EXHIBIT 4.13
LOAN AGREEMENT entered into in Montreal as of March 28, 2002.
AMONG: DRAXIS PHARMA INC., a corporation having an office at 00000
Xxxxx-Xxxxxx, Xxxxxxxx, Xxxxxx, X0X 0X0
(the "Borrower")
AND: SGF SANTE INC. a corporation having an office at 600 de la
Gauchetiere Street, Suite 1700, Xxxxxxxx, Xxxxxx, X0X 0X0 ("SGF")
AND: DRAXIS HEALTH INC. a corporation having an office at 0000 Xxxxxxx
Xxxxx, Xxxxxxxxxxx, Xxxxxxx, X0X 0X0
("DHI" and collectively with SGF the "Lenders")
WHEREAS the Borrower has requested the Lenders to make available to the
Borrower term loans in an initial principal amount of $9,139,335;
WHEREAS the Lenders agreed to make such loans facilities available to
the Borrower.
NOW, THEREFORE THE PARTIES AGREE AS FOLLOWS :
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires,
1.1.1 "Business Day" means a day on which the Lenders are open for
business in the Province of Quebec;
1.1.2 "Capital Plan" means the capital plan of the Borrower annexed
as Schedule 1.1.2 and prepared by the Borrower and ratified on
March 28, 2002, as amended from time to time in accordance
with the Shareholders' Agreement;
1.1.3 "EBITDA" means, for any fiscal period, the net income (or, as
the case may be, net loss) of the Borrower and its
consolidated subsidiaries determined in accordance with GAAP
(but excluding extraordinary items) increased by the sum of,
without duplication (i) the total of all items properly
classified as interest expense for such period in accordance
with GAAP, (ii) the aggregate of all taxes (including future
income taxes) based on the net income of the Borrower and its
consolidated subsidiaries
for such period determined in accordance with GAAP; and (iii)
the aggregate of all depreciation, amortisation and other like
reductions to income of the Borrower and its consolidated
subsidiaries not involving or requiring an outlay of cash for
such period determined in accordance with GAAP;
1.1.4 "Event of Default" has the meaning ascribed to such term in
Section 9.1;
1.1.5 "First Term Credit" means the credit facility referred to in
Section 2.1.1 of this Agreement;
1.1.6 "Free Cash Flow" means, for any fiscal period, (i) EBITDA for
such period, less (ii) an amount equal to any increase in
working capital for such period or plus an amount equal to any
decrease in working capital for such period, as the case may
be, less (iii) any capital expenditures made during such
period other than capital expenditures provided for in the
Capital Plan and in respect of which such plan provides for
funding of such capital expenditures from the proceeds of
financing from Investissement Quebec, DHI and SGF or
additional equity contributions, less (iv) an amount equal to
any payments of principal or interest made, or required to be
made, during such period on account of indebtedness of the
Borrower to the National Bank of Canada or Investissement
Quebec, and less (v) an amount equal to any payment made by
the Borrower on account of Large Corporation Tax;
1.1.7 "GAAP" means accounting principles generally accepted by the
Canada Institute of Chartered Accountants, consistently
applied;
1.1.8 "Indebtedness" means, at any time, the aggregate outstanding
amounts in Principal of the Indebtedness, interest, fees and
accessories owed by the Borrower pursuant to this Agreement;
"Principal of the Indebtedness" means the aggregate amounts of
the advances made by the Lenders hereunder, together with
amounts added thereto pursuant to Sections 4.2.1 and 4.2.2;
1.1.9 "Maturity Date" shall mean March 28, 2007, or such later date
as the Lenders may agree;
1.1.10 "Prime Rate" means the annual rate of interest announced from
time to time by the National Bank of Canada as its reference
rate then in effect for determining interest rates on Canadian
dollar commercial loans made in Canada;
1.1.11 "Second Term Credit" means the credit facility referred to in
Section 2.1.2 of this Agreement;
1.1.12 "Security" means any and all security mentioned in Section
3.1.1 of this Agreement; "Security Agreements" means all
agreements and documents evidencing the Security or made in
relation thereto;
1.1.13 "Shareholders' Agreement" means the amended and restated
unanimous shareholders' agreement entered as of the date
hereof among DHI, SGF, the Borrower, Xxxxxx Xxxxxx, Xxxxxxxx
Xxxxxx and Xxxxxx Xxxxxxxxx;
1.1.14 "Subscription Agreement"; means the Subscription Agreement
dated February 18, 2000 among the Borrower, SGF and DHI, as
such agreement may be amended from time to time;
1.1.15 "Term Credits" means the First Term Credit, the Second Term
Credit and the Third Term Credit; and
1.1.16 "Third Term Credit" means the credit facility referred to in
Section 2.1.3 of this Agreement.
1.2 ACCOUNTING TERMS AND EXPRESSIONS
Unless otherwise provided, the accounting terms and expressions shall
have the meaning assigned to them under generally accepted accounting principles
in Canada and calculations shall be made according to the same principles.
1.3 HEADINGS
The headings have been inserted for convenience only, and do not affect
in any way the interpretation of this Agreement.
1.4 APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Quebec and the laws of Canada applicable therein.
2. THE CREDITS
2.1 THE TERM CREDITS
2.1.1 Subject to the provisions of this Agreement, DHI makes
available to the Borrower a term credit (the "First Term
Credit") in the principal amount of $4,597,517;
2.1.2 Subject to the provisions of this Agreement, DHI makes
available to the Borrower a term credit (the "Second Term
Credit") in the principal amount of $1,557,708, which may be
increased in accordance with the provisions of this Agreement;
and
2.1.3 Subject to the provisions of this Agreement, SGF makes
available to the Borrower a term loan (the "Third Term
Credit") in the amount of $2,984,110, which may be increased
in accordance with the provisions of this Agreement.
2.2 ADDITIONAL CREDIT
DHI and SGF hereto agree that, inasmuch as credit conditions are
reasonable, the Borrower will use senior debt from third party
financing (through a renegociation of the Borrower's existing bank debt
or otherwise on terms and conditions satisfactory to DHI and SGF) to
fund the residual portion of the Capital Plan. In the event that such
senior debt financing is not available, DHI and SGF agree to fund the
residual portion of the Capital Plan with additional debt on the same
terms and conditions as provided herein for the Second Term Credit and
the Third Term Credit, up to a maximum amount of $2,372,182 in
proportion to the then shareholdings of DHI and SGF in the Borrower, on
a non-diluted basis. Such additional funding by DHI and SGF shall be
made available to the Borrower as needed to ensure that the Capital
Plan has been fully implemented by no later than December 31, 2003.
2.3 AVAILABILITY OF THE CREDITS
The Term Credits shall not revolve and shall be available until the
Maturity Date.
2.4 PURPOSE OF THE CREDITS
The Borrower shall use the Term Credits to implement the Capital Plan.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRIOR TO THE FIRST DISBURSEMENT
Prior to the disbursement of the Term Credits:
3.1.1 the Borrower shall have provided the Lenders with a hypothec
on the universality of its property, which hypothec shall rank
only behind existing security granted in favour of National
Bank of Canada and Investissement Quebec;
3.1.2 the Borrower shall have entered into a loan agreement with
Investissement Quebec providing for loans in the amount of
$4,800,000 on terms and conditions satisfactory to the
Lenders;
3.1.3 DHI and SGF shall have subscribed for additional common shares
of the Borrower for an amount of not less than $6,286,000 in
the aggregate pursuant to a subscription agreement on terms
and conditions satisfactory to the Lenders;
3.1.4 the Borrower shall have obtained such consents and waivers
from National Bank of Canada and Investissement Quebec as may
be required by the Lenders;
3.1.5 the Borrower shall have obtained such intercreditor agreements
as the Lenders may reasonably require;
3.1.6 the Borrower shall provide the Lenders with a certificate of a
senior officer attesting that no Event of Default has occurred
and is continuing;
3.1.7 the Lenders shall have obtained an opinion of counsel to the
Borrower on terms and conditions satisfactory to Lenders; and
3.1.8 the Borrower shall have at all times respected and complied
within the obligations incumbent on it (i) pursuant to Article
3 of the unanimous shareholders' agreement entered into by and
among the Borrower, SGF, DHI, Xxxxxx Xxxxxx and Xxxxxxxx
Xxxxxx as of February 18, 2000 to which Xxxxxx Xxxxxxxxx
intervened on January 5, 2001 and (ii) pursuant to Article 5
of the Subscription Agreement.
3.2 BENEFIT OF THE FOREGOING SECTIONS
The provisions of Section 3.1 are for the sole benefit of the Lenders
and the Lenders may waive any of their rights thereunder.
4. INTEREST
4.1 INTEREST RATE
The Principal of the Indebtedness owed under the Term Credits shall
bear interest, before and after maturity, at the Prime Rate in effect
from time to time, plus 1.50%.
4.2 INTEREST ACCRUAL AND PAYMENT
Interest on the Term Credits shall accrue and be paid as follows:
4.2.1 from the date of this Agreement until December 31, 2002,
interest shall accrue and be capitalised quarterly such that
it shall form part of the Principal of the Indebtedness;
4.2.2 from January 1, 2003 until December 31, 2003, interest on the
Term Credits shall accrue quarterly and shall be payable prior
to March 31, 2004 from Free Cash Flow, up to a maximum amount
of 50% of Free Cash Flow for the period from January 1, 2003
to December 31, 2003 provided that, to the extent that the
interest so accrued has not been paid on such date, such
unpaid interest shall be capitalised and form part of the
Principal of the Indebtedness; and
4.2.3 for the period from January 1, 2004 until the Maturity Date,
interest shall accrue and be payable quarterly in arrears.
4.3 Any amount payable hereunder, including fees and expenses, which is not
paid when due shall bear interest at the rate set forth in Section 4.1
and such interest on arrears is payable on demand.
4.4 CALCULATION OF RATES
4.4.1 Any rate of interest under this Agreement is calculated daily
on the basis of a 365-day year.
4.4.2 For the purposes of the INTEREST ACT (Canada), in the case of
a leap year, the annual rate to which a rate calculated on the
basis of 365 days is equivalent, is equal to the rate so
calculated multiplied by 366 and divided by 365.
5. REPAYMENTS
5.1 MANDATORY PAYMENTS
5.1.1 The Indebtedness is repayable in full on the Maturity Date;
5.1.2 From and after March 31, 2004, until the Maturity Date, the
Principal of the Indebtedness under the Term Credits is
repayable from that portion of 50% of the Free Cash Flow
calculated for each annual period beginning with the year
ending December 31, 2003 until the Maturity Date which is not
applied to the repayment of interest pursuant to Section
4.2.2. Such payment is due no later than March 31 of the year
following the year in respect of which the Free Cash Flow is
calculated; and
5.1.3 The Indebtedness shall also be repayable immediately upon the
Lenders demanding payment of same further to the occurrence of
an Event of Default.
5.2 OPTIONAL PAYMENTS
Subject to Section 11.1, the Principal of the Indebtedness may be
repaid by the Borrower at any time in whole or in part without penalty
after receipt by the Lenders of a twenty day written notice to that
effect. However, all unpaid and accrued interest must first be paid in
full before any Principal.
5.3 IMPUTATION OF PAYMENTS
All payments of principal, interest, fees and expenses by the Borrower
shall be made and imputed to the Lenders prorata the Principal of the
Indebtedness owed to them under the Term Credits.
6. PLACE OF PAYMENT
Any payment shall be made to the relevant Lender at its address
indicated on the first page of this Agreement, or at any other place
notified by such Lender to the Borrower.
7. REPRESENTATIONS
The Borrower represents that:
7.1 POWERS
It is a duly incorporated and validly existing corporation, in good
standing under the corporate laws governing it, and has taken all
corporate action necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations hereunder.
7.2 DEFAULTS
It is not in default under any contract to which it is party or under
the laws and regulations applicable to its business, except for
default, if any, which could not materially and adversely affect its
financial situation, its ability to carry on its business or its
ability to fulfil its obligations under this Agreement.
7.3 DISPUTES
There is no litigation or legal proceedings pending or threatened
against the Borrower which could materially and adversely affect its
financial situation, its ability to carry on its business or its
ability to fulfil its obligations under this Agreement.
7.4 PROPERTY
The Borrower owns all of its assets by good and valid title, free and
clear of all hypothecs, security interests, liens and other
encumbrances of any kind, except for the hypothecs granted in favour of
National Bank of Canada and in favour of Investissement Quebec, as more
fully described in Schedule 7.4.
8. DEFAULTS
8.1 EVENTS OF DEFAULT
Each of the following events is an event of default ("Event of
Default"):
8.1.1 if the Borrower fails to pay when due the whole or any part of
the Principal of the Indebtedness;
8.1.2 if the Borrower fails to pay any other amount payable to the
Lenders pursuant to this Agreement or otherwise and if such
failure continues for 10 Business Days;
8.1.3 if the Borrower is in default under any other agreement for
the borrowing of money and such default is not cured or waived
by the Lenders;
8.1.4 if the Borrower becomes insolvent or bankrupt or subject to
any insolvency or bankruptcy law or if it ceases to carry on
its business;
8.1.5 if the assets of the Borrower, or any substantial part
thereof, are seized (except if such seizure is contested in
good faith within ten days and for so long as such
contestation lasts), or are subject to an hypothecary recourse
by a creditor, or are placed under sequestration, receivership
or guardianship, or if a liquidator is appointed in respect of
the Borrower;
8.1.6 if the Borrower amalgamates or merges with another corporation
without the prior written consent of the Lenders, or initiates
proceedings for its corporate dissolution or winding-up;
8.1.7 if any of the representations made by the Borrower in this
Agreement or if a document supplied by the Borrower in
connection or in execution to this Agreement proves to be
erroneous or inaccurate in any material adverse respect;
8.1.8 if the Borrower otherwise fails to fulfil any of its
obligations or undertakings under this Agreement or any of the
Security Agreements and if such failure is not remedied within
15 Business Days after a notice of such failure is given to
the Borrower by a Lender; or
8.1.9 if there occurs a default or a breach of a representation and
warranty of the Borrower under the Subscription Agreement or
under the subscription agreement entered into between the
Borrower and the Lenders on the date hereof and that such
default or breach is not waived by SGF.
8.2 REMEDIES
Upon the occurrence of an Event of Default, the Lenders may:
8.2.1 upon giving a notice to the Borrower, terminate the right of
the Borrower to use the Term Credits, demand immediate payment
of the whole or part of the Indebtedness and same shall become
payable immediately; and
8.2.2 exercise all their legal rights and remedies.
8.3 ABSENCE OF SOLIDARITY
It is hereby stipulated for greater clarity that there shall be no
solidarity between the Lenders and that each Lender shall at all times
retain the right to exercise alone its rights and recourses under this
Agreement, DHI being the sole Lender of the First Term Credit and of
the Second Term Credit and SGF being the sole Lender of the Third Term
Credit.
9. MISCELLANEOUS
9.1 BOOKS AND ACCOUNTS
The Lenders may keep books and accounts evidencing the Indebtedness and
the transactions made pursuant to this Agreement. Such books and
accounts shall, in the absence of manifest error, be deemed to
represent accurately the Indebtedness and these transactions.
9.2 UNASSIGNABILITY
The Borrower may not assign its rights or the amounts to be received
under this Agreement.
9.3 EXPENSES
The Borrower shall pay, upon demand, all reasonable expenses incurred
by the Lenders in connection with this Agreement and the Security
Agreements and the exercise of the rights resulting therefrom,
including fees and expenses of counsel to the Lenders.
9.4 NO WAIVER
The failure of a Lender to exercise any of its rights shall not
constitute a waiver to exercise such right in the future.
9.5 NON-BUSINESS DAY
If a payment must be made on a day which is not a Business Day, this
payment may be made on the following Business Day.
9.6 PREVIOUS AGREEMENTS
This Agreement supersedes any previous agreement in connection with the
credits.
9.7 SEVERABILITY
In the event that any provision of this Agreement is held invalid or
unenforceable, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement.
10. NOTICES
10.1 FORWARDING
Unless indicated otherwise, any notice that a party must give to the
other shall be in writing, and shall be either delivered, or forwarded
by registered mail or transmitted by telecopier, at the Following
address or at any other address which may be notified by a party to the
other in accordance with this Article 10:
IN THE CASE OF THE BORROWER:
DRAXIS PHARMA INC.
00000 Xxxxx-Xxxxxx,
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: President
Fax: (000) 000-0000
IN THE CASE OF THE LENDERS:
SGF SANTE INC.
c/o Societe Generale de Financement du Quebec
000, xx xx Xxxxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: The Secretary
Fax: (000) 000-0000
AND
DRAXIS HEALTH INC.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Secretary
Fax: (000) 000-0000
10.2 RECEIPT
Any such notice shall be deemed to have been received by its addressee
at the time of its delivery, if delivered, or the third Business Day
following its mailing, if it is forwarded by registered mail, or, when
transmitted by telecopier, on the Business Day following the actual
receipt thereof. If mail or telecopier services are interrupted by a
strike, slowdown, force majeure, or any other cause, the party giving
the notice shall use service which is not interrupted or it shall
deliver the notice in question, the whole in a manner to ensure the
receipt of the notice by the party to whom it is sent.
11. CONVERSION OF DEBT
11.1 Each Lender shall have the right, upon providing 15 Business Days prior
written and irrevocable notice to the Borrower and the other Lender, to
exercise its right to convert the whole or a portion only of the
Indebtedness due to it under the Term Credits into common shares of the
Borrower. The sending of said notice by a Lender within the 20 day
period referred to in Section 5.2 shall render void any prior notice
given by the Borrower respecting optional payments pursuant to Section
5.2, but only with respect to such Lender.
11.2 Conversions made pursuant to Section 11.1 shall be made on the basis of
a conversion price of $1.80 per common share in respect of the First
Term Credit and $2.00 per common share in respect of the Second and
Third Term Credits.
11.3 The Borrower shall issue share certificates representing the common
shares issued pursuant to this Agreement within the delay referred to
in Section 11.1.
11.4 No fractional shares shall be issued by the Borrower pursuant to the
exercise by the Lender of its right to convert the Indebtedness into
common shares of the Borrower pursuant to this Agreement.
11.5 In the event that the common shares of the Borrower are subdivided,
consolidated, converted or reclassified by the Borrower, or that any
other action of a similar nature affecting such common shares is taken
by the Borrower, then the conversion price provided for in Section 11.2
of this Agreement shall be appropriately increased or decreased.
AND THE PARTIES HAVE SIGNED AT THE PLACE AND AT THE DATE SET FORTH ON
THE FIRST PAGE OF THIS AGREEMENT.
DRAXIS PHARMA INC.
Per: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
Secretary
SGF SANTE INC.
Per: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
Vice-President
Per: /s/ Michel Sainte-Xxxxx
------------------------------
Michel Sainte-Xxxxx
Secretaire adjoint
DRAXIS HEALTH INC.
Per: /s/ Xxx X.X. Xxxxxx
------------------------------
Xxx X.X. Xxxxxx
Senior Vice-President, Finance
and Chief Financial Officer
