1
|
NAME OF REPORTING PERSONS
Akorn, Inc.
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) x (b)
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
OO
|
5
|
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
o
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Louisiana
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH
|
7
|
SOLE VOTING POWER
0
|
8
|
SHARED VOTING POWER
2,058,615
|
|
9
|
SOLE DISPOSITIVE POWER
0
|
|
10
|
SHARED DISPOSITIVE POWER
0
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,058,615*
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.1%**
|
14
|
TYPE OF REPORTING PERSON
CO
|
*
|
Beneficial ownership of the Issuer Common Stock (as defined below) referred to herein is being reported hereunder solely because the reporting persons may be deemed to have beneficial ownership of such shares as a result of the voting agreement described in Item 4 hereof. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by any of the reporting persons that it is the beneficial owner of any of the Issuer Common Stock referred to herein for purposes of Section 13(d) of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.
|
**
|
The calculation of the foregoing percentage is based on 13,594,182 shares of Issuer Common Stock outstanding as of August 23, 2013, as set forth in the merger agreement described in Item 4 hereof.
|
1
|
NAME OF REPORTING PERSONS
Akorn Enterprises, Inc.
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) x (b)
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
OO
|
5
|
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
o
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH
|
7
|
SOLE VOTING POWER
0
|
8
|
SHARED VOTING POWER
2,058,615
|
|
9
|
SOLE DISPOSITIVE POWER
0
|
|
10
|
SHARED DISPOSITIVE POWER
0
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,058,615*
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.1%**
|
14
|
TYPE OF REPORTING PERSON
CO
|
*
|
Beneficial ownership of the Issuer Common Stock (as defined below) referred to herein is being reported hereunder solely because the reporting persons may be deemed to have beneficial ownership of such shares as a result of the voting agreement described in Item 4 hereof. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by any of the reporting persons that it is the beneficial owner of any of the Issuer Common Stock referred to herein for purposes of Section 13(d) of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.
|
**
|
The calculation of the foregoing percentage is based on 13,594,182 shares of Issuer Common Stock outstanding as of August 23, 2013, as set forth in the merger agreement described in Item 4 hereof.
|
Exhibit
Number
|
Description of Exhibits
|
1
|
Agreement and Plan of Merger, dated as of August 26, 2013, by and among Akorn, Inc., Akorn Enterprises, Inc., and Hi-Tech Pharmacal Co., Inc., incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Akorn on August 28, 2013 (File No. 001-32360)).
|
2
|
Voting Agreement, dated as of August 26, 2013, by and among Akorn, Inc. and the Stockholders party thereto (incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by Akorn on August 28, 2013 (File No. 001-32360)).
|
3
|
Form of Joinder to Voting Agreement.
|
4
|
Debt Commitment Letter, dated as of August 26, 2013, from JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC to Akorn, Inc.
|
5
|
Joint Filing Agreement, dated September 5, 2013, by and among the Reporting Persons.
|
AKORN, INC.
|
|||
Date: September 5, 2013
|
By:
|
/s/ Joseph Bonaccorsi
|
|
Name:
|
Joseph Bonaccorsi
|
||
Title:
|
Senior Vice President, General Counsel and Secretary
|
||
AKORN ENTERPRISES, INC.
|
|||
By:
|
/s/ Joseph Bonaccorsi
|
||
Name:
|
Joseph Bonaccorsi
|
||
Title:
|
Secretary
|
Name
|
Principal Occupation
|
Directors
|
|
John N. Kapoor
|
Dr. Kapoor has served as the Chairman of Akorn’s Board since October 1990. Dr. Kapoor served as Akorn’s interim Chief Executive Officer from March 2001 to May 2002 and as Akorn’s Chief Executive Officer from May 2002 to December 2002. Dr. Kapoor is the President of EJ Financial Enterprises, Inc. Dr. Kapoor is the chairman of the board of directors of Insys Therapeutics, into which NeoPharm, Inc. merged in October 2010. Prior to NeoPharm’s merger, Dr. Kapoor was the chairman of its board of directors.
|
Kenneth S. Abramowitz
|
Mr. Abramowitz was elected to the Akorn Board in May 2010. Mr. Abramowitz is a co-founder and Managing General Partner of NGN Capital. He joined NGN Capital from The Carlyle Group in New York where he was Managing Director from 2001 to 2003. Mr. Abramowitz currently sits on the Board of Directors of EKOS Corporation, OptiScan Biomedical Corporation, Cerapedics, Inc., Valtech Cardio and Small Bone Innovations, Inc.
|
Adrienne L. Graves
|
Dr. Graves was appointed a director by the Akorn Board in March 2012. From 2002 to 2010, Dr. Graves was President and Chief Executive Officer of Santen Inc., the U.S. subsidiary of Santen Pharmaceutical Co., Ltd. She currently serves on the Boards of TearLab Corporation, Encore Vision, the American Academy of Ophthalmology Foundation, the Pan-American Ophthalmology Foundation, the American Association for Cataract and Refractive Surgery, the Glaucoma Research Foundation, KeepYourSight Foundation, the Corporation Committee for the Brown University Medical School, Aerpio Therapeutics, Himalayan Cataract Project and the Advisory Board for Amach Capital Partners.
|
Ronald M. Johnson
|
Mr. Johnson was appointed a director by the Akorn Board in May 2003. Mr. Johnson is the president of Becker & Associates Consulting. Previously, Mr. Johnson was Executive Vice President of The Lewin Group, a subsidiary of Quintiles Transnational, Inc. Prior to joining The Lewin Group, Mr. Johnson served as Executive Vice President of Quintiles Consulting, a business unit of Quintiles Transnational, Inc. from 1997 to 2006.
|
Steven J. Meyer
|
Mr. Meyer was appointed a director by the Akorn Board in June 2009. Since 2005, Mr. Meyer has served as the Chief Financial Officer of JVM Realty. Mr. Meyer sits on the Board of Directors for INSYS Therapeutics.
|
Brian Tambi
|
Mr. Tambi was appointed a director by the Akorn Board in June 2009. Since August 2006, Mr. Tambi has served as the Chairman of the Board, President & CEO of BrianT Laboratories and has been a member of the Board of Directors of Insys Therapeutics since July 2007.
|
Alan Weinstein
|
Mr. Weinstein was appointed a director by the Akorn Board in July 2009. Since 2000, Mr. Weinstein has provided consulting services to supplier clients in the areas of hospital organization, hospital operations, and working with group purchasing organizations. Mr. Weinstein serves as a director on the boards of Vascular Pathways, Inc., Precyse Solutions, SutureExpress and OpenMarkets.
|
Executive Officers
|
|
Raj Rai
|
Mr. Rai was appointed Akorn’s Interim Chief Executive Officer in June 2009, and appointed Akorn’s Chief Executive Officer in May 2010. He had been appointed Strategic Consultant to the Special Committee of the Board in February 2009, following the departure of Akorn’s former President and Chief Executive Officer. Prior to joining Akorn, Mr. Rai was the President and CEO of Option Care, Inc.
|
Timothy A. Dick
|
Mr. Dick was appointed Akorn’s Chief Financial Officer in June 2009. Most recently, he was Vice President, Operations Improvement & Analysis of Option Care, Inc., a division of Walgreen Co.
|
Joseph Bonaccorsi
|
Mr. Bonaccorsi joined Akorn in 2009 as Senior Vice President, Secretary and General Counsel. Mr. Bonaccorsi came to Akorn from Walgreen Co., where he served as Senior Vice President Mergers & Acquisition and Counsel for the Walgreens-Option Care Home Care division.
|
Bruce Kutinsky
|
Dr. Kutinsky joined Akorn in 2009 as Senior Vice President of Corporate Strategy and was named President, Consumer Health Division in May 2011. In September 2012, Dr. Kutinsky was appointed to serve as Akorn’s Chief Operating Officer. Before joining Akorn, Dr. Kutinsky was Vice President – Strategic Solutions for Walgreens.
|
John R. Sabat
|
Mr. Sabat assumed the position of Akorn’s Senior Vice President, National Accounts and Trade Relations in June 2009, after serving as Senior Vice President Sales, Marketing and National Accounts since February 2009. He had served as Akorn’s Senior Vice President, National Accounts since October 2004.
|
Mark M. Silverberg
|
Mr. Silverberg currently serves as Akorn’s Executive Vice President, Global Quality Assurance and Alliance Management, after serving as Senior Vice President, Global Quality Assurance since May 2006.
|
Name
|
Principal Occupation
|
Raj Rai
|
Director of Merger Sub. President of Merger Sub. Mr. Rai was appointed Akorn’s Interim Chief Executive Officer in June 2009, and appointed Akorn’s Chief Executive Officer in May 2010. He had been appointed Strategic Consultant to the Special Committee of the Board in February 2009, following the departure of Akorn’s former President and Chief Executive Officer. Prior to joining Akorn, Mr. Rai was the President and CEO of Option Care, Inc.
|
Timothy A. Dick
|
Director of Merger Sub. Vice President and Treasurer of Merger Sub. Mr. Dick was appointed Akorn’s Chief Financial Officer in June 2009. Most recently, he was Vice President, Operations Improvement & Analysis of Option Care, Inc., a division of Walgreen Co.
|
Joseph Bonaccorsi
|
Director of Merger Sub. Secretary of Merger Sub. Mr. Bonaccorsi joined Akorn in 2009 as Senior Vice President, Secretary and General Counsel. Mr. Bonaccorsi came to Akorn from Walgreen Co., where he served as Senior Vice President Mergers & Acquisition and Counsel for the Walgreens-Option Care Home Care division.
|
Name
|
Shares
|
Options to Purchase Shares
|
David S. Seltzer
|
1,371,185
|
550,000
|
Reuben Seltzer
|
521,510
|
326,250
|
Yashar Hirshaut, M.D.
|
45,500
|
110,875
|
Debrah Seltzer
|
120,420
|
0
|
William Peters
|
0
|
158,750
|
Martin M. Goldwyn
|
0
|
95,194
|
Anthony J. Puglisi
|
0
|
87,250
|
Bruce W. Simpson
|
0
|
50,468
|
Jack van Hulst
|
0
|
46,281
|
1.
|
Agreement to be Bound. The Joining Stockholder hereby agrees that upon execution of this Joinder, it shall become a party to the Agreement and shall be fully bound by, subject to, and entitled to the benefits of all of the covenants, terms and conditions of the Agreement as though an original party thereto and as though such Person were a “Stockholder” for all purposes thereunder and as if the Joined Shares were “Covered Shares” for all purposes thereunder.
|
2.
|
Address of Stockholder. For purposes of Section 5.3(c) of the Agreement, the address of the Joining Stockholder is as follows:
|
Name:
|
|
Joining Stockholder's Mailing Address:
|
|
Attention:
|
3.
|
Governing Law. This Joinder and all disputes or controversies arising out of or relating to this Joinder or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.
|
4.
|
Descriptive Headings. The descriptive headings of this Joinder are inserted for convenience only and do not constitute a part of this Joinder.
|
AKORN, INC.
|
|||
By:
|
|||
Name:
|
|||
Title:
|
|||
[INSERT STOCKHOLDER SIGNATURE BLOCK]
|
|||
Very truly yours,
|
|||
JPMORGAN CHASE BANK, N.A.
|
|||
By:
|
/s/ Dana J. Moran
|
||
Name:
|
Dana J. Moran
|
||
Title:
|
Vice President
|
||
J.P. MORGAN SECURITIES LLC
|
|||
By:
|
/s/ Geoffrey E. Ellis
|
||
Name:
|
Geoffrey E. Ellis
|
||
Title:
|
Executive Director
|
By:
|
/s/ Joseph Bonaccorsi
|
Name:
|
Joseph Bonaccorsi
|
Title:
|
Senior Vice President, General
|
Counsel and Secretary
|
Borrower:
|
Akorn, Inc., a Louisiana corporation (the “Borrower”).
|
|
Guarantors:
|
Each direct and indirect wholly-owned subsidiary of the Borrower organized in the U.S. (the “Guarantors” and, together with the Borrower, the “Loan Parties”) other than the following: (a) any subsidiary to the extent the provision of a guarantee by such subsidiary would result in adverse tax consequences as reasonably determined by the Borrower in consultation with the Term Loan Administrative Agent, (b) captive insurance companies, (c) not-for-profit subsidiaries, (d) special purpose entities (if any) to be agreed, (e) immaterial subsidiaries, (f) to the extent a guarantee by any subsidiary is prohibited or restricted by contracts or applicable law (including any requirement to obtain governmental or regulatory authority or third party consent, approval, license or authorization) on the Closing Date or on the date of acquisition of such subsidiary (so long as such prohibition or restriction is not created or entered into in contemplation of or in connection with such person becoming a subsidiary), (g) other subsidiaries to be mutually agreed, (h) unrestricted subsidiaries (as described below), (i) any domestic subsidiary that has no material liabilities and owns no material assets other than equity interests and/or debt and/or guarantees of debt of one or more foreign subsidiaries that is a “controlled foreign corporation” (in each case, a “CFC”) as defined in Section 957 of the Internal Revenue Code of 1986 (each a “FSHCO”) and (j) to the extent the Borrower and the Term Loan Administrative Agent determine cost and/or burden outweigh benefits; provided that in any event each guarantor under the ABL Facility shall be a Guarantor in respect of the Term Facility.
|
|
Term Loan Administrative Agent:
|
JPMorgan Chase Bank, N.A. (in such capacity and collectively with its permitted successors and assigns, the “Term Loan Administrative Agent”).
|
|
Term Loan Lead Arranger and Bookrunner:
|
J.P. Morgan Securities LLC and any other “Senior Lead Arranger” appointed pursuant to the Commitment Letter (in such capacity, the “Term Loan Lead Arrangers”).
|
|
Term Loan Lenders:
|
A syndicate of banks, financial institutions and other entities, including the Initial Lender, arranged by the Commitment Parties (excluding any Disqualified Institutions (as defined below)) reasonably satisfactory to the Borrower (such consent not to be unreasonably withheld or delayed) (collectively, the “Term Lenders”); provided that, nothing herein shall affect the consent rights of the Borrower set forth below under the heading “Assignments and Participations.”
|
Term Facility:
|
||
Type and Amount:
|
A senior secured term loan facility (the “Term Facility”) in the amount of $600 million (the loans thereunder, the “Term Loans”) (subject to increase at the Borrower’s election, to the extent required under “Market Flex” in the Lead Arranger Fee Letter to account for any original issue discount and/or upfront fees with respect to the Term Facility). The Term Loans shall be made in U.S. Dollars.
|
|
Maturity and Amortization:
|
Term Loans will mature on the date that is seven (7) years after the Closing Date (the “Term Loan Maturity Date”).
|
|
Annual amortization (payable in equal quarterly installments commencing on the last day of the second full fiscal quarter following the Closing Date) of Term Loans shall be required for each year following the Closing Date in an aggregate annual amount equal to 1% of the original principal amount of the Term Facility (subject to customary reductions). The remaining aggregate principal amount of Term Loans will be payable in full on the Term Loan Maturity Date.
|
||
Availability:
|
The Term Loans shall be made in a single drawing on the Closing Date. Repayments and prepayments of the Term Loans may not be reborrowed.
|
|
Use of Proceeds:
|
The proceeds of the Term Loans will be used to finance a portion of the Transactions (including payment of Transaction-related costs and expenses, upfront fees and original issue discount and repayment of certain indebtedness) and for general corporate purposes of the Borrower and its subsidiaries.
|
|
Incremental Facilities:
|
The Borrower will have the right from time to time, on one or more occasions, to (a) add one or more incremental term loan facilities to the Term Facility and/or increase the Term Facility, (b) issue one or more senior secured or junior lien secured or unsecured notes and/or (c) incur additional secured (pari passu or junior ranking) or unsecured loans (each of clauses (a), (b) and (c) being referred to as an “Incremental Term Facility”; the loans under clauses (a) and (c) being referred to as “Incremental Term Loans”; the notes under clause (b) being referred to as “Incremental Notes”), in an aggregate total principal amount not to exceed (A) $200 million plus (B) an unlimited additional amount such that, in the case of this clause (B) only, after giving pro forma effect thereto (which shall assume that all such indebtedness was secured on a pari passu basis with the Term Facility, whether or not so secured), the Senior Secured Net Leverage Ratio is no greater than 3.50:1.00 (it being understood that, to the extent the proceeds of any such Incremental Term Facility are to be used to repay indebtedness, such repayment shall be given pro forma effect) (the “Senior Secured Incremental Leverage Test”) plus (C) an amount equal to all voluntary prepayments of the Term Facility or any Incremental Term Facility prior to such incurrence; provided that:
|
(i) no event of default shall have occurred and be continuing or would result therefrom, except in the case of an Incremental Term Facility incurred to finance a permitted acquisition or other permitted investment, such requirement shall be subject to customary “certain funds provisions” if otherwise agreed by the lenders providing such Incremental Term Facility (but in any event shall be subject to no payment or bankruptcy event of default having occurred or be continuing);
(ii) except as described in clause (viii) below, the Incremental Term Facilities will rank pari passu or junior in right of payment and either pari passu or junior with respect to security with the other Senior Facilities (subject to intercreditor arrangements reasonably satisfactory to the Term Loan Administrative Agent and the Borrower) or be unsecured;
(iii) to the extent guaranteed, the Incremental Term Facilities shall only be guaranteed by the Guarantors and to the extent secured, shall only be secured by assets constituting Collateral;
|
||
(iv) any Incremental Term Facility will have a final maturity no earlier than the final maturity for the initial Term Facility;
|
||
(v) the weighted average life to maturity of each Incremental Term Facility shall be no shorter than that of the remaining initial Term Facility;
|
||
(vi) to the extent the Incremental Term Facility under the Term Facility Documentation (as defined below) is incurred prior to the date that is eighteen (18) months after the Closing Date, the all-in-yield applicable to any Incremental Term Facility will be determined by the Borrower and the lenders providing such Incremental Term Facility and the all-in-yield (which shall be determined by (x) including interest rate margins, original issue discount (based on a four-year average life to maturity or, if less, the remaining life to maturity) and upfront fees payable by the Borrower generally to all the lenders of such indebtedness; (y) if the Incremental Term Facility includes an interest rate floor greater than the applicable interest rate floor under the initial Term Facility, such differential between interest rate floors shall be equated to the applicable all-in-yield for purposes of determining whether an increase to the interest rate margin under the initial Term Facility shall be required, but only to the extent an increase in the interest rate floor in the initial Term Facility would cause an increase in the interest rate then in effect thereunder, and in such case, the interest rate floor (but not the interest rate margin) applicable to the initial Term Facility shall be increased to the extent of such differential between interest rate floors; and (z) excluding arrangement, commitment, structuring and underwriting fees and any amendment fees and other fees not shared generally with other Term Lenders) applicable to any Incremental Term Facility will not be more than 0.50% higher than the corresponding all-in-yield (determined on the same basis) applicable to the initial Term Facility, as the case may be, unless the interest rate margin (or interest rate floor, as provided above) with respect to the initial Term Facility, as the case may be, is increased by an amount equal to the difference between the all-in-yield with respect to the Incremental Term Facility and the corresponding all-in-yield on the initial Term Facility, minus, 0.50%;
|
(vii) any Incremental Term Facility may rank junior in right of security with any other Term Facilities or be unsecured, in which case, the Incremental Term Facility pursuant to which such Incremental Term Loans and/or such Incremental Notes are extended will be established as a separate facility from the then existing Term Facilities (in each case, to the extent secured, subject to customary intercreditor terms to be mutually agreed between the Borrower and the Term Loan Administrative Agent) and, in each case, the provisions of the preceding clause (vi) shall not apply; and
(viii) except as otherwise required in clauses (i)through (vii), all other terms of such Incremental Term Facility, if not consistent with the terms of the existing Term Facility, will be as agreed between the Borrower, the Term Loan Administrative Agent (provided that the consent of the Term Loan Administrative Agent shall not be unreasonably withheld or delayed and shall only be required in the case of pari passu secured Incremental Term Loans) and the lenders providing such Incremental Term Facility; provided any mandatory prepayments corresponding to the same mandatory prepayments under the existing Term Facility shall not be in excess of their pro-rata share (and such prepayment under the then existing Term Facility and other pari passu debt shall be reduced proportionately).
|
||
No existing Term Lender will be required to participate in any such Incremental Term Facility without its consent. The lenders providing any Incremental Term Facility shall be reasonably satisfactory to the Term Loan Administrative Agent to the extent required under “Assignments and Participations” below. If the existing Term Lenders are unwilling to increase their applicable commitments by an amount equal to the requested increase, the Term Loan Administrative Agent, at the request of and in consultation with the Borrower, will use its commercially reasonable efforts to obtain one or more financial institutions which are not then lenders (which financial institution may be suggested by the Borrower) to become party to the Term Facility Documentation and to provide a commitment to the extent necessary to satisfy the Borrower’s requested increase in the Incremental Term Facility, as the case may be; provided, however, (a) compensation for any such assistance by the Term Loan Administrative Agent shall be mutually agreed by the Term Loan Administrative Agent and the Borrower and (b) the Term Loan Administrative Agent shall have no obligation to provide any such commitment.
|
The use of proceeds of the Incremental Term Facilities will be as agreed by the Borrower and the lenders providing such Incremental Term Facility.
“Senior Secured Net Leverage Ratio” means as of any date of determination, the ratio of (a)(i) Total Funded Secured Indebtedness but excluding any such indebtedness to the extent secured on a junior basis to the Senior Facilities, as of such date, less (ii) all unrestricted cash and cash equivalents (which, solely for the purpose of calculating the Senior Secured Incremental Leverage Test as a condition to incurring indebtedness, shall be exclusive of any net cash proceeds of any indebtedness incurred in reliance on the Senior Secured Incremental Leverage Test) to (b) Consolidated EBITDA for the most recently ended four-fiscal quarter period for which financial statements are available.
“Total Funded Secured Indebtedness” means the Total Funded Indebtedness that is secured by a lien on any property of the Borrower and its restricted subsidiaries.
“Total Funded Indebtedness” means the outstanding principal amount of third party indebtedness for borrowed money, purchase money indebtedness, capital lease obligations and, to the extent due and payable and reflected as a liability on the consolidated balance sheet of the Borrower, third party indebtedness obligations evidenced by notes or similar instruments, in each case, of the Borrower and its restricted subsidiaries, but excluding any amounts under letters of credit (other than reimbursement obligations not reimbursed within 5 business days).
“Consolidated EBITDA” shall be defined in a manner to be mutually agreed upon.
|
||
Fees and Interest Rates:
|
As set forth in Annex I to Exhibit B attached hereto.
|
|
Closing Fees:
|
As set forth in the Fee Letters.
|
|
Optional Prepayments:
|
Term Loans may be prepaid, in whole or in part without premium or penalty (except for the Prepayment Premium referred to in Annex I to Exhibit B attached hereto), in minimum amounts to be mutually agreed, at the option of the Borrower at any time upon one business day’s (or, in the case of a prepayment of Eurodollar Loans (as defined in Annex I to Exhibit B attached hereto), three business days’) prior notice, subject to reimbursement of the Term Lenders’ actual “breakage” costs (other than lost profits) in the case of a prepayment of Eurodollar Loans prior to the last day of the relevant interest period. Optional prepayments of the Term Loans shall be applied as directed by the Borrower.
|
Mandatory Prepayments:
|
Mandatory repayments of Term Loans shall be required from:
|
|
(a) 100% of the net cash proceeds of any non-ordinary course sale or other disposition of assets (including as a result of casualty or condemnation and sale leasebacks and excluding sales of inventory, obsolete or worn-out property, ABL Priority Collateral (as defined below) and other customary exceptions to be mutually agreed) by the Borrower or any of its restricted subsidiaries in excess of an amount to be mutually agreed and subject to the right of the Borrower or any of its restricted subsidiaries to reinvest in assets useful in the business of the Borrower or any of its restricted subsidiaries if such proceeds are reinvested (or committed to be reinvested) within twelve (12) months (and if so committed to reinvestment, reinvested within 180 days after such 12-month period); and
|
||
(b) 100% of the net cash proceeds from issuances or incurrence of indebtedness by the Borrower or any of its restricted subsidiaries (other than indebtedness permitted by the Term Facility Documentation (other than proceeds of any Refinancing Facility)).
|
||
Mandatory prepayments shall be applied (i) amongst the Term Facility and any Incremental Term Facility on a pro rata basis (except pursuant to clause (b) above with respect to any Refinancing Facility) and (ii) to the next eight amortization payments scheduled to occur under the Term Facility and any Incremental Term Facility and thereafter on a pro rata basis to all remaining amortization payments.
Prepayments from non-U.S. restricted subsidiaries’ asset sale or other disposition proceeds will be limited under the Term Facility Documentation to the extent such prepayments would result in adverse tax consequences (as reasonably determined by the Borrower in consultation with the Term Loan Administrative Agent) or would be prohibited or restricted by applicable law.
Any Term Lender may elect not to accept its pro rata portion of any mandatory prepayment (each a “Declining Lender”). Any prepayment amount declined by a Declining Lender, may be retained by the Borrower (and such amounts shall increase the Available Additional Basket (defined below).
There will be no prepayment premiums or penalties for mandatory prepayments (except for reimbursement of actual “breakage” costs (other than lost profits)), incurred in the case of a prepayment of Eurodollar Loans other than on the last day of the relevant interest period.
|
Collateral:
|
Subject to the Certain Funds Provision and the provisions of the immediately following paragraph and consistent with the Documentation Principles, the obligations of the Borrower and the Guarantors in respect of the Term Facility shall be secured by (a) a second priority lien on certain cash, inventory and accounts receivables, deposit accounts, securities and commodity accounts, documents, supporting obligations, books and records and all proceeds (including insurance proceeds) related to the foregoing (“ABL Priority Collateral”) and (b) a first priority lien on substantially all other assets of the Borrower and the Guarantors (the items described in clauses (a) and (b) above, but excluding the Excluded Assets (as defined below), collectively, the “Collateral”) (provided that, subject to the Certain Funds Provision, in any event the Collateral on the Closing Date shall not, except as expressly set forth herein, be less than the collateral provided by the Borrower and the other Loan Parties pursuant to the ABL Facility; provided further that, subject to the Intercreditor Agreement described below, the ABL Facility Administrative Agent shall have a license allowing the use of such intellectual property as may be necessary or desirable for the liquidation or disposition of, or realization upon, the ABL Priority Collateral in addition to the benefit of other customary intercreditor provisions relating to access and use of non-ABL Priority Collateral, in each case subject to permitted liens and certain exceptions in the ABL Facility Documentation), in each case subject to permitted liens and certain exceptions in the Term Facility Documentation. The Collateral will also secure banking services obligations (including ACH transactions, credit card transactions and cash management services) owing to any Term Lender or its affiliates and swap obligations owing to any Term Lender or its affiliates.
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Notwithstanding anything to the contrary, the Collateral shall exclude the following: (a) all owned real property with a value less than an amount to be mutually agreed or that is located in a jurisdiction other than the U.S., (b) all leasehold interests (no requirement to obtain landlord waivers, except as may be required under the ABL Facility, in which case, shall only be required to be delivered thereunder and there shall be no corresponding obligation under the Term Facility), (c) governmental licenses or state or local franchises, charters and authorizations to the extent security interest is prohibited or restricted by applicable law, (d) pledges and security interests prohibited or restricted by applicable law (with no requirement to obtain the consent of any governmental authority or third party, including, without limitation, no requirement to comply with the Federal Assignment of Claims Act or any similar statute), (e) any lease, license, permit or agreement or any property subject to such lease, license, permit or agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license, permit or agreement or create a right of termination in favor of any other party thereto or otherwise require consent thereunder (after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law), other than proceeds thereof, the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding such prohibition, (f) any assets to the extent a security interest in such assets could result in adverse tax consequences or adverse regulatory consequences, in each case, as reasonably determined by the Borrower in consultation with the Term Loan Administrative Agent, (g) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, (h) interests in joint ventures and non-wholly owned subsidiaries which cannot be pledged without the consent of third parties, (i) any property subject to a purchase money arrangement permitted to be incurred pursuant to the Term Facility Documentation, (m) assets where the cost of obtaining a security interest therein exceeds the practical benefit to the Term Lenders afforded thereby, in each case, as reasonably determined by the Borrower and the Term Loan Administrative Agent, (n) margin stock, (o) equity interests and assets of unrestricted subsidiaries, (p) voting equity interests of any CFC or FSHCO in excess of 65% of any such class of equity interests and (q) except as may be required under the ABL Facility with respect to assets included in the borrowing base thereunder, any assets located outside the US or assets that require action under the laws of any jurisdiction other than the US to create or perfect a security interest in such assets, including any intellectual property registered in any jurisdiction other than the US (the foregoing described in clauses (a) through (q) are, collectively, the “Excluded Assets”).
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Notwithstanding anything herein to the contrary, no perfection actions will be required with respect to (a) motor vehicles and other assets subject to certificates of title to the extent a lien therein cannot be perfected by the filing of a UCC financing statement, (b) letter of credit rights to the extent a lien therein cannot be perfected by the filing of a UCC financing statement and commercial tort claims below an amount to be agreed and (c) stock and assets of captive insurance companies and immaterial subsidiaries.
Notwithstanding anything to the contrary, the Borrower and the Guarantors shall not be required, nor shall the Term Loan Administrative Agent be authorized (i) to enter into any deposit account control agreement or securities account control agreement with respect to any deposit account or securities account or (ii) to take any action with respect to any assets located outside of the United States (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any jurisdiction other than the United States or any state thereof).
All the above-described pledges, security interests shall be created on terms, and pursuant to documentation, consistent with the Documentation Principles and subject to exceptions permitted under the Term Facility Documentation. Notwithstanding the foregoing, the requirements of the preceding paragraphs of this “Collateral” section shall be, as of the Closing Date, subject to the Certain Funds Provisions.
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Intercreditor Agreement:
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The lien priority, relative rights and other creditors’ rights issues in respect of the Term Facility and the ABL Facility will be set forth in a customary intercreditor agreement (the “Intercreditor Agreement”), which shall be reasonably satisfactory to the Borrower, the Term Loan Administrative Agent and the ABL Facility Administrative Agent and consistent with Documentation Principles.
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Initial Conditions:
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The availability of the Term Facility on the Closing Date will be subject solely to the applicable conditions precedent set forth in Exhibit D to the Commitment Letter and the section entitled “Conditions” of the Commitment Letter. For the avoidance of doubt, it is agreed that conditions on the Closing Date set forth herein and in Exhibit D are subject, in all respects, to the Certain Funds Provision.
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Term Facility Documentation:
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The definitive documentation for the Term Facility (the “Term Facility Documentation”) shall reflect the provisions set forth in the Commitment Letter and this Term Sheet and otherwise be mutually agreed, and in any event will contain only those conditions to borrowing, mandatory prepayments, representations and warranties, covenants and events of default expressly set forth in this Term Sheet, together with other customary loan document provisions and other terms and provisions in each case to be mutually agreed upon, the definitive terms of which will be negotiated in good faith to finalize the Term Facility Documentation, giving effect to the Certain Funds Provision, as promptly as reasonably practicable (the foregoing, the “Documentation Principles”).
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Representations and Warranties:
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Limited to the following (applicable to the Borrower and its restricted subsidiaries only, with all representations to be made as of the Closing Date, subject in all respects to the Certain Funds Provision), in each case with customary exceptions, limitations and qualifications to be mutually agreed and otherwise consistent with the Documentation Principles: accuracy of historical financial statements; no material adverse change; existence and standing of the Loan Parties; authorization and validity of the Term Facility Documentation; compliance with laws; corporate power and authority; enforceability of Term Facility Documentation; governmental approvals; no conflict with law, material contractual obligations or organizational documents; no material litigation; no default; ownership of property material to the businesses of the Loan Parties; creation, perfection, validity and, to the extent applicable, first priority, of security interests in Collateral (subject to permitted liens and other exceptions to perfection to be mutually agreed and consistent with the Documentation Principles); intellectual property; taxes; insurance; Federal Reserve margin regulations; ERISA and other foreign pension matters; Investment Company Act; subsidiaries; environmental matters; labor matters; accuracy of written disclosure; solvency (defined as set forth in Exhibit D) as of the Closing Date; use of proceeds; and sanctions laws and regulations.
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Affirmative Covenants:
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Subject to the Certain Funds Provision, and limited to the following (applicable to the Borrower and its restricted subsidiaries only), in each case with customary exceptions, limitations and qualifications to be mutually agreed, and otherwise consistent with the Documentation Principles: delivery of quarterly (for each of the first three fiscal quarters of any fiscal year) and annual financial statements, quarterly no default certificates and annual projections and other information reasonably requested by the Lenders through the Term Loan Administrative Agent; payment of taxes; continuation of business and maintenance of existence and material rights, licenses and privileges; compliance with laws (including environmental laws); maintenance of property (subject to casualty, condemnation and normal wear and tear) and reasonable and adequate insurance; maintenance of books and records; right of the Term Loan Administrative Agent to inspect property and books and records; notices of defaults, material litigation and other material events; use of proceeds; further assurances; guarantor and collateral requirements; and use of commercially reasonable efforts to obtain and maintain public corporate and family ratings and ratings for the Term Loans (but in each case, not to maintain a specific rating).
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Negative Covenants:
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Subject to the Certain Funds Provisions, limited to the following (applicable to the Borrower and its restricted subsidiaries only), in each case with customary exceptions, limitations and qualifications to be mutually agreed, and otherwise consistent with the Documentation Principles: indebtedness (including guarantee obligations in respect of indebtedness and preferred stock of restricted subsidiaries); liens; mergers, consolidations, liquidations and dissolutions; sales of assets; payment of restricted payments (including dividends and other payments in respect of equity interests); investments (including loans and advances) and acquisitions; sale and leaseback transactions; swap agreements; optional payments and modifications of subordinated and other junior debt instruments; transactions with affiliates; changes in fiscal year (other than with the consent of the Term Loan Administrative Agent); restrictive agreements (including negative pledge clauses); amendment of organizational documents; and sanctions laws and regulations.
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Financial Covenant:
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None.
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Among other things, the Term Facility Documentation will permit:
(a) debt incurred as “ratio” debt equal to an amount to be mutually agreed plus any unlimited amount so long as (i) no event of default under the Term Facility, (ii) pro forma Total Net Leverage Ratio (to be defined in a manner to be mutually agreed upon) does not exceed 5.00 to 1.00 and (iii) if such debt is secured by liens on Collateral on a pari passu basis with the liens that are securing the Term Facility, pro forma Senior Secured Net Leverage Ratio does not exceed 3.50 to 1.00, in each case subject to other customary conditions with respect to guarantors, maturity and entering into applicable intercreditor arrangements;
(b) investments made with the Available Additional Basket described below, subject to terms and conditions to be mutually agreed;
(c) acquisitions (each, a “Permitted Acquisition”) subject only to (i) no event of default under the Term Facility on the date the agreement for such acquisition is executed, (ii) to the extent financed with debt, such debt is permitted to be so incurred, (iii) within 60 days after such acquisition is consummated (or such later date as may be agreed upon by the Term Loan Administrative Agent), acquired subsidiaries become Guarantors, to the extent required pursuant to the definition of Guarantors, (iv) terms with respect to the financing (or transfer of funds or other assets) by the Loan Parties of acquisitions of non-Guarantors to be agreed and (v) the target shall be in the same, or a similar, related or complementary, line of business;
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(d) restricted payments and junior lien and subordinated debt prepayments, redemptions or repurchases made utilizing the Available Additional Basket described below subject to terms and conditions to be mutually agreed;
(e) the Term Facility Documentation will provide that the Borrower may repay the Borrower’s outstanding 3.50% Convertible Senior Notes due June 1, 2016 in accordance with the terms thereof in effect as of the date hereof (including, without limitation, any cash payments made at the Borrower’s election);
“Available Additional Basket” shall be based on (i) $50,000,000, plus (ii) 50% of positive cumulative Consolidated Net Income (excluding the effects of purchase accounting and otherwise defined in the Term Facility Documentation in a manner consistent with the Documentation Principles), plus (iii) the net cash proceeds of new public or private qualified equity issuances and capital contributions, plus (iv) debt and disqualified stock which have been exchanged or converted into qualified equity of the Borrower, plus (v) the net cash proceeds of sales of investments made under the Available Additional Basket, plus (vi) returns, profits, distributions and similar amounts received on investments made under the Available Additional Basket; provided that any such non-cash returns, profits, distributions or similar amounts received shall be restricted to such investments initially made on a non-cash basis, plus (vii) declined proceeds, plus (viii) other adjustments in respect of unrestricted subsidiaries and other matters to be mutually agreed upon;
(f) asset sales consisting of divestures required by applicable law or regulatory compliance; and
(g) debt incurred in connection with a refinancing (which may include the issuance of secured or unsecured notes (“Refinancing Notes”) or loans) or an amendment and extension of the Term Facility (each, a “Refinancing Facility”); provided that, (i) the all-in-yield with respect to any such Refinancing Facility shall be determined by the Borrower and the lenders providing such Refinancing Facility, (ii) any Refinancing Facility does not mature prior to the maturity date of, or have a shorter weighted average life than, the debt or commitments being refinanced, (iii) such Refinancing Notes do not have mandatory redemption features that could result in redemptions of such Refinancing Notes prior to the maturity of the debt being refinanced (other than such features similar to those of the debt being refinanced), (iv) the other terms and conditions (including pricing, and optional prepayment or redemption terms) of such Refinancing Facility or Refinancing Notes reflect market terms and conditions at the time of incurrence or issuance and (excluding pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions) are not materially more restrictive (when taken as whole) on the Borrower and the restricted subsidiaries than the terms and conditions of the Term Facility Documentation (when taken as a whole) (it being understood that to the extent any financial maintenance covenant is added for the benefit of such Refinancing Facility or Refinancing Notes, the terms and conditions of such Refinancing Facility and Refinancing Notes will not be deemed to be more restrictive than the terms and conditions of the Term Facility Documentation if such financial maintenance covenant is also added for the benefit of the Term Facility and any existing Incremental Term Facility under the Term Facility Documentation remaining outstanding after the incurrence or issuance of such Refinancing Facility or Refinancing Notes) (except for covenants or other provisions applicable only to periods after the latest maturity date of the Term Facility or Incremental Term Facility, in either case, remaining outstanding after the issuance or incurrence of such Refinancing Facility or Refinancing Notes at the time of such refinancing), (v) any Refinancing Facility or Refinancing Notes that are secured by the Collateral shall be subject to a customary intercreditor agreement reasonably satisfactory to the Term Loan Administrative Agent and the Borrower, (vii) to the extent guaranteed, any Refinancing Facility or Refinancing Notes shall only be guaranteed by Loan Parties and to the extent secured, shall only be secured by assets constituting Collateral and (viii) the aggregate principal amount of any Refinancing Facility does not exceed the aggregate amount of debt or commitments being refinanced therewith, plus interest, fees, expenses and premium, plus the costs, fees and expenses of incurring such Refinancing Facility (including upfront fees and original issue discount).
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Unrestricted Subsidiaries:
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The Term Facility Documentation will contain provisions to be mutually agreed between the Borrower and the Term Loan Administrative Agent pursuant to which the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a restricted subsidiary. Unrestricted subsidiaries will not be subject to the mandatory prepayment, representation and warranties, affirmative or negative covenants or event of default provisions of the Term Facility Documentation and the cash held by, results of operations, interest expenses and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of determining compliance with any financial metric contained in the Term Facility Documentation.
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Events of Default:
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Limited to the following (applicable to the Borrower and its restricted subsidiaries only), and subject to grace periods, notice requirements, thresholds, and materiality qualifications to be mutually agreed, and otherwise shall be consistent with the Documentation Principles: nonpayment of principal when due; nonpayment of interest, fees or other amounts after five business days; representations and warranties are incorrect in any material respect; violation of covenants (subject, in the case of certain affirmative covenants, to a grace period of thirty (30) days following the earlier of the Borrower’s knowledge thereof and written notice from the Term Loan Administrative Agent); cross-default to occurrence of a default (whether or not resulting in acceleration) under any other agreement governing indebtedness, in excess of an amount to be agreed upon and after the expiration of all applicable grace and notice periods, of the Borrower or any of its restricted subsidiaries (provided that a breach of any financial covenant under the ABL Facility shall not be an event of default under the Term Facility unless and until the date on which all loans under the ABL Facility are accelerated and all commitments thereunder are terminated); bankruptcy events in respect of the Borrower and any material restricted subsidiaries (subject to a 60-day grace period for involuntary bankruptcy or insolvency events); certain ERISA events that could reasonably be expected to have a material adverse effect; monetary judgments in excess of an amount to be agreed upon (after giving effect to third-party insurance from a creditworthy insurer that has not denied coverage); any material provision of any of the Term Facility Documentation shall cease to be in full force and effect (other than pursuant to its express terms) or any Loan Party thereto shall assert that any provision of any Term Facility Documentation is not in full force and effect; any security interests created in a material portion of the Collateral by the security documents shall cease to be enforceable and of the same priority purported to be created thereby (other than as a result of the action or inaction by the Term Loan Administrative Agent and the Term Lenders); and a change of control.
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Voting:
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Amendments, waivers and consents with respect to the Term Facility Documentation will require the approval of Term Lenders holding more than 50% of the aggregate principal amount of the Term Loans and commitments under the Term Facility (the “Required Lenders”), except that (i) the consent of each Term Lender directly and adversely affected thereby (but not the Required Lenders and in the case of (i)(a), only the Term Lenders increasing their commitments shall be deemed directly and adversely affected thereby) shall be required with respect to, (a) increases in the commitment of such Term Lender, (b) reductions of principal, interest or fees owed to such Term Lender (provided that, the waivers of default interest, defaults, events of default or mandatory prepayments shall not constitute such a reduction), and (c) extensions of the final maturity or the scheduled due date of any principal, interest or fee payment due to such Term Lender (other than waivers of default interest, defaults or events of default or mandatory prepayments); and (ii) the consent of all Term Lenders shall be required with respect to (a) (except as otherwise permitted) releases of all or substantially all of the value of the Guarantors (taken as a whole) or all or substantially all of the Collateral and (b) reductions in voting thresholds. It being understood that additional extensions of credit permitted under the Term Facility Documentation shall not require the consent of all Term Lenders but instead shall only require the consent of each Term Lender extending such credit.
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The Term Facility Documentation shall contain customary provisions for replacing Term Lenders claiming increased costs, tax gross ups and similar required indemnity payments and replacing non-consenting Term Lenders in connection with amendments and waivers requiring the consent of all Term Lenders or of all Term Lenders directly affected thereby so long as the Required Lenders shall have consented thereto.
The Term Facility Documentation shall contain an “amend and extend” mechanism to permit the Borrower, with the consent of each directly adversely affected Term Lender under the Term Facility, but without the consent of any other Term Lender or the Required Lenders, to extend the Term Loan Maturity Date and to provide for different interest rates and fees and voluntary prepayments for the Term Lender providing such extended Term Loan Maturity Date, in each case, so long as an offer to extend the final expiration or maturity date of the applicable Term Facility is made to all applicable Term Lenders participating in such Term Facility on a pro rata basis pursuant to procedures established by the Term Loan Administrative Agent.
In addition, the Term Facility Documentation shall provide for the amendment (or amendment and restatement) of the Term Facility Documentation to (a) add one or more replacement credit facilities thereto and changes related thereto and (b) to provide for term loans replacing all or a portion of the Term Loans, subject to customary limitations, with the consent of the Term Loan Administrative Agent, the Borrower and the lenders providing such replacement term loans and, in connection with any of the foregoing, the right of the Borrower to require the applicable Term Lenders to assign their Term Loans to the providers of any replacement credit facility or loans or to prepay their outstanding loans.
In addition, if the Term Loan Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical nature in the Term Facility Documentation, then the Term Loan Administrative Agent and the Borrower shall be permitted to amend such provision without further action or consent of any other party if the same is not objected to in writing by the Required Lenders to the Term Loan Administrative Agent within five business days following receipt of notice thereof.
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Assignments and Participations:
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The Term Lenders will be permitted to assign to certain eligible assignees all or a portion of their Term Loans with the consent of the Borrower (not to be unreasonably withheld or delayed); provided that, no consent of the Borrower shall be required (i) after the occurrence and during the continuance of a payment or bankruptcy event of default, (ii) for assignments to Term Lenders, affiliates of Term Lenders or any approved fund or (iii) if the Borrower has not responded to a request for consent within 10 business days; provided, further, that no assignments shall be made to Disqualified Institutions. All assignments will also require the consent of the Term Loan Administrative Agent, not to be unreasonably withheld or delayed. Each assignment will be in an amount of an integral multiple of $1,000,000 or, if less, all of such Term Lender’s remaining Term Loans of the applicable class. Assignments will be by novation and will not be required to be pro rata among the Term Facility.
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The Term Lenders will have the right to participate their Term Loans to other persons (other than any natural persons or Disqualified Institutions). Participants shall have the same benefits as the Term Lenders with respect to yield protection and increased cost provisions, subject to customary limitations and restrictions. Voting rights of participants shall be limited to matters in respect of (a) reductions of principal, interest or fees owing to such participant, (b) extensions of final scheduled maturity or times for payment of interest or fees owing to such participant and (c) releases of Collateral or Guarantors requiring the approval of all Term Lenders.
“Disqualified Institutions” means (a) persons that are reasonably determined by the Borrower to be competitors of the Borrower or its subsidiaries or the Target or its subsidiaries and which are specifically identified by the Borrower to the Term Loan Administrative Agent in writing prior to the date hereof (“Disqualified Competitors”) and (b) any of such Disqualified Competitors’ affiliates to the extent such affiliates (x) are clearly identifiable as affiliates of Disqualified Competitors on the basis of such affiliates’ names and (y) are not bona fide debt investment funds that are affiliates of Disqualified Competitors; provided that, solely with respect to the foregoing clause (a), the Borrower, upon reasonable notice to the Term Loan Administrative Agent after the date hereof, shall be permitted to supplement in writing by name the list of persons that are Disqualified Competitors to the extent such supplemented person is a competitor (or affiliate thereof, other than a bona fide debt investment fund) of the Borrower or its subsidiaries or the Target or its subsidiaries, which supplement shall become effective two (2) days after delivery to the Term Loan Administrative Agent and the Term Lenders, but which shall not apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest in the Term Loans (but solely with respect to such Term Loans). The initial list of Disqualified Competitors shall be made available to the Term Lenders on the Closing Date.
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The Term Facility Documentation shall provide that Term Loans may be purchased by and assigned to the Borrower or any restricted subsidiary thereof through (a) Dutch auctions open to all Term Lenders on a pro rata basis in accordance with customary procedures to be mutually agreed and/or (b) open market purchases on a non-pro rata basis, in each case on terms and conditions to be agreed (including no default has occurred or is continuing); provided that, none of the Borrower, nor any of its affiliates shall be required to make any representation that it is not in possession of material nonpublic information with respect to the Borrower, its subsidiaries or their respective securities and all parties to the relevant transactions shall render customary “big boy” disclaimer letters. Any Term Loans assigned to or purchased by the Borrower or any restricted subsidiary thereof shall be automatically and permanently cancelled immediately upon acquisition thereof by the Borrower or such restricted subsidiary.
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Yield Protection:
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The Term Facility Documentation shall contain provisions (a) protecting the Term Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy, liquidity and other requirements of law (including reflecting that both (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof and (y) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III shall, in the case of each of the foregoing clause (x) and clause (y), be deemed to be a change in law regardless of the date enacted, adopted or issued), (b) indemnifying the Term Lenders for actual “breakage” costs incurred in connection with, among other things, any prepayment of a Eurodollar Loan (as defined in Annex I to Exhibit B hereto) on a day other than the last day of an interest period with respect thereto (other than lost profits) and (c) providing the Term Lenders with a customary tax gross up (subject to exceptions for customary categories of excluded taxes).
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Expenses and Indemnification:
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The Borrower shall pay promptly following written demand (including documentation reasonably supporting such request) (a) all reasonable and documented out-of-pocket expenses of the Term Loan Administrative Agent and the Term Loan Lead Arrangers associated with the syndication of the Term Facility and the preparation, execution, delivery and administration of the Term Facility Documentation and any amendment or waiver with respect thereto (but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel to the Term Loan Administrative Agent and the Term Loan Lead Arrangers, taken as a whole, plus one local counsel in each applicable jurisdiction) and (b) all reasonable and documented out-of-pocket expenses of the Term Loan Administrative Agent and the Term Lenders (but limited, in the case of legal fees and expenses, to the documented fees, disbursements and other charges of one counsel to the Term Loan Administrative Agent and the Term Lenders, taken as a whole (and in the case of a conflict of interest, one additional counsel to the similarly affected group of Term Lenders, taken as a whole)) in connection with the enforcement of the Term Facility Documentation or protection of rights thereunder.
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The Term Loan Administrative Agent and the Term Loan Lead Arrangers and the Term Lenders (and their respective affiliates and their respective officers, directors, employees, advisors and agents) (each, an “indemnified person”) will be indemnified and held harmless against, any actual losses, claims, damages, liabilities or documented expenses (but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one counsel and, if necessary one additional local counsel in each relevant jurisdiction, to the indemnified persons taken as a whole (and, in the case of a conflict of interest, one additional counsel to the similarly affected group of indemnified persons, taken as a whole)) incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof, except, in the case of any indemnified person, to the extent they arise from (i) the gross negligence, bad faith or willful misconduct of such indemnified person (or its affiliates and its officers, directors, employees, advisors and agents), (ii) in connection with a claim made by the Borrower, the material breach of the Term Facility Documentation by such indemnified person (or its affiliates and its officers, directors, employees, advisors and agents) (in the case of each of the preceding clause (i) and this clause (ii), as determined by a court of competent jurisdiction in a final non-appealable judgment) or (iii) any disputes solely among indemnified persons (other than any claims against an indemnified person in its capacity or in fulfilling its role as the Term Loan Administrative Agent or a Term Loan Lead Arranger or similar role under the Term Facility and other than any claims arising out of any act or omission of the Borrower or any of its affiliates).
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Governing Law and Forum:
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New York.
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Counsel to the Term Loan Administrative Agent:
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Sidley Austin LLP.
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Interest Rate Options:
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The Borrower may elect that the Term Loans comprising each borrowing bear interest at a rate per annum equal to (a) the ABR plus the Applicable Margin or (b) the Eurodollar Rate, plus the Applicable Margin.
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As used herein:
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“ABR” means the greatest of (a) the prime rate of interest announced from time to time by the Term Loan Administrative Agent or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes (the “Prime Rate”), (b) the federal funds effective rate from time to time plus 0.5% per annum and (c) the Eurodollar Rate for a one month interest period as displayed on Reuters Screen LIBOR01 Page (or on any successor or substitute page) on such day plus 1% per annum and (d) 2.0% per annum.
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“ABR Loans” means Term Loans bearing interest based upon the ABR.
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“Applicable Margin” means: (i) 2.25% per annum, in the case of ABR Loans and (ii) 3.25% per annum, in the case of Eurodollar Loans.
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“Eurodollar Rate” means the higher of (i) 1.00% per annum and (ii) the London interbank offered rate administered by the British Bankers Association or any other person that takes over the administration of such rate for U.S. Dollars (adjusted for statutory reserve requirements for eurocurrency liabilities) for a period equal to one, two, three or six, or, to the extent agreed to by all relevant affected Term Lenders, twelve months (as selected by the Borrower) as displayed on Reuters Screen LIBOR01 Page or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the Term Loan Administrative Agent from time to time in its reasonable discretion (the “LIBO Screen Rate”) at approximately 11:00 a.m., London time, two (2) business days prior to the commencement of such interest period; provided that, if the LIBO Screen Rate shall not be available at such time for a period equal in length to such interest period then the Eurodollar Rate shall be determined by the Term Loan Administrative Agent in accordance with procedures to be outlined in the Term Facility Documentation.
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“Eurodollar Loans” means Term Loans bearing interest based upon the Eurodollar Rate.
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Interest Payment Dates:
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In the case of ABR Loans, quarterly in arrears.
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In the case of Eurodollar Loans, on the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.
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Default Rate:
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At any time when the Borrower is in default in the payment of any amount under the Term Facility after giving effect to any applicable grace period, such overdue amounts owed to Term Lenders shall bear interest at 2.00% per annum above the rate otherwise applicable thereto.
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Rate and Fee Basis:
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All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of ABR Loans, the interest rate payable on which is then based on the Prime Rate) for actual days elapsed.
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Prepayment Premium
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Any (a) prepayment of the Term Loans using proceeds of (or on a cashless basis through conversion into) a substantially concurrent incurrence of senior secured term loans by the Borrower for which the “effective margin” thereon (calculated in a manner consistent with the “all-in yield” under the Incremental Facilities section above) on the date of such prepayment is lower than the “effective margin” (calculated a manner consistent with the “all-in yield” under the Incremental Facilities section above) with respect to the Term Loans on the date of such prepayment or (b) repricing of the Term Loans pursuant to an amendment pursuant to which the “effective margin” (calculated a manner consistent with the “all-in yield” under the Incremental Facilities section above) on any amended, exchanged or converted Term Loans are lower than the “effective margin” (calculated a manner consistent with the “all-in yield” under the Incremental Facilities section above) with respect to the Term Loans on the date immediately prior to such amendment (each, a “Repricing Transaction”), prior to the date that is six (6) months after the Closing Date shall in each case be accompanied by a prepayment fee (the “Prepayment Premium”) equal to 1.00% of the aggregate principal amount of such principal prepayment (or, in the case of clause (b) above, of the aggregate amount of loans outstanding under the Term Facility immediately prior to such amendment); provided that such premium shall not apply if such refinancing or amendment is in connection with a “change of control” transaction.
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I.
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Parties
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Borrower:
|
Akorn, Inc., a Louisiana corporation (the “Borrower”).
|
||
Guarantors:
|
Each direct and indirect wholly-owned subsidiary of the Borrower organized in the U.S. (the “Guarantors” and, together with the Borrower, the “Loan Parties”) other than the following: (a) any subsidiary to the extent the provision of a guarantee by such subsidiary would result in adverse tax consequences as reasonably determined by the Borrower in consultation with the ABL Facility Administrative Agent, (b) captive insurance companies, (c) not-for-profit subsidiaries, (d) special purpose entities (if any) to be agreed, (e) immaterial subsidiaries, (f) to the extent a guarantee by any subsidiary is prohibited or restricted by contracts or applicable law (including any requirement to obtain governmental or regulatory authority or third party consent, approval, license or authorization) on the Closing Date or on the date of acquisition of such subsidiary (so long as such prohibition or restriction is not created or entered into in contemplation of or in connection with such person becoming a subsidiary), (g) other subsidiaries to be mutually agreed, (h) unrestricted subsidiaries (as described below), (i) any domestic subsidiary that has no material liabilities and owns no material assets other than equity interests and/or debt and/or guarantees of debt of one or more foreign subsidiaries that is a “controlled foreign corporation” (in each case, a “CFC”) as defined in Section 957 of the Internal Revenue Code of 1986 (each a “FSHCO”) and (j) to the extent the Borrower and the ABL Facility Administrative Agent determine cost and/or burden outweigh benefits; provided that in any event each guarantor under the Term Facility shall be a Guarantor in respect of the ABL Revolving Facility.
|
||
ABL Facility
|
|||
Administrative Agent:
|
JPMorgan Chase Bank, N.A. (“Chase” and, in such capacity and collectively with its permitted successors and assigns, the “ABL Facility Administrative Agent”).
|
ABL Facility Lead Arranger
|
|||
and Bookrunner:
|
J.P. Morgan Securities LLC and any other “Senior Lead Arranger” appointed pursuant to the Commitment Letter (in such capacity, the “ABL Facility Lead Arrangers”).
|
||
ABL Lenders:
|
A syndicate of banks, financial institutions and other entities, including Chase, arranged by the Commitment Parties (excluding any Disqualified Institutions) reasonably satisfactory to the Borrower (such consent not to be unreasonably withheld or delayed) (collectively, the “ABL Revolving Lenders”); provided that, nothing herein shall affect the consent rights of the Borrower set forth below under the heading “Assignments and Participations.”
|
||
II.
|
Revolving Credit Facility
|
||
Type and Amount of
|
|||
Facility:
|
Five-year revolving credit facility (the “ABL Revolving Facility”) in the amount of $75,000,000 (the “ABL Revolving Commitment” and the loans thereunder, the “ABL Revolving Loans”); provided, such amount is subject to increase as set forth below under the heading “Pre-Closing Oversubscription”.
|
||
Availability:
|
The ABL Revolving Facility shall be available on a revolving basis during the period commencing on the Closing Date and ending on the fifth anniversary thereof (the “Revolving Credit Termination Date”).
|
||
Availability under the ABL Revolving Facility will be subject to the Borrowing Base referred to below. “Availability” means, at any time, an amount equal to (i) the lesser of the ABL Revolving Commitment and the Borrowing Base minus (ii) the sum of the aggregate outstanding amount of borrowings under the ABL Revolving Facility plus the undrawn amount of outstanding Letters of Credit issued under the ABL Revolving Facility (the “Revolving Credit Exposure”).
|
|||
In the event that an inventory appraisal and field examination cannot be completed and delivered prior to the Closing Date, for the period from the Closing Date until the 60th day after the Closing Date (or such earlier date on which the ABL Facility Administrative Agent receives a satisfactory inventory appraisal and field examination or such later date as may be agreed to by the ABL Facility Administrative Agent), the Borrowing Base shall be deemed to be an amount equal to $50,000,000 (the “Interim Borrowing Base”) for all purposes under the ABL Facility Documentation, including the calculation of Availability and Excess Availability (as defined below).
|
|||
Letters of Credit:
|
A portion of the ABL Revolving Facility not in excess of $10,000,000 shall be available for the issuance of letters of credit (the “Letters of Credit”) by Chase (in such capacity, the “Issuing Lender”). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance and (b) five business days prior to the Revolving Credit Termination Date, provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (b) above).
|
Drawings under any Letter of Credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of ABL Revolving Loans) on terms to be mutually agreed. To the extent that the Borrower does not so reimburse the Issuing Lender, the ABL Revolving Lenders under the ABL Revolving Facility shall be irrevocably and unconditionally obligated to reimburse the Issuing Lender on a pro rata basis.
|
|||
Swing Line Loans:
|
A portion of the ABL Revolving Facility not in excess of $10,000,000 shall be available for swing line loans (the “Swing Line Loans”) from the ABL Facility Administrative Agent (in such capacity, the “Swing Line Lender”). The Borrower may request Swing Line Loans from the Swing Line Lender on same-day notice. Any such Swing Line Loans will reduce Availability on a dollar-for-dollar basis. Each ABL Revolving Lender under the ABL Revolving Facility shall acquire, under certain circumstances, an irrevocable and unconditional pro rata participation in each Swing Line Loan.
|
||
Borrowing Base:
|
The “Borrowing Base” will equal the sum of 85% of the eligible accounts receivable of the Loan Parties (as defined below), plus the lesser of (i) 65% of the Loan Parties’ eligible inventory (valued at the lower of cost (FIFO) or market) and (ii) the product of 85% multiplied by the net orderly liquidation value percentage identified in the most recent inventory appraisal ordered by the ABL Facility Administrative Agent multiplied by the Loan Parties’ eligible inventory (valued at the lower of cost (FIFO) or market), less reserves established by the ABL Facility Administrative Agent in its Permitted Discretion with prior written notice to the Borrower, subject to the Interim Borrowing Base. “Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset based lender) business judgment.
|
||
Eligibility:
|
The definition of eligible accounts receivable and eligible inventory will be set forth in the ABL Facility Documentation in a manner consistent with the Documentation Principles.
|
||
Maturity:
|
The Revolving Credit Termination Date.
|
||
The ABL Facility Documentation shall contain an “amend and extend” mechanism to permit the Borrower, with the consent of each directly affected ABL Revolving Lender under the ABL Revolving Facility, but without the consent of any other ABL Revolving Lender or the Required Lenders (as defined below), to extend the Revolving Credit Termination Date and to provide for different interest rates and fees and voluntary prepayments for the ABL Revolving Lender providing such extended Revolving Credit Termination Date, in each case, so long as an offer to extend the final expiration or maturity date of the applicable ABL Revolving Facility is made to all applicable ABL Revolving Lenders participating in such ABL Revolving Facility on a pro rata basis pursuant to procedures established by the ABL Facility Administrative Agent.
|
Purpose:
|
The proceeds of the ABL Revolving Facility shall be used to finance the working capital needs of, and for general corporate purposes of, the Borrower and its subsidiaries (including acquisitions, investments, restricted payments, and other transactions not prohibited by the ABL Facility Documentation), to finance the Acquisition, to pay transactions costs related to the Transactions and to refinance certain existing indebtedness.
|
||
Pre-Closing Oversubscription:
|
On or prior to the Closing Date, in the event that the initial commitments from the ABL Revolving Lenders for the ABL Revolving Credit Facility as delivered to the ABL Facility Lead Arrangers exceeds $75,000,000 in the aggregate, the Borrower may, at its option and in consultation with the ABL Facility Lead Arrangers, request that the aggregate principal amount of the ABL Revolving Commitment be increased; provided that any such increase of the ABL Revolving Commitment shall not exceed an amount equal to $75,000,000; provided further, that to the extent the Borrower elects to effect such an increase of the ABL Revolving Commitment, all commitments of the ABL Revolving Lenders (other than the Commitment Parties) shall be allocated to such increased amount until fully subscribed prior to any assignment or other allocation of any Commitment Party’s ABL Revolving Commitment.
|
||
Post-Closing Accordion:
|
The Borrower may, at its option, and subject to customary conditions to be mutually agreed upon, request to increase the ABL Revolving Commitment by up to $125,000,000 (less the amount of any increase to the ABL Revolving Commitment pursuant to the oversubscription feature described above and, in any event, not to cause the ABL Revolving Commitment to exceed a total of $200,000,000) by obtaining one or more commitments from one or more ABL Revolving Lenders or, with the consent of the ABL Facility Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), but without the consent of any other ABL Revolving Lenders, from other entities.
|
||
III.
|
Certain Payment Provisions
|
||
Fees and Interest Rates:
|
As set forth in Annex I to Exhibit C attached hereto.
|
||
Closing Fees:
|
As set forth in the Fee Letters.
|
||
Optional Prepayments:
|
ABL Revolving Loans may be prepaid, in whole or in part without premium or penalty, in minimum amounts to be mutually agreed, at the option of the Borrower at any time upon one business day’s (or, in the case of a prepayment of Eurodollar Loans (as defined in Annex I to Exhibit C attached hereto), three business days’) prior notice, subject to reimbursement of the ABL Revolving Lenders’ actual “breakage” costs (other than lost profits) in the case of a prepayment of Eurodollar Loans prior to the last day of the relevant interest period. Optional prepayments of the ABL Revolving Loans shall be applied ratably to the ABL Revolving Loans included in the prepaid borrowing.
|
Mandatory Prepayments :
|
The ABL Facility Documentation (as defined below) will contain a mandatory prepayment provision that will require a prepayment of amounts outstanding under the ABL Revolving Facility (without a concurrent reduction of the ABL Revolving Commitment): upon a sale or transfer of assets of the Borrower or any other Loan Party constituting ABL Priority Collateral (other than sales of inventory in the ordinary course of business and certain other exceptions to be mutually agreed); and upon receipt of insurance proceeds or condemnation awards in respect of assets constituting ABL Priority Collateral. The amount and application of such mandatory prepayments to be negotiated.
|
||
Without limiting the foregoing, ABL Revolving Loans will be required to be prepaid at any time that the Revolving Credit Exposure exceeds the lesser of the Borrowing Base and the ABL Revolving Commitment.
|
|||
IV.
|
Collateral
|
||
Collateral:
|
Subject to the Certain Funds Provision and the provisions of the immediately following paragraph and consistent with the Documentation Principles, the obligations of the Borrower and the Guarantors in respect of the ABL Revolving Facility shall be secured by (a) a first priority lien on certain cash, inventory and accounts receivables, deposit accounts, securities and commodity accounts (other than the accounts in which net cash proceeds from the sale of non-ABL Priority Collateral are deposited pending reinvestment and other Excluded Accounts (as defined below)), documents, supporting obligations, books and records and all proceeds (including insurance proceeds) related to the foregoing (“ABL Priority Collateral”) and (b) a second priority lien on substantially all other assets of the Borrower and the Guarantors (the items described in clauses (a) and (b) above, but excluding the Excluded Assets (as defined below), collectively, the “Collateral”) (provided that, subject to the Certain Funds Provision, in any event the Collateral on the Closing Date shall not, except as expressly set forth herein, be less than the collateral provided by the Borrower and the other Loan Parties pursuant to the Term Facility; provided further that, subject to the Intercreditor Agreement described below, the ABL Facility Administrative Agent shall have a license allowing the use of such intellectual property as may be necessary or desirable for the liquidation or disposition of, or realization upon, the ABL Priority Collateral in addition to the benefit of other customary intercreditor provisions relating to access and use of non-ABL Priority Collateral, in each case subject to permitted liens and certain exceptions in the ABL Facility Documentation), in each case subject to permitted liens and certain exceptions in the ABL Facility Documentation. The Collateral will also secure banking services obligations (including ACH transactions, credit card transactions and cash management services) owing to any ABL Revolving Lender or its affiliates and swap obligations owing to any ABL Revolving Lender or its affiliates.
|
Notwithstanding anything to the contrary, the Collateral shall exclude the following: (a) all owned real property with a value less than an amount to be mutually agreed or that is located in a jurisdiction other than the U.S., (b) all leasehold interests (except that the Borrower shall be required to deliver landlord waivers, estoppels and access letters to the extent (if any) the delivery thereof shall be required for the eligibility requirements with respect to assets included in the Borrowing Base, to the extent the Borrower elects (in its sole discretion) to include such assets in the Borrowing Base), (c) governmental licenses or state or local franchises, charters and authorizations to the extent security interest is prohibited or restricted by applicable law, (d) pledges and security interests prohibited or restricted by applicable law (with no requirement to obtain the consent of any governmental authority or third party, including, without limitation, no requirement to comply with the Federal Assignment of Claims Act or any similar statute), (e) any lease, license, permit or agreement or any property subject to such lease, license, permit or agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license, permit or agreement or create a right of termination in favor of any other party thereto or otherwise require consent thereunder (after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law), other than proceeds thereof, the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding such prohibition, (f) any assets to the extent a security interest in such assets could result in adverse tax consequences or adverse regulatory consequences, in each case, as reasonably determined by the Borrower in consultation with the ABL Facility Administrative Agent, (g) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, (h) interests in joint ventures and non-wholly owned subsidiaries which cannot be pledged without the consent of third parties, (i) any property subject to a purchase money arrangement permitted to be incurred pursuant to the ABL Facility Documentation, (m) assets where the cost of obtaining a security interest therein exceeds the practical benefit to the ABL Revolving Lenders afforded thereby, in each case, as reasonably determined by the Borrower and the ABL Facility Administrative Agent, (n) margin stock, (o) equity interests and assets of unrestricted subsidiaries, (p) voting equity interests of any CFC or FSHCO in excess of 65% of any such class of equity interests and (q) except as may be required under the ABL Revolving Facility with respect to assets included in the Borrowing Base, any assets located outside the US or assets that require action under the laws of any jurisdiction other than the US to create or perfect a security interest in such assets, including any intellectual property registered in any jurisdiction other than the US (the foregoing described in clauses (a) through (q) are, collectively, the “Excluded Assets”).
|
Notwithstanding anything herein to the contrary, no perfection actions will be required with respect to (a) motor vehicles and other assets subject to certificates of title to the extent a lien therein cannot be perfected by the filing of a UCC financing statement, (b) letter of credit rights to the extent a lien therein cannot be perfected by the filing of a UCC financing statement and commercial tort claims below an amount to be agreed, (c) stock and assets of captive insurance companies and immaterial subsidiaries and (d) deposit and securities accounts (other than deposit accounts included in the “Cash Dominion” requirements set forth below).
|
|||
Notwithstanding anything to the contrary, the Borrower and the Guarantors shall not be required, nor shall the ABL Facility Administrative Agent be authorized, to take any action with respect to any assets that are not included in the Borrowing Base and are located outside of the United States (it being understood that, with respect to such assets, there shall be no security agreements or pledge agreements governed under the laws of any jurisdiction other than the United States or any state thereof); provided Borrower shall not be required to include any specific assets in the Borrowing Base.
|
|||
All the above-described pledges, security interests shall be created on terms, and pursuant to documentation, consistent with the Documentation Principles and subject to exceptions permitted under the ABL Facility Documentation. Notwithstanding the foregoing, the requirements of the preceding paragraphs of this “Collateral” section shall be, as of the Closing Date, subject to the Certain Funds Provisions.
|
|||
Intercreditor Agreement:
|
The lien priority, relative rights and other creditors’ rights issues in respect of the ABL Revolving Facility and the Term Facility will be set forth in a customary intercreditor agreement (the “Intercreditor Agreement”), which shall be reasonably satisfactory to the Borrower, the ABL Facility Administrative Agent and the Term Loan Administrative Agent and consistent with Documentation Principles.
|
||
V.
|
Certain Conditions
|
||
Initial Conditions:
|
The availability of the ABL Revolving Facility on the Closing Date will be subject solely to the applicable conditions precedent set forth in Exhibit D to the Commitment Letter and the section entitled “Conditions” of the Commitment Letter. For the avoidance of doubt, it is agreed that conditions on the Closing Date set forth herein and in Exhibit D are subject, in all respects, to the Certain Funds Provision.
|
||
On-Going Conditions:
|
Subject to the Certain Funds Provision, the making of each extension of credit shall be conditioned upon (a) the accuracy of all representations and warranties in the ABL Facility Documentation (including, without limitation, the material adverse change and litigation representations); (b) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit and (c) after giving effect to the extensions of credit request, the Revolving Credit Exposure shall not exceed the lesser of the ABL Revolving Commitment and the Borrowing Base then in effect.
|
VI.
|
Certain Documentation Matters
|
||
The definitive documentation for the ABL Revolving Facility (the “ABL Facility Documentation” and, together with the Term Facility Documentation, the “Facilities Documentation”) shall reflect the provisions set forth in the Commitment Letter and this Term Sheet and otherwise be mutually agreed, and in any event will contain only those conditions to borrowing, mandatory prepayments, representations and warranties, covenants and events of default expressly set forth in this Term Sheet, together with other customary loan document provisions and other terms and provisions in each case to be mutually agreed upon, the definitive terms of which will be negotiated in good faith to finalize the ABL Facility Documentation, giving effect to the Certain Funds Provision, as promptly as reasonably practicable (the foregoing, the “Documentation Principles”).
|
|||
Representations and
|
|||
Warranties:
|
Limited to the following (applicable to the Borrower and its restricted subsidiaries only, with all representations to be made as of the Closing Date, subject in all respects to the Certain Funds Provision), in each case with customary exceptions, limitations and qualifications to be mutually agreed and otherwise consistent with the Documentation Principles: accuracy of financial statements; no material adverse change; existence and standing of the Loan Parties; authorization and validity of the ABL Facility Documentation; compliance with laws; corporate power and authority; enforceability of the ABL Facility Documentation; governmental approvals; no conflict with law, material contractual obligations or organizational documents; no material litigation; no default; ownership of property material to the businesses of the Loan Parties; creation, perfection, validity and, to the extent applicable, first priority, of security interests in Collateral (subject to permitted liens and other exceptions to perfection to be mutually agreed and consistent with the Documentation Principles); intellectual property; taxes; insurance; Federal Reserve margin regulations; ERISA and other foreign pension matters; Investment Company Act; subsidiaries; environmental matters; labor matters; accuracy of written disclosure; solvency (defined as set forth in Exhibit D); use of proceeds; and sanctions laws and regulations.
|
||
Affirmative Covenants:
|
Subject to the Certain Funds Provision, and limited to the following (applicable to the Borrower and its restricted subsidiaries only), in each case with customary exceptions, limitations and qualifications to be mutually agreed, and otherwise consistent with the Documentation Principles: delivery of quarterly (for each of the first three fiscal quarters of any fiscal year) and annual financial statements, quarterly compliance certificates, annual projections, monthly collateral reporting (including agings and inventory reports) and monthly borrowing base certificates and other information reasonably requested by the ABL Revolving Lenders through the ABL Facility Administrative Agent (provided that, at any time Excess Availability is less than the greater of (i) 12.5% of the ABL Revolving Commitment and (ii) the sum of $9,375,000 plus the lesser of (x) 10.0% of the aggregate principal amount of the ABL Facility in excess of $75,000,000 (such aggregate incremental amount, the “ABL Facility Increase”) and (y) $5,625,000 (such greater amount, the “Excess Availability Threshold Amount”), (x) all applicable Borrowing Base-related collateral reporting and related borrowing base certificates will, to the extent requested by the ABL Facility Administrative Agent, be delivered on a weekly basis and (y) financial statements will be delivered on a monthly basis, in each case until such time as Excess Availability is greater than or equal to the Excess Availability Threshold Amount for twenty (20) consecutive days); payment of taxes; continuation of business and maintenance of existence and material rights, licenses and privileges; compliance with laws (including environmental laws); maintenance of property (subject to casualty, condemnation and normal wear and tear) and reasonable and adequate insurance; maintenance of books and records; right of the ABL Facility Administrative Agent to inspect property and books and records (including periodic field examinations and inventory appraisals) (it being understood and agreed that any ABL Revolving Lender may, at its own cost and expense, accompany the ABL Facility Administrative Agent for such inspections, examinations and appraisals); notices of defaults, material litigation and other material events; depository banks (provided that the Borrower and its restricted subsidiaries may maintain accounts at financial institutions other than the ABL Facility Administrative Agent so long as such accounts are subject to customary control agreements); use of proceeds; further assurances; and guarantor and collateral requirements.
|
“Excess Availability” means, at any time, an amount equal to Availability as of such time, plus the aggregate amount of unrestricted cash and cash equivalents of the Borrower and the Guarantors at such time (in each case, to the extent maintained in segregated accounts at the ABL Facility Administrative Agent and subject to customary control agreements).
|
|||
Negative Covenants:
|
Subject to the Certain Funds Provisions, limited to the following (applicable to the Borrower and its restricted subsidiaries only), in each case with customary exceptions, limitations and qualifications to be mutually agreed, and otherwise consistent with the Documentation Principles: indebtedness (including guarantee obligations in respect of indebtedness and preferred stock of restricted subsidiaries); liens; mergers, consolidations, liquidations and dissolutions; sales of assets; payment of restricted payments (including dividends and other payments in respect of equity interests), provided however, that restricted payments will be permitted without limitation upon satisfaction of one of the Payment Conditions, as defined below; investments (including loans and advances) and acquisitions, provided however that such investments and acquisitions will be permitted without limitation upon satisfaction of one of the Payment Conditions and, in the case of acquisitions, other customary conditions; sale and leaseback transactions; swap agreements; optional payments and modifications of subordinated and other junior debt instruments, provided however that such prepayments will be permitted without limitation upon satisfaction of one of the Payment Conditions; transactions with affiliates; changes in fiscal year (other than with the consent of the ABL Facility Administrative Agent); restrictive agreements (including negative pledge clauses); amendment of organizational documents; sanctions laws and regulations; and, so long as the 3.50% Convertible Senior Notes due June 1, 2016 issued by the Borrower (the “Existing Convertible Notes”) remain outstanding, during the period commencing on March 1, 2016 and ending on June 1, 2016, the Borrower shall not permit liquidity (defined as unrestricted and unencumbered cash, cash equivalents and Excess Availability (calculated without giving effect to whether the applicable accounts are maintained with the ABL Administrative Agent or not) (without duplication)) to be less than the sum of $120,000,000 plus an amount equal to 25% of the Revolving Commitment; provided that the foregoing covenant shall cease to apply if the Borrower shall have demonstrated to the reasonable satisfaction of the ABL Facility Administrative Agent (acting in consultation with the Required Lenders) that the Borrower has made and shall maintain alternative arrangements (such as, without limitation, binding refinancing commitments or satisfactory hedging arrangements) to provide for the repayment and/or refinancing in full of the Existing Convertible Notes on or prior to the maturity date thereof.
|
“Payment Conditions” means (i) after giving effect to the proposed event as if it occurred on the first day of the Pro Forma Period, pro forma Excess Availability greater than 25.0% of the ABL Revolving Commitment at all times during the Pro Forma Period, or (ii) after giving effect to the proposed event as if it occurred on the first day of the Pro Forma Period, (A) pro forma Excess Availability at all times during the Pro Forma Period greater than 17.5% of the ABL Revolving Commitment and (B) a fixed charge coverage ratio greater than 1.10 to 1.00 (computed on a pro forma basis for the most recent four fiscal quarter period for which financials are required to be delivered under the ABL Facility Documentation).
|
|||
“Pro Forma Period” means the period commencing thirty (30) days prior to the date an event is proposed by the Borrower to occur through the date of such event.
|
|||
Financial Covenant:
|
If on any date Excess Availability is less than the greater (such greater amount, the “ABL Covenant Trigger Amount”) of (i) 10.0% of the ABL Revolving Commitment and (ii) the sum of $7,500,000 plus the lesser of (x) 10.0% of the ABL Facility Increase and (y) $7,500,000, then for any period (such period, a “Compliance Period”) commencing on such date and continuing until Excess Availability is subsequently greater than or equal to the ABL Covenant Trigger Amount for 45 consecutive calendar days (provided that if two separate, non-overlapping Compliance Periods have commenced and subsequently ended during any calendar year, the third Compliance Period during such year shall end no earlier than December 31 of such year), the Borrower shall comply on a quarterly basis with a minimum fixed charge coverage ratio of 1.00 to 1.00. The foregoing financial covenant shall be tested (i) immediately upon trigger and computed on a mutually agreed upon pro forma basis based on the most recently completed four fiscal quarter period for which financial statements have been delivered and (ii) on the last day of each subsequently completed fiscal quarter of the Borrower ending during a Compliance Period for which financial statements have been delivered.
|
Cash Dominion:
|
Subject to the limitations set forth below, the Loan Parties will be subject to cash dominion for the life of the ABL Revolving Facility (excluding (i) trust accounts or accounts solely used for the purposes of making payments in respect of payroll, taxes, and/or employees wages and/or benefits, (ii) other accounts with average funds on deposit less than an amount to be agreed and (iii) certain other accounts to be mutually agreed (collectively, “Excluded Accounts”)). Other than on the Closing Date, funds deposited into any depository account will be swept on a daily basis into a blocked account with the ABL Facility Administrative Agent at any time Excess Availability is less than the Excess Availability Threshold Amount (provided that, so long as Excess Availability is greater than or equal to the Excess Availability Threshold Amount for thirty (30) consecutive days, collections which are received into the blocked account with the ABL Facility Administrative Agent or any other depository account may, at the option of the Borrower, be deposited into the applicable Loan Parties’ operating accounts rather than being used to reduce amounts owing under the ABL Revolving Facility). The appropriate documentation, including blocked account and/or lockbox agreements reasonably acceptable to the ABL Facility Administrative Agent, will be required for all depository accounts of the Loan Parties; it being understood and agreed that the Borrower and its restricted subsidiaries shall use commercially reasonable efforts to deliver such documentation as soon as commercially reasonable but in any event the Loan Parties shall be required to deliver such documentation not later than 90 days after the Closing Date (or such later date as may be agreed upon by the ABL Facility Administrative Agent).
|
||
Unrestricted Subsidiaries:
|
The ABL Facility Documentation will contain provisions to be mutually agreed between the Borrower and the ABL Facility Administrative Agent pursuant to which the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a restricted subsidiary. Unrestricted subsidiaries will not be subject to the mandatory prepayment, representation and warranties, affirmative or negative covenants or event of default provisions of the ABL Facility Documentation and the cash held by, results of operations, interest expenses and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of determining compliance with any financial covenant or other financial metric contained in the ABL Facility Documentation.
|
Events of Default:
|
Limited to the following (applicable to the Borrower and its restricted subsidiaries only), and subject to grace periods, notice requirements, thresholds, and materiality qualifications to be mutually agreed, and otherwise shall be consistent with the Documentation Principles: nonpayment of principal when due; nonpayment of interest, fees or other amounts after five business days; representations and warranties are incorrect in any material respect; violation of covenants (subject, in the case of certain affirmative covenants, to a grace period of thirty (30) days following the earlier of the Borrower’s knowledge thereof and written notice from the ABL Facility Administrative Agent); cross-default to occurrence of a default (whether or not resulting in acceleration) under any other agreement governing indebtedness, in excess of an amount to be agreed upon and after the expiration of all applicable grace and notice periods, of the Borrower or any of its restricted subsidiaries; bankruptcy events in respect of the Borrower and any material restricted subsidiaries (subject to a 60-day grace period for involuntary bankruptcy or insolvency events); certain ERISA events that could reasonably be expected to have a material adverse effect; monetary judgments in excess of an amount to be agreed upon (after giving effect to third-party insurance from a creditworthy insurer that has not denied coverage); any material provision of any of the ABL Facility Documentation shall cease to be in full force and effect (other than pursuant to its express terms) or any Loan Party thereto shall assert that any provision of any ABL Facility Documentation is not in full force and effect; any security interests created in a material portion of the Collateral by the security documents shall cease to be enforceable and of the same priority purported to be created thereby; and a change of control.
|
||
Voting:
|
Amendments, waivers and consents with respect to the ABL Facility Documentation shall require the approval of at least two (2) (if there is more than one (1) ABL Revolving Lender) ABL Revolving Lenders holding more than 50% of the Revolving Credit Exposure and unused commitments under the ABL Revolving Facility (the “Required Lenders”), except that (a) the consent of each ABL Revolving Lender directly affected thereby shall be required with respect to (i) reductions in the amount or extensions of the scheduled date of final maturity of any ABL Revolving Loan, (ii) reductions in the rate of interest or any fee or extensions of any due date thereof and (iii) increases in the amount or extensions of the expiry date of any ABL Revolving Lender’s commitment and (b) the consent of each ABL Revolving Lender shall be required to (i) increase the advance rates set forth in the definition of Borrowing Base, (ii) modify the pro rata sharing requirements of the ABL Facility Documentation, (iii) permit any Loan Party to assign its rights under the ABL Facility Documentation, (iv) modify any of the voting percentages, (v) release all or substantially all of the value of the Guarantors (taken as a whole), except as otherwise permitted in the ABL Facility Documentation; or (vi) release all or substantially all of the Collateral, except as otherwise permitted in the ABL Facility Documentation.
|
The ABL Facility Documentation shall contain customary provisions for replacing ABL Revolving Lenders claiming increased costs, tax gross ups and similar required indemnity payments and replacing non-consenting ABL Revolving Lenders in connection with amendments and waivers requiring the consent of all ABL Revolving Lenders or of all ABL Revolving Lenders directly affected thereby so long as the Required Lenders shall have consented thereto.
|
|||
If the ABL Facility Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical nature in the ABL Facility Documentation, then the ABL Facility Administrative Agent and the Borrower shall be permitted to amend such provision without further action or consent of any other party if the same is not objected to in writing by the Required Lenders to the ABL Facility Administrative Agent within five business days following receipt of notice thereof.
|
|||
Assignments and
|
|||
Participations:
|
The ABL Revolving Lenders shall be permitted to assign to certain eligible assignees all or a portion of their ABL Revolving Loans and commitments under the ABL Revolving Facility with the consent, not to be unreasonably withheld or delayed, of (a) the Borrower (provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the ABL Facility Administrative Agent within ten business days after having received notice thereof), unless (i) the assignee is an ABL Revolving Lender, an affiliate of an ABL Revolving Lender or an approved fund or (ii) a payment or bankruptcy event of default has occurred and is continuing, (b) the ABL Facility Administrative Agent, (c) the Issuing Lender and (d) the Swing Line Lender; provided, that no assignments shall be made to Disqualified Institutions or any defaulting lender. In the case of partial assignments (other than to another ABL Revolving Lender, to an affiliate of an ABL Revolving Lender or an approved fund), the minimum assignment amount shall be $5,000,000, unless otherwise agreed by the Borrower and the ABL Facility Administrative Agent.
|
||
The ABL Revolving Lenders shall also be permitted to sell participations in their ABL Revolving Loans to other persons (other than any natural persons, any Disqualified Institution and any defaulting lender). Participants shall have the same benefits as the ABL Revolving Lenders with respect to yield protection and increased cost provisions, subject to customary limitations and restrictions. Voting rights of participants shall be limited to matters in respect of (a) reductions of principal, interest or fees owing to such participant, (b) extensions of final scheduled maturity or times for payment of interest or fees owing to such participant and (c) releases of Collateral or Guarantors requiring the approval of all ABL Revolving Lenders. Pledges of ABL Revolving Loans in accordance with applicable law shall be permitted, subject to customary restrictions.
|
“Disqualified Institutions” means (a) persons that are reasonably determined by the Borrower to be competitors of the Borrower or its subsidiaries or the Target or its subsidiaries and which are specifically identified by the Borrower to the ABL Facility Administrative Agent in writing prior to the date hereof (“Disqualified Competitors”) and (b) any of such Disqualified Competitors’ affiliates to the extent such affiliates (x) are clearly identifiable as affiliates of Disqualified Competitors on the basis of such affiliates’ names and (y) are not bona fide debt investment funds that are affiliates of Disqualified Competitors; provided that, solely with respect to the foregoing clause (a), the Borrower, upon reasonable notice to the ABL Facility Administrative Agent after the date hereof, shall be permitted to supplement in writing by name the list of persons that are Disqualified Competitors to the extent such supplemented person is a competitor (or affiliate thereof, other than a bona fide debt investment fund) of the Borrower or its subsidiaries or the Target or its subsidiaries, which supplement shall become effective two (2) days after delivery to the ABL Facility Administrative Agent and the ABL Revolving Lenders, but which shall not apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest in the ABL Revolving Loans (but solely with respect to such ABL Revolving Loans). The initial list of Disqualified Competitors shall be made available to the ABL Revolving Lenders on the Closing Date.
|
|||
Yield Protection:
|
The ABL Facility Documentation shall contain provisions (a) protecting the ABL Revolving Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy, liquidity and other requirements of law (including reflecting that both (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof and (y) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III shall, in the case of each of the foregoing clause (x) and clause (y), be deemed to be a change in law regardless of the date enacted, adopted or issued), (b) indemnifying the ABL Revolving Lenders for actual “breakage” costs incurred in connection with, among other things, any prepayment of a Eurodollar Loan (as defined in Annex I to Exhibit C hereto) on a day other than the last day of an interest period with respect thereto (other than lost profits) and (c) providing the ABL Revolving Lenders with a customary tax gross up (subject to exceptions for customary categories of excluded taxes).
|
||
Field Examinations:
|
Field examinations will be conducted on an annual basis at the discretion of the ABL Facility Administrative Agent, to ensure the adequacy of Borrowing Base collateral and related reporting and control systems; provided that, in the event Excess Availability is less than the Excess Availability Threshold Amount, two field examinations per year will be conducted; provided further that there shall be no limitation on the number or frequency of field examinations if an event of default shall have occurred and be continuing and the ABL Facility Administrative Agent has given notice thereof. For the avoidance of doubt, the limitations in the foregoing sentence shall not limit or otherwise modify the Borrower’s general obligations under the affirmative covenants in the ABL Facility Documentation regarding the right of the ABL Revolving Lenders to inspect property and books and records.
|
Appraisals:
|
Inventory appraisals will be conducted at the Borrower’s expense on an annual basis at the discretion of the ABL Facility Administrative Agent; provided that, in the event Excess Availability is less than the Excess Availability Threshold Amount, two inventory appraisals per year at the Borrower’s expense will be conducted; provided further that there shall be no limitation on the number or frequency of inventory appraisals at the Borrower’s expense if an event of default shall have occurred and be continuing and the ABL Facility Administrative Agent has given notice thereof.
|
||
Expenses and
|
|||
Indemnification:
|
The Borrower shall pay promptly following written demand (including documentation reasonably supporting such request) (a) all reasonable and documented out-of-pocket expenses of the ABL Revolving Facility Administrative Agent and the ABL Lead Arrangers associated with the syndication of the ABL Revolving Facility and the preparation, execution, delivery and administration of the ABL Facility Documentation and any amendment or waiver with respect thereto (but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel to the ABL Facility Administrative Agent and the ABL Lead Arrangers, taken as a whole, plus one local counsel in each applicable jurisdiction), (b) all reasonable and documented out-of-pocket expenses of the ABL Facility Administrative Agent and the ABL Revolving Lenders (but limited, in the case of legal fees and expenses, to the fees, disbursements and other charges of one counsel to the ABL Facility Administrative Agent and the ABL Revolving Lenders, taken as a whole (and in the case of a conflict of interest, one additional counsel to the similarly affected group of ABL Revolving Lenders, taken as a whole)) in connection with the enforcement of the ABL Facility Documentation or protection of rights thereunder. and (c) fees and expenses associated with collateral monitoring, collateral reviews and appraisals (including field examination fees currently equal to $125 per hour per examiner, plus out-of-pocket expenses) and reasonable fees and expenses of other advisors and professionals engaged by the ABL Facility Administrative Agent or the ABL Facility Lead Arrangers with the prior written consent of the Borrower (such consent not to be unreasonably withheld or delayed); provided that (i) prior to the Closing Date, only one inventory appraisal, one full scope field examination and, at the option of the ABL Facility Administrative Agent, one limited scope pre-closing field examination, in each case in respect of the Borrower and its subsidiaries (or, if any such appraisal or examination is conducted separately for the Target and its subsidiaries, two such inventory appraisals, two such full scope field examinations and, at the option of the ABL Facility Administrative Agent, two such limited scope pre-closing field examinations) shall be included within the scope of this paragraph and (ii) on and after the Closing Date, expense reimbursements with respect to field examinations and inventory appraisals shall be limited as described above.
|
The ABL Facility Administrative Agent, the ABL Facility Lead Arrangers and the ABL Revolving Lenders (and their respective affiliates and their respective officers, directors, employees, advisors and agents) (each, an “indemnified person”) will be indemnified and held harmless against, any actual losses, claims, damages, liabilities or documented expenses (but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one counsel and, if necessary one additional local counsel in each relevant jurisdiction, to the indemnified persons taken as a whole (and, in the case of a conflict of interest, one additional counsel to the similarly affected group of indemnified persons, taken as a whole)) incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof, except, in the case of any indemnified person, to the extent they arise from (i) the gross negligence, bad faith or willful misconduct of such indemnified person (or its affiliates and its officers, directors, employees, advisors and agents), (ii) in connection with a claim made by the Borrower, the material breach of the ABL Facility Documentation by such indemnified person (or its affiliates and its officers, directors, employees, advisors and agents) (in the case of each of the preceding clause (i) and this clause (ii), as determined by a court of competent jurisdiction in a final non-appealable judgment) or (iii) any disputes solely among indemnified persons (other than any claims against an indemnified person in its capacity or in fulfilling its role as the ABL Facility Administrative Agent or an ABL Lead Arranger or similar role under the ABL Revolving Facility and other than any claims arising out of any act or omission of the Borrower or any of its affiliates).
|
|||
Defaulting Lenders:
|
The ABL Facility Documentation will include the ABL Facility Administrative Agent’s customary provisions regarding defaulting lenders.
|
||
Governing Law and Forum:
|
The ABL Facility Documentation will be governed by the internal laws of the State of New York.
|
||
Counsel to the ABL Facility
|
|||
Administrative Agent:
|
Sidley Austin LLP.
|
Interest Rate Options:
|
The Borrower may elect that the ABL Revolving Loans comprising each borrowing bear interest at a rate per annum equal to (a) the Alternate Base Rate (such ABL Revolving Loans herein referred to as “ABR Loans”) plus the Applicable Margin or (b) the Adjusted LIBO Rate (such ABL Revolving Loans herein referred to as “Eurodollar Loans”) plus the Applicable Margin; provided, that all Swing Line Loans shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.
|
|
As used herein:
|
||
“Alternate Base Rate” or “ABR” means the greatest of (a) the prime rate of interest announced from time to time by Chase or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes (the “Prime Rate”), (b) the federal funds effective rate from time to time plus 0.5% per annum and (c) the Adjusted LIBO Rate for a one month interest period as displayed on Reuters Screen LIBOR01 Page (or on any successor or substitute page) on such day plus 1% per annum.
|
||
“Adjusted LIBO Rate” means the London interbank offered rate administered by the British Bankers Association or any other person that takes over the administration of such rate for U.S. Dollars (adjusted for statutory reserve requirements for eurocurrency liabilities) for a period equal to one, two, three or six, or, to the extent agreed to by all relevant affected ABL Revolving Lenders, twelve months (as selected by the Borrower) as displayed on Reuters Screen LIBOR01 Page or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the ABL Facility Administrative Agent from time to time in its reasonable discretion (the “LIBO Screen Rate”) at approximately 11:00 a.m., London time, two (2) business days prior to the commencement of such interest period; provided that, if the LIBO Screen Rate shall not be available at such time for a period equal in length to such interest period then the Adjusted LIBO Rate shall be determined by the ABL Facility Administrative Agent in accordance with procedures to be outlined in the ABL Facility Documentation.
|
||
“Applicable Margin” means a margin to be determined by the ABL Facility Administrative Agent when a commitment is delivered or, if a commitment has not been delivered, on the Closing Date, which margin is expected to initially equal the following amounts for ABL Revolving Loans:
|
||
0.50% per annum in the case of ABR Loans
|
||
1.50% per annum in the case of Eurodollar Loans
|
Performance Pricing:
|
Commencing at least six (6) months after the Closing Date, the Applicable Margins, as well as the Letter of Credit Fee, will be subject to performance pricing adjustments as set forth in the pricing grid attached hereto.
|
|
Interest Payment Dates:
|
In the case of ABR Loans, interest shall be payable in arrears on the last day of each month, upon any prepayment due to acceleration and at final maturity.
|
|
In the case of Eurodollar Loans, interest shall be payable in arrears on the last day of each interest period and, in the case of an interest period longer than three months, quarterly, upon any prepayment and at final maturity.
|
||
Commitment Fee:
|
A commitment fee equal to 0.25% per annum on the average daily unused portion of the ABL Revolving Commitment, payable quarterly in arrears to the ABL Facility Administrative Agent for the ratable benefit of the ABL Revolving Lenders (including the ABL Facility Administrative Agent in its capacity as an ABL Revolving Lender) from the Closing Date until termination of the ABL Revolving Commitment.
|
|
Letter of Credit Fees:
|
Letter of Credit: A letter of credit fee, equal to the ABL Revolving Facility Applicable Margin for Eurodollar Loans, on the daily maximum amount to be drawn under all Letters of Credit, payable monthly in arrears to the ABL Facility Administrative Agent for the ratable benefit of the ABL Revolving Lenders (including the Issuing Lender).
|
|
Fronting Fee: A fronting fee of 0.125% per annum of the face amount of each Letter of Credit issued shall be payable to the Issuing Lender, together with any documentary and processing charges in accordance with the Issuing Lender’s standard schedule for such charges with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of each letter of credit and each drawing made thereunder.
|
||
Default Rate:
|
After a payment default, the applicable interest rate and Letter of Credit Fee will be increased by 2% per annum on such overdue amounts (and new Eurodollar Loans may be suspended). Overdue interest, fees and other amounts shall bear interest at 2% per annum above the rate applicable to ABR Loans.
|
|
Rate and Fee Basis:
|
All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of ABR Loans, the interest rate payable on which is then based on the Prime Rate) for actual days elapsed.
|
Pricing Level
|
Fixed Charge Coverage Ratio
|
Eurodollar
Applicable
Margin
|
ABR
Applicable
Margin
|
Level I
|
> 1.50 to 1.00
|
1.50%
|
0.50%
|
Level II
|
> 1.25 to 1.00 but
< 1.50 to 1.00
|
1.75%
|
0.75%
|
Level III
|
< 1.25 to 1.00
|
2.00%
|
1.00%
|
By:
|
||
Name:
|
[●]
|
|
Title:
|
Chief Financial Officer
|
AKORN, INC.
|
|||
Date: September 5, 2013
|
By:
|
/s/ Joseph Bonaccorsi
|
|
Name:
|
Joseph Bonaccorsi
|
||
Title:
|
Senior Vice President, General Counsel and Secretary
|
||
AKORN ENTERPRISES, INC.
|
|||
By:
|
/s/ Joseph Bonaccorsi
|
||
Name:
|
Joseph Bonaccorsi
|
||
Title:
|
Secretary
|
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