in the Collateral, or any of it, and under this Agreement, or (c) to enable
Lender to exercise all or any of the rights and powers herein granted.
3.23 Year 2000 Covenants. If not previously implemented as delivered to Lender,
on or prior to June 30, 1999, each Corporate Credit Party shall implement Year
2000 Corrective Actions. On or before September 30, 1999, each Corporate Credit
Party shall complete Year 2000 Corrective Actions and Year 2000 Implementation
Testing. On or before September 30, 1999, each Corporate Credit Party shall
eliminate all Year 2000 Problems, except where the failure to correct the same
could not reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate.
4. FINANCIAL MATTERS; REPORTS
4.1 Reports and Notices. Borrower represents, agrees and promises that from and
after the Closing Date until the Termination Date, Borrower shall deliver to
Lender:
(a) within 15 days following the end of each Fiscal Month, an aged
trial balance by Account Debtor and an Inventory Perpetual or Physical (as
requested by Lender) and as soon as available but in no event later than 30 days
following the end of each Fiscal Month, a reconciliation of the aged trial
balance and the Inventory Perpetual or Physical (as the case may be) to the
Borrower's general ledger and from the general ledger to the Financial
Statements for such Fiscal Month accompanied by supporting detail and
documentation as Lender may request;
(b) as frequently as Lender may request and in any event no later than
15 days following the end of each Fiscal Month, a Borrowing Base Certificate in
the form of Exhibit C as of the last day of the previous Fiscal Month detailing
ineligible Accounts and Inventory for adjustment to the Borrowing Base,
certified as true and correct by the Chief Financial Officer of Borrower or such
other officer as is acceptable to Lender;
15
(c) within 15 days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together with an accounts payable
aging) and an Accounts Receivable Roll Forward Analysis in the Form of Exhibit
E, each certified as true and correct by the Chief Financial Officer of Borrower
or such other officer as is acceptable to Lender;
(d) within 30 days following the end of each Fiscal Month, the
Financial Statements for such Fiscal Month, which shall provide comparisons to
budget and actual results for the corresponding period during the prior Fiscal
Year, both on a monthly and year-to-date basis, and accompanied by a
certification in the form of Exhibit J by the Chief Executive Officer or Chief
Financial Officer of Borrower that such Financial Statements are complete and
correct, that there was no Event of Default (or specifying those Events of
Default of which he or she was aware), and showing in reasonable detail the
calculations used in determining compliance with the financial covenants
hereunder;
(e) within 90 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by an
independent certified accounting firm acceptable to Lender, which shall provide
comparisons to budget and actual results for the prior Fiscal Year, both on a
monthly and annual basis, and shall be accompanied by (i) a statement in
reasonable detail showing the calculations used in determining compliance with
the financial covenants hereunder, (ii) a report from Borrower's accountants to
the effect that in connection with their audit examination nothing has come to
their attention to cause them to believe that an Event of Default has occurred
or specifying those Events of Default of which they are aware, and (iii) any
management letter that may be issued;
(f) not less than 30 days prior to the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with care and
diligence, and using assumptions which are reasonable under the circumstances at
the time such Projections are delivered to Lender and disclosed therein when
delivered; and
(g) all the reports and other information set forth on Exhibit B in the
time frames set forth therein.
4.2 Financial Covenants. Borrower shall not breach any of the financial
covenants set forth in Schedule G.
4.3 Other Reports and Information. Borrower shall advise Lender promptly, in
reasonable detail, of: (a) any Lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence causing
a material loss or decline in value of any Collateral and the estimated (or
actual, if available) amount of such loss or decline; (b) any material change in
the composition of the Collateral; and (c) the occurrence of any Default or
other event which has had or could reasonably be expected to have a Material
Adverse Effect. Borrower shall, upon request of Lender, furnish to Lender such
other reports and information in connection with the affairs, business,
financial condition, operations, prospects or management of Borrower or any
other Credit Party or the Collateral as Lender may request, all in reasonable
detail.
16
5. NEGATIVE COVENANTS
Borrower and each Credit Party executing this Agreement covenants and agrees
(for itself and each other Credit Party) that, without Lender's prior written
consent, from the Closing Date until the Termination Date, neither Borrower nor
any other Corporate Credit Party shall, directly or indirectly, by operation of
law or otherwise:
(a) merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or form
any Subsidiary; provided, however, that Borrower may have the opportunity after
the date hereof to merge with or be acquired by another entity and in the event
Borrower is so acquired and Lender no longer wishes to continue as Lender
hereunder, Borrower shall have the right to prepay the Obligations and terminate
this Agreement and any prepayment penalty associated with such termination
shall, notwithstanding anything contained in Schedule E hereto to the contrary,
be limited to 1% of the then Maximum Amount;
(b) except as otherwise permitted in this Section 5 below, make any
investment in, or make or accrue loans or advances of money to, any Person,
except that Borrower may hold investments comprised of notes payable, or stock
or other securities issued by Account Debtors to Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtors' Accounts in the
ordinary course of business, so long as the aggregate amount of such Accounts so
settled by Borrower in any Fiscal Quarter does not exceed $50,000 and such notes
and securities are delivered to Lender as Collateral;
(c) create, incur, assume or permit to exist any Indebtedness, except:
(i) the Obligations; (ii) Indebtedness other than the Obligations in an
aggregate outstanding amount for all such Credit Parties combined not exceeding
$250,000; (iii) deferred taxes; and (iv) other Indebtedness set forth in
Disclosure Schedule 5(c) or any Indebtedness refinancing or replacing such other
Indebtedness provided that the principal amount thereof does not exceed the
principal amount of the Indebtedness being refinanced or replaced;
(d) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) which may adversely affect the interests of
Lender hereunder as determined by Lender in its sole discretion, other than
loans or advances to employees in the ordinary course of business in an
aggregate outstanding amount not exceeding $50,000;
(e) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to materially and adversely affect
repayment of the Obligations or could reasonably be expected to have a Material
Adverse Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date;
17
(f) amend its charter or by-laws or other organizational documents;
(g) incur any Guaranteed Indebtedness except (i) by endorsement of
instruments or items of payment for deposit to the general account of such
Credit Party, and (ii) for Guaranteed Indebtedness incurred for the benefit of
Borrower if the primary obligation is permitted by this Agreement;
(h) create or permit any Lien on any of its properties or assets,
except for Permitted Encumbrances;
(i) sell, transfer, issue, convey, assign or otherwise dispose of any
of its assets or properties, including its Accounts or engage in any
sale-leaseback, synthetic lease or similar transaction (provided, that the
foregoing shall not prohibit the sale of Inventory or obsolete or unnecessary
Equipment in the ordinary course of its business);
(j) take any action or omit to take any action, which act or omission
would constitute a material default or an event of default pursuant to, or
noncompliance with, any of its Contractual Obligations which could reasonably be
expected to have a Material Adverse Effect;
(k) cancel any debt owing to it, except for cancellation of debt not
constituting Accounts for reasonable consideration and in the ordinary course of
its business consistent with historical practice; or
(l) make or permit any Restricted Payment.
6. SECURITY INTEREST
6.1 Grant of Security Interest. (a) As collateral security for the prompt and
complete payment and performance of the Obligations, each of the Borrower and
any other Credit Party executing this Agreement hereby grants to the Lender a
security interest in and Lien upon all of its property and assets, whether real
or personal, tangible or intangible, and whether now owned or hereafter
acquired, or in which it now has or at any time in the future may acquire any
right, title, or interest, including all of the following property in which it
now has or at any time in the future may acquire any right, title or interest:
all Accounts; all bank and deposit accounts and all funds on deposit therein;
all cash and cash equivalents; all commodity contracts; all investments; all
Inventory and Equipment; all Goods; all Chattel Paper, Documents and
Instruments; all Books and Records; all General Intangibles (including all
Intellectual Property, Stock, contract rights, and choses in action); and to the
extent not otherwise included, all Proceeds and products of all and any of the
foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing, but excluding in all events (i) Hazardous
Waste, (ii) all real property owned (legally or beneficially) by Borrower, (iii)
the $729,000 certificate of deposit pledged by Borrower to PIDC and PIDA and
(iv) proprietary ANDA and other product formulations (except that Lender is
hereby granted all licenses, Liens and interests in such product formulations as
may be necessary to perfect Lender's security interest in, and permit Lender to
liquidate, Borrower's Inventory produced using such formulations and all
Accounts arising from the sale of such Inventory) (all of the foregoing,
together with any other collateral pledged to the Lender pursuant to any other
Loan Document, collectively, the "Collateral").
18
(b) Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Borrower and each
other Credit Party executing this Agreement represents, warrants and promises to
Lender that: (i) Borrower and each other Credit Party granting a Lien in
Collateral is the sole owner of each item of the Collateral upon which it
purports to xxxxx x Xxxx pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon completion of the filings and other actions
listed on Disclosure Schedule (6.1) (which, in the case of all filings and other
documents referred to in said Schedule, have been delivered to the Lender in
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Lender as security for the prompt and complete
payment and performance of the Obligations, enforceable in accordance with the
terms hereof against any and all creditors of and purchasers from any Credit
Party (other than purchasers of Inventory in the ordinary course of business)
and such security interests are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances; and (iii) no
effective security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the Collateral
is or will be on file or of record in any public office, except those relating
to Permitted Encumbrances. Borrower and each other Credit Party executing this
Agreement promise to defend the right, title and interest of Lender in and to
the Collateral against the claims and demands of all Persons whomsoever, and
each shall take such actions, including (x) the prompt delivery of all original
Instruments, Chattel Paper and certificated Stock owned by Borrower and each
other Credit Party granting a Lien on Collateral to Lender, (y) notification of
Lender's interest in Collateral at Lender's request, and (z) the institution of
litigation against third parties as shall be reasonably prudent in order to
protect and preserve each Credit Party's and Lender's respective and several
interests in the Collateral. Borrower (and any other Credit Party granting a
Lien in Collateral) shall xxxx its Books and Records pertaining to the
Collateral to evidence the Loan Documents and the Liens granted under the Loan
Documents. All Chattel Paper shall be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of General Electric Capital Corporation."
(c) In the event Borrower wishes to finance any Equipment, Lender shall
release its Lien on such Equipment provided (i) no Default shall have occurred
and be continuing, (ii) the terms of the Indebtedness secured by such released
Equipment are acceptable to Lender and (iii) the Fixed Charge Coverage Ratio for
the immediately preceding twelve months shall be at least 1.0 to 1.0; provided,
however, that the Lien securing such Indebtedness shall only attach to such
released Equipment and any proceeds of such Indebtedness shall be applied to the
repayment of the Revolving Credit Loan.
19
6.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's own name or in
the name of Borrower, communicate with Account Debtors, parties to Contracts,
and obligors in respect of Instruments, Chattel Paper or other Collateral to
verify to Lender's satisfaction, the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper or other Collateral, and (ii)
at any time after the occurrence and during the continuation of an Event of
Default, and without prior notice to Borrower or any other Credit Party, notify
Account Debtors, parties to Contracts, and obligors in respect of Chattel Paper,
Instruments, or other Collateral that the Collateral has been assigned to Lender
and that payments shall be made directly to Lender. Upon the request of Lender,
after the occurrence and during the continuation of an Event of Default,
Borrower shall so notify such Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other Collateral. Borrower
hereby constitutes Lender or Lender's designee as Borrower's attorney with power
to endorse Borrower's name upon any notes, acceptance drafts, money orders or
other evidences of payment or Collateral.
(b) It is expressly agreed by Borrower that, notwithstanding anything
herein to the contrary, Borrower shall remain liable under each Contract,
Instrument and License to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, and Lender shall have no
obligation or liability whatsoever to any Person under any Contract, Instrument
or License (between Borrower or any other Credit Party and any Person other than
Lender) by reason of or arising out of the execution, delivery or performance of
this Agreement, and Lender shall not be required or obligated in any manner (i)
to perform or fulfill any of the obligations of Borrower, (ii) to make any
payment or inquiry, or (iii) to take any action of any kind to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times under or
pursuant to any Contract, Instrument or License.
(c) Borrower and each other Credit Party shall, with respect to each
owned, leased, or controlled property or facility, during normal business hours
and upon reasonable advance notice (unless a Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times): (i) provide access to such facility or property to
Lender and any of its officers, employees and agents, as frequently as Lender
determines to be appropriate; (ii) permit Lender and any of its officers,
employees and agents to inspect, audit and make extracts from all of Borrower's
and such Credit Party's Books and Records; and (iii) permit Lender to inspect,
review, evaluate and make physical verifications and appraisals of the Inventory
and other Collateral in any manner and through any medium that Lender considers
advisable, and Borrower and such Credit Party agree to render to Lender, at
Borrower's and such Credit Party's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Borrower and each
other Credit Party shall make available to Lender and its counsel, as quickly as
practicable under the circumstances, originals or copies of all Borrower's and
such Credit Party's Books and Records and any other instruments and documents
which Lender may request. Borrower shall deliver any document or instrument
reasonably necessary for Lender, as it may from time to time request, to obtain
records from any service bureau or other Person which maintains records for
Borrower or any other Credit Party.
20
(d) After the occurrence and during the continuance of a Default,
Borrower, at its own expense, shall cause the certified public accountant then
engaged by Borrower to prepare and deliver to Lender at any time and from time
to time, promptly upon Lender's request, the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) test verifications of such Accounts as Lender may request.
Borrower, at its own expense, shall cause its certified independent public
accountants to deliver to Lender the results of any physical verifications of
all or any portion of the Inventory made or observed by such accountants when
and if such verification is conducted. Lender shall be permitted to observe and
consult with Borrower's accountants in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date, Borrower and
each other Credit Party executing this Agreement shall execute and deliver a
Power of Attorney in the form attached as Exhibit I. The power of attorney
granted pursuant to the Power of Attorney and all powers granted under any Loan
Document are powers coupled with an interest and shall be irrevocable until the
Termination Date. The powers conferred on Lender under the Power of Attorney are
solely to protect Lender's interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. Lender agrees and promises that (a) it
shall not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and (b) Lender shall
only exercise the powers granted under the Power of Attorney in respect of
Collateral, provided, except as otherwise required by applicable law, Lender
shall not have any duty as to any Collateral, and Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers. NONE OF LENDER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER OR ANY OTHER CREDIT PARTY FOR
ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE POWER OF
ATTORNEY OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
Borrower and each other Credit Party executing this Agreement also hereby
authorizes Lender to file any financing or continuation statement without the
signature of Borrower or such Credit Party to the extent permitted by applicable
law.
6.4 Grant of License to Use Intellectual Property Collateral. For the purpose of
enabling Lender to exercise its rights and remedies under the Loan Documents,
Borrower and each other Credit Party executing this Agreement hereby grants to
Lender an irrevocable, non-exclusive license (exercisable upon the occurrence
and during the continuance of an Event of Default without payment of royalty or
other compensation to Borrower or such Credit Party) to use, transfer, license
or sublicense any Intellectual Property now owned, licensed to, or hereafter
acquired by Borrower or such Credit Party, and wherever the same may be located,
and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer and automatic machinery
software and programs used for the compilation or printout thereof, and
represents, promises and agrees that any such license or sublicense is not and
will not be in conflict with the contractual or commercial rights of any third
Person; provided, that such license will terminate on the Termination Date.
21
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder which shall be deemed to be continuing until waived in writing by
Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) Borrower or any other Credit Party shall fail or neglect to
perform, keep or observe any of the covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in (i) Sections
3.01 through 3.09, 3.11, 3.12, 3.14 through 3.16, 3.22 or 3.23 of this Agreement
within 30 days after the earlier of (x) notice thereof to Borrower or (y) the
date Borrower should reasonably have known of such failure or (ii) any other
Section of this Agreement or any of the other Loan Documents, in each case
regardless of whether such breach involves a covenant, promise, agreement,
condition, requirement, term or provision with respect to a Credit Party that
has not signed this Agreement; or
(c) an event of default shall occur under any Contractual Obligation of
the Borrower or any other Credit Party (other than this Agreement and the other
Loan Documents), and such event of default (i) involves the failure to make any
payment (whether or not such payment is blocked pursuant to the terms of an
intercreditor agreement or otherwise), whether of principal, interest or
otherwise, and whether due by scheduled maturity, required prepayment,
acceleration, demand or otherwise, in respect of any Indebtedness (other than
the Obligations) of such Person in an aggregate amount exceeding the Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness or
a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate
amount exceeding the Minimum Actionable Amount to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower or any other Credit Party shall be untrue or incorrect in any material
respect as of the date when made, regardless of whether such breach involves a
representation or warranty with respect to a Credit Party that has not signed
this Agreement; or
(e) there shall be commenced against the Borrower or any other Credit
Party any Litigation seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which remains
unstayed or undismissed for thirty (30) consecutive days; or Borrower or any
other Credit Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or
22
(f) a case or proceeding shall have been commenced involuntarily
against Borrower or any other Credit Party in a court having competent
jurisdiction seeking a decree or order: (i) under the United States Bankruptcy
Code or any other applicable Federal, state or foreign bankruptcy or other
similar law, and seeking either (x) the appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Person or of any substantial part of its properties, or (y) the reorganization
or winding up or liquidation of the affairs of any such Person, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) consecutive days
or such court shall enter a decree or order granting the relief sought in such
case or proceeding; or (ii) invalidating or denying any Person's right, power,
or competence to enter into or perform any of its obligations under any Loan
Document or invalidating or denying the validity or enforceability of this
Agreement or any other Loan Document or any action taken hereunder or
thereunder; or
(g) Borrower or any other Credit Party shall (i) commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it or seeking appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for it or
any substantial part of its properties, (ii) make a general assignment for the
benefit of creditors, (iii) consent to or take any action in furtherance of, or,
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in paragraphs (e) or (f) of this Section 7.1 or clauses (i) and (ii) of
this paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess of
the Minimum Actionable Amount in the aggregate shall be rendered against
Borrower or any other Credit Party, unless the same shall be (i) fully covered
by insurance (except the related deductible) and the issuer(s) of the applicable
policies shall have acknowledged full coverage in writing within thirty (30)
days of judgment, or (ii) vacated, stayed, bonded, paid or discharged within a
period of thirty (30) days from the date of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect and Lender shall have
given Borrower notice thereof; or
(j) any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral; or
(k) a Change of Control shall have occurred with respect to any
Corporate Credit Party.
23
7.2 Remedies. (a) If any Default shall have occurred and be continuing, then
Lender may, by written notice to Borrower, terminate (in the case of any Default
arising under Xxxxxxx 0.0(x), (x)(xx), (x), (x), (x), (x), (x), (x) or (k)) or
suspend (in the case of any Default arising under Section 7.1(b)(i), (e) or (h))
its obligation to make further Revolving Credit Advances and to incur additional
Letter of Credit Obligations. In addition, if any Event of Default shall have
occurred and be continuing, Lender may, without notice, take any one or more of
the following actions: (i) terminate its obligation to make further Revolving
Credit Advances hereunder; (ii) declare all or any portion of the Obligations to
be forthwith due and payable, including contingent liabilities with respect to
Letter of Credit Obligations, whereupon such Obligations shall become and be due
and payable; (iii) require that all Letter of Credit Obligations be fully cash
collateralized pursuant to Schedule C; or (iv) exercise any rights and remedies
provided to Lender under the Loan Documents or at law or equity, including all
remedies provided under the Code; provided, that upon the occurrence of any
Event of Default specified in Sections 7.1 (e), (f) or (g), the Obligations
shall become immediately due and payable (and any obligation of Lender to make
further Loans, if not previously terminated, shall immediately be terminated)
and the Obligations shall automatically begin to accrue interest at the Default
Rate, in each case, without declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower and each
other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of Lender the whole or any
part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption Borrower and each other Credit Party executing this
Agreement hereby releases. Such sales may be adjourned, or continued from time
to time with or without notice. Lender shall have the right to conduct such
sales on any Credit Party's premises or elsewhere and shall have the right to
use any Credit Party's premises without rent or other charge for such sales or
other action with respect to the Collateral for such time or times as Lender
deems necessary or advisable.
(c) Borrower and each other Credit Party executing this Agreement
further agrees, upon the occurrence and during the continuance of an Event of
Default and at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at
its premises or elsewhere. Until Lender is able to effect a sale, lease, or
other disposition of the Collateral, Lender shall have the right to complete,
assemble, use or operate the Collateral or any part thereof, to the extent that
Lender deems appropriate, for the purpose of preserving such Collateral or its
value or for any other purpose. Lender shall have no obligation to any Credit
Party to maintain or preserve the rights of any Credit Party as against third
parties with respect to any Collateral while such Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. To the maximum extent permitted by applicable law, Borrower and each
other Credit Party executing this Agreement waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
Borrower and each other Credit Party shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
24
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, Borrower and
each other Credit Party executing this Agreement waives: (a) presentment, demand
and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, Accounts, Contracts, Documents, Instruments,
Chattel Paper and guaranties at any time held by Lender on which such Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Lender
may do in this regard; (b) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or levy
upon, any Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws. Borrower and each other
Credit Party executing this Agreement acknowledges that it has been advised by
counsel of its choices and decisions with respect to this Agreement, the other
Loan Documents and the transactions evidenced hereby and thereby.
7.4 Proceeds. The Proceeds of any sale, disposition or other realization upon
any Collateral shall be applied by Lender upon receipt, in the following order
of priorities: first, to reimburse or pay in full the actual expenses of Lender
incurred in connection with such sale, disposition or other realization,
including all other expenses, liabilities and advances incurred or made by
Lender in connection therewith; second, to the other Obligations in such order
as the Lender may deem advisable; third, to cash collateralize any outstanding
Letter of Credit Obligations pursuant to Schedule C; and finally, after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law, including Section 9-504(1)(c) of the Code (but only after Lender has
received what Lender considers reasonable proof of a subordinate party's
security interest), the surplus, if any, to Borrower or its representatives or
to whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
25
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein or
therein. Neither Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation, delegation or
other conveyance by Borrower or such Credit Party without the prior express
written consent of Lender shall be void. The terms and provisions of this
Agreement and the other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower, the other Credit Parties and Lender
with respect to the transactions contemplated hereby and thereby, and there
shall be no third party beneficiaries of any of the terms and provisions of any
of the Loan Documents. Lender reserves the right at any time to create and sell
participations in the Loans and the Loan Documents and to sell, transfer or
assign any or all of its rights in the Loans and under the Loan Documents.
9. MISCELLANEOUS
9.1 Complete Agreement; Modification of Agreement. This Agreement and the other
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, and each other Credit Party a
party to such Loan Document. Borrower and each other Credit Party executing this
Agreement or any other Loan Document shall have all duties and obligations under
this Agreement and such other Loan Documents from the date of its execution and
delivery, regardless of whether the initial Loan has been funded at that time.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses incurred in connection with: (a)(i) the preparation, negotiation,
execution and delivery of the Loan Documents, provided, however, that legal fees
(but not disbursements) of counsel to Lender shall not exceed $8,000 in the
aggregate under this clause (a)(i), and, provided, further, that any audit fees
shall be limited in accordance with Schedule E hereto, (ii) the enforcement of
the Loan Documents and the preservation of any rights thereunder including,
without limitation, the collection, sale, liquidation or other disposition of
the Collateral; (b) collection (including the fees and expenses of all special
counsel, advisors, consultants (including environmental and management
consultants) and auditors retained in connection therewith), including
deficiency collections; (c) the forwarding to Borrower or any other Person on
behalf of Borrower by Lender of the proceeds of any Loan (including a wire
transfer fee of $15 per wire transfer); (d) any amendment, extension,
modification or waiver of, or consent with respect to any Loan Document or
advice in connection with the administration of the Loans (not including any
advice in respect of efforts of monitoring, evaluation or verification described
in clause (f) below) or the rights thereunder; (e) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by or between any
combination of Lender, Borrower or any other Person or Persons), and an appeal
or review thereof, in any way relating to the Collateral, any Loan Document, or
any action taken or any other agreements to be executed or delivered in
connection therewith, whether as a party, witness or otherwise; and (f) any
effort (i) to monitor the Loans, (ii) to evaluate, observe or assess Borrower or
any other Credit Party or the affairs of such Person, and (iii) to verify,
protect, evaluate, assess or appraise the Collateral including the following
with respect to all of the foregoing provisions of this Section 9.2: the fees,
costs and expenses of attorneys, accountants, environmental advisors,
appraisers, investment bankers, management and other consultants, and
paralegals; court costs and expenses; photocopying and duplicating expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram charges; secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection therewith; provided,
however, that such fees, costs and expenses shall be reasonable in the case of
clauses (a)(i), (c) and (d) above; and, provided, further, in the case of costs
and expenses incurred solely pursuant to clause (f) above when no Event of
Default shall have occurred and be continuing, Borrower shall only be
responsible for paying or reimbursing Lender for such costs and expenses if (i)
Lender reasonably believes in its good faith credit judgment that there has been
a material adverse change in the Collateral or the value thereof or that some
other event or development has occurred that will have a Material Adverse Effect
on Borrower, (ii) Lender needs to incur such costs and expenses to obtain
additional information regarding the extent or effects of such change, event or
development, and (iii) Lender has discussed with the Borrower the need for such
additional information and the costs and expenses associated therewith.
26
9.3 No Waiver. Neither Lender's failure, at any time or times, to require strict
performance by Borrower or any other Credit Party of any provision of any Loan
Document, nor Lender's failure to exercise, nor any delay in exercising, any
right, power or privilege hereunder, (a) shall waive, affect or diminish any
right of Lender thereafter to demand strict compliance and performance
therewith, or (b) shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.
Any suspension or waiver of a Default or other provision under the Loan
Documents shall not suspend, waive or affect any other Default under any Loan
Document, whether the same is prior or subsequent thereto and whether of the
same or of a different type, and shall not be construed as a bar to any right or
remedy which Lender would otherwise have had on any future occasion. None of the
undertakings, indemnities, agreements, warranties, covenants and representations
of Borrower or any other Credit Party to Lender contained in any Loan Document
and no Default by Borrower or any other Credit Party under any Loan Document
shall be deemed to have been suspended or waived by Lender, unless such waiver
or suspension is by an instrument in writing signed by an officer or other
authorized employee of Lender and directed to Borrower specifying such
suspension or waiver (and then such waiver shall be effective only to the extent
therein expressly set forth), and Lender shall not, by any act (other than
execution of a formal written waiver), delay, omission or otherwise, be deemed
to have waived any of its rights or remedies hereunder.
15
9.4 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of any Loan Document shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of such Loan Document. Except as otherwise expressly
provided for in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of any financing arrangement under the Loan Documents
shall in any way affect or impair the Obligations, duties, covenants,
representations and warranties, indemnities, and liabilities of Borrower or any
other Credit Party or the rights of Lender relating to any unpaid Obligation,
(due or not due, liquidated, contingent or unliquidated), or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is not required until after the Commitment Termination
Date, all of which shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that all indemnity obligations of the Credit
Parties under the Loan Documents shall survive the Termination Date.
9.5 Conflict of Terms. Except as otherwise provided in any Loan Document by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any other Loan Document, the provision contained in this
Agreement shall govern and control.
27
9.6 Authorized Signature. Until Lender shall be notified in writing by Borrower
or any other Credit Party to the contrary, the signature upon any document or
instrument delivered pursuant hereto and believed by Lender or any of Lender's
officers, agents, or employees to be that of an officer of Borrower or such
other Credit Party listed in the Secretarial Certificate in the form of Exhibit
H shall bind Borrower and such other Credit Party and be deemed to be the act of
Borrower or such other Credit Party affixed pursuant to and in accordance with
resolutions duly adopted by Borrower's or such other Credit Party's Board of
Directors, and Lender shall be entitled to assume the authority of each
signature and authority of the person whose signature it is or appears to be
unless the person acting in reliance of such signature shall have actual
knowledge of the fact that such signature is false or the person whose signature
or purported signature is presented is without authority.
9.7 Notices. Except as otherwise provided herein, whenever any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any party by any other party, or whenever any party
desires to give or serve upon any other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 9.7), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when hand-delivered, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number indicated in Schedule B or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Lender) designated in Schedule B to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
28
9.8 Section Titles. The Section titles and Table of Contents contained in any
Loan Document are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
9.9 Counterparts. Any Loan Document may be executed in any number of separate
counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
9.10 Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
9.11 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF New York APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
9.12 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) BORROWER AND EACH
OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE THAT THE
STATE OR FEDERAL COURTS LOCATED IN New York SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND SUCH CREDIT PARTY
AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT LENDER, BORROWER AND SUCH CREDIT PARTY ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF New York; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER AND EACH OTHER CREDIT PARTY
EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER AND
SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER AND
EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY WAIVE PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER OR SUCH CREDIT PARTY AT
THE ADDRESS SET FORTH IN SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S OR SUCH CREDIT PARTY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
29
(B) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.13 Press Releases. Each Credit Party executing this Agreement agrees that
neither it nor its Affiliates will in the future issue any press release or
other public disclosure using the name of GE Capital or its affiliates or
referring to this Agreement or the other Loan Documents without at least two (2)
Business Days' prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Lender of a tombstone or similar advertising material relating to
the financing transactions contemplated by this Agreement.
9.14 Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by the Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any other Credit Party, or otherwise, all as though such
payments had not been made.
30
IN WITNESS WHEREOF, this Loan and Security Agreement has been
duly executed as of the date first written above.
Global Pharmaceutical Corporation
By:
---------------------------------
Name: Xxx Xxxxxxxxxx
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Duly Authorized Signatory
31
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the Code); (ii) all of such Person's rights in,
to and under all purchase orders or receipts for goods or services; (iii) all of
such Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit D
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the form
of Exhibit E.
"Affiliate" shall mean, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Agreement including all Appendices attached or
otherwise identified thereto, restatements and modifications and supplements
thereto, and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to this Agreement as the same may be in effect at the time such
reference becomes operative; provided, that except as specifically set forth in
this Agreement, any reference to the Disclosure Schedules to this Agreement
shall be deemed a reference to the Disclosure Schedules as in effect on the
Closing Date or in a written amendment thereto executed by Borrower and Lender.
A-1
"ANDA" shall mean an Abbreviated New Drug Application.
"Appendices" shall have the meaning assigned to it in the Recitals of this
Agreement.
"Bank Account Agreements" shall mean the Lockbox Account Agreements.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Borrower" shall mean the Person identified as such in the preamble of this
Agreement.
"Borrowing Availability" shall mean, at any time, the lesser of (i) the Maximum
Amount or (ii) the Borrowing Base, in each case less reserves established by
Lender from time to time.
"Borrowing Base" shall mean at any time an amount equal to the sum at such time
of:
(a) eighty five percent (85%) (less reserves established by Lender
pursuant to Section 1.13) of the value (as determined by Lender) of Borrower's
Eligible Accounts provided that Lender shall reduce the foregoing percentage by
one percentage point for each percentage point that the dilution of Borrower's
Accounts (calculated as the average dilution from the Accounts Receivable Roll
Forward Analysis over the most recent three months) exceeds 5%; plus
(b) fifty percent (50%) (less reserves established by Lender pursuant
to Section 1.13) of the value of Borrower's Eligible Inventory consisting of
finished goods and raw material, as determined by Lender, valued on a first-in,
first-out basis (at the lower of cost or market); provided, however, that,
advances against Eligible Inventory shall not exceed an amount equal to 50% of
Borrower's Eligible Accounts; and, provided, further, that at all times on or
prior to December 31, 1998, advances against Eligible Inventory shall not exceed
the lesser of (i) $750,000 and (ii) an amount equal to 50% of the value of
Borrower's Eligible Accounts.
"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit C.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
A-2
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in Schedule C.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date (i) that any change in the composition of its stockholders as of
the Closing Date shall occur which would result in any stockholder or group
acquiring 50.1% or more of any class of Stock of such Person, or (ii) that any
Person (or group of Persons acting in concert) shall otherwise acquire the power
to direct the management or affairs of such Person by obtaining proxies,
entering into voting agreements or trusts, acquiring securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, assessments, charges, liens, and all additional charges,
interest, penalties, expenses, claims or encumbrances upon or relating to (i)
the Collateral, (ii) the Obligations, (iii) the employees, payroll, income or
gross receipts of any Credit Party, (iv) the ownership or use of any assets by
any Credit Party, or (v) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent set
forth in Section 2 have been satisfied or specifically waived in writing by
Lender, and the initial Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
A-3
"Collection Account" shall mean that certain account of Lender, account number
00-000-000 in the name of GECC-CAF Depository at Bankers Trust Company, 0
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, XXX number 000-000-000.
"Commitment Termination Date" shall mean the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated pursuant
to Section 7.2, and (iii) the date of indefeasible prepayment in full by
Borrower of the Obligations in accordance with the provisions of Section 1.2(c).
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any material agreement, instrument, or
other undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all copyrights in any original work of authorship fixed in any
tangible medium of expression, now known or later developed, all registrations
and applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications, and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all Proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to xxx for past, present
and future infringements, all rights corresponding thereto throughout the world
and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation.
"Credit Party" shall mean Borrower, and each other Person (other than Lender)
that is or may become a party to this Agreement or any other Loan Document.
"Default" shall mean any Event of Default or any event which, with the passage
of time or notice or both, would, unless cured or waived, become an Event of
Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Documents" shall mean all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.
A-4
"EBITDA" shall mean, for any period, the Net Income (Loss) of Borrower and its
Subsidiaries on a consolidated basis for such period, plus interest expense, tax
expense, amortization expense, depreciation expense and extraordinary losses and
minus extraordinary gains, in each case, of Borrower and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss).
"Eligible Accounts" shall mean as at the date of determination, all Accounts of
the Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of Borrower's
business;
(b) upon which (i) Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever
or (ii) Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process;
(c) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted or which is a "contra"
Account;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise
sold or services performed and accepted by the Account Debtor
obligated upon such Account;
(e) with respect to which an invoice, acceptable to Lender in form and
substance, has not been sent;
(f) that is not owned by Borrower or is subject to any right, claim,
or interest of another Person, other than the Lien in favor of
Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of Borrower or any
other Credit Party, or an entity which has common officers or
directors with Borrower or any other Credit Party;
(h) that is the obligation of an Account Debtor that is the Federal
government or a political subdivision thereof, unless Lender has
agreed to the contrary in writing and Borrower has complied with
the Federal Assignment of Claims Act of 1940 with respect to such
obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country unless such Account is supported by a letter of credit or
credit insurance acceptable to Lender;
(j) that is the obligation of an Account Debtor to whom Borrower is or
may become liable for goods sold or services rendered by the
Account Debtor to Borrower, to the extent of Borrower's liability
to such Account Debtor;
A-5
(k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account
Debtor may be conditional;
(l) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts, to the
extent of such excess; provided, however, that such percentage
shall be 30% in the case of the following Account Debtors:
Cardinal Health, Inc., McKesson Corporation, Bergen Xxxxxxxx
Corporation, Bindley Western Industries, Inc., AmeriSource Health
Corp., Walgreen Co., CVS Corp., Rite Aid Corporation and Eckerd
Drugs Corporation.
(m) that is not paid within the later of (i) 30 days from its due date
or (ii) 90 days from its invoice date or that are Accounts of an
Account Debtor if 50% or more of the Accounts owing from such
Account Debtor remain unpaid within such time periods; provided,
however, that in no event (subject to clause (y) below) shall an
Eligible Account be paid more than 120 days from its invoice date;
and, provided, further, that (x) not more than $200,000 in
aggregate principal amount of Eligible Accounts shall be Trade
Show Accounts and (y) no Trade Show Account shall be paid more
than 150 days from its invoice date;
(n) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable
to pay its debts as they become due or as to which a petition has
been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;
(o) that arises from any xxxx-and-hold or other sale of goods which
remain in Borrower's possession or under Borrower's control;
(p) as to which Lender's interest therein is not a first priority
perfected security interest;
(q) to the extent that such Account exceeds any credit limit
established by Lender in Lender's reasonable discretion;
(r) as to which any of Borrower's representations or warranties
pertaining to Accounts are untrue in any material respect;
(s) that represents interest payments or service charges owing to
Borrower; or
(t) that is not otherwise acceptable in the sole discretion of Lender,
provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in
its good faith credit judgment.
"Eligible Inventory" shall mean as at the date of determination, all Inventory
of the Borrower, except any Inventory that:
A-6
(a) is not subject to a first priority perfected security interest of
Lender or is not owned by Borrower free and clear of all Liens and
rights of others (except the Liens in favor of Lender);
(b) is not located on premises owned or operated by Borrower and
referenced in Disclosure Schedule (3.2);
(c) is not located on premises where the aggregate amount of all
Inventory (valued at cost) of such Borrower located thereon is
greater than $100,000;
(d) is located on premises with respect to which Lender has not
received a landlord or mortgagee letter acceptable in form and
substance to Lender;
(e) is in transit;
(f) is covered by a negotiable document of title, unless such document
and evidence of acceptable insurance covering such Inventory has
been delivered to Lender;
(g) in Lender's good faith credit judgment, is obsolete, unsalable,
shopworn, damaged, unfit for further processing, is of substandard
quality or is not of good and merchantable quality, free from any
defects;
(h) consists of (i) discontinued items, (ii) slow-moving or excess
items held in inventory, or (iii) used items held for resale;
(i) does not consist of sealed raw materials or finished goods;
(j) does not meet all standards imposed by any Governmental Authority,
including with respect to its production, acquisition or
importation (as the case may be);
(k) is placed by Borrower on consignment or held by Borrower on
consignment from another Person;
(l) is held for rental or lease by or on behalf of Borrower;
(m) is produced in violation of the Fair Labor Standards Act and
subject to the "hot goods" provisions contained in 29 U.S.C. S 215
or any successor statute or section;
(n) in any way fails to meet or violates any warranty, representation
or covenant contained in this Agreement or any other Loan
Document;
(o) is subject to any licensing, patent, royalty, trademark, trade
name or copyright agreement with any third parties (other than
pursuant to the Development, License and Supply Agreements, each
dated as of August 20, 1997, between Borrower and Eurand America,
Inc., provided that Lender shall have received a consent and
acknowledgment agreement executed by Eurand America, Inc. in form
and substance satisfactory to Lender);
A-7
(p) requires the consent of any Person for the completion of
manufacture, sale or other disposition of such Inventory by Lender
following an Event of Default and such completion, manufacture or
sale constitutes a breach or default under any contract or
agreement to which Borrower is a party or to which such Inventory
is or may become subject (other than pursuant to the Development,
License and Supply Agreements, each dated as of August 20, 1997,
between Borrower and Eurand America, Inc., provided that Lender
shall have received a consent and acknowledgment agreement
executed by Eurand America, Inc. in form and substance
satisfactory to Lender); or
(q) is not otherwise acceptable in the sole discretion of Lender,
provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in
its good faith credit judgment.
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation). Environmental Laws include
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (42 U.S.C. xx.xx. 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act (49 U.S.C. xx.xx. 1801 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 et seq.); the Resource
Conservation and Recovery Act (42 U.S.C. xx.xx. 6901 et seq.) ("RCRA"); the
Toxic Substance Control Act (15 U.S.C. xx.xx. 2601 et seq.); the Clean Air Act
(42 U.S.C. xx.xx. 740 et seq.); the Federal Water Pollution Control Act (33
U.S.C. xx.xx._1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
xx.xx. 651 et seq.) ("OSHA"); and the Safe Drinking Water Act (42 U.S.C. xx.xx.
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state and local counterparts or equivalents and any transfer of
ownership notification or approval statutes.
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including any thereof arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate to any health or
safety condition regulated under any Environmental Law, Environmental Permits or
in connection with any Release, threatened Release, or the presence of a
Hazardous Material.
A-8
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals, registrations or other written documents required by
any Governmental Authority under any Environmental Law.
"Equipment" shall mean all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade or
business (whether or not incorporated) which together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" shall mean with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of Borrower and its
Subsidiaries, internally prepared for each Fiscal Month, and audited for each
Fiscal Year, prepared in accordance with GAAP.
A-9
"Fiscal Month" shall mean any of the monthly accounting periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of Borrower.
"Fiscal Year" shall mean the 12 month period of Borrower ending 12/31 of each
year. Subsequent changes of the fiscal year of Borrower shall not change the
term "Fiscal Year" unless Lender shall consent in writing to such change.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of the
following for Borrower and its Subsidiaries on a consolidated basis determined
in accordance with GAAP: (a) EBITDA for such period less Capital Expenditures
for such period which are not financed through the incurrence of any
Indebtedness (excluding the Revolving Credit Loan) to (b) the sum of (i)
interest expense paid or accrued in respect of any Indebtedness during such
period, plus (ii) taxes to the extent accrued or otherwise payable with respect
to such period plus (iii) regularly scheduled payments of principal paid or that
were required to be paid on Funded Debt (excluding the Revolving Credit Loan)
during such period.
"Funded Debt" shall mean, for any Person, all of such Person's Indebtedness
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one year from, or is directly or indirectly
renewable or extendible at the option of such Person under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof, including
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of such Person.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"GE Capital" shall mean General Electric Capital Corporation, a New York
corporation, and its successors and assigns.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in or
under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
A-10
"Goods" shall mean all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guarantor" shall mean each Person which executes a guaranty or a support, put
or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and in
form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as the
same may be in effect at the time such reference becomes operative.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste ," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 X.X.X.xx.xx. 6901 et. seq.).
A-11
"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not more than 60 days past due, other than any such trade payable
which is being contested in good faith by appropriate proceedings); (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments; (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all Capital Lease Obligations; (v) all Guaranteed Indebtedness; (vi) all
Indebtedness referred to in clauses (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
(vii) the Obligations; and (viii) all liabilities under Title IV of ERISA.
"Indemnified Liabilities" shall have the meaning assigned to it in Section 1.11.
"Indemnified Person" shall have the meaning assigned to it in Section 1.11.
"Index Rate" shall mean the latest rate for 30-day dealer placed commercial
paper (which for purposes hereof shall mean high grade unsecured notes sold
through dealers by major corporations in multiples of $1,000) which normally is
published in the "Money Rates" section of The Wall Street Journal (or if such
rate ceases to be so published, as quoted from such other generally available
and recognizable source as Lender may select). The Index Rate shall be
determined (i) on the first Business Day immediately prior to the Closing Date
and (ii) thereafter, on the last Business Day of each calendar month for
calculation of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
"Inventory" shall mean all "inventory," as such term is defined in the Code, now
or hereafter owned or acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property which are held by or
on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in such Person's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"IRC" shall mean the Internal Revenue Code of 1986, and any successor thereto.
A-12
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lender" shall mean GE Capital and, if at any time GE Capital shall decide to
assign or syndicate all or any of the Obligations, such term shall include such
assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of Borrower for which Lender
has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations incurred
by Lender, if any, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance or guarantee, by Lender or another, of
Letters of Credit, all as further set forth in Schedule C. The amount of such
Letter of Credit Obligations at any time shall equal the maximum amount which
may be payable by Lender thereupon or pursuant thereto at such time and shall
include all duty, freight, taxes, costs, insurance and any other charges and
expenses in connection therewith.
"License" shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Note, the Financial Statements,
each Guaranty, the Power of Attorney, the Bank Account Agreements, and the other
documents and instruments listed in Schedule F, and all security agreements,
mortgages and all other documents, instruments, certificates, and notices at any
time delivered by any Person (other than Lender) in connection with any of the
foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations.
"Lock Box Account" shall have the meaning assigned to it in Schedule D.
"Lock Box Account Agreement" shall have the meaning assigned to it in Schedule
D.
A-13
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations or financial or other condition of Borrower or any
other Credit Party, (b) Borrower's or any other Credit Party's ability to pay or
perform the Obligations under the Loan Documents to which such Credit Party is a
party in accordance with the terms thereof, (c) the Collateral or Lender's Liens
on the Collateral or the priority of any such Lien, or (d) Lender's rights and
remedies under this Agreement and the other Loan Documents.
"Maximum Amount" shall mean the maximum amount of credit to be provided by
Lender to or for the benefit of Borrower for aggregate Revolving Credit Advances
and Letter of Credit Obligations outstanding at any time, without regard to the
Borrowing Base or reserves, which amount, for purposes of this Agreement, is
$5,000,000.
"Minimum Actionable Amount" shall mean $250,000.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001(a) (3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean at any time the Borrowing Availability
less the Revolving Credit Loan.
"Net Income (Loss)" shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
"Notes" shall mean the Revolving Credit Note.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing by
Borrower and any other Credit Party to Lender, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other instrument,
whether arising under any of the Loan Documents or under any other agreement
between Borrower, such Credit Party and Lender, and all covenants and duties
regarding such amounts. This term includes all principal, interest (including
interest accruing at the then applicable rate provided in this Agreement after
the maturity of the Loans and interest accruing at the then applicable rate
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to Borrower under any of the Loan Documents, and all principal and
interest due in respect of the Loans and all obligations and liabilities of any
Guarantor under any Guaranty.
A-14
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of Section 3.11; (ii) pledges or deposits securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of any Credit Party; (v)
inchoate and unperfected workers', mechanics', or similar liens arising in the
ordinary course of business so long as such Liens attach only to Equipment,
fixtures or real estate; (vi) carriers', warehousemans', suppliers' or other
similar possessory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable in an outstanding aggregate amount not in
excess of $25,000 at any time so long as such Liens attach only to Inventory;
(vii) deposits of money securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (viii) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or rent)
to the extent permitted under Section 5(c)(ii); (x) Liens in existence on the
Closing Date as disclosed on Disclosure Schedule 5(h) provided that no such Lien
is spread to cover additional property after the Closing Date and the amount of
Indebtedness secured thereby is not increased; (xi) Liens in favor of Lender
securing the Obligations; and (xii) judgment Liens to the extent such Liens do
not give rise to an Event of Default under Section 7.1(h) of the Agreement.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person's successors and assigns.
"PIDA" shall mean the Pennsylvania Industrial Development Authority.
"PIDC" shall mean the Philadelphia Industrial Development Corporation.
A-15
"Plan" shall mean, with respect to Borrower or any other Credit Party, at any
time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower or any other Credit Party maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower or any other Credit Party from time to
time with respect to any Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to Borrower or any other Credit Party from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any Collateral by any governmental body, authority,
bureau or agency (or any person acting under color of governmental authority);
(iii) any claim of Borrower or any other Credit Party against third parties (a)
for past, present or future infringement of any Intellectual Property or (b) for
past, present or future infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License; (iv) any
recoveries by Borrower or any other Credit Party against third parties with
respect to any litigation or dispute concerning any Collateral; and (v) any and
all other amounts from time to time paid or payable under or in connection with
any Collateral, upon disposition or otherwise.
"Projections" shall mean as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for Borrower and its
Subsidiaries (including forecasted Capital Expenditures and Net Borrowing
Availability) (i) by month for the next Fiscal Year, and (ii) by year for the
following three Fiscal Years, in each case prepared in a manner consistent with
GAAP and accompanied by senior management's discussion and analysis of such
plan.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified under
Section 401(a) of the IRC.
"Real Property" shall have the meaning assigned to it in Section 3.16.
1-16
"Release" shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payment" shall mean: (i) the declaration or payment of any dividend
or the incurrence of any liability to make any other payment or distribution of
cash or other property or assets on or in respect of Borrower's or any other
Credit Party's Stock; (ii) any payment on account of the purchase, redemption,
defeasance or other retirement of Borrower's or any other Credit Party's Stock
or Indebtedness or any other payment or distribution made in respect of any
thereof, either directly or indirectly; other than (a) that arising under this
Agreement or (b) interest and principal, when due without acceleration or
modification of the amortization as in effect on the Closing Date, under
Indebtedness described in Disclosure Schedule (5(c)) or otherwise permitted
under Section 5(c)(ii); or (iii) any payment, loan, contribution, or other
transfer of funds or other property to any Stockholder of such Person which is
not expressly and specifically permitted in this Agreement; provided, that no
payment to Lender shall constitute a Restricted Payment.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare plan"
as defined in Section 3(2) of ERISA, that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a).
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total Letter
of Credit Obligations incurred by Lender and outstanding at such time, plus
(iii) the amount of accrued but unpaid interest thereon and Letter of Credit
Fees with respect thereto.
"Revolving Credit Note" shall mean the promissory note of Borrower dated the
Closing Date, substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section 1.5(a).
"Schedule of Documents" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Loan Documents and the transactions
contemplated thereunder, substantially in the form of Schedule F.
A-17
"Stated Expiry Date" shall mean July 23, 2001.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934).
"Stockholder" shall mean each holder of Stock of Borrower or any other Credit
Party.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Lender.
"Termination Date" shall mean the date on which the Revolving Credit Loan and
any other Obligations under this Agreement are indefeasibly paid in full, in
cash (other than amounts in respect of Letter of Credit Obligations if any, then
outstanding, provided that Borrower shall have funded such amounts in cash in
full into the Cash Collateral Account), and Borrower shall have no further right
to borrow any moneys or obtain other credit extensions or financial
accommodations under this Agreement.
"Third Party Interactives" shall mean all Persons with whom any Corporate Credit
Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an "employee pension benefit plan," as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which Borrower, any other Credit Party or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
A-18
"Trademarks" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof, and (ii) all reissues, extensions
or renewals thereof.
"Trade Show Account" shall mean an Account which is originated by Borrower in
connection with a trade show or trade fair and the Account Debtor of which is
Cardinal Health, Inc., McKesson Corporation, Bergen Xxxxxxxx Corporation,
Bindley Western Industries, Inc., AmeriSource Health Corp., Walgreen Co., CVS
Corp., Rite Aid Corporation or Eckerd Drugs Corporation.
"Transaction Summary" shall mean the Transaction Summary set forth in the
Recitals to this Agreement.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount, if
any, of the sum of (i) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for such Title IV
Plan determined on the basis of a shutdown of the employees thereunder and using
the actuarial assumptions in effect for funding purposes under such Title IV
Plan, and (ii) for a period of five (5) years following a transaction which
could be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by Borrower, any other Credit Party or any ERISA
Affiliate as a result of such transaction.
"Unused Line Fee" shall have the meaning assigned to it in Schedule E.
"Year 2000 Assessment" shall mean a comprehensive written assessment of the
nature and extent of each Corporate Credit Party's Year 2000 Problems and Year
2000 Date-Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Corporate Credit Party,
all actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Corporate Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems on or
before September 30, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000
Date-Sensitive Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and implementing each phase
or subpart of the Year 2000 Corrective Plan.
A-19
"Year 2000 Date-Sensitive System/Component" shall mean, as to any Person, any
system software, network software, applications software, data base, computer
file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Corporate Credit
Party, (i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a system-wide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Corporate Credit Parties' Year 2000 Date-Sensitive Systems/Components and data
exchanges with Third Party Interactives, and (iii) the design and implementation
of additional Corrective Actions, the need for which has been demonstrated by
test and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Corporate Credit Party,
limitations on the capacity or readiness of any such Corporate Credit Party's
Year 2000 Date-Sensitive Systems/Components to accurately accept, create,
manipulate, sort, sequence, calculate, compare or output calendar date
information with respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year computations),
including, without limitation, exchanges of information among Year 2000
Date-Sensitive Systems/Components of the Corporate Credit Parties and exchanges
of information among the Corporate Credit Parties and Year 2000 Date-Sensitive
Systems/Components of Third Party Interactives and functionality of peripheral
interfaces, firmware and embedded microchips.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein, in
accordance with GAAP consistently applied; provided, that all financial
covenants and calculations in the Loan Documents shall be made in accordance
with GAAP as in effect on the Closing Date unless Borrower and Lender shall
otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing. All other undefined terms contained in this
Agreement or the other Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code. The words "herein,"
"hereof" and "hereunder" or other words of similar import refer to this
Agreement as a whole, including the exhibits and schedules thereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement.
A-20
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter; (b) the term "or" is not
exclusive; (c) the term "including" (or any form thereof) shall not be limiting
or exclusive; (d) all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations; (e)
all references in this Agreement or in the Schedules to this Agreement to
sections, schedules, disclosure schedules, exhibits, and attachments shall refer
to the corresponding sections, schedules, disclosure schedules, exhibits, and
attachments of or to this Agreement; and (f) all references to any instruments
or agreements, including references to any of the Loan Documents, shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.
A-21
SCHEDULE B -
LENDER'S AND BORROWER'S ADDRESS FOR NOTICES
Lender's Address
Name: General Electric Capital Corporation
Address: 000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Global Pharmaceutical Corporation Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Borrower's Address
Name: Global Pharmaceutical Corporation
Address: 0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxxx, President and Chief Executive Officer
Telephone: 000-000-0000 (ext. 306)
Facsimile: 000 000-0000
B-1
SCHEDULE C - LETTERS OF CREDIT
[This Schedule is not effective - see Section 1.1(e) of the Agreement]
1. Lender may, subject to the terms and conditions hereinafter set forth, incur
Letter of Credit Obligations in respect of the issuance of Letters of Credit
issued on terms acceptable to Lender and supporting obligations of Borrower
incurred in the ordinary course of Borrower's business, in order to support the
payment of Borrower's inventory purchase obligations, insurance premiums, or
utility or other operating expenses and obligations, as Borrower shall request
by written notice to Lender that is received by Lender not less than five
Business Days prior to the requested date of issuance of any such Letter of
Credit; provided, that: (a) that the aggregate amount of all Letter of Credit
Obligations at any one time outstanding (whether or not then due and payable)
shall not exceed $ [n/a]; (b) no Letter of Credit shall have an expiry date
which is later than the Stated Expiry Date or one year following the date of
issuance thereof; and (c) Lender shall be under no obligation to incur any
Letter of Credit Obligation if after giving effect to the incurrence of such
Letter of Credit Obligation, the Net Borrowing Availability would be less than
zero. The maximum amount payable in respect of each Letter of Credit requested
by Borrower will be guaranteed by Lender in favor of the issuing bank under
terms of a separate agreement between Lender and the issuing bank. Borrower will
enter into an application and agreement for such Letter of Credit with the
issuing bank selected by Lender. The bank that issues any Letter of Credit
pursuant to this Agreement shall be determined by Lender in its sole discretion.
2. The notice to be provided to Lender requesting that Lender incur Letter of
Credit Obligations shall be in the form of a Letter of Credit application in the
form customarily employed by the issuing bank, together with a written request
by Borrower and the bank that Lender approve Borrower's application. Upon
receipt of such notice Lender shall establish a reserve against the Borrowing
Availability in the amount of 100% of the face amount of the Letter of Credit
Obligation to be incurred. Approval by Lender in the written form agreed upon
between Lender and the issuing bank (a) will authorize the bank to issue the
requested Letter of Credit, and (b) will conclusively establish the existence of
the Letter of Credit Obligation as of the date of such approval.
3. In the event that Lender shall make any payment on or pursuant to any Letter
of Credit Obligation, Borrower shall be unconditionally obligated to reimburse
Lender therefor, and such payment shall then be deemed to constitute a Revolving
Credit Advance. For purposes of computing interest under Section 1.5, a
Revolving Credit Advance made in satisfaction of a Letter of Credit Obligation
shall be deemed to have been made as of the date on which the issuer or endorser
makes the related payment under the underlying Letter of Credit.
4. In the event that any Letter of Credit Obligations, whether or not then due
or payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower will either (a) cause the underlying Letter of Credit to be
returned and canceled and each corresponding Letter of Credit Obligation to be
terminated, or (b) pay to Lender, in immediately available funds, an amount
equal to 105% of the maximum amount then available to be drawn under all Letters
of Credit not so returned and canceled to be held by Lender as cash collateral
in an account under the exclusive dominion and control of Lender (the "Cash
Collateral Account").
C-1
5. In the event that Lender shall incur any Letter of Credit Obligations,
Borrower agrees to pay the Letter of Credit Fee to Lender as compensation to
Lender for incurring such Letter of Credit Obligations. In addition, Borrower
shall reimburse Lender for all fees and charges paid by Lender on account of any
such Letters of Credit or Letter of Credit Obligations to the issuing bank.
6. Borrower's Obligations to Lender with respect to any Letter of Credit or
Letter of Credit Obligation shall be evidenced by Lender's records and shall be
absolute, unconditional and irrevocable and shall not be affected, modified or
impaired by (a) any lack of validity or enforceability of the transactions
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (b) any amendment or waiver of or consent to depart from all or any
of the terms of the transactions contemplated by or related to such Letter of
Credit or Letter of Credit Obligation; (c) the existence of any claim, set-off,
defense or other right which Borrower or any other Credit Party may have against
Lender, the issuer or beneficiary of such Letter of Credit, or any other Person,
whether in connection with this Agreement, any other Loan Document or such
Letter of Credit or the transactions contemplated thereby or any unrelated
transactions; or (d) the fact that any draft, affidavit, letter, certificate,
invoice, xxxx of lading or other document presented under or delivered in
connection with such Letter of Credit or any other Letter of Credit proves to
have been forged, fraudulent, invalid or insufficient in any respect or any
statement therein proves to have been untrue or incorrect in any respect.
7. In addition to any other indemnity obligations which Borrower may have to
Lender under this Agreement and without limiting such other indemnification
provisions, Borrower hereby agrees to indemnify Lender from and to hold Lender
harmless against any and all claims, liabilities, losses, costs and expenses
(including, attorneys' fees and expenses) which Lender may (other than as a
result of its own gross negligence or willful misconduct) incur or be subject to
as a consequence, directly or indirectly, of (a) the issuance of or payment of
or failure to pay under any Letter of Credit or Letter of Credit Obligation or
(b) any suit, investigation or proceeding as to which Lender is or may become a
party as a consequence, directly or indirectly, of the issuance of any Letter of
Credit, the incurring of any Letter of Credit Obligation or any payment of or
failure to pay under any Letter of Credit or Letter of Credit Obligation. The
obligations of Borrower under this paragraph shall survive any termination of
this Agreement and the payment in full of the Obligations.
8. Borrower hereby assumes all risks of the acts, omissions or misuse of each
Letter of Credit by the beneficiary or issuer thereof and, in connection
therewith, Lender shall not be responsible (a) for the validity, sufficiency,
genuineness or legal effect of any document submitted in connection with any
drawing under any Letter of Credit even if it should in fact prove in any
respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged;
(b) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or any rights or
benefits thereunder or any proceeds thereof, in whole or in part, even if it
should prove to be invalid or ineffective for any reason; (c) for the failure of
any issuer or beneficiary of any Letter of Credit to comply fully with the terms
thereof, including the conditions required in order to effect or pay a drawing
thereunder; (d) for any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, telecopy, telex or otherwise;
(e) for any loss or delay in the transmission or otherwise of any document or
draft required in order to make a drawing under any Letter of Credit; or (f) for
any consequences arising from causes beyond the direct control of Lender.
C-2
SCHEDULE D - CASH MANAGEMENT
Borrower agrees to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. No Corporate Credit Party: (i) shall (nor shall it permit any of its
Subsidiaries to) open or maintain any deposit, checking, operating or other bank
account, or similar money handling account, with any bank or other financial
institution except for those accounts identified in Attachment I hereto (to
include a xxxxx cash account not to exceed $5,000 during any Fiscal Month, and a
payroll account not to exceed an amount equal to one regular payroll at any
time); and (ii) shall close or permit to be closed any of the accounts listed in
Attachment I hereto, in each case without Lender's prior written consent, and
then only after such Credit Party has implemented agreements with such bank or
financial institution and Lender acceptable to Lender.
2. Commencing on the Closing Date and until the Termination Date, each Corporate
Credit Party shall cause to be deposited directly all cash, checks, notes,
drafts or other similar items relating to or constituting proceeds of or
payments made in respect of any and all Collateral into lock boxes or lock box
accounts in such Credit Party's or Lender's name (collectively, the "Lock Box
Accounts") set forth in paragraph 1 of Attachment I hereto.
3. On or before the Closing Date, each bank at which the Lock Box Accounts are
held shall have entered into tri-party lock box agreements (the "Lock Box
Account Agreements") with Lender and the applicable Credit Party, in form and
substance acceptable to Lender. Each such Lock Box Account Agreement shall
provide, among other things, that (a) such bank executing such agreement has no
rights of setoff or recoupment or any other claim against such Lock Box Account,
other than for payment of its service fees and other charges directly related to
the administration of such account, and (b) such bank agrees to sweep on a daily
basis all amounts in the Lock Box Account to the Collection Account.
4. On the Closing Date, (a) the lock box and blocked account arrangements shall
immediately become operative at the banks at which the Lock Box Accounts are
maintained, and (b) amounts outstanding under the Revolving Credit Loan (for
purposes of the Borrowing Availability) shall be reduced through daily sweeps,
by wire transfer, of the Lock Box Accounts into the Collection Account. Borrower
acknowledges that it shall have no right to gain access to any of the moneys in
the Lock Box Accounts until after the Termination Date.
5. Borrower may maintain, in its name, accounts (the "Disbursement Accounts") at
a bank or banks acceptable to Lender into which Lender shall, from time to time,
deposit proceeds of Revolving Credit Advances made pursuant to Section 1.1 for
use solely in accordance with the provisions of Section 1.3. All of the
Disbursement Accounts as of the Closing Date are listed in paragraph 2 of
Attachment I hereto.
6. Upon the request of Lender, each Corporate Credit Party shall forward to
Lender, on a daily basis, evidence of the deposit of all items of payment
received by such Credit Party into the Lock Box Accounts and copies of all such
checks and other items, together with a statement showing the application of
those items relating to payments on Accounts to outstanding Accounts and a
collection report with regard thereto in form and substance satisfactory to
Lender.
D-1
ATTACHMENT I TO SCHEDULE D
LIST OF BANK ACCOUNTS
1. Lock Box Accounts.
2. Disbursement Accounts.
3. Xxxxx Cash Account (not to exceed $5,000).
4. Payroll Account (not to exceed one regular payroll).
D-2
SCHEDULE E - FEES
1. UNUSED LINE FEE: For each day from the Closing Date, and through and
including the Termination Date, an amount equal to the Maximum Amount less the
Revolving Credit Loan for such day multiplied by .125%, the product of which is
then divided by 360. The Unused Line Fee for each month (except for the month in
which the Termination Date occurs) is payable monthly in arrears on the first
day of each calendar month following the Closing Date; the final monthly
installment of the Unused Line Fee is payable on the Termination Date.
Notwithstanding the foregoing, any unpaid Unused Line Fee is immediately due and
payable on the Commitment Termination Date.
2. LETTER OF CREDIT FEE: For each day for which Lender maintains Letter of
Credit Obligations outstanding, an amount equal to the amount of the Letter of
Credit Obligations outstanding on such day, multiplied by [n/a] %, the product
of which is then divided by 360. The Letter of Credit Fee incurred for each
month is payable at the same time each payment of the Unused Line Fee is due.
Notwithstanding the foregoing, any unpaid Letter of Credit Fee is immediately
due and payable on the Commitment Termination Date.
3. CLOSING FEE; COLLATERAL MONITORING FEE: A non-refundable commitment fee of
$50,000 (the "Closing Fee") payable in three equal installments as follows: (i)
the first installment shall be due upon the execution of the commitment letter
for this facility, and (ii) the remaining two installments shall be due on the
first and second anniversaries of the Closing Date. A non-refundable collateral
monitoring fee of $500 per month, payable in advance on the first day of each
month.
4. PREPAYMENT FEE: Subject to Section 5(a) of the Agreement, for the Revolving
Credit Loan, an amount equal to the Maximum Amount multiplied by:
3% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon an Event of Default or otherwise) on or after the Closing Date
and on or before the first anniversary of the Closing Date, payable on the
Commitment Termination Date;
2% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon an Event of Default or otherwise) after the first anniversary of
the Closing Date and on or before the second anniversary of the Closing Date,
payable on the Commitment Termination Date; or
1% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon an Event of Default or otherwise) after the second anniversary of
the Closing Date and on or before the third anniversary of the Closing Date,
payable on the Commitment Termination Date.
E-1
If Borrower exercises its right of termination and prepayment, or if
Borrower's rights to receive or benefit from, and Lender's obligation to make
Loans, are terminated for any reason prior to the Stated Expiry Date (including
as a result of the occurrence of a Default), Borrower shall pay to Lender the
applicable Prepayment Fee; provided that Borrower shall not be obligated to pay
the applicable Prepayment Fee if Borrower exercises its right of termination and
prepayment within three (3) months after the Lender has unilaterally, or as a
result of increased dilution, at any time when no Default has occurred and is
continuing:
(i) changed the advance percentages under the definition of the
Borrowing Base; and/or
(ii) created or adjusted eligibility standards or reserves
applicable to the Borrowing Base, Eligible Accounts or
Eligible Inventory (but excluding any such new or adjusted
eligibility standards which apply only to a single Account
Debtor, Account and any such new or adjusted reserves
established to protect against identified contingent or
non-contingent liabilities),
in a manner that has the effect of reducing the Borrowing Availability in any
individual case by an amount in excess of $250,000 or in the aggregate for any
of such actions taken over a six (6) month period by an amount in excess of
$500,000, calculated in each case (A) as of the date of determination based on
the most recent Borrowing Base Certificate and (B) by comparing (x) the amount
of the Borrowing Availability based on a calculation of the Borrowing Base as if
the changes or new or adjusted standards or reserves were not utilized in such
calculation with (y) the amount of the Borrowing Availability based on a
calculation of the Borrowing Base as if the changes or new or adjusted standards
or reserves were utilized in such calculation to the extent applicable. Borrower
shall provide Lender with at least 20 Business Days prior written notice before
it exercises its right of termination and prepayment if Borrower intends on
claiming that no Prepayment Fee is due in connection therewith based on the
forgoing provisions, which notice must identify the applicable changes or new or
adjusted standards or reserves imposed by Lender and the calculation of their
impact on the Borrowing Availability in accordance with the foregoing
provisions.
Borrower acknowledges and agrees that (i) it would be difficult or impractical
to calculate Lender's actual damages from early termination of Lender's
obligation to make further Revolving Credit Advances for any reason pursuant to
Section 1.2(c) or Section 7.2, (ii) the Prepayment Fees provided above are
intended to be fair and reasonable approximations of such damages, and (iii) the
Prepayment Fees are not intended to be penalties.
5. AUDIT FEES: Borrower will reimburse Lender at the rate of $600 per person per
day, plus out of pocket expenses, for the audit reviews, field examinations and
collateral examinations conducted by Lender; provided, however, in the event no
Default shall have occurred and be continuing, Borrower shall not be required to
reimburse Lender for more than $3,000 in the aggregate for the initial field
exam conducted prior to the Closing Date or $5,000 in the aggregate annually for
ongoing field examinations.
E-2
SCHEDULE F -
SCHEDULE OF DOCUMENTS
1. Loan and Security Agreement
2. Note
3. Financial Statements
4. Power of Attorney
5. Mellon Bank Lockbox Agreement
F-1
SCHEDULE G -
FINANCIAL COVENANT
1. Minimum Net Worth. Borrower shall maintain, as at the end of each Fiscal
Quarter set forth below, Net Worth of Borrower and its Subsidiaries on a
consolidated basis for such Fiscal Quarter of not less than the amount for such
Fiscal Quarter set forth below:
Fiscal Quarter Ending: Minimum Net Worth:
9/30/98 $3,821,000
12/31/98 3,970,000
3/31/99 3,713,000
6/30/99 3,922,000
9/30/99 4,499,000
12/31/99 5,371,000
3/31/00 5,871,000
6/30/00 6,371,000
9/30/00 6,871,000
12/31/00 9,764,000
3/31/01 9,764,000
6/30/01 9,764,000
For purpose of this covenant in Schedule G the following term shall have the
meaning set forth below:
"Net Worth" shall mean, with respect to any Person, at any date, the total
assets minus the total liabilities, in each case, of such Person at such date
determined in accordance with GAAP.
G-1
DISCLOSURE SCHEDULE (3.2)
CHIEF EXECUTIVE OFFICE & CORPORATE NAMES
Chief Executive Office County/State
0000 Xxxxxx Xxxxxx Xxxxxxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000 Pennsylvania
Locations of Inventory and other Collateral County/State [be sure to include
names of counties]
[other corporate names or trade names if any]
DISCLOSURE SCHEDULE (3.6)
REAL ESTATE
DISCLOSURE SCHEDULE (3.7)
STOCK & AFFILIATES
DISCLOSURE SCHEDULE (3.12)
ERISA
DISCLOSURE SCHEDULE (3.13)
LITIGATION
DISCLOSURE SCHEDULE (3.14)
INTELLECTUAL PROPERTY
DISCLOSURE SCHEDULE (3.16)
ENVIRONMENTAL MATTERS
DISCLOSURE SCHEDULE (3.17)
INSURANCE
DISCLOSURE SCHEDULE (5(c))
INDEBTEDNESS
DISCLOSURE SCHEDULE (5(h))
LIENS
DISCLOSURE SCHEDULE (6.1)
ACTIONS TO PERFECT LIENS
UCC Filings [list state and county filings necessary to perfect liens]
Other Actions to Perfect Liens [if any]
Exhibit A
GE Capital Commercial Finance
Notice Of Revolving Credit Advance
------------------------------------------------------------------------------------------------------------------------------------
BORROWER NAME: Global Pharmaceutical Corporation CERTIFICATE NUMBER:
------------------------------------------------------------------------------------------------------------------------------------
DATE: PREVIOUSLY FAXED: Yes No (circle one)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNTS RECEIVABLE: (Line 5 of previous Notice of Revolving Credit Advance dated ) $ ________.__
2. Additions to Accounts Receivable since last Notice of Revolving Credit Advance
(A) New sales dated from to $ __________.__
Latest Daily Collateral Activity Report dated __________
(B) Other additions $ __________.__
(Explain: )
(C) TOTAL ADDITIONS $ ________.__
Latest Daily Collateral Activity Report dated __________
3. Reductions to Accounts Receivable since last Notice of Revolving Credit Advance
(A) Cash collections dated from to $ __________.__
(B) Discounts issued since last Notice of Revolving Credit Advance $ __________.__
(C) Credit memos issued since last Notice of Revolving Credit Advance $ __________.__
(D) Other reductions/additions since last Notice of Revolving Credit Advance $ __________.__
(E) TOTAL REDUCTIONS $ ________.__
4. Other adjustments to Accounts Receivable $ ________.__
(Explain: )
5. NEW ACCOUNTS RECIEVALBE BALANCE (Total of Lines 1, 2C, 3E and 4) $ ________.__
6. Total ineligible Accounts Receivable (Line 2 of Borrowing Base Certificated dated ) $ ________.__
7. Eligible Accounts Receivable (Line 5 minus Line 6) $ ________.__
8. Eligible Accounts Receivable Availability ( ___ % of Line 7) $ ________.__
9. Eligible Inventory Availability (Line 6 of Borrowing Base Certificate dated ) $ ________.__
10. Reserves Against Availability
(A) Other Reserves $ __________.__
(B) Other Reserves $ __________.__
(C) TOTAL RESERVES $ ________.__
11. Total Borrowing Availability (Line 8 plus Line 9 minus Line 10C) $ ________.__
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
12. BEGINNING REVOLVING CREDIT LOAN BALANCE (Line 16 of previous NRCA dated $ ________.__
)
13. Plus Revolving Credit Advance Requested $ ________.__ 14. Less TOTAL cash
collections against Revolving Credit Loan since last Notice of Revolving Credit
Advance
(A) Date: Amt: $ (B) Date: Amt: $
(C) Date: Amt: $ (D) Date: Amt: $
(E) TOTAL CASH REMITTED $ ________.__
15. OTHER REDUCTIONS AND ADDITIONS (Explain: ) $ ________.__
16. ENDING REVOLVING CREDIT LOAN BALANCE (Lines 12 plus 13 minus 14E plus/minus 15) $ ________.__
17. Letter of Credit Obligations $ ________.__
18. NET BORROWING AVAILABILITY: (Line 11 minus the total of Line 16 plus line 17) $ ________.__
------------------------------------------------------------------------------------------------------------------------------------
The undersigned hereby certifies that all of the statements contained in Section
2.2 of the LOAN AND SECURITY AGREEMENT dated as of July 23,1998 between the
Borrower, General Electric Capital Corporation and the other parties thereto, if
any (as from time to time amended, supplemented, restated or otherwise modified,
the LOAN AGREEMENT) are true and correct on the date hereof, and will be true
and correct on the date of the requested REVOLVING CREDIT ADVANCE, before and
after giving effect thereto and the application of the proceeds therefrom.
By: Title:
--------------------------- Must be CFO [or ]
------------------
A-1
Exhibit B
GE Capital Commercial Finance
Required Reports and Other Information
Daily Weekly Monthly
1. Sales Journal
----------- ---------- ----------
2. Cash Receipts Journal
----------- ---------- ----------
3. Credit Memo Journal
----------- ---------- ----------
4. Accounts Receivable Rollforward
----------- ---------- ----------
5. Copies of Sales Invoices Over $________ with Bills of Lading Attached
----------- ---------- ----------
6. Accounts Receivable Detailed Aging
----------- ---------- ----------
7. Accounts Payable Detailed Aging
----------- ---------- ----------
8. Inventory Perpetual Listing
----------- ---------- ----------
9. Inventory Mix / Item Listing compared to Prior Period
----------- ---------- ----------
10. Inventory Listing by Location compared to Prior Period
----------- ---------- ----------
11. Inventory Aging
----------- ---------- ----------
12. Inventory Composition Analysis by Type (Raw, WIP and Finished Goods)
----------- ---------- ----------
13. Excess / Obsolete Analysis with Supporting Documentation
----------- ---------- ----------
14. Copies of Lockbox Statements
----------- ---------- ----------
15. Accounts Receivable Aging Reconciled to the General Ledger to the
Financial Statements
----------- ---------- ----------
16. Inventory Perpetual Reconciled to the General Ledger to the
Financial Statements
----------- ---------- ----------
17. Accounts Payable Aging Reconciled to the General Ledger to the
Financial Statements
----------- ---------- ----------
18. Other Reports as Set Forth in Section 4.1 of the Loan and
Security Agreement
----------- ---------- ----------
Any Items Due Monthly are due by the 15th day of the following month.
Any Items Due Weekly are due by the 2nd business day of the following
week All Reporting is As Requested by the Lender from Time to Time
B-1
Exhibit C
GE Capital Commercial Finance
Form of Borrowing Base Certificate
------------------------------------------------------------------------------------------------------------------------
BORROWER NAME: Global Pharmaceutical CERTIFICATE NUMBER:
Corporation
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
DATE: PREVIOUSLY FAXED: Yes No (circle
one)
------------------------------------------------------------------------------------------------------------------------
..1. Period end accounts receivable as of: ____________________ $
------------
Ineligible accounts as of: ____________________ $
----------------
. Accounts over ___ days from due date or ___ days from invoice date .$
----------------
Intercompany accounts $
----------------
Government accounts $
----------------
Contra accounts $
----------------
Foreign accounts $
----------------
Credits in prior $
----------------
_____% cross aging exclusion $
----------------
Other _____________________ $
----------------
Other _____________________ $
----------------
Other _____________________ $
----------------
2. Total ineligibles $
------------
3. Eligible accounts (Line 1 minus Line 2) $
------------
4. Eligible accounts advance rate ( _____ % ) %
------------
5. Eligible Accounts Receivable Availability (Line 3 multiplied by Line 4) $
------------
6. Eligible Inventory Availability for Month of : ____________________ $
------------
-------------------------------------------------------------------------------------------
Type Gross Amount Ineligible Advance Rate Available (or cap)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
7. Borrowing Availability (the lesser of the total of Lines 5 plus 6 or the Maximum Amount) $
------------
8. Revolving Credit Loan Balance $
------------
9. Letter of Credit Obligations $
------------
10. Other reserves $
------------
11. Net Borrowing Availability (Line 7 minus the total of Lines 8, 9 and 10) $
------------
The undersigned hereby certifies that (a) all of the foregoing information
regarding the Eligible Accounts is true and correct on the date hereof and all
such Accounts listed as Eligible Accounts are Eligible Accounts within the
meaning given such term in the Loan and Security Agreement dated as of July
23,1998 between Borrower, General Electric Capital Corporation and the other
parties thereto, if any (as from time to time amended, supplemented, restated or
otherwise modified, the "Loan Agreement"), and (b) all of the foregoing
information regarding the Eligible Inventory is true and correct on the date
hereof and all such Inventory listed as Eligible Inventory is Eligible Inventory
within the meaning given such term in the Loan and Security Agreement.
By: Title:
--------------------------- Must be CFO [or ]
------------------
C-1
Exhibit D
GE Capital Commercial Finance
Form of Accounts Payable Analysis
--------------------------------------------------------------------------------------------------------------------------
BORROWER NAME: Global Pharmaceutical CERTIFICATE NUMBER:
Corporation
--------------------------------------------------------------------------------------------------------------------------
DATE: PREVIOUSLY FAXED: Yes No
--------------------------------------------------------------------------------------------------------------------------
1. BEGINNING OF THE MONTH ACCOUNTS PAYABLE BALANCE $
-----------------------------------
2. Purchases $
-----------------------------------
3. Disbursements $
-----------------------------------
4. Other adjustments $
-----------------------------------
5. ENDING ACCOUNTS PAYABLE BALANCE PER ACCOUNTS PAYABLE AGING
$
-----------------------------------
6. Book overdraft $
-----------------------------------
7. Adjusted end of month accounts payable balance $
-----------------------------------
8. Held checks at the end of the month $
-----------------------------------
For the month Ending: _______________
(Note: Attach Accounts Payable Aging)
The undersigned hereby certifies that all of the information shown above
is true and correct on the date hereof.
Signed: __________________________
Title : _________________________
Must be CFO [or _________________]
D-1
Exhibit E
GE Capital Commercial Finance
Daily Accounts Receivable Rollforward
--------------------------------------------------- ---------------------------------------------------------
BORROWER NAME: CERTIFICATE NUMBER:
--------------------------------------------------- ---------------------------------------------------------
DATE: PREVIOUSLY FAXED: Yes No
--------------------------------------------------- ---------------------------------------------------------
Date: A/R Balance
---------- ----------------
--------------------------------------------------------------------------------
CASH DETAIL
------------------------------------------------------------------------------------------------------------------------------
Gross Cash Term/Cash Non- Gross A/R
Date NCR A Sales Debit Credit Deposited Discounts Deductions A/R Cash A/R
Ref. # Memos Memos (+) (+) (+) Cash (-) Reduction Balance
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Month
Total
-------------------------------------------------------------------------------------------------------------
Note: Attach Accounts Receivable Detailed Aging
The undersigned hereby certifies that all of the information shown above is true and correct on the date hereof.
Signed: Title:
---------------------------- -------------------------------
Must be CFO [or ]
---------------------
EXHIBIT F - FORM OF REVOLVING CREDIT NOTE
$5,000,000 July 23, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the receipt and sufficiency of which are hereby
acknowledged, GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation
("Borrower"), hereby promises to pay to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender"), $5,000,000 or such greater or
lesser amount as shall be advanced by Lender from time to time, together with
interest on the unpaid balance of such amount from the date of the initial
Revolving Credit Advance. This Note is the Revolving Credit Note issued under
the Loan and Security Agreement between Borrower and Lender of even date
herewith (said agreement, as the same may be amended, restated or supplemented
from time to time, being herein called the "Agreement") to which a reference is
made for a statement of all of the terms and conditions of the Loan evidenced
hereby. Capitalized terms not defined in this Note shall have the respective
meanings assigned to them in the Agreement. This Note is secured by the
Agreement, the other Loan Documents and the Collateral, and is entitled to the
benefit of the rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Revolving Credit Rate, or, under the circumstances contemplated by the
Agreement, at the Default Rate, in immediately available United States Dollars
at the time and in the manner specified in the Agreement. The outstanding
principal and interest under this Note shall be immediately due and payable on
the Commitment Termination Date. Payments received by Lender shall be applied
against principal and interest as provided for in the Agreement. Borrower
acknowledges that (a) Lender is authorized under the Agreement to charge to the
Revolving Credit Loan unpaid Obligations of Borrower to Lender, (b) the
principal amount of the Revolving Credit Loan will be increased by such amounts,
and (c) the principal, as so increased, will bear interest as provided for
herein and in the Agreement.
To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligations,
the Loan Documents or this Note; (b) all rights to notice and a hearing prior to
Lender's taking possession or control of, or to Lender's reply, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable, all as provided therein.
F-1
Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
BORROWER ACKNOWLEDGES THAT BORROWER HAS WAIVED THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE STATE
OF New York.
GLOBAL PHARMACEUTICAL CORPORATION
By:
-----------------------------------------------
Name: Xxx Xxxxxxxxxx
Title: President and Chief Executive Officer
F-2
EXHIBIT G
[Intentionally Left Blank]
EXHIBIT H - SECRETARIAL CERTIFICATE
The undersigned hereby certifies that he or she is the duly elected and acting
Secretary or Assistant Secretary of Global Pharmaceutical Corporation, a
Delaware corporation ("Credit Party"), and as such is the custodian of Credit
Party's Books and Records and is authorized to execute and deliver this
Certificate in connection with the Loans being made to Global Pharmaceutical
Corporation by General Electric Capital Corporation, as Lender under the Loan
and Security Agreement ("Agreement") of even date herewith. Capitalized terms
not defined in this Certificate shall have the meanings ascribed to them in the
Agreement. In order to induce General Electric Capital Corporation to execute
the Agreement and make the Loans, the undersigned certifies (in his or her
secretarial capacity, and on behalf of Credit Party) as follows:
1. Attached as Attachment 1 hereto is a full, complete, and correct copy of
Credit Party's articles or certificate of incorporation or other creating
instrument ("Charter") as filed and recorded with the Secretary of State of
Delaware, which Charter has not been rescinded or amended and remains in full
force and effect in its entirety.
2. Attached as Attachment 2 is a copy of a written confirmation from the
Secretary of State of Delaware, dated __________ confirming that the Charter of
Credit Party in the form of Attachment 1 remains on file and that Credit Party
is a C corporation in good standing in the State of Delaware.
3. Attached as Attachment 3 is a copy of the By-Laws of Credit Party, and as of
the Closing Date the By-Laws are in full force and effect and have not been
amended or rescinded.
4. Attached as Attachment 4 are copies of good standing certificates dated not
more than 30 days prior to the Closing Date for each state or jurisdiction in
which Credit Party does business confirming that Credit Party is qualified to
engage in business in such jurisdiction and such qualification is in good
standing.
5. Attached as Attachment 5 are copies of the Resolutions of the Board of
Directors of Credit Party duly adopted by Credit Party's Board of Directors in a
meeting duly called upon proper notice, or by written consent in conformity with
the corporate and other laws of such Credit Party's state of incorporation and
with Credit Party's Charter and By-Laws, which Resolutions authorize (a) Credit
Party to execute and deliver the Loan Documents to which it is a party and to
borrow the funds intended to be borrowed thereunder, and (b) the officers of
Credit Party to execute and deliver the Loan Documents to which it is a party.
There is no provision of Credit Party's Charter or By-Laws limiting or
contravening the Resolutions attached as Attachment 5, which Resolutions have
not been amended, modified, revoked or rescinded and are in full force and
effect.
6. No consent, license or approval of any Governmental Authority or any other
Person is necessary in connection with the execution and delivery of the Loan
Documents by Credit Party.
H-1
The undersigned officers and employees of Credit Party have been elected to the
positions set forth opposite their respective names below, are qualified to act
in such capacities and to execute and deliver the Loan Documents on behalf of
Credit Party, and the signature set opposite each name is the authentic
signature of such officer or employee:
NAME TITLE SIGNATURE
Xxx Xxxxxxxxxx President
---------------------
--------------------------------- --------------------------- ---------------------
--------------------------------- --------------------------- ---------------------
--------------------------------- --------------------------- ---------------------
IN WITNESS WHEREOF, the undersigned have executed this Certificate on July ,
1998.
----------------------------------
Secretary of Global Pharmaceutical Corporation
The Undersigned, the President and Chief Executive Officer of Credit Party,
hereby certifies that Xxxxxx X. Xxxxxxxx is the Secretary of Credit Party and is
authorized to execute and deliver this Certificate.
----------------------------------
Name: Xxx Xxxxxxxxxx
Date: July , 1998
H-2
EXHIBIT I - POWER OF ATTORNEY
This Power of Attorney is executed and delivered by Global Pharmaceutical
Corporation ("Credit Party"), to General Electric Capital Corporation
(hereinafter referred to as "Attorney"), as Lender, under a Loan and Security
Agreement dated as even date herewith (the "Agreement"; capitalized terms are
used herein as defined in the Agreement) between Global Pharmaceutical
Corporation and Attorney. No person to whom this Power of Attorney is presented,
as authority for Attorney to take any action or actions contemplated hereby,
shall inquire into or seek confirmation from Credit Party as to the authority of
Attorney to take any action described below, or as to the existence of or
fulfillment of any condition to this Power of Attorney, which is intended to
grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and Credit Party irrevocably waives any right to commence
any suit or action, in law or equity, against any person or entity which acts in
reliance upon or acknowledges the authority granted under this Power of
Attorney. The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Credit Party without Attorney's written
consent upon payment in full of all Obligations due to Attorney under the Loan
Documents.
Credit Party hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Credit Party's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Credit Party and in
the name of Credit Party or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents and, without limiting the
generality of the foregoing, Credit Party hereby grants to Attorney the power
and right, on behalf of Credit Party, without notice to or assent by Credit
Party, and at any time, to do the following: (a) change the address for delivery
of mail, open mail for Credit Party, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse and receive payment of, any
checks, drafts, notes, acceptances, or other instruments for the payment of
moneys due, and sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Credit Party; (b)
effect any repairs to any asset of Credit Party, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Credit Party or its property; (d) defend any
suit, action or proceeding brought against Credit Party if Credit Party does not
defend such suit, action or proceeding or if Attorney believes that Credit Party
is not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Credit Party
whenever payable and to enforce any other right in respect of Credit Party's
property; (f) sell, transfer, pledge, make any agreement with respect to, or
otherwise deal with any property of Credit Party, and execute, in connection
with such sale or action, any endorsements, assignments or other instruments of
conveyance or transfer in connection therewith; and (g) cause the certified
public accountants then engaged by Credit Party to prepare and deliver to
Attorney at any time and from time to time, promptly upon Attorney's request,
the following reports: (1) a reconciliation of all accounts; (2) an aging of all
accounts; (3) trial balances; (4) test verifications of such accounts as
Attorney may request, and (5) the results of each physical verification of
inventory, all as though Attorney were the absolute owner of the property of
Credit Party for all purposes, and to do, at Attorney's option and Credit
Party's expense, at any time or from time to time, all acts and other things
that Attorney reasonably deems necessary to perfect, preserve, or realize upon
Credit Party's property or assets and Attorney's Liens thereon, all as fully and
effectively as Credit Party might do. Credit Party hereby ratifies, to the
extent permitted by law, all that said attorneys shall lawfully do or cause to
be done by virtue hereof.
I-1
IN WITNESS WHEREOF, this Power of Attorney is executed by Credit Party, and
Credit Party has caused its seal to be affixed pursuant to the authority of its
Board of Directors on _________________________.
Global Pharmaceutical Corporation
ATTEST:
-------------------------
(SEAL)
By:
------------------------------
Name: Xxx Xxxxxxxxxx
Title: President
Notarization in appropriate form for the state of execution is required
I-2
EXHIBIT J
FORM OF CERTIFICATE OF COMPLIANCE
[Use Borrower Letterhead with this Form]
[Date]
To: Account Manager
This is to certify that in accordance with Section 4.1 (d) of the Loan and
Security Agreement dated as of July 23, 1998 (the "Agreement"; capitalized terms
are used herein as defined in the Agreement) that the attached Financial
Statements are complete and true and have been prepared in conformance with
GAAP. In addition there are no Defaults or Events of Default continuing as of
such date [if there are acceptable exceptions, list them].
Also attached are the covenant calculations used in determining compliance with
the financial covenant contained in Schedule G to the Agreement.
Very truly yours,
-------------------
Chief Executive Officer, Global Pharmaceutical Corporation
[or Chief Financial Officer, Global Pharmaceutical Corporation]
J-1
Client Name:
FYE:
Covenant:
--------------------------------------------------------------------------------------------------------------------
CASH Mo. FIXED Rolling Rolling Rolling
EBITDA TOTAL INTEREST TAXES PRINCIPAL TOTAL CHARGE 3 mo. FCC 6. mo FCC 12 mo. FCC Required
----------------------------------------------------------------------------------------------------------------------------------
Month 1
----------------------------------------------------------------------------------------------------------------------------------
Month 2
----------------------------------------------------------------------------------------------------------------------------------
Month 3
----------------------------------------------------------------------------------------------------------------------------------
Month 4
----------------------------------------------------------------------------------------------------------------------------------
Month 5
----------------------------------------------------------------------------------------------------------------------------------
Month 6
----------------------------------------------------------------------------------------------------------------------------------
Month 7
----------------------------------------------------------------------------------------------------------------------------------
Month 8
----------------------------------------------------------------------------------------------------------------------------------
Month 9
----------------------------------------------------------------------------------------------------------------------------------
Month 10
----------------------------------------------------------------------------------------------------------------------------------
Month 11
----------------------------------------------------------------------------------------------------------------------------------
Month 12
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
1st Quarter
----------------------------------------------------------------------------------------------------------------------------------
2nd Quarter
----------------------------------------------------------------------------------------------------------------------------------
3rd Quarter
----------------------------------------------------------------------------------------------------------------------------------
4th Quarter
----------------------------------------------------------------------------------------------------------------------------------
ANNUAL TOTALS
----------------------------------------------------------------------------------------------------------------------------------
----------------------- ----------------------------------
Covenant: Minimum Net Worth
Year Ending
Minimum NW
Actual
----------------------- ----------------------------------
In Compliance: VP Portfolio Account Manager
--------------------------- ----------------------------
Exhibit K -
LOCKBOX ACCOUNT AGREEMENT
THIS LOCKBOX ACCOUNT AGREEMENT ("Agreement") is made and
entered into as of [this Lockbox Agreement Date], by and among
-----------------------, a [this Bank's charter state] [this Bank's legal entity
type] ("Bank"), GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation
("Company"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(together with any successors and assigns, "Lender").
A. Pursuant to that certain Loan and Security Agreement dated
as of July 23, 1998 between Company and Lender (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement"), Lender has agreed
to make loans and extend other financial accommodations to Company.
B. Pursuant to an Agreement between Company and Bank (the
"Lockbox Agreement"), Company has established a post office lockbox with Bank
(the "Lockbox") through which cash, checks, money orders and other items of
value of Company are processed by Bank for deposit in Account No. ----------
established by Company with Bank (the "Lockbox Account").
C. The parties hereto desire to enter into this Agreement in
order to set forth their relative rights and duties with respect to the Lockbox,
Lockbox Account and all funds on deposit therein from time to time.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. Effectiveness. This Agreement shall take effect immediately
upon its execution by all parties hereto and shall supersede any blocked account
or similar agreement in effect with respect to the Lockbox or the Lockbox
Account.
2. Security Interest; Agency. As collateral security for
Company's obligations to Lender under the Loan Agreement and the other loan
documents described therein, Company hereby grants to Lender a present and
continuing security interest in (a) the Lockbox and the Lockbox Account, (b) all
contract rights and privileges in respect of the Lockbox or the Lockbox Account,
and (c) all cash, checks, money orders and other items of value of Company now
or hereafter paid, deposited, credited, held (whether for collection,
provisionally or otherwise) or otherwise in the possession or under the control
of, or in transit to, Bank or any agent, bailee or custodian thereof
(collectively, "Receipts"), and all proceeds of the foregoing, and Bank
acknowledges that this Agreement constitutes notice, in accordance with the
Uniform Commercial Code, of Lender's security interest in such collateral.
Lender hereby appoints Bank as Lender's bailee and pledgee-in-possession for the
Lockbox, Lockbox Account and all Receipts, and Bank hereby accepts such
appointment and agrees to be bound by the terms of this Agreement. Company
hereby agrees to such appointment and further agrees that Bank, on behalf of
Lender, shall be entitled to exercise, upon the written instructions of Lender,
any and all rights which Lender may have under the Loan Agreement, the other
loan documents described therein or under applicable law with respect to the
Lockbox, Lockbox Account, all Receipts and all other collateral described in
this paragraph 2.
K-1
3. Control of Lockbox Account. The Lockbox and the Lockbox
Account shall be under the sole dominion and control of Lender and shall be
maintained by Bank in the name of "---------------." Notwithstanding anything
set forth herein to the contrary, neither Company nor any other person or
entity, through or under Company, shall have any control over the use of, or any
right to withdraw any amount from, the Lockbox Account or the Lockbox.
4. Procedures for Lockbox Account. Bank shall follow the
following procedures with respect to the Lockbox Account:
(a) Bank shall have exclusive and unrestricted access
to the Lockbox and shall have complete and exclusive authority to receive,
pickup and open all regular, registered, certified or insured mail addressed to
Company at the Lockbox (the "Mail") pursuant to the terms of the Lockbox
Agreement.
(b) Bank shall open all Mail addressed to the Lockbox
and remove and inspect the enclosures. Bank shall apply and credit for deposit
to the Lockbox Account all Receipts consisting of checks, money orders, drafts,
collection remittances and other instruments or items of value from time to time
tendered by or on behalf of Company for deposit (collectively, "Checks") in the
Lockbox Account in accordance with the Lockbox Agreement or otherwise, and apply
and credit to the Lockbox Account all Receipts from time to time tendered by or
on behalf of Company for deposit therein, including without limitation all wire
transfers and other payments directed to the Lockbox Account. Checks bearing the
legend "Payment in Full" or words of similar import, either typed or
handwritten, shall be withheld from the clearing system and sent to Company or,
at any time after written notice by Lender, to Lender.
c) Bank shall determine, on each business day, the
balance of all available funds on deposit in the Lockbox Account and
automatically initiate a federal funds wire transfer of all such funds not later
than 10:00 a.m. (New York Time) on such business day to the account designated
below, or to such other account as may be designated in writing from time to
time by Lender (the "Collection Account"):
Bankers Trust Company
One Bankers Trust Plaza
New York, New York
ABA No. 000-000-000
Account No. 00-000-000
Account Name: GECC-CAF Depository
5. Statements and Other Information. Bank shall send to Lender
copies of all returned and dishonored Receipts promptly upon Bank's receipt
thereof, and upon Lender's request Bank shall provide Lender with copies of the
regular monthly bank statements provided to Company and such other information
relating to the Lockbox Account as shall reasonably be requested by Lender. Bank
shall also deliver a copy of all notices and statements required to be sent to
Company pursuant to any agreement governing or related to the Lockbox Account
(including the Lockbox Agreement).
K-2
6. Fees. Company agrees to pay on demand all usual and
customary service charges, transfer fees and account maintenance fees
(collectively, "Fees") of Bank in connection with the Lockbox and Lockbox
Account. In the event Company fails to timely make a payment to Bank of any
Fees, Bank may thereafter exercise its right of set-off against the Lockbox
Account for such amounts. Lender shall not have any responsibility or liability
for the payment of any Fees.
7. Uncollected Funds. If any Checks or other Receipts
deposited in the Lockbox Account are returned unpaid or otherwise dishonored
Bank shall have the right to charge any and all such returned or dishonored
items against the Lockbox Account or to demand reimbursement therefor directly
from Company.
8. Set-off. Bank hereby agrees that, prior to the effective
date of a termination of this Agreement, Bank will not exercise or claim any
right of set-off or banker's lien against the Lockbox, Lockbox Account or any
Receipts on deposit therein, and Bank hereby further waives until such date any
such right or lien which it may have against any Receipts deposited in the
Lockbox Account, except to the extent expressly set forth in paragraphs 6 and 7
above.
9. Exculpation of Bank; Indemnification by Company. Company
and Lender agree that Bank shall have no liability to either of them for any
loss or damage that either or both may claim to have suffered or incurred,
either directly or indirectly, by reason of this Agreement or any transaction or
service contemplated by the provisions hereof, unless occasioned by the gross
negligence or willful misconduct of Bank. In no event shall Bank be liable for
losses or delays resulting from computer malfunction, interruption of
communication facilities, labor difficulties or other causes beyond Bank's
reasonable control or for indirect, special or consequential damages. Company
agrees to indemnify Bank and hold it harmless from and against any and all
claims, other than those ultimately determined to be founded on gross negligence
or willful misconduct of Bank, and from and against any damages, penalties,
judgments, liabilities, losses or expenses (including reasonable attorney's fees
and disbursements) incurred as a result of the assertion of any claim, by any
person or entity, arising out of, or otherwise related to, any transaction
conducted or service provided by Bank through the use of any account or Lockbox
at Bank pursuant to the procedures provided for or contemplated by this
Agreement.
10. Termination. This Agreement may be terminated by Company
only upon delivery to Bank of a written notification thereof jointly executed by
Company and Lender. This Agreement may be terminated by Lender at any time, with
or without cause, upon its delivery of written notice thereof to each of Company
and Bank. This Agreement may be terminated by Bank at any time on not less than
30 days prior written notice delivered to each of Company and Lender. Upon
delivery or receipt of such notice of termination to or by Bank, Bank will: (a)
immediately transmit to the Collection Account (i) all funds, if any, then on
deposit in, or otherwise to the credit of, the Lockbox Account, and (ii) upon
receipt, all Receipts (other than Checks) received after such notice for deposit
in, or otherwise to the credit of, the Lockbox Account; and (b) deliver directly
to Lender all Checks, whether then in the possession of Bank or received by Bank
after such notice, without depositing such Checks in the Lockbox Account or any
other account. The provisions of paragraphs 2, 3 and 8 shall survive termination
of this Agreement unless and until specifically released by Lender in writing.
All rights of Bank under paragraphs 6, 7 and 9 shall survive any termination of
this Agreement.
K-3
11. Irrevocable Agreements. Company acknowledges that the
agreements made by it and the authorizations granted by it in paragraphs 2, 3,
and 4 hereof are irrevocable and that the authorizations granted in paragraphs
2, 3 and 4 hereof are powers coupled with an interest.
12. Notices. All notices, requests or other communications
given to Company, Lender or Bank shall be given in writing (including by
facsimile) at the address specified below:
Lender: General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Global Pharmaceutical Corporation -
Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Bank:
----------------------------
[this Bank's street Address]
[this Bank's City, State Zip]
Attention:
----------------------------,
[this Bank's person's Title]
Telephone:
----------------------------
Facsimile:
----------------------------
Company: Global Pharmaceutical Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx, President and Chief
Executive Officer
Telephone:
----------------------------
Facsimile:
----------------------------
Any party may change its address for notices hereunder by notice to each other
party hereunder given in accordance with this paragraph 12. Each notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this paragraph 12
and confirmation of receipt is made by the appropriate party, (b) if given by
overnight courier, 24 hours after such communication is deposited with the
overnight courier for delivery, addressed as aforesaid, or (c) if given by any
other means, when delivered at the address specified in this paragraph 12.
K-4
13. Miscellaneous.
a) This Agreement may be amended only by a written
instrument executed by Lender, Bank, and Company acting by their respective duly
authorized representatives.
b) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, but neither Company nor Bank shall be entitled to assign or delegate
any of its rights or duties hereunder without first obtaining the express prior
written consent of Lender.
(c) This Agreement may be executed in any number of
several counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN SUCH STATE.
IN WITNESS WHEREOF, each of the parties has executed and
delivered this Lockbox Account Agreement as of the day and year first above set
forth.
[THIS BANK'S FULL NAME]
By:
-------------------------------
Name:
Title:
GLOBAL PHARMACEUTICAL CORPORATION
By:
-------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------
Name:
Title:
K-5
EXHIBIT L -
LANDLORD'S WAIVER AND CONSENT
THIS LANDLORD'S WAIVER AND CONSENT ("Waiver and Consent") is made and
entered into as of [this Waiver's Date] by and among [this Landlord's full
Name], a [this Landlord's charter state] [this Landlord's legal entity type]
("Landlord"), GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation
("Company"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(together with any successors and assigns, "Lender").
A. Landlord is the owner of the real property commonly known as [common
name of this premises], and as more fully described in Appendix A attached
hereto (the "Premises").
B. Landlord has entered into that certain [legal name of that contract
form] dated ---------------------- (together with all amendments and
modifications thereto and waivers thereof, the "Lease") with Company pursuant to
which Company has acquired a leasehold interest in all or a portion of the
Premises.
C. Lender has previously entered into or is about to enter into certain
financing transactions with Company, and to secure such financing Company has
granted to Lender a security interest in and lien upon certain of the tangible
and intangible property of Company, including, without limitation, all of
Company's cash, cash equivalents, goods, inventory, machinery, equipment,
furniture and fixtures, together with all additions, substitutions, replacements
and improvements to, and proceeds of, the foregoing (collectively, the
"Collateral").
NOW, THEREFORE, in consideration of any financial accommodation
extended by Lender to Company at any time, and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Landlord acknowledges that (a) a true and correct copy of the Lease
as in effect as of the date hereof is attached hereto as Appendix B, (b) the
Lease is in full force and effect and (c) Landlord is not aware of any existing
default under the Lease.
2. Landlord agrees to provide Lender with (a) a copy of any
cancellation, amendment, consent, or waiver under the Lease, and (b) written
notice of any default by Company or claimed default under the Lease (a "Default
Notice") at the same time as it sends such notice to Company; provided, that (i)
Lender shall have at least 15 days following receipt of such Default Notice to
cure such default before the Lease terminates, and (ii) Lender shall not be
under any obligation to cure any default by Company under the Lease. No action
by Lender pursuant to this Waiver and Consent shall constitute or be deemed to
be an assumption by Lender of any obligation under the Lease, and, except as
provided in paragraphs 6 and 7 below, Lender shall not have any obligation to
Xxxxxxxx.
X-0
0. Xxxxxxxx acknowledges the validity of Lender's lien on the
Collateral and, until such time as the obligations of Company to Lender are
indefeasibly paid in full, Landlord waives any interest in the Collateral and
agrees not to distrain or levy upon any Collateral or to assert any landlord
lien, right of distraint or other claim against the Collateral for any reason.
4. Landlord agrees that the Collateral may be stored, utilized, and/or
installed at the Premises and shall not be deemed a fixture or part of the real
estate but shall at all times be considered personal property, whether or not
any Collateral becomes so related to the real estate that an interest therein
would otherwise arise under applicable law.
5. Prior to a termination of the Lease, Lender or its representatives
or invitees may enter upon the Premises at any time without any interference by
Landlord to inspect or remove any or all of the Collateral, including, without
limitation, by public auction or private sale pursuant to the provisions of
paragraph 7 below.
6. Upon a termination of the Lease, Landlord will permit Lender and its
representatives and invitees to occupy and remain on the Premises; provided,
that (a) such period of occupation (the "Disposition Period") shall not exceed
up to 150 days following receipt by Lender of a Default Notice or, if the Lease
has expired by its own terms (absent a default thereunder), up to 30 days
following Lender's receipt of written notice of such expiration, (b) for the
actual period of occupancy by Lender, Lender will pay to Landlord the basic rent
due under the Lease pro-rated on a per diem basis determined on a 30-day month,
and shall provide and retain liability and property insurance coverage,
electricity and heat to the extent required by the Lease, and (c) such amounts
paid by Lender to Landlord shall exclude any rent adjustments, indemnity
payments or similar amounts payable under the Lease for default, holdover status
or other similar charges.
7. During any Disposition Period, (a) Lender and its representatives
and invitees may inspect, repossess, remove and otherwise deal with the
Collateral, and Lender may advertise and conduct public auctions or private
sales of the Collateral at the Premises, in each case without interference by
Landlord or liability of Lender to Landlord, and (b) Lender shall make the
Premises available for inspection by Landlord and prospective tenants and shall
cooperate in Landlord's reasonable efforts to re-lease the Premises. If Lender
conducts a public auction or private sale of the Collateral at the Premises,
Lender shall use reasonable efforts to notify Landlord first and to hold such
auction or sale in a manner which would not unduly disrupt Landlord's or any
other tenant's use of the Premises. Lender shall promptly repair, at Lender's
expense, any physical damage to the Premises actually caused by the conduct of
such auction or sale and any removal of Collateral by or through Lender
(ordinary wear and tear excluded). Lender shall not be liable for any diminution
in value of the Premises caused by the absence of Collateral actually removed or
by any necessity of replacing the Collateral, and Lender shall have no duty or
obligation to remove or dispose of any Collateral or any other property left on
the Premises by Company.
8. If any order or injunction is issued or stay granted which prohibits
Lender from exercising any of its rights hereunder, then, at Lender's option,
the Disposition Period shall be stayed during the period of such prohibition and
shall continue thereafter for the greater of (a) the number of days remaining in
the Disposition Period or (b) 90 days.
L-2
9. Notices. All notices hereunder shall be in writing, sent by
certified mail, return receipt requested, to the respective parties and the
following addresses:
Lender: General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Global Pharmaceutical Corporation -
Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Bank:
----------------------------
[this Bank's street Address]
[this Bank's City, State Zip]
Attention:
----------------------------,
[this Bank's person's Title]
Telephone:
----------------------------
Facsimile:
----------------------------
Company: Global Pharmaceutical Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx, President and Chief
Executive Officer
Telephone:
----------------------------
Facsimile:
----------------------------
10. Miscellaneous. This Waiver and Consent may be executed in any
number of several counterparts, shall be governed and controlled by, and
interpreted under, the laws of the State of ----------------, and shall inure to
the benefit of Lender and its successors and assigns and shall be binding upon
Landlord and its successors and assigns (including any transferees of the
Premises). Landlord agrees and consents to the filing of this document for
recording in the land records of the county in which the Premises is located.
L-3
IN WITNESS WHEREOF, this Landlord's Waiver and Consent is entered into
as of the date first set forth above.
[THIS LANDLORD'S FULL NAME]
By:
-------------------------------
Name:
Title:
GLOBAL PHARMACEUTICAL CORPORATION
By:
-------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------
Name:
Title:
[ATTACH NOTARIAL ACKNOWLEDGMENTS]
APPENDIX A TO EXHIBIT L
LEGAL DESCRIPTION OF PREMISES
APPENDIX B TO EXHIBIT L
COPY OF LEASE OF PREMISES
See attached.
[COPY OF LEASE NOT ATTACHED TO RECORDED DOCUMENT]
EXHIBIT M
MORTGAGEE'S WAIVER AND CONSENT (Mortgage)
THIS MORTGAGEE'S WAIVER AND CONSENT ("Waiver and Consent") is
made and entered into as of [this Waiver date],by and among [this Mortgagee's
full Name], a [this Mortgagee's charter state] [this Mortgagee's legal entity
type] ("Bank"), GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation
("Company"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(together with any successors and assigns, "Lender").
A. Bank is the mortgagee under that certain [this Mortgage
formal type name] dated [this Mortgage's date] made by Company, and recorded in
the real estate records of [this Mortgage's county of recording] County,[this
Mortgage's state of recording] on [this Mortgage's date of recording] as
instrument no. [this Mortgage's number as recorded] (the "Mortgage").
B. Pursuant to the Mortgage, Company has granted to Bank a
lien upon all or a portion of the real property commonly known as [common name
of mortgaged premises], and as more fully described in Appendix A attached
hereto (the "Premises").
C. Lender has previously entered into or is about to enter
into certain financing transactions with Company, and to secure such financing
Company has granted to Lender a security interest in and lien upon certain of
the tangible and intangible property of Company, including, without limitation,
all of Company's cash, cash equivalents, goods, inventory, machinery, equipment,
furniture and fixtures, together with all additions, substitutions, replacements
and improvements to, and proceeds of, the foregoing (collectively, the
"Collateral").
NOW, THEREFORE, in consideration of any financial
accommodations extended by Lender to Company at any time, and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Bank is not aware of any existing default under the
Mortgage, and agrees to give written notice to Lender in the event Bank acquires
an ownership or possessory interest in the Premises pursuant to the exercise of
its rights under the Mortgage or any other document executed by Company or under
applicable law.
2. Bank acknowledges the validity of Lender's lien on the
Collateral and, until such time as the obligations of Company to Lender are
indefeasibly paid in full, Bank waives any interest in the Collateral and agrees
not to distrain or levy upon any Collateral or to assert any lien, right of
distraint or other claim against the Collateral for any reason.
3. Bank agrees that the Collateral may be stored, utilized,
and/or installed at the Premises and shall not be deemed a fixture or part of
the real estate but shall at all times be considered personal property, whether
or not any Collateral becomes so related to the real estate that an interest
therein would otherwise arise under applicable law.
M-1
4. Bank acknowledges that Lender or its representatives or
invitees may enter upon the Premises at any time without any interference by
Bank to inspect, repossess, remove or otherwise deal with the Collateral, and
Lender may advertise and conduct public auctions or private sales of the
Collateral at the Premises, in each case without interference by Bank or
liability of Lender to Bank. Lender shall promptly repair, at Lender's expense,
any physical damage to the Premises actually caused by the conduct of such
auction or sale and any removal of Collateral by or through Lender (ordinary
wear and tear excluded). Lender shall not be liable for any diminution in value
of the Premises caused by the absence of Collateral actually removed or by any
necessity of replacing the Collateral, and Lender shall have no duty or
obligation to remove or dispose of any Collateral or any other property left on
the Premises by Company.
5. Notices. All notices hereunder shall be in writing,
sent by certified mail, return receipt requested, to the respective parties
and the following addresses:
Lender: General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Global Pharmaceutical Corporation -
Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Bank: [this Mortgagee's full Name]
[this Mortgagee's street Address]
[this Mortgagee's City, State,Zip]
Attention: [this Mortgagee's person Name],
[this Bank's person's Title]
Telephone: [this Mortgagee's voice telephone number]
Facsimile: [this Mortgagee's fax telephone number]
Company: Global Pharmaceutical Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx, President and Chief
Executive Officer
Telephone: 215 289-2220 ext. 306
Facsimile: 000 000-0000
6. Miscellaneous. This Waiver and Consent may be executed in
any number of several counterparts, shall be governed and controlled by, and
interpreted under, the laws of the State of New York and shall inure to the
benefit of Lender and its successors and assigns and shall be binding upon Bank
and its successors and assigns (including any transferees of the Mortgage or
Premises). Bank agrees and consents to the filing of this document for recording
in the land records of the county in which the Premises is located.
M-2
IN WITNESS WHEREOF, this Mortgagee's Waiver and Consent is
entered into as of the date first set forth above.
[THIS MORTGAGEE'S FULL NAME]
By:
-----------------------------------------------
Name: [this Mortgagee's Signatory Name]
Title: [this Mortgagee's Signatory's Title]
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Duly Authorized Signatory
Agreed to and acknowledged by Company:
GLOBAL PHARMACEUTICAL CORPORATION
By:
-----------------------------------------------
Name: Xxx Xxxxxxxxxx
Title: President and Chief Executive Officer
[ATTACH NOTARIAL ACKNOWLEDGMENTS]
M-3
APPENDIX A TO EXHIBIT M
LEGAL DESCRIPTION OF PREMISES
M-4
EXHIBIT O
FORM OF OPINION OF COUNSEL TO THE BORROWER
[Use Borrower's Counsel Letterhead with this Form]
July 23, 1998
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Gentlemen:
We have acted as counsel to Global Pharmaceutical Corporation, a
Delaware corporation (the "Borrower") in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the Loan and Security Agreement dated as of even
date herewith (the "Loan Agreement") between you and Borrower. Terms defined in
the Loan Agreement and not otherwise defined herein are used herein as therein
defined. This opinion is delivered to you pursuant to Section 2.1 of the Loan
Agreement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Loan Agreement, the Note, all
other Loan Documents (collectively, the "Loan Documents") and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Borrower, and have made such inquiries of such officers and representatives
as we have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.
In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Borrower, and upon the representations and
warranties of the Borrower contained in the Loan Agreement.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Borrower (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged and (c) is duly qualified as
a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification.
O-1
2. The Borrower has the corporate power and authority, and the legal right,
to make, deliver and perform the Loan Documents to which it is a party and
to grant the Liens granted by it pursuant thereto and the Borrower has the
corporate power and authority to borrow under the Loan Agreement.
3. The Borrower has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of the Loan Agreement and the Note
and the Borrower has taken all necessary action to authorize the granting
of the Liens pursuant to the Loan Documents and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party.
4. No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings under the Loan Agreement, the
granting of the Liens under the Loan Documents or with the execution,
delivery, performance, validity or enforceability of the Loan Documents.
5. The Loan Agreement and each other Loan Document has been duly executed
and delivered on behalf of the Borrower.
6. The Loan Agreement and each other Loan Document constitutes a legal,
valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
7. The execution, delivery and performance of the Loan Documents to which
the Borrower is or may be a party, the borrowings under the Loan Agreement,
the use of the proceeds thereof and the granting of the Liens pursuant to
the Loan Documents will not violate any Requirement of Law or Contractual
Obligation of the Borrower and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation,
except Liens created pursuant to the Loan Documents.
8. No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the best of our knowledge,
threatened by or against the Borrower or against any of its properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.
O-2
9. The Borrower is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company
Act of 1940, as amended. The Borrower is not subject to regulation under
any Federal or State statute or regulation which limits its ability to
incur Indebtedness.
10. The provisions of the Loan Agreement are effective to create in favor
of the Lender a valid and enforceable security interest in the Collateral
(including any Accounts, Inventory and the proceeds thereof constituting
product (or Accounts arising from the sale of such product) made using the
ANDA formulation). The security interest of the Lender in the Collateral
(including any Accounts, Inventory and the proceeds thereof constituting
product (or Accounts arising from the sale of such product) made using the
ANDA formulation) in which a security interest may be perfected by filing
under Article 9 of the Uniform Commercial Code shall constitute a perfected
security interest in such Collateral (including any Accounts, Inventory and
the proceeds thereof constituting product (or Accounts arising from the
sale of such product) made using the ANDA formulation)(prior to all other
security interests except Permitted Encumbrances which have priority by
operation of law) upon the filing of financing statements in the form
examined by us and acceptance thereof for filing in the locations in
specified in Schedule I hereto.
11. The courts of the State of Pennsylvania will enforce those provisions
of the Loan Documents which provide that the Loan Documents will be
governed by, and construed and interpreted in accordance with, the laws of
the State of New York.
In rendering the opinion set forth in paragraph 11 as it relates to the
priority of Lender's security interest, we have examined and relied upon the
lien searches as of July 15, 1998 and July __, 1998, respectively, ordered by us
in the jurisdictions set forth on Schedule I.
We express no opinion herein as to the laws of any jurisdictions other
than the federal law of the United States, the laws of the States of
Pennsylvania and New York and the General Corporation Law of the State of
Delaware.
Very truly yours,
O-3
SCHEDULE I TO OPINION OF COUNSEL
Filing Jurisdictions
1. Secretary of State, Pennsylvania
2. Philadelphia County, Pennsylvania
O-4
EXHIBIT R - FORM OF U.C.C. SCHEDULE
SCHEDULE A TO UCC FINANCING STATEMENT
Secured Party:
General Electric Capital Corporation
Commercial Finance
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Debtor: Global Pharmaceutical Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
The Financing Statement covers the following types or items of property:
All of Debtor's property and assets, whether real or personal, tangible or
intangible, and whether now or owned or hereafter acquired, or in which it now
has or at any time in the future may acquire any right, title, or interest,
including, all of the following property in which it now has or at any time in
the future may acquire any right, title or interest: all Accounts; all bank and
deposit accounts and all funds on deposit therein; all cash and cash
equivalents; all commodity contracts; all investments; all Inventory and
Equipment; all Goods; all Chattel Paper, Documents and Instruments; all Books
and Records; all General Intangibles (including all Intellectual Property,
Stock, contract rights, and choses in action); and to the extent not otherwise
included, all Proceeds and products of all and any of the foregoing and all
collateral security and guarantees given by any Person with respect to any of
the foregoing, but excluding in all events (i) Hazardous Waste, (ii) all real
property owned by Debtor, (iii) the $729,000 certificate of deposit pledged by
Debtor to PIDC and PIDA and (iv) proprietary ANDA and other product formulations
(except that Secured Party is hereby granted all licenses, Liens and interests
in such product formulations as may be necessary to perfect Secured Party's
security interest in, and permit Secured Party to liquidate, Debtor's Inventory
produced using such formulations and all Accounts arising from the sale of such
Inventory) (all of the foregoing, together with any other collateral pledged to
the Secured Party pursuant to any other Loan Document, collectively, the
"Collateral").
As used in this Financing Statement, the following terms shall have the
following meanings:
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the Code); (ii) all of such Person's rights in,
to and under all purchase orders or receipts for goods or services; (iii) all of
such Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
R-1
"ANDA" shall mean an Abbreviated New Drug Application.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Secured Party's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Copyright License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all copyrights in any original work of authorship fixed in any
tangible medium of expression, now known or later developed, all registrations
and applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications, and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all Proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to xxx for past, present
and future infringements, all rights corresponding thereto throughout the world
and all renewals and extensions thereof.
"Credit Party" shall mean Debtor, and each other Person (other than Secured
Party) that is or may become a party to any Loan Document.
"Documents" shall mean all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.
"Equipment" shall mean all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.
R-2
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in or
under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
"Goods" shall mean all "goods" as such term is defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Waste" shall have the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 USC ss.ss.6901 et seq.).
"Instruments" shall mean all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
"Inventory" shall mean all "inventory," as such term is defined in the Code, now
or hereafter owned or acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property which are held by or
on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in such Person's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"License" shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
R-3
"Loan Documents" shall mean all agreements, notes, financial statements,
guaranties, powers of attorney, bank account agreements, and all other
documents, instruments, certificates, and notices relating to the loan made by
Secured Party to the Debtor (or any affiliate of Debtor) and any time delivered
by any Person (other than Secured Party) in connection with any of the
foregoing.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person's successors and assigns.
"PIDA" shall mean the Pennsylvania Industrial Development Authority.
"PIDC" shall mean the Philadelphia Industrial Development Corporation.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Debtor or any other Credit Party from time to
time with respect to any Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to Debtor or any other Credit Party from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any Collateral by any governmental body, authority,
bureau or agency (or any person acting under color of governmental authority);
(iii) any claim of Debtor or any other Credit Party against third parties (a)
for past, present or future infringement of any Intellectual Property or (b) for
past, present or future infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License; (iv) any
recoveries by Debtor or any other Credit Party against third parties with
respect to any litigation or dispute concerning any Collateral; and (v) any and
all other amounts from time to time paid or payable under or in connection with
any Collateral, upon disposition or otherwise.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934).
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
R-4
"Trademarks" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof, and (ii) all reissues, extensions
or renewals thereof.
A copy of the Loan and Security Agreement between Debtor and Secured Party is on
file with the Secured Party.
R-5
EXHIBIT S
FORM FOR PAYMENT OF PROCEEDS LETTER
July __, 1998
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Re: Loan and Security Agreement, dated as of July 23, 1998 (the "Loan
Agreement"), between Global Pharmaceutical Corporation (the "Borrower")
and General Electric Capital Corporation (the "Lender")
Gentlemen:
All capitalized terms which are used in this letter and not otherwise expressly
defined in this letter shall have the meanings given to them in the
above-referenced Loan Agreement.
Please disburse $________________ in proceeds of the initial Revolving Credit
Loans to the Borrower by delivering official checks or making wire or automated
clearing house transfers to the following recipients of the following sums:
Name of Recipient Amount to be Paid Form and Purpose of Payment
----------------- ----------------- ---------------------------
General Electric Capital Corporation $______________ Closing Fee
Dechert Price & Xxxxxx $______________ Lender's Attorney Fees
The undersigned hereby acknowledges and agrees that the disbursement on or about
this date of the above Loan proceeds in accordance with the foregoing
instruments shall constitute the receipt on or about this date of all such
proceeds by the Borrower.
BORROWER:
GLOBAL PHARMACEUTICAL
CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
-------------------------------
