APP Pharmaceuticals Inc. Contracts
Sample Business Contracts
Credit Agreement - American Pharmaceutical Partners Inc., Canadian Imperial Bank of Commerce, Bank of America NA, UBS Warburg LLC and CIBC World Markets Corp.
Loan Forms
$75,000,000
CREDIT AGREEMENT
among
AMERICAN PHARMACEUTICAL PARTNERS, INC.,
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent,
BANK OF AMERICA, N.A.
and
UBS WARBURG LLC,
as Co-Syndication Agents
Dated as of December 14, 2001
CIBC WORLD MARKETS CORP.,
as Sole Lead Arranger and Sole Bookrunning Manager
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS...................................................1
1.1 Defined Terms................................................1
1.2 Other Definitional Provisions...............................30
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..............................30
2.1 Term Commitments............................................30
2.2 Procedure for Tranche A Term Loan Borrowing.................31
2.3 Repayment of Tranche A Term Loans...........................31
2.4 Revolving Commitments.......................................32
2.5 Procedure for Revolving Loan Borrowing......................32
2.6 Commitment Fees, Etc........................................33
2.7 Termination or Reduction of Revolving Commitments...........33
2.8 Optional Prepayments........................................33
2.9 Mandatory Prepayments.......................................34
2.10 Conversion and Continuation Options.........................36
2.11 Limitations on Eurocurrency Tranches........................36
2.12 Interest Rates and Payment Dates............................37
2.13 Computation of Interest and Fees............................37
2.14 Inability to Determine Interest Rate........................38
2.15 Pro Rata Treatment and Payments.............................38
2.16 Requirements of Law.........................................40
2.17 Taxes.......................................................41
2.18 Indemnity...................................................44
2.19 Change of Lending Office....................................44
2.20 Replacement of Lenders......................................44
2.21 Increase in Revolving Commitments...........................45
SECTION 3. LETTERS OF CREDIT............................................46
3.1 L/C Commitment..............................................46
3.2 Procedure for Issuance of Letter of Credit..................46
3.3 Fees and Other Charges......................................47
3.4 L/C Participations..........................................47
3.5 Reimbursement Obligation of the Borrower....................48
3.6 Obligations Absolute........................................48
3.7 Letter of Credit Payments...................................49
3.8 Applications................................................49
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SECTION 4. REPRESENTATIONS AND WARRANTIES...............................49
4.1 Financial Condition.........................................49
4.2 No Change...................................................50
4.3 Existence; Compliance with Law..............................50
4.4 Power; Authorization; Enforceable Obligations...............50
4.5 No Legal Bar................................................51
4.6 Litigation..................................................51
4.7 No Default..................................................51
4.8 Ownership of Property; Liens................................52
4.9 Intellectual Property.......................................52
4.10 Taxes.......................................................52
4.11 Federal Regulations.........................................52
4.12 Labor Matters...............................................53
4.13 ERISA.......................................................53
4.14 Investment Company Act; Other Regulations...................53
4.15 Subsidiaries................................................54
4.16 Use of Proceeds.............................................54
4.17 Environmental Matters.......................................54
4.18 Accuracy of Information, Etc................................55
4.19 Security Documents..........................................55
4.20 Solvency....................................................57
4.21 Regulation H................................................57
4.22 FDA Compliance..............................................58
4.23 Agreements with American BioScience.........................58
SECTION 5. CONDITIONS PRECEDENT.........................................58
5.1 Conditions to Initial Extension of Credit...................58
5.2 Conditions to Each Extension of Credit......................64
SECTION 6. AFFIRMATIVE COVENANTS........................................64
6.1 Financial Statements........................................64
6.2 Certificates; Other Information.............................65
6.3 Payment of Obligations......................................66
6.4 Maintenance of Existence; Compliance........................67
6.5 Maintenance of Property; Insurance..........................67
6.6 Inspection of Property; Books and Records; Discussions......67
6.7 Notices.....................................................68
6.8 Environmental Laws..........................................69
6.9 Interest Rate Protection....................................70
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6.10 Additional Collateral, Etc..................................70
6.11 Minimum Liquidity...........................................72
6.12 FDA and EPA Matters.........................................72
6.13 Post-Closing Matters........................................73
SECTION 7. NEGATIVE COVENANTS...........................................73
7.1 Financial Condition Covenants...............................74
7.2 Indebtedness................................................75
7.3 Liens.......................................................76
7.4 Fundamental Changes.........................................79
7.5 Disposition of Property.....................................80
7.6 Restricted Payments.........................................81
7.7 Capital Expenditures........................................81
7.8 Investments.................................................81
7.9 Optional Payments and Modifications of Certain Debt
Instruments or License Agreement; Synthetic
Purchase Agreements.....................................83
7.10 Transactions with Affiliates................................83
7.11 Sales and Leasebacks........................................84
7.12 Changes in Fiscal Periods...................................84
7.13 Negative Pledge Clauses.....................................84
7.14 Clauses Restricting Subsidiary Distributions................84
7.15 Lines of Business...........................................85
7.16 Limitation of Guarantee Obligations.........................85
7.17 Payments to American BioScience.............................85
SECTION 8. EVENTS OF DEFAULT............................................85
SECTION 9. THE AGENTS...................................................89
9.1 Appointment.................................................89
9.2 Delegation of Duties........................................90
9.3 Exculpatory Provisions......................................90
9.4 Reliance by Administrative Agent............................90
9.5 Notice of Default...........................................91
9.6 Non-Reliance on Agents and Other Lenders....................91
9.7 Indemnification.............................................92
9.8 Agent in Its Individual Capacity............................92
9.9 Successor Administrative Agent..............................92
9.10 Documentation Agent and Syndication Agent...................93
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SECTION 10. MISCELLANEOUS................................................93
10.1 Amendments and Waivers......................................93
10.2 Notices.....................................................94
10.3 No Waiver; Cumulative Remedies..............................96
10.4 Survival of Representations and Warranties..................96
10.5 Payment of Expenses and Taxes...............................96
10.6 Successors and Assigns; Participations and Assignments......97
10.7 Adjustments; Set-off.......................................100
10.8 Counterparts...............................................101
10.9 Severability...............................................101
10.10 Integration................................................101
10.11 GOVERNING LAW..............................................101
10.12 Submission to Jurisdiction; Waivers........................101
10.13 Acknowledgments............................................102
10.14 Releases of Guarantees and Liens...........................102
10.15 Confidentiality............................................103
10.16 WAIVERS OF JURY TRIAL......................................103
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SCHEDULES:
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1 Lender Commitments
1.1C Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.9(a) Intellectual Property
4.9(c) Intellectual Property Challenges
4.10 Taxes
4.15(a) Subsidiaries
4.15(b) Capital Stock
4.17 Environmental Matters
4.19(a) UCC and Other Necessary Filings
4.19(c) Mortgage Filing Jurisdictions
4.22 FDA Compliance
4.23 ABI Agreements
5.1(d)(i) UCC, Judgment and Tax Lien Searches
5.1(d)(ii) Intellectual Property Searches
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.8(a) Existing Investments
7.10 Existing Affiliate Transactions
EXHIBITS:
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A-1 Form of Tranche A Term Note
A-2 Form of Revolving Note
B Form of Notice of Borrowing
C Form of Notice of Conversion/Continuation
D Form of Exemption Certificate
E-1 Form of Master Security Agreement
E-2 Form of Mortgage
E-3 Form of Perfection Certificate
E-4 Form of Landlord Lien Waiver
E-5 Form of Intercompany Assignment
E-6 Form of Intercompany Note
E-7 Form of Intercompany Mortgage
E-8 Form of American BioScience Pledge Agreement
F Form of Compliance Certificate
G-1 Form of Borrower Closing Certificate
G-2 Form of Guarantor Closing Certificate
H-1 Form of Opinion of Morrison & Foerster LLP
H-2 Form of Opinion of General Counsel
H-3 Form of Local Counsel Opinion
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I Form of Solvency Certificate
J Form of Assignment and Acceptance Agreement
K Form of Subsidiary Guarantee Agreement
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This CREDIT AGREEMENT (this "Agreement"), dated as of December 14,
2001, is among American Pharmaceutical Partners, Inc., a Delaware corporation
(the "Borrower"), the several banks and other financial institutions or entities
from time to time parties to this Agreement (the "Lenders") and Canadian
Imperial Bank of Commerce, as administrative agent (the "Administrative Agent")
and Bank of America, N.A. and UBS Warburg LLC, as co-syndication agents (the
"Co-Syndication Agents").
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
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this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ABI 35 Payment": as defined in Section 7.17.
"ABI 35 Payment Date": December 15, 2002 or such other date when the
ABI 35 Payment is due pursuant to the License Agreement as amended from time to
time in accordance with Section 7.9.
"ABR": for any day, a rate per annum equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acquired Business": (a) any Person, a controlling interest in the
Capital Stock of which is acquired after the date hereof by the Borrower or any
of its Subsidiaries, (b) any assets constituting all or a discrete business or
operating unit of the seller acquired after the date hereof by the Borrower or
any of its Subsidiaries or (c) any product or product lines acquired after the
date hereof by the Borrower or any of its Subsidiaries, in each case pursuant to
a Permitted Acquisition in accordance with the terms of this Agreement.
"Acquired Indebtedness": Indebtedness of an Acquired Business
acquired by the Borrower and/or any of its Subsidiaries after the Closing Date,
if such Indebtedness was
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outstanding prior to the time such Acquired Business was acquired and was not
created in contemplation of or in connection with the acquisition thereof.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": Canadian Imperial Bank of Commerce, together
with its affiliates, as the arranger of the Commitments and as the
administrative agent for the Lenders under this Agreement and the other Loan
Documents, together with any of its successors.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under direct or indirect
common control with, such Person. For purposes of this definition, "control" of
a Person means the power, directly or indirectly, either to (a) vote 20% or more
of the securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agents": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Tranche A Term Loans and
(ii) the amount of such Lender's Revolving Commitment then in effect or, if the
Revolving Commitments have been terminated, the amount of such Lender's
Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": as defined in the preamble hereto.
"American BioScience": American BioScience, Inc., a California
corporation.
"American BioScience Pledge Agreement": the pledge agreement to be
executed and delivered by American BioScience and the Administrative Agent,
substantially in the form of Exhibit E-8
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"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
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ABR Loans Eurocurrency Loans
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Revolving Loans 2.75% 3.75%
Tranche A Term Loans 2.75% 3.75%
provided that on and after the first Adjustment Date occurring after the
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quarterly Compliance Certificate delivered for the quarter ended March 31, 2002
pursuant to Section 6.2(b) is delivered under this Agreement, the Applicable
Margin with respect to Revolving Loans will be determined pursuant to the
Pricing Grid.
"Application": an application, in such form as the relevant Issuing
Lender may specify from time to time, requesting such Issuing Lender to open a
Letter of Credit.
"Approved Fund": any Fund that is administered or managed by (a) a
Lender, (b) a Lender Affiliate or (c) an entity or an Affiliate of an entity
that administers or manages a Lender.
"Asset Sale": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e) or (g) of Section 7.5) that yields gross proceeds to any
Group Member (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $500,000.
"Assignee": as defined in Section 10.6(c).
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit J.
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"Assignment of Intercompany Mortgage": the Collateral assignment to
be executed and delivered by WebDrugSource.com in favor of the Administrative
Agent (for the benefit of the Secured Parties), substantially in the form of
Exhibit E-5.
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"Assignor": as defined in Section 10.6(c).
"Available Revolving Commitment": as to any Revolving Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
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then outstanding.
"Benefited Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States and any successor thereto.
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"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurocurrency Loans, such day is
also a day for trading by and between banks in Dollar deposits or Euro deposits,
as the case may be, in the interbank eurocurrency market.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurocurrency time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not
less than $500.0 million; (c) commercial paper of an issuer rated at least A-1
by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within
one year
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from the date of acquisition; (d) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days, with respect to securities issued or
fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's; (f)
securities with maturities of one year or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g) shares of
money market mutual or similar funds with assets in excess of $500.0 million
which invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Collateral Account": as defined in the Master Security Agreement.
"Commitment": as to any Lender, the sum of the Tranche A Term
Commitment and the Revolving Commitment of such Lender.
"Commitment Fee Rate":1/2of 1% per annum.
"Commodity Account": as defined in the Master Security Agreement.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit F.
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"Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided that the designation
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by any Lender of a Conduit Lender shall not relieve the designating Lender of
any of its obligations to fund a Loan under this Agreement if, for any reason,
its Conduit Lender fails to fund any such Loan, and the designating Lender (and
not the Conduit Lender) shall have the sole right and responsibility to deliver
all consents and waivers required or requested under this Agreement with respect
to its Conduit Lender, and provided, further, that no Conduit Lender shall (a)
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be entitled to receive any greater amount pursuant to Section 2.16, 2.17, 2.18
or 10.5 than the designating Lender would have been entitled to receive in
respect of the extensions of credit made by such Conduit Lender or (b) be deemed
to have any Commitment.
"Confidential Information Memorandum": the Confidential Information
Memorandum prepared in connection with this Agreement and furnished to certain
Lenders.
"Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Indebtedness of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a charge in
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the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization and writeoffs of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization and writeoffs of intangibles (including,
but not limited to, goodwill), (e) any extraordinary, unusual or non-recurring
non-cash expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such period,
non-cash losses on sales of assets outside of the ordinary course of business);
provided that the amounts referred to in this clause (e) shall not, in the
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aggregate, exceed $5.0 million for any fiscal year of the Borrower, (f) all
non-cash noncapitalized transaction costs and charges incurred in connection
with consummated acquisitions or divestitures occurring after the Closing Date
to the extent such costs and charges are incurred within 18 months of the
consummation of such acquisition, (g) Licensing Payments made during such period
to the extent such Licensing Payments are deducted in arriving at Consolidated
Net Income and (h) non-recurring expenses incurred in the fourth quarter of
fiscal year 2000 related to VivoRx settlement payments in an amount not
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to exceed $30.4 million; and minus, to the extent included in the statement of
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such Consolidated Net Income for such period, the sum of (a) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (b) any other non-cash income. For the purposes of calculating
Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a
"Reference Period") pursuant to any determination of the Consolidated Leverage
Ratio, (i) if at any time during such Reference Period the Borrower or any
Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for
such Reference Period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) attributable to the property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the Consolidated EBITDA (if negative) attributable thereto for such Reference
Period and (ii) if during such Reference Period the Borrower or any Subsidiary
shall have made a Material Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto as if such
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Material Acquisition occurred on the first day of such Reference Period. As used
in this definition, "Material Acquisition" means any acquisition of property or
series of related acquisitions of property that (a) constitutes assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
involves the payment of consideration by the Borrower and its Subsidiaries in
excess of $250,000; and "Material Disposition" means any Disposition of property
or series of related Dispositions of property that yields gross proceeds to the
Borrower or any of its Subsidiaries in excess of $250,000.
"Consolidated Fixed Charge Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b) the
aggregate amount actually paid by the Borrower and its Subsidiaries during such
period on account of Capital Expenditures, (c) scheduled payments made during
such period on account of principal of Indebtedness of the Borrower or any of
its Subsidiaries (including scheduled principal payments in respect of the
Tranche A Term Loans but specifically excluding any payments in respect of
Revolving Loans), (d) income taxes paid in cash by the Borrower and/or its
Subsidiaries during such period and (e) any Licensing Payments paid by the
Borrower and/or its Subsidiaries during such period; provided that if the
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Borrower completes a Qualified IPO, then any Licensing Payments made from the
proceeds of such Qualified IPO shall be excluded from this definition of
Consolidated Fixed Charges for the quarter in which Licensing Payments were
made, provided such Licensing Payments were made within 30 days of the
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consummation of such Qualified IPO.
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"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations and synthetic
lease obligations) of the Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries,
including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing plus net costs
under Hedge Agreements in respect of interest rates to the extent such net costs
are allocable to such period in accordance with GAAP.
"Consolidated Leverage Ratio": as at the last day of any period, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for
such period.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
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excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person
in which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the Borrower
or such Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Borrower that is not a
Subsidiary Guarantor to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation (other than under any Loan Document) or
Requirement of Law applicable to such Subsidiary.
"Consolidated Net Worth": means, as of any date, consolidated
shareholders' equity or net worth of the Borrower and its Subsidiaries as
determined in accordance with GAAP.
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date minus Consolidated Current Liabilities
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on such date.
"Contested Collateral Lien Conditions" means, with respect to any
Permitted Lien of the type described in clauses (a), (b) and (d) of Section 7.3,
the following conditions:
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(i) any proceeding instituted contesting such Lien shall operate to
stay the sale or forfeiture of any portion of the Mortgaged Properties
and/or any other Collateral on account of such Lien (except that, with
respect to any Mortgaged Property, the first sentence of Section 9.1 of
the Mortgages or, in the case of the real property located in Erie County,
New York, the Intercompany Mortgage, shall apply);
(ii) unless the Lien has been bonded over, at the option and upon
request of the Administrative Agent, the appropriate Credit Party shall
have deposited with the Administrative Agent a sum sufficient to pay and
discharge such Lien and the Administrative Agent's reasonable estimate of
all interest and penalties related thereto; and
(iii) such Lien shall in all respects be subject and subordinate in
priority to the Lien and security interest created and evidenced by the
Security Documents or, in the case of the real property located in Erie
County, New York, the Intercompany Mortgage, except if and to the extent
that the law or regulation creating, permitting or authorizing such Lien
provides that such Lien is or must be superior to the Lien and security
interest created and evidenced by the Security Documents or, in the case
of the real property located in Erie County, New York, the Intercompany
Mortgage.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control Agreement": as defined in the Master Security Agreement.
"Co-Syndication Agents": as defined in the preamble hereto.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Deposit Account": as defined in the Master Security Agreement.
"Destruction": any and all damage to, or loss or destruction of, or
loss of title to, all or any portion of the Mortgaged Properties and/or any
other Collateral.
"Disposition": with respect to any property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Disqualified Capital Stock": any Capital Stock of a Person or a
Subsidiary thereof which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the
holder), or upon the happening of any event, ma-
<PAGE>
-10-
tures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the final maturity date of the Loans, for cash or
securities constituting Indebtedness. Without limitation of the foregoing,
Disqualified Capital Stock shall be deemed to include any Preferred Stock of a
Person or a Subsidiary of such Person, with respect to either of which, under
the terms of such Preferred Stock, by agreement or otherwise, such Person or
Subsidiary is obligated to pay current dividends or distributions in cash during
the period prior to the final maturity date of the Loans, provided, however,
-------- -------
that Preferred Stock of a Person that is issued with the benefit of provisions
requiring a change of control offer to be made for such Preferred Stock in the
event of a change of control of such Person will not be deemed to be
Disqualified Capital Stock solely by virtue of such provisions.
"Dollars" and "$": dollars in lawful currency of the United States.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States.
"ECF Percentage": 50%.
"Eligible Assignee": any of (a) a Lender, (b) a Lender Affiliate
that is not a Non-U.S. Lender (unless a complete exemption from withholding tax
is available), (c) an Approved Fund that is not a Non-U.S. Lender (unless a
complete exemption from withholding tax is available), and (d) any other Person
(other than a natural Person) approved by the Administrative Agent and, in the
case of any assignment of a Revolving Loan, each Issuing Lender, and, unless (x)
such Person is taking delivery of an assignment in connection with physical
settlement of a credit derivatives transaction or (y) an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed). If the consent of the Borrower to an
assignment or to an Assignee is required hereunder (including a consent to an
assignment which does not meet the minimum assignment thresholds specified in
Section 10.6(c)), the Borrower shall be deemed to have given its consent ten
Business Days after the date notice thereof has been delivered by the Assignor
(through the Administrative Agent) unless such consent is expressly refused by
the Borrower prior to such tenth Business Day.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health (as relating to
exposure to Hazardous Materials) or the environment, as now or may at any time
hereafter be in effect.
<PAGE>
-11-
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Base Rate": with respect to each day during each
Interest Period pertaining to a Eurocurrency Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period
(as specified in the applicable Notice of Borrowing), provided that in the event
--------
that such rate does not appear on Page 3750 of the Telerate screen (or otherwise
on such screen), the "Eurocurrency Base Rate" shall be determined by reference
to such other comparable publicly available service for displaying eurodollar
rates as may be selected by the relevant Administrative Agent or, in the absence
of such availability, by reference to the rate at which the relevant
Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York
City time, as applicable, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein.
"Eurocurrency Loans": Loans the rate of interest applicable to which
is based upon the Eurocurrency Rate.
"Eurocurrency Rate": with respect to each day during each Interest
Period pertaining to a Eurocurrency Loan, a rate per annum determined for such
day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurocurrency Base Rate
--------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurocurrency Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurocurrency Tranche": the collective reference to Eurocurrency
Loans under a particular Facility the then current Interest Periods with respect
to all of which begin on the same date and end on the same later date (whether
or not such Loans shall originally have been made on the same day).
<PAGE>
-12-
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
--------
both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the amount of all non-cash charges (including
depreciation and amortization) deducted in arriving at such Consolidated Net
Income, (iii) decreases in Consolidated Working Capital for such fiscal year and
(iv) the aggregate net amount of non-cash loss on the Disposition of property by
the Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income, minus (b) the sum, without
duplication, of (i) the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness incurred in
connection with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of Revolving Loans during such fiscal year to the extent
accompanying permanent reductions of the Revolving Commitments and all
prepayments of the Tranche A Term Loans during such fiscal year, (iv) the
aggregate amount of all regularly scheduled principal payments of Indebtedness
(including the Tranche A Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal year,
(vi) the aggregate net amount of non-cash gain on the Disposition of property by
the Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business) and (vii) the aggregate amount of
all scheduled Licensing Payments during such fiscal year, to the extent included
in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section 2.9(c).
"Excluded Property": as defined in the Master Security Agreement.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower; it being understood that Pharmaceutical Partners of Canada Inc.
is not an Excluded Foreign Subsidiary.
"Existing Credit Facility": the credit agreement dated June 1, 1998
by and among the Borrower, the lenders named therein and IBJ Schroder Business
Credit Corporation, as agent.
<PAGE>
-13-
"Facility": each of (a) the Tranche A Term Facility and (b) the
Revolving Facility.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by Canadian Imperial Bank
of Commerce from three federal funds brokers of recognized standing selected by
it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"Fund": any Person (other than a natural Person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Funding Office": the office of the Administrative Agent specified
in Section 10.2 or such other office as may be specified from time to time by
the Administrative Agent as its funding office by written notice to the Borrower
and the Lenders.
"GAAP": generally accepted accounting principles in the United
States as in effect from time to time, provided that if any change in GAAP
--------
results in a change in the calculation of the financial covenants or
interpretation of related provisions of this Agreement or any other Loan
Document, then the Lenders, the Administrative Agent and the Borrower agree to
negotiate in good faith to attempt to amend such provisions of this Agreement in
accordance with Section 10.1 so as to reflect equitably such changes in GAAP
with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such change in GAAP as if such
change had not been made.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Group Members": the collective reference to the Borrower and its
Subsidiaries.
<PAGE>
-14-
"Guarantee Agreements": the collective reference to the PPCI
Guarantee Agreement and the WebDrugSource.com Guarantee Agreement including any
joinder to a Guarantee Agreement executed pursuant to Section 6.10(c).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by
such guaranteeing person in good faith.
"Hazardous Materials": all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including, without limitation, petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to, or that could result in the imposition of liability under, any
Environmental Law.
"Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
<PAGE>
-15-
"Immaterial Subsidiary": any Subsidiary of the Borrower that (a)
owns less than 5% of the total assets of the Borrower and its Subsidiaries on a
consolidated basis, or (b) is responsible for less than 5% of the total revenues
of the Borrower and its Subsidiaries on a consolidated basis.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables and accrued expenses incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations and
synthetic lease obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, in respect of acceptances and all obligations of such
Person as an account party or applicant under or in respect of amounts drawn
under letters of credit, surety bonds or similar arrangements that remain
unreimbursed for at least two Business Days, (g) the liquidation value of all
Disqualified Capital Stock of such Person, (h) all Guarantee Obligations of such
Person in respect of obligations of the kind referred to in clauses (a) through
(g) above, (i) all obligations of the kind referred to in clauses (a) through
(h) above secured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation;
provided, however, that the amount considered Indebtedness for purposes of this
-------- -------
clause (i) shall be the lesser of (x) the fair market value of such asset on the
date of determination and (y) the amount of Indebtedness of such other Person
being secured under this clause (i), (j) for the purposes of Sections 7.2 and
8(e) only, all obligations of such Person in respect of Hedge Agreements and (k)
all cash obligations of the Borrower under the VivoRx Settlement Agreement not
to exceed $14.0 million until the scheduled payment is made in fiscal year 2002,
after which such payment is made the obligation is $8.0 million, until the next
scheduled payment is made in fiscal year 2003, after which such payment is made
the obligation is zero. The Indebtedness of any Person shall (i) include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness expressly provide that such
Person is not liable therefor and (ii) exclude customer deposits (and interest
payable thereon) made with such Person by the customers of such Person in the
ordinary course of business. Notwithstanding the foregoing, Permitted
Subordinated Indebtedness shall not be considered Indebtedness.
<PAGE>
-16-
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, licensing agreements, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Loan Documents": the collective reference to the
Assignment of Intercompany Mortgage, the Intercompany Mortgage, the Intercompany
Note and all other documents delivered to the Borrower or the Administrative
Agent in connection therewith.
"Intercompany Mortgage": the intercompany Mortgage made by the
Borrower in favor of WebDrugSource.com, substantially in the form of Exhibit
-------
E-7.
---
"Intercompany Note": the intercompany note to be executed and
delivered by the Borrower in favor of WebDrugSource.com, substantially in the
form of Exhibit E-6.
-----------
"Interest Payment Date": (a) as to any ABR Loan, the last day of
each March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having
an Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurocurrency Loan having an Interest Period longer than
three months, each day that is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period
and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan), the
date of any repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurocurrency Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurocurrency Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurocurrency Loan and ending one, two, three
or six months thereafter, as selected by the Borrower in its irrevocable Notice
of Conversion/Continuation delivered to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that all of the foregoing provisions relating to
--------
Interest Periods are subject to the following:
<PAGE>
-17-
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period under a
particular Facility that would extend beyond the Revolving Termination
Date, with respect to a Revolving Loan, or beyond the date final payment
is due on the Tranche A Term Loans, with respect to the Tranche A Term
Loans;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require
a payment or prepayment of any Eurocurrency Loan during an Interest Period
for such Loan.
"Investments": as defined in Section 7.8.
"Issuing Lender": Canadian Imperial Bank of Commerce, in its
capacity as issuer of any Letter of Credit or any Revolving Lender from time to
time designated by the Borrower as an issuer of any Letter of Credit with the
consent of such Revolving Lender and the Administrative Agent (it being
understood that there shall be only one Issuing Lender per each Letter of
Credit).
"L/C Commitment": $3.0 million.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Revolving Lenders other than the Issuing Lender
that is the issuer of such Letter of Credit.
<PAGE>
-18-
"Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person
that is administered or managed by any Lender and that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and (c) with respect
to any Lender which is a fund that invests in commercial loans and similar
extensions of credit, any other fund that invests in commercial loans and
similar extensions of credit and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such Lender or investment advisor.
"Lenders": as defined in the preamble hereto; provided that unless
--------
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.1(a).
"License Agreement": the license agreement dated November 20, 2001
between American BioScience and the Borrower, a copy of which has been delivered
to the Administrative Agent.
"Licensing Payments": any payments of any kind paid (other than
royalty payments) by the Borrower or any Subsidiary of the Borrower in respect
of Intellectual Property licenses; provided that with respect to the License
Agreement, Licensing Payments shall only include those payments made pursuant to
Sections 8 and 9 of the License Agreement.
"Lien": any Mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Guarantee Agreements, the
Security Documents and the Notes and all other documents delivered to any Agent
and/or any Lender in connection herewith or therewith.
"Loan Parties": the Borrower, the Subsidiary Guarantors and each
Subsidiary of the Borrower, whether now existing or hereafter created or
acquired, that is party to a Loan Document; provided that any Subsidiary
--------
liquidated or sold pursuant to Section 7.4 shall no longer be Loan Party
hereunder or under any Loan Document.
"Manufacturing Agreement": that certain Manufacturing Agreement
dated November 20, 2001 by and between American BioScience and the Borrower.
<PAGE>
-19-
"Master Security Agreement": the master security agreement to be
executed and delivered by the Borrower and the Administrative Agent,
substantially in the form of Exhibit E-1.
-----------
"Material Adverse Effect": a material adverse effect on (a) the
business, property, operations, prospects or condition (financial or otherwise)
of the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or any
Intercompany Loan Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder or (c) the value of the Mortgaged
Properties and/or any other Collateral or the validity, enforceability,
perfection or priority of the Liens granted to the Administrative Agent (for its
benefit and for the benefit of the other Secured Parties) on the Collateral
pursuant to the Security Documents or, on the real property located in Erie
County, New York, pursuant to the Intercompany Mortgage.
"Mortgaged Properties": the real properties listed on Schedule 1.1C,
-------------
and each other real property subject to a Mortgage hereafter delivered pursuant
to the provisions of this Agreement as to which the Administrative Agent for the
benefit of the Secured Parties shall be granted a Lien pursuant to the Mortgages
or, in the case of the real property located in Erie County, New York, pursuant
to the Intercompany Mortgage, as Collaterally assigned to the Administrative
Agent for the benefit of the Secured Parties.
"Mortgages": each of the Mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for its
benefit and for the benefit of the Secured Parties, substantially in the form of
Exhibit E-2 (with such changes thereto as shall be advisable under the law of
-----------
the jurisdiction in which such Mortgage or deed of trust is to be recorded and
otherwise as shall be acceptable to the Administrative Agent).
"Multiemployer Plan": a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness or any
other Contractual Obligation secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale or Recovery Event (other than
any Lien pursuant to a Security Document) and other fees and expenses actually
incurred in connection therewith, net of taxes paid or reasonably estimated to
be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and net of the amount of
any cash Collateral account, escrow or reserve established in connection with
any Asset Sale
<PAGE>
-20-
to secure contingent liabilities, repayment obligations, indemnification
obligations and purchase price adjustments that could become payable in
connection therewith (provided that, upon any amount being released to the
--------
Borrower or any Subsidiary thereof from such cash Collateral account, escrow or
reserve, such amount shall be treated as Net Cash Proceeds and applied in
accordance with Section 2.9(b)), less any payment, liability or purchase price
adjustment paid by the Borrower or any Subsidiary after the closing of the Asset
Sale, and (b) in connection with any issuance or sale of Capital Stock or any
incurrence of Indebtedness, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.17(a).
"Non-U.S. Lender": as defined in Section 2.17(d).
"Notes": the collective reference to any promissory note evidencing
Loans, substantially in the form of Exhibit A-1 or A-2.
----------- ---
"Notice of Borrowing": a Notice of Borrowing, substantially in the
form of Exhibit B.
---------
"Notice of Conversion/Continuation": a Notice of
Conversion/Continuation, substantially in the form of Exhibit C.
---------
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Specified Hedge Agreements, any Lender Affiliate), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, or similar charges arising from any
payment made here-
<PAGE>
-21-
under or from the execution, delivery or enforcement of this Agreement or any
other Loan Document.
"Participant": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": any acquisition by the Borrower or any
Wholly Owned Subsidiary thereof of a controlling interest in the Capital Stock
of, all or substantially all of the assets of, or a business, unit or division
of, any Person; provided that (a) after giving pro forma effect to such
-------- ---------
acquisition (including any Acquired Indebtedness incurred in connection with
such acquisition), the Borrower shall be in compliance with the other covenants
contained in Section 7.1, in each case recomputed as at the last day of the most
recently ended fiscal quarter of the Borrower for which the relevant information
is available as if such acquisition had occurred on the first day of each
relevant period for testing such compliance (as demonstrated, in a certificate
of a Responsible Officer delivered to the Administrative Agent, prior to the
consummation of such acquisition), (b) no Default or Event of Default shall have
occurred and be continuing, or would occur after giving effect to such
acquisition, (c) after giving effect to such acquisition, the aggregate
Available Revolving Commitments of all Lenders plus cash on hand and/or Cash
Equivalents shall not be less than $5.0 million, (d) the assets acquired
pursuant to such acquisition are useful in the businesses in which the Borrower
and its Subsidiaries are engaged as of the date of this Agreement or that are
reasonably related thereto, (e) the Borrower shall comply with the requirements
of Section 6.10 insofar as they relate to the Capital Stock or other assets
acquired pursuant to such acquisition unless such Acquired Indebtedness
prohibits a Lien on the Acquired Business and such Lien is permitted pursuant to
Section 7.3 of this Agreement, (g) any Person whose Capital Stock is directly or
indirectly acquired shall be, after giving effect to such acquisition, a direct
or indirect Subsidiary of the Borrower and (h) the value of (1) all
consideration (comprised of any combination of cash and stock) paid in any
fiscal year for Permitted Acquisitions shall not exceed (A) $10.0 million prior
to a Qualified IPO, (B) $20.0 million in the first fiscal year after a Qualified
IPO, (C) $25.0 million in the second fiscal year after a Qualified IPO and (D)
$30.0 million in the third fiscal year and in each subsequent year after a
Qualified IPO and (2) all consideration (comprised solely of Capital Stock
(other than Disqualified Stock)) paid in any fiscal year for Permitted
Acquisitions shall not exceed (A) $10.0 million prior to a Qualified IPO, (B)
$20.0 million for the first fiscal year after a Qualified IPO, (C) $25.0 million
in the second fiscal year after a Qualified IPO and (D) $30.0 million in the
third fiscal year and in each subsequent year after a Qualified IPO.
"Permitted Subordinated Indebtedness": Indebtedness of the Borrower;
provided that (a) such Indebtedness and any related Guarantee Obligation shall
--------
not be secured by any Lien, (b) such Indebtedness shall be subject to
subordination and intercreditor provi-
<PAGE>
-22-
sions that are reasonably satisfactory to and approved in writing by the
Required Lenders, (c) such Indebtedness shall not have any principal payments or
mature while any Loans are outstanding and (d) such Indebtedness shall not pay
cash interest while any Loans are outstanding.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan (other than
a Multiemployer Plan) that is covered by ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledged Securities": as defined in the Master Security Agreement.
"PPCI": Pharmaceutical Partners of Canada, Inc., a company
incorporated under the laws of Canada and a Wholly Owned Subsidiary of the
Borrower.
"PPCI Guarantee Agreement": the guarantee agreement to be executed
and delivered by PPCI, substantially in the form of Exhibit K.
---------
"PPCI Security Agreement": the security agreement to be executed and
delivered by PPCI and the Administrative Agent.
"Preferred Stock": any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
<PAGE>
-23-
"Pricing Grid": the table set forth below:
=====================================================================================
Applicable Margin for Applicable Margin for
Consolidated Revolving Revolving
Leverage Ratio Eurocurrency Loans ABR Loans
-------------------------------------------------------------------------------------
greater than or equal to 3.75 2.75
2.5
-------------------------------------------------------------------------------------
greater than or equal to 3.25 2.25
2.0 or less than 2.5
-------------------------------------------------------------------------------------
greater than or equal to 2.75 1.75
1.5 or less than 2.0
-------------------------------------------------------------------------------------
less than 1.5 2.25 1.25
=====================================================================================
The foregoing margins shall become applicable upon the delivery of
the Compliance Certificate by the Borrower for the quarter ended March 31, 2002.
For the purposes of the Pricing Grid, changes in the Applicable Margin resulting
from changes in the Consolidated Leverage Ratio shall become effective on the
date (the "Adjustment Date") that is three Business Days after the date on which
financial statements are delivered to the Lenders pursuant to Section 6.1 and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified in Section 6.1, then, until the date that is
one Business Day after the date on which such financial statements are
delivered, the highest rate set forth in each column of the Pricing Grid shall
apply. In addition, at all times while an Event of Default shall have occurred
and be continuing, the highest rate set forth in each column of the Pricing Grid
shall apply. Each determination of the Consolidated Leverage Ratio pursuant to
the Pricing Grid shall be made in a manner consistent with the determination
thereof pursuant to Section 7.1(a).
"Prime Rate": the rate of interest per annum publicly announced from
time to time by Canadian Imperial Bank of Commerce as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended to
be the lowest rate of interest charged by Canadian Imperial Bank of Commerce in
connection with extensions of credit to debtors).
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
<PAGE>
-24-
"Qualified IPO": an initial public offering of the Capital Stock of
the Borrower of at least $100.0 million.
"Recovery Event": any settlement of or payment in respect of any
property or casualty or title insurance claim or any condemnation proceeding
relating to any asset of any Group Member.
"Recovery Event Assets": assets that are the subject of a Recovery
Event.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit issued by such Issuing Lender.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to prepay the Tranche A Term Loans or
reduce the Revolving Commitments pursuant to Section 2.9(b) as a result of the
delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring 270 days after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair assets useful in the
Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.
<PAGE>
-25-
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Replaced Lender": as defined in Section 2.20.
"Replacement Assets": assets that are of substantially the same
quality and workmanship as the Recovery Event Assets.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived.
"Required Lenders": at any time, two or more holders of more than
50% of (a) until the Closing Date, the Commitments then in effect and (b)
thereafter, the sum of (i) the aggregate unpaid principal amount of the Tranche
A Term Loans then outstanding and (ii) the Total Revolving Commitments then in
effect or, if the Revolving Commitments have been terminated, the Total
Revolving Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president, chief
operating officer or chief financial officer of the Borrower, but in any event,
with respect to financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Commitment": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and to participate in Letters of Credit
in an aggregate principal and/or face amount not to exceed the amount set forth
opposite the heading "Revolving Commitment" on Schedule 1 hereto or, as the case
may be, in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the terms
hereof.
"Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held
<PAGE>
-26-
by such Lender then outstanding and (b) such Lender's Revolving Percentage of
the L/C Obligations then outstanding.
"Revolving Facility": the Revolving Commitments and the extensions
of credit made thereunder.
"Revolving Lender": each Lender that has a Revolving Commitment or
that holds Revolving Loans.
"Revolving Loans": as defined in Section 2.4(a).
"Revolving Percentage": as to any Revolving Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding, provided
--------
that, in the event that the Revolving Loans are paid in full prior to the
reduction to zero of the Total Revolving Extensions of Credit, the Revolving
Percentages shall be determined in a manner designed to ensure that the other
outstanding Revolving Extensions of Credit shall be held by the Revolving
Lenders on a comparable basis.
"Revolving Termination Date": the third anniversary of the Closing
Date or the fifth anniversary of the Closing Date, if the Borrower completes a
Qualified IPO prior to June 30, 2002, unless terminated earlier by the Borrower
pursuant to Section 2.7. Notwithstanding the foregoing, the Revolving
Termination Date will be the ABI 35 Payment Date if the Borrower has not
otherwise made the ABI 35 Payment on or prior to the ABI 35 Payment Date or
demonstrated to the reasonable satisfaction of the Administrative Agent that it
has the necessary funds to make the ABI 35 Payment on the ABI 35 Payment Date
or, if the Borrower does not have such funds, it shall have demonstrated to the
reasonable satisfaction of the Administrative Agent that the License Agreement
has been terminated, waived or amended such that the ABI 35 Payment is no longer
due on the ABI 35 Payment Date.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"Secured Parties": the collective reference to the Administrative
Agent, the Lenders and each Lender Affiliate party to any Specified Hedge
Agreement.
"Securities Account": as defined in the Master Security Agreement.
"Security Agreements": the collective reference to the Master
Security Agreement and the PPCI Security Agreement.
<PAGE>
-27-
"Security Documents": the collective reference to the Security
Agreements, the American BioScience Pledge Agreement, the Mortgages, the
Assignment of Intercompany Mortgage, all UCC or other financing statements and
other instruments of perfection required by this Agreement, the Security
Agreements, the American BioScience Pledge Agreement, the Mortgages or the
Assignment of Intercompany Mortgage to be executed, delivered and/or filed or
recorded, and any other documents utilized to pledge to the Administrative
Agent, for its benefit and for the benefit of the other Secured Parties, any
other property or assets as Collateral for the Obligations.
"Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim," and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Hedge Agreement": any Hedge Agreement entered into by the
Borrower and any Lender or Lender Affiliate.
"Standard Termination": a "standard termination," as described in
Section 4041(b) of ERISA, of a Single Employer Plan.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person or if in accordance with GAAP,
such entity is consolidated
<PAGE>
-28-
with such Person for financial statement purposes. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower, it being understood that
Drug Source Co., LLC will not be considered a Subsidiary of the Borrower or its
Subsidiaries. Any Subsidiary of the Borrower liquidated or sold pursuant to
Section 7.4(f) shall not be considered a Subsidiary under this Agreement or any
Loan Document.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than
any Excluded Foreign Subsidiary.
"Synthetic Purchase Agreement": any swap, derivative or other
agreement pursuant to which any Group Member is or may become obligated to make
(a) any payment in connection with the purchase by any third party from a Person
other than a Group Member of any Capital Stock of any Group Member or any
Indebtedness referred to or (b) any payment (except as otherwise expressly
permitted by Section 7.6) the amount of which is determined by reference to the
price or value at any time of any such Capital Stock or Indebtedness; provided
that no phantom stock or similar plan providing for payments only to current or
former directors, officers or employees of any Group Member (or to their heirs
or estates) shall be deemed to be a Synthetic Purchase Agreement.
"Taking": any taking of the Mortgaged Properties and/or any other
Collateral or any portion thereof, in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, or by reason of the
temporary requisition of the use of the Mortgaged Properties and/or any other
Collateral or any portion thereof, by any Governmental Authority, civil or
military.
"Tax Sharing Agreement": that certain Tax Sharing and
Indemnification Agreement dated as of July 25, 2001 by and between the Borrower
and American BioScience.
"Themba Trust": has the meaning set forth in that certain letter of
the Borrower dated the date hereof delivered to the Administrative Agent.
"Title Insurance Company": such title insurance company as shall be
retained by the Borrower and reasonably acceptable to the Administrative Agent.
"Total Revolving Commitments": at any time, the aggregate amount of
the Revolving Commitments then in effect. The original amount of the Total
Revolving Commitments is $50.0 million; provided, however, that the Total
-------- -------
Revolving Commitments are subject to increase in accordance with Section 2.21.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
<PAGE>
-29-
"Tranche A Term Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Tranche A Term Loan to the Borrower in a
principal amount not to exceed the amount set forth opposite the heading
"Tranche A Term Commitment" on Schedule 1 hereto, or, as the case may be, in the
----------
Assignment and Acceptance pursuant to which such Lender became a party hereto.
The original aggregate amount of the Tranche A Term Commitments is $25.0
million.
"Tranche A Term Facility": the Tranche A Term Commitment and the
Tranche A Term Loans made thereunder.
"Tranche A Term Lender": each Lender that has a Tranche A Term
Commitment or that holds a Tranche A Term Loan.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Percentage": as to any Tranche A Term Lender at any
time, the percentage which such Lender's Tranche A Term Commitment then
constitutes of the aggregate Tranche A Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche A Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche A Term Loans then outstanding).
"Transferee": any Assignee or Participant.
"Type": as to any Loan, its nature as an ABR Loan or a Eurocurrency
Loan.
"UCC": the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"United States": the United States of America.
"VivoRx Settlement Agreement": that certain Settlement Agreement and
General Release dated February 5, 2001 between the Borrower, American BioScience
and the other parties named therein.
"WebDrugSource.com": WebDrugSource.com, Inc., a California
corporation and Subsidiary of the Borrower.
"WebDrugSource.com Guarantee Agreement": the guarantee agreement to
be executed and delivered by WebDrugSource.com, substantially in the form of
Exhibit K.
---------
<PAGE>
-30-
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation," (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions hereof,
----------------
each Tranche A Term Lender severally agrees to make a term loan (a "Tranche A
Term Loan") to the Borrower on the Closing Date in an amount in Dollars equal to
the amount of the Tranche A Term Commitment of such Lender. The Tranche A Term
Loans may be Eurocurrency Loans or ABR Loans, as determined or changed by the
Borrower from time to time and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.10.
<PAGE>
-31-
2.2 Procedure for Tranche A Term Loan Borrowing. The Borrower shall
-------------------------------------------
give the Administrative Agent irrevocable notice by delivery of a Notice of
Borrowing to the Administrative Agent which Notice of Borrowing must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Tranche
A Term Lenders make the Tranche A Term Loans on the Closing Date. The Tranche A
Term Loans made on the Closing Date shall initially be ABR Loans and, unless
otherwise agreed by the Administrative Agent in its sole discretion, no Tranche
A Term Loan may be converted into or continued as a Eurocurrency Loan prior to
the date that is five Business Days after the Closing Date. Upon receipt of such
Notice of Borrowing the Administrative Agent shall promptly notify each Tranche
A Term Lender thereof. Not later than 12:00 Noon, New York City time, on the
Closing Date each Tranche A Term Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Tranche A Term Loans to be made by such Lender. The
Administrative Agent shall credit the account of the Borrower at such account
maintained with the Administrative Agent as specified by the Borrower with the
aggregate of the amounts made available to the Administrative Agent by the
Tranche A Term Lenders in immediately available funds.
2.3 Repayment of Tranche A Term Loans. The Tranche A Term Loan of
---------------------------------
each Tranche A Term Lender shall mature in twelve consecutive quarterly
installments, payable on the dates set forth below:
--------------------------------------------------------------------------------
Date Principal Amount
--------------------------------------------------------------------------------
March 31, 2002 $1,250,000
--------------------------------------------------------------------------------
June 30, 2002 $1,250,000
--------------------------------------------------------------------------------
September 30, 2002 $1,250,000
--------------------------------------------------------------------------------
December 31, 2002 $1,250,000
--------------------------------------------------------------------------------
March 31, 2003 $2,000,000
--------------------------------------------------------------------------------
June 30, 2003 $2,000,000
--------------------------------------------------------------------------------
September 30, 2003 $2,000,000
--------------------------------------------------------------------------------
December 31, 2003 $2,000,000
--------------------------------------------------------------------------------
March 31, 2004 $2,000,000
--------------------------------------------------------------------------------
June 30, 2004 $2,000,000
--------------------------------------------------------------------------------
September 30, 2004 $2,000,000
--------------------------------------------------------------------------------
December 31, 2004 $6,000,000
--------------------------------------------------------------------------------
Notwithstanding the foregoing, the Tranche A Term Loans will be due and payable
on the ABI 35 Payment Date unless the Borrower has otherwise made the ABI 35
Payment prior to or on the ABI 35 Payment Date or has demonstrated to the
reasonable satisfaction of the Administrative Agent that it has the necessary
funds to make the ABI 35 Payment on the ABI 35
<PAGE>
-32-
Payment Date or, if the Borrower does not have such funds, it shall have
demonstrated to the reasonable satisfaction of the Administrative Agent that the
License Agreement has been terminated, waived or amended such that the ABI 35
Payment is no longer due on the ABI 35 Payment Date.
2.4 Revolving Commitments. (a) Subject to the terms and conditions
---------------------
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of L/C Obligations then
outstanding, does not exceed the amount of such Lender's Revolving Commitment.
During the Revolving Commitment Period the Borrower may use the Revolving
Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Loans may from time to time be Eurocurrency Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.10.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow
--------------------------------------
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
--------
irrevocable notice by delivery of a Notice of Borrowing (which Notice of
Borrowing must be received by the Administrative Agent prior to 12:00 Noon, New
York City time, (a) three Business Days prior to the requested Borrowing Date,
in the case of Eurocurrency Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of ABR Loans), specifying (i) the amount
and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date
and (iii) in the case of Eurocurrency Loans, the respective amounts of each such
Type of Loan and the respective lengths of the initial Interest Period therefor.
Any Revolving Loans made on the Closing Date shall initially be ABR Loans, and,
unless otherwise agreed by the Administrative Agent in its sole discretion, no
Revolving Loan may be made as, converted into or continued as a Eurocurrency
Loan prior to the date that is five Business Days after the Closing Date. Each
borrowing under the Revolving Commitments shall be in an amount equal to (x) in
the case of ABR Loans, $100,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Commitments are less than $100,000, such lesser
amount) and (y) in the case of Eurocurrency Loans, $1.0 million or a $250,000
multiple thereof in excess thereof. Upon receipt of any such Notice of Borrowing
from the Borrower, the Administrative Agent shall promptly notify each Revolving
Lender thereof. Each Revolving Lender will make the amount of its pro rata share
of each borrowing available to the Administrative Agent for the account of the
Borrower at the Funding Office prior to 12:00 Noon, New York City time, on
<PAGE>
-33-
the Borrowing Date requested by the Borrower in funds immediately available to
the Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account designated by the
Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent.
2.6 Commitment Fees, Etc. (a) The Borrower agrees to pay to the
--------------------
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the date hereof to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Revolving Termination
Date, commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.
2.7 Termination or Reduction of Revolving Commitments. The Borrower
-------------------------------------------------
shall have the right, upon not less than three Business Days' notice by delivery
of a notice of prepayment to the Administrative Agent, to terminate the
Revolving Commitments or, from time to time, to reduce the amount of the
Revolving Commitments; provided that no such termination or reduction of
--------
Revolving Commitments shall be permitted if, after giving effect thereto and to
any prepayments of the Revolving Loans made on the effective date thereof, the
Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments. Any such reduction shall be in an amount equal to $100,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Commitments
then in effect.
2.8 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice by delivery to the Administrative Agent of a notice of
prepayment at least three Business Days prior thereto in the case of
Eurocurrency Loans and at least one Business Day prior thereto in the case of
ABR Loans, which notice of prepayment shall specify the date and amount of
prepayment and whether the prepayment is of Eurocurrency Loans or ABR Loans;
provided that if a Eurocurrency Loan is prepaid on any day other than the last
day of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.18. Upon receipt of any such notice of
prepayment the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice of prepayment is given, the amount specified in such
notice of prepayment shall be due and payable on the date specified therein,
together with (except in the case of Revolving Loans that are ABR Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Tranche A
Term Loans
<PAGE>
-34-
and Revolving Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof, unless the prepayment is of an entire Loan, in which
case such Loan can be prepaid.
2.9 Mandatory Prepayments. (a) If any Capital Stock or Indebtedness
---------------------
shall be issued or incurred by any Group Member (excluding (i) any Indebtedness
incurred in accordance with Section 7.2, (ii) any Capital Stock issued pursuant
to management, employee or director compensation plans, any Capital Stock (other
than Disqualified Capital Stock) issued in connection with a Permitted
Acquisition and any Capital Stock (other than Disqualified Capital Stock) issued
in connection with a transaction described in Sections 7.4 and 7.5(d) and (iii)
the issuance of Capital Stock (other than Disqualified Capital Stock) the
proceeds of which are to be used by the Borrower to make the ABI 35 Payment or
any other payment under the License Agreement or the Manufacturing Agreement and
the Borrower shall have delivered a certificate of a Responsible Officer to the
Administrative Agent to such effect)), an amount equal to 100% of the Net Cash
Proceeds thereof shall be applied on the date of such issuance or incurrence
toward the prepayment of the Tranche A Term Loans and a prepayment of the
Revolving Loans as set forth in Section 2.9(d), but not a reduction of the
Revolving Commitments; provided, that such percentage shall be reduced to 50%
--------
with respect to the issuance by the Borrower of Capital Stock (other than
Disqualified Stock) if the Consolidated Leverage Ratio of the Borrower
determined on a pro forma basis is less than 2.0 to 1.0 after giving effect to
---------
the application of the proceeds thereof. Notwithstanding the foregoing the
Borrower will repay the Tranche A Term Loans in full with the Net Cash Proceeds
from a Qualified IPO.
(b) (i) If on any date any Group Member shall receive Net Cash
Proceeds from any Asset Sale, then, unless a Reinvestment Notice shall be
delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Tranche A Term Loans and the reduction of the
Revolving Commitments as set forth in Section 2.9(d); provided that,
--------
notwithstanding the foregoing, (A) the aggregate Net Cash Proceeds that may be
excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed $5.0 million in the case of Asset Sales in any fiscal year of the
Borrower and (B) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Tranche A Term Loans and the
reduction of the Revolving Commitments as set forth in Section 2.9(d); provided,
--------
however, that in the event of any Reinvestment Event relating to any Mortgaged
-------
Property and/or any other Collateral, the Net Cash Proceeds relating thereto
shall be deposited and maintained in the Collateral Account and withdrawn and
applied in accordance with the provisions of the Master Security Agreement.
(ii) If on any date any Group Member shall receive Net Cash Proceeds
in excess of $500,000 from any Recovery Event, then, unless a Reinvestment
Notice
<PAGE>
-35-
shall be delivered in respect thereof, such Net Cash Proceeds in excess of
$500,000 shall be applied on such date toward the prepayment of the
Tranche A Term Loans and the reduction of the Revolving Commitments as set
forth in Section 2.9(d); provided, however, if the following conditions
-----------------
are satisfied, such prepayment of the Tranche A Term Loans and the
reduction of the Revolving Commitments will not be required: (A) no Event
of Default shall have occurred and be continuing; (B) within 270 days of
the receipt of such Net Cash Proceeds, (1) such Net Cash Proceeds are used
to replace or restore or otherwise repair the Recovery Event Assets with
Replacement Assets or (2) the Borrower shall have entered into binding
contractual commitments to replace, restore, build or otherwise repair the
Recovery Event Assets and the work to replace, restore, build or repair
the Recovery Event Assets shall have been commenced; (C) prior to the
application of such Net Cash Proceeds pursuant to (B)(1) or (B)(2) above,
such Net Cash Proceeds shall be deposited in the Collateral Account and
withdrawn and applied in accordance with the provisions of the Master
Security Agreement; and (D) the Borrower has demonstrated to the
reasonable satisfaction of the Administrative Agent sufficient funds
and/or insurance proceeds to make any mandatory prepayment under the Loans
until such time as the Recovery Event Assets have been reconstructed and
are fully operational or Replacement Assets have been acquired.
(c) If, for any fiscal year of the Borrower commencing with the
fiscal year ending December 31, 2002, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF
Percentage of such Excess Cash Flow toward the prepayment of the Tranche A Term
Loans and the prepayment of the Revolving Loans as set forth in Section 2.9(d),
but not a reduction of the Revolving Commitments. Each such prepayment and
commitment reduction shall be made on a date (an "Excess Cash Flow Application
Date") no later than five days after the earlier of (i) the date on which the
financial statements of the Borrower referred to in Section 6.1(a), for the
fiscal year with respect to which such prepayment is made, are required to be
delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to paragraphs (a) through (c) of this
Section 2.9 shall be applied, first, to the prepayment of the Tranche A Term
Loans on a pro rata basis and, second, to prepay any Revolving Loans and in the
-------- ------
case of Section 2.9(b) only to reduce permanently the Revolving Commitments in
the amount of the prepayment of the Revolving Loans. Any such reduction of the
Revolving Commitments shall be accompanied by prepayment of the Revolving Loans
to the extent, if any, that the Total Revolving Extensions of Credit exceed the
amount of the Total Revolving Commitments, provided that if the aggregate
--------
principal amount of Revolving Loans then outstanding is less than the amount of
such excess (because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such
<PAGE>
-36-
excess, replace outstanding Letters of Credit and/or deposit an amount in cash
in a cash Collateral account established with the Administrative Agent for the
benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to this Section
2.9 shall be made, first, to ABR Loans and, second, to Eurocurrency Loans. Each
----- ------
prepayment of the Loans under this Section 2.9 (except in the case of Revolving
Loans that are ABR Loans) shall be accompanied by accrued interest to the date
of such prepayment on the amount prepaid.
2.10 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurocurrency Loans to ABR Loans by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election pursuant to a Notice of Conversion/Continuation, provided that any
--------
such conversion of Eurocurrency Loans may only be made on the last day of an
Interest Period with respect thereto. The Borrower may elect from time to time
to convert ABR Loans to Eurocurrency Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election pursuant to
a Notice of Conversion/Continuation (which Notice of Conversion/Continuation
shall specify the length of the initial Interest Period therefor), provided that
--------
no ABR Loan under a particular Facility may be converted into a Eurocurrency
Loan when any Event of Default has occurred and is continuing and the Required
Lenders have determined in their sole discretion not to permit such conversions.
Upon receipt of any such Notice of Conversion/Continuation the Administrative
Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurocurrency Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent pursuant to a
Notice of Conversion/Continuation, in accordance with the applicable provisions
of the term "Interest Period" set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no
--------
Eurocurrency Loan under a particular Facility may be continued as such when any
Event of Default has occurred and is continuing and the Administrative Agent has
or the Required Lenders have determined in its or their sole discretion not to
permit such continuations, and provided, further, that if the Borrower shall
--------
fail to deliver a Notice of Conversion/Continuation in the manner described
above in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to ABR Loans on
the last day of such then expiring Interest Period. Upon receipt of any such
Notice of Conversion/Continuation the Administrative Agent shall promptly notify
each relevant Lender thereof.
2.11 Limitations on Eurocurrency Tranches. Notwithstanding anything
------------------------------------
to the contrary in this Agreement, all borrowings, conversions and continuations
of Eurocurrency Loans and all selections of Interest Periods shall be in such
amounts and be made pursuant to such elections so that (a) after giving effect
thereto, the aggregate principal amount of the
<PAGE>
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Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to $1.0
million or a whole multiple of $250,000 in excess thereof and (b) no more than
ten Eurocurrency Tranches shall be outstanding at any one time.
2.12 Interest Rates and Payment Dates. (a) Each Eurocurrency Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate determined for such
day plus the Applicable Margin.
----
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
----
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
----
applicable to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or
----
a portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to ABR Loans under the relevant Facility plus 2% (or, in the case of any such
----
other amounts that do not relate to a particular Facility, the rate then
applicable to ABR Loans under the Revolving Facility plus 2%), in each case,
----
with respect to clauses (i) and (ii) above, from the date of such non-payment
until such amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.13 Computation of Interest and Fees. (a) Interest and fees payable
--------------------------------
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurocurrency Rate. Any change in the interest rate on a Loan resulting from
a change in the ABR or in the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
<PAGE>
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(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be presumptively true in
the absence of manifest error. The Administrative Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate pursuant to Section
2.12(a).
2.14 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be presumptively true, absent manifest error) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurocurrency Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurocurrency Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost
to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter, providing a
description and evidence of the circumstances of such determination.
If such notice is given, (x) any Eurocurrency Loans under the
relevant Facility requested to be made on the first day of such Interest Period
shall be made as ABR Loans, (y) any Loans under the relevant Facility that were
to have been converted on the first day of such Interest Period to Eurocurrency
Loans shall be continued as ABR Loans and (z) any outstanding Eurocurrency Loans
under the relevant Facility shall be converted, on the last day of the
then-current Interest Period, to ABR Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurocurrency Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurocurrency Loans;
provided that the Administrative Agent shall advise the Borrower as soon as
--------
practicable after it determines in good faith that such circumstances no longer
exist.
2.15 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Tranche A Term Percentages or
Revolving Percentages, as the case may be, of the relevant Lenders.
<PAGE>
-39-
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Tranche A Term Loans shall be made
pro rata according to the respective then outstanding principal amounts of the
Tranche A Term Loans then held by the Tranche A Term Lenders. The amount of each
principal prepayment of the Tranche A Term Loans shall be applied to reduce the
then remaining repayment installments of the Tranche A Term Loans pro rata based
--------
upon the then remaining principal amount thereof. Amounts prepaid on account of
the Tranche A Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
----
Loans then held by the Revolving Lenders.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 2:00 p.m., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurocurrency Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurocurrency Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate (or, in the case of
amounts denominated in Euros, the rate per annum reasonably determined by the
Administrative Agent to reflect the cost of funds to it in maintaining such
Lender's unfunded portion of such borrowing) plus any costs of the
----
Administrative Agents in connection therewith for the period until such Lender
makes
<PAGE>
-40-
such amount immediately available to the Administrative Agent. A certificate of
the Administrative Agent submitted to any Lender with respect to any amounts
owing under this paragraph shall be conclusive in the absence of manifest error.
If such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans under
the relevant Facility, on demand, from the Borrower; provided that such
--------
prepayment shall not relieve such Lender's obligation to fund such amount to the
Borrower hereunder.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
--------
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate plus any costs of
the Administrative Agent in connection therewith. Nothing herein shall be deemed
to limit the rights of the Administrative Agent or any Lender against the
Borrower.
2.16 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the Closing Date:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurocurrency Loan made by it after the Closing Date, or change the basis
of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.17 and changes in the rate of tax
on the overall net income of such Lender);
(ii) shall, after the Closing Date, impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of credit by, or
any other acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurocurrency Rate; or
(iii) shall impose on such Lender any other condition;
<PAGE>
-41-
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurocurrency Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change after the Closing Date in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the Closing Date shall have the effect
of reducing the rate of return on such Lender's or such corporation's capital as
a consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance after the Closing Date
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender or such corporation for such reduction; provided that the Borrower
--------
shall not be required to compensate a Lender pursuant to this paragraph for any
amounts incurred more than three months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor,
along with calculations and evidence thereof; and provided further that, if the
----------------
circumstances giving rise to such claim have a retroactive effect, then such
three-month period shall be extended to include the period of such retroactive
effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower, along with calculations
and evidence thereof (with a copy to the Administrative Agent), shall be
conclusive in the absence of manifest error. The obligations of the Borrower
pursuant to this Section shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.17 Taxes. (a) All payments made by the Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by
<PAGE>
-42-
any Governmental Authority, excluding net income taxes or taxes on gross
receipts or capital (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
are required to be withheld from any amounts payable to the Administrative Agent
or any Lender hereunder, then (i) the amounts so payable to the Administrative
Agent or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, provided, however, that the
-----------------
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (a) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (b) that are United States withholding taxes imposed on amounts
payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph,
(ii) the Borrower shall make such deductions or withholdings, and (iii) the
Borrower shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") or that becomes
a Non-U.S. Lender at any time shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two
<PAGE>
-43-
copies of either United States Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from United
States federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest," a statement substantially in the
form of Exhibit D and a Form W-8BEN, or any subsequent versions thereof or
---------
successors thereto, properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, United States federal
withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement or designates a new
lending office (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrower (or any other form of certification adopted by the United States taxing
authorities for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation.
(f) If any Lender or the Administrative Agent receives a refund in
respect of any amounts paid by the Borrower pursuant to this Section 2.17, which
refund in the reasonable judgment of the Administrative Agent or such Lender is
allocable to such payment, it shall promptly notify the Borrower of such refund
and shall, within 15 days after receipt, repay such refund to the Borrower net
of all out-of-pocket expenses of the Administrative Agent or such Lender;
provided, however, that the Borrower, upon the request of Administrative Agent
-------- -------
or such Lender, agrees to repay the amount paid over to the Borrower to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund.
(g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
<PAGE>
-44-
2.18 Indemnity. The Borrower agrees to indemnify each Lender for,
---------
and to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurocurrency Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurocurrency Loans after the Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurocurrency Loans on a day that is not the last day
of an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
----
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurocurrency market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.19 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.16 or 2.17(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such
--------
designation is made on terms that, in the reasonable judgment of such Lender,
cause such Lender and its lending office(s) to suffer no material economic,
legal or regulatory disadvantage, and provided, further, that nothing in this
Section shall affect or postpone any of the obligations of the Borrower or the
rights of any Lender pursuant to Section 2.16 or 2.17(a).
2.20 Replacement of Lenders. The Borrower shall be permitted to
----------------------
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.16 or 2.17(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution (a "Replacement Lender");
provided that (i) such replacement does not conflict with any Requirement of
--------
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) prior to any such replacement, such Replacement
Lender shall have taken no action under Section 2.19 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.16 or 2.17(a),
(iv) the Replacement Lender shall purchase, at par, all Loans and other amounts
owing to such replaced Lender on or prior to the
<PAGE>
-45-
date of replacement, (v) the Borrower shall be liable to such replaced Lender
under Section 2.18 if any Eurocurrency Loan owing to such replaced Lender shall
be purchased other than on the last day of the Interest Period relating thereto,
(vi) the Replacement Lender, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
10.6 (provided that the Borrower shall be obligated to pay the registration and
--------
processing fee referred to therein), (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.16 or 2.17(a), as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
2.21 Increase in Revolving Commitments. Subject to the terms and
---------------------------------
conditions set forth herein, the Borrower may, at any time after consummation of
a Qualified IPO and the repayment in full of the Tranche A Term Loans, upon
written notice to the Administrative Agent, increase the Total Revolving
Commitments to not more than $75.0 million; provided that:
--------
(a) existing Lenders or other commercial banks or financial
institutions reasonably acceptable to the Administrative Agent and the
Borrower shall have delivered commitments in order to increase the Total
Revolving Commitments to not more than $75.0 million and such commercial
banks and financial institutions shall join in this Agreement as Lenders
by executing a joinder agreement or other arrangement reasonably
acceptable to the Administrative Agent;
(b) such increase shall be in a minimum aggregate principal amount
of $5.0 million and integral multiples of $1.0 million in excess thereof
(or the remaining amount, if less);
(c) if any Revolving Loans are outstanding at the time of any such
increase, the Borrower shall make such payments and adjustments on the
Revolving Loans (including payment of any break-funding amounts owing
under Section 2.18) as may be necessary to give effect to the revised
commitment percentages and commitment amounts; and
(d) the conditions to the making of the Revolving Loans as set forth
in Section 5.2 shall be satisfied.
In connection with any such increase in the Revolving Commitments, Schedule 1
----------
hereto shall be revised to reflect the Lenders' modified commitment amounts and
percentages and the Borrower shall provide supporting corporate resolutions,
legal opinions, notes and other docu-
<PAGE>
-46-
mentation as may be reasonably requested by the Administrative Agent and the
Lenders in connection therewith.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
each Issuing Lender, in reliance on the agreements of the other Revolving
Lenders set forth in Section 3.4(a), agrees to issue commercial and standby
letters of credit ("Letters of Credit") for the account of the Borrower or any
Subsidiary on any Business Day during the Revolving Commitment Period in such
form as may be approved from time to time by such Issuing Lender; provided that
--------
no Issuing Lender shall have any obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would exceed the
L/C Commitment or (ii) the aggregate amount of the Available Revolving
Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars, (ii) have a face amount of at least $100,000 (unless
otherwise agreed by the relevant Issuing Lender) and (iii) expire no later than
the earlier of (x) the first anniversary of its date of issuance and (y) the
date that is five Business Days prior to the Revolving Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
--------
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue any
Letter of Credit if such issuance would conflict with, or cause such Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
------------------------------------------
from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Lender, and
such other certificates, documents and other papers and information as such
Issuing Lender may request. Upon receipt of any Application, such Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall an Issuing Lender be required to issue any Letter
of Credit earlier than five Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed to by such Issuing
Lender and the Borrower. Each Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof. Each Issuing
Lender shall promptly furnish to the Administrative Agent, which shall in turn
promptly furnish to the Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof).
<PAGE>
-47-
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
----------------------
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurocurrency Loans under the Revolving Facility,
shared ratably among the Revolving Lenders and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse each Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce each Issuing
Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from each Issuing Lender,
on the terms and conditions set forth below, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Percentage in such Issuing Lender's obligations and rights under and in respect
of each Letter of Credit and the amount of each draft paid by such Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each Issuing Lender that, if a draft is paid under any Letter of Credit for
which such Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
such Issuing Lender upon demand at such Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Percentage
of the amount of such draft, or any part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to an
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by such Issuing Lender under any Letter of Credit is not
paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
(A) costs of the Administrative Agent in connection therewith and (B) an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to such
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the relevant Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, such
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Facility. A
certificate of an Issuing Lender submitted to any
<PAGE>
-48-
L/C Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.4(a), such Issuing
----
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of Collateral applied thereto
by such Issuing Lender), or any payment of interest on account thereof, such
Issuing Lender will distribute to such L/C Participant its pro rata share
--------
thereof; provided, however, that in the event that any such payment received by
-------- -------
such Issuing Lender shall be required to be returned by such Issuing Lender,
such L/C Participant shall return to such Issuing Lender the portion thereof
previously distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
----------------------------------------
reimburse each Issuing Lender on the next succeeding Business Day after such
Issuing Lender notifies the Borrower of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Lender for the amount of (a)
such draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment. Each such
payment shall be made to each Issuing Lender at its address for notices referred
to herein in Dollars and in immediately available funds. Interest shall be
payable on any such amounts from the date on which the relevant draft is paid by
the Issuing Lender until payment in full by the Borrower on the Business Day
next succeeding the date of the relevant notice at the rate set forth in Section
2.12(b) and thereafter at the rate set forth in Section 2.12(c).
3.6 Obligations Absolute. The Borrower's obligations under this
--------------------
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against any Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with each Issuing
Lender that such Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. No Issuing Lender
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions resulting
from the gross negligence or willful misconduct of such Issuing Lender. The
Borrower agrees that any action taken or omitted by an Issuing Lender under or
in connection with any Letter of Credit or the related drafts or documents, if
<PAGE>
-49-
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of New York, shall be binding on the Borrower and shall not result in any
liability of such Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the relevant Issuing Lender shall promptly
notify the Borrower of the date and amount thereof. The responsibility of the
relevant Issuing Lender to the Borrower in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
------------
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- ---------
balance sheet of the Borrower and its consolidated Subsidiaries as at September
30, 2001 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the Loans to be made
and the use of proceeds thereof and (ii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet has been prepared in
good faith based on the best information available to the Borrower as of the
date of delivery thereof, and presents fairly in all material respects, on a pro
---
forma basis the estimated financial position of the Borrower and its
-----
consolidated Subsidiaries as at September 30, 2001, assuming that the events
specified in the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at December 31, 1998, December 31, 1999 and
December 31, 2000, and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from Ernst & Young
<PAGE>
-50-
LLP, present fairly, in all material respects, the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such dates,
and the consolidated results of its operations and its consolidated cash flows
for the respective fiscal years then ended. The unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at September 30,
2001, and the related unaudited consolidated statements of income and cash flows
for the nine-month period ended on such date, present fairly, in all material
respects, the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the nine-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved. No
Group Member has any material Guarantee Obligations, contingent liabilities and
liabilities for taxes or any long-term leases, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2000 to and
including the date hereof there has been no Disposition by any Group Member of
any material part of its business or property.
4.2 No Change. Since September 30, 2001, there has been no change,
---------
development or event which, individually or when taken together with all other
circumstances, changes or events, has had or could reasonably be expected to
have a Material Adverse Effect.
4.3 Existence; Compliance with Law. Each Group Member (a) is duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where failure to be so qualified, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply, individually or in the aggregate, therewith could not reasonably be
expected to have a Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Each Loan Party
---------------------------------------------
has the power and authority, and the legal right, to execute, deliver and
perform the Loan Documents and the Intercompany Loan Documents to which it is a
party and, in the case of the Borrower, to obtain extensions of credit
hereunder. Each Loan Party has taken all necessary organizational action to
authorize the execution, delivery and performance of the Loan Documents and the
Intercompany Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the extensions of
<PAGE>
-51-
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents or any of the
Intercompany Loan Documents, except (i) consents (other than any consent that
would be required in connection with the Administrative Agent's exercise of its
remedies hereunder in respect of any lease, license or other contract
restricting the assignment thereof), authorizations, filings and notices
described in Schedule 4.4, which consents, authorizations, filings and notices
------------
have been obtained or made and are in full force and effect except as specified
on Schedule 4.4, and (ii) the filings referred to in Section 4.19. Each Loan
------------
Document and Intercompany Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document and Intercompany Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable (except for the exercise of remedies hereunder in respect
of any lease, license or other contract restricting assignment thereof) against
each such Loan Party in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents and the Intercompany Loan Documents, the
issuance of Letters of Credit, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or any Contractual
Obligation (other than Contractual Obligations restricting the assignment
thereof in connection with the Administrative Agent's exercise of its remedies
hereunder) of any Group Member and will not result in, or require, the creation
or imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents and the Intercompany Mortgage),
except if such violation could not reasonably be expected to have a Material
Adverse Effect.
4.6 Litigation. Except as set forth in Schedule 4.6, no litigation,
---------- ------------
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower, threatened in writing
against any Group Member or against any of their respective properties or
revenues that (a) in the Borrower's reasonable opinion, is reasonably likely to
be found successful on the merits and (b) if found successful, could reasonably
be expected to have a Material Adverse Effect.
4.7 No Default. No Group Member is in default under or with respect
----------
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
<PAGE>
-52-
4.8 Ownership of Property; Liens. Each Group Member has good and
----------------------------
marketable title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest in, all its
other property except (i) with respect to the Mortgaged Properties, the Prior
Liens (as defined in the applicable Mortgage or the Intercompany Mortgage), (ii)
such defects in title that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (iii) such properties
that are no longer used or useful in such Group Member's business, and (iv) any
Lien as permitted by Section 7.3.
4.9 Intellectual Property. (a) Except as set forth on Schedule
--------------------- --------
4.9(a), each Group Member owns, is licensed to use or otherwise has the right to
------
use all Intellectual Property necessary for the conduct of its business as
currently conducted, except to the extent that the absence of such property
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (b) as of the Closing Date and the date of each
extension of credit, no claim has been asserted or is pending or, to the
knowledge of the Borrower, threatened against such Group Member by any Person
challenging or questioning the use by such Group Member of any Intellectual
Property in a manner that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, nor does the Borrower know of any
reason to believe that any such claim would be successful if brought; (c) except
as set forth in Schedule 4.9(c),as of the Closing Date and the date of each
---------------
extension of credit, no claim has been asserted or is pending or, to the
knowledge of the Borrower, threatened against such Group Member by any Person
challenging or questioning the validity or effectiveness of any of such Group
Member's Intellectual Property in a manner that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (d) to
the best of Borrower's knowledge, the use of Intellectual Property by each Group
Member does not infringe on the rights of any Person in a manner that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
4.10 Taxes. Except as set forth on Schedule 4.10, each Group Member
----- -------------
has filed or caused to be filed all Federal and material state and other tax
returns that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the relevant Group Member); no material tax Lien has been filed, and,
to the knowledge of the Borrower, no material claim is being asserted, with
respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans, and
-------------------
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin
<PAGE>
-53-
stock" within the respective meanings of each of the quoted terms under
Regulation U as now and from time to time hereafter in effect or for any purpose
that violates the provisions of the Regulations of the Board. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable,
referred to in Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not
-------------
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.
4.13 ERISA. Except where it could not reasonably be expected to
-----
result in a material liability, (i) neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and (ii) each Plan has complied in all respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan
(other than a Standard Termination) has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, and after giving
effect to any contribution that was made or is to be made after such annual
valuation date on the basis of such valuation, exceed the value of the assets of
such Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and, to the knowledge of
the Borrower, neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to
<PAGE>
-54-
regulation under any Requirement of Law (other than Regulation X of the Board)
that limits its ability to incur Indebtedness.
4.15 Subsidiaries. Except as disclosed on Schedule 4.15 or as
------------ -------------
disclosed to the Administrative Agent by the Borrower in writing from time to
time after the Closing Date, (a) Schedule 4.15(a) sets forth the name and
----------------
jurisdiction of organization of each Subsidiary and, as to each such Subsidiary,
the percentage of each class of Capital Stock owned by any Loan Party and (b)
except as set forth in Schedule 4.15(b) there are no outstanding subscriptions,
----------------
options, warrants, calls, rights or other agreements or commitments (other than
stock options granted to employees, management or directors and directors'
qualifying shares) of any nature relating to any Capital Stock of the Borrower
or any Subsidiary, except as created by the Loan Documents.
4.16 Use of Proceeds. The proceeds of the Facilities borrowed on the
---------------
Closing Date shall be used to repay in full all indebtedness under the Existing
Credit Facility.
4.17 Environmental Matters. Except as set forth in Schedule 4.17 or
--------------------- -------------
as, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect:
(a) the facilities and properties owned, leased or operated by any
Group Member (the "Properties") do not contain, and have not previously
contained since June 1, 1998, any Hazardous Materials in amounts or
concentrations or under circumstances that constitute a violation of, or
could reasonably be expected to give rise to liability under, any
applicable Environmental Law;
(b) no Group Member has received or is aware of any written notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the Properties or the business operated by any
Group Member (the "Business"), nor does the Borrower have knowledge or
reason to believe that any such notice will be received or is being
threatened;
(c) (i) Hazardous Materials have not been transported or disposed of
from the Properties by any Group Member since June 1, 1998 in violation
of, or to a location that could give rise to liability under, any
applicable Environmental Law and (ii) no Hazardous Materials have been
generated, treated, stored or disposed of at, on or under any of the
Properties by any Group Member in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which any Group Member is or will be named as a party
with respect to the
<PAGE>
-55-
Properties or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business;
(e) (i) there has been no release of Hazardous Materials at or from
the Properties arising from or related to the operations of any Group
Member in connection with the Properties or the Business in violation of
or in amounts subject to reporting requirements or in a manner that could
reasonably be expected to give rise to liability under any applicable
Environmental Laws, and (ii) there are no Hazardous Materials currently
being released from the Properties, including, without limitation, from
surface water or groundwater, in violation of, or in amounts or in a
manner that could reasonably be expected to give rise to liability under,
any applicable Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have since June 1, 1998 been in compliance, with all
applicable Environmental Laws; and
(g) no Group Member has assumed any liability of any other Person
under Environmental Laws.
4.18 Accuracy of Information, Etc. No statement or information
----------------------------
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or
any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents or the Intercompany Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum, as
of the date of this Agreement), taken as a whole, any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements contained herein or therein not misleading. The projections and pro
---
forma financial information contained in the materials referenced above are
-----
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount.
4.19 Security Documents. (a) The Master Security Agreement is
------------------
effective to create in favor of the Administrative Agent, for its benefit and
the benefit of the other Secured Parties, a legal, valid and enforceable (other
than with respect to leases, licenses or contracts restricting the assignment
thereof) security interest in the Collateral described therein
<PAGE>
-56-
(including, without limitation, the Intercompany Loan Documents) and proceeds
thereof. In the case of the Pledged Securities described in the Master Security
Agreement, when stock certificates or other instruments representing such
Pledged Securities are delivered to the Administrative Agent, and in the case of
the other Collateral described in the Master Security Agreement, when financing
statements and other filings specified on Schedule 4.19(a) in appropriate form
----------------
are filed in the offices and jurisdictions specified on Schedule 4.19(a) and
----------------
upon execution of control agreements and other documents specified in the Master
Security Agreement, the Master Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Secured Obligations (as defined in the Master Security Agreement), in each
case prior and superior in right to any other Person (except for the Prior Liens
(as defined in the Master Security Agreement and including, without limitation,
Liens listed on Schedule 7.3(f)), and in the case of Collateral other than
Pledged Securities, Liens permitted by Section 7.3(a), (b) and (e) which have
priority by operation of law and Liens permitted by Section 7.3(c), (d),(g) and
(k)).
(b) The PPCI Security Agreement is effective to create in favor of
the Administrative Agent, for its benefit and the benefit of the other Secured
Parties, a legal, valid and enforceable (other than with respect to leases,
licenses or contracts restricting the assignment thereof) security interest in
the Collateral described therein and proceeds thereof. In the case of Collateral
described in the PPCI Security Agreement, when financing statements and other
filings specified on Schedule A to the opinion of Fraser Milner Casgrain LLP
----------
delivered on the date hereof in appropriate form are filed in the offices and
jurisdictions specified on Schedule A to the opinion of Fraser Milner Casgrain
----------
LLP delivered on the date hereof and upon execution of control agreements and
other documents specified in the PPCI Security Agreement, the PPCI Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Secured Obligations (except for the Prior
Liens (as defined in the PPCI Security Agreement and including, without
limitation, the Liens listed on Schedule 7.3(f))), in each case prior and
superior in right to any other Person (except, in the case of Collateral other
than Pledged Securities (as defined in the PPCI Security Agreement), Liens
permitted by Section 7.3(a), (b) and (e) which have priority by operation of law
and Liens permitted by Section 7.3(c), (d), (g) and (k)).
(c) The Mortgage executed and delivered on the date hereof is (and
as to each Mortgagee hereafter executed and delivered will, upon execution and
delivery thereof, be) effective to create in favor of the Administrative Agent,
for its benefit and the benefit of the other Secured Parties, a legal, valid and
enforceable Lien on and security interest in the Mortgaged Properties described
therein and proceeds thereof, and when the Mortgage is executed and delivered on
the date it is filed in the offices and jurisdictions specified on Schedule
--------
4.19(c) (or as to each Mortgage hereafter executed and delivered, when such
-------
Mortgage is
<PAGE>
-57-
filed in the appropriate offices and jurisdictions under local law), each such
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Borrower in the Mortgaged Properties and
the proceeds thereof, as security for the Secured Obligations (as defined in the
applicable Mortgage), in each case prior and superior in right to any other
Person (except for the Prior Liens (as defined in the applicable Mortgage) and
Liens permitted under Sections 7.3(a), (b) and (e) which have priority by
operation of law). Schedule 1.1C lists each parcel of real property owned in fee
-------------
simple by the Borrower or any of its Wholly Owned Subsidiaries as of the Closing
Date or in which the Borrower or any of its Wholly Owned Subsidiaries has a
leasehold interest as of the Closing Date which, as of such date, has a value,
in the reasonable opinion of the Borrower, in excess of $250,000.
(d) The American BioScience Pledge Agreement is effective to create
in favor of the Administrative Agent, for its benefit and the benefit of the
other Secured Parties, a legal, valid and enforceable security interest in the
Pledged Securities described therein. When stock certificates or other
instruments representing such Pledged Securities are delivered to the
Administrative Agent, the American BioScience Pledge Agreement shall constitute
a fully perfected Lien on, and security interest in, all right, title and
interest of American BioScience in such Pledged Securities as security for the
Secured Obligations (as defined in the American BioScience Pledge Agreement), in
each case prior and superior in right to any other Person.
(e) The Intercompany Mortgage is effective to create in favor of
WebDrugSource.com a legal, valid and enforceable Lien on and security interest
in the Mortgaged Property described therein and proceeds thereof, and when the
Intercompany Mortgage is filed in the Erie County Recorder's Office, the
Intercompany Mortgage will constitute a fully perfected Lien on and security
interest in all right, title and interest of the Borrower in such Mortgaged
Property and the proceeds thereof, as security for the Intercompany Note and the
other obligations secured thereby, prior and superior in right to any other
Person (except Prior Liens (as defined in the Intercompany Mortgage) and the
Liens permitted under Sections 7.3(a), (b) and (e) which have priority by
operation of law).
4.20 Solvency. The Borrower and its Subsidiaries are, taken as a
--------
whole, and after giving effect to the incurrence of all Indebtedness and
obligations being incurred in connection herewith, Solvent.
4.21 Regulation H. Neither the Mortgage nor the Intercompany
------------
Mortgage encumbers improved real property that is located in an area that has
been identified by the Secretary of Housing and Urban Development as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968.
<PAGE>
-58-
4.22 FDA Compliance. The Borrower and each of its Subsidiaries are,
--------------
and the products sold by the Borrower and each of its Subsidiaries are, in
compliance in all respects with all current applicable statutes, rules,
regulations, guides, policies, orders or directives administered or issued by
the United States Food and Drug Administration (the "FDA") and the Food, Drug
and Cosmetic Act, as amended (the "FDCA"), except (a) where in the Borrower's
reasonable opinion, the Borrower and its Subsidiaries will not ultimately be
found by the FDA or under the FDCA to be out of compliance with such statutes,
rules, regulations, guides, policies, orders or directives, (b) where failure to
so comply could not reasonably be expected to have a Material Adverse Effect,
(c) with respect to any FDA Form 483-s or warning letters issued by the FDA or
pursuant to the FDCA, so long as the Borrower or other Group Member is
diligently pursuing corrective action with respect to the same or (d) as
disclosed in Schedule 4.22.
-------------
4.23 Agreements with American BioScience. Schedule 4.23 contains a
----------------------------------- -------------
true, correct and complete list of every material agreement in existence as of
the Closing Date between any Group Member and American BioScience or an
affiliate or Subsidiary of American BioScience (collectively, the "ABI
Agreements"), copies of which have been provided to the Administrative Agent.
Other than as set forth in Schedule 4.23 there are no other material agreements
-------------
between any Group Member or American BioScience or an Affiliate or Subsidiary of
American BioScience.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, on or before the Closing Date and prior to or
concurrently with the making of such extension of credit on the Closing Date, of
the following conditions precedent:
(a) Credit Agreement; Guarantee Agreements; Security Documents. The
----------------------------------------------------------
Administrative Agent shall have received (i) this Agreement, executed and
delivered by the Administrative Agent and the Borrower, (ii) the PPCI Guarantee
Agreement, executed and delivered by PPCI and the Administrative Agent and the
WebDrugSource.com Guarantee Agreement, executed and delivered by
WebDrugSource.com Inc. and the Administrative Agent, (iii) the Master Security
Agreement, executed and delivered by the Borrower, WebDrugSource.com and the
Administrative Agent and the PPCI Security Agreement, executed and delivered by
PPCI and the Administrative Agent, (iv) the American BioScience Pledge
Agreement, executed and delivered by American BioScience and the Administrative
Agent, (v) the Intercompany Note, executed and delivered by the Borrower, (vi)
the Intercompany Mortgage, executed and delivered by the Borrower, (vii) the
Assignment of Intercompany
<PAGE>
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Mortgage, executed and delivered by WebDrugSource.com, (viii) the other Security
Documents and (ix) copies of the Notes, if any.
(b) Pro Forma Balance Sheet; Financial Statements; Compliance
---------------------------------------------------------
Certificate; Projections. The Lenders shall have received (i) the Pro Forma
------------------------
Balance Sheet, (ii) audited consolidated financial statements of the Borrower
and its consolidated Subsidiaries for the 1998, 1999 and 2000 fiscal years
thereof, (iii) unaudited interim consolidated financial statements of the
Borrower and its consolidated Subsidiaries for each fiscal month and quarterly
period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clause (ii) of this paragraph as to which such
financial statements are available, and such financial statements shall not, in
the reasonable judgment of the Lenders, reflect any material adverse change in
the consolidated financial condition of the Borrower and its consolidated
Subsidiaries, as reflected in the financial statements or projections contained
in the Confidential Information Memorandum and (iv) satisfactory Projections
through the fiscal year ended December 31, 2005. The Lenders shall have received
a Compliance Certificate of a Responsible Officer of the Borrower confirming to
the satisfaction of the Administrative Agent, and including reasonably detailed
support for the calculations included therein, that the Consolidated EBITDA for
the period of twelve consecutive months ended September 30, 2001 (adjusted to
give effect to the incurrence of the Loans) is at least $30.0 million.
(c) Approvals. All governmental and third party approvals necessary
---------
in connection with the transactions contemplated hereby shall have been obtained
and become final and be in full force and effect, in each case without the
imposition of burdensome conditions and except to the extent failure to obtain
any such third party approvals could not reasonably be expected to have a
Material Adverse Effect and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(d) Lien Searches. (i) The Administrative Agent shall have received
-------------
the results of a recent search or UCC, tax and judgment filings in each of the
jurisdictions described on Schedule 5.1(d)(i), together with copies of financing
------------------
statements disclosed by such searches, and such search shall reveal no Liens on
any of the assets of the Loan Parties except for Liens permitted by Section 7.3
or discharged on or prior to the Closing Date pursuant to documentation
reasonably satisfactory to the Administrative Agent and (ii) the Administrative
Agent shall have the results of intellectual property searches described on
Schedule 5.1(d)(ii), together with copies of Liens disclosed thereby and such
-------------------
search shall reveal no Liens on any of the assets of the Loan Parties encumbered
by any Security Document except for Liens permitted by Section 7.3 or discharged
on or prior to the Closing Date pursuant to documentation reasonably
satisfactory to the Administrative Agent.
<PAGE>
-60-
(e) Fees. The Lenders and the Administrative Agent shall have
----
received all fees required to be paid pursuant to that certain fee letter dated
December 14, 2001 between the Borrower and the Administrative Agent, and all
expenses of the Administrative Agent reimbursable by the Borrower pursuant to
Section 10.5 for which invoices have been presented (including the reasonable
fees and expenses of legal counsel to the Administrative Agent), on or before
the Closing Date. All such amounts will be paid with proceeds of Loans made on
the Closing Date and will be reflected in the funding instructions given by the
Borrower to the Administrative Agent on or before the Closing Date.
(f) Closing Certificate; Certified Certificate of Incorporation;
-----------------------------------------------------------
Good Standing Certificates. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit G-1 or G-2, as applicable, with appropriate insertions and
attachments, including the certificate of incorporation of each Loan Party that
is a corporation certified by the relevant authority of the jurisdiction of
organization of such Loan Party, and (ii) a good standing certificate for each
Loan Party from its jurisdiction of organization.
(g) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Morrison & Foerster LLP, counsel to the
Borrower and its Subsidiaries, substantially in the form of Exhibit H-1;
-----------
(ii) the legal opinion of Jack C. Silhavy, Vice President and
General Counsel of the Borrower and its Subsidiaries, substantially in the
form of Exhibit H-2;
-----------
(iii) the legal opinion of local and foreign counsel in each of
Illinois and Canada and such other special and local counsel as may be
required by the Administrative Agent, substantially in the form of Exhibit
-------
H-3; and
---
(iv) the legal opinion of Leydig, Voit & Mayer, Ltd., special patent
counsel to the Loan Parties, in form and substance reasonably satisfactory
to the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(h) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Security Agreements and the American
BioScience Pledge Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof and (ii) each promissory note pledged to the Adminis-
<PAGE>
-61-
trative Agent pursuant to the Security Agreements (including, without
limitation, the Intercompany Note and each other intercompany note pledged in
the applicable Security Document) endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof.
(i) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any Uniform Commercial Code financing statement) required by the Security
Documents or the Intercompany Mortgage or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to create
in favor of the Administrative Agent, for its benefit and for the benefit of the
Secured Parties, a perfected Lien on the Collateral described therein (or, in
the case of real property located in Erie County, New York, the Mortgaged
Property described therein), prior and superior in right to any other Person
(other than with respect to Liens expressly permitted by Section 7.3), shall be
in proper form for filing, registration or recordation.
(j) Mortgages, etc. (i) The Administrative Agent shall have received
--------------
a Mortgage with respect to each Mortgaged Property (or, in the case of the
Mortgaged Property located in Erie County, New York, the Intercompany Mortgage
and the Assignment of Intercompany Mortgage), executed and delivered by a duly
authorized officer of the appropriate Loan Party, together with such
certificates, affidavits, questionnaires, instruments or returns as shall be
required in connection with filing or recordation thereof and to grant a
perfected Mortgage Lien on such Mortgaged Property.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received, and the Title Insurance Company issuing the
policy referred to in clause (iii) below shall have received, maps or
plats of an as-built survey of the sites of the Mortgaged Properties
certified to the Administrative Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1999, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (A) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the
sites; (D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any
<PAGE>
-62-
encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a
filed map, a legend relating the survey to said map; and (G) the flood
zone designations, if any, in which the Mortgaged Properties are located.
(iii) The Administrative Agent shall have received in respect of
each Mortgaged Property a Mortgagee's title insurance policy (or policies)
or marked up unconditional binder for such insurance. Each such policy
shall (A) be in an amount satisfactory to the Administrative Agent; (B) be
issued at ordinary rates; (C) insure that the Mortgage (or, in the case of
the Mortgaged Property located in Erie County, New York, the Intercompany
Mortgage as Collaterally assigned by the Master Security Agreement)
insured thereby creates a valid first Lien on such Mortgaged Property free
and clear of all defects and encumbrances, except as disclosed therein;
(D) name the Administrative Agent for its benefit and for the benefit of
the Secured Parties as the insured thereunder; (E) be in the form of ALTA
Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent
policies); (F) contain such endorsements (including, without limitation,
"tie-in" or "cluster", first loss, last dollar, usury, contiguity,
revolving credit (except in the case of the Mortgaged Property located in
Erie County, New York), doing business, non-imputation, public road
access, survey, variable rate, zoning (provided that with respect to
--------
zoning, the Borrower may, in lieu of such endorsement, deliver a zoning
compliance letter prepared by the appropriate Governmental Authority or a
zoning and site requirement summary report prepared by the Planning and
Zoning Resource Corporation or other similar service reasonably acceptable
to the Administrative Agent) and so-called comprehensive coverage over
covenants and restrictions) and affirmative coverage as the Administrative
Agent may reasonably request and as may be generally available in the
applicable jurisdiction; and (G) be issued by title companies satisfactory
to the Administrative Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, all charges for Mortgage
recording tax, and all related expenses, if any, have been paid.
(iv) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood insurance
that (1) covers any parcel of improved real property that is encumbered by
any Mortgage or the Intercompany Mortgage, (2) is written in an amount not
less than the outstanding principal amount of the indebtedness secured by
such Mortgage or Intercompany Mortgage that is reasonably allocable to
such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (3) has a term ending not
later than the maturity of the Indebtedness secured by such Mortgage or
Intercompany Mortgage and (B) confir-
<PAGE>
-63-
mation that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (iii) above and a copy of
all other material documents affecting the Mortgaged Properties.
(k) Solvency Certificate. The Administrative Agent shall have
--------------------
received a solvency certificate executed by the Chief Executive Officer or the
Chief Financial Officer of the Borrower.
(l) Insurance. The Administrative Agent shall have received
---------
insurance certificates satisfying the requirements of the Security Agreements,
the Mortgages and the Intercompany Mortgage.
(m) Due Diligence Review. The Administrative Agent shall have
--------------------
completed its due diligence, including but not limited to the receipt of due
diligence reports conducted by third parties and shall be satisfied with the
results thereof in all respects and no information shall have come to the
attention of the Administrative Agent that leads it to conclude that any such
report is inaccurate in any material respect.
(n) No Adverse Change or Development; Conduct of Business. Since
--------------------------------
September 30, 2001, nothing shall have occurred which could reasonably be likely
to have a material adverse effect on the rights and remedies of the Lenders, or
on the ability of the Borrower to perform its obligations to the Lenders; and
there shall not have been, in the sole judgment of the Required Lenders, any
material adverse change, or any development involving (or which may reasonably
be expected to involve) as prospective material adverse change, in the business,
condition (financial or other), results of operations, operations, property,
assets, liabilities or prospects of the Borrower and its Subsidiaries, taken as
a whole.
(o) Market and Other Conditions. There shall not have occurred (i)
---------------------------
any general suspension of, or limitation on times or prices for, trading in
securities on the New York Stock Exchange or the American Stock Exchange; (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
the banks in the United States; or (iii) either (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an outbreak
or escalation of any insurrection or armed conflict involving the United States,
or any other national or international calamity or emergency, or (C) any
material change in the financial, banking or capital markets which, in the sole
judgment of the Lenders, makes it impracticable or inadvisable to proceed with
the consummation of the Loans or would materially affect the ability to sell or
syndicate the Facilities.
<PAGE>
-64-
(p) Perfection Certificate. The Administrative Agent shall have
----------------------
received the Perfection Certificate, substantially in the form of Exhibit E-3,
-----------
duly authorized, executed and delivered to the Borrower.
(q) Use of Proceeds. Simultaneously with the initial extension of
---------------
credit on the Closing Date, the Borrower shall repay in full all indebtedness
under the Existing Credit Facility.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents or the
Intercompany Loan Documents shall be true and correct on and as of such date as
if made on and as of such date, unless such representation and warranty refers
to an earlier date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of
the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Letter of Credit remains outstanding or any Loan or other amount
is owing to any Lender or the Administrative Agent hereunder and unless waived
pursuant to Section 10.5, the Borrower shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
--------------------
each Lender:
(a) as soon as available, but in any event within 95 days after the
end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated and unaudited consolidating statements of income and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising out of the scope
of the audit, by Ernst & Young,
<PAGE>
-65-
LLP or other independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of footnotes); and
(c) as soon as available, but in any event not later than 35 days
after the end of each month of the Borrower, the unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such month and the related unaudited consolidated statements of
income and of cash flows for such month, setting forth in each case in
comparative form the figures for the previous comparable month, certified
by a Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments and the absence of
footnotes).
All such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or financial officer, as
the case may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
-------------------------------
Agent (or, in the case of clause (f), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor nothing came to their attention
that caused them to believe that the Borrower failed to comply with the
covenants, provisions or conditions of Section 2.9 and Section 7.1, except
as specified in such certificate, which certificate may be limited to
accounting matters and disclaim legal interpretations;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) in the case of quarterly or annual financial statements, (x) a
Compliance Certificate setting forth the computations in reasonable detail
satisfactory
<PAGE>
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to the Administrative Agent demonstrating compliance by the Borrower with
the provisions of Section 2.9 and Section 7.1, and (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any
Intellectual Property acquired by any Loan Party since the date of the
most recent list delivered pursuant to this clause (y) (or, in the case of
the first such list so delivered, since the Closing Date) and a list of
each Subsidiary of the Borrower including whether such subsidiary was
formed or acquired since the end of the previous fiscal quarter;
(c) at least 15 days prior to commencement of each fiscal year of
the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year, the related consolidated
statements of projected cash flow, projected changes in financial position
and projected income and a description of the underlying assumptions
applicable thereto), and, promptly when available, significant revisions,
if any, of such budget and projections with respect to such fiscal year
(collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;
(d) within 50 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year consistent with such discussion and analysis then
required by the SEC on Form 10-Q or 10-K;
(e) promptly after the same are sent, copies of all financial
statements and reports that the Borrower sends to the holders of any class
of its debt securities or public equity securities and, within five days
after the same are filed, copies of all financial statements and reports
that the Borrower may make to, or file with, the SEC;
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request; and
(g) within 90 days after the completion of a Qualified IPO prior to
June 30, 2002, Projections through the fiscal year ended December 31,
2006.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in
<PAGE>
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good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the relevant Group Member;
provided that if any failure to discharge or otherwise satisfy any such
obligation or liability results in the incurrence of a Lien against any of the
Mortgaged Properties and/or any other Collateral, such Lien and the contest
thereof shall satisfy the Contested Collateral Lien Conditions.
6.4 Maintenance of Existence; Compliance. (a) (i) Preserve, renew
------------------------------------
and keep in full force and effect its organizational existence (after
reincorporation in Delaware with respect to the Borrower) and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all property
----------------------------------
material to and necessary in connection with its business in good working order
and condition, ordinary wear and tear excepted, (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business and (c) in the case of the Mortgaged Properties and/or any
other Collateral, maintain the insurance policies required pursuant to the
provisions of the Security Documents or, in the case of the real property
located in Erie County, New York, the Intercompany Mortgage, and otherwise
comply with the provisions thereof relating thereto.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
------------------------------------------------------
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of the Administrative Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records (all at the expense of such Lender unless an Event of Default
has occurred and is continuing, in which case at the expense of the Borrower) at
any reasonable time during business hours with reasonable notice and without
causing material disruption, but no more than once each six months for all such
visits and inspections (unless a Default or an Event of Default has occurred and
is continuing), to discuss the business, operations, properties and financial
and other condition of the Group Members with officers and employees of the
Group Members and with their independent certified public accountants (subject
to reasonable requests of confidentiality including requirements imposed by law
or
<PAGE>
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contract); provided that the Borrower shall have the right to be present at any
such meeting with the independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of the occurrence of any of the following events after the date of
this Agreement:
(a) any Default or Event of Default known to any Responsible
Officer;
(b) any (i) default or event of default by any Group Member under
any Contractual Obligation of any Group Member known to any Responsible
Officer or (ii) litigation, investigation or proceeding that may exist at
any time between any Group Member and any Governmental Authority, that in
either case, if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which it is probable that there will be an adverse determination and, if
adversely determined, would reasonably be expected to result in liability
to a Group Member in an aggregate amount of $250,000 or more and which is
not covered by insurance, (ii) in which injunctive or similar relief is
sought which if granted could reasonably be expected to incur a Material
Adverse Effect or (iii) which materially impairs the ability of any Group
Member to perform its obligations under any Loan Document;
(d) the following events, as soon as possible and in any event
within 30 days after any Responsible Officer of the Borrower knows or has
reason to know of any of the following events has resulted or could
reasonably be expected to result in a material liability or with respect
to which a Lien in favor of the PBGC or a Plan could reasonably be
expected to arise: (i) the occurrence of any Reportable Event with respect
to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the termination (other than a Standard Termination), Reorganization or
Insolvency of, any Single Employer Plan or Multiemployer Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect, in the reasonable opinion of
any Responsible Officer.
<PAGE>
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Each notice pursuant to this Section 6.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the relevant Group Member proposes
to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with,
------------------
and contractually require and enforce compliance in all material respects by all
tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and use
commercially reasonable efforts to cause all tenants and subtenants obtain and
comply in all material respects with and maintain, any and all material
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, response and other
corrective actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
(c) (i) At the request of the Administrative Agent, deliver a Phase
I Environmental Site Assessment ("Phase I Report"), and if and to the extent
recommended in such Phase I Report, a Phase II Report with respect to the real
properties of the Borrower and its Subsidiaries in form and substance reasonably
satisfactory to the Administrative Agent. The Borrower will, and will cause each
of its Subsidiaries to, take appropriate steps to initiate and expeditiously
complete all investigations, response and other corrective action required by
applicable Environmental Law and to eliminate any violation of or any potential
liability of any Group Member under applicable Environmental Law identified in
such Reports which could reasonably be expected to result in a Material Adverse
Effect, and shall keep the Administrative Agent apprised of all such actions. If
the Borrower or any Subsidiary fails to take such action, the Administrative
Agent may, in addition to any other remedies set forth herein, at the Borrower's
sole expense, cause any such actions to be taken, and the Borrower or any
Subsidiary shall grant the Administrative Agent and its agents an irrevocable,
non-exclusive license, subject to the rights of any tenants, for such purpose.
(ii) At the written request of the Administrative Agent, which
request shall specify in reasonable detail the basis therefor, the
Borrower will provide, at the Borrower's sole cost and expense, a Phase I
Report and if and to the extent required in any such Phase I Report, a
Phase II Report, concerning any Real Property now or hereafter owned or
operated by the Borrower or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably acceptable to the Administrative
Agent, indicating the presence or absence of Hazardous Materials, and the
potential cost of any investigation, response, or other corrective action
required under any applicable Environmental Law in connection with any
Hazardous Materials on, at, under, or emanating from such Real Property;
provided that such requests may be made only if (A) there
--------
<PAGE>
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has occurred and is continuing an Event of Default and the exercise of
remedies by the Administrative Agent in connection therewith or (B) the
Administrative Agent reasonably believes that the Borrower or any Real
Property is in violation of Environmental Law, and such violation is
reasonably expected to have a Material Adverse Effect, or circumstances
exist that reasonably could be expected to form the basis of an
Environmental Claim against the Borrower or any such Real Property that
could reasonably be expected to have a Material Adverse Effect. If the
Borrower fails to provide the Phase I Report or Phase II Report (if
required) within 90 days after such request is made, the Administrative
Agent may order the same, and the Borrower shall grant and hereby grants
to the Administrative Agent and its agents access to such Real Property,
and specifically grants the Administrative Agent an irrevocable,
non-exclusive license, subject to the rights of tenants, to perform such
an assessment, all at the Borrower's expense. For purposes of this
subsection, the term "Environmental Claim" shall mean any action, suit,
demand, notice of noncompliance or violation, investigation or proceeding
("Claims") under any applicable Environmental Law, including, without
limitation, (a) any Claims by governmental or regulatory authorities for
enforcement, clean-up, response, corrective action or damages, including,
without limitation, natural resources damages, and (b) any Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
or injunctive relief arising out of alleged injury or threat of injury to
health, safety or the environment, or personal injury or property damage,
due to the release or threat of release of Hazardous Materials.
6.9 Interest Rate Protection. In the case of the Borrower, within 60
------------------------
days after the Closing Date, enter into, and thereafter maintain, Hedge
Agreements to the extent necessary to provide interest rate protection for a
period of not less than three years for the full amount of the Tranche A Term
Loans, which Hedge Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.
6.10 Additional Collateral, Etc. (a) With respect to any property
--------------------------
acquired after the Closing Date by any Loan Party (other than (w) any Excluded
Property, (x) any property described in paragraph (b), (c) or (d) below, (y) any
property subject to a Lien expressly permitted by Sections 7.3(g) and 7.3(k)
solely to the extent that and for so long as the documents evidencing such Lien
or the Indebtedness secured by such Lien prohibit the grant of a security
interest in or Lien on such property and (z) property acquired by any Excluded
Foreign Subsidiary) as to which the Administrative Agent, for its benefit and
the benefit of the other Secured Parties, does not have a perfected Lien,
promptly (i) execute and deliver to the Administrative Agent such amendments to
the applicable Security Agreement, or such other documents as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for its
benefit and the benefit of the other Secured Parties, a security interest in
such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the its benefit and the benefit of the other Secured
Parties, a perfected first priority
<PAGE>
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security interest in such property, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Security Agreements or by law or as may be requested by the Administrative
Agent. The Borrower shall otherwise take such actions and execute and/or deliver
to the Administrative Agent such documents as the Administrative Agent shall
require to confirm the validity, perfection and priority of the Lien of the
Security Documents against such after-acquired properties or assets.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $500,000 acquired after
the Closing Date by any Loan Party (other than (x) any such real property
subject to a Lien expressly permitted by Sections 7.3(g) and 7.3(k) solely to
the extent that and for so long as the documents evidencing such Lien or the
Indebtedness secured by such Lien prohibit the grant of a security interest in
or Lien on such real property and (y) real property acquired by any Excluded
Foreign Subsidiary), promptly (i) execute and deliver a first priority Mortgage
(subject only to prior liens permitted by such Mortgage), in favor of the
Administrative Agent, for its benefit and the benefit of the other Secured
Parties, covering such real property, (ii) if requested by the Administrative
Agent, provide the other Secured Parties with (x) title and extended coverage
insurance covering such real property in an amount at least equal to the
purchase price of such real property (or such other amount as shall be
reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Wholly-Owned Subsidiary (other than an
Excluded Foreign Subsidiary) created or acquired after the Closing Date by any
Group Member (which, for the purposes of this paragraph (c), shall include any
existing Wholly-Owned Subsidiary that ceases to be an Excluded Foreign
Subsidiary), promptly (i) execute and deliver to the Administrative Agent (A)
such amendments to the applicable Security Agreement, as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for its
benefit and the benefit of the other Secured Parties, a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by
any Group Member and (B) a joinder agreement to the applicable Guarantee
Agreement substantially in the form of Annex A to Exhibit K attached hereto,
------- ---------
(ii) deliver to the Administrative Agent the certificates representing such
Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member, (iii) cause
such new Subsidiary (A) to become a party to the applicable Security Agreement
(unless such Subsidiary is contractually prohibited from placing a Lien on its
assets due to the terms of any Acquired In-
<PAGE>
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debtedness of such Subsidiary), (B) to take such actions necessary or advisable
to grant to the Administrative Agent for its benefit and the benefit of the
other Secured Parties a perfected first priority security interest in the
Collateral described in the applicable Security Agreement with respect to such
new Subsidiary (other than (I) property subject to a Lien expressly permitted
under Sections 7.3(g) and 7.3(k) solely to the extent that and for so long as
the documents evidencing such Lien or the Indebtedness secured by such Lien
prohibit the grant of a security interest in or Lien on such property and (II)
any Excluded Property), including the filing of Uniform Commercial Code
financing statements, or equivalent statements, in such jurisdictions as may be
required by the applicable Security Agreement or by law or as may be requested
by the Administrative Agent and (C) to deliver to the Administrative Agent a
certificate of such Subsidiary, substantially in the form of Exhibit G-2, with
-----------
appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Administrative Agent such amendments to the applicable Security
Agreement, as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for its benefit and the benefit of the other Secured
Parties, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by any such Group Member (provided that in no
--------
event shall more than 66% of the total outstanding voting Capital Stock of any
such new Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the relevant Group Member, and take such other action as may be
necessary or, in the opinion of the Administrative Agent, desirable to perfect
the Administrative Agent's security interest therein, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
6.11 Minimum Liquidity. Until the date that the Facilities have been
-----------------
paid in full and terminated, the Borrower shall have an aggregate amount of at
least $5.0 million in cash and/or Cash Equivalents and/or availability under the
Revolving Facility, after taking into account any Licensing Payments or
litigation settlement payments made by the Borrower or any of its Subsidiaries.
6.12 FDA and EPA Matters. Promptly notify the Administrative Agent
-------------------
of any material violation,
<PAGE>
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claim, complaint, charge or receipt of any notice of any violation, claim,
complaint or charge of or under (a) the FDCA or any applicable statutes, rules,
regulations, guides, policies, orders or directives administered or issued by
the FDA or (b) any applicable Environmental Law, in either instance which is
likely to result in a Material Adverse Effect.
6.13 Post-Closing Matters. The Borrower will, and will cause each
--------------------
Subsidiary to, as expeditiously as possible:
(a) No earlier than December 20, 2001 nor later than January 4,
2002, the Borrower shall pay $15.0 million in Licensing Payments to
American BioScience;
(b) Use its commercially reasonable efforts to deliver to the
Administrative Agent, a Control Agreement, duly authorized, executed and
delivered by the parties thereto, with respect to each Deposit Account,
Securities Account and Commodities Account maintained by any Loan Party;
provided, however, that if such pledgor shall not have entered into a
-------- -------
Control Agreement with the applicable account bank and delivered such
Control Agreement to the Administrative Agent within thirty (30) days
after the Closing Date with respect to any such Deposit Account,
Securities Account or Commodities Account, such pledgor shall close such
account and transfer the contents of such account to an account for which
a Control Agreement exists;
(c) Use its commercially reasonable efforts to obtain and deliver,
with respect to each Leased Property where material equipment and
inventory is located, a landlord lien waiver and access agreement,
substantially in the form of Exhibit E-4 annexed hereto, with such changes
-----------
as shall be reasonably acceptable to the Administrative Agent;
(d) Use its commercially reasonable efforts to obtain and deliver,
with respect to each property that the Borrower leases to third parties, a
subordination, non-disturbance and attornment agreement, substantially in
the form of Exhibit 1 to Exhibit E-2 annexed hereto, with such changes as
--------- -----------
shall be reasonably acceptable to the Administrative Agent; and
(e) Use its commercially reasonable efforts to obtain and deliver
the survey for the Cook County, Illinois Mortgaged Property.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Letter of Credit remains outstanding or any Loan or other amount
is owing to any Lender
<PAGE>
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or the Administrative Agent hereunder and unless waived pursuant to Section
10.5, the Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:
7.1 Financial Condition Covenants. For purposes of this Section 7.1,
-----------------------------
Permitted Subordinated Indebtedness will be excluded from the financial ratios.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
---------------------------
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
--------------------------------------------------------------------------------
Consolidated
Fiscal Quarter Leverage Ratio
--------------------------------------------------------------------------------
December 31, 2001 2.75 to 1.0
--------------------------------------------------------------------------------
March 31, 2002 2.75 to 1.0
--------------------------------------------------------------------------------
June 30, 2002 2.75 to 1.0
--------------------------------------------------------------------------------
September 30, 2002 2.75 to 1.0
--------------------------------------------------------------------------------
December 31, 2002 2.50 to 1.0
--------------------------------------------------------------------------------
March 31, 2003 2.50 to 1.0
--------------------------------------------------------------------------------
June 30, 2003 2.25 to 1.0
--------------------------------------------------------------------------------
September 30, 2003 2.25 to 1.0
--------------------------------------------------------------------------------
December 31, 2003
and thereafter 2.00 to 1.0
--------------------------------------------------------------------------------
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
------------------------------------
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower at any time to be less than 5.0x.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
----------------------------------------
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
--------------------------------------------------------------------------------
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
--------------------------------------------------------------------------------
December 31, 2001 1.00 to 1.0
--------------------------------------------------------------------------------
March 31, 2002 1.00 to 1.0
--------------------------------------------------------------------------------
June 30, 2002 1.00 to 1.0
--------------------------------------------------------------------------------
September 30, 2002 1.00 to 1.0
--------------------------------------------------------------------------------
December 31, 2002 1.00 to 1.0
--------------------------------------------------------------------------------
<PAGE>
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--------------------------------------------------------------------------------
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
--------------------------------------------------------------------------------
March 31, 2003 1.15 to 1.0
--------------------------------------------------------------------------------
June 30, 2003 1.15 to 1.0
--------------------------------------------------------------------------------
September 30, 2003 1.15 to 1.0
--------------------------------------------------------------------------------
December 31, 2003 1.15 to 1.0
--------------------------------------------------------------------------------
March 31, 2004 1.30 to 1.0
--------------------------------------------------------------------------------
June 30, 2004 1.30 to 1.0
--------------------------------------------------------------------------------
September 30, 2004 1.30 to 1.0
--------------------------------------------------------------------------------
December 31, 2004 1.30 to 1.0
--------------------------------------------------------------------------------
March 31, 2005 and thereafter 1.50 to 1.0
--------------------------------------------------------------------------------
(d) Consolidated Net Worth. As of the end of each fiscal quarter,
----------------------
commencing with the fiscal quarter ended March 31, 2002, the Consolidated Net
Worth of the Borrower and its Subsidiaries shall not be less than the Targeted
Net Worth of the Borrower and its Subsidiaries. For purposes of this covenant,
"Targeted Net Worth" means the sum of (i) Base Net Worth plus (ii) fifty percent
(50%) of Consolidated Net Income (but not less than zero) for the fiscal quarter
then ended plus (iii) 50% of the Net Cash Proceeds received from the sale of
Capital Stock during such fiscal quarter (excluding the Net Cash Proceeds from
(a) Disqualified Capital Stock, (b) the Qualified IPO and (c) any Capital Stock
issued pursuant to management, employee or director compensation plans in each
case received during such fiscal quarter), minus (iv) the amount of any License
Payments made by the Borrower during such fiscal quarter that were a direct
charge to shareholder's equity. "Base Net Worth" means (i) with respect to the
fiscal quarter ending March 31, 2002, 85% of the Borrower's Consolidated Net
Worth as of December 31, 2001 after giving effect to the Qualified IPO and (ii)
with respect to any other fiscal quarter, Targeted Net Worth for the immediately
preceding fiscal quarter, in each case as determined on a consolidated basis in
accordance with GAAP.
7.2 Indebtedness. Create, issue, incur, assume, become liable in
------------
respect of or suffer to exist any Indebtedness or Permitted Subordinated
Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary thereof and of
any Subsidiary of the Borrower to the Borrower or any other Subsidiary of
the Borrower, provided that Indebtedness of the Borrower to any Subsidiary
--------
that is not a Loan Party shall only be permitted by this paragraph (b) if
it is permitted by Section 7.8(n);
(c) Guarantee Obligations incurred in the ordinary course of
business by the Borrower or any of its Subsidiaries of obligations of any
Subsidiary, provided that
--------
<PAGE>
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Guarantee Obligations in respect of obligations of any Subsidiary that is
not a Loan Party shall only be permitted by this paragraph (c) if it is
permitted by Section 7.8(n);
(d) Indebtedness outstanding on the Closing Date and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
---------------
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $5.0 million at any one time outstanding;
(f) Hedge Agreements in respect of Indebtedness otherwise permitted
hereby that bears interest at a floating rate, so long as such agreements
are not entered into for speculative purposes;
(g) Acquired Indebtedness incurred in connection with a Permitted
Acquisition in an aggregate amount, not to exceed $20.0 million at any one
time outstanding;
(h) unsecured Indebtedness of the Borrower or any Subsidiary
Guarantor that is issued after such time as the Borrower has consummated a
Qualified IPO to a seller of an Acquired Business and incurred in
connection with a Permitted Acquisition; provided that neither the
--------
Borrower nor any Subsidiary Guarantor of the Borrower will issue
Indebtedness pursuant to this Section 7.2(h) in an aggregate principal
amount in excess of $20.0 million for the first year subsequent to a
Qualified IPO; $25.0 million for the second year subsequent to a Qualified
IPO; and $30.0 million for the third year subsequent to a Qualified IPO
and each year thereafter; provided, further that such unsecured
-------- -------
Indebtedness shall meet the requirements of clauses (a), (b) and (c) of
the definition of Permitted Subordinated Indebtedness and may pay cash
interest as long as no Event of Default has occurred and is continuing;
(i) other Indebtedness in an aggregate principal amount not to
exceed $3.5 million at any time outstanding; and
(j) Permitted Subordinated Indebtedness in an amount not to exceed
$20.0 million at any one time outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien (other
-----
than de minimis amounts not in excess of $1,000) upon any of its property,
-- -------
whether now owned or hereafter acquired, except:
<PAGE>
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(a) Liens for taxes, assessments or other governmental charges
(including pursuant to any Environmental Law) not yet due or that are
being contested in good faith by appropriate proceedings, provided that
--------
(i) adequate reserves with respect thereto are maintained on the books of
the Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP and (ii) in the case of any such charge which has or may become a
Lien against any of the Mortgaged Properties and/or any other Collateral,
such Lien and the contest thereof shall satisfy the Contested Collateral
Lien Conditions;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
that are not overdue for a period of more than 30 days or that are being
contested in good faith by appropriate proceedings, provided that (i)
--------
adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP
and (ii) in the case of any such Lien against any of the Mortgaged
Properties and/or any other Collateral, such Lien and the contest thereof
shall satisfy the Contested Collateral Lien Conditions;
(c) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(d) deposits to secure the performance of bids, trade contracts,
leases, licenses, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature (in each case,
other than for borrowed money) incurred in the ordinary course of business
for amounts not yet delinquent or, to the extent such amounts are so
delinquent, such amounts are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted if (i) adequate
reserves with respect thereto are maintained on the books of the Borrower
or the relevant Subsidiary, as the case may be, in accordance with GAAP
and (ii) in the case of any such Lien against any of the Mortgaged
Properties and/or any other Collateral, (A) such Lien and the contest
thereof shall satisfy the Contested Collateral Lien Conditions and (B) to
the extent such Lien is not imposed by law, such Lien shall in no event
encumber any Collateral other than cash;
(e) easements, rights-of-way, zoning and similar restrictions,
building codes, reservations, covenants, conditions, waivers, survey
exceptions and other similar encumbrances or title defects (and with
respect to any interests in real property held by the Borrower or any of
its Subsidiaries, Mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through
or under a landlord or owner of such leased property encumbering solely
such landlord's
<PAGE>
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or owner's interest in such real property, with or without the consent of
the lessee), including those on the title report that, individually or in
the aggregate, do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct
of the business of the Borrower or any of its Subsidiaries on the property
subject thereto;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such
-------------- --------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(e) to finance the acquisition,
construction or improvement of fixed or capital assets, provided that (i)
--------
such Liens shall be created within 90 days of acquisition, construction or
improvement of such fixed or capital assets, (ii) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(h) Liens created pursuant to the Security Documents or the
Intercompany Mortgage;
(i) any interest or title of a lessor under any lease entered into
by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) leases, subleases or licenses with respect to the assets or
properties of the Borrower or any of its Subsidiaries, in each case,
entered into in the ordinary course of the Borrower's or such Subsidiary's
business so long as such leases, subleases or licenses (i) are subordinate
in all respects to the Liens granted and evidenced by the Security
Documents (or, with respect to the real property located in Erie County,
New York, the Intercompany Mortgage) and, in the case of any lease,
sublease or license affecting any Mortgaged Property, such lease, sublease
or license shall also be entered into in compliance with the provisions of
the applicable Mortgage or the Intercompany Mortgage and (ii) do not,
individually or in the aggregate, (A) interfere in any material respect
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries or (B) materially impair the use (for its intended purposes)
or the value of the assets or property subject thereto; and
(k) any Lien existing on any Acquired Business prior to the
acquisition thereof by the Borrower or any Subsidiary pursuant to a
Permitted Acquisition or existing on any property or asset of any Person
that becomes a Subsidiary pursuant to a
<PAGE>
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Permitted Acquisition after the date hereof prior to the time such Person
becomes a Subsidiary; provided that (A) such Lien is not created in
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, as the case may be, (B) such Lien shall not apply
to any other property or assets of the Borrower or any Subsidiary other
than the Acquired Business and (C) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be.
7.4 Fundamental Changes. Enter into any merger, consolidation or
-------------------
amalgamation, or liquidation, winding-up or dissolution (or suffer any
liquidation, winding-up or dissolution), or Dispose of all or substantially all
of its property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into or liquidated into the Borrower (provided that the Borrower
--------
shall be the continuing or surviving corporation) or with or into any
Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be the
--------
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (i) to the Borrower or any Subsidiary Guarantor (upon voluntary
liquidation or otherwise) or (ii) pursuant to a Disposition permitted by
Section 7.5;
(c) any Investment expressly permitted by Section 7.8 may be
structured as a merger, consolidation or amalgamation;
(d) provided that no Default or Event of Default shall result
--------
therefrom, any Excluded Foreign Subsidiary may be merged with or into any
other Subsidiary of the Borrower; provided, however, that the survivor of
-------- -------
such merger shall become a Loan Party;
(e) the Borrower may merge with an Affiliate incorporated solely for
the purpose of incorporating the Borrower in another jurisdiction to
realize tax or other benefits, provided that (i) no Default or Event of
--------
Default shall have occurred and be continuing or would result therefrom,
(ii) the surviving entity shall execute and deliver such assumption
agreements and other documents and instruments as shall be reasonably
requested by the Administrative Agent to cause such entity to become
responsible for all the obligations and liabilities of the Borrower under
the Loan Documents and Intercompany Loan Documents, (iii) all actions
reasonably requested by the Administrative Agent to continue without any
adverse impact to the Lenders the perfected Liens on the Mortgaged
Properties and/or any other Collateral created by the Security Documents
or the Intercompany Mortgage shall have been completed to the satisfaction
of the Administrative Agent and (iv) there shall have been delivered to
the Administrative Agent such legal opinions and other documents with
respect to the forego-
<PAGE>
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ing, including board of directors' resolutions, charters and by-laws, as
the Administrative Agent shall reasonably request, each of which shall be
in form and substance reasonably satisfactory to the Administrative Agent;
provided that in connection with the foregoing, the appropriate Loan
--------
Parties shall take all actions necessary or reasonably requested by the
Administrative Agent to maintain the perfection or perfect, as the case
may be, protect and preserve the Liens on the Mortgaged Properties and/or
any other Collateral granted to the Administrative Agent pursuant to the
Security Documents or the Intercompany Mortgage and otherwise comply with
the provisions of Section 6.10 to the extent applicable; and
(f) subject to Section 7.5(f), the Borrower may liquidate or sell
any Subsidiary which in the Borrower's reasonable judgment is not
profitable; provided that the Net Cash Proceeds received therefrom shall
--------
be applied as set forth in Section 2.9(b).
7.5 Disposition of Property. Dispose of any of its property, whether
-----------------------
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property or property no
longer used or useful in its business in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) leases of real or personal property in the ordinary course of
business; provided that in the case of any lease of Mortgaged Property,
--------
such Lease shall be subject to the provisions of the applicable Mortgage
or, with respect to the real property in Erie County, NY, the Intercompany
Mortgage;
(d) the sale or issuance of any Capital Stock of any Subsidiary to
the Borrower or any wholly-owned Subsidiary Guarantor so long as such
Capital Stock shall be made subject to the Lien of the Security Documents
and comply therewith;
(e) the Borrower or any Subsidiary of the Borrower may Dispose of
the stock of any Excluded Foreign Subsidiary to any other Loan Party;
(f) the Disposition of other property having a fair market value not
to exceed $5.0 million in the aggregate for any fiscal year of the
Borrower; provided that the Net Cash Proceeds of any Asset Sale
--------
consummated pursuant to this clause (f) shall be applied as set forth in
Section 2.9(b); or
<PAGE>
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(g) any Excluded Foreign Subsidiary may issue Capital Stock to any
other Subsidiary to the extent the related Investment is permitted by
Section 7.8;
provided that all Dispositions permitted hereunder shall be made for fair market
--------
value and all Dispositions permitted by clause (f) above shall be for at least
85% cash consideration.
7.6 Restricted Payments. Declare or pay any dividend (other than
-------------------
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of any Group Member
(collectively, "Restricted Payments"), except that:
(a) any Subsidiary of the Borrower which is not a Subsidiary
Guarantor may make Restricted Payments ratably with respect to its Capital
Stock, and any Subsidiary Guarantor may make Restricted Payments to the
Borrower or any Subsidiary Guarantor; and
(b) so long as no Event of Default shall have occurred and be
continuing or would result therefrom, the Borrower may purchase or
repurchase its Capital Stock or common stock options therefor from present
or former officers or employees of any Group Member upon the death,
disability or termination of employment of such officer or employee,
provided that the aggregate amount of payments under this clause (b) after
--------
the date hereof shall not exceed $500,000.
7.7 Capital Expenditures. Make or commit to make any Capital
--------------------
Expenditure, except Capital Expenditures of the Borrower and its Subsidiaries in
the ordinary course of business not exceeding (a) in respect of any period prior
to the completion of a Qualified IPO, $15.0 million in any fiscal year of the
Borrower and (b) in respect of any period subsequent to the completion of a
Qualified IPO, $25.0 million in the first fiscal year of the Borrower subsequent
to a Qualified IPO, $20.0 million for the second fiscal year of the Borrower
subsequent to a Qualified IPO and $20.0 million for each fiscal year thereafter.
7.8 Investments. Make any advance, loan, extension of credit (by way
-----------
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
(a) Investments existing on the Effective Date and set forth on
Schedule 7.8(a);
---------------
<PAGE>
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(b) extensions of trade credit in the ordinary course of business;
(c) Investments in Cash Equivalents;
(d) Indebtedness and Guarantee Obligations permitted by Section 7.2
(excluding, however, loans and advances to, and Guarantee Obligations in
respect of obligations of, Subsidiaries that are not Subsidiary
Guarantors);
(e) (i) cash loans and advances to employees of the Borrower or any
Subsidiary in an aggregate amount for all Group Members not to exceed
$500,000 at any one time outstanding and (ii) non-cash loans and advances
to employees of the Borrower or any Subsidiary in connection with the
exercise of stock options in an aggregate amount for all Group Members not
to exceed $10.0 million at any one time outstanding;
(f) Permitted Acquisitions;
(g) Investments in assets (including Capital Stock of acquired
Persons and assets constituting a business unit) useful in the business of
the Borrower and its Subsidiaries made by the Borrower or any of its
Subsidiaries with the proceeds of any Reinvestment Deferred Amount;
(h) intercompany Investments by any of the Borrower or any
Subsidiary in the Borrower or any Person that, prior to such investment,
is a wholly-owned Subsidiary Guarantor;
(i) Investments made by the Borrower or a Subsidiary thereof in the
form of any Capital Stock, bonds, notes, debentures, partnership or joint
venture interests or other securities that are issued by a third party to
the Borrower or such Subsidiary solely as partial consideration for the
consummation of an Asset Sale that is otherwise permitted under Section
7.5(f);
(j) Investments by the Borrower or any Subsidiary thereof in
securities of trade creditors or customers received pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency
of such trade creditors or customers or as part of a work-out with such
creditors or customers;
(k) Hedge Agreements permitted under Section 7.2(f);
(l) payroll, travel, housing and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course
of business;
<PAGE>
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(m) Investments by the Borrower or any Subsidiary thereof in prepaid
expenses, negotiable instruments held for collection or lease, workers'
compensation, performance and other similar deposits provided to third
parties in the ordinary course of business; and
(n) in addition to Investments otherwise expressly permitted by this
Section, (a) cash Investments by the Borrower or any of its Subsidiaries
in Persons (including loans and advances to, and Guarantee Obligations in
respect of obligations of, Subsidiaries that are not Loan Parties) in an
aggregate amount (valued at cost) not to exceed $5.0 million during the
term of this Agreement and (b) Investments the consideration for which is
paid with the issuance of Capital Stock (other than Disqualified Capital
Stock) of the Borrower; provided that in each case such Investments are in
--------
Persons that are in the same or similar business as the business of the
Borrower.
7.9 Optional Payments and Modifications of Certain Debt Instruments
---------------------------------------------------------------
or License Agreement; Synthetic Purchase Agreements. (a) Make or offer to make,
---------------------------------------------------
or accept, as the case may be, any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease or
segregate funds with respect to any Indebtedness (other than the Loans) of the
Borrower and its Subsidiaries; (b) amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, (i)
any of the terms of the any Indebtedness of the Borrower and its Subsidiaries,
(ii) the License Agreement, (iii) the Intercompany Loan Documents, or (iv) its
certificate of incorporation, by-laws or other organizational documents, in each
case described in clauses (i), (ii) and (iv) of this clause (b) other than any
such amendment, modification, waiver or other change that does not adversely
affect any of the Lenders hereunder; or (c) enter into or be party to, or make
any payment under, any Synthetic Purchase Agreement. Notwithstanding the
foregoing, this Section 7.9 will not prohibit the Borrower from amending its
certificate of incorporation or by-laws in order to re-incorporate in Delaware
or as necessary to consummate a Qualified IPO.
7.10 Transactions with Affiliates. Enter into any transaction,
----------------------------
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower or any Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement or in existence as
of the date hereof as set forth in Schedule 7.10, (b) in the ordinary course of
-------------
business of the relevant Group Member, and (c) upon fair and reasonable terms no
less favorable to the relevant Group Member than it would obtain in a comparable
arm's length transaction with a Person that is not an Affiliate; provided that
--------
in any such transaction (or a series of related transactions which are similar
or part of a common plan) involving an amount or having a fair market value in
excess of (i) $500,000, the Borrower must obtain a board resolution of the board
of directors of the Borrower to that effect or (ii) $5.0 million, prior to the
closing
<PAGE>
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thereof, the Borrower must deliver a favorable written opinion of a nationally
recognized accounting, appraisal or investment banking firm as to the fairness
of the transaction to the Borrower.
7.11 Sales and Leasebacks. Enter into any arrangement with any
--------------------
Person providing for the leasing by any Group Member of real or personal
property that has been or is to be sold or transferred by such Group Member to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of such
Group Member unless (a) such Asset Sale is permitted under Section 7.5, (b) the
proceeds from such Asset Sale are applied in accordance with Section 2.9 and (c)
the Indebtedness incurred in connection with such Asset Sale is permitted under
Section 7.2.
7.12 Changes in Fiscal Periods. Permit the fiscal year of the
-------------------------
Borrower to change from its current 52/53 week fiscal year or change the
Borrower's method of determining fiscal quarters.
7.13 Negative Pledge Clauses. Enter into or suffer to exist or
-----------------------
become effective any agreement that prohibits or limits the ability of any Group
Member to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, to secure its
obligations under the Loan Documents and the Intercompany Loan Documents to
which it is a party other than (a) this Agreement, the other Loan Documents and
the Intercompany Loan Documents; (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective against the assets
financed thereby), (c) customary restrictions contained in leases and licenses
or other contracts restricting the assignment thereof and (d) restrictions
contained in agreements relating to Acquired Indebtedness permitted pursuant to
this Agreement.
7.14 Clauses Restricting Subsidiary Distributions. Enter into or
--------------------------------------------
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and the Intercompany Loan Documents and (ii) any restrictions with
respect to a Subsidiary imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary.
<PAGE>
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7.15 Lines of Business. Enter into any business, either directly or
-----------------
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related thereto.
7.16 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except for (i) the Guarantees, (ii) any
Guarantee Obligation arising from the guarantee by the Borrower or any
Subsidiary of obligations of the Borrower or a Subsidiary if the obligation so
guaranteed is permitted hereunder and (iii) guarantee obligations under the Code
on account of filing income taxes as a member of a consolidated group under the
Code with the Borrower and its Subsidiaries.
7.17 Payments to American BioScience. Neither the Borrower nor any
-------------------------------
of its Subsidiaries will make any payments of any kind, including, without
limitation, Licensing Payments, milestone payments or service payments to
American BioScience or any Affiliate or Subsidiary of American BioScience other
than Licensing Payments made in accordance and pursuant to the License Agreement
and other payments made in accordance with and pursuant to the License
Agreement, the Manufacturing Agreement and the Tax Sharing Agreements as each
are in effect on the Closing Date; provided that the Borrower and its
--------
Subsidiaries shall not make the $35.0 million payment required by Section 8.1(c)
of the License Agreement (such payment the "ABI 35 Payment") unless the Borrower
has demonstrated to the reasonable satisfaction of the Administrative Agent that
it has the necessary funds to make the ABI 35 Payment on the ABI 35 Payment Date
or if the Borrower does not have the funds it shall have demonstrated to the
reasonable satisfaction of the Administrative Agent that the License Agreement
has been terminated, waived or amended such that the ABI 35 Payment is no longer
due on the ABI 35 Payment Date.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due and payable in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or under
any other Loan Document or any Intercompany Loan Document, within five
Business Days after any such interest or other amount becomes due and
payable in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or any Intercompany Loan
Document or that is contained in any certificate, document or financial or
other statement furnished
<PAGE>
-86-
by it at any time under or in connection with this Agreement or any such
other Loan Document or Intercompany Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed
made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a), Section 6.7(a) or Section 7 (other than 7.3 or 7.13) of this
Agreement or (ii) an "Event of Default" under and as defined in any
Mortgage or Intercompany Mortgage shall have occurred and be continuing;
or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
or any Intercompany Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for the earlier of (i) a period of 30 days after notice to the
Borrower from the Administrative Agent or the Required Lenders or (ii) a
period of 30 days from the date the Borrower had actual knowledge of such
default; or
(e) any Group Member (other than an Immaterial Subsidiary) shall (i)
default in making any payment of any principal of any Indebtedness on the
scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or to become payable; provided that a default, event
--------
or condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such time,
one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and
be continuing with respect to Indebtedness the outstanding principal
amount of which exceeds in the aggregate $1.0 million; or
(f) (i) any Group Member (other than an Immaterial Subsidiary) shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrange-
<PAGE>
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ment, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or any Group
Member (other than an Immaterial Subsidiary) shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Group Member (other than an Immaterial Subsidiary)
any case, proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against any Group Member (other than an Immaterial Subsidiary) any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets that results in the entry of an order for any such
relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) any Group
Member (other than an Immaterial Subsidiary) shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
any Group Member (other than an Immaterial Subsidiary) shall generally
not, or shall be unable to, or shall admit in writing its inability to,
pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) for which an
exemption is not available involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of any Group Member (other than
an Immaterial Subsidiary) or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate (other than a Standard Termination), any Single
Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA (other than a Standard Termination), (v) any
Group Member (other than an Immaterial Subsidiary) or any Commonly
Controlled Entity shall, or is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material
Adverse Effect; or
<PAGE>
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(h) one or more judgments or decrees shall be entered against any
Group Member (other than an Immaterial Subsidiary) involving in the
aggregate a liability (not paid or fully covered by insurance) of $5.0
million or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 consecutive
days from the entry thereof; or
(i) any of the Security Documents or the Intercompany Loan Documents
shall cease, for any reason, to be in full force and effect, or any Loan
Party or any Affiliate of any Loan Party shall so assert, or any Lien
created by any of the Security Documents or the Intercompany Mortgage, as
Collaterally assigned to the Administrative Agent pursuant to the
Assignment of Intercompany Mortgage, shall cease to give the
Administrative Agent for the benefit of the Secured Parties the rights,
powers and privileges purported to be created thereby or cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) the Guarantee Agreements shall cease, for any reason, to be in
full force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or
(k) the Themba Trust or Patrick Soon-Shiong or one or more other
entities controlled by the Themba Trust or Patrick Soon-Shiong
collectively shall cease to own or hold voting power with respect to
voting (as to election of directors) representing not less than 51% of the
outstanding Capital Stock of the Borrower prior to an initial public
offering or 40% after an initial public offering of the Borrower; or
(l) any failure by the Borrower or any other Group Member (other
than an Immaterial Subsidiary) to be in substantial compliance with the
FDCA and all current applicable statutes, rules, regulations, guides,
policies, orders or directives administered or issued by the FDA, only to
the extent that such failure would reasonably be anticipated to (i) have a
materially adverse effect or impact on the Borrower's sales or (ii)
account for a ten percent (10%) or greater decrease in the Borrower's
total sales from the preceding fiscal year; provided that the issuance of
--------
a 483 letter or any warning letter by the FDA or pursuant to the FDCA
shall not constitute an Event of Default if the Borrower or such Group
Member is diligently taking corrective action with respect to such warning
letter;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become due and
payable, and (B) if such event is any other Event of Default, either or both of
the following ac-
<PAGE>
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tions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving
Commitments to be terminated forthwith, whereupon the Revolving Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable. With respect to all
Letters of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to this paragraph, the Borrower
shall at such time deposit in a cash Collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash Collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of the Borrower hereunder and under the other
Loan Documents. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Borrower hereunder and under the other Loan
Documents shall have been paid in full (other than contingent and unliquidated
indemnification obligations not due or payable), the balance, if any, in such
cash Collateral account shall be returned to the Borrower (or such other Person
as may be lawfully entitled thereto). Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities,
<PAGE>
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duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their
----------------------
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
--------------------------------
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation reasonably believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully pro-
<PAGE>
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tected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders (or,
if so specified by this Agreement, all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed
-----------------
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent receives such a notice or otherwise acquires actual
knowledge of a Default or an Event of Default, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
<PAGE>
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9.7 Indemnification. The Lenders agree to indemnify each Agent in
---------------
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
--------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon ten days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as
<PAGE>
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Administrative Agent by the date that is ten days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 Documentation Agent and Syndication Agent. Neither the
-----------------------------------------
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights or
obligations of the Lenders or of the Loan Parties hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
-------- -------
and no such amendment, supplement or modification shall (i) forgive the
principal amount or extend the final scheduled date of maturity of any Loan,
extend the scheduled date of any amortization payment in respect of any Tranche
A Term Loan, reduce the stated rate of any interest or fee payable hereunder
(except (x) in connection with the waiver of applicability of any post-default
increase in interest rates (which waiver shall be effective with the consent of
the Required Lenders) and (y) that any amendment or modification of defined
terms used in the financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (i)) or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Commitment, in each case
without the written consent of each Lender directly affected thereby; (ii)
eliminate or reduce the voting rights of any Lender under this Section 10.1
without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its
<PAGE>
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rights and obligations under this Agreement and the other Loan Documents or the
Intercompany Loan Documents, release all or substantially all of the Mortgaged
Properties and/or any other Collateral or release all or substantially all of
the Subsidiary Guarantors from their obligations under the Guarantee and Master
Security Agreement, in each case without the written consent of all Lenders;
(iv) amend, modify or waive any provision of Section 2.15 without the written
consent of the Lenders adversely affected thereby; (v) amend, modify or waive
any provision of Section 9 without the written consent of the Administrative
Agent; or (vi) amend, modify or waive any provision of Section 3 without the
written consent of each Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
Notwithstanding the foregoing, this Agreement may be amended (or
amended and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Tranche A Term Loans and Revolving Extensions of Credit and the accrued
interest and fees in respect thereof and (b) to include appropriately the
Lenders holding such credit facilities in any determination of the Required
Lenders.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or five Business Days after being
deposited in the mail, postage prepaid, or, in the case of facsimile notice,
when receipt is confirmed, or overnight courier, on the day after delivery by
the courier service, or hand delivery on the day of delivery, addressed (a) in
the case of the Borrower and the Administrative Agent, as follows, (b) in the
case of the Lenders, as set forth in an administrative questionnaire delivered
to the Administrative Agent or, in the case of a Lender which becomes a party to
this Agreement pursuant to an Assignment and Acceptance, in such Assignment and
Acceptance or (c) in the case of any party, to such other address as such party
may hereafter notify to the other parties hereto:
<PAGE>
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Borrower: American Pharmaceutical Partners, Inc.
10866 Wilshire Boulevard, Suite 1270
Los Angeles, California 90024
Attention: Derek Brown
Telecopy: (310) 470-7472
Telephone: (310) 470-4222
with a copy to:
American Pharmaceutical Partners, Inc.
1101 Perimeter Drive
Suite 300
Schaumburg, Illinois 60173-5837
Attention: Jack C. Silhavy, Esq.
Telecopy: (847) 413-2670
Telephone: (847) 330-1373
and
Morrison & Foerster LLP
400 Capitol Mall, 23rd Floor
Sacramento, California 95814
Attention: Charles S. Farman, Esq.
Telecopy: (916) 448-3200
Telephone: (916) 325-1309
Administrative Agent: Canadian Imperial Bank of Commerce
c/o
CIBC World Markets
425 Lexington Avenue, 8th Floor
New York, New York 10017
Attention: Jo Manger
Telecopy: (212) 885-4853
Telephone: (212) 856-3818
<PAGE>
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Helene R. Banks, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
Issuing Lender: As notified by such Issuing Lender to the Admin-
istrative Agent and the Borrower
provided that any notice, request or demand to or upon the Administrative Agent,
--------
any Issuing Lender or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents, the Intercompany
Loan Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans and other extensions of credit
hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
-----------------------------
or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of this Agreement and the other Loan Documents, the Intercompany Loan Documents
and any other documents prepared in connection herewith, and the consummation
and administration of the transactions contemplated hereby and thereby,
including the reasonable fees and disbursements of counsel to the Administrative
Agent and filing and recording fees and expenses, with statements with respect
to the foregoing to be submitted to the Borrower prior to the Closing Date (in
the case of amounts to be paid on the Closing Date) and from time to time
thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender
and the Administrative Agent for all its costs and expenses incurred in
connection with any amendment, supplement or modification to this Agreement and
the other Loan Documents, the Intercompany Loan Documents and any other
documents prepared in
<PAGE>
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connection therewith and the enforcement or preservation of any rights under
this Agreement, the other Loan Documents, the Intercompany Loan Documents and
any such other documents, including the reasonable fees and disbursements of
counsel (including the reasonable allocated fees and expenses of in-house
counsel) to each Lender and counsel to the Administrative Agent, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, that may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents, the Intercompany Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents, the Intercompany Loan Documents and any
such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Group Member or
any of the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any
Loan Party under any Loan Document (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided that the Borrower shall
--------
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities resulted from the gross
negligence or willful misconduct of such Indemnitee. All amounts due under this
Section 10.5 shall be payable not later than ten Business Days after written
demand therefor. Statements payable by the Borrower pursuant to this Section
10.5 shall be submitted to a Responsible Officer, at the address of the Borrower
set forth in Section 10.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 10.5 shall survive repayment of the Loans
and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, express or implied, shall be construed to confer upon any Person
(other than the
<PAGE>
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parties hereto and, their respective successors and assigns permitted hereby)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender other than any Conduit Lender may, without the
consent of the Borrower, in accordance with applicable law, at any time sell to
one or more banks, financial institutions or other entities (each, a
"Participant") participating interests in any Loan owing to such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Loans or any fees payable hereunder, or postpone the date of
the final maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.16, 2.17 and 2.18 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 2.17, such Participant shall have
--------
complied with the requirements of said Section; and provided, further, that no
-------- -------
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Lender Affiliate or, with the consent of the Borrower (but only so
long as no Event of Default shall have occurred and be continuing) and the
Administrative Agent (which, in each case, shall not be unreasonably withheld or
delayed), to any other Eligible Assignee (an "As-
<PAGE>
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signee") all or any part of its rights and obligations under this Agreement and
the other Loan Documents pursuant to an Assignment and Acceptance, executed by
such Assignee, such Assignor and any other Person whose consent is required
pursuant to this paragraph, and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that, unless otherwise agreed
--------
by the Borrower and the Administrative Agent, no such assignment to an Assignee
(other than any Lender or any Lender Affiliate) shall be in an aggregate
principal amount of less than $5.0 million, in each case except in the case of
an assignment of all of a Lender's interests under this Agreement. For purposes
of the proviso contained in the preceding sentence, the amount described therein
shall be aggregated in respect of each Lender and its Lender Affiliates, if any.
Any such assignment need not be ratable as among the Facilities. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto).
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the
Administrative Agent any or all of the Loans it may have funded hereunder and
pursuant to its designation agreement and without regard to the limitations set
forth in the first sentence of this Section 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing such Loan, accompanied by a duly executed
Assignment and Acceptance, and thereupon one or more new Notes shall be issued
to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of
<PAGE>
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$3,500, the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) record the information contained therein in the Register on
the effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender to any Federal Reserve Bank in accordance with applicable law; provided
--------
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee
of such Lender as a party hereto.
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
(h) The Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
-------- -------
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
10.7 Adjustments; Set-off. (a) Except to the extent that this
--------------------
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a "Benefited
Lender") shall receive any payment of all or part of the Obligations owing to
it, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or Collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such Collateral, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such Collateral ratably with each of the Lenders; provided, however, that if
-------- -------
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
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(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
--------
the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission to Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for
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recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York,
the courts of the United States for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgments. The Borrower hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
10.14 Releases of Guarantees and Liens. (a) Notwithstanding anything
--------------------------------
to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 10.1) to take any action requested by the Bor-
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rower having the effect of releasing any Collateral or guarantee obligations (i)
to the extent necessary to permit consummation of any transaction not prohibited
by any Loan Document or that has been consented to in accordance with Section
10.1 or (ii) under the circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements and contingent and unliquidated indemnification
obligations not due or payable) shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, or, if
outstanding, the Letters of Credit have been backed by cash Collateral or a
letter of credit from a bank, the Collateral shall be released from the Liens
created by the Loan Documents, and the Loan Documents and all obligations (other
than those expressly stated to survive such termination) of the Administrative
Agent and each Loan Party under the Security Documents shall terminate, all
without delivery of any instrument or performance of any act by any Person.
10.15 Confidentiality. Each of the Administrative Agent and each
---------------
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
--------
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any Lender Affiliate, having been
bound by this Section 10.15, (b) subject to an agreement to comply with the
provisions of this Section, to any actual or prospective Transferee or any
direct or indirect counterparty to any Hedge Agreement (or any professional
advisor to such counterparty) which are notified of the confidentiality
obligation hereunder, (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of its affiliates
which are notified of the confidentiality obligation hereunder, (d) upon the
demand of any Governmental Authority, (e) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed except by
a person with a confidentiality obligation hereunder, (h) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender which are notified of the confidentiality obligation hereunder, or
(i) in connection with the exercise of any remedy hereunder or under any other
Loan Document, if and to the extent necessary to exercise such remedy.
10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
---------------------
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PRO-
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CEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
[Signature Pages Follow]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
AMERICAN PHARMACEUTICAL
PARTNERS, INC., as the Borrower
By: /s/ Derek Brown
----------------------------
Derek Brown
Chief Operating Officer, Operations,
Finance and Administration; Chief
Financial Officer and Secretary
CANADIAN IMPERIAL BANK OF
COMMERCE, as Administrative Agent
By: /s/ Terence Moore
------------------
Terence Moore
Executive Director
<PAGE>
S-2
CANADIAN IMPERIAL BANK OF
COMMERCE, as Lender
By: /s/ Terence Moore
-----------------------
Terence Moore
Executive Director
BANK OF AMERICA, N.A., as Co-Syndication
Agent and as a Lender
By: /s/ Craig Murless
-------------------
Craig Murless
Vice President
UBS AG, STAMFORD BRANCH, as a Lender
By: /s/ Patricia O'Kicki
--------------------------
Patricia O'Kicki
Director , Banking Products Services
By: /s/ Wilfred V. Saint
----------------------------
Wilfred V. Saint
Associate Director, Banking Products
Services, US
<PAGE>
S-3
UBS WARBURG LLC, as Co-Syndication Agent
By: /s/ Christopher R. Ryan
-------------------------------
Christopher R. Ryan
Managing Director
By: /s/ Oliver O. Trumbo II
-------------------------------
Oliver O. Trumbo II
Director