SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - K
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission File No. 1-8593
December 31, 1994
A.L. PHARMA INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2095212
(State of Incorporation) (I.R.S. Employer Identification No.)
One Executive Drive, Fort Lee, New Jersey 07024
(Address of principal executive offices) zip code
(201) 947-7774
(Registrant's Telephone Number Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange on
Title of each Class which Registered
Class A Common Stock, New York Stock Exchange
$.20 par value
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of the voting stock of the Registrant (Class A
Common Stock, $.20 par value) as of March 17, 1995 was $282,810,000.
The number of shares outstanding of each of the Registrant's classes of
common stock as of March 17, 1995 was:
Class A Common Stock, $.20 par value - 13,387,469 shares;
Class B Common Stock, $.20 par value - 8,226,562 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held on June 7, 1995 are incorporated by reference into
Part III of this report. Other documents incorporated by reference are
listed in the Exhibit index.<PAGE>
PART I
Item 1. Business
General
A.L. Pharma Inc., formerly called A. L. Laboratories, Inc.,
(the "Company") is a multinational pharmaceutical company engaged
in developing, manufacturing and marketing specialty generic and
proprietary human pharmaceuticals and animal health products.
The Company maintains dual corporate headquarters in Fort Lee,
New Jersey and Oslo, Norway.
The Company was originally organized in 1975 as a wholly-
owned subsidiary of Apothekernes Laboratorium A.S, a Norwegian
health care company established in 1903. In February 1984, the
Company's Class A Common Stock was initially listed on the
American Stock Exchange through a public offering and such stock
is currently listed on the New York Stock Exchange.
On October 3, 1994, the Company completed a transaction (the
"Combination Transaction") in which the Company acquired the
pharmaceutical, bulk antibiotic, animal health and aquatic animal
health businesses of Apothekernes Laboratorium A.S (the "Related
Norwegian Businesses"). Immediately following the closing, the
Company changed its name to "A.L. Pharma Inc." and its trading
symbol on the New York Stock Exchange to "ALO".
In order to accomplish the Combination Transaction,
Apothekernes Laboratorium A.S changed its name to A.L. Industrier
AS ("A.L. Industrier") and demerged the Related Norwegian
Businesses into a new Norwegian corporation called Apothekernes
Laboratorium AS ("A.L. Oslo"). The Company then acquired the
shares of A.L. Oslo through a tender offer for $23.6 million
plus warrants to purchase 3,600,000 shares of the Company's Class
A Common Stock, par value $0.20 per share. The warrants have an
exercise price of $21.945, generally become exercisable after
October 3, 1995 and expire on January 3, 1999. The Company has
agreed to file, and use its best efforts to cause to become
effective, a registration statement concerning the warrants and
the warrant shares with the Securities and Exchange Commission
("SEC") by October 3, 1995. In addition, the Company has agreed
to take all action necessary to list the warrants and the warrant
shares for trading or quotation on a national securities exchange
or over-the-counter system to facilitate the trading of the
warrants and the warrant shares when exercisable.
A.L. Industrier is the beneficial owner of 100% of the
outstanding shares of the Company's Class B Common Stock and is
able to control the Company through its ability to elect more
than a majority of the Board of Directors and to cast a majority
of the votes in any vote of the Company's stockholders. A.L.
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Industrier's holdings of the Company's Class B Common Stock
account for approximately 38.1% of the Company's total common
stock outstanding at December 31, 1994.
Subsequent to the Combination Transaction, the Company was
reorganized into five operating divisions included in two
business segments, Human Pharmaceuticals and Animal Health. The
Human Pharmaceuticals segment consists of three operating
divisions, U.S. Pharmaceuticals, International Pharmaceuticals
and Fine Chemicals. The Animal Health segment consists of two
operating divisions, Animal Health and Aquatic Animal Health.
After the closing of the Combination Transaction, each
division was required to evaluate its business to determine
actions necessary to maximize the division's and the Company's
competitive position. As a result, in December 1994, the Board
of Directors approved a plan and the Company announced post-
combination management actions which included exiting certain
businesses and product lines which did not fit into the Company's
new strategic direction, severing certain employees employed in
the businesses or product lines to be exited or whose positions
had become redundant as a result of the acquisition and the sale
or exiting of certain support facilities which also became
redundant as a result of the acquisition (the "Post Combination
Actions"). A summary of the charges resulting from these actions
is included in Note 3 of the Notes to the Consolidated Financial
Statements included in Item 8 of this report.
In 1992, the Company's wholly owned Danish subsidiary, Dumex
Ltd, completed the sale of all its former Human Nutrition
businesses. Accordingly, prior year financial information has
been presented to reflect the Human Nutrition segment as a
discontinued operation.
Human Pharmaceuticals
U.S. Pharmaceuticals Division (the "USPD")
The USPD develops, manufactures and markets specialty
generic human pharmaceuticals in the U.S. The division is
managed by a single senior management team and is comprised of
four wholly-owned subsidiaries, Barre-National , Inc. ("Barre"),
NMC Laboratories, Inc. ("NMC"), Able Laboratories, Inc. ("Able")
and ParMed Pharmaceuticals, Inc. ("ParMed"). Barre, acquired in
October 1987, is the leading U.S. manufacturer of liquid generic
pharmaceutical products. NMC, acquired in August 1990, is a
specialized pharmaceutical manufacturer and marketer of creams
and ointments for topical use, primarily prescription products.
Able, acquired in October 1992, is a manufacturer and marketer of
specialized prescription and over the counter pharmaceuticals
with an emphasis on suppositories and tablets. ParMed, acquired
in May, 1986, markets a broad line of generic pharmaceuticals
nationally under the "ParMed" label. ParMed has its products
manufactured by drug manufacturers and sells primarily to
independent retail pharmacies utilizing advanced telemarketing
techniques.
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In March 1993, Barre acquired a pharmaceutical manufacturing
facility in Lincolnton, North Carolina ("Lincolnton"), including
inventories, approved Abbreviated New Drug Applications ("ANDA")
and other related assets. The facility is designed to
manufacture oral liquids and topical ointments and creams. In
addition, a multi-year supply agreement was signed which provides
for the sale of pharmaceutical products from Barre, Able and NMC
to the previous owner of Lincolnton, a major generic drug
distributor. The facility was expanded in 1994 and the USPD
expects future productive capacity increases and/or the possible
realignment of productive capacity to relocate the manufacture of
certain products to Lincolnton.
During the formation and organization of the USPD in late
1993 and 1994, management took a number of consolidating actions.
Sales and marketing functions of all the manufacturing
subsidiaries comprising the division were combined to provide
pharmaceutical purchasers greater access to a larger portfolio of
products. Research and development activities were centralized
in a modern facility at the Bayview campus of Johns Hopkins
University in Baltimore, Maryland. In addition, the USPD
consolidated distribution from its four manufacturing sites into
one 165,000 square foot facility in Maryland to better serve
customers and improve inventory management.
Additionally, as part of the Post Combination Actions, the
USPD decided to cease producing tablets at its South Plainfield,
New Jersey facility in 1995.
International Pharmaceuticals Division (the "IPD")
The IPD develops, manufactures and markets a broad range of
generic and specialty dosage-form human pharmaceuticals, oral
health care products, adhesive bandages and surgical tapes under
proprietary brands primarily in the Nordic and other Western
European countries and Indonesia. The division is managed by a
single senior management team and business is primarily conducted
through two wholly-owned subsidiaries, Dumex Ltd. of Copenhagen,
Denmark ("Dumex") and A.L. Oslo and their respective
subsidiaries.
As part of the Post Combination Actions, the IPD decided to
discontinue one oral health care product produced under license,
fully integrate the remaining oral health care business as part
of the division, and sell unimproved land which, prior to the
consummation of the Combination Transaction, was to have been the
site of a future manufacturing plant.
Fine Chemicals Division (the "FCD")
The FCD develops, manufactures and markets bulk
pharmaceutical antibiotics to the pharmaceutical industry
worldwide. The products of the FCD constitute the active
substances in a large number of finished pharmaceuticals. The
division is managed by a single senior management team and
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business is conducted through the Dumex and A.L. Oslo
subsidiaries.
Animal Health
Animal Health Division (the "AHD")
The AHD develops, manufactures and markets feed additives
and animal health products for animals raised for commercial food
production worldwide. The division's principal feed additive is
the antibiotic bacitracin methylene disalicylate sold under the
BMD trademark ("BMD "), which is used to promote growth and feed
efficiency and to prevent or treat diseases in poultry and swine.
In addition, as a result of the Combination Transaction, the AHD
also manufactures a zinc bacitracin based feed additive sold
under the Albac trademark ("Albac "). Sales of the division's
products are made principally to commercial feed manufacturers
and swine and poultry producers through a staff of scientifically
trained sales and technical service personnel. The division is
managed by a single senior management team and business is
primarily conducted through the Company, A.L. Oslo and certain
other subsidiaries.
In July 1994 the AHD acquired the Wade Jones Company, Inc.
("Wade Jones"). Wade Jones is the major poultry animal health
products distributor in the U.S. and is also actively involved in
the development, manufacture and sale of its own line of products
including animal health pharmaceuticals and feed additives.
In July 1991 the AHD acquired, in two unrelated
transactions, trademarks, New Animal Drug Applications ("NADA"),
other intangibles and inventory associated with two product lines
of growth promotants and disease preventatives, the principal
components of which are commonly used in combination or
sequentially with BMD .
Aquatic Animal Health Division (the "AAHD")
The AAHD develops, manufactures and markets vaccines for use
in immunizing farmed fish against disease. The AAHD was the
leading supplier of fish vaccines to the Norwegian fish farming
industry in 1994. The division is managed by a single senior
management team and business is conducted through two wholly-
owned subsidiaries, A.L. Oslo and Biomed, Inc. of Bellevue,
Washington ("Biomed") which was acquired in July 1989.
As part of the Post Combination Actions, AAHD has
discontinued manufacture and marketing of one aquatic animal
health antibiotic product and will close a current production
facility in Tromso, Norway.
Financial Information About Industry Segments
The Company's two business segments are (1) Human
Pharmaceuticals and (2) Animal Health. For certain financial
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information concerning the Company's business segments see Note
20 of the Notes to the Consolidated Financial Statements included
in Item 8 of this Report.
Narrative Description of Business
Human Pharmaceuticals
The human pharmaceuticals segment is comprised of three of
the five operating divisions of the Company, namely the USPD, IPD
and FCD.
U.S. Pharmaceuticals Division
The USPD develops, manufactures and markets specialty
generic human pharmaceuticals in the U.S. The USPD is not
dependent on a single customer or a few customers. Generic
pharmaceuticals are chemical equivalents of drugs that are sold
under established brands and that may have been subject to patent
protection. Although typically less expensive, generic drugs
must meet the same regulatory standards for good manufacturing
practices, efficacy and safety as the corresponding branded
products.
The generic pharmaceutical industry is highly competitive,
with competition from companies specializing in generic products
as well as the branded and generic product operations of the
major international pharmaceutical companies. Consequently,
profit margins on generic drug products tend to be reduced as
more competitors obtain the necessary approvals to manufacture
and sell such products from the U.S. Food and Drug Administration
(the "FDA").
In recent years generic pharmaceuticals have increased their
market share in the U.S. relative to branded drugs. This
increase is due to several factors including: (i) state laws
permitting and/or mandating substitution of generics by
pharmacists; (ii) pressure from managed care and third party
payors to encourage cost containment by health care providers and
consumers; and (iii) increased acceptance of generic drugs by
physicians, pharmacists and consumers.
Since 1989 the U.S. pharmaceutical industry has been, and
continues to be, subject to an intense level of scrutiny by the
FDA and by members of Congress. As a result of actions taken by
the Company to respond to the progressively more demanding
regulatory environment in which it operates, the operating income
of the USPD's operations has been negatively affected. The
Company has spent, and will continue to spend, significant funds
and management time on FDA compliance matters. In 1992 Barre
concluded a binding agreement in the form of a consent decree
with the FDA which clarified Barre's regulatory obligations (the
"Consent Decree"). The Consent Decree defines the standards
Barre must achieve in meeting Current Good Manufacturing
Practices ("CGMP"). In addition, USPD's Able operation is also
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a party to an amended consent decree with the FDA governing
manufacturing operations in accordance with CGMP. In this
regard, Able has engaged in extensive regulatory compliance
activities which have included discontinuing certain products
and making capital expenditures and increasing operating
expenditures for quality assurance and control.
As described above, the cost of actions, both direct and
indirect, taken by the Company with respect to meeting regulatory
requirements has negatively affected gross profit and operating
income. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in Item 7 of this
report. Certain of these higher costs will continue to be
incurred as a normal part of the business while others are of a
one-time nature.
The Company has been impacted in previous years by delays in
the receipt of approvals for new products and supplemental
approvals for certain existing products from the FDA. The
Company cannot predict whether future legislative or regulatory
developments might have an adverse effect on the Company.
In April 1993, the USPD, together with all other
manufacturers and marketers, was requested by the FDA to
discontinue marketing products to treat respiratory congestion
which contain iodinated glycerol. During the period from May
through October 1993, the USPD did not ship these products.
However, as a result of the USPD's support of its position to
the FDA that these products should remain on the market and that
the innovator company was allowed to continue shipping, the USPD
resumed marketing of these products on a limited basis in late
October 1993. In June 1994, the innovator company reached
agreement with the FDA for the orderly cessation of sales of
these products. Accordingly, the USPD advised the FDA in late
July that it had ceased the manufacture and distribution of these
products.
In 1994, sales of iodinated glycerol products exceeded 1993
sales and reflected strong market demand (i.e. 1994 sales were
approximately 2% of the Company's sales). The prospective loss
of iodinated glycerol products will negatively impact the
Company's future operations. These products were used to treat
respiratory congestion resulting from cough and colds. The USPD
has a broad line of cough and cold remedies which may provide
alternative therapies to the iodinated glycerol product line.
However, the Company cannot predict the extent, if any, which the
alternative products will be substituted.
The USPD markets more than 300 product presentations,
primarily in liquid, cream, ointment and suppository dosage
forms. These products are marketed nationwide to pharmaceutical
distributors, merchandising chains and wholesalers under the
"Barre" and "Barre-NMC" labels and private labels. Prescription
products are sold by a divisional sales force. Over-the-counter
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products are sold by the divisional sales force as well as by
certain independent sales representatives.
Liquid Pharmaceuticals: Through its Barre operation, the
USPD is the leading manufacturer of generic pharmaceutical
products in liquid form with approximately 190 product
presentations. Most of the division's liquid products are
manufactured in its 255,000 square foot facility in
Baltimore, Maryland. The experience and technical know-how
of the USPD enables it to formulate therapeutic equivalent
drugs in liquid forms and to refine product characteristics
such as taste, texture, appearance and fragrance.
Because of the importance to the USPD of cough and cold
remedies, the liquid pharmaceutical business is seasonal in
nature. A higher percentage of sales are made in the winter
months and are affected, from year to year, by the incidence
of colds, respiratory diseases and influenza in its
geographical market.
As with its other products, the USPD must obtain FDA
approval for new generic drugs it is developing. In 1994,
the USPD received approval from the FDA to manufacture and
market Cimetidine Hydrochloride Oral Solution. In addition,
the USPD launched three other liquid products in 1994:
Clemastine Fumarate Syrup and Metaproterenol Sulfate
Inhalation Solution in 0.4% and 0.6% strengths.
Creams and Ointments: The USPD manufactures more than 90
cream and ointment presentations for topical use. Most of
these creams and ointments are prescription products and
include antibacterial, anti-inflammatory and combination
products. The USPD manufactures these creams and ointments
through its NMC operation in Glendale, New York as well as
at Lincolnton, North Carolina. Consistent with the other
manufacturing facilities of USPD, the NMC facility has also
been affected by increased regulatory costs in its ongoing
efforts to comply with the FDA's interpretation of CGMP.
The creams and ointments market is highly competitive and
includes a number of companies with significant market
share. This market is expected to grow significantly and a
number of important products will come off patent in the
next few years.
In 1994, the USPD received approval from the FDA to
manufacture and market Clobetasol Propionate Cream 0.05% and
Clobetasol Propionate Ointment 0.05%. In addition, the USPD
was able to expand its sales launch of Clotrimazole Vaginal
Cream during 1994 after its limited introduction in late
1993.
Suppositories and Other Specialty Generic Products: During
1994 and early 1995, the USPD expanded its suppository line
to 6 product presentations. In addition, the USPD also
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manufactures and/or markets certain other specialty generic
products, including Epinephrine Mist and home pregnancy
test kits.
In late February 1995, the USPD received FDA approval to
manufacture and market three strengths of Acetaminophen
Suppositories USP, 120 mg., 325 mg. and 650 mg. In
addition, USPD also began commercial sale of Miconazole
Nitrate Vaginal Suppositories 200 mg. in January 1995.
Through its ParMed operation, the USPD distributes a line of
over 1800 generic prescription and over-the-counter
pharmaceutical product presentations under the "ParMed" label as
well as private labels in the U.S. The largest part of ParMed's
sales are made to independent retail pharmacists in the U.S. A
substantial majority of ParMed's sales are made through a 45
person telemarketing sales force. ParMed's products are
manufactured by drug manufacturers who package and label products
for ParMed. Most products are available from more than one
source. ParMed also markets USPD products bearing the "Barre",
"Barre-NMC" and "Able" labels as part of its overall strategy.
Due to the fact that ParMed does not manufacture its products,
ParMed may be affected from time to time due to recalls of
products by its suppliers.
International Pharmaceuticals Division
The IPD develops, manufactures and markets a broad
range of generic and specialty dosage-form human pharmaceuticals,
oral health care products, adhesive bandages and surgical tapes
under proprietary brands primarily in the Nordic and other
Western European countries, Indonesia and the Middle East. The
IPD conducts its business primarily in Scandinavian and U.S.
Dollar denominated currencies (or currencies linked to the U.S.
Dollar).
Dosage-Form Pharmaceuticals: Substantially all of the dosage
form pharmaceutical products sold by the IPD in the Nordic
Countries, Western Europe and the Middle East are
manufactured at its facilities in Lier, Norway and
Copenhagen, Denmark, while products sold in Indonesia are
manufactured at its facility in Jakarta, Indonesia. The
facility at Lier, Norway was designed with a view towards
meeting the FDA's CGMP standard. However, given that the
facility's current production is not exported to the U.S.,
the Company has not initiated the process to cause the
facility to be in compliance with the FDA's interpretation
of CGMP.
The IPD has a broad range of dosage-forms, including
tablets, ointments, creams, and liquid and injectable
preparations for many different therapies with a
concentration on prescription drug antibiotics,
analgesics/antirheumatics and psychotropics, over-the-
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counter skin care, gastrointestinal and analgesic products.
The principal geographical markets for the IPD's dosage-form
pharmaceutical products are the Nordic and other Western
European countries as well as Indonesia and certain Middle
Eastern countries. The IPD employs a specialized sales
force which markets and promotes dosage-form products to
doctors, hospitals, pharmacies and consumers. In each of
its markets, the IPD uses wholesalers to distribute its
pharmaceutical products. In Norway, all pharmaceuticals
have historically been distributed through Norsk
Medisinaldepot ("NMD"), the state controlled distribution
entity, but have been marketed and promoted by
pharmaceutical manufacturers and suppliers to the ultimate
customer. However, as a result of Norway becoming a member
state of the European Economic Agreement, NMD is no longer
entitled to be the sole distributor in Norway and the IPD
believes that other wholesalers may begin to compete with
NMD in the near future.
The pharmaceutical business is highly competitive, and many
of IPD's competitors are substantially larger and have
greater financial, technical and marketing resources than
the IPD. Most of the IPD's pharmaceutical products compete
with one or more products of other companies which contain
the same active ingredient.
The development, manufacture and marketing of IPD
pharmaceutical products is subject to comprehensive
government regulation both in Norway, Denmark and in other
countries where the products are manufactured and marketed.
Government regulation includes detailed inspection of and
controls over manufacturing and quality control practices
and procedures, requires approvals to market products and
can result in the recall of products and the suspension of
production. Such government regulation substantially
increases the cost of producing pharmaceutical products.
Regulatory approvals are required before any new
prescription or over-the-counter drug can be marketed.
In Denmark, the IPD's pharmaceutical products are beginning
to encounter price pressures from parallel imports (i.e.
imports of competing products from neighboring countries).
The IPD believes that it is likely that parallel imports may
be a developing trend in other markets in which the IPD
sells its dosage-form pharmaceuticals. Such parallel
imports could lead to lower volume growth and downward
pressure on prices in certain product and market areas.
In the Nordic countries in recent years, there has been an
increase in volume of sales of generic pharmaceuticals
relative to original pharmaceuticals. This increase in
market share is primarily a result of government initiatives
to reduce pharmaceutical expenses through new regulations
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which promoted generic pharmaceuticals in lieu of original
formulations. However, the increased focus on the
regulation of pharmaceutical prices may lead to increased
competition and price pressure for suppliers of all types of
pharmaceuticals.
The pharmaceutical business of the IPD also includes oral
health care products. The two primary oral health care
products are Elyzol Dental Gel for the treatment of
periodontal disease and Flux sodium fluoride tablets.
In 1994 significant expenses continued to be incurred to
build an administrative, selling and marketing
infrastructure for promotion of Elyzol Dental Gel and for
continuing research and development work, including the
preparation of a New Drug Application to be submitted for
Elyzol Dental Gel in the United States.
As part of the Post Combination Actions, the Elyzol Dental
Gel business was administratively combined with the IPD and
the infrastructure to market Elyzol Dental Gel was subject
to cost reduction via the severance of certain employees.
In addition, IPD management is continuing to study
alternative marketing arrangements for the product. The
Company considers the Elyzol Dental Gel product to be in the
developmental phase and expects to continue to incur
expenses in excess of revenues during 1995.
Adhesive Bandages and Surgical Tapes: The IPD, through its
Norgesplaster subsidiary, manufactures adhesive bandages,
surgical tapes and non-medical tapes and is the only
manufacturer of adhesive bandages and surgical tapes in the
Nordic countries. Norgesplaster's most significant market
is Norway, where it is the leading supplier in the industry.
These products are sold to consumers and hospitals through
pharmacies and other retail outlets. The IPD's production
facility is located at Vennesla, Norway, which is 320 km
southwest of Oslo.
Fine Chemicals Division
The FCD develops, manufactures and markets bulk
pharmaceutical antibiotics to the pharmaceutical industry
worldwide. The products of the FCD constitute the active
substances in a large number of finished pharmaceuticals,
including finished pharmaceuticals for the treatment of certain
skin, throat and intestinal infections. Bacitracin, Zinc
Bacitracin and Polymyxin are the most significant products for
the FCD, which believes it is the world's largest manufacturer
and supplier of such products. The division also manufactures
other antibiotics such as Vancomycin, Amphotericin B and Colistin
for use in specialized, low volume topical and surgical human
applications. In addition, the FCD markets other well-
established bulk antibiotics, such as Gramicidin and Tyrothricin,
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which are contract manufactured for the division by a Danish
company.
The FCD manufactures its products in its plants in Oslo,
Norway and Copenhagen, Denmark. Both plants include
fermentation, specialized recovery and purification equipment.
Both facilities have been approved as a manufacturer of sterile
and non-sterile bulk antibiotics by the FDA and by the health
authorities of European countries. The manufacturing methods,
quality control procedures and quality assurance systems for the
production of such antibiotics are subject to periodic
inspections by regulatory agencies.
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Animal Health
Since the completion of the Combination Transaction on
October 3, 1994, the Animal Health segment is comprised of two
of the operating divisions of the Company, namely the AHD and the
AAHD.
Animal Health Division
The AHD develops, manufactures and markets feed additives
and animal health products for animals raised for commercial food
production worldwide. The AHD's principal animal health product
is BMD , a feed additive, which is used to promote growth and
feed efficiency and prevent or treat diseases in poultry and
swine. In addition, the AHD also manufactures and markets a feed
additive for poultry, swine and calves sold under the Albac
trademark. Albac is produced in granulated, powder and
lactodispersible forms and contains a special grade of zinc
bacitracin as its active ingredient.
In 1991, the Company purchased two animal health lines which
are commonly used in combination or sequentially with BMD . These
products include 3-Nitro , Histostat , Zoamix , Mycostatin , and
chlortetracycline ("CTC"), a feed grade antibiotic. The AHD also
manufactures and sells Vitamin D and other feed additives which
are used for poultry and swine.
The AHD presently sells a major portion of its volume in the
U.S. However, with the opening of sales offices in Mexico and
Canada in 1993 and with the international scope of the animal
health business acquired in the Combination Transaction, the AHD
has increased its manufacturing and marketing capabilities
outside the U.S. and expects international sales to increase in
the future.
Historically, the principal market for BMD has been the
poultry segment of the feed additives business where it is one of
the leading products. The AHD continues to increase its
marketing efforts with respect to the swine segment of the
market, which is more fragmented than the poultry market.
Effective August 1994, the AHD completed a distribution
arrangement with Merck AgVet, a division of Merck & Co., Inc.
Under the agreement, the AHD will assume all sales, marketing and
distribution functions for Merck AgVet's poultry products line in
the U.S. This arrangement affords the AHD an opportunity to
further broaden its product offerings to the U.S. poultry
industry with the addition of the well established Merck AgVet,
anticoccidial products which are complementary to the division's
BMD and 3-Nitro products.
Sales of the AHD's products in the U.S., Canada and Mexico
are made principally to commercial feed manufacturers and
integrated swine and poultry producers through a staff of
technically trained sales and technical service personnel located
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throughout the country. Sales of the AHD's products outside
North America are made primarily through the use of distributors
and sales companies.
The AHD produces BMD at its Chicago Heights, Illinois
facility, which includes a modern fermentation and recovery
plant. During recent years, the Chicago Heights facility's
capacity has increased and it has operated at or near capacity.
In the Combination Transaction the Company acquired the
technology to manufacture BMD which it previously licensed from
A.L. Industrier.
The Albac product is manufactured at the division's Skoyen
facility in Oslo, Norway. The 3-Nitro product line is
manufactured in accordance with a ten year agreement using AHD
technology at an unrelated company's facility in Charles City,
Iowa. The contract requires the AHD to purchase minimum yearly
quantities on a cost plus basis. CTC is purchased primarily from
foreign suppliers and blended domestically.
In July 1994, the AHD acquired Wade Jones Company, Inc.
Wade Jones is the major poultry animal health products
distributor in the U.S. and is also actively involved in the
development, manufacture and sales of its own line of products
including animal health pharmaceuticals and feed additives.
Approximately two-thirds of all products sold by the AHD in the
U.S. to the poultry industry are distributed by Wade Jones.
The animal health industry is highly competitive and
includes a large number of companies with greater financial,
technical and marketing resources than the Company. These
companies offer a wide range of products with various therapeutic
and growth stimulating qualities. Competition is also affected
by the issuance of regulatory approvals for similar or competing
products (particularly in the U.S.) and the availability of
generic versions of certain products. The Company believes that
its competitive position in the animal health business has been
enhanced because BMD and Albac are not absorbed into animal
tissues. The FDA does not require BMD and Albac to be
withdrawn from feed prior to the marketing of the food animals.
Certain tests have also shown that BMD and Albac do not tend to
produce resistance in bacteria which is a characteristic of some
competitive products.
Aquatic Animal Health Division
The AAHD develops, manufactures and markets vaccines for use
in immunizing farmed fish against disease. The Company
originally entered the aquaculture business with the purchase of
Biomed in 1989. This base business was expanded after the
Combination Transaction with the acquisition of A.L. Oslo's fish
health business. Presently, the AAHD is the leading supplier of
vaccines for farm raised salmon in Norway, which is the largest
market for the farming of salmon and other cold water species of
fish. In 1994, approximately 78% of the revenues of the AAHD
-13-<PAGE>
were generated from the Norwegian market. The Company believes
that the share of sales from markets outside Norway will increase
in the future as the division continues to expand its sales
efforts internationally.
The AAHD manufactures its products at two locations,
Bellevue, Washington and Tromso, Norway. However, in November
1994 the AAHD purchased a new manufacturing facility in
Overhalla, Norway and expects to shift all Norwegian production
from Tromso to Overhalla by the end of 1996.
Competition in the aquatic animal health industry is
characterized by relatively few competitors. However, the
industry is subject to rapid technological change. As a result,
new techniques and products developed by competitors could cause
the AAHD products to become obsolete if the division was unable
to match technological improvements.
Research, Product Development and Technical Activities
Scientific development is important to each of the Company's
business segments. The Company's research, product development
and technical activities in human pharmaceuticals within the
U.S., Norway and Denmark concentrate on the development of
generic equivalents of established branded products as well as
discovering creative uses of existing drugs for new treatments
and on establishing the necessary data to obtain government
approvals. The Company's research, product development and
technical activities also focus on developing improved delivery
systems and packaging and manufacturing techniques. In view of
the substantial funds which are generally required to develop new
chemical drug entities the Company has not emphasized such
activities. The Company's technical development activities for
the Animal Health segment involve extensive product development
and testing for the primary purpose of establishing clinical
support for new products and additional uses for or variations of
existing products and seeking related FDA and analogous
governmental approvals.
Generally, research and development are conducted on a
divisional basis. The Company conducts its technical product
development activities at its facilities in Copenhagen, Denmark,
Oslo, Norway, Baltimore, Maryland, Bellevue, Washington and
Chicago Heights, Illinois, as well as through independent
research facilities in the U.S.
Significant research and development projects in progress
include: A project to conduct clinical trials as part of the new
drug approval process in the U.S. for Elyzol Dental Gel, a
product for the treatment of the gum disease periodontitis, a
project to obtain FDA approval for Albuterol metered dose
inhalant products, and a project to obtain FDA approval for a
gram negative antibiotic which will be used as an injectable
treatment for respiratory and systemic diseases in broilers,
turkeys and cattle.
-14-<PAGE>
In March 1993, the Company committed to provide funds for
research and development and collaborate to some extent with an
Israeli company to develop products based on colonic delivery of
drugs. In 1994 the Company fulfilled its commitment to fund such
project by paying a total of $3.5 million to the Israeli company
for such research and development. The Company does not intend
to provide any additional funding for this project.
Research and development expenses were approximately $32.5
million, $24.0 million and $20.6 million in 1994, 1993 and 1992,
respectively.
Financial Information About Foreign and Domestic Operations and
Export Sales
The Company derives a substantial portion of its revenues
and operating income from its foreign operations. Restated
revenues from foreign operations accounted for 38.3% of the
Company's revenues in 1994 compared to 40.7% in 1993 and 48.0% in
1992. For certain financial information concerning foreign and
domestic operations see Note 20 of the Notes to the Consolidated
Financial Statements included in Item 8 of this Report. Export
sales from domestic operations were not significant.
The Company's foreign operations are subject to various
risks which are not present in domestic operations, including, in
certain countries, currency exchange fluctuations and
restrictions, restrictions on imports, government price controls,
restrictions on the level of remittance of dividends, interest,
royalties and other payments, the need for governmental approval
of new operations, the continuation of existing operations and
other corporate actions, political instability, the possibility
of expropriation and uncertainty as to the enforceability of
commercial rights, trademarks and other proprietary rights.
Regulation; Proprietary Rights
The development, manufacturing and marketing of the
Company's products are subject to comprehensive government
regulation both in the U.S., Norway, Denmark and other countries.
Government regulation includes detailed inspection of and
controls over manufacturing practices and procedures, requires
approvals to market products and can result in the recall of
products and suspension of production. Such government
regulation substantially increases the cost of producing human
pharmaceutical and animal health products. FDA approval is
required before any new prescription or over-the-counter drug
products or any animal health drug can be marketed in the U.S.
Analogous governmental and agency approvals are similarly
required before such products are marketed in other countries.
These government approvals are therefore very important to both
the Human Pharmaceuticals and Animal Health segments.
Continuing studies of the proper utilization, safety, and
efficacy of pharmaceuticals and other health care products are
-15-<PAGE>
being conducted by industry, government agencies and others.
Such studies, which increasingly employ sophisticated methods and
techniques, can call into question the utilization, safety and
efficacy of previously marketed products and in some cases have
resulted, and may in the future result, in the discontinuance of
their marketing and, in certain countries, give rise to claims
for damages from persons who believe they have been injured as a
result of their use.
The Company's manufacturing operations are required to
comply with CGMP as interpreted by the FDA and, in countries
outside the U.S., with similar regulations. This concept
encompasses all aspects of the production process, including
validation and record keeping, and involves changing and evolving
standards. Consequently, continuing compliance with CGMP is a
particularly difficult and expensive part of regulatory
compliance.
The evolving and complex nature of regulatory requirements,
the broad authority and discretion of the FDA and analogous
foreign agencies, and the generally increased level of regulatory
oversight have resulted in a higher possibility that from time to
time the Company will be adversely affected by regulatory actions
despite its ongoing efforts and commitment to achieve and
maintain full compliance with all regulatory requirements.
In many countries in which the Company does business,
including some of the Scandinavian countries, the initial prices
of pharmaceutical preparations for human use are dependent upon
governmental approval or clearance under governmental
reimbursement schemes usually based on costs or prices of
comparable products and subsequent price increases may also be
regulated. In the past three years, as part of overall programs
to lower health care costs, certain European governments have not
allowed price increases and have introduced various systems to
lower prices. As a result, cost increases and/or lower prices
due to exchange rate fluctuations have not been recovered.
Environmental Matters
The Company believes that it is substantially in compliance
with all presently applicable federal, state and local provisions
regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment. No
material capital expenditures are expected to be made in 1995 for
environmental control facilities.
Employees
As of December 31, 1994, the Company had approximately 2,819
employees, including 1,425 in the U.S. and 1,394 outside of the
United States.
Item 1A. Executive Officers of the Registrant
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The following is a list of the names and ages of all of the
Company's corporate officers and certain officers of each of the
Company's principal operating units, indicating all positions and
offices with the Registrant held by each such person and each
such person's principal occupations or employment during the past
five years.
Each of the Company's corporate officers has been elected to
the indicated office or offices of the Registrant, to serve as
such until the next annual election of officers of the Registrant
(expected to occur June 7, 1995) and until his successor is
elected, or until his earlier death, resignation or removal.
Name and Position Principal Business Experience
with the Company Age During the Past Five Years
E.W. Sissener 66 Chief Executive Officer since
Chairman, Director and June 1994. Member of the
Chief Executive Officer Office of the Chief Executive
of the Company July 1991 - May
1994. Chairman of the Company
since 1975. President of
Apothekernes Laboratorium AS
since October 1994. President
of A.L. Industrier AS from
1972-1994. Chairman of A.L.
Industrier AS since November
1994.
Jeffrey E. Smith 47 Vice President and Chief
Vice President, Finance Financial Officer since May
and Chief Financial 1994. Executive Vice
Officer President and Member of the
Office of the Chief Executive
July 1991 - May 1994. Vice
President, Finance of the
Company from November 1984 to
July 1991.
Beth P. Hecht 31 Corporate Counsel of the
Secretary and Corporate Company since June 1993;
Counsel Secretary of the Company since
November 1993; Attorney with
the law firm of Kirkland &
Ellis 1990-1993; Attorney with
the law firm of Willkie, Farr
& Gallagher 1988-1990.
Albert N. Marchio, II 42 Treasurer of the Company since
Treasurer May 1992; Treasurer of Laura
Ashley, Inc. 1990-1992,
Director of Taxes of Laura
Ashley, Inc. 1986-1990
-17-<PAGE>
David E. Cohen 40 President of the Company's
Vice President and Animal Health Division since
President, Animal October 1994; President,
Health Division Animal Health Division of
A. L. Laboratories, Inc. since
September 1988.
George S. Barrett 39 President of the Company's
Vice President and U.S. Pharmaceutical Division
President, U.S. since 1993; President of
Pharmaceuticals Barre-National since August
Division 1991; President of NMC since
August 1990; Vice President,
Operations of NMC, 1984 to
August 1990.
Thor Kristiansen 51 President of the Company's
Vice President and Fine Chemicals Division since
President, Fine October 1994; President,
Chemicals Division Biotechnical Division of
Apothekernes Laboratorium A.S
1986 to 1994.
Knut Moksnes 44 President of the Company's
Vice President and Aquatic Animal Health Division
President, Aquatic since October 1994; Managing
Animal Health Division Director, Fish Health Division
of Apothekernes Laboratorium
A.S 1991 to 1994.
Ingrid Wiik 50 President of the Company's
Vice President and International Pharmaceuticals
President, Division since October 1994;
International President, Pharmaceutical
Pharmaceuticals Division of Apothekernes
Division Laboratorium A.S 1986 to 1994.
-18-<PAGE>
Item 2. Properties
The Company's principal production and technical development
facilities are located in the United States, Denmark, Norway and
Indonesia. The Company also owns or leases offices and
warehouses in the United States, Sweden, Holland, Finland and
elsewhere.
FACILITY
LAND SIZE
LOCATION TITLE (acres) (sq. USE
ft.)
Fort Lee, NJ Leased -- 48,000 Office - dual
corporate office
and AHD
Headquarters
Skoyen, Norway Leased -- 204,400 Manufacturing of
AHD and FC
products, dual
corporate office
and headquarters
for IDP, FC and
AAHD.
Chicago Owned 20 195,000 Manufacturing,
Heights, IL warehouse, R&D and
offices - AHD
Bellevue, WA Leased -- 20,000 Manufacturing,
warehouse,
laboratory and
offices - Biomed
(AAHD)
Baltimore, MD Owned 19 255,000 Manufacturing,
warehouse, and
offices - Barre-
National, Inc., and
USPD headquarters.
Baltimore, MD Leased -- 18,000 Research and
Development - USPD
Columbia, MD Leased -- 165,000 Central
Distribution Center
- USPD
Lincolnton, NC Owned 13 138,000 Manufacturing,
warehouse, and
offices - Barre-
National,
Inc.(USPD)
-19-<PAGE>
Glendale, NY Leased -- 78,000 Manufacturing,
warehouse, and
offices -
NMC Laboratories,
Inc. (USPD)
Lowell, AK Leased -- 68,000 Manufacturing,
warehouse and
offices - the Wade
Jones Company (AHD)
Niagara Falls, Owned 2 30,000 Warehouse and
NY offices - ParMed
(USPD)
South Leased -- 60,000 Manufacturing,
Plainfield, NJ warehouse, and
offices - Able
Laboratories, Inc.
(USPD)
Lier, Norway Owned 23 118,400 Manufacturing of
IPD products,
warehousing and
offices
Overhalla, Owned 1 12,900 Manufacturing of
Norway vaccines,
warehousing and
offices (AAHD).
Tromso, Norway Leased 10,600 Manufacturing of
fish vaccines,
warehousing and
offices (AAHD).
Vennesla, Owned 4 81,300 Manufacturing of
Norway adhesive bandages
and surgical tapes,
warehousing and
offices -
Norgesplaster
(IPD).
Copenhagen, Owned 10 425,000 Manufacturing,
Denmark warehouse, R&D and
offices - Dumex
(IPD & FCD)
Jakarta, Owned 5 80,000 Manufacturing,
Indonesia building warehouse, R&D and
leased offices - P. T.
land Dumex (IPD)
The Company believes that its principal facilities described
above are generally in good repair and condition and adequate and
suitable for the products they produce.
-20-<PAGE>
-21-<PAGE>
Item 3. Legal Proceedings
On September 13, 1982, the Company filed at the FDA a
"Citizen Petition" requesting the FDA to reconsider and rescind
its approval of a new animal drug application ("NADA") filed by
Philips Roxane, Inc.("PRI") for the use of Bacitracin Zinc in
animal feeds for growth promotion. PRI is now a subsidiary of
Boehringer Ingleheim Animal Health Inc. The Citizen Petition
contended that FDA's approval was invalid and improper in several
respects, including improper reliance on confidential data which
was proprietary to the Company and inadequate evidence by PRI of
safety and efficacy. FDA denied the Citizen Petition on May 9,
1984 and the Company filed an action for judicial review in the
United States District Court for the District of Columbia (the
"Action") seeking to have FDA's denial of the Citizen Petition
set aside. Subsequent administrative proceedings based on
further alleged irregularities in FDA's continued approval of the
PRI NADA also resulted in FDA decisions denying the relief
sought. The complaint in the Action was amended to challenge
FDA's decisions on those subsequent proceedings. The parties
filed cross-motions for summary judgement and the U.S. District
Court granted FDA's motion for summary judgement to dismiss the
Action. The Company has appealed this decision to the U.S. Court
of Appeals for the District of Columbia. The matter has been
briefed and is scheduled to be argued in late March 1995.
From time to time the Company is involved in certain non-
material litigation which is ordinarily found in businesses of
this type, including product liability, contract and employment
matters.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Market Information
The Company's Class A Common Stock is listed on the New York
Stock Exchange. Information concerning the 1994 and 1993 sales
prices of the Company's Class A Common Stock are set forth in the
table below.
Stock Trading Price
1994 1993
Quarter High Low High Low
First $16.88 $14.00 $27.25 $20.00
Second $16.25 $13.00 $29.38 $20.00
Third $17.25 $12.63 $27.50 $13.75
Fourth $20.63 $15.63 $18.75 $12.75
As of December 31, 1994 and March 8, 1995 the Company's
stock closing price was $20.25 and $20.75, respectively.
Holders
As of February 28, 1995, there were 1,181 holders of record
of the Company's Class A Common Stock and A.L. Industrier held
all of the Company's Class B Common Stock. Record holders of the
Class A Common Stock include Cede & Co., a clearing agency which
held 94.6% of the outstanding Class A Common Stock as a
nominee.
Dividends
The Company has declared consecutive quarterly cash
dividends on its Class A and Class B Common Stock beginning in
the third quarter of 1984. Quarterly dividends per share in
1994 and 1993 were as follows:
Quarter Dividend per common share
1994 1993
First $.045 $.045
Second $.045 $.045
Third $.045 $.045
Fourth $.045 $.045
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Item 6. Selected Financial Data
The following is a summary of selected financial data for
the Company and its subsidiaries. All financial data has been
restated to reflect the combination with A.L. Oslo as a pooling
of interests. The data for each of the three years in the period
ended December 31, 1994 have been derived from, and all data
should be read in conjunction with, the audited consolidated
financial statements of the Company, included in Item 8 of this
Report. All amounts are in thousands, except per share data.
Years Ended December 31,
Income Statement Data (1) 1994(3) 1993 1992 1991 1990
Total revenue $469,263 $402,675 $358,632 $301,814 $289,424
Cost of sales 275,543 233,423 194,665 162,523 151,037
Gross profit 193,720 169,252 163,967 139,291 138,387
Selling, general and
administrative
expenses 177,742 139,038 128,658 122,175 101,547
Operating income 15,978 30,214 35,309 17,116 36,840
Interest expense (15,355) (14,996) (18,534) (15,070) (13,348)
Other income, net 1,113 1,880 3,937 5,961 2,128
Income from continuing
operations before
taxes 1,736 17,098 20,712 8,007 25,620
Provision for taxes 3,439 6,969 7,161 3,389 9,629
Income (loss) from
continuing operations $ (1,703) $ 10,129 $ 13,551 $ 4,618 $ 15,991
Net income (loss)(2) $ (2,386) $ 10,129 $ 20,974 $ 9,120 $ 16,874
Average number of
shares outstanding:
Primary 21,568 21,510 18,264 16,904 16,788
Fully Diluted 21,666 21,581 21,568 21,611 21,434
Earnings per share:
Fully diluted
Income (loss) from
continuing operations $ (.08) $ .47 $ .74 $ .27 $ .89
Net income (loss) $ (.11) $ .47 $ 1.09 $ .54 $ .93
(1) Includes results of operations from date of acquisition of the Wade
Jones Company (July 1994), the Lincolnton facility (March 1993),
Norgesplaster A/S (January 1993), Able Laboratories, Inc. (October
1992) and NMC Laboratories, Inc. (August 1990). Reflects the
adoption of Statement of Financial Accounting Standards No. 109 and
No. 106 effective January 1, 1992 and January 1, 1993, respectively.
(2) Net income includes: 1994 - extraordinary item - loss on
extinguishment of debt ($683); 1992 - cumulative effect of a change
-24-<PAGE>
in accounting for income taxes - $2,614; 1992, 1991 and 1990 - Income
from discontinued Human Nutrition Segment - $4,809, $4,502 and $883,
respectively.
(3) 1994 includes transaction costs relating to the combination with A.L.
Oslo and post-combination actions which are included in cost of goods
sold ($450) and selling, general and administrative ($24,200).
Amount net after tax of approximately $17,400.
As of December 31,
Balance Sheet Data (1) 1994 1993 1992 1991 1990
Current assets $250,499 $202,913 $178,283 $187,416 $178,792
Non-current assets 341,819 324,704 302,730 301,140 232,199
Total assets $592,318 $527,617 $481,013 $488,556 $410,991
Current liabilities $154,650 $139,205 $107,015 $125,697 $112,138
Long-term debt,
less current
maturities 220,036 144,350 133,701 196,103 142,476
Deferred taxes and
other non-current
liabilities 36,344 40,129 33,454 28,449 26,129
Stockholders' equity(2) 181,288 203,933 206,843 138,307 130,248
Total liabilities
and equity $592,318 $527,617 $481,013 $488,556 $410,991
(1) Includes accounts from date of acquisition of the Wade Jones Company
(July 1994), the Lincolnton facility (March 1993), Norgesplaster A/S
(January 1993), Able Laboratories, Inc. (October 1992) and NMC
Laboratories, Inc. (August 1990) and the conversion of the
Convertible Subordinated Debentures in 1992.
(2) 1994 reflects acquisition of A.L. Oslo accounted for as a pooling of
interests with cash purchase price deducted from stockholders'
equity.
-25-<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
1994 Compared to 1993
General
1994 was a year of significant change for the Company. The
following major events occurred and had an effect on the
Company's operations and financial position.
- The Company acquired the related Norwegian Human
Pharmaceutical and Animal Health businesses ("A.L.
Oslo") of its controlling shareholder for $23.6
million and warrants to purchase 3.6 million shares of
the Company's Class A Common Stock. The combination
was accounted for in a manner similar to a pooling of
interests since the companies were under common
control. All prior financial statements were restated
to include A.L. Oslo and the following discussion
reflects such restatement.
- The Company changed its name from A. L. Laboratories,
Inc. to A.L. Pharma Inc. and reorganized its business
into two main segments. The Human Pharmaceuticals
Segment which includes the International
Pharmaceuticals Division ("IPD"), the U.S.
Pharmaceuticals Division ("USPD") and the Fine
Chemicals Division ("FCD"), and the Animal Health
Segment which includes the Animal Health Division
("AHD") (both U.S. and International) and the Aquatic
Animal Health Division ("AAHD").
- The Company incurred significant charges as follows:
- Direct transaction expenses relating to the
acquisition of A.L. Oslo including special committee
fees, investment banking, legal, accounting and
other expenses - $2.9 million after tax.
- Post-combination management actions which resulted
in charges for severance, exiting of certain
businesses and product lines and other related
actions - $14.5 million after tax.
- The Company obtained a $185.0 million credit facility
to purchase A.L. Oslo, refinance a significant amount
of existing long and short term debt and for general
corporate purposes. The refinancing of existing debt
resulted in an extraordinary item for a loss on debt
extinguishment of $.7 million after tax.
Results of Operations
-26-<PAGE>
Total revenue increased to $469.3 million in 1994 compared
to $402.7 million in 1993 while operating income and income
before extraordinary item and taxes decreased substantially due
to the above described transaction expenses and post-combination
expenses. As a result, the Company had a loss before
extraordinary item of $1.7 million ($.08 loss per share) in 1994
compared to income of $10.1 million ($.47 per share) in 1993.
Revenue in the Human Pharmaceuticals Segment accounted for
$44.4 million of the consolidated revenue increase. The USPD
accounted for a major portion of the increase due primarily to
volume increases achieved in its liquids (including products
containing iodinated glycerol), creams and ointments, and
suppository product lines. The volume increase was fueled by
products introduced in late 1993, (Epinephrine Mist and
Clotrimazole cream) and products introduced in 1994 (Cimetidine
liquid, Clobetasol cream and ointment, Miconazole suppositories
and Clemastine liquid). On an overall basis price increases for
certain products offset and slightly exceeded price declines for
other products caused by competitive pressures.
IPD including oral health care also accounted for a portion
of the revenue increase due primarily to volume, and where
permitted by local conditions selected price increases. Oral
health care revenues increased by $2.9 million and the related
operating loss declined due to continued penetration in markets
where approval has been received, especially Sweden. FCD
revenues improved by approximately 10% due to volume increases
for Bacitracin, Vancomycin and Amphotericin B and selected price
increases for Polymyxin and Bacitracin.
Animal Health Segment revenue increased $22.3 million
primarily due to the acquisition of Wade Jones Company in July
1994, higher volume sales of BMD and international and domestic
sales of disease preventative products used in poultry markets.
In addition, sales volume of fish vaccines, primarily for salmon,
increased approximately 10% compared to 1993.
On a consolidated basis gross profit increased $24.5 million
while the gross margin percentage declined marginally from 42.0%
to 41.3% in 1994.
Gross profit dollars in the Human Pharmaceuticals Segment
increased at a rate consistent with the sales increase as the
aggregate gross profit percentage improved slightly compared to
1993. The U.S. Pharmaceuticals Division increased significantly
in dollars and marginally in percent as overall product volume
increases and higher value added new products offset continued
high production and operating costs incurred to maintain
compliance with "Current Good Manufacturing Practices" ("CGMP").
International Pharmaceuticals and Fine Chemicals generally
maintained gross margins in line with revenue increases.
Gross profit dollars in the Animal Health Segment increased
at a rate less than the sales increase as the gross margin
-27-<PAGE>
percent declined slightly. The gross margin percent for the
Animal Health Division declined mainly due to competitive
pressure on BMD prices and due to the acquisition of the Wade
Jones Company, a distributor to the poultry market, and sales
made pursuant to a distribution agreement with Merck AgVet for
poultry products. The gross profits earned in the distribution
business are generally lower than manufacturing gross profits.
Gross profits earned by the Aquatic Animal Health Division as a
percentage of sales were generally maintained as sales increased.
Operating expenses on a consolidated basis increased $38.7
million compared to 1993. Included in operating expenses are
$24.2 of expenses for transaction costs and for post-combination
actions by management relating to the combination with A.L. Oslo.
If the transaction and post-combination expenses were
excluded the operating expense increase was $14.5 million or
10.4% compared to a 16.5% revenue increase.
Operating expenses, not including transaction and post-
combination expenses, in the Human Pharmaceuticals Segment
increased due to variable selling expenses related to volume
increases, additional research and development expenses for
planned projects in process, and additional costs incurred in
USPD in setting up a Central Distribution Center in 1994.
Operating expenses, excluding transaction and post-combination
expenses, for the Animal Health Segment increased due to the
acquisition of Wade Jones in July 1994, increases in variable
selling expenses and increases in research and development
expenses.
Including transaction and post-combination costs operating
income was $16.0 million in 1994 compared to $30.2 million in
1993. By segment operating income was impacted as follows (in
millions):
Human Animal
Pharmaceuticals Health
Segment Segment Unallocated Total
Operating income (loss)
as reported $(3.8) $28.5 $(8.7) $16.0
Transaction costs and
post-combination
actions $19.0 $ 2.0 $ 3.7 $24.7
Operating income (loss)
excluding transaction
costs and post-combination
actions - 1994 $15.2 $30.5 $(5.0) $40.7
Operating income (loss) -
1993 $ 8.6 $28.8 $(7.2) $30.2
-28-<PAGE>
Post-combination charges reflect the following management
actions for the Human Pharmaceuticals Segment: severance of $2.9
million for employees eliminated due to redundancy, $8.8 million
(including the write off of $5.8 million of intangibles) for the
exit of the USPD from the tablet business in the U.S., $3.4
million for a write off of an intangible relating to an oral
health care product which will no longer be marketed, $.9 million
for the write down to fair market value of land which will be
held for sale, $2.5 million for an accelerated payment for
contractually committed research and development relating to a
project which will no longer be funded by the Company and $.5
million for closing sales offices and eliminating duplicate
distributors and other.
Post-combination management actions for the Animal Health
Segment relate to Aquatic Animal Health and include the exiting
of an antibiotic product and related equipment of $1.7 million
and severance of $.3 million.
Unallocated expenses relate primarily to Corporate functions
and include severance for redundant personnel of $.6 million and
$3.1 million for transaction expenses primarily for legal,
accounting and investment banking services incurred in 1994 to
complete the combination. 1993 unallocated expenses include
approximately $1.0 million for pre-combination transaction costs.
The transaction costs and charges for post-combination
management actions, a majority of which did not use cash, are
anticipated to lower future expenses (i.e. eliminate redundant
employees, distributors, etc.) and allow management to focus on
its core businesses (i.e. eliminate U.S. tablet business and
other minor products and exit non core research and development
projects). The Company has provided for the exiting of the U.S.
tablet business by the most probable exit plan (i.e. sale). If
the exit by sale is not achieved an adjustment for additional
future costs could be required in 1995.
Interest expense increased $.4 million in 1994 to $15.4
million due primarily to additional debt incurred for the
acquisition of A.L. Oslo and capital expenditures in the U.S.,
and higher U.S. interest rates in the latter part of 1994.
Partially offsetting domestic increases was lower foreign
interest expense due primarily to lower rates relative to 1993.
As required the Company restated the prior years results of
operations to reflect the acquisition of A.L. Oslo in a manner
similar to a pooling of interests. Previous restated periods do
not include the interest expense on the purchase price of $23.6
million which would have been incurred had the acquisition
actually taken place in prior periods. Assuming an interest rate
of 7%, interest expense for 1994 and 1993 would have been
approximately $1.2 million and $1.7 million higher, respectively.
The provision for income taxes in 1994 exceeded pre-tax
income compared to a more representative 40.8% tax rate in 1993.
The disproportionate relationship is the result of low pre-tax
-29-<PAGE>
income (due to the transaction costs and post-combination
actions) which magnifies the effect of non-deductible expenses
principally goodwill amortization and portions of the transaction
costs capitalized for tax purposes.
Results for 1994 include an extraordinary item for a loss on
extinguishment of debt. The loss of $.7 million ($1.1 million
less a tax benefit of $.4 million) results from the expensing of
debt issuance costs related to the previously existing debt when
the Company refinanced such debt with a $185.0 million credit
agreement.
1993 Compared to 1992
General
The discussion which follows analyzes operating results by
segment for 1993 and 1992 as restated in the manner in which the
businesses were managed (i.e. as legal entities not as operating
divisions which were set up in 1994).
Results of Operations
Revenue increased $44.0 million, (12.3%), while operating
income, income from continuing operations and net income declined
in the year ended December 31, 1993. Fully diluted earnings per
share from continuing operations were $0.47 in 1993 compared to
$0.74 in 1992. Discontinued operations in 1992 include income
from the Human Nutrition business which was sold in September
1992.
Revenue in the Human Pharmaceuticals Segment increased $31.2
million. Barre National ("Barre") achieved significant volume
increases in most major product lines which were partially offset
by lower pricing due to competitive pressures. ParMed and NMC
Laboratories ("NMC") also had sales increases primarily related
to volume. Included in the volume increases were sales in excess
of $2.5 million for new products including Epinephrine Mist,
Loperamide liquid and Clotrimazole cream. In addition, revenue
increased from the inclusion of Able Laboratories, Inc. ("Able")
acquired in October 1992, and sales related to the manufacturing
facility in Lincolnton, NC ("Lincolnton") purchased in March
1993.
Revenue decreased at Dumex Ltd. ("Dumex") due primarily to
devaluations of Scandinavian currencies relative to the Danish
Krone("DKK"), the translation effect of lower average exchange
rates in 1993 versus the U.S. Dollar, lower exports to non-
European markets, and price declines and controls mandated by
certain Scandinavian and other European governments.
Revenues increased at A.L. Oslo due to the acquisition of
the remaining 50% of Norgesplaster A/S on January 1, 1993 and
increased sales due to both price and volume increases of
pharmaceutical grade bacitracin and other bulk antibiotics.
-30-<PAGE>
Norgesplaster, previously accounted for on the equity basis,
became a consolidated subsidiary on January 1, 1993. Partially
offsetting the increases were lower Scandinavian revenues due to
devaluations of the Swedish Kroner and the Finnish Mark in 1993
and the translation effect of lower average exchange rates in
1993 versus the U.S. Dollar.
Revenue in the Animal Health business ("Animal Health")
increased $14.4 million. North American sales of the Company's
BMD antibiotic in both the poultry and swine markets increased
due primarily to volume. Product lines used in combination or
sequentially with BMD including 3-Nitro and CTC also increased
sales due mainly to volume. Internationally BMD , Albac and 3-
Nitro sales increased primarily due to volume. Contributing to
the segment's increase was the Aquatic Animal Health Division,
which had significant gains in the sale of vaccines for farm
raised salmon.
On a consolidated basis, gross profit increased $5.3 million
while the gross profit percentage declined from 45.7% in 1992 to
42.0% in 1993.
The decline in gross profit percentage resulted from a
number of factors in the Human Pharmaceuticals Segment. A.L.
Oslo gross margins improved in dollars and percent due to the
acquisition of Norgesplaster in January 1993, manufacturing
efficiencies and increased sales of higher margin fine chemical
products. Dumex gross margins declined in percent and dollars
due to lower revenues resulting from devaluations of Scandinavian
currencies other than the DKK, lower sales prices and increased
manufacturing costs in 1993.
The U.S. Pharmaceuticals gross margin percentage declined
due to the negative impact of price reductions, and continued
higher production and operating costs incurred to maintain
regulatory compliance with CGMP. In particular, gross margin
percentages were lower at Able due to increased costs incurred in
connection with intensive regulatory compliance activities. The
percentage reductions were somewhat offset by the benefit of
higher volume in the U.S.
The decline in gross profit dollars in the Human
Pharmaceuticals Segment was more than offset by the Animal Health
segment which had increased sales volume and maintained gross
margins in its operating units.
Consolidated operating expenses increased 8.1% or $10.4
million compared to a 12.3% revenue increase. The increase
reflects higher selling expense related to volume increases and
higher research and development expense. The Human
Pharmaceuticals Segment had increased operating expenses due to
the inclusion of Able and Norgesplaster and the acquisition of
the Lincolnton facility, and continued expenses incurred to build
an oral health care ("OHC") infrastructure. In addition, 1993
-31-<PAGE>
and 1992 include expenses related to settlement of the class
action litigation and the combination study with A. L. Oslo.
Operating income decreased on a consolidated basis by $5.1
million as a result of a $9.4 million reduction in the operating
income for the Human Pharmaceuticals Segment which was offset in
part by a $6.7 million increase in operating profit in Animal
Health. The lower operating income in the Human Pharmaceuticals
Segment results primarily from the decline in gross profit
margins and dollars due to lower pricing, currency effects, and
higher manufacturing costs primarily due to regulatory
compliance, and the loss incurred by the newly established OHC
business.
In 1993 OHC sales were less than $1.0 million and
significant expenses were incurred to build an administrative,
selling and marketing infrastructure, for promotion of products
when approved and for continuing research and development work,
including the preparation of a New Drug Application ("NDA") for
Elyzol Dental Gel to be filed in the United States.
Interest expense decreased by $3.5 million due to the
redemption of the convertible subordinated debentures in October
1992 and lower interest rates in 1993. Additional debt incurred
to fund the acquisitions and additional working capital partially
offset the decrease.
Other income (expense), net was $1.9 million income in 1993
compared to $3.9 million income in 1992 due mainly to foreign
exchange transaction gains recorded by A.L. Oslo of $3.3 million.
Such gains resulted primarily from the termination of
transactions which effectively denominated A.L. Oslo s debt in
U.S. Dollars at a time when the Norwegian Kroner exchange rate
was strong vis a vis the U.S. Dollar. These gains were offset in
part by foreign exchange transaction losses incurred as a result
of the devaluation of Scandinavian currencies other than the DKK.
The Company's effective tax rate for continuing operations
increased to 40.8% from 34.6% in 1992. Income taxes for 1992
were lowered by approximately $1.0 million due to the
remeasurement of deferred taxes in Denmark due to the enactment
of lower tax rates in the second quarter of 1992. 1992 results
also include a non-cash increase to income of $2.6 million for
the cumulative effect of adopting SFAS 109 as of January 1, 1992.
Inflation
The effect of inflation on the Company's operations during
1994, 1993 and 1992 was not significant.
Governmental Actions affecting the Company
-32-<PAGE>
The Company's operations in all countries are subject to
regulation which includes inspections of manufacturing
facilities, requires approvals to market products, and can result
in the recall of products and suspension of production. In the
United States the Food and Drug Administration (FDA) has imposed
more stringent regulatory requirements on the pharmaceutical
industry.
The U.S. manufacturing companies included in the Company's
Pharmaceuticals Segment, Barre, NMC, and Able, are affected in
that they are required to comply with the FDA's interpretation of
CGMP. In this regard, Barre and Able are parties to separate
consent decrees with the FDA which define the specific standards
they must meet to comply with CGMP.
In 1992, 1993 and 1994, regulatory compliance has continued
to affect costs directly by requiring the addition of personnel,
programs and capital and indirectly by adding activities without
directly increasing efficiency. The costs both direct and
indirect of regulatory compliance (which have increased in recent
years) are expected to continue to increase in the future.
In July 1994, the Company ceased the marketing of products
which contain iodinated glycerol. The cessation was the result
of an industry wide banning of such products by the FDA. Because
the FDA allowed for an orderly cessation of sales of these
products the immediate impact was minimized.
Iodinated glycerol products represented approximately 2% of
the Company's 1994 sales and the prospective loss of sales of
these products will negatively impact the Company's future
operations.
The iodinated glycerol product line was used to treat
respiratory congestion resulting from coughs and colds. The
Company has a broad line of other cough and cold remedies which
may provide alternative therapies to the iodinated glycerol
product line. The Company cannot predict the extent, if any,
which the alternative products will be substituted.
The Company and its subsidiaries have filed applications to
market products with regulatory agencies both in the U.S. and
internationally. The timing of receipt of approvals of these
applications can significantly increase future revenues and
income. The Company cannot control or predict with accuracy
whether such applications will be approved or the timing of their
approval.
European Operations
The fluctuations of European currencies have and will
continue to impact the Company's European operations which
comprise approximately 35% of revenues in 1994. In addition,
many European governments have enacted or are in the process of
enacting mechanisms aimed at lowering the cost of
-33-<PAGE>
pharmaceuticals. Currency fluctuations and governmental actions
to reduce or not allow increases of prices have affected revenue.
The Company cannot predict future currency fluctuations or future
governmental pricing actions or their impact on the Company's
results.
Liquidity and Capital Resources
At December 31, 1994, stockholders' equity was $181.3
million compared to $203.9 million at December 31, 1993. The
ratio of long-term debt to equity was 1.21:1 and .71:1 at
December 31, 1994 and 1993, respectively. The increase in the
ratio reflects the financing required for the acquisition of A.L.
Oslo, significant capital expenditures in 1994, and increased
working capital requirements. Additionally, the required
accounting for the A.L. Oslo acquisition magnified the change in
the ratio since restated prior year financials include A.L.
Oslo's equity as part of restated stockholders' equity and upon
acquisition, the cash purchase price, $23.6 million, was deducted
from stockholders' equity and in effect, added to long-term debt
(i.e. the acquisition was financed).
Working capital at December 31, 1994 was $95.8 million
compared to $63.7 million and $71.3 million at December 31, 1993
and 1992, respectively. The current ratio was 1.62:1 at
December 31, 1994 compared to 1.46:1 and 1.67:1 at December 31,
1993 and 1992, respectively.
Working capital increased relative to 1993 primarily due to
increases in accounts receivable and inventory partially offset
by an increase in accounts payable and accrued expenses.
Accounts receivable increased due to seasonally higher fourth
quarter sales of liquid pharmaceuticals by the USPD, increased
Animal Health sales of fish vaccines and poultry products, and
the acquisition of the Wade Jones Company in 1994.
Inventory increased due to additional Animal Health
inventories for Wade Jones and products sold under a distribution
agreement with Merck AgVet. USPD inventories increased to meet
expected demand.
All working capital elements also increased in 1994 in U.S.
Dollars as the functional currencies of the Company's principal
foreign subsidiaries, the Danish Krone and Norwegian Krone,
strengthened versus the U.S. Dollar as compared to 1993 by
approximately 10%. The approximate increase due to currency
translation was; accounts receivable $4.4 million, inventory $3.7
million and accounts payable and accrued expenses $3.2 million.
The Company presently has various capital expenditure
programs under way and planned including the planned expansion of
a fermentation facility in Denmark. In 1994, the Company's
capital expenditures were $44.3 million and in 1995 the Company
plans to spend a lower amount than 1994.
-34-<PAGE>
If anticipated sales growth occurs the Company will have
increased working capital requirements.
At December 31, 1994, the Company had $26.9 million
available under existing short-term unused lines of credit and
$15.5 million in cash. In addition, the Company has $10.3
million available in Europe under long-term lines of credit and
$30.0 million available under a revolving credit facility which
was included in the $185.0 million credit facility. The Company
believes that the combination of cash from operations and funds
available under existing lines of credit will be sufficient to
cover its currently planned operating needs. A substantial
portion of the Company's short-term and long-term debt is at
variable interest rates. An increase in interest rates in the
U.S.or EuropewillnegativelyimpacttheCompany'sresultsofoperations.
The $185.0 million credit facility contains various
financial covenants including the maintenance of minimum equity
to assets, current and interest coverage ratios. The equity to
asset ratio requires the Company maintain stockholders' equity
(plus adjustments) of at least 30% of total assets. This ratio
will in effect require the Company to issue equity in the near
term if significant additional funding for acquisitions or other
purposes is required.
Item 8. Financial Statements and Supplementary Data
See page F-1 of this Report, which includes an index to the
consolidated financial statements and financial statement
schedule.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information as to the Directors of the Registrant set
forth under the sub-caption "Board of Directors" appearing under
the caption "Election of Directors" of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on June
7, 1995, which Proxy Statement will be filed on or prior to April
12, 1995, is incorporated by reference into this Report. The
information as to the Executive Officers of the Registrant is
included in Part I hereof under the caption Item 1A "Executive
Officers of the Registrant" in reliance upon General Instruction
G to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-
K.
Item 11. Executive Compensation
-35-<PAGE>
The information to be set forth under the subcaption
"Directors' Fees and Related Information" appearing under the
caption "Board of Directors" of the Proxy Statement relating to
the Annual Meeting of Shareholders to be held on June 7, 1995,
which Proxy Statement will be filed on or prior to April 12,
1995, and the information set forth under the caption "Executive
Compensation and Benefits" in such Proxy Statement is
incorporated into this Report by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information to be set forth under the caption "Security
Ownership of Certain Beneficial Owners" of the Proxy Statement
relating to the Annual Meeting of Stockholders expected to be
held on June 7, 1995, is incorporated into this Report by
reference. Such Proxy Statement will be filed on or prior to
April 12, 1995.
There are no arrangements known to the Registrant, the
operation of which may at a subsequent date result in a change in
control of the Registrant.
Item 13. Certain Relationships and Related Transactions
The information to be set forth under the caption "Certain
Related Transactions and Relationships" of the Proxy Statement
relating to the Annual Meeting of Stockholders expected to be
held on June 7, 1995, is incorporated into this Report by
reference. Such Proxy Statement will be filed on or prior to
April 12, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
List of Financial Statements
See page F-1 of this Report, which includes an index to
consolidated financial statements and financial statement
schedule.
List of Financial Statement Schedule
See index to consolidated financial statements and financial
statement schedule, which appears at page F-1 of this Report.
List of Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
3.1 Amended and Restated Certificate of Incorporation of
A.L. Pharma Inc., dated September 30, 1994 and filed with the
-36-<PAGE>
Secretary of State of the State of Delaware on October 3, 1994,
is filed as an Exhibit to this Report.
3.2 Amended and Restated By-Laws of A.L. Pharma Inc.,
effective as of October 3, 1994, is filed as an Exhibit to this
Report.
4.1 Reference is made to Article Fourth of the Amended
and Restated Certificate of Incorporation of A.L. Pharma Inc.
which is being filed as Exhibit 3.1 to this Report.
4.2 Warrant Agreement between A.L. Pharma Inc. and The
First National Bank of Boston, as warrant agent, is filed as an
Exhibit to this Report.
10.1 $185,000,000 Credit Agreement among A.L.
Laboratories, Inc., as Borrower, Union Bank of Norway, as agent
and arranger, and Den norske Bank AS, as co-arranger, dated
September 28, 1994, is filed as an Exhibit to this Report.
Copies of debt instruments (other than those listed above)
for which the related debt does not exceed 10% of consolidated
total assets as of December 31, 1994 will be furnished to the
Commission upon request.
10.2 Parent Guaranty, made by A.L. Pharma Inc. in favor of
Union Bank of Norway, as agent and arranger, and Den norske Bank
AS, as co-arranger, dated September 28, 1994 is filed as an
Exhibit to this Report.
10.3 Restructuring Agreement, dated as of May 16, 1994,
between A.L. Laboratories, Inc. (now known as A.L. Pharma Inc.)
and Apothekernes Laboratorium A.S (now known as A.L. Industrier
AS) was filed as Exhibit A to the Definitive Proxy Statement
dated August 22, 1994 and is incorporated herein by reference.
10.4 Employment Agreement dated January 1, 1987, as
amended December 12, 1989, between I. Roy Cohen and A.L.
Laboratories, Inc. was filed as Exhibit 10.3 to A.L.
Laboratories, Inc.'s 1989 Annual Report on Form 10-K and is
incorporated herein by reference.
10.5 Control Agreement dated February 7, 1986 between
Apothekernes Laboratorium A.S (now known as A.L. Industrier AS)
and A.L. Laboratories, Inc. (now known as A.L. Pharma Inc.) was
filed as Exhibit 10.10 to the A.L. Laboratories, Inc.'s 1985
Annual Report on Form 10-K and is incorporated herein by
reference.
10.6 Amendment to Control Agreement dated October 3, 1994
between A.L. Industrier AS (formerly known as Apothekernes
Laboratorium A.S) and A.L. Laboratories, Inc. (now known as A.L.
Pharma Inc.) is filed as an Exhibit to this Report.
-37-<PAGE>
10.7 A.L. Laboratories, Inc. 1983 Incentive Stock Option
Plan, as amended through January 1, 1991 was filed as Exhibit
10.7 to A.L. Laboratories, Inc.'s 1990 Annual Report on Form 10-K
and is incorporated herein by reference.
10.8 Employment agreement dated July 30, 1991 between the
Company and Jeffrey E. Smith was filed as Exhibit 10.8 to A.L.
Laboratories, Inc.'s 1991 Annual Report on Form 10-K and is
incorporated herein by reference.
10.9 Employment agreement between NMC Laboratories and
George S. Barrett dated August 6, 1990 was filed as Exhibit 10.11
to A.L. Laboratories, Inc.'s 1991 Annual Report on Form 10-K and
is incorporated herein by reference.
10.10 Lease Agreement between A.L. Industrier AS, as
landlord, and Apothekernes Laboratorium AS, as tenant, dated
October 3, 1994 is filed as an Exhibit to this Report.
10.11 Administrative Services Agreement between A.L.
Industrier AS and Apothekernes Laboratorium AS dated October 3,
1994 is filed as an Exhibit to this Report.
10.12 Employment agreement dated August 10, 1972 between
Apothekernes Laboratorium A.S (transferred to A.L. Oslo per the
combination transaction) and Einar W. Sissener is filed as an
exhibit to this report.
10.13 Employment contract dated October 5, 1989 between
Apothekernes Laboratorium A.S (transferred to A.L. Oslo per the
combination transaction) and Ingrid Wiik is filed as an exhibit
to this report.
10.14 Employment contract dated October 5, 1989 between
Apothekernes Laboratorium A.S (transferred to A.L. Oslo per the
combination transaction) and Thor Kristiansen is filed as an
exhibit to this report.
10.15 Employment contract dated October 2, 1991 between
Apothekernes Laboratorium A.S (transferred to A.L. Oslo per the
combination transaction) and Knut Moksnes is filed as an exhibit
to this report.
11 Computation of Earnings per Common Share for the
years ended December 31, 1994, 1993 and 1992.
21 A list of the subsidiaries of the Registrant as of
March 18, 1995 is filed as an Exhibit to this Report.
23 Consent of Coopers & Lybrand L.L.P., Independent
Accountants, is filed as an Exhibit to this Report.
27 Financial Data Schedule
-38-<PAGE>
See exhibit index on Page E-1 for exhibits filed with this
report.
Report on Form 8-K
On October 17, 1994, the Company filed a report on Form 8-K
dated October 3, 1994 reporting Item 2. "Acquisition or
Disposition of Assets" and Item 7. "Financial statements of
businesses acquired, proforma financial information and exhibits
relating to the acquisition of the Related Norwegian businesses.
-39-<PAGE>
Undertakings
For purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities
Act of 1933, the undersigned Registrant hereby undertakes as
follows, which undertaking shall be incorporated by reference
into Registrant's Registration Statements on Form S-8 Nos. 2-
97830(as amended April 19, 1989) and 33-37516 (filed November 1,
1990):
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of
the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
-40-<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
March 30, 1995 A.L. PHARMA INC.
Registrant
By: /s/ Einar W. Sissener
Einar W. Sissener
Chairman, Director and
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange
Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date: March 30, 1995 /s/ Einar W. Sissener
Einar W. Sissener
Chairman, Director and
Chief Executive Officer
Date: March 30, 1995 /s/ Jeffrey E. Smith
Jeffrey E. Smith
Vice President, Finance and
Chief Financial Officer
(Principal accounting officer)
Date: March 30, 1995 /s/ I. Roy Cohen
I. Roy Cohen
Director and Chairman of the
Executive Committee
Date: March 30, 1995
James Balog
Director and Chairman of the
Audit Committee
-41-<PAGE>
Date: March 30, 1995 /s/ Thomas G. Gibian
Thomas G. Gibian
Director and Chairman of the
Compensation Committee
Date: March 30, 1995 /s/ Glen E. Hess
Glen E. Hess
Director
Date: March 30, 1995 /s/ Peter G. Tombros
Peter G. Tombros
Director
Date: March 30, 1995 /s/ Georg W. Sverdrup
Georg W. Sverdrup
Director
Date: March 30, 1995 /s/ Erik G. Tandberg
Erik G. Tandberg
Director
Date: March 30, 1995 /s/ Gert Munthe
Gert Munthe
Director
-42-<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
______________
Page
Consolidated Financial Statements:
Report of Independent Accountants F-2
Consolidated Balance Sheet at
December 31, 1994 and 1993 F-3
Consolidated Statement of Operations for
the years ended December 31, 1994,
1993 and 1992 F-4 to F-5
Consolidated Statement of Stockholders'
Equity for the years ended
December 31, 1994, 1993 and 1992 F-6 to F-8
Consolidated Statement of Cash Flows
for the years ended December 31, 1994,
1993 and 1992 F-9 to F-10
Notes to Consolidated Financial Statements F-11 to F-42
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
for the years ended December 31, 1994,
1993 and 1992 F-43
Financial statement schedules other than Schedule II are omitted
for the reason that they are not applicable or the required
information is included in the consolidated financial statements
or notes thereto.
F-1<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and
Board of Directors of
A.L. Pharma Inc.:
We have audited the consolidated financial statements and
the financial statement schedule of A.L. Pharma Inc. and
Subsidiaries (formerly A.L. Laboratories, Inc.) (the "Company")
listed in the index on page F-1 of this Form 10-K. These
financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of A.L. Pharma Inc. and Subsidiaries as of
December 31, 1994 and 1993 and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1994 in conformity with generally
accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information
required to be included therein.
As discussed in Note 2 to the consolidated financial
statements, effective January 1, 1993, the Company changed its
method of accounting for postretirement benefits other than
pensions, and effective January 1, 1992, the Company changed its
method of accounting for income taxes.
COOPERS & LYBRAND L.L.P.
Parsippany, New Jersey
F-2<PAGE>
March 1, 1995
F-3<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
December 31,
1994 1993
ASSETS
Current assets:
Cash and cash equivalents $ 15,512 $ 11,647
Accounts receivable, net 119,084 97,306
Inventories 106,297 88,132
Prepaid expenses and other current assets 9,606 5,828
Total current assets 250,499 202,913
Property, plant and equipment, net 202,903 170,355
Intangible assets, net 128,758 135,098
Other assets and deferred charges 10,158 19,251
Total assets $592,318 $527,617
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 13,288 $ 14,108
Short-term debt 61,196 55,533
Accounts payable 31,153 23,556
Accrued expenses 46,651 42,448
Accrued and deferred income taxes 2,362 3,560
Total current liabilities 154,650 139,205
Long-term debt 220,036 144,350
Deferred income taxes 27,528 28,797
Other non-current liabilities 8,816 11,332
Stockholders' equity:
Preferred stock, $1 par value, no shares issued
Class A Common Stock, $.20 par value,
13,618,791 and 13,567,683 shares issued 2,724 2,714
Class B Common Stock, $.20 par value,
8,226,562 shares issued 1,646 1,646
Additional paid-in capital 118,833 111,473
Foreign currency translation adjustment 8,125 307
Retained earnings 55,482 93,291
Treasury stock, 248,920 and 247,210 shares of
Class A Common Stock, at cost (5,522) (5,498)
Total stockholders' equity 181,288 203,933
Total liabilities and
stockholders' equity $592,318 $527,617
See notes to consolidated financial statements.
F-4<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
Years Ended December 31,
1994 1993 1992
Total revenue $469,263 $402,675 $358,632
Cost of sales 275,543 233,423 194,665
Gross profit 193,720 169,252 163,967
Selling, general and
administrative expenses 177,742 139,038 128,658
Operating income 15,978 30,214 35,309
Interest expense (15,355) (14,996) (18,534)
Other income (expense), net 1,113 1,880 3,937
Income from continuing operations
before provision for income taxes,
extraordinary item and cumulative
effect of change in accounting
principle 1,736 17,098 20,712
Provision for income taxes 3,439 6,969 7,161
Income (loss) from continuing operations
before extraordinary item and
cumulative effect of change in
accounting principle (1,703) 10,129 13,551
Income from discontinued
operations, net of tax 4,809
Income (loss) before extraordinary item
and cumulative effect of change
in accounting principle (1,703) 10,129 18,360
Extraordinary item, net of tax (683)
Cumulative effect of change in
accounting principle 2,614
Net income (loss) $ (2,386) $ 10,129 $ 20,974
Average common shares outstanding:
Primary 21,568 21,510 18,264
Fully diluted 21,666 21,581 21,568
Continued on next page.
F-5<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS, (Continued)
(In thousands, except per share data)
Earnings per common share:
Primary
Income (loss) from continuing operations
before extraordinary item and
cumulative effect of change in
accounting principle $ (.08) $ .47 $ .74
Cumulative effect of change in
accounting principle .14
Net income (loss) $ (.11) $ .47 $ 1.15
Fully diluted
Income (loss) from continuing operations
before extraordinary item and
cumulative effect of change in
accounting principle $ (.08) $ .47 $ .74
Cumulative effect of change in
accounting principle .12
Net income (loss) $ (.11) $ .47 $ 1.09
See notes to consolidated financial statements.
F-6<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(COMMON STOCK ACCOUNTS)
(In thousands, except share data)
<TABLE>
<CAPTION>
Class Class
A B
Common Common
Stock Stock Treasury Stock Total
Common Common
Shares Par Par Shares Stock
Issued Value Value Held Cost Accounts
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 17,213,023 $1,797 $1,646 (179,871) $(3,759) $ (316)
Purchase of treasury stock (27,127) (651) (651)
Exercise of stock options
(Class A) and other 82,423 16 16
Employee stock purchase plan 25,678 5 5
Conversion of debentures 4,377,917 876 876
Balance, December 31, 1992 21,699,041 $2,694 $1,646 (206,998) $(4,410) $ (70)
Purchase of treasury stock (40,212) (1,088) (1,088)
Exercise of stock options
(Class A) and other 57,574 13 13
Employee stock purchase plan 37,630 7 7
Balance, December 31, 1993 21,794,245 $2,714 $1,646 (247,210) $(5,498) $(1,138)
Purchase of treasury stock (1,710) (24) (24)
Exercise of stock options
(Class A) 2,750 1 1
Employee stock purchase plan 48,358 9 9
Balance, December 31, 1994 21,845,353 $2,724 $1,646 (248,920) $(5,522) $(1,152)
F-7<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
Foreign Total
Common Additional Currency Stock-
Stock Paid-In Translation Retained holders'
Accounts Capital Adjustment Earnings Equity
Balance, December 31, 1991
previously reported $ (316) $ 49,588 $11,159 $53,575 $114,006
Accounts of A.L. Oslo (ALO)
net of eliminations 2,621 21,680 24,301
Balance, December 31, 1991
restated (316) 49,588 13,780 75,255 138,307
Net income - 1992 20,974 20,974
Dividends declared
($.18 per common share) (3,305) (3,305)
Net foreign currency
translation adjustment (7,137) (7,137)
Purchase of treasury stock (651) (651)
Tax benefit realized from
stock option plan 447 447
Exercise of stock options
(Class A) and other 16 662 678
Employee stock purchase plan 5 575 580
Conversion of debentures 876 58,605 59,481
Remittances from ALO to
A.L. Industrier (2,531) (2,531)
Balance, December 31, 1992 $ (70) $109,877 $ 6,643 $90,393 $206,843
Net income - 1993 10,129 10,129
Dividends declared
($.18 per common share) (3,873) (3,873)
Net foreign currency
translation adjustment (6,336) (6,336)
F-8<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Continued)
(In thousands, except share data)
Foreign Total
Common Additional Currency Stock-
Stock Paid-In Translation Retained holders'
Accounts Capital Adjustment Earnings Equity
Purchase of treasury stock (1,088) (1,088)
Tax benefit realized from
stock option plan 311 311
Exercise of stock options
(Class A) and other 13 586 599
Employee stock purchase plan 7 699 706
Remittances from ALO to
A.L. Industrier (3,358) (3,358)
Balance, December 31, 1993 $(1,138) $111,473 $ 307 $93,291 $203,933
Net loss - 1994 (2,386) (2,386)
Dividends declared
($.18 per common share) (3,893) (3,893)
Net foreign currency
translation adjustment 7,818 7,818
Purchase of treasury stock (24) (24)
Exercise of stock options
(Class A) 1 30 31
Employee stock purchase plan 9 778 787
Remittances from ALO to
A.L. Industrier (1,384) (1,384)
Appropriation of retained
earnings equal to cash
purchase price for A.L.
Oslo 23,594 (23,594)
Purchase of A.L. Oslo
Cash paid (23,594) (23,594)
Warrants issued 6,552 (6,552)
Balance, December 31, 1994 $(1,152) $118,833 $ 8,125 $55,482 $181,288
</TABLE>
F-9<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands of dollars)
Years Ended December 31,
1994 1993 1992
Operating activities:
Net income (loss) $ (2,386) $ 10,129 $ 20,974
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 26,773 23,842 22,671
Deferred income taxes (5,506) 493 2,763
Noncurrent asset writeoffs 14,841
Extraordinary item 683
Income from option fee and sale of
trademarks and intangibles (4,958)
Cumulative effect of change in
accounting principle (2,614)
Change in assets and liabilities, net
of effects from business
acquisitions:
(Increase) decrease in accounts
receivable (14,864) (16,000) 14,464
(Increase) in inventory (11,639) (4,635) (11,114)
(Increase) decrease in prepaid
expenses and other current
assets (774) (833) 797
Increase (decrease) in accounts
payable and accrued expenses 8,492 3,497 (12,538)
Increase (decrease) in accrued and
deferred income taxes (1,269) (2,592) 1,723
Other, net 2,811 1,847 918
Net cash provided by operating
activities 17,162 15,748 33,086
Investing activities:
Proceeds from option fee, sale of
trademarks, intangibles and
equipment 268 5,043
Capital expenditures (44,326) (24,044) (21,325)
Acquisition of A.L. Oslo (23,594)
Purchase of acquired businesses,
and intangibles, net of cash
acquired (13,733) (17,280) (11,660)
Net cash used in investing
activities (81,653) (41,056) (27,942)
Continued on next page.
See notes to consolidated financial statements.
F-10<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(In thousands of dollars)
Years Ended December 31,
1994 1993 1992
Financing activities:
Net borrowings under
lines of credit $ 4,494 $ 23,484 $ (9,141)
Proceeds of long-term debt 164,423 26,375 28,000
Reduction of long-term debt (100,719) (12,397) (20,280)
Dividends paid (3,893) (3,873) (3,305)
Cash transfers between A.L. Oslo
and A.L. Industrier 4,991 (3,358) (2,531)
Treasury stock acquired (24) (1,088) (651)
Proceeds from employee stock option
and stock purchase plan 818 1,305 1,258
Other, net (2,713) 575 (79)
Net cash provided by (used in)
financing activities 67,377 31,023 (6,729)
Exchange rate changes:
Effect of exchange rate changes
on cash 1,481 (818) (558)
Income tax effect of exchange rate
changes on intercompany advances (502) 225 384
Net cash flows from exchange rate
changes 979 (593) (174)
Increase (decrease) in cash and cash
equivalents 3,865 5,122 (1,759)
Cash and cash equivalents at
beginning of year 11,647 6,525 8,284
Cash and cash equivalents at
end of year $ 15,512 $ 11,647 $ 6,525
See notes to consolidated financial statements.
F-11<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
1. The Company and Basis of Presentation:
A.L. Pharma Inc., previously named A. L. Laboratories,
Inc., (the "Company") is a specialized multinational
pharmaceutical company engaged in developing, manufacturing and
marketing branded and generic, value-added human pharmaceuticals
and animal health products.
On October 3, 1994, the Company completed the acquisition
of the pharmaceutical, animal health, bulk antibiotic and aquatic
animal health businesses of Apothekernes Laboratorium A.S (the
"Related Norwegian Businesses"). Concurrent with the closing of
the acquisition the Company changed its name to A.L. Pharma Inc.
from A. L. Laboratories, Inc.
The combination of the Related Norwegian Businesses of
Apothekernes Laboratorium A.S with the Company was completed
pursuant to an Agreement dated May 16, 1994, which was
subsequently approved separately by the shareholders of both
companies.
In order to accomplish the transaction Apothekernes
Laboratorium A.S changed its name to A.L. Industrier A.S ("A.L.
Industrier") and demerged the Related Norwegian Businesses into a
new Norwegian corporation called Apothekernes Laboratorium AS
("A.L. Oslo"). The Company then acquired the shares of A.L. Oslo
through a tender offer.
A.L. Industrier is the beneficial owner of 100% of the
outstanding shares of the Company's Class B stock and is able to
control the Company through its ability to elect more than a
majority of the Board of Directors and to cast a majority of the
votes in any vote of the Company's stockholders. (See Note 15.)
The consideration paid by the Company for A.L. Oslo was
$30,146 consisting of $23,594 in cash, and warrants to purchase
3.6 million shares of the Company's Class A Common Stock
(estimated value at time of closing of $1.82 per share or $6,552
in total). The warrants expire on January 3, 1999 and have an
exercise price of $21.945.
The Company was required to account for the acquisition of
A.L. Oslo as a transfer and exchange between companies under
common control. Accordingly, the accounts of A.L. Oslo were
combined with the Company at historical cost in a manner similar
to a pooling-of-interests and the Company's financial statements
have been restated to include A.L. Oslo. At the acquisition
date, the consideration paid for A.L. Oslo was reflected as a
decrease to stockholders' equity net of the estimated value
ascribed to the warrants. There were no adjustments required to
conform accounting practices of the companies.
F-12<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
______________________
Selected information for A. L. Laboratories, Inc. and A.L. Oslo
follows:
1994 1993 1992
Total Revenue
A. L. Laboratories, Inc. $400,636 $338,230 $295,112
A.L. Oslo 85,401 78,467 78,724
Eliminations (a) (16,774) (14,022) (15,204)
$469,263 $402,675 $358,632
Income (loss) from continuing
operations
A. L. Laboratories, Inc. $ (2,705) $ 8,621 $ 11,367
A.L. Oslo 1,202 1,008 2,535
Eliminations (a) (200) 500 (351)
$ (1,703) $ 10,129 $ 13,551
Discontinued operations
A. L. Laboratories, Inc. $ 4,809
Extraordinary item -
debt retirement
A. L. Laboratories, Inc. $ (683)
Cumulative effect of
change in accounting
for income taxes
A.L. Oslo $ 2,614
Net income (loss)(b)
A. L. Laboratories, Inc. $ (3,388) $ 8,621 $ 16,176
A.L. Oslo 1,202 1,008 5,149
Eliminations (a) (200) 500 (351)
$ (2,386) $ 10,129 $ 20,974
(a) Prior to the combination there were transactions between
A.L. Laboratories, Inc. and A.L. Oslo such as sales, commissions
and license fees. As a result of the combination such
transactions became intercompany in nature and have been
eliminated.
(b) The 1994 net loss includes the net after tax effect of
combination related transaction costs and the extraordinary item
of approximately $3,600 ($.17 per share) and the net after tax
effect of post-combination management actions of approximately
$14,500 ($.67 per share). The total of $18,100 was incurred
$3,200 by A.L. Oslo and $14,900 by A. L. Laboratories, Inc.
The restated statement of operations for 1992, 1993 and the
period January 1, to October 2, 1994 do not include interest
expense related to the cash consideration paid on October 3, 1994
by the Company for A.L. Oslo. Assuming cash consideration of
F-13<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
______________________
$23,594, interest expense after tax would have decreased reported
results by approximately $750 in 1994 (for the period January 1,
to October 2, 1994), and $1,000 in 1993 and 1992.
2. Summary of Significant Accounting Policies:
Principles of consolidation:
The consolidated financial statements include the accounts
of the Company and its domestic and foreign subsidiaries. The
effects of all significant intercompany transactions have been
eliminated.
Financial statements and related footnotes have been
restated for all periods presented to reflect the combination of
the Company with A.L. Oslo. (See Note 1.)
Cash equivalents:
Cash equivalents include all highly liquid investments that
have an original maturity of three months or less.
Inventories:
Inventories are valued at the lower of cost or market. The
last-in, first-out (LIFO) method is principally used to determine
the cost of the U.S. Pharmaceuticals manufacturing subsidiary
inventories including: Barre-National, Inc. ("Barre"), NMC
Laboratories, Inc. ("NMC") and Able Laboratories, Inc. ("Able").
The first-in, first-out (FIFO) and average cost methods are used
to value remaining inventories.
Property, plant and equipment:
Property, plant and equipment are recorded at cost.
Expenditures for additions, major renewals and betterments are
capitalized and expenditures for maintenance and repairs are
charged to income as incurred. When assets are sold or retired,
their cost and related accumulated depreciation are removed from
the accounts, with any gain or loss included in net income.
Interest is capitalized as part of the acquisition cost of
major construction projects. In 1994, 1993 and 1992, $722, $262
and $214 of interest cost was capitalized, respectively.
Depreciation is computed by the straight-line method over
the estimated useful lives which are generally as follows:
Buildings 30-40 years
Building improvements 10-30 years
Machinery and equipment 2-20 years
F-14<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Intangible assets:
Intangible assets represent the excess of cost of acquired
businesses over the underlying fair value of the tangible net
assets acquired and the cost of technology, trademarks, New
Animal Drug Applications ("NADAs"), and other non-tangible assets
acquired in product line acquisitions. Intangible assets are
amortized on a straight-line basis over their estimated period of
benefit. The Company's policy in assessing the recoverability of
intangible assets is to compare the carrying value of the
intangible assets with the anticipated future income of
businesses to which the intangibles relate. In connection with
the acquisition of A.L. Oslo and the reorganization of the
Company in December 1994, the Company decided to exit its U.S.
tablet business and cease the marketing of an oral health care
product based on licensed technology. These actions resulted in
a write off of intangible assets of $9,200. (See Note 3). The
following table is net of accumulated amortization of $28,699 and
$21,884 for 1994 and 1993, respectively.
1994 1993 Life
Excess of cost of acquired
businesses over the fair value
of the net assets acquired $104,768 $101,039 20 - 40
Technology, trademarks, NADAs
and other 23,990 34,059 6 - 20
$128,758 $135,098
Foreign currency translation and transactions:
The assets and liabilities of the Company's foreign
subsidiaries are translated from their respective functional
currencies into U.S. Dollars at rates in effect at the balance
sheet date. Results of operations are translated using average
rates in effect during the year. Foreign currency transaction
gains and losses are included in income. Foreign currency
translation adjustments are accumulated in a separate component
of stockholders' equity. The foreign currency translation
adjustment for 1994, 1993 and 1992 is net of ($502), $225, and
$384, respectively, representing the foreign tax effects
associated with intercompany advances to foreign subsidiaries.
Foreign exchange contracts:
The Company enters into foreign exchange contracts to buy
and sell certain cash flows in non-functional currencies and as a
hedge against foreign debt payable. Market value gains and
losses are recognized, and the resulting credit or debit offsets
foreign exchange gains or losses on the foreign debt. Foreign
F-15<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
exchange contracts that are not recognized as hedges are
accounted for as foreign currency transactions.
Interest rate hedging transactions:
The Company enters into interest rate hedge agreements
which fix the interest rate to be paid for specified periods on
variable rate long-term debt. The differential to be paid or
received is recorded as of the value date and recognized over the
life of the agreements as an adjustment to interest expense.
Change in accounting method for income taxes:
In 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). SFAS 109 requires the utilization of the liability method
of accounting for deferred taxes based on enacted tax rates. The
cumulative effect of adopting SFAS 109 as of January 1, 1992
resulted in a non-cash increase to net income of $2,614 ($.12 per
share fully diluted).
The provision for income taxes includes federal, state and
foreign income taxes currently payable and those deferred because
of temporary differences in the basis of assets and liabilities
between amounts recorded for financial statement and tax
purposes.
At December 31, 1994, the Company's share of the
undistributed earnings of its foreign subsidiaries (excluding
cumulative foreign currency translation adjustments) was
approximately $27,000. No provisions have been made for U.S.
income taxes that would be payable upon the distribution of
earnings which have been reinvested abroad or are expected to be
returned in tax-free distributions. It is the Company's policy
to provide for taxes payable with respect to earnings which the
Company plans to repatriate.
Change in Accounting Method for Postretirement Benefits:
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other than Pensions" (SFAS 106). The
statement requires accrual accounting for these benefits over the
service lives of the employees instead of expensing payments as
incurred. Adoption of SFAS 106 did not have a material impact on
the Company. (See Note 11.)
Accounting for Postemployment Benefits:
Effective January 1, 1994, the Company formally adopted
Statement of Financial Accounting Standards No. 112 "Employers'
Accounting for Postemployment Benefits" (SFAS 112). The
F-16<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
statement requires accrual of postemployment benefits during the
employment period when certain conditions are met. The adoption
of SFAS 112 did not have a material impact on the Company.
Earnings per share:
Primary earnings per share is based upon the weighted
average number of common shares outstanding and commencing in
1994 warrants to purchase common shares will be included when
dilutive.
Fully diluted earnings per share reflect the dilutive
effect of stock options (not material for the computation of
primary) and assumes through October of 1992 that the 7 3/4%
Convertible Subordinated Debentures were converted into common
stock, with earnings being increased for interest expense
thereon, net of taxes. In October 1992, the Convertible
Subordinated Debentures were fully converted into Class A Common
Stock.
3. Transaction Expenses and Post-Combination Management
Actions
In connection with the acquisition of A.L. Oslo, the
Company incurred transaction expenses related to the combination
for fees paid to a special committee of the Board of Directors
(charged with evaluating the feasibility of the transaction), and
investment banking, legal, accounting and other transaction
expenses. In 1994 these expenses before tax totalled $3,100 of
which $2,600 were expensed in the fourth quarter of 1994.
Certain of these expenses are not deductible for tax purposes.
Similar expenses of approximately $1,000 were incurred in both
1993 and 1992 relating to a possible combination. Additionally,
to complete the acquisition, the Company refinanced its long-term
debt and incurred a loss on extinguishment of $683 ($1,102 loss
less $419 of income taxes or $.03 per share which has been
classified as an extraordinary item.)
Upon consummation of the acquisition the Company was
reorganized on a global basis into decentralized business
divisions. Each division was required to evaluate its business
to determine actions necessary to maximize the division's and the
Company's competitive position. As a result, in December 1994
the Board of Directors approved a plan and the Company announced
post-combination management actions which included exiting
certain businesses and product lines which did not fit into the
Company's new strategic direction, severing certain employees
employed in the businesses or product lines to be exited or whose
positions had become redundant as a result of the acquisition and
the sale or exiting of certain support facilities which also
became redundant as a result of the acquisition. A summary of
the charges resulting from these actions follows:
F-17<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
F-18<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Pre-tax
Amount Description of Action
$3,750 Sever 53 employees primarily in the
pharmaceutical segment. All identified
employees were notified in the fourth quarter
of 1994. At year end $3,156 was accrued for
severance to be paid subsequent to December
31, 1994.
$8,800 Exit by sale or closing the U.S. tablet
business in 1995. Write-off includes
intangible assets of $5,800 and plant and
equipment of $3,000. No severance for tablet
employees was accrued based on management's
evaluation of the most probable exit plan
(sale). Should such exit plan fail to be
consummated an adjustment for additional
future costs could be required in 1995 if the
business is closed.
$5,000 Discontinue manufacturing and marketing of
Aquatic Animal Health antibiotics and an oral
health care product produced under license.
Write off includes $1,600 of tangible assets,
primarily machinery and equipment and
intangible assets of $3,400.
$900 Sell unimproved land which was to be the site
for manufacturing expansion. This land is no
longer needed as a result of the acquisition
resulting in a write down to fair market
value.
$600 Close duplicate sales offices and eliminate
duplicate distributors.
In addition, the Company made the decision to no longer
pursue research and development activities relating to the
colonic delivery of drugs. The Company accelerated contractually
required payments of $2,500 in the fourth quarter of 1994 and
does not intend to fund future activities in this area.
The expenses for transaction costs (excluding the
extraordinary item) and the post-combination actions described
are included in cost of goods sold ($450) and in selling, general
and administrative expenses ($24,200).
The net after tax effect of the transaction costs including
the extraordinary item was approximately $3,600 ($.17 per share)
and the net after tax effect of the post-combination actions
described above was approximately $14,500 ($.67 per share).
F-19<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
4. Business and Product Line Acquisitions:
The following acquisitions were accounted for under the
purchase method and the accompanying financial statements reflect
results of operations from their respective acquisition dates.
In July 1994, the Company acquired the Wade Jones Company
("Wade Jones") headquartered in Lowell, Arkansas. Wade Jones is
a major distributor of poultry animal health products and also
manufactures and blends certain animal health products.
The purchase agreement required a purchase price of
approximately $8,350 including adjustments based on actual
financial position on the closing date. In addition, the
agreement provides for contingent payments based on future
product approvals. The excess of purchase price over the
underlying estimated fair value of net assets acquired based on a
preliminary allocation is being amortized over 20 years.
Had the acquisition of Wade Jones occurred as of January 1,
1993 pro forma revenues and net income (loss) would have been as
follows (unaudited):
Year Ended
December 31,
1994 1993
Revenues $481,525 $427,014
Income (loss) before extraordinary
items $ (1,488) $ 10,471
Net Income (loss) $ (2,168) $ 10,471
Net Income (loss) per common share
Primary $(.10) $.49
Fully diluted $(.10) $.49
The foregoing pro forma information is presented in
response to applicable accounting rules relating to business
acquisitions and is not necessarily indicative of results of
operations that would have been reported had the acquisition been
completed at the beginning of 1993.
On January 1, 1993, A.L. Oslo acquired the remaining
outstanding shares (50% ownership) of Norgesplaster A/S which it
did not already own from an unrelated third party for $2,100 in
cash. Norgesplaster is a Norwegian manufacturer of adhesive
bandages, surgical tapes and non-medical tapes. The excess of
the total cost of the acquisition over the fair value of the net
assets aggregated approximately $900 and is being amortized over
20 years.
F-20<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
In March 1993, the Company's subsidiary, Barre, acquired a
pharmaceutical manufacturing facility in Lincolnton, North
Carolina ("Lincolnton"), including inventories, approved ANDAs
and other related assets for approximately $16,000 including
direct costs of acquisition. The purchase price was paid by cash
and by issuance of a $5,000 long-term promissory note bearing
interest at prime. The facility is designed to manufacture oral
liquids and topical ointments and creams. In addition, a multi-
year supply agreement was signed which provides for the sale from
Lincolnton, Barre, Able and NMC of pharmaceutical products to the
previous owner of Lincolnton, a major generic drug distributor.
In October 1992, the Company acquired the business, assets
and assumed liabilities of Able.
Able is a manufacturer and marketer of specialized
prescription and over-the-counter pharmaceuticals with an
emphasis on suppositories, and tablets for specialty markets.
The purchase agreement required an initial payment in cash and
provided for contingent payments based on FDA product approvals
received. The cost of the acquisition was approximately $17,900,
including direct costs of acquisition and actual contingent
payments of $6,000. The contingent payments for FDA approvals of
suppository products were recorded as intangible assets and are
being amortized over 15 years. No further contingent payments
are required in accordance with the terms of an agreement reached
with the prior owners in the fourth quarter of 1994. (See Notes
2 and 3 relating to the Company's decision to exit the U.S.
tablet business.)
During 1994 the Company recorded contingent payments based
on the results of operations required by the respective purchase
agreements of approximately $750 for NMC (acquired in 1990) and
$762 for Biomed Inc. (acquired in 1989). No further contingent
payments are required for Biomed.
Contingent payments are included in intangible assets when
earned and amortized over their remaining life. The excess of
purchase prices over the underlying fair value of net assets
acquired for Lincolnton and the suppository business of Able is
being amortized on a straight-line basis over 30 years.
5. Inventories:
Inventories consist of the following:
December 31,
1994 1993
Finished product $ 60,443 $ 46,698
Work-in-process 14,075 12,440
Raw materials 31,779 28,994
$106,297 $ 88,132
F-21<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
At December 31, 1994 and 1993, approximately $47,300 and
$42,300 of inventories, respectively, are valued on a LIFO basis.
Such amounts exceeded the FIFO basis by $376 in 1994 and $1,566
in 1993.
6. Property, Plant and Equipment:
Property, plant and equipment, at cost, consist of the
following:
December 31,
1994 1993
Land $ 9,279 $ 8,507
Buildings and building
improvements 90,321 77,291
Machinery and equipment 191,701 157,080
Construction in progress 12,069 7,386
303,370 250,264
Less, accumulated depreciation 100,467 79,909
$202,903 $170,355
F-22<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
7. Long-Term Debt:
Long-term debt consists of the following:
December 31,
1994 1993
U.S. Dollar Denominated:
1994 Credit Facility
Term Loan A - 7.625% $ 65,000
Term Loan B - 7.50% 72,000
Revolving Credit - 7.375% 18,000
Bank term loans $ 73,660
Lincolnton acquisition note 3,000 5,000
Industrial Development Revenue
Bonds:
Baltimore County, Maryland
(7.25%) 6,700 6,700
(6.875%) 1,200 1,200
Lincoln County, NC 6,000
Niagara County, NY
(70% of Prime) 100 154
Other, U.S. 4,809 2,046
Denominated in Other Currencies:
Mortgage notes payable (NOK) 32,496 30,029
Bank and agency development
loans (NOK) 16,979 15,577
Long term credit lines (NOK) 12,618
Lundbeck acquisition note
(DK) 6,056 10,404
Other, foreign 984 1,070
233,324 158,458
Less, current maturities 13,288 14,108
$220,036 $144,350
On September 28, 1994, the Company signed a $185,000 credit
agreement ("1994 Credit Facility") with a consortium of banks
arranged by the Union Bank of Norway and Den norske Bank A.S. The
agreement provided for the refinancing of outstanding
indebtedness, the acquisition of A.L. Oslo (including related
transaction costs, fees and expenses) and for general corporate
purposes.
F-23<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
The credit agreement provided for the loans as follows:
Term Loan Term Loan Revolving
Credit
(A) (B) Facility
Maximum Amount $65,000 $72,000 $48,000
Term 7 years 5 years 4 years 3
months
Interest Rate Eurodollar Eurodollar Eurodollar
rate
(Variable) rate plus rate plus plus 1.125%
1.375% 1.25%
Amount of 5% to 9% of 5% to 10% of Revolving
repayment loan amount loan amount 100% at
per year per year maturity
commencing in commencing in subject to
1996 and 30% 1996 and 30% extension
at final at final
maturity maturity
On October 3, 1994, concurrent with the acquisition of A.L.
Oslo the Company borrowed $142,000 under the 1994 Credit Facility
and subsequently repaid bank term loans of $71,279 and line of
credit debt of $30,620. The repayment of the bank term loans
resulted in a loss on repayment of $1,102 ($683 net of tax). The
loss has been classified as an extraordinary item.
In connection with the purchase of the Lincolnton facility,
the Company issued the former owner a promissory note of $5,000
bearing interest at prime. ($3,000 at 8.5% is outstanding as of
December 31, 1994.) Payment of the note can vary under the terms
of the agreement but is expected to require repayment of $1,500
in both 1995 and 1996.
In August 1994, the Company issued Industrial Development
Revenue Bonds for $6,000 in connection with the expansion of the
Lincolnton, North Carolina plant. The bonds require monthly
interest payments at a floating rate (5.75% at December 31, 1994;
3.712% cumulative weighted average for 1994) approximating the
current money market rate on tax exempt bonds and the payment by
the Company of annual letter of credit, remarketing, trustee, and
rating agency fees of 1.125%. The bonds require a yearly sinking
fund redemption of $500 from August 1996 to August 2004 and $300
thereafter through August 2009. To account for the unexpended
bond proceeds at December 31, 1994, the Company has classified
$1,287 of cash, which is restricted for use in the plant
expansion, as construction in progress. Plant and equipment with
F-24<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
an approximate net book value of $5,800 serve as collateral for
this loan.
The Baltimore County Industrial Development Revenue Bonds
are payable in varying amounts through 2009. Plant and equipment
with an approximate net book value of $12,900 collateralize the
Baltimore County Industrial Revenue Bonds.
The mortgage notes payable denominated in Norwegian Kroner
(NOK) were originally issued in connection with the construction
of a pharmaceutical facility in Lier, Norway and are
collateralized by this facility (net book value of $38,200 at
December 31, 1994) and the Oslo, Norway ("Skoyen") facility.
(See Note 12.) The debt was borrowed in a number of tranches
over the construction period and interest is fixed for specified
periods based on actual yields of Norgeskreditt publicly traded
bonds plus a lending margin of 0.70%. The weighted average
interest rate at December 31, 1994 and 1993 was 9.6% and 11.3%,
respectively. In 1995 and 1996, debt of approximately $6,000 and
$15,500, respectively, will be subject to interest rate
adjustments based on the then current rates. The tranches are
repayable in semiannual installments through 2021. Yearly
amounts payable vary between $1,120 and $1,950.
A.L. Oslo has various loans with government development
agencies and banks which have been used for acquisitions and
construction projects. Such loans are collateralized by the
Skoyen property and require yearly payments made semiannually
through 1998 of between $721 and $1,744 and a final payment of
$11,568 in 1999. The weighted average interest rate of the loans
at December 31, 1994 and 1993 was 6.9% and 8.8%, respectively.
The banks and agencies have the option to extend payment in 1999.
The $6,056 outstanding debt to Lundbeck represents the
present value of the remaining installment due in Danish Kroner
(DK) payable on the first business day of 1995. A.L. Oslo has
hedged the currency exposure arising from the Lundbeck
installments by purchasing forward exchange contracts which
mature on the same date as the DK installment is due. This debt
has been accounted for using the interest method applying an
interest rate of 10.00% Payments on this debt have been
guaranteed via a guarantee fee of 0.75% per annum. This loan was
repaid on January 2, 1995.
As of December 31, 1994, A.L. Oslo had approximately
$10,300 available in NOK in three year line of credit agreements
with two banks. The credit lines require certain equity, cash
flow and quick ratios, as defined, be maintained.
The 1994 Credit Facility has a number of loan covenants,
the most restrictive of which is the equity to asset ratio.
F-25<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Certain NOK loans have loan covenants which apply directly to
A.L. Oslo.
F-26<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Maturities of long-term debt during each of the next five
years and thereafter are as follows:
Year ending December 31,
1995 $13,288
1996 12,883
1997 19,110
1998 28,104
1999 89,703
Thereafter 70,236
$233,324
8. Short-Term Debt:
Short-term debt consists of the following:
December 31,
1994 1993
Domestic $42,096 $39,107
Foreign 19,100 16,426
$61,196 $55,533
At December 31, 1994, the Company and its domestic
subsidiaries have available bank lines of credit totaling
$61,250. Borrowings under these lines are made for periods
generally less than three months and bear interest from 6.625% to
8.50% at December 31, 1994. At December 31, 1994, the amount of
the unused lines totaled $19,154.
At December 31, 1994, the Company's foreign subsidiaries
have available lines of credit with various banks totaling
$26,846 ($23,963 in Europe and $2,883 in the Far East). Drawings
under these lines are made for periods generally less than three
months and bear interest at December 31, 1994 at rates ranging
from 6.25% to 7.13%. At December 31, 1994, the amount of the
unused lines totaled $7,746 ($6,731 in Europe and $1,015 in the
Far East).
The weighted average interest rate on short-term debt
during the years 1994, 1993 and 1992 was 5.9%, 5.7% and 8%,
respectively.
F-27<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
9. Income Taxes:
Domestic and foreign income from continuing operations
before income taxes was $158 and $1,578, respectively in 1994,
$13,348 and $3,750, respectively in 1993, and $11,104 and $9,608,
respectively, in 1992. Taxes on income of foreign subsidiaries
are provided at the tax rates applicable to their respective
foreign tax jurisdictions. The provision for income taxes
consists of the following:
Years Ended December 31,
1994 1993 1992
Current:
Federal $6,246 $4,104 $3,224
Foreign 1,389 1,595 1,301
State 1,310 777 685
8,945 6,476 5,210
Deferred:
Federal (5,018) 748 825
Foreign 142 (397) 932
State (630) 142 194
(5,506) 493 1,951
Provision for
income taxes $3,439 $6,969 $7,161
A reconciliation of the statutory U.S. federal income tax
rate to the effective rate follows:
Years Ended December 31,
1994 1993 1992
Provision for income taxes at
statutory rate 35.0% 35.0% 34.0%
State income tax, net of federal
tax benefit 25.5% 3.5% 2.8%
Higher (lower) taxes on foreign
earnings, net 14.2% (4.4%) (2.4%)
Tax credits (0.1%) (0.4%) (.3%)
Non-deductible costs, principally
depreciation and amortization
related to acquired companies 78.1% 7.1% 5.0%
Capitalized combination costs 49.4%
Reduction in Danish tax rates (4.9%)
Non-deductible interest expense on
conversion of convertible debentures 1.9%
Other (4.0%) (1.5%)
Provision for income taxes 198.1% 40.8% 34.6%
F-28<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Deferred tax liabilities (assets) are comprised of the
following:
Year Ended
December 31,
1994 1993
Accelerated depreciation and amortization
for income tax purposes $22,157 $23,920
Excess of book basis of acquired assets
over tax bases 9,200 9,052
Differences between inventory valuation
methods used for book and tax purposes
(Denmark) 2,186 2,136
Other 40 374
Gross deferred tax liabilities 33,583 35,482
Accrued liabilities and other reserves (6,115) (4,183)
Pension liabilities (1,250) (701)
Loss carryforwards (801) (610)
Other (1,035) (882)
Gross deferred tax assets (9,201) (6,376)
Deferred tax assets valuation allowance 801 610
Net deferred tax liabilities $25,183 $29,716
As of December 31, 1994, the Company has state loss
carryforwards of approximately $8,898, which are available to
offset future taxable income. These carryforwards will expire
between the years 1999 and 2001. Accordingly, the Company has
recognized a deferred tax asset relating to these carryforwards.
The Company has established a valuation allowance for the entire
amount of these carryforwards.
Danish tax law prior to 1991 allowed the Company's Danish
subsidiaries to appropriate an investment fund of up to 25% of
annual taxable income adjusted for certain items. The
appropriation is tax deductible in the year it was made. Fifty
percent of the amount appropriated must be deposited in an
interest-yielding blocked bank account. Blocked funds are
released with the acquisition of the qualifying property and
equipment. Included in "other assets and deferred charges" as of
December 31, 1994 and 1993 is $1,481 and $1,988, respectively, of
such blocked funds.
F-29<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
10. Pension Plans:
Domestic:
Prior to July 1, 1994, the Company maintained two qualified
noncontributory, defined benefit pension plans ("A.L. Plan" and
"Subsidiary Plan") covering the majority of its domestic
employees. Effective July 1, 1994, the Company amended the A.L.
Plan to include certain subsidiary employees and merged the
Subsidiary Plan into the A.L. Plan. The benefits are based on
years of service and the employee's compensation during the last
five years of service. The Company's funding policy is to
contribute annually an amount that can be deducted for federal
income tax purposes. Plan assets are invested in equities, long-
term government securities and bonds.
Net pension cost for 1994, 1993 and 1992 included the
following components:
Years Ended December 31,
1994 1993 1992
Service cost $1,047 $ 939 $ 794
Interest cost 856 693 549
Actual return on plan assets 105 (375) (451)
Net amortization and deferral (502) 106 160
$1,506 $1,363 $1,052
F-30<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
The following tables set forth the plan's funded status as
of December 31, 1994 and 1993 (1993 amounts are combined to be
consistent with the 1994 presentation):
Accumulated
Benefits Exceed
Assets
1994 1993
Accumulated benefit obligation:
Vested $ 5,388 $ 5,838
Nonvested 770 520
$ 6,158 $ 6,358
Projected benefit obligation $ 8,767 $ 9,652
Fair value of plan assets (5,658) (5,986)
Unrecognized net loss (2,705) (2,551)
Unrecognized prior service cost 1,540 (76)
Unrecognized net transition
obligation (274) (304)
Additional minimum liability -- 354
Accrued pension costs $ 1,670 $ 1,089
The assumptions used were as follows:
1994 1993 1992
Weighted average discount rate 8.5% 7.25% 8.0%
Rate of increase in compensation
rate 5.0% 5.0% 5.0%
Expected long-term rate of return
on plan assets 8.0% 8.0% 8.0%
In 1993, the Company incurred a settlement loss of $322 as a
result of a number of retirees accepting lump sum settlements in
lieu of receiving pension benefits.
In addition, the Company has unfunded supplemental executive
pension plans providing additional benefits to a few highly
compensated employees. For 1994 such pension expense was
approximately $60 and the year end accrual was $115. Prior year
expenses and accruals were not material.
The Company and its domestic subsidiaries also have a number
of defined contribution plans, both qualified and non-qualified,
which allow eligible employees to withhold a fixed percentage of
their salary (maximum 10%) and provide for a Company match based
on service (maximum 6%). The Company's contributions to these
F-31<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
plans were approximately $700, $500 and $400 in 1994, 1993 and
1992, respectively.
Europe:
A.L. Oslo has defined benefit plans which cover the majority
of its employees. These pension commitments are funded through a
collective agreement with a Norwegian insurance company and A.L.
Oslo makes annual contributions to the plan in accordance with
Norwegian insurance principles and practices. In addition to the
annual premiums, A.L. Oslo has made prepayments to specific
premium funds. These premium funds are used to cover ordinary
future annual premiums. The pension plan assets are deposited in
the insurance company's general account which is principally
invested in fixed income securities.
A.L. Oslo also maintains a direct pension arrangement with
certain employees. These pension commitments are paid out of
general assets and the obligations are accrued but not prefunded.
Net pension cost for 1994, 1993 and 1992 included the following
components:
1994 1993 1992
Service cost $1,009 $ 729 $ 658
Interest cost 766 895 797
Actual return on plan assets (340) (12) (467)
Net amortization and deferral (178) (478) (22)
$1,257 $1,134 $ 966
F-32<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
The following tables set forth the plans' funded status as of
December 31, 1994 and 1993:
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1994 1993 1994 1993
Accumulated benefit
obligation:
Vested $ 7,337 $ 5,919 $ 1,455 $ 1,070
Nonvested 418 90 77
$ 7,755 $ 6,009 $ 1,455 $ 1,147
Projected benefit
obligation $12,041 $ 9,125 $ 1,503 $ 1,207
Fair value of plan
assets (8,978) (7,616)
Unrecognized net gain
(loss) 2,082 2,356 (7) 109
Unrecognized prior
service cost (856) (811) (459) (472)
Unrecognized net
transition obligation (1,409) (1,360) (36) (36)
Additional minimum
liability 454 339
Accrued pension costs $ 2,880 $ 1,694 $ 1,455 $ 1,147
The assumptions used were as follows:
1994 1993 1992
Weighted average discount rate 7.0% 7.0% 8.5%
Rate of increase in compensation
rate 3.5% 3.5% 5.0%
Expected long-term rate of return
on plan assets 7.0% 7.0% 8.0%
The Company's Danish subsidiary, Dumex, has a defined
contribution pension plan for salaried employees. Under the
plan, the Company contributes a percentage of each salaried
employee's compensation to an account which is administered by an
insurance company. Pension expense under the plan was
approximately $1,900, $1,800 and $2,000 in 1994, 1993 and 1992,
respectively.
F-33<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
11. Postretirement Benefits:
The Company has an unfunded postretirement medical and
nominal life insurance plan covering certain domestic employees
included in the A.L. Plan as of January 1, 1993. The plan will
not be extended to any additional employees. Retired employees
are required to contribute for coverage as if they were active
employees.
The Company adopted SFAS 106 on January 1, 1993 and elected
to recognize the change on a delayed recognition basis.
Accordingly, the transition obligation of $1,079 will be
amortized over twenty years. The discount rate used in
determining the 1994 and 1993 expense was 7.25% and 8.0%,
respectively. The discount rate used in determining the
accumulated post retirement obligation as of December 31, 1994
and 1993 was 8.5% and 7.25%, respectively. The health care cost
trend rate was 9.5% declining to 5.0% over a ten year period,
remaining level thereafter.
The unfunded plan is recognized at December 31, 1994 and
1993 as follows:
1994 1993
Accumulated postretirement benefit obligation
Retirees $ 277 $ 327
Fully eligible active participants 180 184
Other active participants 819 849
1,276 1,360
Unrecognized estimated net loss 102 (137)
Unrecognized transition obligation (971) (1,025)
Accrued postretirement benefit cost $ 407 $ 198
The net periodic postretirement benefit cost included the
following components. Prior year costs expensed as incurred were
not material.
1994 1993
Service cost $102 $ 94
Interest cost 97 85
Amortization of
transition obligation 54 54
$253 $233
F-34<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
12. Transactions With A. L. Industrier:
Years Ended December 31,
1994 1993 1992
Sales to and commissions received
from A.L. Industrier $2,805 $2,855 $1,716
Compensation received for
management services rendered to
A.L. Industrier $ 854 $ 876 $1,162
Inventory purchased from and
commissions paid to A.L.
Industrier $ 291 $ 580 $1,736
Net interest received from A.L.
Industrier $ 401 $ 850 $ 851
The acquisition of A.L. Oslo has been accounted for as a
pooling of interests. Therefore, prior period related party
transactions are now intercompany and eliminated in the
consolidation. Transactions between A.L. Oslo and A.L.
Industrier which were formerly intercompany are now related party
transactions. (See Note 1.)
As of December 31, 1994 and 1993 there was a net current
receivable of $673 and $1,141, respectively, from A.L.
Industrier. As of December 31, 1993, included in "other assets
and deferred charges" was a long-term interest bearing receivable
of $5,804 from A.L. Industrier which was repaid in 1994. The
rate of interest at December 31, 1993 was 13%.
The Company and A.L. Industrier have an administrative
service agreement whereby the Company is required to provide
management services to A.L. Industrier with an initial term
through January 1, 1997. The agreement provides for payment
equal to the direct and indirect cost of providing the services
subject to a minimum amount in the initial term. The agreement
may be terminated by either party upon six months notice after
the initial term.
In addition, in connection with the agreement to purchase
A.L. Oslo, A.L. Industrier retained the ownership of the Skoyen
manufacturing facility and administrative offices (not including
leasehold improvements and manufacturing equipment) and leases it
to the Company. The agreement also permits the Company to use
the Skoyen facility as collateral on existing debt for five
years. The Company is required to pay all expenses related to
the operation and maintenance of the facility in addition to
nominal rent. The lease has an initial 20 year term and is
F-35<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
renewable at the then fair rental value at the option of the
Company for four consecutive five year terms.
13. Contingent Liabilities, Litigation and Commitments:
In November 1992, a class action complaint was filed against
the Company and certain senior executives related to alleged
losses as a result of a decline in the Company's stock price in
November 1992. In the fourth quarter of 1993 the Company settled
the lawsuit while continuing to deny all facts and liabilities in
the matter. The gross settlement amount was $2,300 with a
significant amount covered by insurance. The settlement amount
was paid prior to December 31, 1993.
The Company and its subsidiaries are, from time to time,
involved in litigation arising out of the ordinary course of
business. It is the view of management, after consultation with
counsel, that the ultimate resolution of all pending suits should
not have a material adverse effect on the consolidated financial
position of the Company.
In connection with a 1991 product line acquisition, the
Company entered into a ten-year manufacturing agreement which
requires the Company to purchase a yearly minimum quantity of
feed additives on a cost-plus basis. If the minimum quantities
are not purchased, the Company must reimburse the supplier a
percentage of the fixed costs related to the unpurchased
quantities. The current cost of the yearly minimum quantity is
approximately $6,000 and the fixed cost portion is approximately
20%. For 1994 and prior years, the Company has purchased in
excess of the minimum quantities.
14. Leases:
Rental expense under operating leases for 1994, 1993 and
1992 was $5,513, $5,099 and $4,157, respectively. Future minimum
lease commitments under non-cancelable operating leases during
each of the next five years and thereafter are as follows:
Year Ending December 31,
1995 $ 4,200
1996 3,200
1997 2,600
1998 2,400
1999 1,800
Thereafter 5,000
$19,200
F-36<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
15. Stockholders' Equity:
The holders of the Company's Class B Common Stock, (totally
held by A. L. Industrier at December 31, 1994) are entitled to
elect 66 2/3% of the Board of Directors of the Company and may
convert each share of Class B Common Stock held into one fully
paid share of Class A Common Stock. Whenever the holders of the
Company's common stock are entitled to vote as a combined class,
each holder of Class A and Class B Common Stock is entitled to
one and four votes, respectively, for each share held.
In connection with the acquisition of A.L. Oslo the Company
issued warrants to purchase 3,600,000 shares of Class A Common
stock for $21.945 per share through January 3, 1999. The
warrants generally are exercisable on the earlier of October 3,
1995 or the date the registration statement relating to such
warrants becomes effective. (See Note 1.)
The number of authorized shares of Preferred Stock is
500,000; the number of authorized shares of Class A Common Stock
is 40,000,000; and the number of authorized shares of Class B
Common Stock is 15,000,000.
16. Derivatives and Fair Value of Financial Instruments:
The Company currently uses the following derivative
financial instruments for purposes other than trading.
Derivative Use Purpose
Forward foreign Frequent Entered into to sell or
exchange contracts buy both fixed and
anticipated cash flows in
non-functional
currencies.
Interest rate Occasional Entered into to fix
hedge agreements interest rate for
specified periods on
variable rate long-term
debt.
At December 31, 1994 and 1993, the Company's European
subsidiaries had foreign currency contracts outstanding with a
notional amount of approximately $19,000. These contracts called
for the exchange of Scandinavian and European currencies and in
some cases the U.S. Dollar to meet commitments in or sell cash
flows generated in non-functional currencies. All outstanding
contracts expired by February 1995. At December 31, 1994 there
were no other derivative contracts outstanding.
F-37<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Counterparties to derivative agreements are major financial
institutions. Management believes the risk of incurring losses
related to credit risk is remote.
During 1991 and 1992, prior to its acquisition by the
Company A.L. Oslo, whose functional currency is the Norwegian
Kroner (NOK), entered into U.S. Dollar loans and through foreign
currency derivative contracts effectively denominated a
significant portion of its debt in U.S. Dollars. The favorable
movement of the NOK compared to the U.S. Dollar in 1992 resulted
in foreign exchange gains of approximately $2,400 in 1992. These
contracts were terminated in 1992.
The carrying amount reported in the consolidated balance
sheets for cash and cash equivalents, accounts receivable,
accounts payable and short-term debt approximates fair value
because of the immediate or short-term maturity of these
financial instruments. The carrying amount reported for long-
term debt approximate fair value because a significant portion of
the underlying debt is at variable rates and reprices frequently.
17. Stock Options and Employee Stock Purchase Plan:
Under the Company's 1983 Incentive Stock Option Plan, as
amended (the "Plan"), the Company may grant options to key
employees to purchase shares of Class A Common Stock. In May
1993 the Company's stockholders approved an increase, from
1,500,000 to 1,650,000, in the maximum number of shares available
for grant. The exercise price of options granted under the Plan
may not be less than 100% of the fair market value of the Class A
Common Stock on the date of the grant. Generally, options are
exercisable in installments of 25% beginning one year from date
of grant. The Plan permits a cash appreciation right to be
granted to certain employees. This right must be exercised at
the same time the stock option is exercised and is limited to one
half of the total number of shares being exercised. Included in
options outstanding at December 31, 1994 are options to purchase
1,875 shares with cash appreciation rights, all of which are
exercisable. If an option holder ceases to be an employee of the
Company or its subsidiaries for any reason prior to vesting of
any options, all options which are not vested at the date of
termination are forfeited. As of December 31, 1994 and 1993,
options for 299,373 and 482,748 shares, respectively, were
available for future grant.
F-38<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
The table below summarizes the activity of the Plan:
Shares Option Shares
Outstanding Price Exercisable
Balance at December 31, 1991 460,535 $ 4.58 - $17.63 177,971
Granted in 1992 92,500 $19.50 - $19.50
Canceled in 1992 (26,751) $ 7.75 - $16.62
Exercised in 1992 (81,823) $ 4.58 - $16.62
Balance at December 31, 1992 444,461 $ 4.58 - $19.50 195,555
Granted in 1993 122,500 $21.38 - $27.13
Canceled in 1993 (20,187) $15.00 - $22.13
Exercised in 1993 (56,874) $ 4.58 - $16.62
Balance at December 31, 1993 489,900 $ 4.58 - $27.13 226,155
Granted in 1994 207,000 $13.50 - $16.87
Canceled in 1994 (23,625) $ 8.75 - $23.13
Exercised in 1994 ( 1,700) $ 8.75 - $ 8.75
Balance at December 31, 1994 671,575 $ 4.58 - $27.13 319,703
The Company implemented an Employee Stock Purchase Plan on
January 1, 1991. Eligible employees of the Company and its
domestic subsidiaries may authorize payroll deductions up to 4%
of their regular base salary to purchase shares of Class A Common
Stock at the fair market value. The Company matches these
contributions with an additional contribution equal to 25% of the
employee's contribution. Shares are issued on the last day of
each calendar quarter. The Company's contributions to the plan
were approximately $156, $140 and $115 in 1994, 1993 and 1992,
respectively.
F-39<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
18. Supplemental Data:
Years Ended December 31,
1994 1993 1992
Allowance for doubtful accounts
receivable at year end $ 4,897 $ 2,983 $ 2,965
Research and development
expense 32,497 24,032 20,559
Depreciation expense 18,342 16,096 14,513
Amortization expense 8,431 7,746 8,158
Interest cost incurred 16,077 15,258 18,748
Other income (expense) net:
Interest income 1,432 1,915 1,740
Foreign exchange gains
(losses), net (34) 163 2,522
Other, net (285) (198) (325)
$ 1,113 $ 1,880 $ 3,937
Supplemental cash flow information:
Cash paid for interest
(net of amount capitalized) $15,687 $15,025 $18,514
Cash paid for income taxes 9,228 8,848 3,764
Supplemental schedule of
noncash investing and
financing activities:
Warrants issued $ 6,552
Conversion of debentures to
common stock, net $59,481
Fair value of assets acquired $19,437 $36,461 $18,699
Cash paid 13,733 17,280 11,660
Liabilities assumed $ 5,704 $19,181 $ 7,039
19. Discontinued Human Nutrition Business:
In September 1992, Dumex completed the disposition of the
remaining assets and operations of the Company's Human Nutrition
business. As a result, the Company has reported the Human
Nutrition business as a discontinued operation in the
Consolidated Statement of Operations.
The table below sets forth a summary of selected components
relating to the results of the Human Nutrition business. In
F-40<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
accordance with applicable accounting requirements, the only
amounts shown in the accompanying Consolidated Statement of
Operations are the amounts shown below as "Income from
discontinued operations, net of tax".
Year ended
December 31,
1992
Revenues $35,496
Pre-tax Income:
Operations $ 1,067
Sale of trademarks,
intangibles and option
fee 4,958
6,025
Provision for foreign
income taxes
Current 404
Deferred 812
Income from
Discontinued operations,
net of tax $ 4,809
The provision for income taxes reflects a rate lower than
the statutory rate due to favorable tax treatment in Denmark of
capital gains.
20. Information Concerning Business Segments and Geographic
Operations:
The Company currently conducts its business operations in
two business segments: (1) Human Pharmaceuticals and (2) Animal
Health. The Human Pharmaceuticals business includes the U.S.
Pharmaceutical Division, International Pharmaceuticals Division
including Oral health care, and Fine Chemicals Division (i.e.
bulk antibiotics). The Animal Health business consists of the
Animal Health Division and the Aquatic Animal Health Division.
The Company's operations outside the United States are conducted
primarily in Europe by the Company's manufacturing subsidiaries
in Norway and Denmark.
In 1994 the Company combined with A. L. Oslo and was
required to restate its prior years financial statements. In
addition, the operating structure of the Company was reorganized
to include Fine Chemicals as part of Human Pharmaceuticals
instead of being part of the Animal Health business. As a result
of these changes 1993 and 1992 segment data were restated to
include A. L. Oslo and combine Fine Chemicals with Human
Pharmaceuticals.
F-41<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Depre-
ciation
and
Identi- Amorti- Capital
Total Operating fiable zation Expendi-
1994 Revenue Income(4) Assets Expense tures
Business segments:
Human
Pharmaceuticals
("HP") $329,113 $(3,850) $454,685 $20,900 $25,201
Animal Health
("AH") 141,077 28,532 122,804 5,657 18,134
Unallocated 615 (8,708) 14,829 216 991
Eliminations (1,542) 4
$469,263 $15,978 $592,318 $26,773 $44,326
Geographic:
United States $303,270 $ 6,774 $362,359
Europe and Other 179,714 9,180 230,722
Eliminations (13,721) 24 (763)
$469,263 $15,978 $592,318
1993
Business segments:
Human
Pharmaceuticals(1) $219,789 $(2,584) $326,429 $12,829 $12,828
Restatement and
Reclassification,
net(3) 64,950 11,148 101,943 5,951 3,802
HP restated 284,739 8,564 428,372 18,780 $16,630
Animal Health (1) 119,708 29,987 93,160 4,914 7,723
Restatement and
Reclassification,
net(3) (975) (1,139) (6,916) (23) (579)
AH restated 118,733 28,848 86,244 4,891 7,144
Unallocated (1) (6,479) 3,613 63 46
A.L. Oslo -
unallocated 470 (774) 9,388 108 224
Eliminations (1,267) 55
$402,675 $30,214 $527,617 $23,842 24,044
Geographic:
United States (1) $249,301 $17,404 $319,854
Europe and Other (2) 164,075 12,853 208,618
Eliminations (10,701) (43) (855)
$402,675 $30,214 $527,617
F-42<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Depre-
ciation
and
Identi- Amorti- Capital
Total Operating fiable zation Expendi-
Revenue Income(4) Assets Expense tures
1992
Business segments:
Human
Pharmaceuticals(1) $195,380 $ 8,420 $270,867 $12,202 $ 7,873
Restatement and
Reclassification,
net(3) 58,177 9,522 110,899 5,989 7,115
HP restated 253,557 17,942 381,766 18,191 $14,988
Animal Health (1) 100,308 24,060 92,236 4,116 6,755
Restatement and
Reclassification,
net(3) 4,061 (1,870) (11,679) 165 (634)
AH restated 104,369 22,190 80,557 4,281 $ 6,121
Unallocated (1) (3,986) 8,621 57 69
A.L. Oslo -
unallocated 1,282 (863) 10,069 142 147
Eliminations (576) 26
$358,632 $35,309 $481,013 $22,671 21,325
Geographic:
United States (1) $197,645 $18,557 $264,620
Europe and
Other (2) 172,090 16,766 217,840
Eliminations (11,103) (14) (1,447)
$358,632 $35,309 $481,013
1. As reported
2. 1993 and 1992 amounts increase compared to previously reported due to
the restatement.
3. Restatement and reclassification, net - includes the results of A.L.
Oslo and the reclassification of the Fine Chemicals Division from the
Animal Health Segment to the Human Pharmaceutical Segment.
4. 1994 operating income includes charges for post combination actions
related to the acquisition of A.L. Oslo and transaction expenses as
follows:
Human Pharmaceuticals $19,000
Animal Health 1,950
Unallocated 3,700
$24,650
F-43<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
21. Selected Quarterly Financial Data (unaudited):
Quarter
Total
1994(a) First Second Third Fourth Year
Total revenue $107,380 $110,958 $117,438 $133,487 $469,263
Gross profit 45,230 45,504 48,261 54,725 193,720
Income loss before
extraordinary item 3,551 2,807 4,005 (12,066) (1,703)
Net income (loss)(b) $ 3,551 $ 2,807 $ 4,005 $(12,749) $(2,386)
Earnings per common share:
Primary
Income (loss) before
extraordinary item $ .16 $ .13 $ .19 $ (.56) $ (.08)
Net income (loss) $ .16 $ .13 $ .19 $ (.59) $ (.11)
Fully diluted
Income (loss) before
extraordinary item $ .16 $ .13 $ .19 $ (.56) $ (.08)
Net income (loss) $ .16 $ .13 $ .19 $ (.59) $ (.11)
1993(a)
Total revenue $ 94,617 $ 97,673 $ 97,418 $112,967 $402,675
Gross profit 43,179 42,668 38,402 45,003 169,252
Net income $ 3,952 $ 2,877 $ 829 $ 2,471 $10,129
Earnings per common share:
Primary
F-44<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
__________________
Net income $ .18 $ .13 $ .04 $ .11 $ .47
Fully diluted
Net income $ .18 $ .13 $ .04 $ .11 $ .47
(a) Financial information for all quarters reflects the retroactive
effect of the October 1994 combination, accounted for as a pooling
of interests, with A.L. Oslo (See Note 1.)
(b) The fourth quarter 1994 reflects an extraordinary item for the
write off of deferred loan costs of $683, net of tax, related to
the early extinguishment of debt. The fourth quarter also
includes expenses for transaction costs and related charges for
post-combination actions taken by management. Such expenses
reduced net income by $17,025 ($.79 per share). (See Note 3.)
F-45<PAGE>
A.L. PHARMA INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands of dollars)
<TABLE>
Column A Column B Column C Column D Column E
Additions
Balance at Charged (Credited) to Balance
Beginning Costs and Other At End
Description of Period Expenses Accounts Deductions of Period
Reserve for doubtful accounts:
Year ended December 31,
<S> <C> <C> <C> <C> <C>
1994 $ 2,983 $1,361 $ 261 * ($ 208) ** $4,897
1993 $ 2,965 $ 502 ($ 148) * ($ 336) ** $2,983
1992 $ 2,886 $ 588 ($ 56) * ($ 453) ** $2,965
* Includes $65 and $250 in 1993 and 1992, related to business acquisitions and ($ ),
($152) and ($150) in 1994, 1993 and 1992, respectively, related to foreign currency
translation adjustments. Includes ($61) and ($163) of cash collected in 1993 and 1992,
respectively, on previously written off accounts.
** Accounts written off to reserve.
</TABLE>
F-46<PAGE>
CERTIFICATE
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
A.L. LABORATORIES, INC.
Jeffrey E. Smith and Beth P. Hecht being the duly
elected Executive Vice President and Secretary, respectively, of
A.L. Laboratories, Inc., a Delaware corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware (the "Corporation") do hereby certify the
following:
1. That the Corporation filed its original
Certificate of Incorporation with the Secretary of State of
Delaware on September 22, 1983, as amended on February 1, 1984;
June 16, 1986; June 11, 1987; May 30, 1990; May 22, 1991; and
October 1, 1993.
2. The Board of Directors of the Corporation approved
the foregoing amendment and restatement pursuant to the
provisions of Sections 141(f) 242 and 245 of the General
Corporation Law of the State of Delaware and directed that the
amendment be submitted to the stockholders of the Corporation for
their consideration and approval.
3. The Stockholders of the Corporation approved the
foregoing amendment and restatement pursuant to the provisions of
Section 228, 242 and 245 of the General Corporation Law of the
State of Delaware.<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
A.L. PHARMA INC.
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware, the undersigned
Executive Vice President and Secretary of A.L. Laboratories,
Inc., a Delaware corporation (the "Corporation") do hereby
certify that the Certificate of Incorporation of the Corporation
shall be amended and restated in its entirety to read as follows:
ARTICLE FIRST.
The name of the Corporation is A.L. PHARMA INC.
ARTICLE SECOND.
The address of its registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address
is Corporation Service Company.
ARTICLE THIRD.
The purpose of the Corporation is to conduct any lawful
business, to exercise any lawful purpose and power, and to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
ARTICLE FOURTH.
The total number of shares which the Corporation shall
have authority to issue shall be 55,500,000 shares, divided into
three classes, namely: 500,000 shares of Preferred Stock of the
par value of $1.00 per share (hereinafter sometimes referred to
as the "Preferred Stock"); 40,000,000 shares of Class A Common
Stock of the par value of $.20 (hereinafter sometimes referred to
as the "Class A Common Stock"); and 15,000,000 shares of Class B
Common Stock of the par value of $.20 (hereinafter sometimes
referred to as the "Class B Common Stock").
The designation, relative rights, preferences and
limitations of the shares of each class; the authority of the
Board of Directors of the Corporation to establish and to
designate series of the Preferred Stock and to fix the variations
in the relative rights, preferences and limitations as between
such series, and the relative rights, preferences and limitations
of such series, shall be as follows:
1. Preferred Stock.
(a) The Board of Directors of the Corporation is
authorized, subject to limitations prescribed by law and the
provisions of this Section 1 and subparagraph 2(d)(iv) of
this Article FOURTH, to provide for the issuance of the
Preferred Stock in series, to establish or change the number
of shares to be included in each such series and to fix the
designation, relative rights, preferences and limitations of
the shares of each such series. The authority of the Board<PAGE>
of Directors of the Corporation with respect to each series
shall include, but not be limited to, determination of the
following:
(i) The number of shares constituting that series
and the distinctive designation of that series;
(ii) The dividend rate or rates on the shares of that
series and/or the method of determining such rate or rates,
whether dividends shall be cumulative, and if so, from which
date or dates;
(iii) Subject to subparagraph 2(d)(iv) of this Article
FOURTH, whether and to what extent the shares of that series
shall have voting rights in addition to the voting rights
provided by law, which might include the right to elect a
specified number of directors in any case or if dividends on
such series were not paid for a specified period of time;
(iv) Whether the shares of that series shall be
convertible into shares of stock of any other series or
class, and, if so, the terms and conditions of such
conversion, including the price or prices or the rate or
rates of conversion and the terms of adjustment thereof;
(v) Whether or not the shares of that series shall
be redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which
they shall be redeemable and the amount per share payable in
case of redemption, which amount may vary under different
conditions and at different redemption dates;
(vi) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution
or winding up of the Corporation;
(vii) The obligation, if any, of the Corporation to
retire shares of that series pursuant to a sinking fund; and
(viii) Any other relative rights, preferences and
limitations of that series.
(b) Subject to the designations, relative rights,
preferences and limitations provided pursuant to Subsection
1(a) of this Article FOURTH, each share of Preferred Stock
shall be of equal rank with each other share of Preferred
Stock.
(c) The holders of Preferred Stock shall not be
entitled to vote as a class upon a proposed amendment to
this Certificate of Incorporation to increase or decrease
the number of authorized shares of Preferred Stock.<PAGE>
2. Common Stock.
(a) Class A Common Stock and Class B Common Stock
shall be identical in all respects and shall have equal
rights and privileges, except as otherwise provided in this
Article FOURTH.
(b) Dividends. Subject to all of the rights of any
Preferred Stock outstanding from time to time, such dividend
or distribution as may be determined by the Board of
Directors of the Corporation may from time to time be
declared and paid or made upon the Class A Common Stock and
Class B Common Stock out of any source at the time lawfully
available for the payment of dividends. Subject to the
following sentence, holders of shares of Class A Common
Stock and holders of shares of Class B Common Stock shall
have the same rights to dividends and distributions of the
Corporation whether paid in cash, property or stock. If a
dividend is to be paid in shares of Class A Common Stock
and/or Class B Common Stock, such dividend may be declared
and paid as follows:
(i) Shares of Class A Common Stock may be declared
and paid as dividends on shares of both Class A Common
Stock and Class B Common Stock;
(ii) Shares of Class B Common Stock may be declared
and paid as dividends on shares of both Class A Common
Stock and Class B Common Stock; or
(iii) Shares of Class A Common Stock may be declared
and paid as dividends on shares of Class A Common
Stock and shares of Class B Common Stock may be
declared and paid as dividends on shares of Class B
Common Stock;
and in any such case the same number of shares shall be
declared and paid in respect of each outstanding share of
Class A Common Stock and each outstanding share of Class B
Common Stock.
The Corporation shall not combine or subdivide shares
of either class of Common Stock without at the same time
combining or subdividing shares of the other class of Common
Stock in the same proportion.
(c) Liquidation. The holders of both Class A Common
Stock and Class B Common Stock shall be entitled to share
ratably upon any liquidation, dissolution or winding up of
the affairs of the Corporation (voluntary or involuntary) in
all assets of the Corporation, if any, remaining after
payment in full to the holders of Preferred Stock of the
preferential amounts, if any, to which they are entitled.
Neither the consolidation nor the merger of the Corporation
with or into any other corporation or corporations, nor a
reorganization of the Corporation alone, nor the sale or
transfer by the Corporation of all or any part of its<PAGE>
assets, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation for the purposes of this
Section 2.
(d) Voting. Subject to the rights of the holders of
any Preferred Stock outstanding from time to time, voting
power shall be divided between the Class A Common Stock and
the Class B Common Stock as follows:
(i) Subject to subparagraphs (d)(v) and (d)(vi) of
this Article, with respect to the election of
directors, holders of Class A Common Stock voting as a
separate class shall be entitled to elect that number
of directors which constitute thirty-three and one-
third percent (33 1/3%) of the authorized number of
members of the Board of Directors rounded to the
nearest whole number of directors. In no event shall
the number of directors elected by the holders of
Class A Common Stock be less than two (2). Holders of
Class B Common Stock voting as a separate class shall
be entitled to elect the remaining directors.
(ii) Subject to subparagraph 2(d)(v) of this Article,
any vacancy in the office of a director elected by the
holders of the Class A Common Stock may be filled by a
vote of such holders voting as a separate class and
any vacancy in the office of a director elected by the
holders of the Class B Common Stock may be filled by a
vote of such holders voting as a separate class or, in
the absence of a stockholder vote, in the case of a
vacancy in the office of a director elected by either
class, such vacancy may be filled by the remaining
director or directors elected by the holders of such
class. Each director elected to fill a vacancy shall
serve until the next annual meeting of stockholders
and until his or her successor has been duly elected
and qualified. If permitted by the bylaws, the Board
of Directors from time to time may increase the number
of directors, and any newly created directorship or
directorships so created may be filled by the Board of
Directors; provided that, so long as the holders of
Class A Common Stock have the rights provided in
subparagraphs 2(d)(i) of this Article in respect of
the last preceding annual meeting of stockholders,
such newly created directorship or directorships may
be filled by the Board of Directors only to the extent
that at least thirty-three and one-third percent
(33 1/3%) (or if such 33 1/3% is not a whole number
rounded to the nearest whole number of directors) of
the directors in office subsequent to such filling of
such newly created directorship or directorships
consists of directors elected or appointed by the
holders of Class A Common Stock or by persons
appointed to fill vacancies created by the death,
resignation or removal of persons elected by the
holders of Class A Common Stock. If permitted by the
bylaws, the Board of Directors may decrease the number<PAGE>
of directors, provided that a decrease in the number
of directors shall not become effective until the next
annual election of directors by the stockholders.
Directors may be removed with or without cause only by
holders of the class of Common Stock which elected
them voting as a separate class; provided that any
directormay beremoved forcause bythe Boardof Directors.
(iii) The holders of Class A Common Stock and the
holders of Class B Common Stock shall be entitled to
vote as separate classes on such other matters as may
be required from time to time by law or this
Certificate of Incorporation to be submitted to such
holders voting as separate classes, but not upon a
proposed amendment to this Certificate of
Incorporation to increase or decrease the number of
authorized shares of Class A Common Stock or Class B
Common Stock or otherwise.
(iv) Whenever the holders of shares of Class A Common
Stock and Class B Common Stock shall not be entitled
under subparagraph 2(d)(i), 2(d)(ii) or 2(d)(iii) of
this Article FOURTH to vote as separate classes, they
shall vote together as a single class, provided that
the holders of shares of Class A Common Stock shall
have one vote per share of Class A Common Stock held
and the holders of shares of Class B Common Stock
shall have four votes per share of Class B Common
Stock held. Whenever such holders are entitled under
subparagraph 2(d)(i), 2(d)(ii) or 2(d)(iii) of this
Article FOURTH to vote as separate classes, holders of
Class A Common Stock voting as a separate class shall
be entitled to one vote per share of Class A Common
Stock held and holders of Class B Common Stock voting
as a separate class shall be entitled to one vote per
share of Class B Common Stock held. Notwithstanding
anything contained in this Certificate of
Incorporation to the contrary, if any new class or
series of capital stock (including any Preferred
Stock) is authorized and issued at any time, the
voting rights granted, if any, shall not limit the
rights of the holders of Class A Common Stock as set
forth in subparagraphs 2(d)(i) and 2(d)(ii) of this
Article FOURTH.
(v) The holders of shares of Class A Common Stock
will not have the rights to elect directors set forth
in subparagraphs 2(d)(i) and 2(d)(ii) of this Article
FOURTH if, on the record date for any stockholder
meeting at which directors are to be elected, the
number of issued and outstanding shares of Class A
Common Stock (exclusive of any shares held in the
Corporation's treasury) is less than ten percent (10%)
of the aggregate number of issued and outstanding
shares of Class A Common Stock and Class B Common
Stock (exclusive of any shares held in the
Corporation's treasury). In such case, all directors<PAGE>
to be elected at such meeting shall be elected by the
holders of Class A Common Stock and Class B Common
Stock voting together as a single class in accordance
with the provisions of subparagraph 2(d)(iv) of this
Article FOURTH.
(vi) The holders of shares of Class B Common Stock
will not have the rights to elect directors and to
have four votes per share at a stockholder meeting set
forth in subparagraph 2(d)(i) and 2(d)(iv) of this
Article FOURTH if, on the record date for any
stockholder meeting at which directors are to be
elected or at which any other matter is to be put to a
vote of stockholders, the number of issued and
outstanding shares of Class B Common Stock (exclusive
of any shares held in the Corporation's treasury), is
less than twelve and one-half percent (12-1/2%) of the
aggregate number of issued and outstanding shares of
Class A Common Stock and Class B Common Stock
(exclusive of any shares held in the Corporation's
treasury). In such case, the holders of Class A
Common Stock and the holders of Class B Common Stock
that are entitled to vote at such meeting shall vote
together as a single class, with each holder of
Class B Common Stock entitled to one vote per share
and each holder of Class A Common Stock entitled to
one vote per share.
(e) Conversion. Each holder of record of a share of
Class B Common Stock may at any time or from time to time,
at such holder's option, convert any whole number or all of
such holder's shares of Class B Common Stock into fully paid
and nonassessable shares of Class A Common Stock at the rate
of one share of Class A Common Stock for each share of
Class B Common Stock surrendered for conversion. Any such
conversion may be effected by any holder of Class B Common
Stock by surrendering such holder's certificate or
certificates of the shares of Class B Common Stock to be
converted, duly endorsed, at the office of the Corporation
or any transfer agent for the Class A Common Stock, together
with a written notice to the Corporation at such office that
such holder elects to convert all or a specified whole
number of such shares of Class B Common Stock. Promptly
thereafter, the Corporation shall issue and deliver to such
holder a certificate or certificates for the number of
shares of Class A Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be effective
at the close of business on the date of such surrender and
the person or persons entitled to receive the shares of
Class A Common Stock issuable on such conversion shall be
treated for all purposes as the record holder or holders of
such shares of Class A Common Stock on such date.
3. General Provisions With Respect to All Classes of
Stock.<PAGE>
(a) Issue of Stock. Shares of capital stock of the
Corporation may be issued by the Corporation from time to
time in such amounts and proportions and for such
consideration (not less than the par value thereof in the
case of capital stock having par value) as may be fixed and
determined from time to time by the Board of Directors and
as shall be permitted by law.
(b) Unclaimed Dividends. Any and all right, title,
interest and claim in or to any dividends declared by the
Corporation, whether in cash, stock or otherwise, which are
unclaimed by the stockholder entitled thereto for a period
of six years after the close of business on the payment
date, shall be and be deemed to be extinguished and
abandoned; and such unclaimed dividends in the possession of
the Corporation, its transfer agents or other agents or
depositaries, shall at such time become the absolute
property of the Corporation, free and clear of any and all
claims of any persons whatsoever.
ARTICLE FIFTH.
The Corporation is to have perpetual existence.
ARTICLE SIXTH.
In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized to make, alter, or repeal the by-laws of the
Corporation.
ARTICLE SEVENTH.
Section 1
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit. If the
Delaware General Corporation Law is amended after approval by the
stockholders of this Article SEVENTH to authorize corporate
action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph
by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing
at the time of such repeal or modification.<PAGE>
Section 2
(a) Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is
otherwise involved (including involvement as a witness) in
any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or
was a director or officer of the Corporation or, while a
director or officer of the Corporation, is or was serving at
the request of the Corporation as a director, officer,
employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving
as a director or officer, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided
in paragraph (b) hereof with respect to proceedings to
enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in connection with any
such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided,
however, that, if and to the extent that the Delaware
General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity in which
service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision
from which there is no further right to appeal (hereinafter
a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section or
otherwise.<PAGE>
(b) Right of Indemnitee to Bring Suit. If a claim for
indemnification (including the advancement of expenses)
under paragraph (a) of this Section is not paid in full by
the Corporation within forty-five days after a written claim
has been received by the Corporation, except in the case of
a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may
at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by
the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting
or defending such suit. In any suit brought by the
indemnitee to enforce a right to indemnification hereunder
(but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses) it shall be a defense
that the indemnitee has not met the applicable standard of
conduct set forth in the Delaware General Corporation Law.
In any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon
a final adjudication that the indemnitee has not met the
applicable standard of conduct set forth in the Delaware
General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a
determination that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met
the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought
by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this
section or otherwise shall be on the Corporation.
(c) Service for Subsidiaries. Any person serving as a
director, officer, employee or agent of another corporation,
partnership, joint venture or other enterprise, at least 50%
of whose equity interests are owned by the Corporation
(hereinafter a "subsidiary"), shall be conclusively presumed
to be serving in such capacity at the request of the
Corporation.
(d) Reliance. Persons who after the date of the
adoption of this provision become or remain directors or
officers of the Corporation or who, while a director or
officer of the Corporation, become or remain a director,<PAGE>
officer, employee or agent of a subsidiary, shall be
conclusively presumed to have relied on the rights to
indemnity and advancement of expenses contained in this
Article Seventh in entering into or continuing such service.
The rights to indemnification and to the advancement of
expenses conferred in this Section shall apply to claims
made against an indemnitee arising out of acts or omissions
which occurred or occur both prior and subsequent to the
adoption hereof.
(e) Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred
in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under this
Certificate of Incorporation or under any statute, by-law,
agreement, vote of stockholders or disinterested directors
or otherwise.
(f) Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware
General Corporation Law.
(g) Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized
from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses, to any
employee or agent of the Corporation to the fullest extent
of the provisions of this Section with respect to the
indemnification and advancement of expenses of directors and
officers of the Corporation.
ARTICLE EIGHTH.
Meetings of stockholders may be held within or without
the State of Delaware, as the by-laws may provide. The books of
the Corporation may be kept (subject to any provisions contained
in the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of
Directors or in the by-laws of the Corporation. Elections of
directors need not be by written ballot unless the by-laws of the
Corporation shall so provide.
ARTICLE NINTH.
No contract or other transaction between the
Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership,
association or other entity in which one or more of its directors
or officers, are directors or officers, or have a financial
interest, shall be void or voidable solely because of such
relationship or interest, or solely because the director or
officer is present at or participates in the meeting of the Board
of Directors or committee of the Corporation which authorizes<PAGE>
such contract or transaction, or solely because his or their
votes are counted for such purpose, if:
(1) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Directors or the committee, and
the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote thereon,
and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee or the
stockholders of the Corporation.
Any director or officer of the Corporation, who is also a
director or officer of such other corporation, partnership,
association or other entity, or who is so interested may be
counted in determining the presence of a quorum at a meeting
of the Board of Directors or of any committee of the
Corporation which authorizes any such contract or
transaction.
ARTICLE TENTH.
The Corporation reserves the right to amend or repeal
any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.<PAGE>
IN WITNESS WHEREOF, the undersigned, being the
Executive Vice President and the Secretary of the Corporation,
under the penalties of perjury, do hereby declare and certify
that this act and deed of the Corporation and the facts stated
herein are true, and accordingly has hereunto signed this Amended
and Restated Certificate of Incorporation as of this 30th day of
September, 1994.
A.L. LABORATORIES, INC.
By: /s/ Jeffrey E. Smith
Name: Jeffrey E. Smith
Title: Executive Vice President
Attest:
By: /s/ Beth P. Hecht
Name: Beth P. Hecht
Title: Secretary<PAGE>
EFFECTIVE: OCTOBER 3, 1994
AMENDED AND RESTATED
BYLAWS
of
A.L. PHARMA INC.
(formerly known as A.L. Laboratories, Inc.)
A Delaware Corporation
ARTICLE ONE
Offices
Section 1.1 Principal Executive Office. The
corporation's headquarters and principal executive office shall
be located at One Executive Drive, Fort Lee, New Jersey 07024.
Section 1.2. Other Offices. The corporation may also
have offices at such other places, both within and without the
State of Delaware, as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE TWO
Meetings of Stockholders
Section 2.1. Annual Meetings. An annual meeting of
the stockholders shall be held for the purpose of electing
directors and conducting such other business as may come before
the meeting. The date, time and place of the annual meeting
shall be determined by or under authority of the Board of
Directors.
Section 2.2. Special Meetings. A special meeting of
stockholders for any purpose may be called by the President of
the Corporation, and shall be called by the Secretary at the
request in writing of a majority of the Board of Directors or of
the stockholders entitled to cast at least one-tenth of the votes
which all stockholders are entitled to cast at the particular
meeting. Such request shall state the purpose or purposes of the
proposed special meeting. The time and place of each special
meeting of stockholders shall be determined by or under the
authority of the Board of Directors, provided that if no such
determination shall be made prior to the mailing of the notice
for such meeting, the time and place for such meeting shall be
determined by the President.
Section 2.3. Notice. Written or printed notice of
every annual or special meeting of the stockholders, stating the<PAGE>
place, date, time, and, in the case of special meetings, the
purpose or purposes of such meeting, shall be given to
titleholders entitled to vote at such meeting not less than ten,
nor more than sixty, days before the date of the meeting. All
such notices shall be given by mail or by other means reasonably
selected by or at the direction of the Board of Directors, the
President or the Secretary. Notices which shall be mailed shall
be deemed to be "given" when deposited in the United States mail
addressed to the stockholder at his or her address as it appears
on the records of the corporation, with postage prepaid, and any
notice transmitted other than by mail shall be deemed to have
been "given" when delivered either to the stockholder or to any
person reasonably requested to cause such notice to be
transmitted to such stockholder.
Section 2.4 Stockholders List. The corporation's
Secretary shall cause to be maintained a stock ledger of the
corporation. The corporation's Secretary shall cause to be made,
at least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, specifying the address of
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior
to the meeting, either at the corporation's headquarters or at
such other place as the corporation's Secretary shall reasonably
designate. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 2.5. Quorum. Except as otherwise provided by
statute or by the Certificate of Incorporation, a quorum shall be
deemed to be present at any meeting of stockholders for purposes
of any given matter to be voted upon at such meeting if such
meeting shall be attended by persons entitled (either personally
or by proxy) to vote stock representing a majority of the poten-
tial voting power with respect to such matter (as defined in
Section 2.9(c) of these bylaws). If a quorum shall not be
present for purposes of any given matter to be voted upon at any
meeting, the holders of the relevant stock (as defined in Section
2.9(d) of these bylaws) may, by the affirmative vote of a
majority of the voting power represented by such relevant stock,
adjourn the meeting insofar as it relates to the given matter to
another time and/or place. Unless the adjournment is for more
than thirty days or unless a new record date is set for the
adjourned meeting, no notice of the adjourned meeting need be
given to any stockholder provided that the time and place of the
adjourned meeting shall have been announced at the meeting at
which such adjournment shall have been taken. At the adjourned
meeting the corporation may transact any business which might
have been transacted at the original meeting, provided that no
business shall be transacted at such adjourned meeting on which
any class of stock is entitled to be voted which class shall not<PAGE>
have been permitted to participate in the vote to postpone the
meeting.
Section 2.6. Vote Required. When a quorum is present
at any meeting with respect to any given matter, a majority of
the voting power represented by the relevant stock (as defined in
Section 2.9(c) of these bylaws) shall be necessary and sufficient
to approve such matter, except that: (i) if the given matter is
one upon which by express provisions of an applicable statute or
of the Certificate of Incorporation a different vote is required,
such express provision shall govern and control the decision of
such question, and (ii) directors shall be elected by plurality
vote.
Section 2.7. Proxies. At all meetings of
stockholders, a stockholder may vote by proxy executed in writing
by the stockholder or by his duly authorized attorney in fact.
Such proxy shall be filed with the Secretary of the corporation
before commencement of the meeting or at such later time as shall
be expressly permitted by the corporate officer presiding at such
meeting. No proxy shall be valid after three years from the date
of its execution, unless otherwise provided in the proxy.
Section 2.8. Governing Rules. The President shall
preside at any meeting of any of the corporation's stockholders,
provided that if the President shall be unable or unwilling to so
preside, then a person designated by the Board of Directors shall
preside. The person presiding at any meeting of any of the
corporation's stockholders shall have the power to make rules and
decisions (i) as to whether and to what extent proxies presented
at the meeting shall be recognized as valid, (ii) as to the
procedure for taking and counting votes at such meeting, (iii) as
to procedures for the conduct of such meeting, and (iv) to
resolve any questions which may be raised at such meeting. The
person presiding at any meeting of any of the corporation's
stockholders shall have the right to delegate any of the powers
contemplated by this Section 2.8 to such other person or persons
as the person presiding deems desirable.
Section 2.9. Certain Definitions.
(a) Entitled to be Voted. A share in any given class
of the corporation's capital stock shall be deemed to be
"entitled to be voted" with respect to any given matter at any
meeting of the corporation's stockholders if (i) it shall be
outstanding at the record date for such meeting and (ii) stock in
such class shall have the right to be voted with respect to the
given matter at such meeting.
(b) Voting Power. The "voting power" of any share of
stock issued by the corporation with respect to any given matter
to be voted upon at any meeting of the corporation's stockholders
shall be equal to the size of the vote which such share would
entitle its owner of record at the regular date for such meeting<PAGE>
to cast at such meeting with respect to a given matter if such
record owner were present at such meeting. For example, with
respect to any matter on which the holders of Class A Common
Stock and Class B Common Stock are entitled to vote together and
neither the Class A Common Stock nor the Class B Common Stock is
entitled to vote as a separate class, the "voting power" of a
share of Class A Common Stock shall be one vote and the "voting
power" of a share of Class B Common Stock shall be four votes.
(c) Potential Voting Power. The "potential voting
power" with respect to any given matter to be voted upon at any
meeting of any of the corporation's stockholders shall be equal
to the aggregate voting power of all shares of stock entitled to
be voted with respect to such matter at such meeting.
(d) Relevant Stock. Stock issued by the corporation
shall be deemed to be "relevant stock" with respect to any given
matter to be voted upon at any meeting of any of the
corporation's stockholders if both (i) such stock is entitled to
be voted with respect to the given matter and (ii) one or more of
the persons attending the meeting in person or by proxy has a
right to vote such stock by reason of being the record holder of
such stock at the record date established for such meeting or by
reason of holding voting rights assigned by the record holder
entitled to vote such stock.
ARTICLE THREE
Directors
Section 3.1. General Powers. The business and
affairs of the corporation shall be managed by its Board of
Directors. The term "Board" whenever it is used in these bylaws
means the corporation's Board of Directors. In addition to the
powers and authorities expressly conferred upon it by these
bylaws, the Board of Directors may exercise all such powers of
the corporation and do all such lawful acts and things as are not
by statute or by the Certificate of Incorporation or by these
bylaws directed or required to be exercised or done by the
stockholders.
Section 3.2. Number of Directorship Positions.
(a) Number of Directors. Except as otherwise provided
in paragraph (b) of this Section 3.2, there shall be nine
positions on the corporation's Board of Directors.
(b) Board's Power to Alter The Number of Directors.
The corporation's Board of Directors shall have the power
(subject to any limitations prescribed by the Certificate of
Incorporation) by a resolution adopted by not less than a
majority of all directors serving on the Board at the time of
4<PAGE>
such adoption to alter at any time and from time to time the
number of total directorship positions on the Board. Upon the
adoption of any resolution in the manner provided in the
preceding sentence, the total number of directorship positions on
the corporation's Board of Directors shall be equal to the number
specified in such resolution. If the Board shall determine to
reduce the number of directorship positions, then the term of
each incumbent member shall end upon the election of directors at
the next annual meeting of stockholders of the corporation and
the persons elected to fill such reduced number of directorship
positions shall be deemed to be the successors to all persons who
shall have previously held such directorship positions.
Section 3.3. Regular Meetings. Regular meetings of
the Board of Directors may be held without notice at such time
and at such place as shall from time to time be determined by
resolution of the Board.
Section 3.4. Special Meetings. Special meetings of
the Board of Directors may be called by or at the request of the
President or any three directors. The person or persons who
call(s) an special meeting of the Board of Directors may fix the
time and place at which the meeting shall be held.
Section 3.5. Notice. Notice of any special meeting
shall be given at least twenty-four hours prior thereto if notice
is given directly to the director by telephone or in person or at
least two days prior thereto if notice is given by telegram,
telex or by any other method reasonably calculated to cause the
notice to be delivered within twenty-four hours after its
transmission or at least five days prior thereto if transmitted
by mail. If mailed, such notice shall be deemed to be "given"
when deposited in the United States mail addressed to the
director at either his business address or such other address as
the officer sending such notice shall reasonably believe
appropriate, with postage thereon prepaid. If notice be given by
telegram, telex, or other method reasonably calculated to reach
the director within twenty-four hours after its transmission,
such notice shall be deemed to be "given" when the notice so
addressed either is delivered to an independent company with
instructions for prompt transmission or is transmitted. Any
director may waive notice of any meeting by signing a written
waiver of notice either before or after the meeting. The
attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of
such meeting.
5<PAGE>
Section 3.6. Quorum. Except as otherwise provided in
the corporation's Certificate of Incorporation or by applicable
law, directors holding a majority of the positions on the Board
of Directors established pursuant to Section 3.2 of these bylaws
shall constitute a quorum for transaction of business at any
meeting of the Board of Directors; provided that if less than a
majority of such number of directors are present at any meeting,
a majority of the directors present may adjourn the meeting from
time to time without further notice until a quorum is obtained.
Section 3.7. Manner of Voting. Except as otherwise
provided by applicable law, in the corporation's Certificate of
Incorporation or in these bylaws, the affirmative vote by at
least a majority of the directors present at any meeting at which
a quorum shall be present shall be necessary and sufficient to
approve any action within the Board's power, and any action so
approved by such a majority shall be deemed to have been approved
by the Board of Directors. A director of the corporation who is
present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be conclusively presumed to
have asserted to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the
corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 3.8. Action by Directors Without a Meeting.
Any action required or permitted to be taken at any meeting of
the Board of Directors or any Board Committee may be taken
without a meeting if all members of the Board or Committee (as
the case may be) consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board
or Committee. In the event one or more positions on the Board or
any Board Committee shall be vacant at the time of the execution
of any such consent, such consent shall nevertheless be effective
if it shall be signed by all persons serving as members of the
Board or such Committee (as the case may be) at such time and if
the persons signing the consent would be able to take the action
called for by the consent at a properly constituted meeting of
the Board or such Committee (as the case may be).
Section 3.9. Compensation. No director who is an
employee of the corporation or any of its subsidiaries shall
receive any stated salary or fee for his service as director. A
director who is not an employee may receive such compensation for
his services as a director as is fixed by resolution of the
Board. Members of any Board or other Committee may receive such
compensation for their duties as committee members as is fixed by
resolution of the Board of Directors. All directors and members
6<PAGE>
of Board Committees shall be reimbursed for their expenses
reasonably incurred to attend meetings.
ARTICLE FOUR
Board Committees
Section 4.1. General.
(a) Establishment. The Board shall have the power to
establish committees consisting exclusively of directors of this
corporation and (subject to the limitations set forth in Section
4.1(d) of these bylaws) delegate to any such committee any power
exercisable by the Board of Directors, including without
limitation the power and authority to declare dividends and to
authorize the issuance of stock. The term "Board Committee" as
used in these bylaws means any committee comprised exclusively of
directors of the corporation which is identified as a "Board
Committee" either in these bylaws or in any resolutions adopted
by the Board.
(b) Membership. The Board shall have the power to:
(i) establish the number of membership positions on each Board
Committee from time to time and change the number of membership
positions on such Committee from time to time; (ii) appoint any
director to membership on any Board Committee who shall be
willing to serve on such Committee; (iii) remove any person from
membership on any Board Committee without cause; and (iv) appoint
any director to membership on any Board Committee as an alternate
member. A person s membership on any Board Committee shall
automatically terminate when such person ceases to be a director
of the corporation.
(c) Powers. Except as otherwise provided in Section
4.1(d) of these bylaws, each Board Committee shall have and may
exercise all the powers and authority of the Board of Directors
in the management of the business and affairs of the corporation
to the extent (but only to the extent) such powers shall be
expressly delegated to it by the Board or by these bylaws.
(d) Reserved Powers. No Board Committee shall have
the right or power to: amend the Certificate of Incorporation;
adopt an agreement of merger or consolidation; recommend to the
stockholders the sale, lease or exchange of all or substantially
all of the corporation's property and assets; recommend to the
stockholders a dissolution of the corporation or a revocation of
a dissolution; amend the bylaws of the corporation; amend, alter
or repeal any resolution adopted by the Board which by its terms
precludes such action by such Committee; or take any action
contrary to an express directive issued by the Board.
7<PAGE>
(e) Vote Required. The members holding at least a
majority of the positions on any Board Committee shall constitute
a quorum for purposes of any meeting of such committee. The
affirmative vote of members holding at least a majority of the
positions on any Board Committee shall be necessary and
sufficient to approve any action within the Committee s power,
and any action so approved by such a majority shall be deemed to
have been taken by the Committee and to be the act of such
Committee.
(f) Governance. The Board may designate the person
who is to serve as chairman of any Board Committee, and in the
absence of any such designation by the Board, the members of the
Committee may either designate one member of the Committee as its
chairman or elect to operate without a chairman. Each Board
Committee may appoint a Secretary who need not be a member of the
Committee or a member of the Board. Each Board Committee shall
have the right to establish such rules and procedures governing
its meetings and operations as such Committee shall deem
desirable provided such rules and procedures shall not be
inconsistent with the Certificate of Incorporation, these bylaws,
or any direction to the Committee issued by the Board.
(f) Alternate Committee Members. The Board may
designate one or more directors as alternate members of any Board
Committee, and any such director may replace any regular member
of such Board Committee who for any reason is absent from a
meeting of such Board Committee or is otherwise disqualified from
serving on such Board Committee.
Section 4.2. Executive Committee.
(a) Authorization. The corporation shall have an
Executive Committee. The Executive Committee shall be a Board
Committee and shall be subject to the provisions of Section 4.1
of these bylaws.
(b) Duties. The Executive Committee shall assist the
Board in developing and evaluating general corporate policies and
objectives. The Executive Committee shall perform such specific
assignments as shall be expressly delegated to it from time to
time by the Board of Directors and shall (subject to the
limitations specified in Section 4.1(d) of these bylaws or
imposed by law) have the power to exercise fully the powers of
the Board except to the extent expressly limited or precluded
from exercising such powers in resolutions from time to time
adopted by the Board.
(c) Membership. Membership on the Executive Committee
shall be determined from time to time by the Board in accordance
with the provisions of Section 4.1(b) of these bylaws.
8<PAGE>
(d) Meetings. Meetings of the Executive Committee
may be called at any time by any two members of the Committee.
The time and place for each meeting shall be established by the
members calling the meeting.
Section 4.3 Audit Committee.
(a) Authorization. The corporation shall have an
Audit Committee. The Audit Committee shall be a Board Committee
and shall be subject to the provisions of Section 4.1 of these
bylaws.
(b) Duties. The Audit Committee shall: (i) recommend
to the Board of Directors annually a firm of independent public
accountants to act as auditors of the corporation; (ii) review
with the auditors in advance the scope of their annual audit;
(iii) review with the auditors and the management, from time to
time, the corporation's accounting principles, policies, and
practices and its reporting policies and practices; (iv) review
with the auditors annually the results of their audit; (v) review
from time to time with the auditors and the corporation's
financial personnel the adequacy of the corporation's accounting,
financial and operating controls; (vi) review all transactions
between the corporation or any subsidiary of the corporation and
any stockholder who holds at least fifty percent of the total
number of shares outstanding of the corporation's Class A Common
Stock or Class B Common Stock (a "Controlling Shareholder") or
any subsidiary of such Controlling Shareholder on at least an
annual basis in accordance with policies adopted by the Board;
and (vii) perform such other duties as shall from time to time be
delegated to the Committee by the Board.
(c) Membership. The membership of the Audit Committee
shall always be such that all of the members of the Audit
Committee shall not be full-time employees of any Controlling
Shareholder, the corporation or any of their respective
subsidiaries. Within the limitations prescribed in the preceding
sentence, the membership on the Committee shall be determined by
the Board as provided in Section 4.1 of these bylaws.
ARTICLE FIVE
Officers
Section 5.1 Corporate and Divisional Officers. The
corporate officers of the corporation shall be chosen by the
Board of Directors and shall consist of a Chairman of the Board,
a Vice Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers and
assistant officers as may be deemed necessary or desirable by the
Board. In its discretion, the Board of Directors may choose not
9<PAGE>
to fill any office for any period as it may deem advisable,
[provided that at all times one or more officers shall be elected
or appointed with the authority (irrespective of title) to carry
out all responsibilities of the President, Treasurer and
Secretary required by law]. The Chairman of the Board, the Vice
Chairman of the Board, and the President must be members of the
Board of Directors but no other officer need be a member of the
Board. Any number of offices may be held by the same person. In
addition to the corporate officers, the Board of Directors or the
chief executive officer may appoint divisional officers having a
title which indicates that the divisional officer's authority and
responsibilities are limited to a designated operation division
of the corporation. Divisional officers shall have such duties
and responsibilities as the Board of Directors or the corporate
officers shall determine. Any person may hold more than one
corporate and/or divisional office.
Section 5.2. Appointment and Term of Office. The
corporate officers of the corporation shall be appointed annually
by the Board of Directors at its first meeting following the
annual meeting of stockholders. If the appointment of officers
shall not be held at such meeting, such appointment shall be held
as soon thereafter as conveniently may be. Vacancies in cor-
porate offices may be filled and new offices may be created and
filled at any meeting of the Board of Directors. Divisional
officers may be appointed at any time. Each officer shall hold
office until the earlier of: (i) the time at which a successor is
duly appointed and qualified or (ii) his or her death, resig-
nation or removal as hereinafter provided. In case of the
absence of any officer of the corporation, or for any other
reason that the Board may deem sufficient, the Board may dele-
gate, for the time being, the powers or duties, or any of them,
of such officer to any other officer, or to any director. The
Board shall have the right to enter into employment contracts
providing for the employment of any officer for a term longer
than one year, but no such contract shall preclude the Board from
removing any person from any position with the corporation
whenever in the Board's judgment the best interests of the
corporation would be served thereby.
Section 5.3. Removal. Any officer or agent may be
removed by the Board at any time with or without cause, and any
divisional officer may be removed by the chief executive officer,
but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Appointment shall not
of itself create contract rights.
Section 5.4. General Powers of Officers. The chief
executive officer of the corporation shall, subject to the
control of the Board of Directors, in general supervise and
control all of the business and affairs of the corporation and
shall have all the authority and shall perform all duties
10<PAGE>
incident to the office of chief executive officer. The Board of
Directors may designate any of the Chairman of the Board, the
Vice Chairman of the Board or the President as the chief
executive officer of the corporation, and in the absence of such
designation the President shall be the chief executive officer of
the corporation. For purposes of these bylaws, the corporate
Chairman of the Board, the Vice Chairman of the Board, the
President and each corporate Vice President shall be deemed to be
a "senior officer." Whenever any resolution adopted by the
corporation's stockholders, Board of Directors or Board Committee
shall authorize the "proper officers" of the corporation to
execute any note, contract or other document or to take any other
action or shall generally authorize any action without specifying
the officer or officers authorized to take such action, any
senior officer acting alone and without countersignatures may
take such action on behalf of the corporation. Any officer of
the corporation may on behalf of the corporation sign contracts,
reports to governmental agencies, or other instruments which are
in the regular course of business (provided that, in the case of
divisional officers, such items relate to such officer's divi-
sion), except where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these bylaws
to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed.
Section 5.5. The Chairman and the Vice Chairman. The
Chairman of the Board shall preside at all meetings of the Board
of Directors and consult with the Vice Chairman of the Board and
the President regarding corporate policies and have such other
duties as may be assigned to him by the Board. The Vice Chairman
of the Board shall consult with the Chairman and the President
regarding corporate policies and shall have such other duties as
shall be assigned to him by the Board or the chief executive
officer (if other than the Vice Chairman) of the Corporation. In
the absence of the Chairman of the Board, the Vice Chairman of
the Board shall preside at meetings of the Board of Directors.
Section 5.6. The President. The corporate President
shall, when present, preside at all meetings of the stockholders,
shall consult with the Chairman of the Board and the Vice Chair-
man of the Board regarding corporate policies and in general
shall perform all duties incident to the office of President and
have such other duties as may be prescribed by the Board of
Directors or the chief executive officer (if the President is not
the Chief Executive Officer) from time to time.
Section 5.7. Vice Presidents. Each corporate Vice
President shall perform such duties and have such powers as the
Board of Directors may from time to time prescribe. The Board of
Directors may designate any vice president as being senior in
rank or degree of responsibility and may accord such a Vice
President an appropriate title designating his senior rank such
11<PAGE>
as "Executive Vice President" or "Senior Vice President" or
"Group Vice President." The Board of Directors may assign a
certain corporate Vice President responsibility for designated
group, division or function of the corporation's business and add
an appropriate descriptive designation to his title.
Section 5.8. Secretary.
(a) The Secretary. The Secretary shall (subject to
the control of the Board): (i) keep the minutes of the
stockholders, and the Board of Directors' meetings in one or more
books provided for that purpose; (ii) see that all notices are
duly given in accordance with the provisions of these bylaws or
as required by law; (iii) be custodian of the corporate records
and of the seal of the corporation and see that the seal of the
corporation is affixed to all documents, the execution of which
on behalf of the corporation under its seal is duly Authorized;
(iv) keep or cause to be kept a register of the post office
address of each stockholder which shall be furnished to the
Secretary by such stockholder; (v) have general charge of the
stock transfer books of the corporation; (vi) supply in such
circumstances as the Secretary deems appropriate to any
governmental agency or other person a copy of any resolution
adopted by the corporation's stockholders, Board of Directors or
Board Committee, any corporate record or document, or other
information concerning the corporation and its officers and
certify on behalf of the corporation as to the accuracy and
completeness of the resolution, record, document or information
supplied; and (vii) in general, perform all duties incident to
the office of Secretary and perform such other duties and have
such other powers as the Board of Directors or the chief
executive officer may from time to time prescribe.
(b) Assistant Secretary. Each Assistant Secretary
shall (subject to the direction of the Board of Directors and the
Secretary) assist the Secretary in the performance of the
Secretary's duties and be entitled to exercise the powers of the
Secretary. Any person dealing with the corporation shall have
the right to presume (in the absence of actual notice to the
contrary) that each Assistant Secretary is entitled to exercise
the powers of the Secretary.
Section 5.10. Treasurer.
(a) The Treasurer. The Treasurer shall: have charge
and custody of and be responsible for all funds and securities of
the corporation; receive and give receipts for monies due and
payable to the corporation from any source whatsoever, and
deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected
by or under authority of the Board of Directors; and, in general,
perform all of the duties incident to the office of Treasurer and
12<PAGE>
such other duties as from time to time may be assigned to him by
the chief executive officer. The Treasurer shall give a bond if
required by the Board of Directors for the faithful discharge of
his duties in a sum and with one or more sureties satisfactory to
the Board.
(b) Assistant Treasurer. Each Assistant Treasurer
shall (subject to the direction of the vice President-Finance and
Treasurer) assist the Treasurer in the performance of the
Treasurer's duties and be entitled to exercise the powers of the
Treasurer. Each person dealing with the corporation shall have
the right to presume (in the absence of actual notice to the
contrary) that each Assistant Treasurer is entitled to exercise
the powers of the Treasurer.
ARTICLE SIX
Indemnity
Section 6.1. Each officer and director shall be
entitled to indemnification as provided in the corporation's
Certificate of Incorporation, and the Board of Directors, or any
duly authorized Board Committee, shall have the power to provide
such additional indemnification, whether through specific action,
by contract or otherwise, to officers, directors, employees and
agents of the corporation as may be deemed desirable or
appropriate under the circumstances.
ARTICLE SEVEN
Corporate Stock
Section 7.1. Certificates for Shares. Certificates
representing shares of any class of stock issued by the
corporation (herein called "corporate shares") shall be in such
form as may be determined by the Board of Directors. Such
certificates shall be signed by the President and shall be
countersigned by the Secretary and shall be sealed with the seal,
or a facsimile of the seal, of the corporation. If a certificate
is countersigned by a transfer agent or registrar, other than the
corporation itself or its employees, any other signature or
countersignature on the certificate may be a facsimile. In case
any officer of the corporation, or any officer or employee of the
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate ceases to be an
officer of the corporation, or an officer or employee of the
transfer agent or registrar before such certificate is issued,
the certificate may be issued by the corporation with the same
effect as if the officer of the corporation, or the officer or
employee of the transfer agent or registrar had not ceased to be
13<PAGE>
such at the date of its issue. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of
the person to whom the shares represented thereby are issued,
with the number of shares and date of issue, shall be entered on
the books of the corporation. All certificates surrendered to
the corporation for transfer shall be canceled, and no new
certificate shall be issued in replacement until the former
certificate for a like number of shares shall have been
surrendered and canceled, except as otherwise provided in Section
7.4 with respect to lost, destroyed or mutilated certificates.
Section 7.2. Transfer Agent and Registrar. The Board
of Directors may from time to time with respect to each class of
stock issuable by the corporation appoint such transfer agents
and registrars in such locations as it shall determine, and may,
in its discretion, appoint a single entity to act in the capacity
of both transfer agent and registrar in any one location.
Section 7.3. Transfers of Shares. Transfers of
corporate shares shall be made only on the books maintained by
the corporation or a transfer agent appointed as contemplated by
Section 7.2 at the request of the holder of record thereof or of
his attorney, lawfully constituted in writing, and on surrender
for cancellation of the certificate for such shares. The
corporation may (but shall not be required to) treat the person
in whose name corporate shares stand on the books of the
corporation as the only person having any interest in such shares
and as the only person having the right to receive dividends on
and to vote such shares, and the corporation shall not be bound
to recognize any equitable or other claim to or interest in such
shares on the part of the other person, whether or not it shall
have express or other notice thereof.
Section 7.4. Lost Certificates. The Board of
Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the
person requesting such new certificate or certificates, or his or
her legal representative, to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 7.5. Dividends. Dividends upon the capital
stock of the corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to
14<PAGE>
law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate
of Incorporation.
ARTICLE EIGHT
General Provisions
Section 8.1. Fiscal Year. The fiscal year of the
corporation shall begin on the first day of January and end on
the last day of December in each year.
Section 8.2. Seal. The corporate seal shall have
inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware." The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
Section 8.3. Voting Securities Issued By Another
Corporation. Voting securities in any other corporation held by
the corporation shall be voted by the President or any Vice
President, unless the Board of Directors specifically confers
authority to vote with respect thereto (which may be general or
confined to specific instances) upon some other person or
officer. Any person authorized to vote securities shall have the
power to appoint proxies, with general power of substitution.
ARTICLE NINE
Amendments
These bylaws may be amended, altered, or repealed and
new bylaws adopted by the affirmative vote of directors
constituting at least a majority of the number of directors then
constituting the entire Board. The corporation's stockholders
shall have the power to amend, alter or repeal these bylaws and
to adopt new bylaws in the manner provided in the corporation's
Certificate of Incorporation.
ARTICLE TEN
Delaware Corporation Law Section 203
The Corporation expressly elects not to be governed by
203 of the General Corporation Law of Delaware. The bylaw
amendment adopting this provision shall not be further amended by
the Board of Directors except to the extent permitted by the
General Corporation Law of Delaware.
15<PAGE>
16<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
WARRANT AGREEMENT
BETWEEN
A.L. PHARMA INC.
AND
THE FIRST NATIONAL BANK OF BOSTON,
WARRANT AGENT
WARRANTS TO PURCHASE CLASS A COMMON STOCK
October 3, 1994<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
This WARRANT AGREEMENT (the "Agreement") is dated as of October
3, 1994, between A.L. PHARMA INC., a Delaware corporation (the
"Company"), and THE FIRST NATIONAL BANK OF BOSTON, a national
banking association, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue Warrants (the "Warrants")
entitling the holders to purchase an aggregate of up to three
million, six hundred thousand (3,600,000) shares ("Shares") of
the Company's Class A Common Stock, $.20 par value (the "Class A
Common Stock"); and
WHEREAS, the Warrant Agent, at the request of the Company, has
agreed to act as the agent of the Company in connection with the
issuance, registration, transfer, exchange and exercise of
Warrants;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company
hereby appoints the Warrant Agent to act as agent for the Company
in accordance with the instructions hereinafter set forth; and
the Warrant Agent hereby accepts such appointment, upon the terms
and conditions hereinafter set forth.
Section 2. Amount Issued. Subject to the provisions of
this Agreement, Warrants to purchase no more than three million,
six hundred thousand (3,600,000) Shares may be issued and
delivered by the Company hereunder.
Section 3. Form of Warrant Certificates. The certificates
evidencing the Warrants (the "Warrant Certificates") to be
delivered pursuant to this Agreement shall be in registered form
only. The Warrant Certificates and the forms of election to
purchase Shares and of assignment to be printed on the reverse
thereof shall be in substantially the form set forth in Exhibit A
hereto together with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with any law or with any
rules made pursuant thereto or with any rules of any securities
exchange, any agreement between the Company and any
Warrantholder, or as may, consistently herewith, be determined by
the officers executing such Warrants, as evidenced by their
execution of the Warrants.
Section 4. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its
- 1 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
Chairman of the Board of Directors, its President, a Vice
President or its Treasurer and attested by its Secretary or
Assistant Secretary, under its corporate seal. Each such
signature upon the Warrant Certificates may be in the form of a
facsimile signature of the current or any future Chairman of the
Board, President, Vice President, Treasurer, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced
on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall
have been Chairman of the Board, President, Vice President,
Treasurer, Secretary or Assistant Secretary, notwithstanding the
fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of such person shall have
ceased to hold such office. The seal of the Company may be in
the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
If any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the
Warrant Certificates so signed shall have been countersigned by
the Warrant Agent or disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or
disposed of as though such person had not ceased to be such
officer of the Company; and any Warrant Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although
at the date of the execution of this Agreement any such person
was not such officer.
Section 5. Registration and Countersignature. Warrant
Certificates shall be manually countersigned and dated the date
of countersignature by the Warrant Agent and shall not be valid
for any purpose unless so countersigned. The Warrants shall be
numbered and shall be registered in a register (the "Warrant
Register") to be maintained by the Warrant Agent.
The Warrant Agent's countersignature on all Warrants shall
be in substantially the form set forth in Exhibit A hereto.
The Company and the Warrant Agent may deem and treat the
registered holder of a Warrant Certificate as the absolute owner
thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone), for the purpose of any exercise
thereof or any distribution to the holder thereof and for all
other purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.
Section 6. Registration of Transfers and Exchanges. No
Warrant may be transferred prior to the Restricted Period
Termination Date except in a Permitted Transfer. Prior to the
Restricted Period Termination Date, the Warrant Agent shall not
- 2 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
register the transfer of any outstanding Warrant Certificate
except a Permitted Transfer. Following the Restricted Period
Termination Date until the Close of Business on the Expiration
Date (as hereinafter defined), the Warrant Agent shall from time
to time register the transfer of any outstanding Warrant
Certificates in the Warrant Register, upon surrender of such
Warrant Certificates, duly endorsed, and, if not surrendered by
or on behalf of an original holder of Warrants or a Permitted
Transferee accompanied by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, duly signed
by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly authorized
attorney, such signature to be guaranteed by (a) a bank or trust
company, (b) a broker or dealer that is a member of the National
Association of Securities Dealers, Inc. (the "NASD"), (c) a
member of a national securities exchange or (d) by an "eligible
guarantor institution" as defined under Rule 17Ad-15 promulgated
under the Securities Exchange Act of 1934, as amended. Upon any
such registration of transfer, a new Warrant Certificate shall be
issued to the transferee. For purposes of this Agreement the
"Restricted Period Termination Date" shall be the earlier of
October 3, 1995 or the date on which a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act"), covering the Warrants and Shares shall have been declared
effective by the Securities and Exchange Commission (the "SEC"),
and such other action as may be required by federal or state law
relating to the issuance or distribution of securities shall have
been taken, except that with respect to Warrants issued to or
held by Einar W. Sissener or A/S Swekk or holders who acquire
such warrants from Einar W. Sissener or A/S Swekk in a Permitted
Transfer, the Restricted Period Termination Date shall be
October 3, 1997. For purposes of this Agreement a "Permitted
Transfer" shall be any of the following: (i) a transfer by
operation of law, (ii) a transfer pursuant to applicable laws of
descent and distribution, and (iii) a transfer to the owners of
an entity holder upon the liquidation of such entity; provided,
however, that the restrictions contained in this Section 6 and
elsewhere in this Agreement shall continue in effect with respect
to any Warrant in the hands of the transferee of a Permitted
Transfer. For purposes of this Agreement, the term "Permitted
Transferee" shall mean any holder who acquired Warrants in a
Permitted Transfer.
Warrant Certificates may be exchanged at the option of the
holder or holders thereof, when surrendered to the Warrant Agent
at its offices or agency maintained in New York, New York (or at
such other offices or agencies as may be designated by the Agent)
for the purpose of exchanging, transferring and exercising the
Warrants (a "Warrant Agent Office,") or at the offices of any
successor Warrant Agent as provided in Section 18 hereof, for
another Warrant Certificate or other Warrant Certificates of like
- 3 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
tenor and representing in the aggregate a like number of
Warrants.
The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 5 and of this Section
6, and deliver the new Warrant Certificates required pursuant to
the provisions of this Section, and for the purpose of any
distribution of Warrant Certificates contemplated by Section 13.
For purposes of this Agreement, "Affiliate" or "affiliate"
means, with respect to any person, (i) any other person or entity
controlling, controlled by or under common control with such
person, and (ii) any officer, director, partner, trustee,
beneficiary or employee of any person referred to in clause (i)
above.
Section 7. Duration and Exercise of Warrants. The Warrants
shall expire at (a) 5:00 p.m. New York City Time (the "Close of
Business") on January 3, 1999 or (b) the Close of Business on
such later date as shall be determined in the sole discretion of
the Company in a written statement to the Warrant Agent and with
notice to registered holders of Warrants in the manner provided
for in Section 15 (such date of expiration being hereinafter
referred to as the "Expiration Date"). The Warrants shall not be
exercisable prior to the Restricted Period Termination Date. At
such time as the Warrants become exercisable, and thereafter
until the Close of Business on the Expiration Date, the Warrants
may be exercised on any business day. After the Close of
Business on the Expiration Date, the Warrants will become void
and of no value.
Subject to the provisions of this Agreement, including
Section 13, each Warrant shall entitle the holder thereof to
purchase from the Company (and the Company shall issue and sell
to such holder of a Warrant) one fully paid and nonassessable
Share at the price of $21.9450 (U.S.) (such price, as may be
adjusted from time to time as provided in Section 13, being the
"Exercise Price"). The holder of a Warrant shall exercise such
holder's right to purchase Shares by depositing with the Warrant
Agent at a Warrant Agent Office the Warrant Certificate
evidencing such Warrant, with the form of election to purchase on
the reverse thereof duly completed and signed by the registered
holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, such
signature (if not signed by or on behalf of an original holder of
Warrants or a Permitted Transferee) to be guaranteed in the
manner described in Section 6 hereof, and paying to the Warrant
Agent in lawful money of the United States of America by wire
transfer of immediately available funds or by certified check or
official bank check an amount equal to the Exercise Price
multiplied by the number of Shares in respect of which such
Warrants are being exercised.
- 4 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
Subject to Section 9, upon such surrender of a Warrant
Certificate and payment of the Exercise Price, the Warrant Agent
shall requisition from the Company's Class A Common Stock
transfer agent (the "Transfer Agent") for issuance and delivery
to or upon the written order of the registered holder of such
Warrant Certificate and in such name or names as such registered
holder may designate, a certificate or certificates for the Share
or Shares issuable upon the exercise of the Warrant or Warrants
evidenced by such Warrant Certificate. Such certificate or
certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become
the holder of record of such Share or Shares as of the date of
the surrender of such Warrant Certificate duly executed and
payment of the aggregate Exercise Price. The Warrants evidenced
by a Warrant Certificate shall be exercisable, at the election of
the registered holder thereof, either as an entirety or from time
to time for a portion of the number of Warrants specified in the
Warrant Certificate. If less than all of the Warrants evidenced
by a Warrant Certificate surrendered upon the exercise of
Warrants are exercised at any time prior to the Expiration Date,
a new Warrant Certificate or Certificates shall be issued for the
number of Warrants evidenced by the Warrant Certificate so
surrendered that have not been exercised, and the Warrant Agent
is hereby authorized to countersign such new Warrant Certificate
or Certificates pursuant to the provisions of Section 6 and this
Section 7.
The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay or deliver to
the Company all moneys and other consideration received by it
upon the purchase of Shares through the exercise of Warrants.
Section 8. Cancellation of Warrants. If the Company shall
purchase or otherwise acquire Warrants, the Warrant Certificates
representing such Warrants shall thereupon be delivered to the
Warrant Agent and be cancelled by it and retired. The Warrant
Agent shall cancel all Warrant Certificates surrendered for
exchange, substitution, transfer or exercise in whole or in part.
Warrant Certificates so cancelled shall be delivered by the
Warrant Agent to the Company from time to time upon request.
Section 9. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
Warrants and of Shares upon the exercise of Warrants; provided,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Shares
in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, and the
Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of
- 5 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
such tax or shall have established to the satisfaction of the
Company that such tax has been paid or adequate provision has
been made for the payment thereof.
Section 10. Mutilated or Missing Warrant Certificates. If
any of the Warrant Certificates shall be mutilated, lost, stolen
or destroyed, the Company may in its discretion issue, and the
Warrant Agent shall countersign and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and representing an equivalent number of Warrants,
but only upon receipt of evidence satisfactory to the Company and
the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity or bond, if requested, also
satisfactory to them. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company
or the Warrant Agent may prescribe.
Section 11. Reservation of Shares. For the purpose of
enabling it to satisfy any obligation to issue Shares upon
exercise of Warrants, the Company will at all times through the
Close of Business on the Expiration Date, reserve and keep
available, free from preemptive rights and out of its aggregate
authorized but unissued or treasury shares of Class A Common
Stock, the number of Shares deliverable upon the exercise of all
outstanding Warrants, and the Transfer Agent is hereby
irrevocably authorized and directed at all times to reserve such
number of authorized and unissued or treasury shares of Class A
Common Stock as shall be required for such purpose. The Company
will keep a copy of this Agreement on file with such Transfer
Agent and with every transfer agent for any shares of the
Company's capital stock issuable upon the exercise of Warrants
pursuant to Section 12. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from such Transfer
Agent stock certificates issuable upon exercise of outstanding
Warrants, and the Company will supply such Transfer Agent with
duly executed stock certificates for such purpose.
Before taking any action that would cause an adjustment
pursuant to Section 13 reducing the Exercise Price below the then
par value (if any) of the Shares issuable upon exercise of the
Warrants, the Company will take any corporate action that may, in
the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable Shares at the Exercise Price as so adjusted.
The Company covenants that all Shares issued upon exercise
of the Warrants will, upon issuance in accordance with the terms
of this Agreement, be fully paid and nonassessable and free from
- 6 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
all liens, charges and security interests created by or imposed
upon the Company with respect to the issuance thereof.
Section 12. Registration of Warrants and Shares and Stock
Exchange Listings; Prospectus Delivery. (a) The Company will
file with the SEC and use its best efforts to have declared
effective by the first anniversary of the issuance of the
Warrants a registration statement, on Form S-3 or such other form
as is then available for such use by the Company, covering all
Warrants and the Shares. The Company will use it best efforts to
keep such registration statement continuously effective from the
date on which it is first declared effective by the SEC through
the Close of Business ten (10) business days following the
Expiration Date; provided however, that if the Company has
received a written request from any person who in the judgment of
the Company may be deemed to be an affiliate of the Company, (as
that term is defined in Rule 144 promulgated under the Securities
Act) prior to the Expiration Date that any Shares acquired as the
result of the exercise of a Warrant are owned or deemed to be
owned by such affiliate and that such Shares will be owned or
will be deemed to be owned by such affiliate on and after the
Expiration Date, then the Company shall use its best efforts to
keep the registration statement provided for by this Section 12
effective for so long as necessary to permit sales of such Shares
to be made by such affiliate but in no event longer than the
second anniversary of the Expiration Date. So long as any
unexpired Warrants remain outstanding and if required in order to
comply with the Securities Act, the Company agrees that it will
file such post-effective amendments to the registration statement
provided for in this Section 12. So long as any Warrants remain
outstanding (and so long as necessary to permit affiliates to
sell Shares in the circumstances and subject to the limitations
described in the second preceding sentence), the Company will
take all necessary action (a) to obtain and keep effective any
and all permits, consents and approvals of government agencies
and authorities and to make filings under federal and state
securities acts and laws, which may be or become necessary in
connection with the issuance, sale, transfer and delivery of the
Warrant Certificates, the exercise of the Warrants and the
issuance, sale, transfer and delivery of the Shares issued upon
exercise of Warrants, and (b) to have the Warrants (no later than
the first anniversary of the issuance of the Warrants) and the
Shares (immediately upon their issuance upon exercise of
Warrants) listed for trading or quotation on the New York Stock
Exchange or, if such listing is in the opinion of the Company
impracticable, on one of the following securities exchanges or
securities markets, as the board of directors of the Company
deems appropriate to facilitate the trading of the Warrants: (i)
another national securities exchange; (ii) quotation on the
National Association of Security Dealers Automated Quotations
system ("NASDAQ") or the National Association of Security Dealers
- 7 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
Automated Quotation/National Market System ("NASDAQ/NMS"); or
(iii) such other over-the-counter quotation system.
(b) On the date of its effectiveness and on the date of any
Warrant sale or exercise, the Registration Statement will comply
in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder; on the
date of its effectiveness, the Registration Statement will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, the
final prospectus contained in the Registration Statement, if not
filed pursuant to rule 424(b), will not, and on the date of any
filing pursuant to rule 424(b) and upon the date of any Warrant
sale or exercise or any resale by an affiliate, such final
prospectus (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Company will indemnify and hold harmless, to the
fullest extent permitted by law, the holders of Warrants and
Shares and each person, if any, who controls each such holder
within the meaning of the Securities Act, from and against any
and all losses, damages, claims, liabilities, joint or several,
costs and expenses (including any amounts paid in any settlement
effected with the Company's consent) to which the holders or any
such controlling person may become subject under the Securities
Act, state securities or blue sky laws, common law or otherwise,
insofar as such losses, damages, claims, liabilities (or actions
or proceedings in respect thereof), costs or expenses arise out
of or are based upon (x) any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement or included prospectus, as amended or supplemented, or
(y) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they
are made, not misleading, and the Company will reimburse the
holders and each such controlling person of the holders promptly
upon demand for any reasonable legal or any other expenses
incurred by them in connection with investigating, preparing to
defend or defending against or appearing as a third-party witness
in connection with such loss, claim, damage, liability, action or
proceeding; provided, however, that the Company will not be
liable to any holder in any such case to the extent, but only to
the extent, that any such loss, damage, liability, cost or
expenses arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made
in conformity with information about such holder furnished by
such holder or such controlling persons for use in the
preparation thereof, provided further, that the Company shall not
- 8 -<PAGE>
be liable to any person who participates as an underwriter, in
the offering or sale of Registrable Securities or to any other
person, if any, who controls such underwriter, within the meaning
of the Securities Act, in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such person's failure
to send or give a copy of the final prospectus prepared by the
Company and made available to such persons, as the same may be
then supplemented or amended, to the person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such person if such statement or
omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of any holder or any
controlling person of the holder, and shall survive the transfer
of such securities by the holder. In the event that indemnity is
not available, the Company agrees to contribute to any and all
losses based on the relative faults of the parties involved as
well as other equitable factors which may be appropriate.
(d) Each holder of Warrants or Shares covered by any
registration statement contemplated by this Section 12 will
severally indemnify and hold harmless to the fullest extent
permitted by law, the Company and each person, if any, who
controls the Company within the meaning of the Securities Act,
from and against any and all losses, damages, claims,
liabilities, joint or several, costs and expenses (including any
amounts paid in any settlement effected with such holder's
consent) to which the Company or any such controlling person may
become subject under the Securities Act, state securities or blue
sky laws, common law or otherwise, insofar as such losses,
damages, claims, liabilities (or actions or proceedings in
respect thereof), costs or expenses arise out of or are based
upon (x) any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or included
prospectus, as amended or supplemented, or (y) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not
misleading, or (z) the failure of such holder to send or give a
copy of the final prospectus prepared by the Company and made
available to such holder to any person, and such holder will
reimburse the Company and each such controlling person of the
Company promptly upon demand for any reasonable legal or any
other expenses incurred by them in connection with investigating,
preparing to defend or defending against or appearing as a third-
party witness in connection with such loss, claim, damage,
liability, action or proceeding to the extent, but only to the
extent, that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in
- 9 -<PAGE>
conformity with information about such holder furnished by such
holder or such controlling persons for use in the preparation of
such registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto. Each holder, by
accepting delivery of any Warrant, agrees to be bound by the
provisions of this Section 12(d). Such indemnity shall remain in
full force and effect regardless of any investigation made by or
on behalf of the Company or any controlling person of the
Company. In the event that indemnity is not available, each such
holder severally agrees to contribute to any and all losses based
on the relative faults of the parties involved as well as any
other equitable factors which may be appropriate.
(e) If requested by the original holders of not less than
25% of the outstanding Warrants, the Company and such holders
shall enter into an underwriting agreement with an investment
banking firm containing customary representations, warranties and
provisions relating to indemnification and contribution. In
addition, the Company shall use its reasonable efforts to
cooperate with such investment banking firm to facilitate any
such offering.
(f) The Company shall make available to the holders of
Warrants copies of the prospectus so that such holders may comply
with their prospectus delivery requirements.
(g) The Company shall pay all out-of-pocket expenses
incurred in connection with the Registration Statement including,
without limitation, all SEC and blue sky registration and filing
fees, printing expenses, transfer agents' and registrars' fees,
fees and disbursements of the Company's and the Warrant holders'
counsel (provided however that the Warrant holders are only
entitled to one counsel as a group selected by the holders of a
majority of the Shares) and accountants and fees and
disbursements of experts used by the Company in connection with
such registration, provided, that the Company shall not be
required to pay any underwriting discounts or commissions.
(h) The provisions of this Section 12 are for the benefit
of the holders of Warrants and persons who may be deemed to be
affiliates of the Company acquiring Shares upon the exercise of
Warrants and shall survive the expiration and/or exercise of the
Warrants.
Section 13. Adjustment of Exercise Price and Number of
Shares Purchasable or Number of Warrants. The Exercise Price,
the number of Shares purchasable upon the exercise of each
Warrant and the number of Warrants outstanding are subject to
adjustment from time to time upon the occurrence of the events
enumerated in this Section 13.
- 10 -<PAGE>
(a) If the Company shall (i) pay a dividend on its shares
of Class A Common Stock in shares of either Class A Common Stock
or shares of the Company's Class B Common Stock, $.20 par value,
(ii) subdivide its outstanding shares of Class A Common Stock,
(iii) combine its outstanding shares of Class A Common Stock into
a smaller number of shares of Class A Common Stock or
(iv) reclassify the Class A Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation), the number of
Shares purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the holder of each
Warrant shall be entitled upon exercise to receive the kind and
number of Shares or other securities of the Company which such
holder would have owned or have been entitled to receive after
the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment
made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to
the record date, if any, for such event. In addition, in the
event of any reclassification of the Class A Common Stock,
references in this Agreement to Class A Common Stock shall
thereafter be deemed to refer to the securities into which the
Class A Common Stock shall have been reclassified.
(b) If the Company shall issue rights, options or warrants
to all holders of its outstanding Class A Common Stock entitling
them for a period of 45 days or less to subscribe for or purchase
shares of Class A Common Stock at a price per share that is lower
than the market price per share of Class A Common Stock (as
defined in paragraph (f) below) as of the record date mentioned
below, the number of Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the
number of Shares theretofore purchasable upon exercise of each
Warrant by a fraction, (i) the numerator of which shall be the
number of shares of Class A Common Stock outstanding on the date
of issuance of such rights, options or warrants plus the number
of additional shares of Class A Common Stock offered for
subscription or purchase, and (ii) the denominator of which shall
be the number of shares of Class A Common Stock outstanding on
the date of issuance of such rights, options or warrants plus the
number of shares which the aggregate offering price of the total
number of shares of Class A Common Stock so offered would
purchase at the market price per share of Class A Common Stock at
such record date (the date of computation referenced in paragraph
(f) below). Such adjustment shall be made whenever such rights,
options or warrants are issued, and shall become effective
immediately on the date of issuance retroactive to the record
date for the determination of stockholders entitled to receive
such rights, options or warrants.
- 11 -<PAGE>
For the purposes of adjustments required by paragraph (b) of
this Section 13, the shares of Class A Common Stock that the
holder of any outstanding rights, options or warrants shall be
entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of sale, issuance or
distribution of such securities to the extent that an adjustment
has been made for such issuance pursuant to such paragraph (b),
and the consideration, if any, received by the Company therefor
shall be deemed to be the consideration received by the Company
for such securities, plus the consideration or premiums stated in
such securities to be paid for the shares of Class A Common Stock
covered thereby.
(c) If the Company shall distribute to all holders of its
shares of Class A Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) above) or rights,
options or warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Class
A Common Stock (excluding those referred to in paragraph (b)
above), then in each case the number of Shares thereafter
purchasable upon the exercise of each Warrant shall be determined
by multiplying the number of Shares theretofore purchasable upon
the exercise of each Warrant, by a fraction, (i) the numerator of
which shall be the then current market price per share of Class A
Common Stock (as defined in paragraph (f) below) on the date of
such distribution (the date of computation referenced in
paragraph (f) below), and (ii) the denominator of which shall be
the then current market price per share of Class A Common Stock
(as defined in paragraph (f) below) on the date of such
distribution (the date of computation referenced in paragraph (f)
below), less the then fair value (as determined in good faith
by the Board of Directors of the Company, whose determination
shall be conclusive and shall be evidenced by a resolution filed
with the Warrant Agent) of the portion of the assets or evidences
of indebtedness so distributed or of subscription rights, options
or warrants or convertible or exchangeable securities, in each
instance applicable to one share of Class A Common Stock. Such
adjustment shall be made whenever any such distribution is made,
and shall become effective on the date of distribution
retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraph (b)
of this Section 13, the current or closing market price per share
of Class A Common Stock at any date shall be deemed to be the
average of the daily closing prices (determined as provided in
Section 14(c)) for the 15 consecutive trading days commencing 20
trading days before the date of such computation.
- 12 -<PAGE>
(e) Except for adjustments required by paragraph (k)
hereof, no adjustment in the number of Shares purchasable
hereunder shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the
number of Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest cent and to the nearest
one-hundredth of a share, as the case may be.
(f) Whenever the number of Shares purchasable upon the
exercise of each Warrant is adjusted as herein provided (whether
or not the Company then or thereafter elects to issue additional
Warrants in substitution for an adjustment in the number of
Shares as provided in paragraph (k) hereof), the Exercise Price
payable upon exercise of each Warrant shall be adjusted by
multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the
number of Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment and the denominator of which
shall be the number of Shares so purchasable immediately
thereafter.
(g) For the purpose of this Section 13, the term "shares of
Class A Common Stock" shall mean (i) the class of stock
designated as the Class A Common Stock of the Company at the date
of this Agreement, or (ii) any other class of stock resulting
from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to
no par value, or from no par value to par value. If at any time,
as a result of an adjustment made pursuant to paragraph (a) or
(c) above, the holders of Warrants shall become entitled to
purchase any shares of the Company other than shares of Class A
Common Stock, thereafter the provisions of this Agreement with
respect to Shares, including, without limitation, the provisions
regarding adjustments to be made from time to time to the number
of such other shares so purchasable upon exercise of each Warrant
and the Exercise Price of such shares, shall apply as nearly as
practicable in an equivalent manner to such other shares.
(h) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges, if any thereof shall not have
been exercised, the Exercise Price and the number of shares of
Class A Common Stock purchasable upon the exercise of each
Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally
adjusted (or had the original adjustment not been required, as
the case may be) as if (i) the only shares of Class A Common
Stock so issued were the shares of Class A Common Stock, if any,
actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (ii) such
- 13 -<PAGE>
shares of Class A Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of
such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, that no such readjustment
shall have the effect of increasing the Exercise Price or
decreasing the number of shares by an amount in excess of the
amount of the adjustment initially made in respect to the
issuance, sale or grant of such rights, options, warrants or
conversion or exchange rights.
(i) The Company in its discretion may elect, on or after
the date of any adjustment required by paragraphs (a) and (b) of
this Section 13, to adjust the number of Warrants in substitution
for an adjustment in the number of Shares purchasable upon the
exercise of a Warrant. Each of the Warrants outstanding after
such adjustment of the number of Warrants shall be exercisable
for the same number of Shares as immediately prior to such
adjustment. Each Warrant held of record prior to such adjustment
of the number of Warrants shall become that number of Warrants
(calculated to the nearest hundredth) obtained by dividing the
Exercise Price in effect prior to adjustment of the Exercise
Price by the Exercise Price in effect after adjustment of the
Exercise Price. The Company shall notify the holders of Warrants
in the same manner as provided in the first paragraph of Section
15, of its election to adjust the number of Warrants, indicating
the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be
the date on which the Exercise Price is adjusted or any day
thereafter. Upon each adjustment of the number of Warrants
pursuant to this paragraph (i) the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Warrants on such record date Warrant Certificates evidencing,
subject to Section 14, the additional Warrants to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Warrant
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Warrant Certificates evidencing all the Warrants to
be issued, executed and registered in the manner specified in
Sections 4, 5 and 6 (and which may bear, at the option of the
Company, the adjusted Exercise Price) and shall be registered in
the names of the holders of record of Warrant Certificates on the
record date specified in the notice.
(j) Except as provided in paragraphs (a) and (b) of this
Section 13, no adjustment to the number of Shares which may be
purchased upon exercise of any Warrant in respect of any dividend
shall be made during the term of a Warrant or upon the exercise
of a Warrant.
- 14 -<PAGE>
(k) In case of any consolidation of the Company with or
merger of the Company into another corporation or in case of any
sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety or the
Company is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Class A Common Stock, the
Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrant Agent an agreement, in
form and substance substantially equivalent to this Agreement,
that each holder of a Warrant shall have the right thereafter,
subject to terms and conditions substantially equivalent to those
contained in this Agreement, upon payment of the Exercise Price
in effect immediately prior to such action to purchase upon
exercise of each Warrant the kind and amount of shares and other
securities and property which such holder would have owned or
have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been
exercised immediately prior to such action. The Company shall
mail by first-class mail, postage prepaid, to each registered
holder of a Warrant, notice of the execution of any such
agreement. Such agreement shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 13. The provisions of
this paragraph (k) shall similarly apply to successive
consolidations, mergers, sales or conveyances. The Warrant Agent
shall be under no duty or responsibility to determine the
correctness of any provisions contained in any such agreement
relating either to the kind or amount of shares of stock or other
securities or property receivable upon exercise of Warrants or
with respect to the method employed and provided therein for any
adjustments and shall be entitled to rely upon the provisions
contained in any such agreement
(l) Irrespective of any adjustments in the Exercise Price
or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares
as are stated in the Warrants initially issuable pursuant to this
Agreement.
Section 14. Fractional Warrants and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Warrants on any distribution of Warrants to holders of Warrant
Certificates pursuant to Section 13(k) or to distribute Warrant
Certificates that evidence fractional Warrants. In lieu of such
fractional Warrants there shall be paid to the registered holders
of the Warrant Certificates with regard to which such fractional
Warrants would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a full Warrant.
For purposes of this Section 14(a), the current market value of a
Warrant shall be the closing price of one Warrant (as determined
- 15 -<PAGE>
pursuant to paragraph (c) below) for the trading day immediately
prior to the date on which such fractional Warrant would have
been otherwise issuable.
(b) Notwithstanding any adjustment pursuant to Section 13
in the number of Shares purchasable upon the exercise of a
Warrant, the Company shall not be required to issue fractions of
Shares upon exercise of the Warrants or to distribute
certificates which evidence fractional Shares. In lieu of
fractional Shares, there shall be paid to the registered holders
of Warrant Certificates at the time such Warrant Certificates are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of Class A Common
Stock minus the equivalent fraction of the exercise price. For
purposes of this Section 14(b), the current market value of a
share of Class A Common Stock shall be the closing price of a
share of Class A Common Stock (as determined pursuant to
paragraph (c) below) for the trading day immediately prior to the
date of such exercise.
(c) The closing price for each day shall be the last sale
price, regular way, or, if no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, for
such day, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Warrants or Class A Common Stock, as the case
may be, are not listed or admitted to trading on such exchange,
as reported on the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Warrants or Class A
Common Stock, respectively, is listed or admitted to trading, or
if the Warrants or Class A Common Stock, as the case may be, is
not listed or admitted to trading on any national securities
exchange, as reported on NASDAQ/NMS or, if the Warrants or Class
A Common Stock, as the case may be, is not listed or admitted to
trading on NASDAQ/NMS, as reported on NASDAQ.
Section 15. Notices to Warrantholders. Upon any adjustment
of the number of Shares purchasable upon exercise of each
Warrant, the Exercise Price or the number of Warrants outstanding
pursuant to Section 13, the Company within 20 calendar days
thereafter shall (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of
recognized standing selected by the Company (who may be the
regular auditors of the Company) setting forth the Exercise Price
and either the number of Shares purchasable upon exercise of each
Warrant or the additional number of Warrants to be issued for
each previously outstanding Warrant, as the case may be, after
such adjustment and setting forth in reasonable detail the method
of calculation and the facts upon which such adjustment was made,
which certificate shall be conclusive evidence of the correctness
- 16 -<PAGE>
of the matters set forth therein, and (ii) cause the Warrant
Agent to give to each of the registered holders of the Warrant
Certificates at such holder's address appearing on the Warrant
Register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be
mailed under the other provisions of this Section 15.
If:
(a) the Company shall declare any dividend payable in
any securities upon its shares of Class A Common Stock or
make any distribution (other than a cash dividend declared
in the ordinary course) to the holders of its shares of
Class A Common Stock, or
(b) the Company shall offer to the holders of its
shares of Class A Common Stock any additional shares of
Class A Common Stock or securities convertible or
exchangeable into shares of Class A Common Stock or any
right to subscribe for or purchase Class A Common Stock, or
(c) there shall be a dissolution, liquidation or
winding up of the Company (other than in connection with a
consolidation, merger or sale of all or substantially all of
its property, assets and business as an entirety),
then the Company shall (i) cause written notice of such
event to be filed with the Warrant Agent and shall cause written
notice of such event to be given to each of the registered
holders of the Warrant Certificates at such holder's address
appearing on the Warrant Register, by first-class mail, postage
prepaid, and (ii) make a public announcement in a daily morning
English language newspaper of general circulation in New York
City, New York, and in a daily morning Norwegian language
newspaper of general circulation in Oslo, Norway, of such event,
such giving of notice and publication to be completed at least 10
calendar days (or 20 calendar days in any case specified in
clause (c) above) prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution or
subscription rights, or for the determination of stockholders
entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. The
failure to give the notice required by this Section 15 or any
defect therein shall not affect the legality or validity of any
dividend, distribution, right, option, warrant, dissolution,
liquidation or winding up or the vote upon or any other action
taken in connection therewith.
- 17 -<PAGE>
Section 16. Merger, Consolidation or Change of Name of
Warrant Agent. Any corporation into which the Warrant Agent may
be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the shareholder services business of
the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Warrant Agent under the provisions of Section 18. If
at the time such successor to the Warrant Agent shall succeed
under this Agreement, any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original
Warrant Agent; and if at that time any of the Warrant
Certificates shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrant Certificates
either in the name of the predecessor Warrant Agent or in the
name of the successor Warrant Agent; in all such cases such
Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
If at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall
have been countersigned but not delivered, the Warrant Agent
whose name has changed may adopt the countersignature under its
prior name; and if at that time any of the Warrant Certificates
shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or
in its changed name; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant
Certificates and in this Agreement.
Section 17. Warrant Agent. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and
the holders of Warrants, by their acceptance thereof, shall be
bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of
any of the same except such as describe the Warrant Agent or
action taken or to be taken by it. Except as herein otherwise
provided, the Warrant Agent assumes no responsibility with
respect to the execution, delivery or distribution of the Warrant
Certificates.
(b) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants
contained in this Agreement or in the Warrant Certificates to be
- 18 -<PAGE>
complied with by the Company nor shall it at any time be under
any duty or responsibility to any holder of a Warrant to make or
cause to be made any adjustment in the Exercise Price or in the
number of Shares issuable upon exercise of any Warrant (except as
instructed by the Company), or to determine whether any facts
exist which may require any such adjustments, or with respect to
the nature or extent of or method employed in making any such
adjustments when made.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the
Company or any holder of any Warrant Certificate in respect of
any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such
counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant
Certificate for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate or other paper,
document or instrument believed in good faith by it to be genuine
and to have been signed, sent or presented by the proper party or
parties.
(e) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant
Agent under this Agreement, to reimburse the Warrant Agent upon
demand for all expenses, taxes and governmental charges and other
charges of any kind and nature incurred by the Warrant Agent in
the performance of its duties, under this Agreement and to
indemnify the Warrant Agent and save it harmless against any and
all losses, liabilities and expenses, including judgments, costs
and reasonable counsel fees and expenses, for anything done or
omitted by the Warrant Agent arising out of or in connection with
this Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one
or more registered holders of Warrant Certificates shall furnish
the Warrant Agent with reasonable security and indemnity for any
costs or expenses which may be incurred. All rights of action
under this Agreement or under any of the Warrants may be enforced
by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other
proceeding related thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in
its name as Warrant Agent, and any recovery or judgment shall be
for the ratable benefit of the registered holders of the
Warrants, as their respective rights or interests may appear.
- 19 -<PAGE>
(g) The Warrant Agent, and any stockholder, director,
officer or employee thereof, may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though they were not the
Warrant Agent under this Agreement, or a stockholder, director,
officer or employee of the Warrant Agent, as the case may be.
Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for
anything which it may do or refrain from doing in connection with
this Agreement except for its own negligence or bad faith.
(i) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Warrant Agent for the carrying out or performing the provisions
of this Agreement.
(j) The Warrant Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of any Warrant
Certificate (except its countersignature thereof), nor shall the
Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of the Shares to be issued pursuant to this Agreement or any
Warrant Certificate or as to whether the Shares will when issued
be validly issued, fully paid and nonassessable or as to the
Exercise Price or the number of Shares issuable upon exercise of
any Warrant.
(k) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or an Assistant Secretary
of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or in
good faith reliance upon any statement signed by any one of such
officers of the Company with respect to any fact or matter
(unless other evidence in respect thereof is herein specifically
prescribed) which may be deemed to be conclusively proved and
established by such signed statement.
- 20 -<PAGE>
Section 18. Change of Warrant Agent. If the Warrant Agent
shall resign (such resignation to become effective not earlier
than 60 days after the giving of written notice thereof to the
Company and the registered holders of Warrant Certificates) or
shall become incapable of acting as Warrant Agent or if the Board
of Directors of the Company shall by resolution remove the
Warrant Agent (such removal to become effective not earlier than
30 days after the filing of a certified copy of such resolution
with the Warrant Agent and the giving of written notice of such
removal to the registered holders of Warrant Certificates), the
Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30
days after such removal or after it has been so notified in
writing of such resignation or incapacity by the Warrant Agent or
by the registered holder of a Warrant Certificate (in the case of
incapacity), then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the
Company or by such a court, the duties of the Warrant Agent shall
be carried out by the Company. Any successor Warrant Agent,
whether appointed by the Company or by such a court, shall be a
bank or trust company, in good standing, incorporated under the
laws of any state or of the United States of America. As soon as
practicable after appointment of the successor Warrant Agent, the
Company shall cause written notice of the change in the Warrant
Agent to be given to each of the registered holders of the
Warrant Certificates at such holder's address appearing on the
Warrant Register. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant
Agent without further act or deed. The former Warrant Agent
shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder and execute and
deliver, at the expense of the Company, any further assurance,
conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in this Section 18 or any defect
therein, shall not affect the legality or validity of the removal
of the Warrant Agent or the appointment of a successor Warrant
Agent, as the case may be.
Section 19. Warrantholder Not Deemed a Stockholder.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders
thereof the right to vote or to receive dividends or to consent
or to receive notice as stockholders in respect of the meetings
of stockholders or for the election of directors of the Company
or any other matter, or any rights whatsoever as stockholders of
the Company.
Section 20. Delivery of Prospectus. If the Company is
required under applicable federal or state securities laws to
- 21 -<PAGE>
deliver a prospectus upon exercise of Warrants, the Company will
furnish to the Warrant Agent sufficient copies of a prospectus,
and the Warrant Agent agrees that upon the exercise of any
Warrant Certificate by the holder thereof, the Warrant Agent will
deliver to such holder, prior to or concurrently with the
delivery of the certificate or certificates for the Shares issued
upon such exercise, a copy of the prospectus.
Section 21. Notices to Company and Warrant Agent. Any
notice or demand authorized by this Agreement to be given or made
by the Warrant Agent or by any registered holder of any Warrant
Certificate to or on the Company shall be sufficiently given or
made if sent by mail, first-class or registered, postage prepaid,
addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
A.L. Pharma Inc.
One Executive Drive
Fort Lee, New Jersey 07024
If the Company shall fail to maintain such office or agency
or shall fail to give such notice of any change in the location
thereof, presentation may be made and notices and demands may be
served at the principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the
Company or by any registered holder of any Warrant Certificate to
the Warrant Agent shall be sufficiently given if sent by first-
class mail, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company), as
follows:
The First National Bank of Boston
150 Royall Street
Mail Stop 45-01-19
Canton, Massachusetts 02021
Attn: Shareholder Services Division
The Warrant Agent maintains a Warrant Agent Office at BancBoston
Trust Company of New York, 55 Broadway, New York, New York
10006.
Section 22. Supplements and Amendments. The Company and
the Warrant Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Warrant
Certificates in order to cure any ambiguity, manifest error or
other mistake in this Agreement, or to correct or supplement any
provision contained herein that may be defective or inconsistent
with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder that the
Company and the Warrant Agent may deem necessary or desirable and
- 22 -<PAGE>
that shall not adversely affect, alter or change the interests of
the holders of the Warrants in any material respect.
Any supplement or amendment of this Agreement which may not
be made by the Company and the Warrant Agent without the approval
of holders of Warrant Certificates pursuant to the preceding
paragraph shall require the approval of the holders of Warrant
Certificates entitled to purchase upon exercise thereof a
majority of the Shares which may be purchased upon the exercise
of all outstanding Warrant Certificates at the time that such
amendment or supplement is to be made. Notwithstanding the
foregoing, any amendment or supplement to this Agreement which
would change the Expiration Date to a date prior to January 3,
1999 or which would provide for an adjustment to either (i) the
number of Shares purchasable upon exercise of a Warrant or (ii)
the exercise price for which Shares are purchasable upon exercise
of a Warrant, in either case, in a manner not provided for in
this agreement and in a manner that would have a substantial
negative impact on the holders of Warrant Certificates, then such
amendment or supplement shall require the consent of the holders
of all Warrant Certificates.
Section 23. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the
Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 24. Termination. This Agreement shall terminate at
the Close of Business on the Expiration Date. Notwithstanding
the foregoing, this Agreement will terminate on any earlier date
when all Warrants have been exercised. The provisions of Section
18 shall survive such termination.
Section 25. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes
shall be construed in accordance with the internal laws of the
State of New York without regard to principles of conflict of law
or choice of laws of the State of New York or any other
jurisdiction which would cause the application of any laws other
than of the State of New York.
Section 26. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Warrant Agent and the registered
holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be
for the sole and exclusive benefit of the Company, the Warrant
Agent and the registered holders of the Warrant Certificates.
Section 27. Counterparts. This Agreement may be executed
in a number of counterparts and each of such counterparts shall
- 23 -<PAGE>
all for purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same
instrument.
Section 28. Headings. The headings of sections of this
Agreement have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify
or restrict any of the terms or provisions hereof.
* * * * *
- 24 -<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this
Warrant Agreement to be executed and delivered as of the day and
year first above written.
A.L. PHARMA INC.
By /s/ Jeffrey E. Smith
Title: Chief Financial
Officer/Executive
Vice President
ATTEST:
/s/ Beth P. Hecht
THE FIRST NATIONAL BANK OF
BOSTON
By /s/ Katherine S.
Anderson
Title: Administration
Manager
ATTEST:
- 25 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THIS WARRANT WAS ORIGINALLY ISSUED ON ______________,
1994 AND SUCH ISSUANCE WAS NOT REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE OR OTHER SECURITIES LAW. NEITHER
THIS WARRANT NOR THE CLASS A COMMON STOCK OBTAINABLE
UPON EXERCISE HEREOF MAY BE OFFERED OR SOLD, PLEDGED OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE OR OTHER SECURITIES LAW COVERING SUCH
SECURITY OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENT. THE TRANSFER AND EXERCISE OF
THIS WARRANT ARE ALSO SUBJECT TO THE CONDITIONS ON
TRANSFER AND EXERCISE SPECIFIED IN THE WARRANT
AGREEMENT, DATED AS OF October 3, 1994 (AS AMENDED AND
MODIFIED FROM TIME TO TIME), BETWEEN THE ISSUER HEREOF
(THE "COMPANY") AND THE FIRST NATIONAL BANK OF BOSTON,
AS WARRANT AGENT; THE COMPANY AND THE WARRANT AGENT
EACH RESERVE THE RIGHT TO REFUSE THE TRANSFER OF THIS
WARRANT UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY
OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF WITHOUT CHARGE.
VOID AFTER JANUARY 3, 1999
No. C- WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK
A.L. PHARMA INC.
WARRANT TO PURCHASE CLASS A COMMON STOCK
This Warrant Certificate certifies that ________________ or
registered assigns, is the registered holder of a Warrant (the
"Warrant") of A.L. Pharma Inc., a Delaware corporation (the
"Company"), to purchase the number of shares (the "Shares") of
Class A Common Stock, $.20 par value (the "Class A Common
Stock"), of the Company set forth above. This Warrant expires at
the close of business on January 3, 1999 (the "Expiration Date"),
unless such date is extended at the option of the Company, and
entitles the holder to purchase from the Company the number of
fully paid and nonassessable Shares set forth above at the
initial exercise price of $21.9450 (the "Exercise Price"),
payable in lawful money of the United States of America.
Subject to the terms and conditions set forth herein and in
the Warrant Agreement referred to on the reverse hereof, this
Warrant may be exercised upon surrender of this Warrant
Certificate and payment of an amount equal to the Exercise Price
multiplied by the number of Shares to be purchased upon exercise
hereof at the office or agency of the Warrant Agent at BancBoston
- 26 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
Trust Company of New York, 55 Broadway, New York, New York 10006
(the "Warrant Agent Office").
The Exercise Price and the number of Shares purchasable upon
exercise of this Warrant are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant
Agreement. The holder hereof by accepting this Warrant
Certificate hereby acknowledges and consents to the restrictions
regarding transfer and exercise of this Warrant contained in the
Warrant Agreement.
No Warrant may be exercised prior to the earlier of October
3, 1995 or the date on which a registration statement under the
Securities Act covering the Warrants and the Shares shall have
been declared effective by the SEC, and such other action as may
be required by federal or state law relating to the issuance or
distribution of securities shall have been taken (the "Restricted
Period Termination Date"), or after the Close of Business on the
Expiration Date, unless the Company exercises its option to
extend such date. After the Close of Business on the Expiration
Date, the Warrants will become void and of no value.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF. SUCH
FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
THOUGH FULLY SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless manually
countersigned by the Warrant Agent.
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I:\AL-COMBO\CURRENT\WARRANT.013
IN WITNESS WHEREOF, the Company has caused this Certificate
to be executed by its duly authorized officers, and the corporate
seal hereunto affixed.
Dated: ________________.
A.L. PHARMA INC.
By
Title
[Corporate Seal of A.L. Pharma
Inc.]
ATTEST:
By
Title
Countersigned:
THE FIRST NATIONAL BANK OF
BOSTON
AS WARRANT AGENT
By
- 28 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
[Form of Reverse of Warrant Certificate]
A.L. PHARMA INC.
The warrant evidenced by this warrant certificate is part of
a duly authorized issue of Warrants to purchase a maximum of
three million, six hundred thousand (3,600,000) Shares of Class A
Common Stock issued pursuant to a Warrant Agreement, dated as of
October 3, 1994 (the "Warrant Agreement"), duly executed and
delivered by the Company and The First National Bank of Boston,
as Warrant Agent (the "Warrant Agent"). The Warrant Agreement
hereby is incorporated by reference in and made a part of this
instrument and is should be referred to for a description of the
rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant
Agreement may be inspected at the Warrant Agent Office and is
available upon written request addressed to the Company. All
terms used herein that are defined in the Warrant Agreement have
the meanings assigned to them therein.
Warrants may be exercised to purchase Shares from the
Company before the Close of Business on the Expiration Date, at
the Exercise Price set forth on the face hereof, subject to
adjustment as described in the Warrant Agreement. The holder of
the Warrant evidenced by this Warrant Certificate may exercise
such Warrant by surrendering the Warrant Certificate, with the
form of election to purchase set forth hereon properly completed
and executed, together with payment of the aggregate Exercise
Price, in lawful money of the United States of America, and any
applicable transfer taxes, by wire transfer of immediately
available funds, certified check or official bank check at the
Warrant Agent Office.
In the event that upon any exercise of the Warrant evidenced
hereby the number of Shares actually purchased shall be less than
the total number of Shares purchasable upon exercise of the
Warrant evidenced hereby, there shall be issued to the holder
hereof, or such holder's assignee, a new Warrant Certificate
evidencing a Warrant to purchase the Shares not so purchased. No
adjustment shall be made for any cash dividends on any Shares
issuable upon exercise of this Warrant. After the Close of
Business on the Expiration Date, unexercised Warrants shall
become void and of no value.
The Company shall not be required to issue fractions of
Shares or any certificates that evidence fractional Shares. In
lieu of such fractional Shares, there shall be paid to holders of
the Warrant Certificates with regard to which such fractional
Shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value (as determined pursuant
to the Warrant Agreement) of a full Share minus the same fraction
of the exercise price.
Warrant Certificates, when surrendered at the Warrant Agent
Office by the registered holder thereof in person or by a legal
- 29 -<PAGE>
I:\AL-COMBO\CURRENT\WARRANT.013
representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service
charge, for another Warrant Certificate or Warrant Certificates
of like tenor evidencing a Warrant to purchase in the aggregate a
like number of Shares.
Upon due presentment for registration of transfer of this
Warrant Certificate at the Warrant Agent Office, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing
a Warrant or Warrants to purchase in the aggregate a like number
of Shares shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the
Warrant Agreement, without charge, except for any tax or other
governmental charge imposed in connection therewith.
The Company and Warrant Agent may deem and treat the
registered holder hereof as the absolute owner of this Warrant
Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone) for the purpose of any exercise
hereof and for any other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the
contrary.
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ELECTION TO EXERCISE
(TO BE EXECUTED UPON EXERCISE OF THE WARRANT)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate to purchase
________ Shares and herewith tenders in payment for such Shares
$________ in lawful money of the United States of America, in
accordance with the terms hereof. The undersigned requests that
a certificate representing such Shares be registered and
delivered as follows:
Name
Address
Delivery Address (if different)
If such number of Shares is less than the aggregate number of
Shares purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the balance of such Shares be
registered and delivered as follows:
Name
Address
Delivery Address (if different)
Social Security or Other Signature
Taxpayer Identification
Number of Holder
Note: The above signature must correspond with
the name as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatsoever. In addition, the signature of the
holder hereof must be guaranteed.
SIGNATURE
GUARANTEED:
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I:\AL-COMBO\CURRENT\WARRANT.013
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I:\AL-COMBO\CURRENT\WARRANT.013
ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, the undersigned registered holder hereby
sells assigns and transfers unto
Name of Assignee
Address of Assignee
this Warrant Certificate, together with all right, title and
interest therein, and does irrevocably constitute and appoint
________________ attorney, to transfer the within Warrant
Certificate on the books of the Warrant Agent, with full power of
substitution.
Dated Signature
Note: The above signature must
correspond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. In addition,
the signature of the holder hereof
must be guaranteed.
Social Security or Other Taxpayer
Identification Number of Holder
SIGNATURE GUARANTEED:
- 33 -<PAGE>
CONFORMED COPY
$185,000,000
CREDIT AGREEMENT
dated as of
September 28, 1994,
among
A. L. LABORATORIES, INC.,
(formerly known as A.L. Restructuring Sub, Inc.)
as Borrower,
THE BANKS NAMED HEREIN,
as Banks,
UNION BANK OF NORWAY
as Agent,
UNION BANK OF NORWAY
as Arranger,
and
DEN NORSKE BANK AS,
as Co-Arranger<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Computation of Time Periods . . . . . . . . . . . . . . . . . 14
1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
AMOUNT AND TERMS OF THE TRANCHE A TERM LOANS . . . . . . 14
2.1. The Tranche A Term Loans . . . . . . . . . . . . . . . . . . 14
2.2. Making the Tranche A Term Loans . . . . . . . . . . . . . . . 15
2.3. Termination/Reduction of the Tranche A Term Commitments . . . 16
2.4. Consolidation and Repayment of Tranche A Term Loans . . . . . 17
ARTICLE III
AMOUNT AND TERMS OF THE TRANCHE B TERM LOANS . . . . . . 17
3.1. The Tranche B Term Loans . . . . . . . . . . . . . . . . . . 17
3.2. Making the Tranche B Term Loans . . . . . . . . . . . . . . . 18
3.3. Termination/Reduction of the Tranche B Term Commitments . . . 19
3.4. Consolidation and Repayment of the Tranche B Term Loans . . . 20
ARTICLE IV
AMOUNT AND TERMS OF THE REVOLVING LOANS . . . . . . . 20
4.1. The Revolving Loans . . . . . . . . . . . . . . . . . . . . . 20
4.2. Making the Revolving Loans . . . . . . . . . . . . . . . . . 21
4.3. Termination/Reduction of the Revolving Loan Commitments . . . 22
4.4. Repayment of the Revolving Loan . . . . . . . . . . . . . . . 23
ARTICLE V
INTEREST, FEES, ETC. . . . . . . . . . . . . 23
5.1. Interest Period Election . . . . . . . . . . . . . . . . . . 23
5.2. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3. Interest Rate Determination and Protection . . . . . . . . . 24
5.4. Prepayments of the Loans. . . . . . . . . . . . . . . . . . . 25
(a) Optional Prepayments . . . . . . . . . . . . . . . . . . 25
(b) Mandatory Prepayment . . . . . . . . . . . . . . . . . . 26
5.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 27
5.7. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . 28
5.9. Payments and Computations . . . . . . . . . . . . . . . . . . 29
5.10. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . 31
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ARTICLE VI
CONDITIONS OF LENDING . . . . . . . . . . . 32
6.1. Conditions Precedent to the Making of the Initial Loans . . . 32
6.2. Conditions Precedent to the Making of Each Loan . . . . . . . 33
ARTICLE VII
REPRESENTATIONS AND WARRANTIES . . . . . . . . . 34
7.1. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 34
7.2. Corporate Power; Authorization; Enforceable Obligations. . . 34
7.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4. Financial Information . . . . . . . . . . . . . . . . . . . . 35
7.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6. Margin Regulations . . . . . . . . . . . . . . . . . . . . . 36
7.7. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.8. No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.9. Investment Company Act . . . . . . . . . . . . . . . . . . . 37
7.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.11. Environmental Protection . . . . . . . . . . . . . . . . . . 37
7.12. Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 37
7.13. Title and Liens . . . . . . . . . . . . . . . . . . . . . . . 37
7.14. Compliance with Law . . . . . . . . . . . . . . . . . . . . . 37
7.15. Trademarks, Copyrights, Etc. . . . . . . . . . . . . . . . . 38
7.16. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.17. Existing Indebtedness . . . . . . . . . . . . . . . . . . . . 38
7.18. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 38
7.19. Principal Subsidiaries. . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII
AFFIRMATIVE COVENANTS . . . . . . . . . . . 38
8.1. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . 38
8.2. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . 38
8.3. Maintenance of Insurance . . . . . . . . . . . . . . . . . . 39
8.4. Preservation of Corporate Existence, Etc. . . . . . . . . . . 39
8.5. Books and Access . . . . . . . . . . . . . . . . . . . . . . 39
8.6. Maintenance of Properties, Etc. . . . . . . . . . . . . . . . 39
8.7. Application of Proceeds . . . . . . . . . . . . . . . . . . . 39
8.8. Financial Statements . . . . . . . . . . . . . . . . . . . . 39
8.9. Reporting Requirements . . . . . . . . . . . . . . . . . . . 40
8.10. Acquisition Related Loan . . . . . . . . . . . . . . . . . . 41
8.11. Additional Credit Support Documents . . . . . . . . . . . . . 41
8.12. Delivery of Opinions . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
NEGATIVE COVENANTS
9.1. Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.2. Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
- ii -<PAGE>
9.3. Substantial Asset Sale . . . . . . . . . . . . . . . . . . . 42
9.4. Transactions with Affiliates . . . . . . . . . . . . . . . . 42
9.5. Restrictions on Indebtedness . . . . . . . . . . . . . . . . 43
ARTICLE X
EVENTS OF DEFAULT
10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
THE AGENT
11.1. Authorization and Action . . . . . . . . . . . . . . . . . . 45
11.2. The Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . 45
11.3. Union Bank of Norway and Den norske Bank AS . . . . . . . . . 46
11.4. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . 46
11.5. Determinations Under Sections 6.1. and 6.2 . . . . . . . . . 46
11.6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 46
11.7. Successor Agents . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII
MISCELLANEOUS
12.1. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . 47
12.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . 49
12.4. Costs; Expenses; Indemnities . . . . . . . . . . . . . . . . 49
12.5. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . 50
12.6. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 50
12.7. Assignments and Participation; Additional Banks . . . . . . . 50
12.8. Pari Passu Ranking . . . . . . . . . . . . . . . . . . . . . 52
12.9. GOVERNING LAW; SEVERABILITY . . . . . . . . . . . . . . . . . 52
12.10. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. . . . 52
12.11. Confidentiality . . . . . . . . . . . . . . . . . . . . 53
12.12. Section Titles . . . . . . . . . . . . . . . . . . . . 53
12.13. Execution in Counterparts . . . . . . . . . . . . . . . 53
- iii -<PAGE>
Schedules
Schedule I - Lending Offices
Schedule II - Commitments
Schedule III - Restructuring Documents
Schedule 7.2(a)(iv) - Required Consents and Approvals
Exhibits
Exhibit A-1 - Form of Tranche A Term Note
Exhibit A-2 - Form of Tranche B Term Note
Exhibit A-3 - Form of Revolving Note
Exhibit B - Form of Acquisition Related Guaranty
Exhibit C - Form of Intercreditor Agreement
Exhibit D-1 - Form of Notice of Initial Borrowing and
Waiver Request
Exhibit D-2 - Form of Notice of Borrowing
Exhibit E - Form of Parent Guaranty
Exhibit F-1 - Form of Pledge Agreement (New A.L.-
Oslo/Norwegian)
Exhibit F-2 - Form of Pledge Agreement (A.L. Pharma
A/S/Danish)
Exhibit F-3 - Form of Pledge Agreement (A/S
Dumex/Danish)
Exhibit G - Form of Subsidiary Guaranty
Exhibit H - Form of Assignment of Intercompany Note
Exhibit I - Form of Notice of Interest Period
Exhibit J-1 - Form of Opinion of Kirkland & Ellis
Exhibit J-2 - Form of Opinion of Beth P. Hecht, Esq.,
Corporate Counsel of the Borrower
Exhibit J-3 - Form of Opinion of Watson, Farley &
Williams
Exhibit J-4 - Form of Opinion of Advokatfirmaet Ole
Christian Hoie
Exhibit J-5 - Form of Opinion of Gorrissen & Federspiel
Exhibit J-6 - Form of Opinion of McCarter & English
Exhibit K - Form of Notice of Assignment and
Acceptance
- iv -<PAGE>
CREDIT AGREEMENT, dated as of September 28, 1994, among A.L.
Restructuring Sub, Inc., to be renamed A. L. LABORATORIES, INC.,
a Delaware corporation (together with its successors and assigns
the "Borrower"), the Banks parties hereto from time to time (the
"Banks"), UNION BANK OF NORWAY, as Agent, UNION BANK OF NORWAY,
as Arranger, and DEN NORSKE BANK AS, as Co-Arranger.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Banks provide
financing for, among other things, (a) the refinancing of certain
existing indebtedness of the Borrower and its affiliate,
Apothekernes Laboratorium AS, a Norwegian joint stock company, to
be renamed (after the Restructuring hereinafter defined) A.L.
Industrier AS ("A.L.-Oslo"), (b) for payment of transaction
costs, fees and expenses associated with the acquisition of the
Related Norwegian Businesses of A.L.-Oslo (the "Restructuring")
as contemplated by the Restructuring Agreement and (c) for
general corporate purposes, and the Banks are willing to make
funds available for such purposes, but only upon the terms and
subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the
following terms have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the
terms defined):
"Acquisition Related Guarantor" means an Affiliate of the
Borrower to whom the proceeds of a Borrowing are, directly or
indirectly, made available for purposes of effecting an
acquisition of Equity or assets.
"Acquisition Related Guaranty" means a guaranty of the
obligations of the Borrower pursuant to the Loan Documents made
by an Acquisition Related Guarantor in connection with a
Borrowing made in respect of an acquisition of Equity or assets
substantially in the form of Exhibit B hereto.
"Affiliate" means, as to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly,
- 1 -<PAGE>
controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" means the
possession of the power to direct or cause the direction of
management and policies of any Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agency Fee" has the meaning specified in Section 5.5(c).
"Agent" means Union Bank of Norway, in its capacity as the
Agent, or any successor in such capacity.
"Agreement" means this Credit Agreement, as modified,
amended or supplemented from time to time.
"Agreement Date" means the date set forth as such on the
last signature page hereof.
"Agreement Termination Date" means the first day on which
all the Commitments have been reduced to zero, this Agreement is
terminated and no Loan Party has any obligations outstanding
under this Agreement or any other Loan Document.
"A.L. - Oslo" has the meaning specified in the recitals
hereof.
"A.L. - Oslo Existing Credit Agreements" means
______________________.
"A.L. Pharma A/S" means A.L.-Pharma A/S, a Danish
corporation.
"Applicable Law" means (a) all applicable common law and
principles of equity and (b) all applicable provisions of all (i)
constitutions, statutes, rules, regulations and orders of
governmental bodies, (ii) governmental approvals and (iii)
orders, decisions, judgments and decrees of all courts (whether
at law, in equity or admiralty) and arbitrators.
"Applicable Margin" shall mean on any date (a) 1-3/8%, with
respect to Tranche A Term Loans, (b) 1-1/4%, with respect to
Tranche B Term Loans, and (c) 1-1/8%, with respect to Revolving
Loans.
"Arrangement Fee" has the meaning specified in Section
5.5(b).
"Arranger" means Union Bank of Norway.
- 2 -<PAGE>
"Assignment of Intercompany Note" means the Assignment made
by the Parent Guarantor in favor of the Agent, substantially in
the form of Exhibit H hereto.
"Banks" means the lenders listed on the signature pages
hereof, and such other lenders as may become parties hereto from
time to time pursuant to Section 12.7.
"Borrower" has the meaning specified in the recitals hereof.
"Borrowing" means a Tranche A Term Borrowing, a Tranche B
Term Borrowing or a Revolving Loan Borrowing (as the case may
be).
"Business Day" means a day of the year on which banks are
not required or authorized to close in New York City, Oslo,
Norway and Copenhagen, Denmark and on which dealings are also
carried on in Dollars in the London interbank market.
"Capital Market Transaction" means the issuance of any
Equity (including convertible debt securities but excluding any
other debt securities), in each case whether by means of a public
offering, private placement, or other capital market method.
"Capitalized Lease" means, as applied to any Person, any
lease of property by such Person as lessee which is or should be
capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
"Cash Equivalents" means any one or more of the following
instruments:
(a) open-market commercial paper issued by
corporations organized in the United States of America,
maturing not later than 270 days after the date of issuance
thereof and having at the time of acquisition a rating of at
least A-1 from Standard & Poor's Rating Group or P-1 from
Moody's Investors Services, Inc.
(b) readily marketable direct obligations issued
by the United States of America, or by any agency thereof
that are unconditionally guaranteed or backed by the full
faith and credit of the United States of America, in each
case maturing within one year from the date of acquisition
thereof; and
(c) certificates of deposit or bankers'
acceptances maturing within one year from the date of
creation thereof issued by any Bank or by a commercial bank
or trust company organized under the laws of the United
- 3 -<PAGE>
States of America, or of any state thereof, having combined
capital, surplus and undivided profits of not less than
$1,000,000,000 (or its equivalent in any other currency) and
having, in respect of its long-term senior debt securities,
a rating of at least A- from Standard & Poor's Rating Group
or A3 from Moody's Investors Services, Inc.,
in each case so long as the same (x) provide for the payment of
principal and interest (and not principal alone or interest
alone) and (y) are not subject to any contingency regarding the
payment of principal or interest.
"Change in Tax Law" means the enactment, promulgation,
execution or ratification of, any tax treaty, law (including,
without limitation, the Code), rule or regulation (or any change
in the application or judicial, administrative or other official
interpretation of any treaty, law, rule or regulation).
"Co-Arranger" means Den norske Bank AS.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"Commitment" means, as to any Bank, such Bank's aggregate
Tranche A Term Commitment, Tranche B Term Commitment and/or
Revolving Loan Commitment and "Commitments" means, as to all of
the Banks, the aggregate of the Tranche A Term Commitments,
Tranche B Term Commitments and Revolving Loan Commitments of all
the Banks.
"Commitment Fee" means any of the fees paid by the Borrower
pursuant to Section 5.5(a).
"Consolidation" means any adjustment of Interest Periods in
respect of Tranche A Term Loans or Tranche B Term Loans in
accordance with Section 2.4(a) or Section 3.4(a) of this
Agreement.
"Consolidation Date" means, with respect to Tranche A Term
Loans or Tranche B Term Loans, the day that is twelve (12) months
after the Initial Funding Date with respect to Tranche A Term
Loans and Tranche B Term Loans, respectively, or such earlier
date on which the Consolidation of Tranche A Term Loans and
Tranche B Term Loans, respectively, occurs as the Agent may
designate by notice to the Banks.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum derived substance or waste, or any
- 4 -<PAGE>
constituent of such substance or waste, including any substance
regulated under any Environmental Law.
"Credit Support Document" means the Parent Guaranty, the
Subsidiary Guaranties, the Pledge Agreements, the Assignment of
Intercompany Note and the Acquisition Related Guaranties.
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"Dollars" and the sign "$" each mean the lawful money of the
United States of America.
"Dumex" means A/S Dumex, a Danish corporation.
"Earnings from Operations" has the meaning specified in the
Parent Guaranty.
"Effective Date" means the first day on which the conditions
set forth in Sections 6.1 and 6.2 are satisfied or waived.
"Environmental Law" means the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. SS
1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. 12Sl et seq.), the Clean Air Act (42 U.S.C. 7401
et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et
seq.), and the Occupational Safety and Health Act (29 U.S.C.
651 et seq.), in each case as amended or supplemented from time
to time, and any analogous future federal or present or future
state or local statutes, including, without limitation, transfer
of ownership notification statutes such as the New Jersey
Environmental Cleanup Responsibility Act (N.J. Stat. Ann.
13:lK-6 et seg.) and the Connecticut Industrial Transfer Law of
1985 (Conn. Gen. Stat. 22a-134 et seq.) and the regulations
promulgated pursuant thereto.
"Environmental Liabilities and Costs" means, as to any
Person, all liabilities, obligations, responsibilities, Remedial
Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including, without
limitation, all reasonable fees, disbursements and expenses of
counsel, expert and consulting fees, and costs of investigation
and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand, by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, any criminal or civil statute,
including any Environmental Law, Permit, order or agreement with
any Government Authority or other Person, arising from
- 5 -<PAGE>
environmental, health or safety conditions, or the Release or
threatened Release of a Contaminant into the environment,
resulting from the past, present or future operations of such
Person or its Subsidiaries.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equity" means all shares, options, equity interests,
general or limited partnership interests, joint venture interests
or participation or other equivalents (regardless of how
designated) of or in a corporation, partnership or other entity,
whether voting or non-voting, and including, without limitation,
common stock, preferred stock, purchase rights, warrants or
options for any of the foregoing.
"Equity Ratio" has the meaning specified in the Parent
Guaranty.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto) and the rules and
regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" shall mean a corporation, partnership or
other entity which is considered one employer with the Borrower
under Section 4001 of ERISA or Section 414 of the Code.
"ERISA Event" means (i) a Reportable Event with respect to a
Title IV Plan; (ii) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject
to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA;
(iii) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D.
"Eurodollar Rate" means, for any Interest Period, the rate
per annum determined by the Agent to be the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum determined, respectively, by each Reference Bank to be
the rate at which such Reference Bank offered or would have
offered to place with first-class banks in the London interbank
market deposits in Dollars in amounts comparable to the Loan of
such Reference Banks to which such Interest Period applies, for a
period equal to such Interest Period, at 11:00 a.m. (London time)
on the second Business Day before the first day of such Interest
- 6 -<PAGE>
Period. If any Reference Bank is unable or otherwise fails to
furnish the Agent with appropriate rate information in a timely
manner, the Agent shall determine the Eurodollar Rate based on
the rate information furnished by the remaining Reference Banks.
"Eurodollar Reserve Requirement" means, at any time, the
then current maximum rate for which reserves (including any
marginal, supplemental or emergency reserve) are required to be
maintained under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding five
billion Dollars against Eurocurrency Liabilities.
"Event of Default" has the meaning specified in Section
10.1.
"Existing Lenders" has the meaning specified in the Parent
Guaranty.
"Existing Loan Agreements" has the meaning specified in the
Parent Guaranty.
"Federal Funds Rate" means, for any day, a fluctuating
interest rate per annum equal for such day to 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 for such day (or, if such day is not a
Business Day, for the next preceding 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 such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by
it.
"Final Judgment" has the meaning specified in Section
10.1(f).
"Fiscal Quarter" means any three month period ending March
31, June 30, September 30 or December 31 of any Fiscal Year.
"Fiscal Year" means each twelve-month period ending December
31, or such other fiscal year end date as may be determined by
the Borrower following the Agreement Date.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time and set
forth in the rules, regulations, opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in
such other statements by such other entity as may be in general
- 7 -<PAGE>
use by significant segments of the accounting profession and
which are applicable to the circumstances as of the date of
determination.
"GAAS" means generally accepted auditing standards in the
United States of America as in effect from time to time and set
forth in the rules, regulations, opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in
such other statements by such other entity as may be in general
use by significant segments of the accounting profession and
which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Indebtedness" of any Person means at any date, without
duplication, (i) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (ii) all
obligations of such Person to pay the deferred purchase price of
Property or services, except as provided below, (iii) all
obligations of such Person as lessee under Capitalized Leases,
(iv) all Indebtedness of others secured by a Lien on any Property
of such Person, whether or not such Indebtedness is assumed by
such Person, (v) all Indebtedness of others directly or
indirectly guaranteed or otherwise assumed by such Person,
including any obligations of others endorsed (otherwise than for
collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable,
including, without limitation any Indebtedness in effect
guaranteed by such Person through any agreement (contingent or
otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation, or to maintain the
solvency or any balance sheet or other financial condition of the
obligor of such obligation, (vi) all obligations of such Person
as issuer, customer or account party under letters of credit or
bankers' acceptances that are either drawn or that back financial
obligations that would otherwise be Indebtedness, or (vii) any
obligation with respect to an interest rate or currency swap or
similar obligation (a "Swap Agreement") obligating such Person to
make payments, whether periodically or upon the happening of a
contingency, except that if any agreement relating to such
obligation provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the
- 8 -<PAGE>
simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net
amount thereof.
"Indebtedness for Borrowed Money" of any Person means at any
date, without duplication, Indebtedness described in clauses (i),
(iii), (v) and (vii) of the definition of Indebtedness.
"Indemnified Liability" has the meaning specified in Section
12.4(b).
"Indemnified Person" has the meaning specified in Section
12.4(b).
"Initial Funding Date" means, with respect to each of the
Tranche A Term Loans, Tranche B Term Loans and Revolving Loans,
the date on which (i) the conditions set forth in Sections 6.1
and 6.2 are satisfied or waived and (ii) the initial Tranche A
Term Loans, Tranche B Term Loans or Revolving Loans,
respectively, are made hereunder.
"Intercreditor Agreement" means the Intercreditor Agreement
among the Agent, the Banks and the Other Lenders, substantially
in the form of Exhibit C hereto.
"Interest Period" means with respect to any Loans (i)
initially, the period commencing on the date such Loans are made
and ending one, three or six months (or 12 months, in accordance
with Section 5.1(b)) thereafter, as selected by the Borrower in
its Notice of Borrowing or Notice of Interest Period given to the
Agent pursuant to Section 2.2, 3.2, 4.2 or 5.1, as the case may
be, and (ii) thereafter, the period commencing on the last day of
the immediately preceding Interest Period therefor and ending
one, three, six or twelve months thereafter, as selected by the
Borrower in its Notice of Interest Period given to the Agent
pursuant to Section 5.1, subject, however, to the following:
(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 for any Loan would be to extend
such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period in respect of Loans 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;
- 9 -<PAGE>
(iii) no Interest Period may extend beyond (A) the
Tranche A Term Loan Maturity Date, in the case of the
Tranche A Term Loans, (B) the Tranche B Term Loan Maturity
Date, in the case of the Tranche B Term Loans or (C) the
Revolving Loan Commitment Termination Date, in the case of
Revolving Loans; and
(iv) there shall be outstanding at any one time in the
aggregate no more than (A) 4 Interest Periods, prior to the
Consolidation Date with respect to Tranche A Term Loans and
Tranche B Term Loans, and (B) 2 Interest Periods,
thereafter.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Lending Office" opposite its name
on Schedule I or such other office of such Bank as such Bank may
from time to time specify to the Borrower and the Agent.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), security interest or preference, priority
or other security agreement or preferential arrangement of any
kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement.
"Loan Documents" means (i) this Agreement, the Notes, the
Credit Support Documents and the Intercreditor Agreement and (ii)
all other agreements, documents and instruments that may
hereafter be entered into relating to or arising out of any
agreement, document or instrument referred to in clause (i).
"Loan Party" means any Person (other than the Agent, the
Banks, the Arranger, the Co-Arranger and the Other Lenders) that
is a party to a Loan Document.
"Loans" means, collectively, the Tranche A Term Loans, the
Tranche B Term Loans and the Revolving Loans.
"Majority Banks" means, at any time, Banks holding more than
75% of the then aggregate unpaid principal amount of Loans held
by the Banks, or, if no such principal amount is then
outstanding, Banks having more than 75% of the aggregate amount
of the Commitments; provided, that for purposes of the last
paragraph of Section 10.1 hereof, the relevant percentage for
determining Majority Banks shall be 51%.
"Margin Stock" has the meaning specified in Regulation U.
- 10 -<PAGE>
"Material Adverse Change" means a change that has resulted,
or would result, in a Material Adverse Effect.
"Material Adverse Effect" means, in the judgment of the
Majority Banks (or, for purposes of any notice of a Material
Adverse Effect to be given by a Loan Party, in the judgment of
such Loan Party), a material adverse effect on the business,
financial condition, operations or Properties of the Borrower and
its Subsidiaries or of the Parent Guarantor and its Subsidiaries
(as the case may be), in each case taken as a whole.
"Material Credit Agreement Change" means, in the judgment of
the Majority Banks (or, for purposes of any notice of a Material
Credit Agreement Change to be given by a Loan Party, in the
judgment of such Loan Party), a change that has materially
adversely affected or would materially adversely affect the
legality, validity or enforceability of any payment obligation of
the Borrower, the Parent Guarantor, any of the Subsidiary
Guarantors or the Acquisition Related Guarantors under this
Agreement or any other Loan Document.
"Multiemployer Plan" means a multiemployer plan, as defined
in Section 4001(a)(3) of ERISA, to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to
make, has made or been obligated to make, contributions on behalf
of participants who are or were employed by any of them.
"Net Cash Proceeds" means:
(a) in reference to asset sales, proceeds in cash as and
when received by the Borrower or any of its Subsidiaries, or
the Parent Guarantor or any of its Subsidiaries, from, or in
connection with, the sale by the Borrower or any of its
Subsidiaries, or the Parent Guarantor or any of its
Subsidiaries, to any Person (other than the Borrower or any
of its Subsidiaries, or the Parent Guarantor or any of its
Subsidiaries) of any asset outside of the ordinary course of
business (including, without limitation, the sale of any
facility, division, plant or other real property or interest
in real property outside the ordinary course of business),
net of the direct costs relating to such sale, including,
without limitation, (i) legal, accounting and investment
banking fees and sale commissions, (ii) taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements in each case arising directly from such sale),
(iii) amounts required to be applied to the repayment of
Indebtedness relating to the asset that is the subject of
such sale and not otherwise provided for by the terms of
- 11 -<PAGE>
such sale, and (iv) reasonable reserves for purchase price
adjustments; and
(b) in reference to Capital Market Transactions by any
Person, the proceeds in cash received from such Capital
Market Transactions, net of all issuance fees, discounts,
and other costs.
For purposes of this definition, proceeds received by any
Subsidiary of the Borrower or of the Parent Guarantor other than
a wholly owned Subsidiary shall be deemed to be Net Cash Proceeds
received by the Borrower or the Parent Guarantor only in an
amount proportionate to the equity ownership interest of the
Borrower or the Parent Guarantor in the Subsidiary receiving such
proceeds.
"New A.L. - Oslo" means Apothekernes Laboratorium AS, a
Norwegian joint stock company (under incorporation) formed by
A.L. Oslo in connection with the Demeger (as defined in the
Restructuring Agreement).
"New Permitted Indebtedness" has the meaning specified in
the Parent Guaranty.
"Non-U.S. Subsidiary" means, as to any Person, each
Subsidiary of such Person that is incorporated or organized under
the laws of a jurisdiction outside of the United States of
America.
"Notes" means the Tranche A Term Notes, the Tranche B Term
Notes and the Revolving Notes.
"Notice of Assignment and Acceptance" has the meaning
specified in Section 12.7(a).
"Notice of Borrowing" means a notice of the Borrower
substantially in the form of Exhibit D hereto specifying therein
(i) the date of the proposed Borrowing, (ii) the aggregate amount
of such proposed Borrowing, (iii) the initial Interest Period or
Interest Periods for such Loans and (iv) whether such Borrowing
is to be a Tranche A Term Borrowing, a Tranche B Term Borrowing
or a Revolving Loan Borrowing.
"Notice of Interest Period" has the meaning specified in
Section 5.1.
"Original Banks" means each financial institution that is a
"Bank" as of the Agreement Date.
- 12 -<PAGE>
"Other Lenders" shall mean (i) as of the Agreement Date,
Signet Bank, U.S. Bank and National Westminster Bank NJ, and (ii)
at any time thereafter, the banks and financial institutions
party to the Intercreditor Agreement at such time (other than the
Banks and the Agent).
"Parent Guarantor" means A. L. Pharma Inc., a Delaware
corporation.
"Parent Guaranty" means the guaranty by the Parent Guarantor
of the obligations of the Borrower pursuant to the Loan
Documents, substantially in the form of Exhibit E hereto.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Pension Plan" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer
Plan), which is not an individual account plan, as defined in
Section 3(34) of ERISA, and which the Borrower, any of its
Subsidiaries or any ERISA Affiliate now or in the future
maintains, contributes to or has an obligation to contribute to
on behalf of participants who are orwere employed by any of them.
"Permit" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority
under an applicable Requirement of Law.
"Permitted Indebtedness" has the meaning specified in the
Parent Guaranty.
"Permitted Liens" has the meaning specified in the Parent
Guaranty.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or
Governmental Authority.
"Plan" shall mean an employee benefit plan as defined in
Section 3(3) of ERISA which is maintained or contributed to by
the Borrower or an ERISA Affiliate.
"Pledge Agreement" means each pledge made by the
Shareholders of a Pledge Subsidiary in favor of the Agent on
behalf of the Banks in respect of 65% of the total combined
voting power of all classes of stock entitled to vote (within the
meaning of Section 956 of the Code and the regulations
thereunder) of such Pledge Subsidiary, substantially in the form
of Exhibit F hereto.
- 13 -<PAGE>
"Pledge Subsidiary" means each Principal Subsidiary that is
a Non-U.S. Subsidiary.
"Principal Subsidiary" means (a) at all times, the
Scandinavian Principal Companies, and (b) at any time (except as
otherwise provided for in this Agreement or any other Loan
Document), any Subsidiary of the Parent Guarantor that (a) owns
more than 5% of the total assets of the Parent Guarantor and its
Subsidiaries on a consolidated basis, or (b) is responsible for
more than 5% of the total revenues of the Parent Guarantor and
its Subsidiaries, on a consolidated basis; provided that on and
as of the Agreement Date, Principal Subsidiary shall mean each of
the entities listed on Schedule 5(n) to the Parent Guaranty
hereto and at any time thereafter, shall mean (except as
otherwise provided for in this Agreement or any other Loan
Document) the entities listed as "Principal Subsidiaries" (as
determined in accordance with this definition) on the certificate
of the Responsible Financial Officer of the Parent Guarantor most
recently delivered pursuant to Section 6(g)(v) of the Parent
Guaranty.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible, including, without limitation, the right to use,
transmit, display, license or otherwise temporarily or
permanently benefit from the possession of, control of or access
to any film, television program, trademark, trade name,
copyright, service mark or any other type of intellectual or
intangible property.
"Qualified Plan" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be
tax-qualified under Section 401(a) of the Code, and which the
Borrower, any of its Subsidiaries or any ERISA Affiliate now or
in the future maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed
by any of them.
"Ratable Portion" means, as to any Bank, (i) with respect to
the Tranche A Term Loans, the Tranche B Term Loans and the
Revolving Loans, respectively, the percentage obtained by
dividing the amount of such Bank's Tranche A Term Commitment,
Tranche B Term Commitment or Revolving Loan Commitment, as the
case may be, by the aggregate amount of all of such Tranche A
Term Commitments, Tranche B Term Commitments or Term Loan
Commitments of all the Banks, respectively, and (ii) with respect
to the aggregate amount of all Commitments, the percentage
obtained by dividing the aggregate Commitment of such Bank for
all Loans by the aggregate amount of all Commitments of all the
Banks for all Loans.
- 14 -<PAGE>
"Reference Banks" means Union Bank of Norway, Den norske
Bank AS and The First National Bank of Boston.
"Register" has the meaning specified in Section 12.7(g)
hereof.
"Regulation D", "Regulation T", "Regulation U" and
"Regulation X" means Regulation D, T, U, and X, respectively, of
the Board of Governors of the Federal Reserve System (or any
successor thereto), as in effect from time to time, or any
successor thereto.
"Related Norwegian Businesses" has the meaning specified in
the Restructuring Agreement.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, disbursal, leaching or migration into the indoor or
outdoor environment or into or out of any property owned by such
Person, including the movement of Contaminants through or in the
air, soil, surface water, ground water or property.
"Remedial Action" means all actions required to (i) clean
up, remove, treat or in any other way address Contaminants in the
indoor or outdoor environment, (ii) prevent the Release or threat
of Release or minimize the further Release of Contaminants so
they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, or (iii)
perform preremedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" means any of the events described in
Section 4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Responsible Financial Officer" of any Person means the
chief financial officer, treasurer, assistant treasurer,
controller, secretary, assistant secretary or other officer of
such Person listed in the certificate delivered to the Agent
pursuant to Section 6.1(a)(iii) or otherwise notified to the
Agent as being authorized to execute documents and certificates
and otherwise act on behalf of such Person in connection with
financial matters arising under this Agreement or any other Loan
Document.
"Responsible Officer" of any Person means any of the
officers of such Person listed in the certificate delivered to
the Agent pursuant to Section 6.1(a)(iii) or otherwise notified
to the Agent as being authorized to execute and deliver documents
and certificates and otherwise act on behalf of such Person in
- 15 -<PAGE>
all matters (other than financial matters) arising under this
Agreement or any other Loan Document.
"Restructuring" has the meaning specified in the recitals
hereof.
"Restructuring Agreement" means the Restructuring Agreement
dated as of May 16, 1994 by and between the Parent Guarantor and
A.L. - Oslo.
"Restructuring Documents" means the documents listed on the
attached Schedule III.
"Revolving Loan" means a Loan made to the Borrower pursuant
to Section 4.1.
"Revolving Loan Availability Period" means the period
beginning on the Agreement Date and ending on the Revolving Loan
Commitment Termination Date.
"Revolving Loan Borrowing" means a borrowing by the Borrower
consisting of Revolving Loans made on the same day by the Banks
ratably according to their respective Revolving Loan Commitments.
"Revolving Loan Commitment" has the meaning specified in
Section 4.1(a).
"Revolving Loan Commitment Termination Date" means the later
of (i) the day that is three years and three months after the
Effective Date with respect to Revolving Loans, (ii) such other
day to which the Revolving Loan Commitment Termination Date shall
have been extended in accordance with Section 4.5 hereof and
(iii) the date of the earlier termination or cancellation in full
of the Revolving Loan Commitment pursuant to the terms hereof,
including pursuant to Section 10.1.
"Revolving Note" means any promissory note in the form of
Exhibit A-3.
"Scandinavian Principal Companies" means New A.L.-Oslo, A.L.
Pharma A/S and A/S Dumex.
"Shareholder" means, with respect to any corporation, the
holder of any of the Equity of such Person.
"Single-Employer Plan" shall mean a single.employer plan as
defined in section 4001(a)(15) of ERISA which is subject to the
provisions of Title IV of ERISA.
- 16 -<PAGE>
"Subordinated Indebtedness" has the meaning specified in the
Parent Guaranty.
"Subsidiary" means, with respect to any Person, any
corporation, partnership or other business entity of which more
than 50% of the outstanding Equity having ordinary voting power
to elect a majority of the board of directors of such entity
(irrespective of whether, at the time, Equity of any other class
or classes of such entity shall have or might have voting power
by reason of the happening of any contingency) is, or of which
more than 50% of the interests in which are, at the time,
directly or indirectly, owned by such Person and/or one or more
Subsidiaries of such Person.
"Subsidiary Guarantor" means each Principal Subsidiary that
is incorporated or organized under the laws of a jurisdiction
located in the United States of America.
"Subsidiary Guaranty" means any of the guaranties of the
obligations of the Borrower delivered by each of the Subsidiary
Guarantors, pursuant to this Agreement, substantially in the form
of Exhibit G hereto.
"Swap Agreement" has the meaning specified in the definition
of Indebtedness.
"Tax" means any federal, state, local or foreign tax,
assessment or other governmental charge or levy (including any
withholding tax) upon a Person or upon its assets, revenues,
income or profits.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary
of such Person, or (ii) any Affiliate of such Person with which
such Person files or is required to file consolidated, combined
or unitary tax returns.
"Title IV Plan" means a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Tranche A Availability Period" means the period beginning
on the Agreement Date and ending on the Tranche A Term Commitment
Termination Date.
"Tranche A Term Borrowing" means a borrowing by the Borrower
consisting of Tranche A Term Loans made on the same day by the
Banks ratably according to their respective Tranche A Term
Commitments.
"Tranche A Term Commitment" has the meaning specified in
Section 2.1(a).
- 17 -<PAGE>
"Tranche A Term Commitment Termination Date" means the
earlier of (i) January 28, 1995, (ii) the date on which a second
Tranche A Term Borrowing is made pursuant to the terms of this
Agreement, and (iii) the date of the earlier termination or
cancellation in full of the Tranche A Term Commitment pursuant to
the terms hereof, including pursuant to Section 10.1.
"Tranche A Term Loan" means a Loan made to the Borrower
pursuant to Section 2.1.
"Tranche A Term Loan Maturity Date" means the earlier of (i)
the seventh anniversary of the Initial Funding Date with respect
to Tranche A Term Loans and (ii) December 31, 2001.
"Tranche A Term Note" means any promissory note in the form
of Exhibit A-1.
"Tranche B Availability Period" means the period beginning
on the Agreement Date and ending on the Tranche B Term Commitment
Termination Date.
"Tranche B Term Borrowing" means a borrowing by the Borrower
consisting of Tranche B Term Loans made on the same day by the
Banks ratably according to their respective Tranche B Term
Commitments.
"Tranche B Term Commitment" has the meaning specified in
Section 3.1(a).
"Tranche B Term Commitment Termination Date" means the
earlier of (i) January 28, 1995, (ii) the date on which a second
Tranche B Term Borrowing is made pursuant to the terms of this
Agreement, and (iii) the date of the earlier termination or
cancellation in full of the Tranche B Term Commitment pursuant to
the terms hereof, including pursuant to Section 10.1.
"Tranche B Term Loan" means a Loan made to the Borrower
pursuant to Section 3.1.
"Tranche B Term Loan Maturity Date" means the earlier of (i)
the fifth anniversary of the Initial Funding Date with respect to
Tranche B Term Loans and (ii) December 31, 1999.
"Tranche B Term Note" means any promissory note in the form
of Exhibit A-2.
"U.S." means the United States of America.
- 18 -<PAGE>
"Withdrawal Liability" means, as to any Person, at any time,
the aggregate amount of the liabilities, if any, of such Person
pursuant to Section 4201 of ERISA.
1.2. Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding" and
the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP.
ARTICLE II
AMOUNT AND TERMS OF THE TRANCHE A TERM LOANS
2.1. The Tranche A Term Loans.
(a) Commitment to Lend. On the terms and subject to
the conditions contained in this Agreement, each Bank severally
agrees to make up to two (2) Tranche A Term Loans to the Borrower
from time to time on any Business Day during the Tranche A
Availability Period, each such Loan being part of a Tranche A
Term Borrowing, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Bank's name on
Schedule II as its "Tranche A Term Commitment" (as adjusted from
time to time by reason of assignments in accordance with the
provisions of Section 12.7 and as such amount may be reduced
pursuant to Section 2.3, such Bank's "Tranche A Term
Commitment"); provided, however, that following the making of
each such proposed Tranche A Term Loan, (i) the aggregate
principal amount of all Tranche A Term Loans outstanding shall
not exceed the aggregate amount of the Tranche A Term Commitments
and (ii) the aggregate principal amount of all Loans outstanding
shall not exceed the aggregate amount of the Commitments, in each
case at such time.
(b) Evidence of Debt. (i) Each Bank shall maintain in
accordance with its usual practice an account or accounts and
shall receive from the Borrower a single Tranche A Term Note
payable to the order of such Bank, both evidencing the
Indebtedness to such Bank resulting from each Tranche A Term Loan
made by such Bank to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such
Bank from time to time hereunder.
- 19 -<PAGE>
(ii) The Register maintained by the Agent pursuant to
Section 12.7(g) shall include a "Tranche A Term Loan control
account" for each Bank, in which account shall be recorded (A)
the date and amount of each Tranche A Term Borrowing hereunder,
(B) the amount of each Bank's Tranche A Term Loan comprising such
Borrowing and the Interest Period applicable thereto, (C) the
amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Bank with respect to
each such Tranche A Term Loan hereunder and (D) the amount of any
sum received by the Agent from the Borrower with respect to such
Tranche A Term Loans hereunder and each Bank's Ratable Portion
thereof.
(iii) The entries made in the Register in respect of Tranche
A Term Loans shall be conclusive and binding for all purposes,
absent manifest error.
2.2. Making the Tranche A Term Loans. (a) Each Tranche
A Term Borrowing shall be made upon receipt of a Notice of
Borrowing, given by the Borrower to the Agent not later than
11:00 A.M. (New York City time) on the fifth Business Day prior
to the date of the proposed Tranche A Term Borrowing.
(b) The Agent shall give to each Bank prompt notice of
its receipt of a Notice of Borrowing in respect of Tranche A Term
Loans and, upon its determination thereof, notice of the
applicable interest rate under Section 5.3(b). Each Bank shall,
before 11:00 A.M. (New York City time) on the date of the
proposed Tranche A Term Borrowing, make available for the account
of its Lending Office to the Agent at its address referred to in
Section 12.2, in immediately available funds, such Bank's Ratable
Portion of such proposed Tranche A Term Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VI, the Agent will
make such funds available to the Borrower at the Agent's
above-referenced address.
(c) Each Tranche A Term Borrowing pursuant to this
Section 2.2 shall be in an aggregate amount of not less than
$10,000,000 or an integral multiple of $5,000,000 in excess
thereof. The maximum number of Tranche A Term Borrowings
permitted under this Agreement shall be two (2).
(d) Each Notice of Borrowing pursuant to this Section
2.2 shall be irrevocable and binding on the Borrower. The
Borrower shall indemnify each Bank against any loss, cost or
expense incurred by such Bank as a result of any failure to
fulfill on or before the date specified in such Notice of
Borrowing for such proposed Borrowing the applicable conditions
set forth in Article VI, including, without limitation, any loss,
- 20 -<PAGE>
cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to
fund any Tranche A Term Borrowing when such Tranche A Term Loan,
as a result of such failure, is not made on such date. A
certificate as to such amounts submitted to the Borrower and the
Agent by such Bank shall be conclusive and binding absent
manifest error.
(e) Unless the Agent shall have received notice from a
Bank prior to the date of any proposed Tranche A Term Borrowing
pursuant to this Section 2.2 that such Bank will not make
available to the Agent such Bank's Ratable Portion of such
Tranche A Term Borrowing, the Agent may assume that such Bank has
made such Ratable Portion available to the Agent on the date of
such Tranche A Term Borrowing in accordance with this Section 2.2
and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If
and to the extent that such Bank shall not have so made such
Ratable Portion available to the Agent and the Agent has so made
available such amount, such Bank and the Borrower severally agree
to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Tranche
A Term Loans comprising the Tranche A Term Borrowing and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Tranche A Term Loan as part
of such Borrowing for purposes of this Agreement. If the Borrower
shall repay to the Agent such corresponding amount, such payment
shall not relieve such Bank of any obligation it may have to the
Borrower hereunder.
(f) The failure of any Bank to make the Tranche A Term
Loan to be made by it as part of any Tranche A Term Borrowing
pursuant to this Section 2.2 shall not relieve any other Bank of
its obligation, if any, hereunder to make its Tranche A Term Loan
on the date of such Borrowing, but no Bank shall be responsible
for the failure of any other Bank to make the Tranche A Term Loan
to be made by such other Bank on the date of any such Tranche A
Term Borrowing.
2.3. Termination/Reduction of the Tranche A Term
Commitments.
(a) Optional Reductions. The Borrower shall have the
right, upon at least five Business Day's prior notice (which
shall be irrevocable) to the Agent, to terminate in whole or
permanently reduce ratably in part the unused portions of the
- 21 -<PAGE>
respective Tranche A Term Commitments of the Banks; provided,
however, that each partial reduction shall be in the aggregate
amount of not less than $10,000,000 or an integral multiple of
$5,000,000 (or such lesser amount as may be necessary to reduce
to zero the amount of the Tranche A Term Commitments) in excess
thereof.
(b) Cancellation of Unused Portion. On the Tranche A
Term Commitment Termination Date, the unused portion of each
Bank's Tranche A Term Commitment shall be cancelled and will no
longer be available for any Tranche A Term Borrowings thereafter.
(c) Payment of Commitment Fee. Simultaneously with
any termination, reduction or cancellation of the Tranche A Term
Commitments pursuant to this Section 2.3, the Borrower shall pay
to the Agent for the account of each relevant Bank the applicable
Commitment Fee, if any, on the amount of the Tranche A Term
Commitments so terminated, reduced or cancelled and owed to such
Bank through the date of such termination or reduction.
2.4. Consolidation and Repayment of Tranche A Term
Loans.
(a) Consolidation. If more than one Tranche A Term
Borrowing is made, then on the Consolidation Date with respect to
Tranche A Term Loans, the Interest Periods for the Tranche A Term
Loans shall be adjusted by the Agent so that on and after the
Consolidation Date, there will be no more than one (1) Interest
Period outstanding with respect to the Tranche A Term Loan. The
Agent shall give the Banks 30 days' prior notice of the proposed
Consolidation Date. The Borrower shall indemnify the Banks in
accordance with Section 12.4(c) for any costs resulting from such
Consolidation.
(b) Repayment. The Borrower shall repay the
outstanding principal amount of the Tranche A Term Loans in
eleven (11) consecutive semi-annual installments in amounts equal
to the percentage indicated in the table below of the principal
amount of the Tranche A Term Loan outstanding on the
Consolidation Date (subject to adjustment to reflect any
prepayments pursuant to Section 5.4); provided that, in any
event, on the Tranche A Term Loan Maturity Date, the Borrower
shall pay the full principal amount of all Tranche A Term Loans
then outstanding (together with all accrued and unpaid interest
thereon):
The day that is the following
Number of months after the
Initial Funding Date with
- 22 -<PAGE>
respect to Tranche A Term Loans Installment
Percentage
24 months 5%
30 months 5%
36 months 6%
42 months 6%
48 months 7%
54 months 7%
60 months 8%
66 months 8%
72 months 9%
78 months 9%
84 months 30%
ARTICLE III
AMOUNT AND TERMS OF THE TRANCHE B TERM LOANS
3.1. The Tranche B Term Loans.
(a) Commitment to Lend. On the terms and subject to
the conditions contained in this Agreement, each Bank severally
agrees to make up to two (2) Tranche B Term Loans to the Borrower
from time to time on any Business Day during the Tranche B
Availability Period, each such Loan being part of a Tranche B
Term Borrowing, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Bank's name on
Schedule II as its "Tranche B Term Commitment" (as adjusted from
time to time by reason of assignments in accordance with the
provisions of Section 12.7 and as such amount may be reduced
pursuant to Section 3.3, such Bank's "Tranche B Term
Commitment"); provided, however, that, following the making of
each such proposed Tranche B Term Loan, (i) the aggregate
principal amount of all Tranche B Term Loans outstanding, shall
not exceed the aggregate amount of the Tranche B Term Commitments
and (ii) the aggregate principal amount of all Loans outstanding
shall not exceed the aggregate amount of the Commitments, in each
case at such time.
(b) Evidence of Debt. (i) Each Bank shall maintain
in accordance with its usual practice an account or accounts and
shall receive from the Borrower a single Tranche B Term Note
payable to the order of such Bank, both evidencing the
Indebtedness to such Bank resulting from each Tranche B Term Loan
made by such Bank to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such
Bank from time to time hereunder.
- 23 -<PAGE>
(ii) The Register maintained by the Agent pursuant to
Section 12.7(g) shall include a "Tranche B Term Loan control
account" for each Bank, in which account shall be recorded (A)
the date and amount of each Tranche B Term Borrowing hereunder,
(B) the amount of each Bank's Tranche B Term Loan comprising such
Borrowing and the Interest Period applicable thereto, (C) the
amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Bank with respect to
each such Tranche B Term Loan hereunder and (D) the amount of any
sum received by the Agent from the Borrower with respect to such
Tranche B Term Loans hereunder and each Bank's Ratable Portion
thereof.
(iii) The entries made in the Register in respect of Tranche
B Term Loans shall be conclusive and binding for all purposes,
absent manifest error.
3.2. Making the Tranche B Term Loans.
(a) Each Tranche B Term Borrowing shall be made upon
receipt of a Notice of Borrowing, given by the Borrower to the
Agent not later than 11:00 A.M. (New York City time) on the fifth
Business Day prior to the date of the proposed Tranche B Term
Borrowing.
(b) The Agent shall give to each Bank prompt notice of
its receipt of a Notice of Borrowing in respect of Tranche B Term
Loans and, upon its determination thereof, notice of the
applicable interest rate under Section 5.3(b). Each Bank shall,
before 11:00 A.M. (New York City time) on the date of the
proposed Tranche B Term Borrowing, make available for the account
of its Lending Office to the Agent at its address referred to in
Section 12.2, in immediately available funds, such Bank's Ratable
Portion of such proposed Tranche B Term Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VI, the Agent will
make such funds available to the Borrower at the Agent's
aforesaid address.
(c) Each Tranche B Term Borrowing pursuant to this
Section 3.2 shall be in an aggregate amount of not less than
$10,000,000 or an integral multiple of $1,000,000 in excess
thereof. The maximum number of Tranche B Term Borrowings
permitted under this Agreement shall be two (2).
(d) Each Notice of Borrowing pursuant to this Section
3.2 shall be irrevocable and binding on the Borrower. The
Borrower shall indemnify each Bank against any loss, cost or
expense incurred by such Bank as a result of any failure to
fulfill on or before the date specified in such Notice of
- 24 -<PAGE>
Borrowing for such proposed Borrowing the applicable conditions
set forth in Article VI, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to
fund any Tranche B Term Borrowing when such Tranche B Term Loan,
as a result of such failure, is not made on such date. A
certificate as to such amounts submitted to the Borrower and the
Agent by such Bank shall be conclusive and binding, absent
manifest error.
(e) Unless the Agent shall have received notice from a
Bank prior to the date of any proposed Tranche B Term Borrowing
pursuant to this Section 3.2 that such Bank will not make
available to the Agent such Bank's Ratable Portion of such
Tranche B Term Borrowing, the Agent may assume that such Bank has
made such Ratable Portion available to the Agent on the date of
such Tranche B Term Borrowing in accordance with this Section 3.2
and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If
and to the extent that such Bank shall not have so made such
Ratable Portion available to the Agent and the Agent has so made
available such amount, such Bank and the Borrower severally agree
to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Tranche
B Term Loans comprising such Tranche B Term Borrowing and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Tranche B Term Loan as part
of such Borrowing for purposes of this Agreement. If the Borrower
shall repay to the Agent such corresponding amount, such payment
shall not relieve such Bank of any obligation it may have to the
Borrower hereunder.
(f) The failure of any Bank to make the Tranche B Term
Loan to be made by it as part of any Tranche B Term Borrowing
pursuant to this Section 3.2 shall not relieve any other Bank of
its obligation, if any, hereunder to make its Tranche B Term Loan
on the date of such Borrowing, but no Bank shall be responsible
for the failure of any other Bank to make the Tranche B Term Loan
to be made by such other Bank on the date of any such Tranche B
Term Borrowing.
3.3. Termination/Reduction of the Tranche B Term
Commitments.
(a) Optional Reductions. The Borrower shall have the
right, upon at least five Business Day's prior notice (which
- 25 -<PAGE>
shall be irrevocable) to the Agent, to terminate in whole or
permanently reduce ratably in part the unused portions of the
respective Tranche B Term Commitments of the Banks; provided,
however, that each partial reduction shall be in the aggregate
amount of not less than $10,000,000 or an integral multiple of
$1,000,000 (or such lesser amount as may be necessary to reduce
to zero the amount of the Tranche B Term Commitments) in excess
thereof.
(b) Cancellation of Unused Portion. On the Tranche B
Term Commitment Termination Date, the unused portion of each
Bank's Tranche B Term Commitment shall be cancelled and will no
longer be available for any Tranche B Term Borrowings thereafter.
(c) Payment of Commitment Fee. Simultaneously with
any termination, reduction or cancellation of the Tranche B Term
Commitments pursuant to this Section 3.3, the Borrower shall pay
to the Agent for the account of each Bank the applicable
Commitment Fee, if any, on the amount of the Tranche B Term
Commitments so terminated or reduced and owed to such Bank
through the date of such termination, reduction or cancellation.
3.4. Consolidation and Repayment of the Tranche B Term
Loans.
(a) Consolidation. If more than one Tranche B Term
Borrowing is made, then on the Consolidation Date with respect to
Tranche B Term Loans, the Interest Periods for the Tranche B Term
Loans shall be adjusted by the Agent so that on and after the
Consolidation Date, there will be no more than one (1) Interest
Period outstanding with respect to the Tranche B Term Loan. The
Agent shall give the Banks 30 days' prior notice of the proposed
Consolidation Date. The Borrower shall indemnify the Banks in
accordance with Section 12.4(c) for any costs resulting from such
Consolidation.
(b) Repayment. The Borrower shall repay the
outstanding principal amount of the Tranche B Term Loans in seven
(7) consecutive semi annual installments in amounts equal to the
percentage indicated in the table below of the principal amount
of the Tranche B Term Loans outstanding on the Consolidation Date
(subject to adjustment to reflect any prepayments pursuant to
Section 5.4); provided that, in any event, on the Tranche B Term
Loan Maturity Date, the Borrower shall pay the full principal
amount of all Tranche B Term Loans then outstanding (together
with all accrued and unpaid interest thereon):
The day that is the following
Number of months after the
Initial Funding Date with
- 26 -<PAGE>
respect to Tranche B Term Loans Installment Percentage
24 months 5%
30 months 5%
36 months 5%
42 months 10%
48 months 10%
54 months 10%
60 months 55%
ARTICLE IV
AMOUNT AND TERMS OF THE REVOLVING LOANS
4.1. The Revolving Loans.
(a) Commitment to Lend. On the terms and subject to
the conditions contained in this Agreement, each Bank severally
agrees to make Revolving Loans to the Borrower from time to time
on any Business Day during the Revolving Loan Availability
Period, each such Loan being part of a Revolving Loan Borrowing,
in an aggregate amount not to exceed at any time outstanding the
amount set forth opposite such Bank's name on Schedule II as its
"Revolving Loan Commitment" (as adjusted from time to time by
reason of assignments in accordance with the provisions of
Section 12.7 and as such amount may be reduced pursuant to
Section 4.3, such Bank's "Revolving Loan Commitment"); provided,
however, that, following the making of each such proposed
Revolving Loan, (i) the aggregate amount of all Revolving Loans
outstanding shall not exceed the aggregate amount of the
Revolving Loan Commitments of the Banks and (ii) the aggregate
principal amount of all Loans outstanding shall not exceed the
aggregate amount of the Commitments, in each case at such time.
(b) Evidence of Debt. (i) Each Bank shall maintain in
accordance with its usual practice an account or accounts and
shall receive from the Borrower a single Revolving Note payable
to the order of such Bank, both evidencing the Indebtedness to
such Bank resulting from each Revolving Loan made by such Bank to
the Borrower from time to time, including the amounts of
principal and interest payable and paid to such Bank from time to
time hereunder.
(ii) The Register maintained by the Agent pursuant to
Section 12.7(g) shall include a "Revolving Loan control account"
for each Bank, in which account shall be recorded (A) the date
and amount of each Revolving Loan Borrowing hereunder, (B) the
amount of each Bank's Revolving Loan comprising such Borrowing
and the Interest Period applicable thereto, (C) the amount of any
- 27 -<PAGE>
principal or interest due and payable or to become due and
payable from the Borrower to each Bank with respect to each such
Revolving Loan hereunder and (D) the amount of any sum received
by the Agent from the Borrower with respect to such Revolving
Loans hereunder and each Bank's Ratable Portion thereof.
(iii) The entries made in the Register in respect of the
Revolving Loans shall be conclusive and binding for all purposes,
absent manifest error.
(c) Repayment of Revolving Loans. (i) The Borrower
may, upon at least five Business Days' prior notice to the Agent
(which shall be irrevocable) stating the proposed date and
aggregate principal amount of the repayment, repay without
premium the outstanding principal amount of the Revolving Loans
comprising a part of the same Revolving Loan Borrowing, in whole
or in part, together with accrued interest to the date of such
repayment on the principal amount repaid. Within the limits of
each Bank's Revolving Loan Commitment, amounts borrowed under
Section 4.1(a) and repaid may be reborrowed under Section 4.1(a),
subject to Section 4.2(c) below.
(ii) The Borrower shall indemnify the Banks pursuant to
Section 12.4(c) in the event that any repayment shall be made on
a day other than the last day of an Interest Period for the Loan
or Loans being prepaid.
4.2. Making the Revolving Loans. (a) Each Revolving Loan
Borrowing shall be made upon receipt of a Notice of Borrowing,
given by the Borrower to the Agent not later than 11:00 A.M. (New
York City time) on the fifth Business Day prior to the date of
the proposed Revolving Loan Borrowing.
(b) The Agent shall give to each Bank prompt notice of
its receipt of a Notice of Borrowing in respect of Revolving
Loans and, upon its determination thereof, notice of the
applicable interest rate under Section 5.3(b). Each Bank shall,
before 11:00 A.M. (New York City time) on the date of the
proposed Revolving Loan Borrowing, make available for the account
of its Lending Office to the Agent at its address referred to in
Section 12.2, in immediately available funds, such Bank's Ratable
Portion of such proposed Revolving Loan Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the
applicable conditions set-forth in Article VI, the Agent will
make such funds available to the Borrower at the Agent's
aforesaid address.
(c) Each Revolving Loan Borrowing pursuant to this
Section 4.2 shall be in an aggregate amount of not less than
$6,000,000 or an integral multiple of $3,000,000 in excess
- 28 -<PAGE>
thereof (or such lesser amount as may be necessary to draw down
the full amount of the Revolving Loan Commitment). The maximum
number of Interest Periods that may be outstanding in respect of
Revolving Loans at any one time is four (4).
(d) Each Notice of Borrowing pursuant to this Section
4.2 shall be irrevocable and binding on the Borrower. The
Borrower shall indemnify each Bank against any loss, cost or
expense incurred by such Bank as a result of any failure to
fulfill on or before the date specified in such Notice of
Borrowing for such proposed Borrowing the applicable conditions
set forth in Article VI, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to
fund any Revolving Loan to be made by such Bank as part of such
proposed Revolving Loan Borrowing when such Revolving Loan, as a
result of such failure, is not made on such date. A certificate
as to such amounts submitted to the Borrower and the Agent by
such Bank shall be conclusive and binding, absent manifest error.
(e) Unless the Agent shall have received notice from a
Bank prior to the date of any proposed Revolving Loan Borrowing
pursuant to this Section 4.2 that such Bank will not make
available to the Agent such Bank's Ratable Portion of such
Revolving Loan Borrowing, the Agent may assume that such Bank has
made such Ratable Portion available to the Agent on the date of
such Revolving Loan Borrowing in accordance with this Section 4.2
and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If
and to the extent that such Bank shall not have so made such
Ratable Portion available to the Agent and the Agent has so made
available such amount, such Bank and the Borrower severally agree
to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the
Revolving Loan comprising such Revolving Loan Borrowing and (ii)
in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such amount
so repaid shall constitute such Bank's Revolving Loan as part of
such Borrowing for purposes of this Agreement. If the Borrower
shall repay to the Agent such corresponding amount, such payment
shall not relieve such Bank of any obligation it may have to the
Borrower hereunder.
(f) The failure of any Bank to make the Revolving Loan
to be made by it as part of any Revolving Loan Borrowing pursuant
to this Section 4.2 shall not relieve any other Bank of its
obligation, if any, hereunder to make its Revolving Loan on the
- 29 -<PAGE>
date of such Borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Revolving Loan to be made
by such other Bank on the date of any such Revolving Loan
Borrowing.
4.3. Termination/Reduction of the Revolving Loan
Commitments.
(a) Optional Reductions. The Borrower shall have the
right, upon at least thirty days' prior notice to the Agent, to
terminate in whole or permanently reduce ratably in part the
unused portions of the respective Revolving Loan Commitments of
the Banks; provided, however, that each partial reduction shall
be in the aggregate amount of not less than $10,000,000 or an
integral multiple of $2,000,000 (or such other lesser amount as
may be necessary to reduce to zero the amount of the Revolving
Loan Commitments) in excess thereof.
(b) Payment of Commitment Fee. Simultaneously with any
termination or reduction of the Revolving Loan Commitment
pursuant to this Section 4.3, the Borrower shall pay to the Agent
for the account of each Bank the applicable Commitment Fee, if
any, on the amount of the Revolving Loan Commitments so
terminated or reduced and owed to such Bank through the date of
such termination or reduction.
4.4. Repayment of the Revolving Loan. The Borrower shall
repay the outstanding principal amount of the Revolving Loans
(together with all accrued but unpaid interest thereon) in full
on the Revolving Loan Commitment Termination Date.
4.5. Extension of Revolving Loan Commitment Termination
Date. (a) On or before the first anniversary of the Agreement
Date, the Borrower may deliver a notice to the Agent indicating
that the Revolving Loan Commitment Termination Date is to be
extended for an additional one year period with respect to all or
a portion of the outstanding Revolving Loans in which case the
Revolving Loan Commitment Termination Date shall be so extended;
(b) The Borrower may request that the Revolving Loan
Commitment Termination Date be so extended for an additional one
year period by submitting a request in writing to the Agent three
months prior to the then scheduled Revolving Loan Commitment
Termination Date. The Agent shall promptly inform the Banks of
such request. Each Bank shall then determine, in its sole
discretion, whether the Revolving Loan Commitment Termination
Date will be extended as to its Revolving Loans and such Bank
shall inform the Agent of its decision. The Agent shall inform
the Borrower within one month of the time when the Borrower's
request was received whether its request for an extension of the
- 30 -<PAGE>
Revolving Loan Commitment Termination Date has been approved and
by which Banks. The Borrower shall repay in accordance with the
terms of this Agreement the full amount of the Revolving Loans of
any non-Extending Bank on the next scheduled Revolving Loan
Commitment Termination Date without giving effect to the
extension.
(c) Extension Fee. On the day notice is given, in the
case of an extension effected pursuant to clause (a) above, or
within 7 days of the approval of each extension of the Revolving
Loan Commitment Termination Date in accordance with the terms
hereof, in the case of extensions effected pursuant to clause (b)
above, the Borrower shall pay to the Agent for the account of
each Bank that has Revolving Loans outstanding as to which the
Revolving Loan Commitment Termination Date has been extended a
fee equal to 1/8% of each such Bank's Ratable Portion of the
Revolving Loans so extended.
ARTICLE V
INTEREST, FEES, ETC.
5.1. Interest Period Election. (a) Subject to the
adjustment of any Interest Periods in connection with a
Consolidation, after the election of an initial Interest Period
pursuant to a Notice of Borrowing, the Borrower shall elect the
Interest Period that shall apply to each Loan after the end of
the then current Interest Period with respect to such Loan;
provided that all Loans related to the same Borrowing shall have
the same Interest Period. Each such election shall be in
substantially the form of Exhibit I hereto (a "Notice of Interest
Period") and shall be made by giving the Agent at least three
Business Days' prior written notice thereof specifying the
Interest Period being elected. The Agent shall promptly notify
each Bank of its receipt of a Notice of Interest Period and of
the contents thereof. If, within the time period required under
the terms of this Section 5.1, the Agent does not receive a
Notice of Interest Period from the Borrower, or a Default shall
then exist and be continuing, then the Agent shall inform the
Banks of the same and, upon the expiration of the Interest Period
therefor, the Interest Period applicable to such Loans thereafter
shall be (x) one month, in the case of the Borrower's failure to
deliver a Notice of Interest Period, and (y) of such duration as
the Agent may determine, in the event a Default shall then exist
and be continuing, until such time as (i) in the case of the
foregoing clause (x), the Borrower delivers a Notice of Interest
Period in accordance with the terms of this Agreement electing a
different Interest Period or (ii) such Loans become due and
- 31 -<PAGE>
payable (as the case may be). Each Notice of Interest Period
shall be irrevocable.
(b) Notwithstanding anything else herein contained, if
requested by the Borrower in its Notice of Borrowing or in its
Notice of Interest Period, the Banks may, in their sole
discretion, make Loans with an applicable Interest Period of 12
months; provided that no such request shall be granted unless all
of the Banks so agree.
5.2. Interest Rate. (a) The Borrower shall pay interest
on the unpaid principal amount of each Loan from the date of the
making thereof until the principal amount thereof shall be paid
in full at a rate per annum equal at all times during the
applicable Interest Period for each Loan to the sum of the
Eurodollar Rate for such Interest Period plus the Applicable
Margin (subject to clause (b) below), payable in arrears (i) on
the last day of such Interest Period or (ii) in the case of an
Interest Period having a duration of 12 months, (x) on the day
that is 6 months after the day such Borrowing is made and (y) on
the last day of such Interest Period.
(b) Reduction in Applicable Margin. The Applicable
Margin in respect of all types of Loans shall be reduced by 1/8%
per annum in respect of each Interest Period next succeeding any
Interest Period during the whole of which the Equity Ratio
exceeds 0.5:1.
(c) Default Rate of Interest. If any amount of
principal of any Loan is not paid when due, whether at stated
maturity, by acceleration or otherwise, the interest rate
applicable to any such amount shall be (i) the Eurodollar Rate
applicable to such Loan (as determined in accordance with this
Agreement) plus (ii) the Applicable Margin plus (iii) 1% per
annum, payable on demand, and if any interest, fee or other
amount payable hereunder is not paid when due, such amount shall
bear interest at a rate per annum equal at all times to the
Eurodollar Rate in effect at such time, for a period and for a
Dollar amount determined by the Agent, plus 2% per annum, payable
on demand.
5.3. Interest Rate Determination and Protection. (a) If
the Agent shall on behalf of the Banks determine in good faith
(which determination shall be conclusive and binding on the
Borrower and the Banks) that, by reason of circumstances
affecting the international interbank Eurocurrency market
generally, adequate and reasonable means do not or will not exist
for ascertaining the Eurodollar Rate applicable to any Interest
Period, the Agent shall give notice of such determination
(hereinafter called a "Determination Notice") to the Borrower and
- 32 -<PAGE>
each of the Banks. The Borrower, the Banks and the Agent shall
then negotiate in good faith in order to agree upon a mutually
satisfactory interest rate (or separate rates in respect of the
Loans of the several Banks) and Interest Period (or Periods) to
be substituted for those which would otherwise have applied under
this Agreement. If the Borrower, the Banks and the Agent are
unable to agree upon an interest rate (or rates) and Interest
Period (or Periods) within a period not exceeding thirty days of
the giving of such Determination Notice, then the Borrower shall
have the right to prepay any such Loans (without premium or
penalty) and with respect to any such Loans that are not so
prepaid, the Agent shall (after consultation with the Banks) set
an interest rate (or separate rates in respect of the Loans of
the several Banks) and an Interest Period (or Periods) all to
take effect from the expiration of the Interest Period current at
the date of the Determination Notice, which rate (or rates) shall
be the aggregate of the Applicable Margin and the cost to each of
the Banks of funding their Ratable Portion of the Loans. In the
event that the condition referred to in this Section 5.3(a) shall
extend beyond the end of an Interest Period so agreed or set, the
foregoing procedure shall be repeated as often as may be
necessary.
(b) The Agent shall give prompt notice to the Borrower
and the Banks of the applicable interest rate determined by the
Agent for purposes of Section 5.2(a) or (c), and the applicable
rate furnished by each Reference Bank.
(c) If the Majority Banks notify the Agent that the
Eurodollar Rate for any Interest Period will not adequately
reflect the cost to such Banks of making or maintaining their
respective Loans for such Interest Period, the Agent shall
forthwith give notice thereof to the Borrower and the Banks
stating the circumstances which have caused such notice to be
given, and if such notice shall be given prior to the Loan or
Loans being advanced by the Banks, the Borrower's right to borrow
the Loans hereunder from the Banks shall be suspended during the
continuation of such circumstances. In any event, during the
thirty (30) days following the giving of such notice, the
Borrower, the Agent and the Banks shall negotiate in good faith
in order to arrive at an alternative interest rate or (as the
case may be) an alternative basis for the Banks to fund or
continue to fund their Ratable Portion of such Loans during such
Interest Period. If within such thirty (30) day period an
alternative interest rate or (as the case may be) an alternative
basis is agreed upon, then such alternative interest rate or (as
the case may be) alternative basis shall take effect in
accordance with the terms of such agreement. If the Borrower,
the Agent and the Banks fail to agree on such an alternative
interest rate or (as the case may be) alternative basis within
- 33 -<PAGE>
such thirty (30) day period and such circumstances are continuing
at the end of such thirty (30) day period, then the Agent with
the agreement of each Bank shall set an interest period and
interest rate representing the cost of funding of the Banks in
Dollars of their Ratable Portion of such Loans plus the Margin.
If the circumstance shall continue at the end of such interest
period, the procedure in this Section 5.3(c) shall be repeated.
If the Borrower shall not agree with such rate then the Borrower
may give not less than fifteen (15) Business Days' irrevocable
notice of prepayment to the Agent in which case the aggregate
Commitments of the Banks shall thereupon be cancelled and, if the
Loans are outstanding, the Borrower shall prepay (without premium
or penalty) the Loans on the first Business Day after such period
together with accrued interest thereon at the applicable rate
plus the Applicable Margin.
5.4. Prepayments of the Loans. (a) Optional
Prepayments. Subject to the provisions of this Section 5.4, the
Borrower may prepay Loans on the last day of any Interest Period
with respect to such Loans (or, with respect to a Loan as to
which the applicable Interest Period is 12 months, on any day on
which an interest payment is due pursuant to Section 5.2(a);
provided that if such day is not the last day of the Interest
Period in respect of such Loan, the Borrower shall continue to be
liable for any costs or expenses pursuant to Section 12.4(c)) as
follows:
(i) Tranche A Term Loans and Tranche B Term Loans.
(A) The Borrower may, upon at least fifteen Business Days'
prior notice to the Agent (which shall be irrevocable)
stating the proposed date and aggregate principal amount of
the prepayment, prepay without premium or penalty the
outstanding principal amount of the Tranche A Term Loans and
the Tranche B Term Loans, in whole or in part (but if in
part, then such prepayment shall be applied pro rata to all
Tranche A Term Loans and Tranche B Term Loans then
outstanding), together with accrued interest to the date of
such prepayment on the principal amount prepaid.
(B) Notwithstanding the foregoing, if the aggregate
principal amount of all Tranche A Term Loans and Tranche B
Term Loans prepaid by the Borrower during the period from
the Agreement Date through the third anniversary thereof is
equal to or exceeds $50,000,000, then any additional
prepayment of the Tranche A Term Loans and the Tranche B
Term Loans made during such period shall be subject to a fee
of 1/4 of 1% on the amount being prepaid; provided, however,
that such fee shall not be payable if the source of funds
for such prepayment is (x) the Net Cash Proceeds of asset
sales, (y) the Net Cash Proceeds of Capital Market
- 34 -<PAGE>
Transactions, or (z) Earnings from Operations, (in each case
as evidenced in the certificate of a Responsible Financial
Officer delivered to the Agent and setting forth in detail
satisfactory to the Agent the source of such funds); and
provided, further, that no such fee shall apply to
prepayments made after the third anniversary of the
Agreement Date.
(C) Tranche A Term Loans and Tranche B Term Loans
prepaid pursuant to this Agreement may not be reborrowed.
(ii) Prepayments of any type of Loan made at the
Borrower's option may be allocated (A) towards payment of
the next payment due, (B) pro-rata among all remaining
maturities or (C) towards the final payment due, in any case
with respect to such Loans at the option of the Borrower.
(b) Mandatory Prepayment. The Borrower shall prepay
Tranche A Term Loans, Tranche B Term Loans and Revolving Loans to
the extent necessary to ensure that the aggregate principal
amount of all (i) Tranche A Term Loans outstanding will not at
any time exceed the aggregate of the Tranche A Term Commitments
of the Banks, (ii) Tranche B Term Loans outstanding will not at
any time exceed the aggregate of the Tranche B Term Commitments
of the Banks, and (iii) Revolving Loans outstanding will not at
any time exceed the Revolving Loan Commitments of the Banks.
(c) Indemnification of Banks. The Borrower shall
indemnify the Banks pursuant to Section 12.4(c) in the event that
any prepayment shall be made on a day other than the last day of
an Interest Period for the Loan or Loans being prepaid. In
addition to any amounts due by the Borrower to the Banks pursuant
to Section 12.4(c), the Borrower shall pay to the Agent for the
account of the Banks an additional fee of 1/4% per annum on the
amount so prepaid for the remainder of the Interest Period.
(d) Amount and Allocation of Prepayment. Each partial
prepayment permitted under this Section 5.4 shall be in an
aggregate amount of not less than $5,000,000 or integral
multiples of $1,000,000 in excess thereof.
5.5. Fees. (a) Commitment Fees. (i) Tranche A Term
Commitment. The Borrower will pay on the Tranche A Term
Commitment Termination Date to the Agent for the account of each
Bank in arrears a fee accruing from the Agreement Date until the
Tranche A Term Commitment Termination Date, on such Bank's
aggregate daily unused and uncancelled Tranche A Term Commitment
as in effect from time to time at the rate of 3/8% per annum.
- 35 -<PAGE>
(ii) Tranche B Term Commitment. The Borrower will pay
on the Tranche B Term Commitment Termination Date to the Agent
for the account of each Bank in arrears a fee accruing from the
Agreement Date until the Tranche B Term Commitment Termination
Date on such Bank's aggregate daily unused and uncancelled
Tranche B Term Commitment, as in effect from time to time, at the
rate of 3/8% per annum.
(iii) Revolving Loan Commitment. The Borrower will pay
to the Agent for the account of each Bank quarterly in arrears a
fee accruing from the Agreement Date until the Revolving Loan
Commitment Termination Date on such Bank's aggregate daily unused
and uncancelled Revolving Loan Commitment, as in effect from time
to time, at the rate of .55% per annum.
(b) Arrangement Fee. The Borrower will pay to the
Arranger a fee (the "Arrangement Fee"), in an amount separately
agreed. Such fee shall be payable in two equal payments with one
half payable on the Agreement Date and the other payable on the
Initial Funding Date with respect to the first type of Loan made
hereunder.
(c) Agency Fee. The Borrower will pay to the Agent an
annual fee (the "Agency Fee") in an amount separately agreed.
Such fee shall be paid (a) within seven days of the Agreement
Date, (b) each year thereafter on the anniversary of the
Agreement Date, and (c) on termination of this Agreement in an
amount equal to the accrued and unpaid portion of such fee.
5.6. Increased Costs. (a) If, due to either (i) the
introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the
Eurodollar Reserve Requirement) in, or in the interpretation of,
any law or regulation or (ii) the compliance with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any
increase in the cost (other than with respect to income,
franchise or withholding taxes or other taxes of a similar
nature) to any Bank of agreeing to make or making, funding or
maintaining any Loans, then (A) such Bank shall, as soon as such
Bank becomes aware of such increased cost, but in any event not
later than 90 days after such increased cost was incurred,
deliver to the Borrower and the Agent a notice stating the actual
amount of such increased cost incurred by such Bank; (B) the
Borrower shall, promptly upon its receipt of such notice pay to
the Agent for the account of such Bank amounts sufficient to
compensate such Bank for the increased cost incurred by it as set
forth in the notice referred to above and (C) such Bank shall use
its reasonable best efforts to designate another of its then
existing offices as its Lending Office if the making of such
- 36 -<PAGE>
designation would, without any detrimental effect to such Bank,
as determined by such Bank in its sole discretion, avoid the need
for, or reduce the amount of, future increased costs which are
probable of being incurred by such Bank. The amount of increased
costs payable by the Borrower to any Bank as stated in any such
notice delivered to the Borrower and the Agent pursuant to the
provisions of this Section 5.6(a) shall be conclusive and binding
for all purposes, absent manifest error.
(b) If any Bank shall be required under Regulation D to
maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities, then (i)
such Bank shall, within 45 days after the end of any Interest
Period with respect to any Loan during which such Bank was so
required to maintain such reserves, deliver to the Borrower and
the Agent a notice stating (A) that such Bank was required to
maintain reserves and as a result such Bank incurred additional
costs in connection with making Loans and (B) in reasonable
detail, such Bank's computations of the amount of additional
interest payable by the Borrower pursuant to the provisions of
this Section 5.6(b), and (ii) the Borrower shall promptly upon
receipt of any such notice, pay to the Agent, for the account of
such Bank, additional interest on the unpaid principal amount of
each Loan of such Bank outstanding during the Interest Period
with respect to which the above-referenced notice was delivered
to the Borrower, at a rate per annum equal to the difference
obtained by subtracting (x) the Eurodollar Rate for such Interest
Period from (y) the rate obtained by dividing such Eurodollar
Rate by a percentage equal to 100% minus the Eurodollar Reserve
Requirement of such Bank for such Interest Period. The amount of
interest payable by the Borrower to any Bank as stated in any
certificate delivered to the Borrower and the Agent pursuant to
the provisions of this Section 5.6(b) shall be conclusive and
binding for all purposes, absent manifest error.
(c) The payments required under Sections 5.6(a) and
(b) are in addition to any other payments and indemnities
required under this Agreement.
5.7. Illegality. Notwithstanding any other provision
of this Agreement, if the introduction of or any change in or in
the interpretation of any law or regulation, in each case after
the date hereof, shall make it unlawful, or any central bank or
other Governmental Authority shall assert that it is unlawful,
for any Bank or its Lending Office to make Loans or to continue
to fund or maintain Loans, then, on notice thereof and demand
therefor by such Bank to the Borrower through the Agent, (i) the
obligation of such Bank to make Loans shall be suspended until
such Bank through the Agent shall notify the Borrower that the
circumstances causing such suspension no longer exist and (ii)
- 37 -<PAGE>
the Borrower shall forthwith prepay (without premium or penalty)
in full all Loans of such Bank then outstanding, together with
interest accrued thereon; provided, however, that before making
any such demand, each Bank agrees to use its reasonable best
efforts to designate another of its then existing offices as its
Lending Office if the making of such a designation would, without
any detrimental effect to such Bank, cause the making of Loans to
not be subject to this Section 5.7.
5.8. Capital Adequacy. If any Bank shall, at any time,
reasonably determine that (a) the adoption (i) after the date of
this Agreement, of any capital adequacy guidelines or (ii) at any
time, of any other applicable law, government rule, regulation or
order regarding capital adequacy of banks or bank holding
companies, (b) any change in (i) any of the foregoing or (ii) the
interpretation or administration of any of the foregoing by any
Governmental Authority, central bank or comparable agency or (c)
compliance with any policy, guideline, directive or request
regarding capital adequacy (whether or not having the force of
law and whether or not failure to comply therewith would be
unlawful) of any Governmental Authority, central bank or
comparable agency, would have the effect of reducing the rate of
return on the capital of such Bank to a level below that which
such Bank could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Bank
with respect to capital adequacy in effect immediately before
such adoption, change or compliance) and (x) such reduction is as
a consequence of the Commitment of, or the making of any Loans
by, such Bank hereunder and (y) such reduction is reasonably
deemed by such Bank to be material, then (1) such Bank shall
deliver to the Borrower and the Agent a notice stating the
reduction in the rate of return such Bank will in the future
suffer as a result of its Commitment or the making of any Loans
by it to the Borrower hereunder and (2) the Borrower shall,
promptly upon receipt of such notice pay to the Agent for the
account of such Bank from time to time as specified by such Bank
such amount as shall be sufficient to compensate such Bank for
such reduced return. The amount stated in any notice delivered
to the Borrower pursuant to the provisions of this Section 5.8
shall be conclusive and binding for all purposes, absent manifest
error. In determining any such amount, such Bank may use
reasonable averaging and attribution methods. The payments
required under this Section 5.8 are in addition to any other
payments and indemnities required hereunder.
5.9. Payments and Computations. (a) The Borrower shall
make each payment payable by it hereunder not later than 11:00
A.M. (New York City time) on the day when due, in Dollars, to the
Agent at its address referred to in Section 12.2 in immediately
available funds without set-off or counterclaim. The Agent will
- 38 -<PAGE>
promptly thereafter cause to be distributed like funds relating
to the payment of principal or interest or fees ratably (other
than amounts payable pursuant to Section 5.6, 5.7 or 5.8) to the
Banks for the account of their respective Lending Offices, and
like funds relating to the payment of any other amount payable to
any Bank to such Bank for the account of its Lending Office, in
each case to be applied in accordance with the terms of this
Agreement. Payment received by the Agent after 11:00 A.M. (New
York City time) shall be deemed to be received on the next
Business Day.
(b) No Reductions. (i) Subject to Section 5.9(b)(ii) and
(iii), payments due to the Agent, the Arranger, the Co-Arranger
or any Bank under the Loan Documents, and all other terms,
conditions, covenants and agreements to be observed and performed
by the Borrower thereunder, shall be made, observed or performed
by the Borrower without any reduction or deduction whatsoever,
including any reduction or deduction for any set-off, recoupment,
counterclaim (whether sounding in tort, contract or otherwise) or
Tax.
(ii)(x) If any withholding or deduction from any payment to
be made by the Borrower hereunder is required for any Taxes under
any applicable law, rule or regulation, then the Borrower will
(A) pay directly to the relevant taxing authority the
full amount required to be so withheld or deducted;
(B) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing
such payment to such authority; and
(C) pay to the Agent for the account of the Banks such
additional amount or amounts necessary to ensure that the
net amount actually received by each Bank will equal the
full amount such Bank would have received had no such
withholding or deduction been required.
In addition, to the extent permitted by applicable law, the
Borrower agrees to pay any present or future stamp or documentary
taxes, excise or property taxes, or any other charges or similar
levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Notes (hereinafter referred to as
"Other Taxes").
Each Bank shall use its reasonable best efforts to designate
another of its then existing offices as its Lending Office if the
making of such designation would, without any detrimental effect
to such Bank (as determined by the Bank in its sole discretion),
- 39 -<PAGE>
avoid the need for, or reduce the amount of, such withholding or
deduction from any payment to be made to such Bank by the
Borrower hereunder required for any Taxes.
The Borrower will indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes paid by such Bank or the
Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be
made within 30 days from the date such Bank or the Agent (as the
case may be) makes written demand therefor.
If the Borrower fails to pay any Taxes or Other Taxes when
due to the appropriate taxing authority or fails to remit to the
Agent, for the account of the respective Banks, the required
receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Banks for any incremental Taxes
or Other Taxes, penalties, interest or expenses that may become
payable by the Agent or any Bank as a result of any such failure.
(y) Notwithstanding subsection (x), the Borrower shall not
be required to indemnify or pay additional amounts for or on
account of:
(A) Taxes imposed on or measured by the net income of
the Agent or any Bank or franchise Taxes imposed on the Agent or
any Bank, but in each case only to the extent imposed by the
jurisdiction under the laws of which the Agent or such Bank is
organized or doing business (other than as a result of the
transactions contemplated by the Loan Documents or the Agent's or
any Bank's enforcement of its rights under any Loan Document) or
any political subdivision or taxing authority thereof or therein,
or by any jurisdiction in which the Agent or such Bank's lending
office or principal executive office is located or any political
subdivision or taxing authority thereof or therein (except, in
each case, to the extent required by the following paragraph to
make payments on a net after-tax-basis), or
(B) any Tax or Other Tax imposed by reason of either
(i) the failure of the certification made by a Bank on any form
provided pursuant to Section 5.9(b)(iii) to be accurate and true
in all material respects unless any such failure is attributable
solely to a Change in Tax Law that occurs on or after the date on
which such form is provided by such Bank, or (ii) the failure by
a Bank to deliver to the Borrower and the Agent two duly
completed and executed copies of IRS Form 1001 or 4224 (or
successor applicable forms) in accordance with the second
sentence of Section 5.9(b)(iii), certifying that such Bank is
entitled to receive payments under this Agreement and the Loans
- 40 -<PAGE>
without deduction or withholding of any United States federal
income taxes, provided that this clause (B)(ii) will not apply if
such failure is attributable solely to a Change in Tax Law that
occurs on or after the date hereof.
All amounts payable as additional amounts or indemnities
pursuant to this Section 5.9(b) shall include an amount necessary
to hold the Agent or the relevant Bank harmless on a net after-
tax-basis from and against all Taxes required to be paid with
respect to or as a result of the payment of such additional
amount or indemnity (including, without limitation, Taxes
described in clause (A) of the preceding paragraph.)
(iii) Each Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees that
it will, on or before the date that the Bank executes this
Agreement (or, in the case of a Bank that becomes a Bank pursuant
to an assignment described in Section 12.7, on or before the date
that the Agent records the Notice of the Assignment and
Acceptance by which it becomes a Bank), deliver to the Borrower
and the Agent two duly completed and executed copies of IRS Form
1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Bank is entitled to receive
payments payable to it under this Agreement and the Loans without
deduction or withholding of any United States federal income
taxes. Each Bank that undertakes to deliver to the Borrower and
the Agent an IRS Form 1001 or 4224 under the preceding sentence
further undertakes to deliver to the Agent and the Borrower two
additional duly completed and executed copies of Form 1001 or
4224 (or successor applicable forms) on or before the date that
any such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form
previously delivered by it to the Borrower and the Agent, and
such extensions or renewals thereof as may reasonably be required
by the Borrower, certifying, in the case of a Form 1001 or 4224,
that such Bank is entitled to receive payments under this
Agreement and the Loans without deduction or withholding of any
United States federal income taxes, unless, in any such case, an
event (including, without limitation, any Change in Tax Law) has
occurred before the date on which any such delivery would
otherwise be required which renders all such forms inapplicable
or which causes such Bank to be no longer eligible to complete
and deliver any such form with respect to it, in which case the
Bank shall either (1) furnish to the Borrower such forms or other
certification as the Bank (in its sole opinion) is legally
entitled to furnish evidencing the Bank's eligibility for a
complete exemption from or a reduced rate of withholding of
United States federal income taxes, or (2) notify the Borrower
that the Bank is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
- 41 -<PAGE>
(c) Computations of the Commitment Fee. All computations
of the Commitment Fee and all computations of interest based on
the Eurodollar Rate shall be made by the Agent on the basis of a
year of 360 days, and all computations of other fees shall be
made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, in each case for the actual number of days
(including the first day but excluding the last day) occurring in
the period for which such interest and fees are payable. All
computations of the Commitment Fee in respect of any type of Loan
shall be based on the aggregate daily unused Tranche A Term
Commitment, Tranche B Term Commitment or Revolving Loan
Commitment (as the case may be) of each Bank. Each determination
by the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.
(d) Payment Due on Other Than Business Day. Whenever any
payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as
the case may be.
(e) Notice to Agent of Non-Payment; Presumption of Payment.
Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full,
the Agent may assume that the Borrower has made such payment in
full to the Agent on such date and the Agent may, in reliance
upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank.
If and to the extent that the Borrower shall not have so made
such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Rate.
5.10. Sharing of Payments, Etc. (a) If, prior to the
occurrence of an Event of Default, any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) on account of the Loans of a
certain type (i.e. Tranche A Term Loans, Tranche B Term Loans or
Revolving Loans) made by it (other than pursuant to Section 5.6,
5.7, 5.8 or 5.9) in excess of its Ratable Portion of payments on
account of the Loans of the same type obtained by all the Banks,
such Bank shall forthwith purchase from the other Banks such
participation in the Loans of such type made by them as shall be
necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered
- 42 -<PAGE>
from such purchasing Bank, such purchase from each Bank shall be
rescinded and each such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery together with
an amount equal to such Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of
any interest or other amount paid or payable by the purchasing
Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another
Bank pursuant to this Section 5.10 may, to the fullest extent
permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully
as if such Bank were the direct creditor of the Borrower in the
amount of such participation.
(b) If, after the Loans are declared to be due and owing
(in accordance with the provisions of this Agreement) prior to
their stated maturity, any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-
off, or otherwise) on account of any Loan or Loans made by it
(other than pursuant to Section 5.6, 5.7, 5.8 or 5.9) in excess
of its Ratable Portion of payments on account of all Loans
obtained by all the Banks, such Bank shall pay over to the Agent
such excess amount and the Agent shall forthwith distribute such
payment to the Banks pro rata in accordance with each such Bank's
Ratable Portion of all Loans then outstanding.
ARTICLE VI
CONDITIONS OF LENDING
6.1. Conditions Precedent to the Making of the Initial
Loans. The making of the initial Loans hereunder is subject to
satisfaction of the conditions precedent that (a) the Agent shall
have received the following, in form and substance satisfactory
to the Agent, and in sufficient copies for each Bank:
(i) Certified copies of (1) the resolutions of the
Board of Directors of each Loan Party approving each Loan
Document to which it is a party, and (2) all documents
evidencing any other necessary corporate action and required
governmental and any third party approvals, licenses and
consents with respect to each Loan Document to which it is a
party.
(ii) A copy of the certificate of incorporation of
each Loan Party certified as of a recent date by the
Secretary of State of such Person's jurisdiction of
incorporation (or by an official of equivalent standing in
- 43 -<PAGE>
the case of a Loan Party incorporated outside the U.S.),
together with certificates of such official attesting to the
good standing of such Person, and a copy of the By-Laws of
each such Person certified by its Secretary or one of its
Assistant Secretaries.
(iii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true
signatures of its officers who have been authorized to
execute and deliver each Loan Document to which it is a
party and each other document and certificate to be executed
or delivered hereunder on behalf of such Person.
(iv) A favorable opinion of (1) Kirkland & Ellis,
special New York counsel to the Loan Parties, in
substantially the form of Exhibit J-1 hereto, (2) Beth P.
Hecht, Corporate Counsel to the Loan Parties, in
substantially the form of Exhibit J-2 hereto, (3) Watson,
Farley & Williams, special New York counsel to the Agent, in
substantially the form of Exhibit J-3 hereto, (4)
Advokatfirmaet Ole Christian Hoie, special Norwegian counsel
to the Agent, in substantially the form of Exhibit J-4
hereto, (5) Gorrissen & Federspiel, special Danish counsel
to the Agent, in substantially the form of Exhibit J-5
hereto and (6) McCarter & English, Special New Jersey
counsel to the Borrower, in substantially the form of
Exhibit J-6.
(v) the Notes, duly executed on behalf of the
Borrower.
(vi) A duly executed Parent Guaranty.
(vii) A Subsidiary Guaranty duly executed on behalf of
each of the Subsidiary Guarantors.
(viii) A duly executed Pledge Agreement in respect of
each Pledge Subsidiary, each of which shall be substantially
in the form of the pertinent exhibit attached hereto and
duly executed by the Shareholders of each such Pledge
Subsidiary.
(ix) Evidence that all necessary governmental and
third party consents and approvals in connection with the
Restructuring have been obtained and remain in effect, and
that all applicable waiting periods have expired without any
action being taken by any competent authority which
restricts, prevents or imposes materially adverse conditions
upon the consummation of the Restructuring as contemplated
by the Restructuring Documents;
- 44 -<PAGE>
(x) True copies of the Restructuring Documents,
together with true copies of each document, certificate,
governmental approval and opinion referred to in Article V
of the Restructuring Agreement.
(xi) The Intercreditor Agreement, duly executed and
delivered by the Other Banks and the Credit Agreement
Parties (as defined in the Intercreditor Agreement) all
parties thereto.
(xii) A duly executed Assignment of Intercompany Note.
(b) on the date of such Loans, all Indebtedness of the
Parent Guarantor and its Subsidiaries (other than Permitted
Indebtedness) shall have been (or shall simultaneously be) repaid
and all commitments thereunder cancelled;
(c) on the date of such Loans and except as may otherwise
be permitted in the Loan Documents, the transactions contemplated
by the Restructuring Agreement shall have been validly
consummated, that no waivers have been granted in connection
therewith unless consented to by the Agent, and that all legal
aspects thereof are reasonably satisfactory to the Agent; and
(d) on or prior to the date of such Loans, the Borrower
shall have validly changed its name in accordance with Applicable
Law from "A.L. Restructuring Sub, Inc." to "A.L. Laboratories,
Inc."
6.2. Conditions Precedent to the Making of Each Loan.
The obligation of each Bank to make any Loan, including the
initial Loans, shall be subject to the further conditions
precedent that the following statements shall be true on the date
of the making of such Loan, before and after giving effect
thereto and to the application of the proceeds therefrom (and the
acceptance by the Borrower of the proceeds of such Loan shall
constitute a representation and warranty by the Borrower that on
the date of such Loan such statements are true):
(i) The representations and warranties contained in
Article VII hereof and in Section 5 of the Parent Guaranty
(other than those stated to be made as of a particular date)
are true and correct in all material respects on and as of
such date as though made on and as of such date.
(ii) No event has occurred and is continuing, or would
result from the Loans being made on such date, which
constitutes a Default or an Event of Default.
- 45 -<PAGE>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Agent and Banks to enter into this Agreement,
the Borrower represents and warrants to the Agent and the Banks
as follows:
7.1. Corporate Existence. The Borrower, its
Subsidiaries and each other Loan Party (i) is a corporation duly
incorporated, validly existing and in good standing (in
jurisdictions where good standing is an applicable concept) and
all fees and taxes due or owing to any Governmental Authority
have been paid) under the laws of the jurisdiction of its
incorporation; (ii) is duly qualified and in good standing (in
jurisdictions where due qualification and good standing are
applicable concepts) as a foreign corporation under the laws of
each other jurisdiction in which the failure so to qualify would
have a Material Adverse Effect; (iii) has all requisite corporate
power and authority to conduct its business as now being
conducted and as proposed to be conducted; (iv) is in compliance
with its articles or certificate of incorporation and by-laws.
7.2. Corporate Power; Authorization; Enforceable
Obligations. (a) The execution, delivery and performance by the
Borrower and each other Loan Party of this Agreement or any other
Loan Document to which it is a party:
(i) are within its corporate powers;
(ii) have been duly authorized by all necessary
corporate action;
(iii) do not (A) contravene its certificate of
incorporation or by-laws, (B) violate any law or regulation
(including, without limitation, Regulations G, T, U or X ),
or any order or decree of any court or governmental
instrumentality, except those as to which the failure to
comply would not have a Material Adverse Effect, (C)
conflict with or result in the breach of, or constitute a
default under, any instrument, document or agreement binding
upon and material to the Borrower or such Loan Party, or (D)
result in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Property of the Borrower,
any of its Subsidiaries or any other Loan Party; and
(iv) do not and will not require any consent of,
authorization by, approval of, notice to, or filing or
registration with, any Governmental Authority or any other
consent or approval, including any consent or approval of
- 46 -<PAGE>
any Subsidiary of the Borrower or any consent or approval of
the stockholders of the Borrower or any Subsidiary of the
Borrower, other than (A) consents, authorizations and
approvals that have been obtained, are final and not subject
to review on appeal or to collateral attack, and are in full
force and effect and, in the case of any such required under
Applicable Law as in effect on the Agreement Date, are
listed on Schedule 7.2(a)(iv), (B) notices, filings or
registrations that have been given or effected, and (C) the
filing of copies of Loan Documents with the Securities and
Exchange Commission as exhibits to its public filings.
(b) This Agreement and each other Loan Document has been
duly executed and delivered by each Loan Party that is a party
hereto or thereto, and is the legal, valid and binding obligation
of each such Person, enforceable against it in accordance with
its terms, except where such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors rights generally or
equitable principles relating to enforceability.
7.3. Taxes. All federal, and all material state, local
and foreign tax returns, reports and statements required to be
filed by the Borrower or any of its Subsidiaries have been filed
with the appropriate governmental agencies in all jurisdictions
in which such returns, reports and statements are required to be
filed. All consolidated, combined or unitary returns which
include the Borrower or any of its Subsidiaries have been filed
with the appropriate governmental agencies in all jurisdictions
in which such returns, reports and statements are required to be
filed except where such filing is being contested or may be
contested. All federal, and all material state, local and foreign
taxes, charges and other impositions of the Borrower, its
Subsidiaries or any consolidated, combined or unitary group which
includes the Borrower or any of its Subsidiaries which are due
and payable have been timely paid prior to the date on which any
fine, penalty, interest, late charge or loss may be added thereto
for non-payment thereof except where contested in good faith and
by appropriate proceedings if adequate reserves therefor have
been established on the books of the Borrower or such Subsidiary
in accordance with GAAP. Proper and accurate amounts have been
withheld by or on behalf of the Borrower and each of its
Subsidiaries from their respective employees for all periods in
full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid
to the respective governmental agencies, in all material
respects. Neither the Borrower nor any of its Tax Affiliates has
agreed or has been requested to make any adjustment under Section
- 47 -<PAGE>
481(a) of the Code by reason of a change in accounting method or
otherwise relating to the Borrower or any of its Subsidiaries
which will affect a taxable year of the Borrower or a Tax
Affiliate ending after December 31, 1993, which has not been
reflected in the financial statements delivered pursuant to
Section 8.8 and which would have a Material Adverse Effect. The
Borrower has no obligation to any Person other than the Parent
Guarantor and Subsidiaries of the Parent Guarantor under any tax
sharing agreement or other tax sharing arrangement.
7.4. Financial Information. (a) The reports of the
Parent Guarantor on Form 10-K for the Fiscal Year ended December
31, 1993 and on Form 10-Q for the Fiscal Quarters ended March 31,
1994 and June 30, 1994, the Proxy Statement of the Parent
Guarantor dated August 22, 1994, the report on Form 8-K of the
Parent Guarantor dated August 4, 1994 and the report on Form 8K/A
of the Parent Guarantor dated as of August 22, 1994 which have
been furnished to the Agent and each Bank, are respectively
complete and correct in all material respects as of such
respective dates, and the financial statements therein have been
prepared in accordance with GAAP and fairly present the financial
condition and results of operations of the Parent Guarantor and
its consolidated Subsidiaries as of such respective dates
(subject, in the case of such reports on Form 10-Q, to changes
resulting from normal year-end adjustments).
(b) Since December 31, 1993 there has been no Material
Adverse Change or Material Credit Agreement Change.
(c) None of the Parent Guarantor or any Subsidiary of the
Parent Guarantor had at June 30, 1994 any obligation, contingent
liability, or liability for taxes or long-term leases material to
the Parent Guarantor and its Subsidiaries taken as a whole which
is not reflected in the balance sheets referred to in subsection
(a) above or in the notes thereto.
7.5. Litigation. There are no pending, or to the best
knowledge of the Borrower threatened, actions, investigations or
proceedings against or affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator
in which, individually or in the aggregate, there is a reasonable
probability of an adverse decision that could have a Material
Adverse Effect or result in a Material Credit Agreement Change.
7.6. Margin Regulations. The Borrower is not engaged
in the business of extending credit for the purpose of purchasing
or carrying-Margin Stock, and no proceeds of any Borrowing will
be used to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin
Stock.
- 48 -<PAGE>
7.7. ERISA. (a) No liability under Sections 4062, 4063,
4064 or 4069 of ERISA has been or is expected by the Borrower to
be incurred by the Borrower or any ERISA Affiliate with respect
to any Plan which is a Single-Employer Plan in an amount that
could reasonably be expected to have a Material Adverse Effect.
(b) No Plan which is a Single-Employer Plan had an
accumulated funding deficiency, whether or not waived, as of the
last day of the most recent fiscal year of such Plan ended prior
to the date hereof. Neither the Borrower nor any ERISA Affiliate
is (A) required to give security to any Plan which is a
Single-Employer Plan pursuant to Section 401(a)(29) of the Code
or Section 307 of ERISA, or (B) subject to a Lien in favor of
such a Plan under Section 302(f) of ERISA.
(c) Each Plan of the Borrower, each of its Subsidiaries and
each of its ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA and the Code,
except where the failure to comply would not result in any
Material Adverse Effect.
(d) Neither the Borrower nor any of its Subsidiaries has
incurred a tax liability under Section 4975 of the Code or a
penalty under Section 502(i) of ERISA in respect of any Plan
which has not been paid in full, except where the incurrence of
such tax or penalty would not result in a Material Adverse
Effect.
(e) None of the Borrower, any of its Subsidiaries or any
ERISA Affiliate has incurred or reasonably expects to incur any
Withdrawal Liability under Section 4201 of ERISA as a result of a
complete or partial withdrawal from a Multiemployer Plan which
will result in Withdrawal Liability to the Borrower, any of its
Subsidiaries or any ERISA Affiliate in an amount that could
reasonably be expected to have a Material Adverse Effect.
7.8. No Defaults. Neither the Borrower nor any of its
Subsidiaries is in breach of or default under or with respect to
any instrument, document or agreement binding upon the Borrower
or such Subsidiary which breach or default is reasonably probable
to have a Material Adverse Effect or result in the creation of a
Lien on any Property of the Borrower or its Subsidiaries.
7.9. Investment Company Act. The Borrower is not an
"investment company" or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as
amended. The making of the Loans by the Banks, the application of
the proceeds and repayment thereof by the Borrower and the
consummation of the transactions contemplated by this Agreement
- 49 -<PAGE>
will not violate any provision of such act or any rule,
regulation or order issued by the Securities and Exchange
Commission thereunder.
7.10. Insurance. All policies of insurance of any kind
or nature owned by the Borrower and its Subsidiaries are
maintained with reputable insurers which to the Borrower's best
knowledge are financially sound. The Borrower currently maintains
insurance with respect to its Properties and business and causes
its Subsidiaries to maintain insurance with respect to their
respective Properties and business against loss or damage of the
kinds customarily insured against by corporations engaged in the
same or similar business and similarly situated, of such types
and in such amounts as are customarily carried under similar
circumstances by such other corporations including, without
limitation, worker's compensation insurance.
7.11. Environmental Protection. (a) There are no known
conditions or circumstances known to the Borrower associated with
the currently or previously owned or leased properties or
operations of the Borrower or its Subsidiaries or tenants which
may give rise to any Environmental Liabilities and Costs which
would have a Material Adverse Effect; and
(b) No Environmental Lien has attached to any Property of
the Borrower or any of its Subsidiaries which would have a
Material Adverse Effect.
7.12. Regulatory Matters. Except as disclosed in the
Parent Guarantor's Form 10-K for the fiscal year ending December
31, 1993, its Report on Form 10-Q for the fiscal quarter ending
June 30, 1994, or in its definitive Proxy Statement relating to
the Restructuring filed with the Securities and Exchange
Commission on August 22, 1994, the Borrower and its Subsidiaries
are to the best of their knowledge in compliance with all rules,
regulations and other requirements of the Food and Drug
Administration ("FDA") and other regulatory authorities of
jurisdictions in which the Borrower or any of its Subsidiaries do
business or operate manufacturing facilities, including without
limitation those relating to compliance by the Borrower's or any
such Subsidiary's manufacturing facilities with "Current Good
Manufacturing Practices" as interpreted by the FDA, except to the
extent any such noncompliance would not have a Material Adverse
Effect. Except as so disclosed, neither the FDA nor any other
such regulatory authority has requested (or, to the Borrower's
knowledge, are considering requesting) any product recalls or
other enforcement actions.
7.13. Title and Liens. Each of the Borrower and its
Subsidiaries has good and marketable title to its real properties
- 50 -<PAGE>
and owns or leases all its other material Properties, in each
case, as shown on its most recent quarterly balance sheet, and
none of such Properties is subject to any Lien except for
Permitted Liens.
7.14. Compliance with Law. Each of the Borrower and its
Subsidiaries is in compliance with all Applicable Law, including,
without limitation, all Environmental Laws, except where any
failure to comply with any such laws would not, alone or in the
aggregate, have a Material Adverse Effect on the business or
financial condition of the Borrower and its Subsidiaries taken as
a whole, or the Borrower's ability to perform its obligations
under the Loan Documents.
7.15. Trademarks, Copyrights, Etc. The Borrower and
each of its Subsidiaries own or have the rights to use such
trademarks, service marks, trade names, copyrights, licenses or
rights in any thereof, as in the aggregate are adequate in the
reasonable judgment of the Borrower for the conduct of the
business of the Borrower and its Subsidiaries as now conducted.
7.16. Disclosure. All written information relating to
the Borrower, the Parent Guarantor and any of their respective
Subsidiaries which has been delivered by or on behalf of the
Borrower to the Agent or the Banks in connection with the Loan
Documents and all financial and other information furnished to
the Agent is true and correct in all material respects and
contains no misstatement of a fact of a material nature. Any
financial projections and other information regarding anticipated
future plans or developments contained therein was based upon the
Borrower's best good faith estimates and assumptions at the time
they were prepared.
7.17. Existing Indebtedness. Schedule 5(l) to the
Parent Guaranty is complete and correct in all material respects.
7.18. Subsidiaries. (a) Schedule 5(m) to the Parent
Guaranty sets forth all of the Subsidiaries, their jurisdictions
of incorporation and the percentages of the various classes of
their capital stock owned by the Parent Guarantor or another
Subsidiary of the Parent Guarantor, (b) the Parent Guarantor or
another Subsidiary, as the case may be, has the unrestricted
right to vote, and (subject to limitations imposed by Applicable
Law or the Loan Documents) to receive dividends and dividends on,
all capital stock indicated on such Schedule as owned by the
Parent Guarantor or such Subsidiary and (c) such capital stock
has been duly authorized and issued and is fully paid and
nonassessable.
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7.19. Principal Subsidiaries. Schedule 5(n) to the
Parent Guaranty sets forth all of the Principal Subsidiaries in
existence as of the Agreement Date.
ARTICLE VIII
AFFIRMATIVE COVENANTS
As long as any of the Loans or any other amounts shall
remain unpaid or any Bank shall have any Commitment hereunder,
unless otherwise agreed by the written consent of the Majority
Banks:
8.1. Compliance with Laws, Etc. The Borrower shall
comply, and cause each of its Subsidiaries to comply, in all
material respects with all Applicable Law except such
non-compliance as would not have a Material Adverse Effect or
result in a Material Credit Agreement Change.
8.2. Payment of Taxes, Etc. The Borrower and any
consolidated, combined or unitary group which includes the
Borrower or any of its Subsidiaries shall pay and discharge, and
cause each Subsidiary of the Borrower to pay and discharge,
before the same shall become delinquent, all lawful claims,
Taxes, assessments and governmental charges or levies except
where contested in good faith, by proper proceedings, and where
adequate reserves therefor have been established on the books of
the Borrower or such Subsidiary in accordance with GAAP.
8.3. Maintenance of Insurance. The Borrower shall
maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates. The Borrower will furnish
to the Agent from time to time such information as may be
requested as to such insurance.
8.4. Preservation of Corporate Existence, Etc. The
Borrower shall preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, their respective corporate
existences; provided, that this Section 8.4 shall not apply at
any time with respect to the corporate existence of a Subsidiary
of the Borrower in any case where the Parent Guarantor's Board of
Directors determines in good faith that such termination of
corporate existence is in the best interests of the Parent
Guarantor, the Borrower and their respective Subsidiaries taken
- 52 -<PAGE>
as a whole and where noncompliance will not have a Materially
Adverse Effect on the Borrower and its Subsidiaries or any Loan
Document (other than a Loan Document delivered by a Subsidiary
that at such time is no longer a Principal Subsidiary, as
determined at such time); provided, further, that this Section
8.4 shall be without prejudice to the other provisions of this
Agreement and the Parent Guaranty.
8.5. Books and Access. The Borrower shall, and shall
cause each of its Subsidiaries to, keep proper books of record
and accounts in conformity with GAAP, and upon reasonable notice
and at such reasonable times during the usual business hours as
often as may be reasonably requested, permit representatives of
the Agent, at its own initiative or at the request of any Bank,
to make inspections of its Properties, to examine its books,
accounts and records and make copies and memoranda thereof and to
discuss its affairs and finances with its officers or directors
and independent public accountants.
8.6. Maintenance of Properties, Etc. The Borrower
shall maintain and preserve, and cause each of its Subsidiaries
to maintain and preserve, all of their respective Properties
which are used or useful in the conduct of its business in good
working order and condition and, from time to time make or cause
to be made all appropriate repairs, renewals and replacements,
except where the failure to do so would not have a Material
Adverse Effect.
8.7. Application of Proceeds. The Borrower shall use
the proceeds of the Loans (i) to refinance Indebtedness existing
at the date hereof of the Borrower under the Existing Credit
Agreements, (ii) to be made available to the Parent Guarantor to
refinance certain Indebtedness existing at the date hereof of
A.L.-Oslo under the A.L.-Oslo Existing Credit Agreements, (iii)
to finance the costs associated with the Restructuring, and (iv)
for other general corporate purposes.
8.8. Financial Statements. The Borrower shall furnish,
or shall cause to be furnished, to the Agent (with sufficient
copies to the Banks):
(a) the financial statements and reports required by
Sections 6(g) and (h) of the Parent Guaranty.
(b) together with each delivery of financial statements of
the Parent Guarantor and its Subsidiaries pursuant to clauses (a)
above, and commencing with the Fiscal Quarter ending December 31,
1994, a certificate signed by a Responsible Financial Officer of
the Borrower stating that (i) such officer is familiar with both
this Agreement and the business and financial condition of the
- 53 -<PAGE>
Borrower, (ii) that the representations and warranties set forth
in Article VII hereof are true and correct in all material
respects as though such representations and warranties had been
made by the Borrower on and as of the date thereof; and (iii) no
Event of Default or Default has occurred and is continuing or if
an Event of Default or Default has occurred and is continuing a
statement as to the nature thereof, and whether or not the same
shall have been cured.
8.9. Reporting Requirements. The Borrower shall
furnish to the Agent for distribution to the Banks:
(a) from time to time as the Agent may reasonably request,
copies of such statements, lists of Property, accounts, reports
or information prepared by or for the Borrower or within the
Borrower's control. In addition, the Borrower shall furnish to
the Agent for distribution to the Banks, within five (5) days
after delivery thereof to the Borrower's Board of Directors,
copies of budgets and forecasts prepared by or for the Borrower
or within the Borrower's control;
(b) promptly and in any event within thirty (30) days after
the Borrower, any of its Subsidiaries or any ERISA Affiliate
knows that any ERISA Event has occurred (other than a Reportable
Event for which notice to the PBGC is waived), a written
statement of the chief financial officer or other appropriate
officer of the Borrower describing such ERISA Event and the
action, if any, which the Borrower, any of its Subsidiaries or
any ERISA Affiliate proposes to take with respect thereto, and a
copy of any notice filed with the PBGC or the IRS pertaining
thereto;
(c) promptly and in any event within thirty (30) days after
notice or knowledge thereof, notice that the Borrower or any of
its Subsidiaries becomes subject to the tax on prohibited
transactions imposed by Section 4975 of the Code, together with a
copy of Form 5330;
(d) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, against or affecting the Borrower or any of
its Subsidiaries, in which there is a reasonable probability of
an adverse decision which would have a Material Adverse Effect;
(e) promptly upon the Borrower or any of its Subsidiaries
learning of (i) any Event of Default or any Default, or (ii) any
Material Credit Agreement Change, telephonic or telegraphic
notice specifying the nature of such Event of Default, Default or
Material Credit Agreement Change, including the anticipated
- 54 -<PAGE>
effect thereof, which notice shall be promptly confirmed in
writing within five days;
(f) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to its security holders
generally, and copies of all reports and registration statements
which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities
exchange;
(g) promptly upon, and in any event within 30 days of, the
Borrower or any of its Subsidiaries learning of any of the
following:
(i) notice that any Property of the Borrower or any of
its Subsidiaries is subject to any Environmental Liens
individually or in the aggregate which would have a Material
Adverse Effect;
(ii) any proposed acquisition of stock, assets or real
estate, or any proposed leasing of Property, or any other
action by the Borrower or any of its Subsidiaries in which
there is a reasonable probability that the Borrower or any
of its Subsidiaries would be subject to any material
Environmental Liabilities and Costs, provided, that, in the
event of any such proposed acquisition or lease, the
Borrower must furnish to the Banks evidence in a form
acceptable to the Banks that the proposed acquisition will
not have a Material Adverse Effect;
(h) prior to the effectiveness thereof, information
relating to any proposed change in the accounting
treatment or reporting practices of the Borrower and
its Subsidiaries the nature or scope of which
materially affects the calculation of any component of
any financial covenant, standard or term contained in
this Agreement;
(i) prior to the Borrower, or any of its Subsidiaries, (i)
entering into any agreement relating to the sale of, or
the granting of a Lien on, assets having a fair market
value of $10,000,000 or more, or (ii) incurring
Indebtedness pursuant to a single transaction the
aggregate principal amount of which is $10,000,000 or
more, the Borrower shall give the Agent 15 days' notice
of its intention to enter into such an agreement; and
(j) from time to time, such other information and materials
as the Agent (or the Banks through the Agent) may
reasonably request.
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8.10. Acquisition Related Loan. Where the proceeds of a
Loan, including the initial Loans, are to be made available,
either directly or indirectly, to an Affiliate of the Borrower in
connection with an acquisition of Equity or assets, the Borrower
shall, within 15 Business Days of the making of such Loan,
deliver to the Agent (a) an Acquisition Related Guaranty duly
executed by such Affiliate (an "Acquisition Related Guarantor")
(which shall be in addition to, and not in substitution of, any
Credit Support Document previously delivered by such Affiliate)
or (b) if such Affiliate is incorporated outside the United
States of America, a Pledge Agreement duly executed by the
Shareholders of such Affiliate; provided that Clause (b) shall
not apply to any Affiliate the stock of which is at that time
already subject to a valid and binding Pledge Agreement.
8.11. Additional Credit Support Documents. The Borrower
shall deliver, or shall cause to be delivered, within five (5)
Business Days of delivery to the Agent of a certificate pursuant
to Section 6(g)(v) of the Parent Guaranty, in respect of each
Principal Subsidiary disclosed on the schedule attached to such
certificate (a) a Subsidiary Guaranty duly executed by each such
Principal Subsidiary or (b) if any such Principal Subsidiary is a
Non-U.S. Subsidiary, a Pledge Agreement duly executed by the
Shareholders of such Non-U.S. Subsidiary; provided, that this
Section 8.11 shall not apply to any Principal Subsidiary as to
which there already is at such time a valid and binding
Subsidiary Guaranty or Pledge Agreement (as the case may be).
8.12. Delivery of Opinions. Concurrently with the
execution and delivery of any additional Credit Support Documents
pursuant to Sections 8.10 or 8.11 hereof, the Borrower shall
deliver, or shall cause to be delivered, to the Agent an opinion
of counsel relating to such additional Credit Support Document in
form and substance substantially similar to the opinions rendered
in connection with comparable agreements on the Effective Date.
ARTICLE IX
NEGATIVE COVENANTS
So long as any of the Loans or any other amounts shall
remain unpaid or any Bank shall have any Commitment hereunder,
unless otherwise agreed by the written consent of the Majority
Banks:
9.1. Liens, Etc. The Borrower shall not, directly or
indirectly, create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its Properties, whether now owned or hereafter
- 56 -<PAGE>
acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, in each case to secure or provide
for the payment of any Indebtedness of any Person, except
Permitted Liens.
9.2. Mergers. The Borrower shall not merge or
consolidate in any transaction in which it is not the surviving
Person. The Borrower shall not permit without the consent of the
Majority Banks any of its Subsidiaries to merge or consolidate in
any transaction in which such Subsidiary is not the surviving
Person other than in mergers of any Subsidiary into the Borrower,
the Parent Guarantor or any other wholly owned Subsidiary of the
Borrower or the Parent Guarantor that is incorporated in the
U.S.; provided, that with respect to mergers in which the
surviving entity is not the Borrower or the Parent Guarantor,
then the Borrower shall cause such surviving entity to deliver a
Subsidiary Guaranty if immediately after the merger the surviving
entity is a Principal Subsidiary (as determined at such time) in
respect of which there is not, at such time, a valid, legal and
binding Subsidiary Guaranty or Pledge Agreement; provided,
further, that the Majority Banks will not unreasonably withhold
their consent to a merger or other combination of A.L. Pharma A/S
and New A.L. - Oslo.
9.3. Substantial Asset Sale. The Borrower shall not,
and shall not permit any of its Subsidiaries to, sell, lease,
transfer or otherwise dispose of all or any substantial part of
its or their assets (including any of the stock of the
Scandinavian Principal Companies owned by it or them), except
that this Section 9.3 shall not apply to any disposition of
assets (a) in the ordinary course of business or (b) any
disposition of assets (other than assets consisting of the stock
of the Scandinavian Principal Companies or assets owned by the
Scandinavian Principal Companies) (i) to the Borrower, the Parent
Guarantor or any Principal Subsidiary (in respect of which there
is in existence a legal, valid and binding Subsidiary Guaranty or
Pledge Agreement) or (ii) where the proceeds of such disposition
(A) consist solely of cash or Cash Equivalents and (B) the Net
Cash Proceeds of such disposition are first applied towards the
prepayment of any Loans then outstanding in accordance with
Section 5.4(a); provided, that for purposes of this Section 9.3,
any such prepayment shall be effected on the next succeeding day
on which an interest payment is due in respect of the Loan being
prepaid after consummation of the asset sale, and if such day is
not the last day of the Interest Period in respect of the Loan or
Loans being prepaid, the Borrower shall continue to be liable for
any costs or expenses pursuant to Section 12.4(c).
9.4. Transactions with Affiliates. The Borrower shall
not engage in, and will not permit any of its Subsidiaries to
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engage in, any transaction with an Affiliate of the Borrower or
of such Subsidiary other than transactions in the ordinary course
of business between a Subsidiary and its parent or among
Subsidiaries of the Borrower that are on terms no less favorable
to the Borrower or such Subsidiaries than as would be obtained in
a comparable arms-length transaction and other than transactions
contemplated by, and effected in accordance with, the
Restructuring Agreement.
9.5. Restrictions on Indebtedness. (a) The Borrower
shall not incur, and shall not permit its Subsidiaries to incur,
Indebtedness except (subject to clause (b) below) Permitted
Indebtedness.
(b) No Permitted Indebtedness may be incurred unless the
Parent Guarantor or the Borrower shall have complied with the
provisions of Section 7(f) of the Parent Guaranty.
ARTICLE X
EVENTS OF DEFAULT
10.1. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower or any other Loan Party shall fail to pay
(i) any principal when due in accordance with the terms and
provisions of this Agreement or any other Loan Document, or (ii)
any interest on any amounts due hereunder or thereunder, or any
fee or any other amount due hereunder or thereunder within five
Business Days after the same becomes due and payable; or
(b) Any representation or warranty made by any Loan Party
in this Agreement or any other Loan Document or by any Loan Party
(or any of its officers) in connection with this Agreement or any
other Loan Document shall prove to have been incorrect in any
material respect when made; or
(c) The Borrower or any other Loan Party shall default in
the performance or observance of any term, covenant condition or
agreement contained in Section 8.9(e) of the Credit Agreement or
Section 6(h)(v) of the Parent Guaranty, respectively; or
(d) Any Loan Party shall fail to perform or observe any
term, covenant or agreement contained in this Agreement or any
other Loan Document, which failure or change shall remain
unremedied for (i) forty-five (45) days, in the case of the terms
and covenants contained in Section 8 of the Parent Guaranty, and
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(ii) thirty (30) days, in the case of all other terms, covenants
or agreements not otherwise specifically dealt with in this
Section 10.1, and in either case after the earlier of the date on
which (x) telephonic, telefaxed or telegraphic notice thereof
shall have been given to the Agent by the Borrower pursuant to
Section 8.9(e), (y) written notice thereof shall have been given
to the Borrower by the Agent or (z) the Borrower or any other
Loan Party knows, or should have known, of such failure; or
(e) The Borrower, the Parent Guarantor or any of their
Subsidiaries shall fail to pay any principal of, or premium or
interest on, any Indebtedness for Borrowed Money of the Borrower,
the Parent Guarantor or such Subsidiary, in an aggregate amount
of not less than $2,500,000 when the same becomes due and payable
(whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or any other event shall
occur or condition shall exist under any agreement or instrument
relating to any such Indebtedness for Borrowed Money, if the
effect of such event or condition is to accelerate, or to permit
the acceleration of, the maturity of such Indebtedness or to
terminate any commitment to lend; or any such Indebtedness shall
be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof and, with respect to all of the
foregoing, after the expiration of the earlier of (i) any
applicable grace period or the giving of any required notice or
both and (ii) a period of 30 days after such Indebtedness for
Borrowed Money first became due; or
(f) Each of the Borrower, the Parent Guarantor or any of
the Principal Subsidiaries shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for
the benefit of creditors, or any proceedings shall be instituted
by or against the Borrower, the Parent Guarantor or any of the
Principal Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or
other similar official for it or for a material part of its
Property employed in its business or any writ, attachment,
execution or similar process shall be issued or levied against a
material part of the Property employed in the business of the
Borrower or the Parent Guarantor and their respective
Subsidiaries taken as a whole, and, in the case of any such
proceedings instituted against the Borrower or the Parent
Guarantor or any of the Principal Subsidiaries (but not
instituted by it), either such proceedings shall remain
- 59 -<PAGE>
undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceedings shall occur; or the Borrower,
the Parent Guarantor or any of the Principal Subsidiaries shall
take any corporate action to authorize any of the actions set
forth above in this subsection (f); or
(g) Any order for the payment of money or judgment of any
court, not appealable or not subject to certiorari or appeal (a
"Final Judgment"), which, with other outstanding Final Judgments,
exceeds an aggregate of $5,000,000 shall be rendered against the
Borrower or any of its Principal Subsidiaries and, within 60 days
after entry thereof, such Final Judgment shall not have been
discharged; or
(h) (i) With respect to any Plan, a final determination is
made that a prohibited transaction within the meaning of Section
4975 of the Code or Section 406 of ERISA occurred which results
in direct or indirect liability of the Borrower or any of its
Principal Subsidiaries, (ii) with respect to any Title IV Plan,
the filing of a notice to voluntarily terminate any such plan in
a distress termination, (iii) with respect to any Multiemployer
Plan, the Borrower, any of its Principal Subsidiaries or any of
its or their ERISA Affiliates shall incur any Withdrawal
Liability, or (iv) with respect to any Qualified Plan, the
Borrower, any of its Principal Subsidiaries or any of its or
their ERISA Affiliates shall incur an accumulated funding
deficiency or request a funding waiver from the IRS; provided,
however, that with respect to the events listed in clauses (i),
(iii) and (iv) hereof there shall be no Event of Default if the
liability of the Borrower, the relevant Principal Subsidiary or
the relevant ERISA Affiliate is satisfied in full or in
accordance with the due dates therefor; or
(i) This Agreement or any other Loan Document shall cease
to be valid or enforceable for any reason in any material
respect; provided, that in the case of the invalidity or
unenforceability of a Credit Support Document, such event shall
not constitute a Default if the Borrower shall have delivered, or
caused to be delivered, within 15 days of learning or receiving
notice of such invalidity or unenforceability additional security
or credit support in form and substance satisfactory to the
Agent;
(j) A Material Adverse Change shall occur;
then, and in any such event, the Agent (i) shall at the request,
or may with the consent, of the Majority Banks, by notice to the
Borrower, declare the obligation of each Bank to make Loans to be
terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the
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Majority Banks, by notice to the Borrower, declare all amounts
due under this Agreement and all interest thereon to be forthwith
due and payable, whereupon all amounts due under this Agreement
and all such interest and all such amounts shall become and be
forthwith due and payable; provided, however, that upon an actual
or deemed entry of an order for relief with respect to the
Borrower or the Guarantor or any of its Principal Subsidiaries
under the federal Bankruptcy Code, (A) the obligation of each
Bank to make Loans shall automatically be terminated and (B) all
amounts due under this Agreement and all such interest and all
such amounts shall automatically and without further notice
become and be due and payable. In addition to the remedies set
forth above, the Agent may exercise any other remedies provided
for by this Agreement in accordance with the terms hereof or any
other remedies provided by applicable law.
ARTICLE XI
THE AGENT
11.1. Authorization and Action. Each Bank hereby
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as
are delegated to such Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement, the Agent
shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Banks (or when
expressly required hereunder, all the Banks), and such
instructions shall be binding upon all Banks; provided, however,
that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to
this Agreement or applicable law. The Agent agrees to give to
each Bank prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
11.2. The Agent's Reliance, Etc. Neither the Agent, its
Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or
omitted to be taken by any of them under or in connection with
this Agreement, except for its own gross negligence or willful
misconduct. Without limitation of the generality of the
foregoing, (i) the Agent may consult with legal counsel
(including counsel to the Borrower), independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants
or experts; (ii) the Agent makes no warranty or representation to
- 61 -<PAGE>
any Bank and it shall not be responsible to any Bank for any
statements, warranties or representations made in or in
connection with this Agreement; (iii) the Agent shall have no
duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the
Properties (including the books and records) of the Borrower;
(iv) the Agent shall not be responsible to any Bank for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (v) the Agent not shall
incur liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
11.3. Union Bank of Norway and Den norske Bank AS. With
respect to the Commitments of Union Bank of Norway and Den norske
Bank AS respectively, and the Loans made by each of them, each of
Union Bank of Norway and Den norske Bank AS shall have the same
rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not an Agent or Arranger or
Co-Arranger, as the case may be; and the term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include each of
Union Bank of Norway and Den norske Bank AS, in their individual
capacities. Each of Union Bank of Norway and Den norske Bank AS
and their Affiliates may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind
of business with, the Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of the Borrower
or any such Subsidiary, all as if Union Bank of Norway and Den
norske Bank AS, as the case may be, were not an Agent, Arranger
or Co-Arranger, as the case may be, and without any duty to
account therefor to the Banks.
11.4. Bank Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent, the
Arranger or Co-Arranger or any other Bank, and based on the
financial statements referred to in Article VII and such other
documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, the Arranger or Co-Arranger or
any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement.
11.5. Determinations Under Sections 6.1. and 6.2. For
purposes of determining compliance with the conditions specified
- 62 -<PAGE>
in Sections 6.1 and 6.2, each Bank shall be deemed to have
consented to, approved or accepted, or to be satisfied with each
document or other matter required thereunder to be consented to
or approved by or acceptable or satisfactory to the Banks unless
an officer of the Agent responsible for the transactions
contemplated by this Agreement shall have received notice from
such Bank prior to the applicable Borrowing specifying its
objection thereto (unless such objection shall have been
withdrawn by notice to the Agent to that effect or such Bank
shall have made available to the Agent such Bank's ratable
portion of such Borrowing).
11.6. Indemnification. Each Bank agrees to indemnify
the Agent and its respective Affiliates, and its respective
directors, officers, employees, agents and advisors (to the
extent not reimbursed by the Borrower), ratably according to such
Bank's Ratable Portion of the Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
(including, without limitation, fees and disbursements of legal
counsel) of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against, any such Person in any way
relating to or arising out of this Agreement or any action taken
or omitted by any such Person under this Agreement; provided,
however, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
any such Person's gross negligence or willful misconduct or from
any violation or alleged violation by any such Person or any
other Bank of any law, rule or regulation or any guideline or
request from any central bank or other Governmental Authority
(whether or not having the force of law) or, with respect to the
Agent, any conflict or alleged conflict between its rights and
duties in its capacity as such or as a Bank under this Agreement
and any other rights or duties it may have in any other capacity
in which it may act in connection with the consummation of the
transactions contemplated by this Agreement, whether or not such
Bank is a party to such transactions. Without limitation of the
foregoing, each Bank agrees to reimburse any such Person promptly
upon demand for its ratable share of any out-of-pocket expenses
(including fees and disbursements of one counsel) incurred by
such Person in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement, to the extent that such Person is not
reimbursed for such expenses by the Borrower.
11.7. Successor Agents. Any Agent may resign at any
time by giving written notice thereof to the Banks and the
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Borrower and may be removed at any time with cause by the
Majority Banks. Upon any such resignation or removal, the
Majority Banks shall have the right to appoint a successor to
such Agent. If no successor to such Agent shall have been so
appointed by the Majority Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Majority Banks removal of such
retiring Agent, then such retiring Agent on behalf of the Banks,
shall appoint a successor Agent (which successor Agent shall be a
Bank or another commercial bank organized under the laws of a
member nation of the Organization for Economic Cooperation and
Development and having a combined capital and surplus of at least
$100,000,000). Upon the acceptance of any appointment as an Agent
hereunder by any successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and such
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder, the provisions of this Article
XI shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent.
11.8. Notices and Forwarding of Documents to Banks.
Promptly upon receipt of the same, the Agent shall furnish to the
Banks copies of all notices received from the Borrower or any
other Loan Party.
ARTICLE XII
MISCELLANEOUS
12.1. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any other Loan Document, nor
consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed
by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing signed by all the
Banks and consented to by all of the Banks, do any of the
following: (a) waive any of the conditions specified in Section
6.1 or 6.2; (b) increase the Commitments of the Banks or subject
the Banks to any additional obligations; (c) change the principal
of, or decrease the interest on, any amounts payable hereunder or
reduce the amount of any Commitment Fee payable to the Banks
hereunder; (d) postpone any date fixed for any scheduled payment
of any Commitment Fee, or scheduled payment of principal of, or
interest on, any amounts, payable hereunder; (e) change the
definition of Majority Banks; (f) terminate, or release the
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Parent Guarantor from its obligations under, the Parent Guaranty
or (g) amend this Section 12.1; and provided further, however,
that no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Persons required above to
take such action, affect the rights or duties of the Agent under
this Agreement.
12.2. Notices, Etc. Except as otherwise set forth
herein, all notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex,
telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand,
(i) if to the Borrower, at:
A.L. Laboratories, Inc.
c/o A.L. Pharma Inc.
One Executive Drive
P.O. Box 1399
Fort Lee, NJ 07024
Attn: Albert Marchio
Treasurer
Telephone: (201) 947-7774
Telefax: (201) 947-5541
and to:
Beth P. Hecht, Esq.
Corporate Counsel
Telephone: (201) 947-7774
Telecopy: (201) 592-1481
(ii) if to the Agent, at:
Union Bank of Norway
Loan Administration
P.O. Box 1172 Sentrum
N-0107 Oslo
Telephone: 011-47-22-31-90-50
Telecopy: 011-47-22-31-85-58
(iii) if to any Bank, at its Lending Office specified on
the signature pages hereof, and if to any other
lender that becomes a "Bank", at its Lending
Office specified in the Notice of Assignment and
Acceptance by which it became a Bank;
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or, as to the Borrower, any Bank or the Agent, at such other
address as shall be designated by such party in a written notice
to the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice
to the Borrower and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed,
telecopied, cabled or delivered, be effective when deposited in
the mails, delivered to the telegraph company, confirmed by telex
answerback, telecopied with confirmation of receipt, delivered to
the cable company, delivered by overnight courier with
confirmation of receipt or delivered by hand to the addressee,or
its agent, respectively, except that notices and communications
to the Agent pursuant to Articles II, III, IV or XI shall not be
effective until received by the Agent.
12.3. No Waiver; Remedies. No failure on the part of
any Bank or the Agent to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
12.4. Costs; Expenses; Indemnities. (a) The Borrower
agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, the
other Loan Documents and the other documents to be delivered
hereunder or thereunder, including, without limitation, the
specified reasonable fees and out-of-pocket expenses of counsel
to the Agent with respect thereto (such fees and expenses to be
payable on the Effective Date) and with respect to advising the
Agent as to their rights and responsibilities under this
Agreement, and all costs and expenses of the Agent and the Banks
(including, without limitation, reasonable counsel fees and
expenses) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement,
the other Loan Documents and the other documents to be delivered
hereunder and thereunder.
(b) The Borrower agrees to defend, indemnify and hold
harmless each of the Agent, the Arranger, the Co-Arranger and the
Banks and their respective affiliates and their respective
directors, officers, attorneys, agents, employees, successors and
assigns (each, an "Indemnified Person") from and against any and
all liabilities, obligations, losses, damages, penalties,
actions, claims, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel of the
Agent, the Arranger, the Co-Arranger or the Banks) which may be
- 66 -<PAGE>
incurred by or asserted or awarded against any Indemnified
Person, in each case arising in any manner of or in connection
with or by reason of the Restructuring, the Restructuring
Agreement, this Agreement, the other Loan Documents, the
Commitments or any undertakings in connection therewith, or the
proposed or actual application of the proceeds of the Loans (all
of the foregoing collectively, the "Indemnified Liabilities") and
will reimburse each Indemnified Person on a current basis for all
properly documented expenses (including outside counsel fees as
they are incurred by such party) in connection with
investigating, preparing or defending any such action, claim or
suit, whether or not in connection with pending or threatened
litigation irrespective of whether such Indemnified Person is
designated a party thereto; provided that the Borrower shall not
have any liability hereunder to any Indemnified Person with
respect to Indemnified Liabilities which are determined by a
court of competent jurisdiction to have arisen primarily from the
gross negligence or willful misconduct of such Indemnified
Person; and provided further, that if the Borrower has determined
in good faith that such Indemnified Liabilities were primarily
the result of such Indemnified Person's gross negligence or
willful misconduct, it shall not be obligated to pay such
Indemnified Liabilities until a court of competent jurisdiction
has determined whether such Indemnified Person acted with gross
negligence or willful misconduct. If for any reason the foregoing
indemnification is unavailable to an Indemnified Person or
insufficient to hold an Indemnified Person harmless, then the
Borrower shall contribute to the amount paid or payable by such
Indemnified Person as a result of any Indemnified Liability in
such proportion as is appropriate to reflect not only the
relative benefits received by the Borrower and the Agent, the
Arranger, the Co-Arranger and each Bank, but also the relative
fault of the Borrower and the Agent, the Arranger, the Co-
Arranger and each Bank, as well as any other relevant equitable
considerations. The foregoing indemnity shall be in addition to
any rights that any Indemnified Person may have at common law or
otherwise, including, but not limited to, any right to
contribution.
(c) If any Loans are Consolidated or if any Bank receives
any payment of principal of any Loan other than on the last day
of an Interest Period relating to such Loan, as a result of any
payment made by the Borrower or acceleration of the maturity of
the amounts due under this Agreement pursuant to Section 11.1 or
for any other reason, the Borrower shall, upon demand by such
Bank (with a copy of such demand to the Agent), pay to the Agent
for the account of such Bank any amounts required to compensate
such Bank for any additional losses, costs or expenses which it
may reasonably incur as a result of such payment or
Consolidation, including, without limitation, any loss, cost or
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expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Bank to fund or maintain
such Loan. The foregoing obligations of the Borrower contained in
paragraphs (a), (b) and (c) of this Section 12.4, and the
obligations of the Borrower contained in Sections 5.6(b), 5.8 and
5.9, shall survive the payment of the Loans.
12.5. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the
making of the request or the granting of the consent specified by
Section 10.1 to authorize the Agent to declare all amounts under
this Agreement due and payable pursuant to the provisions of
Section 10.1 or the automatic acceleration of such amounts
pursuant to the proviso to that Section, each Bank is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement irrespective of whether
or not such Bank shall have made any demand under this Agreement
and although such obligations may be unmatured. Each Bank agrees
promptly to notify the Borrower after any such set-off and
application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this
Section 12.5 are in addition to any other rights and remedies
(including, without limitation, any other rights of set-off)
which such Bank may have.
12.6. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the
Agent, the Arranger, the Co-Arranger and when the Agent shall
have been notified by each of the Banks that such Bank has
executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent, the Arranger, the Co-Arranger
and each of the Banks and their respective successors and
assigns, except that (i) the Borrower shall have no right to
assign its rights hereunder or any interest herein without the
prior written consent of the Banks and (ii) no Bank may sell,
transfer, assign, pledge or grant participation in any of its
Loans or any of its rights or obligations hereunder except in
accordance with Section 12.7 or as expressly required hereunder.
12.7. Assignments and Participation; Additional Banks.
(a) Any Bank may, at any time, by notice substantially in the
form of Exhibit K hereto (each, a "Notice of Assignment and
Acceptance") delivered to the Agent for its acceptance and
recording, together with a recording fee in the amount of $1,500,
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assign all or any part of its rights and obligations and delegate
its duties under this Agreement (A) to any other Bank or any
affiliate of any Bank which actually controls, is controlled by,
or is under common control with such Bank or to any Federal
Reserve Bank (in either case without limitation as to amount), or
(B) with the prior consent of the Borrower, to any other Person
(but if in part, in a minimum amount of $10,000,000 or, if less,
the balance of such Bank's Tranche A Term Commitment, Tranche B
Term Commitment and the Revolving Loan Commitment); provided,
however, that no Bank may make any such assignment or delegation
of any of its rights or duties under this Agreement until the one
hundredth day after the Effective Date (or such other date as may
be agreed by the Agent and the Banks), except to any affiliate of
such Bank which actually controls, is controlled by, or is under
common control with such Bank or to any Federal Reserve Bank; and
provided, further, that after any such assignment, the assigning
Bank's aggregate Commitments hereunder shall not be less than
$10,000,000.
(b) Any Bank may at any time sell or grant participations
in its Commitment, or the obligations owing to or from any Person
existing under this Agreement; provided, however, that (i) as
between such Bank and the Borrower, the existence of such
participation shall not give rise to any direct rights or
obligations between the Borrower and the participants; (ii) such
Bank shall remain solely responsible to the other parties hereto
for the performance of such obligations; (iii) the Borrower, the
Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement; and (iv) no such sale or grant
of a participation shall, without the consent of the Borrower,
require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to qualify the
Commitments or the Loans under the securities laws of any state.
(c) If an assignment is made by any Bank in accordance with
the provisions of paragraph (a) above, upon acceptance and
recording by the Agent, and approval by the Borrower, where
applicable, of each Notice of Assignment and Acceptance, (i) the
assignee thereunder shall become a party to this Agreement and
the Borrower shall release and discharge the assigning Bank from
its duties, liabilities or obligations under this Agreement to
the extent the same are so assigned and delegated by such Bank,
provided that no such consent, release or discharge shall have
effect until the Borrower shall have received a fully executed
copy of the Notice of Assignment and Acceptance relating to such
assignment and (ii) Schedule II shall be deemed amended to give
effect to such assignment. The Borrower agrees that each such
disposition will give rise to a direct obligation of the Borrower
to any such assignee. The Borrower agrees that, promptly
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following any such assignment, it shall deliver upon delivery of
the applicable outstanding Notes or Notes for cancellation a new
Note or Notes to the assignee and a replacement Note or Notes to
the transferor, in amounts properly reflecting such assignment.
(d) The Borrower authorizes each Bank to disclose to any
prospective assignee or participant and any assignee or
participant any and all financial information in such Bank's
possession concerning the Borrower and this Agreement; provided,
however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Bank in
accordance with Section 12.11.
(e) Any Bank which sells or grants participation in any
Loans or its Commitment may not grant to the participants the
right to vote other than on amendments, consents, waivers,
modifications or other actions which change the principal amount
of, postpone the scheduled maturity of, or decrease the interest
rates applicable to, any Loans under, or increase the amount of,
such Commitment (except with respect to participating Affiliates
actually controlled by, controlling or under common control with,
such Bank); provided, however, that as between the Bank and the
Borrower, only the Bank shall be entitled to cast such votes.
(f) No participant in any Bank's rights or obligations
shall be entitled to receive any greater payment under Section
5.6, 5.8 or 5.9 than such Bank would have been entitled to
receive with respect to the rights participated, and no
participation shall be sold or granted to any Person as to which
the events specified in Section 5.7 have occurred on or before
the date of participation.
(g) The Agent shall maintain at its address referred to in
Section 12.2 a copy of each Notice of Assignment and Acceptance
received by it and a register, containing the terms of each
Notice of Assignment and Acceptance, for the recordation of the
names and addresses of each Bank and the Commitment of, and
principal amount of the Loans owing to, each Bank from time to
time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Banks, and the Agent may treat each Person
whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available
for inspection by the Borrower, or any Bank, at any reasonable
time and from time to time upon reasonable prior notice.
12.8. Pari Passu Ranking. The Obligations of the
Borrower hereunder shall rank at least pari passu in right of
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payment and in liquidation with all of the Borrower's other
unsecured and unsubordinated obligations.
12.9. GOVERNING LAW; SEVERABILITY. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE
AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW,
SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH
PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
12.10. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT
AND THE BANKS HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(b) Each of the Borrower, the Agent and the Banks
irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower at its address specified for
notices in or pursuant to Section 12.2 hereof, to the Agent at
Watson, Farley & Williams, 380 Madison Avenue, New York, NY
10017; and to the Banks as set forth on Schedule I, such service
to become effective 30 days after such mailing.
(c) Nothing contained in this Section 12.9 shall affect the
right of the Agent or any Bank to serve process in any other
manner permitted by law or commence legal proceedings or
otherwise proceed against the Borrower or any other Loan Party in
any other jurisdiction.
(d) Each of the parties hereto waives any right it may have
to trial by jury in any proceeding arising out of this Agreement.
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12.11. Confidentiality. Each Bank and the Agent agrees to
keep confidential information obtained by it pursuant hereto (or
otherwise obtained from the Borrower in connection with this
Agreement) confidential in accordance with such Person's
customary practices and agrees that it will only use such
information in connection with the transactions contemplated by
this Agreement and not disclose any of such information other
than (i) to such Person's employees, counsel, representatives and
agents who are or are expected to be involved in the evaluation
of such information in connection with the transactions
contemplated by this Agreement and who in each case agree to be
bound by the provisions of this sentence, (ii) to the extent that
disclosure by such Person is required, or to the extent that such
Person has been advised by counsel that disclosure is required,
in order to comply with any law, regulation or judicial order or
requested or required by bank regulators or auditors or other
Governmental Authority, (iii) to assignees or participants of the
Loans or Commitments or potential assignees or participants of
the Loans or Commitments who in each case agree in writing to be
bound by the provisions of this sentence or (iv) to the extent
that such information has otherwise been disclosed or made public
other than by such Person, or such Person's employees, counsel,
representatives or agents, in violation of this Section 12.10.
12.12. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties hereto.
12.13. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different Parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Credit Agreement to be duly executed as of the date first above
written.
A.L. RESTRUCTURING SUB, INC., as
Borrower
By /s/ E.W. Sissener
Name: E.W. Sissener
Title: Chariman & C.E.O.
UNION BANK OF NORWAY, as Agent
By /s/ Terje D. Skullerud
Name: Terje D. Skullerud
Title: General Manager
UNION BANK OF NORWAY, as Arranger
By /s/ Terje D. Skullerud
Name: Terje D. Skullerud
Title: General Manager
UNION BANK OF NORWAY, as Bank
By /s/ Kjell O. Kran
Name: Kjell O. Kran
Title: President and CEO
THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. Peter Mitchell
Name: J. Peter Mitchell
Title: Director
- 73 -<PAGE>
- 74 -<PAGE>
BIKUBEN A/S
By /s/ Jorn Christiansen
Name: Jorn Christiansen
Title: Vice President
CORESTATES BANK, N.A.
By /s/ Stephen E. Stambaugh
Name: Stephen E. Stambaugh
Title: Vice President
THE DAIWA BANK, LIMITED
By /s/ Ronald W. Gale
Name: Ronald W. Gale
Title: Vice President
By /s/ B.W. Henry
Name: B.W. Henry
Title: V.P. and Manager
DEN NORSKE BANK AS, as Co-Arranger
By /s/ Jon A. Jacobsen
Name: Jon A. Jacobsen
Title: Senior Vice President
DEN NORSKE BANK AS, as Bank
By /s/ Jon A. Jacobsen
Name: Jon A. Jacobsen
Title: Senior Vice President
UNIBANK A/S
- 75 -<PAGE>
By /s/ Anders Laegrid /s/ Sven Hove
Name: Anders Laegrid Sven Hove
Title: Attorney-in-Fact Attorney-in-
Fact
UNITED JERSEY BANK
By /s/ James F. Deutsch
Name: James F. Deutsch
Title: Senior Vice President
Agreement Date: September 28, 1994
- 76 -<PAGE>
Schedule I
BIKUBEN A/S Lending Office:
Sparekassen Bikuben A/S
8, Silkegade
DK-1113 Copenhagen K
Denmark
Attn: Klaus L. Svendsen
Telephone: +45-3312-2174
Telecopier: +45-3315-0143
Address for Notice Purposes:
Sparekassen Bikuben A/S
8, Silkegade
DK-1113 Copenhagen K
Denmark
C o n t a c t f o r a l l
operational/administrative matters:
Treasury and International Division
Loans Administration
Attn: Jean-Pierre Leuleu/Elin Haastrup
Telephone: +45-3312-0133 ext.
4960/4964
Telecopier: +45-3332-1697
Contact for all credit and
documentation matters:
Treasury and International Division
International Capital Markets
Attn: Klaus L. Svendsen
Telephone: +45-3312-2174
Telecopier: +45-3315-0143
Address for Service of Process:
Watson, Farley & Williams
380 Madison Avenue, 19th Floor
New York, New York 10017
Attn: Peter S. Smedresman, Esq.
Telephone: 212-922-2200
Telecopier: 212-922-1512
- 77 -<PAGE>
CORESTATES BANK, N.A. Lending Office:
CoreStates Bank, N.A.
1345 Chestnut Street
P.O. Box 7618
F.C. 1-8-3-18
Philadelphia, PA 19101
Attn: Foreign Corporate Department
Stephen E. Stambaugh, V.P.
Telephone: 215-973-3791
Telecopier: 215-973-6894
Address for Notice Purposes:
CoreStates Bank, N.A.
1345 Chestnut Street
P.O. Box 7618
F.C. 1-8-3-18
Philadelphia, PA 19101
Attn: Foreign Corporate Department
Stephen E. Stambaugh, V.P.
Telephone: 215-973-3791
Telecopier: 215-973-6894
Address for Service of Process:
CoreStates Bank, N.A.
Legal Department
F. C. 1-1-17-1
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
THE DAIWA BANK, LIMITED Lending Office:
The Daiwa Bank, Ltd. Chicago Branch
Administration Center
233 South Wacker Drive, Suite 4500
Chicago, IL 60606
Tel: (312) 876-0181
Fax: (312) 993-6255
- 78 -<PAGE>
Address for Notice Purposes:
The Daiwa Bank, Ltd.
450 Lexington Avenue, 17th Floor
New York, NY 10017
Tel: (212) 808-2337
Fax: (212) 818-0865
Address for Service of Process:
The Daiwa Bank, Ltd. Chicago Branch
Administration Center
233 South Wacker Drive, Suite 4500
Chicago, IL 60606
Tel: (312) 876-0181
Fax: (312) 993-6255
DEN NORSKE BANK Lending Office:
Stranden 21
0107 Oslo
Norway
Attn: Credit Administration
Telecopier: 47-22-48-10-46
Address for Notice Purposes:
Stranden 21
0107 Oslo
Norway
Attn: Credit Administration
Telecopier: 47-22-48-10-46
Address for Service of Process:
Den norske Bank AS, New York Branch
600 Fifth Avenue
New York, NY 10020
- 79 -<PAGE>
THE FIRST NATIONAL BANK Lending Office:
OF BOSTON
100 Federal Street
P.O. Box 2016
Boston, MA 02106-2016
Attn: J. Peter Mitchell
Telephone: 617-434-8307
Telecopier: 617-434-6685
Address for Notice Purposes:
100 Federal Street
P.O. Box 2016
Boston, MA 02106-2016
Attn: J. Peter Mitchell
Telephone: 617-434-8307
Telecopier: 617-434-6685
Address for Service of Process:
100 Federal Street
P.O. Box 2016
Boston, MA 02106-2016
Attn: J. Peter Mitchell
Telephone: 617-434-8307
Telecopier: 617-434-6685
UNIBANK A/S Lending Office:
Unibank A/S
Corporate Banking
2 Torvegade
DK-1786 Kobenhavn V
Denmark
Attn: Ole Saxkjaer
Telephone: +45-33-33-33-33
Telecopier: +45-33-33-55-27
- 80 -<PAGE>
Address for Notice Purposes:
Unibank A/S
Corporate Banking
2 Torvegade
DK-1786 Kobenhavn V
Denmark
Attn: Ole Saxkjaer
Telephone: +45-33-33-33-33
Telecopier: +45-33-33-55-27
Address for Service of Process:
Unibank A/S
New York Branch
15-15 West 54th Street
New York, New York 10019
Attn: Kurt Jensen
Telephone: 212-609-6900
Telecopier: 212-245-9181
UNION BANK OF NORWAY Lending Office:
Union Bank of Norway
Kirkegaten 18
P.O. Box 1172 Sentrum
0107 Oslo
Norway
Attn: Loan Administration
Telephone: 011-47-22-31-90-50
Telecopier: 011-47-22-31-85-58
Address for Notice Purposes:
Union Bank of Norway
Kirkegaten 18
P.O. Box 1172 Sentrum
0107 Oslo
Norway
Attn: Loan Administration
Telephone: +011-47-22-31-90-50
Telecopier: +011-47-22-31-85-58
Address for Service of Process:
- 81 -<PAGE>
Watson, Farley & Williams
380 Madison Avenue, 19th Floor
New York, NY 10017
Attn: Peter Smedresman, Esq.
UNITED JERSEY BANK Lending Office:
United Jersey Bank
25 East Salem Street
Hackensack, NJ 07602
Attn:
Telephone:
Telecopier:
Address for Notice Purposes:
United Jersey Bank
25 East Salem Street
Hackensack, NJ 07602
Attn:
Telephone:
Telecopier:
Address for Service of Process:
United Jersey Bank
Deposit Services - Elizabeth
288 North Broad Street
Elizabeth, NJ 07207
- 82 -<PAGE>
Schedule II
Commitments
The Banks listed below will participate in the Credit Agreement
in the following manner: (in million USD)
Tranche A Tranche B Revolving
Term Term Loan
Bank Commitment Commitment Commitment Sum
Union Bank of 12.500 22.500 15.000 50.000
Norway
Den norske 12.500 10.500 7.000 30.000
Bank AS
Sparekassen 12.500 7.500 5.000 25.000
Bikuben
Unibank A/S 12.500 7.500 5.000 25.000
United Jersey 15.000 0 0 15.000
Bank
The First 0 9.000 6.000 15.000
National Bank
of Boston
CoreStates 0 9.000 6.000 15.000
Bank, N.A.
The Daiwa 0 6.000 4.000 10.000
Bank, Limited
Sum 65.000 72.000 48.000 185.000
- 83 -<PAGE>
Schedule III
Restructuring Documents
1. The Restructuring Agreement dated as of May 16, 1994 by and
between the Parent Guarantor and A.L. - Oslo.
2. The Demerger Agreement dated May 16 between A.L. - Oslo and
New A.L. - Oslo.
3. The Administrative Services Agreement dated September 30,
1994 between A.L. - Oslo and New A.L. - Oslo.
4. The Lease Agreement dated September 28, 1994 between A.L. -
Oslo and New A.L. - Oslo.
5. Opinions of U.S. and Norwegian counsel to A.L. - Oslo.
6. Opinion of counsel to the Parent Guarantor.
7. Lehman Brothers letter dated May 16, 1994 to the Special
Committee of the board of Directors of the Parent Guarantor.
8. Bear, Stearns & Co. Inc. dated May 16, 1994 to the Board of
Directors of A.L. - Oslo.
- 84 -<PAGE>
Schedule 7.2(a)(iv)
Required Consents and Approvals
None
- 85 -<PAGE>
EXHIBIT A-1
A.L. RESTRUCTURING SUB, INC.
TRANCHE A TERM NOTE
October 3, 1994
FOR VALUE RECEIVED, A.L. RESTRUCTURING SUB, INC. (to be
renamed A.L. Laboratories, Inc.) (the "Borrower") hereby promises
to pay to the order of (the "Bank") the
principal amount of Dollars ($
), or, if less, the principal amount of the Tranche A Term Loans
of the Bank outstanding, on the dates and in the amounts
specified in the Credit Agreement referred to below, and to pay
interest on such principal amount on the dates and at the rates
specified in such Credit Agreement. All payments due to the Bank
hereunder shall be made to the Agent, for distribution to the
Bank, at the place, in the type of money and funds and in the
manner specified in such Credit Agreement.
Each holder hereof is authorized to endorse on the grid
attached hereto, or on a continuation thereof, each Tranche A
Term Loan of the Bank and each payment, prepayment or conversion
with respect thereto.
Presentment, demand, protest, notice of dishonor and notice
of intent to accelerate are hereby waived by the undersigned.
This Tranche A Term Note evidences Tranche A Term Loans made
under, and is entitled to the benefits of, the Credit Agreement,
dated as of September 28, 1994, among the Borrower, the banks
listed on the signature pages thereof, Union Bank of Norway, as
Agent, Union Bank of Norway, as Arranger, and Den norske Bank AS,
as Co-Arranger, as the same may be amended from time to time.
Reference is made to such Credit Agreement, as so amended, for
provisions relating to the prepayment and the acceleration of the
maturity hereof. This Tranche A Term Note is also entitled to
the benefits of the Credit Support Documents referred to therein.
This Tranche A Term Note shall be construed in accordance
with and governed by the laws of the State of New York.
A.L. RESTRUCTURING SUB, INC.
- 86 -<PAGE>
By
Name:
Title:
- 87 -<PAGE>
GRID
TRANCHE A TERM NOTE
Amount of
Amount of Principal Paid, Unpaid Principal
Domestic Rate Prepaid or Amount of Notation
Date Loan Converted Domestic Note Made By
EXHIBIT A-2
- 88 -<PAGE>
A.L. RESTRUCTURING SUB, INC.
TRANCHE B TERM NOTE
October 3, 1994
FOR VALUE RECEIVED, A.L. RESTRUCTURING SUB, INC. (to be renamed A.L.
Laboratories, Inc.) (the "Borrower") hereby promises to pay to the order
of (the "Bank") the principal amount of
Dollars ($ ), or, if less, the principal amount of the Tranche
B Term Loans of the Bank outstanding, on the dates and in the amounts
specified in the Credit Agreement referred to below, and to pay interest on
such principal amount on the dates and at the rates specified in such Credit
Agreement. All payments due to the Bank hereunder shall be made to the
Agent, for distribution to the Bank, at the place, in the type of money and
funds and in the manner specified in such Credit Agreement.
Each holder hereof is authorized to endorse on the grid attached
hereto, or on a continuation thereof, each Tranche B Term Loan of the Bank
and each payment, prepayment or conversion with respect thereto.
Presentment, demand, protest, notice of dishonor and notice of intent
to accelerate are hereby waived by the undersigned.
This Tranche B Term Note evidences Tranche B Term Loans made under, and
is entitled to the benefits of, the Credit Agreement, dated as of September
28, 1994, among the Borrower, the banks listed on the signature pages
thereof, Union Bank of Norway, as Agent, Union Bank of Norway, as Arranger,
and Den norske Bank AS, as Co-Arranger, as the same may be amended from time
to time. Reference is made to such Credit Agreement, as so amended, for
provisions relating to the prepayment and the acceleration of the maturity
hereof. This Tranche B Term Note is also entitled to the benefits of the
Credit Support Documents referred to therein.
This Tranche B Term Note shall be construed in accordance with and
governed by the laws of the State of New York.
A.L. RESTRUCTURING SUB, INC.
By
Name:
Title:
- 89 -<PAGE>
GRID
TRANCHE B TERM NOTE
Amount of
Amount of Principal Paid, Unpaid Principal
Domestic Rate Prepaid or Amount of
Notation
Date Loan Converted Domestic Note Made
By
- 90 -<PAGE>
EXHIBIT A-3
A.L. RESTRUCTURING SUB, INC.
REVOLVING NOTE
October 3, 1994
FOR VALUE RECEIVED, A.L. RESTRUCTURING SUB, INC. (to be
renamed A.L. Laboratories, Inc.) (the "Borrower") hereby promises
to pay to the order of (the "Bank")
the principal amount of Dollars ($
), or, if less, the principal amount of the Revolving Term
Loans of the Bank outstanding, on the dates and in the amounts
specified in the Credit Agreement referred to below, and to pay
interest on such principal amount on the dates and at the rates
specified in such Credit Agreement. All payments due to the Bank
hereunder shall be made to the Agent, for distribution to the
Bank, at the place, in the type of money and funds and in the
manner specified in such Credit Agreement.
Each holder hereof is authorized to endorse on the grid
attached hereto, or on a continuation thereof, each Revolving
Term Loan of the Bank and each payment, prepayment or conversion
with respect thereto.
Presentment, demand, protest, notice of dishonor and notice
of intent to accelerate are hereby waived by the undersigned.
This Revolving Note evidences Revolving Term Loans made
under, and is entitled to the benefits of, the Credit Agreement,
dated as of September 28, 1994, among the Borrower, the banks
listed on the signature pages thereof, Union Bank of Norway, as
Agent, Union Bank of Norway, as Arranger, and Den norske Bank AS,
as Co-Arranger, as the same may be amended from time to time.
Reference is made to such Credit Agreement, as so amended, for
provisions relating to the prepayment and the acceleration of the
maturity hereof. This Revolving Note is also entitled to the
benefits of the Credit Support Documents referred to therein.
This Revolving Note shall be construed in accordance with
and governed by the laws of the State of New York.
A.L. RESTRUCTURING SUB, INC.
By
Name:
Title:
- 91 -<PAGE>
GRID
REVOLVING NOTE
Amount of
Amount of Principal Paid, Unpaid Principal
Domestic Rate Prepaid or Amount of
Notation
Date Loan Converted Domestic Note Made
By
- 92 -<PAGE>
Exhibit B
[AFFILIATE NAME]
ACQUISITION RELATED GUARANTY
GUARANTY, dated as of _____________ 19__, made by
_________________, a corporation (together with its
successors and assigns, the "Acquisition Related Guarantor"), in
favor of the banks (the "Banks") parties, from time to time, to
the Credit Agreement (as defined below), Union Bank of Norway as
agent (the "Agent"), Union Bank of Norway, as arranger (the
"Arranger"), and Den norske Bank AS, as co-arranger (the "Co-
Arranger", and collectively with the Banks, the Agent and the
Arranger, the "Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, the Guaranteed Parties have entered into the Credit
Agreement dated as of September __, 1994 (said agreement, as it
may hereafter be amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement", and the terms defined
therein and not otherwise defined herein being used herein as
therein defined) with A.L. Restructuring Sub, Inc. (to be renamed
A.L. Laboratories, Inc.), a corporation organized and existing
under the laws of the State of Delaware (the "Borrower"), or any
successor thereto;
WHEREAS, pursuant to the terms of the Credit Agreement, if
the proceeds of a Borrowing are to be made available, either
directly or indirectly, to an Affiliate of the Borrower in
connection with an acquisition of Equity or assets ("Acquisition
Related Loan Proceeds"), the Borrower is required to deliver, or
cause to be delivered, a guaranty of its obligations under the
Credit Agreement made by such Affiliate in favor of the
Guaranteed Parties.
WHEREAS, on _____________, 19__, the Borrower effected a
Borrowing and the proceeds thereof were made available to the
Acquisition Related Guarantor in connection with an acquisition
of equity or asset and therefore constituted Acquisition Related
Loan Proceeds;
NOW, THEREFORE, in consideration of the premises, in order
to satisfy the obligations of the Borrower pursuant to Section
8.10 of the Credit Agreement, and in consideration of the receipt
by the Acquisition Related Guarantor of the Acquisition Related
- 93 -<PAGE>
Loan Proceeds, the Acquisition Related Guarantor hereby agrees as
follows:
SECTION 1. Guaranty. The Acquisition Related Guarantor
hereby unconditionally and irrevocably guarantees the punctual
payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter
existing under the Loan Documents, whether for borrowed money,
interest, fees or any other amounts due thereunder or otherwise
(the "Guaranteed Obligations") and any and all expenses
(including counsel fees and expenses) reasonably incurred by any
Guaranteed Party in enforcing any rights under this Guaranty.
SECTION 2. Guaranty Absolute. The Acquisition Related
Guarantor guarantees that the obligations will be paid strictly
in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The liability of the
Acquisition Related Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan
Documents (including this Guaranty) or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent
to departure from the Loan Documents;
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Guaranteed Obligations; or
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Borrower, or a
guarantor.
SECTION 3. Waiver. The Acquisition Related Guarantor
hereby waives all notices with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any
Guaranteed Party protect, secure, perfect or insure any security
interests or lien on any property subject thereto or exhaust any
right or take any action against the Borrower, or any other
person or entity or any collateral.
SECTION 4. Subrogation. (a) The Acquisition Related
Guarantor shall not exercise any rights which it may have
- 94 -<PAGE>
acquired by way of subrogation under this Argument, by any
payment made hereunder or otherwise nor shall the Acquisition
Related Guarantor seek any reimbursement from the Borrower in
respect of payments made by the Acquisition Related Guarantor
hereunder, unless and until all of the Guaranteed Obligations
shall have been paid and discharged, in full, and if any payment
shall be made to the Acquisition Related Guarantor on account of
such subrogation or reimbursement rights at any time when the
Guaranteed Obligations shall not have been paid and discharged,
in full, each and every amount so paid shall forthwith be paid to
the Agent to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured.
(b) If, pursuant to Applicable Law, the Acquisition Related
Guarantor, by payment or otherwise, becomes subrogated to all or
any of the rights of the Guaranteed Parties under any of the Loan
Documents, the rights of the Guaranteed Parties to which the
Acquisition Related Guarantor shall be subrogated shall be
accepted by the Acquisition Related Guarantor "as is" and without
any representation or warranty of any kind by the Guaranteed
Parties, express or implied, with respect to the legality, value,
validity or enforceability of any of such rights, or the
existence, availability, value, merchantability or fitness for
any particular purpose of any collateral and shall be without
recourse to the Guaranteed Parties.
SECTION 5. Representations and Warranties. The Acquisition
Related Guarantor hereby represents and warrants as follows:
(a) Incorporation and Good Standing. It is (i) a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of __________; and (ii) duly
qualified and in good standing as a foreign corporation under the
laws of each other jurisdiction in which the failure so to
qualify would have a Material Adverse Effect.
(b) Corporate Power and Authorization. The execution,
delivery and performance by the Acquisition Related Guarantor of
this Guaranty are within the Acquisition Related Guarantor's
corporate powers, have been duly authorized by all necessary
corporate action, do not contravene the Acquisition Related
Guarantor's charter or by-laws, any law or any contractual
restriction binding on or affecting and material to the
Acquisition Related Guarantor, and do not result in or require
the creation of any Lien upon or with respect to any of its
properties.
(c) Authorization. No authorization, consent or approval
or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required for the due
- 95 -<PAGE>
execution, delivery and performance by the Acquisition Related
Guarantor of this Guaranty, other than (i) consents,
authorizations and approvals that have been obtained, are final
and not subject to review on appeal or to collateral attack, and
are in full force and effect and, in the case of any such
required under Applicable Law as in effect on the Agreement Date,
are listed on Schedule 7.2(a)(iv) of the Credit Agreement, (ii)
notices, filings or registrations that have been given or
effected, and (iii) the filing of copies of Loan Documents with
the Securities and Exchange Commission as exhibits to its public
filings.
(d) Valid Guaranty. This Guaranty is a legal, valid and
binding obligation of the Acquisition Related Guarantor,
enforceable against the Acquisition Related Guarantor in
accordance with its terms, except where such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditor's rights generally
or equitable principles relating to enforceability.
(e) Economic Benefits; Solvency.
(i) The Acquisition Related Loan Proceeds constitute
direct and/or indirect economic benefits to the Acquisition
Related Guarantor at least equal to the amount of its
obligations hereunder (with the amount thereof being
determined without giving effect to Section 12);
(ii) The guarantee by the Acquisition Related
Guarantor of the Guaranteed Obligations and the Incurrence
by its of its other obligations hereunder (with the amounts
thereof being determined without giving effect to Section
12), will not render the Acquisition Related Guarantor
insolvent or unable to pay its debts as they mature or leave
the Acquisition Related Guarantor with unreasonably small
capital;
(iii) The Acquisition Related Guarantor does not
intend to incur debts, including those hereunder, that would
be beyond its ability to pay as such debts mature.
SECTION 6. Payments and Computations. (a) The Acquisition
Related Guarantor shall make each payment payable by it hereunder
not later than 11:00 A.M. (New York City time) on the day when
due, in Dollars, to the Agent at its address referred to in
Section 12.2 of the Credit Agreement in immediately available
funds without set-off or counterclaim, for the account of the
several Banks.
- 96 -<PAGE>
(b) No Reductions. Payments due to the Agent, the
Arranger, the Co-Arranger or any Bank hereunder, and all other
terms, conditions, covenants and agreements to be observed and
performed by the Acquisition Related Guarantor hereunder, shall
be made, observed or performed by the Acquisition Related
Guarantor without any reduction or deduction whatsoever,
including any reduction or deduction for any set-off, recoupment,
counterclaim (whether sounding in tort, contract or otherwise) or
Tax.
SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to the Acquisition
Related Guarantor, addressed to it at
Attention: , if to the Agent, addressed to it at the
address specified in the Credit Agreement, or as to each party at
such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with
the terms of this Section. All such notices and other
communications shall, when mailed or telegraphed, respectively,
be effective when deposited in the mails or delivered to the
telegraph company, respectively, addressed as aforesaid, and
shall, when delivered or telecopied, be effective when received.
SECTION 8. No Waiver; Remedies. No failure on the part of
any Guaranteed Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default (as defined in the
Credit Agreement), each Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit
or the account of the Acquisition Related Guarantor against any
and all of the obligations of the Acquisition Related Guarantor
now or hereafter existing under this Guaranty, irrespective of
whether or not such Bank shall have made any demand under this
Guaranty. Each Bank agrees promptly to notify the Acquisition
Related Guarantor after any such set-off and application made by
such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section are in
- 97 -<PAGE>
addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
SECTION 10. Continuing Guaranty; Transfer of Interest.
This Guaranty is a continuing guaranty and shall (i) remain in
full force and effect until indefeasible payment in full of the
Guaranteed Obligations and all other amounts payable under this
Guaranty, (ii) be binding upon the Acquisition Related Guarantor,
its successors and permitted assigns; provided, that the
Acquisition Related Guarantor may not assign or transfer its
obligations hereunder without the consent of the Majority Banks,
and (iii) inure to the benefit of and be enforceable by any
Guaranteed Party and its respective successors, transferees, and
assigns, without limiting the generality of the foregoing clause
(iii), any Bank may assign or otherwise transfer all or any part
of its rights and obligations under the Credit Agreement in
accordance therewith, and such other person or entity shall
thereupon become vested with all the rights in respect thereof
granted to such Bank herein or otherwise, subject, however, to
the provisions of Article XII of the Credit Agreement.
SECTION 11. Reinstatement. This Guaranty shall remain in
full force and effect and continue to be effective should any
petition be filed by or against any Loan Party (as defined in the
Credit Agreement) for liquidation or reorganization, should any
Loan Party become insolvent or make an assignment for the benefit
of creditors or should a receiver or trustee be appointed for all
or any significant part of any Loan Party's assets, and shall, to
the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and
performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the
Guaranteed Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored, or
returned, the Guaranteed Obligations shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
SECTION 12. Limitation of Obligation. Notwithstanding
anything else herein to the contrary, the liability of the
Acquisition Related Guarantor under this Guaranty shall not
exceed the greater of (i) 95% of the Adjusted Net Assets (as
defined below) of the Acquisition Related Guarantor on the date
of delivery hereof and (ii) 95% of the Adjusted Net Assets (as
defined below) of the Acquisition Related Guarantor on the date
of any payment hereunder; provided, that nothing in this Section
14 shall be construed to limit the liability of the Acquisition
- 98 -<PAGE>
Related Guarantor under any other Loan Document to which it is,
or may be, a party. "Adjusted Net Assets" of any Acquisition
Related Guarantor at any date means the lesser of (x) the amount
by which the fair value of the property of such Acquisition
Related Guarantor (including, without limitation, the property
constituting the Equity or assets acquired with the Acquisition
Related Loan Proceeds and rights of subrogation, contribution,
and similar rights) exceeds the total amount of liabilities,
including, without limitation, contingent liabilities, but
excluding liabilities under this Guaranty, of the Acquisition
Related Guarantor at such date and (y) the amount by which the
present fair salable value of the assets of the Acquisition
Related Guarantor (including, without limitation, the property
constituting the Equity or assets acquired with the Acquisition
Related Loan Proceeds and rights of subrogation, contribution,
and similar rights) at such date exceeds the amount that will be
required to pay the probable liability of the Acquisition Related
Guarantor on its debts, excluding debt in respect of this
Guaranty, as they become absolute and matured.
SECTION 13. Additional Obligation. This Guaranty is
delivered by the Acquisition Related Guarantor in addition to,
and not in substitution of, any other Credit Support Document
that was previously, or that may hereafter be, delivered by the
Acquisition Related Guarantor and nothing contained herein shall
be deemed to limit or in any way prejudice the rights of the
Guaranteed Parties against the Acquisition Related Guarantor
under any other Loan Document.
SECTION 14. GOVERNING LAW. This Guaranty SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 15. WAIVER OF JURY TRIAL. THE ACQUISITION RELATED
GUARANTOR IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES
HEREUNDER, UNDER THE CREDIT AGREEMENT OR UNDER THE OTHER LOAN
DOCUMENTS RELATIVE TO EACH OF THE FOREGOING.
IN WITNESS WHEREOF, the Acquisition Related Guarantor has
caused this Guaranty to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above
written.
[ACQUISITION RELATED
GUARANTOR]
- 99 -<PAGE>
By:____________________________
Name:
Title:
- 100 -<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of September 28, 1994,
made by Union Bank of Norway, as agent (the "Agent") for the
banks (the "Banks") parties from time to time to the Credit
Agreement (as defined below), Signet Bank/Maryland ("Signet"),
National Westminster Bank NJ ("NatWest") and U.S. Bank of
Washington, N.A. ("U.S. Bank", and together with Signet and
NatWest, the "Other Lenders").
W I T N E S S E T H:
WHEREAS, the Other Lenders have made available to A.L.
Laboratories, Inc. (to be renamed A.L. Pharma Inc.) (the
"Parent") and/or its Subsidiaries (such Subsidiaries and the
Parent are collectively referred to herein as the "Obligors")
certain unsecured lines of credit (the "Lines of Credit");
WHEREAS, A.L. Restructuring Sub Inc. (to be renamed A.L.
Laboratories, Inc.) (the "Borrower"), the Agent, the Banks, Union
Bank of Norway, as arranger, and Den norske Bank AS, as co-
arranger, have entered into the Credit Agreement dated as of
September 28, 1994 (said agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement");
WHEREAS, it is a condition precedent to the making of any
Loans under the Credit Agreement that the parties hereto execute
and deliver this Agreement so as to set forth certain of the
parties' agreements in respect of the obligations of the Obligors
to the Banks and the Other Lenders under the Credit Agreement and
the Lines of Credit, respectively.
NOW, THEREFORE, in consideration of the premises and in
order to induce the Banks to make the loans under the Credit
Agreement, the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used but not
otherwise defined herein are used with the meaning ascribed
thereto in the Credit Agreement or, if not defined therein, in
the Parent Guaranty (such meanings to be equally applicable to
both the singular and plural forms of the terms defined).
SECTION 2. Amounts Under Other Credit Agreements. Each of
the Other Lenders represents and warrants to the Agent that
Schedule A hereto sets forth the maximum amount of Indebtedness
available under the Lines of Credit made available by such Other
Lender to any of the Obligors and the amount outstanding and
owing by any of the Obligors to such Other Lender under such Line
of Credit, in each case on and as of the date of this Agreement.<PAGE>
SECTION 3. No Additional Debt. So long as the Credit
Agreement is in effect, each of the Other Lenders agrees that it
will not enter into any agreements, including agreements to
modify, alter or amend the terms and provisions of the Lines of
Credit made available by it, the effect of which is to increase
the amount of Indebtedness which can be incurred by any of the
Obligors under the Lines of Credit over and above the maximum
principal amount available under the Lines of Credit on the date
hereof (as disclosed on the attached Schedule A), unless such
Indebtedness constitutes Permitted Indebtedness and such Other
Lender provides the Agent with at least 15 days' notice of its
intention to increase such Indebtedness.
SECTION 4. Credit Agreement Security. The Other Lenders
acknowledge that pursuant to the Subsidiary Guaranties and the
Pledge Agreements, certain of the Subsidiaries of the Borrower
and the Guarantor are providing security for the Borrower's
obligations under the Credit Agreement.
SECTION 5. Pari Passu Ranking of Obligations. The Agent
and the Other Lenders acknowledge and agree that so long as the
Credit Agreement is in effect, the obligations of any Obligor
pursuant to the terms of the Credit Agreement or the Lines of
Credit (as the case may be), whether now or hereafter existing,
rank, and will at all times hereafter rank, pari passu in right
of payment and in liquidation with all obligations of such
Obligor to the Banks and Other Lenders pursuant to the terms of
the Credit Agreement and the Lines of Credit. Each Other Lender
agrees that it has not and will not take any action which would
cause the Borrower or the Parent to be in breach of the
provisions of Section 9.1 or 7(a) of the Credit Agreement and the
Guaranty, respectively.
SECTION 6. Termination of this Agreement. This Agreement
shall terminate in the event that the Credit Agreement is
terminated upon satisfaction of the Borrower's obligations
thereunder in accordance with the provisions thereof.
SECTION 7. Credit Agreement Obligations. Each of the Other
Lenders represents and warrants that it is familiar with the
provisions of Article IX of the Credit Agreement and Sections 7
and 8 of the Parent Guaranty.
SECTION 8. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, as to each party at its
address specified on the signature pages hereto, or at such other
address as shall be designated by such party in a written notice
to each other party complying as to delivery with the terms of
- 102 -<PAGE>
this Section. All such notices and other communications shall,
when mailed or telegraphed, respectively, be effective when
deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid, and shall, when delivered
or telecopied, be effective when received.
SECTION 9. No Waiver; Remedies. No failure on the part of
any party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 11. Amendment. This Agreement may not be amended,
modified or waived except with the written consent of each of the
parties hereto; provided, however, that the parties hereto
acknowledge that at any time hereafter future lenders of the
Obligors may become parties to this Agreement by executing and
delivering to all other parties a counterpart of this Agreement,
and thereafter this Agreement shall be deemed to have been
thereby amended and such future lender shall have, on and as of
such date, all of the rights and obligations of an "Other Lender"
as if it had executed this Agreement on the date hereof.
SECTION 12. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
SECTION 13. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 14. Headings and Titles. The Section headings and
other titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not
part of the agreement between the parties hereto.
SECTION 15. Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Intercreditor Agreement to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above
written.
SIGNET BANK/MARYLAND
By:_______________________
Name:
Title:
Address for Notices:
_________________________
_________________________
Telecopy:
Telephone:
Attention:
NATIONAL WESTMINSTER BANK NJ
By:_______________________
Name:
Title:
Address for Notices:
_________________________
_________________________
Telecopy:
Telephone:
Attention:
U.S. BANK OF WASHINGTON, N.A.
By:_______________________
Name:
Title:
Address for Notices:
_________________________
_________________________
Telecopy:
- 104 -<PAGE>
Telephone:
Attention:
UNION BANK OF NORWAY, as Agent
By:_______________________
Name:
Title:
Address for Notices:
_________________________
_________________________
Telecopy:
Telephone:
Attention:
- 105 -<PAGE>
Schedule A
LINES OF CREDIT
- 106 -<PAGE>
EXHIBIT D-1
NOTICE OF INITIAL BORROWING AND WAIVER REQUEST
September 28, 1994
Union Bank of Norway.
as Agent for
the Banks parties to the
Credit Agreement referred to below
______________________
______________________
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, dated as of
September __, 1994, among A.L. Restructuring Sub, Inc. (to be
renamed A.L. Laboratories, Inc.), as Borrower (the "Borrower"),
the Banks named therein, Union Bank of Norway, as Agent, Union
Bank of Norway, as Arranger, and Den norske Bank AS, as Co-
Arranger (such agreement, as it may be amended, supplemented or
otherwise modified, the "Credit Agreement", the terms defined
therein being used herein as therein defined), and hereby gives
you notice, irrevocably, pursuant to Section[s] [2.2], [3.2]
[and] [4.2] of the Credit Agreement that the undersigned hereby
requests [a Tranche A Term Loan Borrowing][,] [a Tranche B Term
Loan Borrowing] [and] [a Revolving Term Loan Borrowing] under the
Credit Agreement (the "Proposed [Tranche A Term Loan
Borrowing][,] [Tranche B Term Loan Borrowing] [and] [Revolving
Term Loan Borrowing]"), and in that connection sets forth below
the information relating to such Proposed [Tranche A Term Loan
Borrowing][,] [Tranche B Term Loan Borrowing] [and] [Revolving<PAGE>
Term Loan Borrowing] as required by Section [2.2(a)][,] [3.2(a)]
[and] [4.2(a)], of the Credit Agreement:
(i) The Business Day of the Proposed [Tranche A Term
Loan Borrowing][,] [Tranche B Term Loan Borrowing] [and]
[Revolving Term Loan Borrowing] is [October 3], 1994.
(ii) The aggregate principal amount of the Borrowing
constituting the Proposed Tranche A Term Loan Borrowing is
$____________ having an Interest Period of [1] [3] [6] [12]
months.
(iii) The aggregate principal amount of the Borrowing
constituting the Proposed Tranche B Term Loan Borrowing is
$____________ having an Interest Period of [1] [3] [6] [12]
months.
(iv) The aggregate principal amount of the Borrowing
constituting the Proposed Revolving Term Loan Borrowing is
$____________ having an Interest Period of [1] [3] [6] [12]
months.
(v) The undersigned hereby certifies that, before and
after giving effect to the Proposed [Tranche A Term Loan
Borrowing][,] [Tranche B Term Loan Borrowing] [and]
- 108 -<PAGE>
[Revolving Term Loan Borrowing], no Default or Event of
Default has occurred and is continuing or would result
therefrom.
[(vi) Proceeds of this [Tranche A Term Loan
Borrowing][Tranche B Term Loan Borrowing][Revolving Term
Loan Borrowing] in the amount of $____________ are to be
made [directly][indirectly] available to [name of
Affiliate], an Affiliate of the undersigned, in connection
with an acquisition of [Equity][assets].]
(vii) The undersigned hereby certifies that all
representations and warranties of the undersigned, as
Borrower, contained in the Credit Agreement are true and
correct in all material respects as though such
representations and warranties had been made on and as of
the date hereof.
Furthermore, the undersigned requests that, notwithstanding
the provisions in Section[s] [2.2(a)][,] [3.2(a)] [and] [4.2(a)]
of the Credit Agreement requiring delivery by the undersigned to
the Agent of a Notice of Borrowing at least five Business Days
prior to the date of a proposed Borrowing, the Agent, for and on
behalf of the Banks and for purposes of this Notice of Initial
Borrowing and Waiver Request, waive the requirements of
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Section[s] [2.2(a)][,] [3.2(a)] [and] [4.2(a)] of the Credit
Agreement. The undersigned shall indemnify each Bank against any
loss, cost or expense incurred (i) as a result of the foregoing
waiver; and (ii) by reason of the liquidation or reemployment of
deposits or other funds acquired by such Bank to fund any
Borrowing when such Loan, as a result of (A) the foregoing
waiver; or (B) any failure to fulfill on or before the date of
the proposed Borrowing the applicable conditions set forth in
Article VI of the Credit Agreement, is not made on such date.
The foregoing waiver shall be effective only for the purpose
and upon the terms set forth herein, and shall not apply to any
other Notices of Borrowing to be delivered by the undersigned
pursuant to the terms of the Credit Agreement.
Very truly yours,
A.L. RESTRUCTURING SUB, INC.
By:___________________
Name:
Title:
- 110 -<PAGE>
EXHIBIT D-2
NOTICE OF BORROWING
____________, 199_
Union Bank of Norway,
as Agent for
the Banks parties to the
Credit Agreement referred to below
______________________
______________________
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, dated as of
September 28, 1994, among A.L. Restructuring Sub, Inc. (now known
as A.L. Laboratories, Inc.), as Borrower (the "Borrower"), the
Banks named therein, Union Bank of Norway, as Agent, Union Bank
of Norway, as Arranger, and Den norske Bank AS, as Co-Arranger
(such agreement, as it may be amended, supplemented or otherwise
modified, the "Credit Agreement", the terms defined therein being
used herein as therein defined), and hereby gives you notice,
irrevocably, pursuant to Section[s] [2.2], [3.2] [and] [4.2] of
the Credit Agreement that the undersigned hereby requests [a
Tranche A Term Loan Borrowing][,] [a Tranche B Term Loan
Borrowing] [and] [a Revolving Loan Borrowing] under the Credit
Agreement (the "Proposed [Tranche A Term Loan Borrowing][,]
[Tranche B Term Loan Borrowing] [and] [Revolving Loan
Borrowing]"), and in that connection sets forth below the
information relating to such Proposed [Tranche A Term Loan
- 111 -<PAGE>
Borrowing][,] [Tranche B Term Loan Borrowing] [and] [Revolving
Loan Borrowing] as required by Section [2.2(a)][,] [3.2(a)] [and]
[4.2(a)], of the Credit Agreement:
(i) The Business Day of the Proposed [Tranche A Term
Loan Borrowing][,] [Tranche B Term Loan Borrowing] [and]
[Revolving Loan Borrowing] is _______________, 199__.
(ii) The aggregate principal amount of the Borrowing
constituting the Proposed Tranche A Term Loan Borrowing is
$____________ having an initial Interest Period of [1] [3]
[6] [12] months.
(iii) The aggregate principal amount of the Borrowing
constituting the Proposed Tranche B Term Loan Borrowing is
$____________ having an initial Interest Period of [1] [3]
[6] [12] months.
(iv) The aggregate principal amount of the Borrowing
constituting the Proposed Revolving Loan Borrowing is
$____________ having an initial Interest Period of [1] [3]
[6] [12] months.
[(v) Proceeds of this [Tranche A Term Loan
Borrowing][Tranche B Term Loan Borrowing][Revolving Loan
- 112 -
- 112 -<PAGE>
Borrowing] in the amount of $____________ are to be made
[directly][indirectly] available to [name of Affiliate], an
Affiliate of the undersigned, in connection with an
acquisition of [Equity][assets].]
(vi) The undersigned hereby certifies that, before and
after giving effect to the Proposed [Tranche A Term Loan
Borrowing][,] [Tranche B Term Loan Borrowing] [and]
[Revolving Loan Borrowing], no Event of Default has occurred
and is continuing or would result therefrom.
(vii) The undersigned hereby certifies that all
representations and warranties of the undersigned, as
Borrower, contained in the Credit Agreement, and all
representations and warranties of the Parent Guarantor,
contained in the Parent Guaranty, are true and correct in
all material respects as though such representations and
warranties had been made by the Borrower and the Parent
Guarantor, respectively, on and as of the date hereof.
Pursuant to Section 2.2(d) of the Credit Agreement, the
undersigned shall indemnify each Bank against any loss, cost or
expense incurred by such Bank as a result of any failure to
fulfill on or before the date specified herein for the Proposed
[Tranche A Term Loan Borrowing][,] [Tranche B Term Loan
- 113 -
- 113 -<PAGE>
Borrowing][and][Revolving Loan Borrowing] the applicable
conditions set forth in Article VI of the Credit Agreement,
including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund such Borrowing[s] when such
Loan[s], as a result of such failure, [is][are] not made on such
date.
Very truly yours,
A.L. LABORATORIES, INC.
(formerly known as A.L.
Restructuring Sub, Inc.)
By:___________________
Name:
Title:
- 114 -
- 114 -<PAGE>
Exhibit G
[NAME] SUBSIDIARY GUARANTY
GUARANTY, dated as of September __, 1994, made by
_________________, a corporation (together with its
successors and assigns, the "Subsidiary Guarantor"), in favor of
the banks (the "Banks") parties, from time to time, to the Credit
Agreement (as defined below), Union Bank of Norway as agent (the
"Agent"), Union Bank of Norway, as arranger (the "Arranger"), and
Den norske Bank AS, as co-arranger (the "Co-Arranger", and
collectively with the Banks, the Agent and the Arranger, the
"Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, the Guaranteed Parties have entered into the Credit
Agreement dated as of September __, 1994 (said agreement, as it
may hereafter be amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement", and the terms defined
therein and not otherwise defined herein being used herein as
therein defined) with A.L. Restructuring Sub, Inc. (to be renamed
A.L. Laboratories, Inc.), a corporation organized and existing
under the laws of the State of Delaware (the "Borrower"), or any
successor thereto;
WHEREAS, it is a condition precedent to the Initial Funding
Date under the Credit Agreement that the Subsidiary Guarantor
shall have executed and delivered this Guaranty;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Banks to make the loans under the Credit
Agreement, the Subsidiary Guarantor hereby agrees as follows:
SECTION 1. Guaranty. The Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees the punctual payment
when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter
existing under the Loan Documents, whether for borrowed money,
interest, fees or any other amounts due thereunder or otherwise
(the "Guaranteed Obligations") and any and all expenses
(including counsel fees and expenses) reasonably incurred by any
Guaranteed Party in enforcing any rights under this Guaranty.
SECTION 2. Guaranty Absolute. The Subsidiary Guarantor
guarantees that the obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any
- 115 -<PAGE>
jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The liability of the
Subsidiary Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan
Documents (including this Guaranty) or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent
to departure from the Loan Documents;
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Guaranteed Obligations; or
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Borrower, or a
guarantor.
SECTION 3. Waiver. The Subsidiary Guarantor hereby waives
all notices with respect to any of the Guaranteed Obligations and
this Guaranty and any requirement that any Guaranteed Party
protect, secure, perfect or insure any security interests or lien
on any property subject thereto or exhaust any right or take any
action against the Borrower, or any other person or entity or any
collateral.
SECTION 4. Subrogation. (a) The Subsidiary Guarantor shall
not exercise any rights which it may have acquired by way of
subrogation under this Guaranty, by any payment made hereunder or
otherwise nor shall the Subsidiary Guarantor seek any
reimbursement from the Borrower in respect of payments made by
the Subsidiary Guarantor hereunder, unless and until all of the
Guaranteed Obligations shall have been paid and discharged, in
full, and if any payment shall be made to the Subsidiary
Guarantor on account of such subrogation or reimbursement rights
at any time when the Guaranteed Obligations shall not have been
paid and discharged, in full, each and every amount so paid shall
forthwith be paid to the Agent to be credited and applied against
the Guaranteed Obligations, whether matured or unmatured.
(b) If, pursuant to Applicable Law, the Subsidiary
Guarantor, by payment or otherwise, becomes subrogated to all or
any of the rights of the Guaranteed Parties under any of the Loan
Documents, the rights of the Guaranteed Parties to which the
Subsidiary Guarantor shall be subrogated shall be accepted by the
- 116 -
- 116 -<PAGE>
Subsidiary Guarantor "as is" and without any representation or
warranty of any kind by the Guaranteed Parties, express or
implied, with respect to the legality, value, validity or
enforceability of any of such rights, or the existence,
availability, value, merchantability or fitness for any
particular purpose of any collateral and shall be without
recourse to the Guaranteed Parties.
SECTION 5. Representations and Warranties. The Subsidiary
Guarantor hereby represents and warrants as follows:
(a) Incorporation and Good Standing. It is (i) a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of __________; and (ii) duly
qualified and in good standing as a foreign corporation under the
laws of each other jurisdiction in which the failure so to
qualify would have a Material Adverse Effect.
(b) Corporate Power and Authorization. The execution,
delivery and performance by the Subsidiary Guarantor of this
Guaranty are within the Subsidiary Guarantor's corporate powers,
have been duly authorized by all necessary corporate action, do
not contravene the Subsidiary Guarantor's charter or by-laws, any
law or any contractual restriction binding on or affecting and
material to the Subsidiary Guarantor, and do not result in or
require the creation of any Lien upon or with respect to any of
its properties.
(c) Authorization. No authorization, consent or approval
or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required for the due
execution, delivery and performance by the Subsidiary Guarantor
of this Guaranty, other than (i) consents, authorizations and
approvals that have been obtained, are final and not subject to
review on appeal or to collateral attack, and are in full force
and effect and, in the case of any such required under Applicable
Law as in effect ont eh Agreement date, are listed on Schedule
7,.2(a)(iv) of the Credit Agreement, (ii) notices, filings or
registrations that have been given or effected, and (iii) the
filing of copies of Loan Documents with the Securities and
Exchange Commission as exhibits to its public filings.
(d) Valid Guaranty. This Guaranty is a legal, valid and
binding obligation of the Subsidiary Guarantor, enforceable
against the Subsidiary Guarantor in accordance with its terms,
except where such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
to or limiting creditor's rights generally or equitable
principles relating to enforceability.
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- 117 -<PAGE>
(e) Economic Benefits; Solvency.
(i) The execution and delivery by the Guaranteed
Parties of the Credit Agreement, and the extensions of credit by
the Guaranteed Parties thereunder, constitute indirect economic
benefit to the Subsidiary Guarantor at least equal to the amount
of its obligations hereunder (with the amount thereof being
determined without giving effect to Section 12);
(ii) The guarantee by the Subsidiary Guarantor of the
Guaranteed Obligations and the incurrence by it of its other
obligations hereunder (with the amounts thereof being determined
without giving effect to Section 12), will not render the
Subsidiary Guarantor insolvent or unable to pay its debts as they
mature or leave the Subsidiary Guarantor with unreasonably small
capital;
(iii) The Subsidiary Guarantor does not intend to incur
debts, including those hereunder, that would be beyond its
ability to pay as such debts mature.
SECTION 6. Payments and Computations. (a) The Subsidiary
Guarantor shall make each payment payable by it hereunder not
later than 11:00 A.M. (New York City time) on the day when due,
in Dollars, to the Agent at its address referred to in Section
12.2 of the Credit Agreement in immediately available funds
without set-off or counterclaim, for the account of the several
Banks.
(b) No Reductions. Payments due to the Agent, the
Arranger, the Co-Arranger or any Bank hereunder, and all other
terms, conditions, covenants and agreements to be observed and
performed by the Subsidiary Guarantor hereunder, shall be made,
observed or performed by the Subsidiary Guarantor without any
reduction or deduction whatsoever, including any reduction or
deduction for any set-off, recoupment, counterclaim (whether
sounding in tort, contract or otherwise) or Tax.
SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to the Subsidiary
Guarantor, addressed to it at Attention:
, if to the Agent, addressed to it at the address
specified in the Credit Agreement, or as to each party at such
other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the
terms of this Section. All such notices and other communications
shall, when mailed or telegraphed, respectively, be effective
when deposited in the mails or delivered to the telegraph
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company, respectively, addressed as aforesaid, and shall, when
delivered or telecopied, be effective when received.
SECTION 8. No Waiver; Remedies. No failure on the part of
any Guaranteed Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default (as defined in the
Credit Agreement), each Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit
or the account of the Subsidiary Guarantor against any and all of
the obligations of the Subsidiary Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not such
Bank shall have made any demand under this Guaranty. Each Bank
agrees promptly to notify the Subsidiary Guarantor after any such
set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each
Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off)
which such Bank may have.
SECTION 10. Continuing Guaranty; Transfer of Interest.
This Guaranty is a continuing guaranty and shall (i) remain in
full force and effect until indefeasible payment in full of the
Guaranteed Obligations and all other amounts payable under this
Guaranty, (ii) be binding upon the Subsidiary Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be
enforceable by any Guaranteed Party and its respective
successors, transferees, and permitted assigns; provided that the
Subsidiary Guarantor may not assign or transfer its obligations
hereunder without the consent of the Majority Banks, without
limiting the generality of the foregoing clause (iii), any Bank
may assign or otherwise transfer all or any part of its rights
and obligations under the Credit Agreement in accordance
therewith, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to such
Bank herein or otherwise, subject, however, to the provisions of
Article XII of the Credit Agreement.
SECTION 11. Reinstatement. This Guaranty shall remain in
full force and effect and continue to be effective should any
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petition be filed by or against any Loan Party (as defined in the
Credit Agreement) for liquidation or reorganization, should any
Loan Party become insolvent or make an assignment for the benefit
of creditors or should a receiver or trustee be appointed for all
or any significant part of any Loan Party's assets, and shall, to
the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and
performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the
Guaranteed Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored, or
returned, the Guaranteed Obligations shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
SECTION 12. Limitation of Obligation. Notwithstanding
anything else herein to the contrary, the liability of the
Subsidiary Guarantor under this Guaranty shall not exceed the
greater of (i) 95% of the Adjusted Net Assets (as defined below)
of the Subsidiary Guarantor on the date of delivery hereof and
(ii) 95% of the Adjusted Net Assets (as defined below) of the
Subsidiary Guarantor on the date of any payment hereunder;
provided, that nothing in this Section 11 shall be construed to
limit the liability of the Subsidiary Guarantor under any other
Loan Document to which it is, or may be, a party. "Adjusted Net
Assets" of any Subsidiary Guarantor at any date means the lesser
of (x) the amount by which the fair value of the property of such
Subsidiary Guarantor (including, without limitation, rights of
subrogation, contribution, and similar rights) exceeds the total
amount of liabilities, including, without limitation, contingent
liabilities, but excluding liabilities under this Guaranty, of
the Subsidiary Guarantor at such date and (y) the amount by which
the present fair salable value of the assets of the Subsidiary
Guarantor (including, without limitation, rights of subrogation,
contribution, and similar rights) at such date exceeds the amount
that will be required to pay the probable liability of the
Subsidiary Guarantor on its debts, excluding debt in respect of
this Guaranty, as they become absolute and matured.
SECTION 13. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 14. WAIVER OF JURY TRIAL. THE SUBSIDIARY GUARANTOR
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER,
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UNDER THE CREDIT AGREEMENT OR UNDER THE OTHER LOAN DOCUMENTS
RELATIVE TO EACH OF THE FOREGOING.
IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this
Guaranty to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.
[SUBSIDIARY GUARANTOR]
By:____________________________
Name:
Title:
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ASSIGNMENT OF INTERCOMPANY NOTE
ASSIGNMENT OF INTERCOMPANY NOTE dated as of the 3rd day of
October 1994, made by A.L. PHARMA, INC. (formerly known as A.L.
Laboratories, Inc.), a Delaware corporation (the "Assignor"), in
favor of UNION BANK OF NORWAY, as agent (the "Assignee") for the
Banks (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, A.L. Restructuring Sub, Inc. (now known as A.L.
Laboratories, Inc.) (the "Borrower") has entered into a Credit
Agreement dated as of September 28, 1994 with the Banks party
thereto (collectively, the "Banks"), the Assignee, Union Bank of
Norway, as Arranger, and Den norske Bank AS, as Co-Arranger (as
such agreement may be amended, supplemented or restated from time
to time, the "Credit Agreement") pursuant to which the Banks have
made certain commitments to make loans to the Borrower up to an
aggregate principal amount of U.S. $185,000,000; and
WHEREAS, A.L. Pharma A/S, a Danish corporation (the
"Obligor") has entered into an intercompany loan agreement and
promissory note with the Assignor dated as of December 31, 1993
(as the same may be amended, supplemented or restated from time
to time, the "Intercompany Note") whereby the Obligor has
promised to pay to the Assignor the principal amount of U.S.
$20,634,272.26 in accordance with the terms thereof; and
WHEREAS, it is a condition precedent to the funding of any
Loans by the Banks under the Credit Agreement that the Assignor
execute and deliver this Agreement for the benefit of the Banks,
and the Assignor desires to execute this Agreement to satisfy
such condition precedent;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
undersigned hereby covenants and agrees as follows (and except as
otherwise defined herein, capitalized terms used herein and
defined in the Credit Agreement shall be used herein as so
defined):
Section 1. Assignment of Interest. To secure the payment,
observance and performance of the obligations of the Borrower and
the Parent Guarantor (the "Companies") under the Loan Documents,
the Assignor hereby pledges, assigns, grants, transfers and makes
over unto the Assignee (a) the Intercompany Note, (b) any other
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promissory note made, or agreement entered into, in substitution
or in addition thereto or otherwise evidencing the obligations of
the Obligor thereunder and (c) all rights, interests and benefits
arising thereunder due to the Assignor, and (c) any and all
proceeds of the foregoing (collectively the "Collateral").
Section 2. Representations and Warranties. The Assignor
represents and agrees that:
(a) The pledge and assignment of the Collateral provided in
Section 1 above shall be held by the Assignee as
general and continuing collateral security for the
fulfillment of all obligations, present or future,
direct or indirect, absolute or contingent, matured or
not, of the Companies under the Loan Documents or of
the Assignor hereunder;
(b) The address of the Assignor and the location of the
Collateral as well as its books and records relating to
the Collateral is set out opposite its name on the
signature page hereof, and it will not change such
address or location without giving the Assignee at
least ten (10) days' prior written notice of the new
address and location and the date at which such change
shall take effect;
(c) The Assignor shall deliver and pledge to the Assignee
any and all instruments evidencing, representing, or
arising from or existing in respect of, any of the
Collateral (including, without limitation, the
Intercompany Note), endorsed and/or accompanied by such
instruments of assignment and transfer in such form and
substance as the Assignee may request; and
(d) Prior to or concurrently with the execution and the
delivery of this Assignment, the Assignor shall file
such financing statements and other documents in such
offices as the Assignee may reasonably request to
perfect the security interest granted herein.
(e) Prior to or concurrently with the execution and the
delivery of this Assignment, the Assignor shall procure
the execution and delivery by the Obligor to the
Assignee of an acknowledgement and agreement to this
Assignment in substantially the form attached hereto as
Schedule A.
Section 3. Remedies on Default. Upon the occurrence and
during the continuance of an Event of Default:
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(a) Any and all payments of principal, premium or interest
on the Collateral, including but not limited to
prepayments of the loan evidenced by the Intercompany
Note, shall be paid directly to the Assignee;
(b) The Assignor expressly authorizes the Assignee to
collect, demand, sue for, enforce, recover and receive
the Collateral and all security therefor and to give
valid and binding receipts and discharges therefor and
in respect thereof, the whole to the same extent and
with the same effect as if the Assignee were the
absolute owner thereof and without regard to the state
of accounts between the Assignor and the Banks;
(c) The Assignee may assign or otherwise dispose of any or
all of the Collateral and realize on the security
therefor in such manner, upon such terms and
conditions, for such consideration and at such time or
times as the Assignee may deem expedient and without
notice to the Assignor and without any liability for
any loss resulting therefrom.
Section 4. Application of Proceeds. Any moneys received in
respect of the Collateral and all security therefor may be
applied by the Assignee against any obligation of either of the
Companies to the Banks under the Loan Documents as the Assignee
deems best or held in a separate collateral account for such time
as the Assignee may see fit and then applied as aforesaid, the
whole without prejudice to any claim for any deficiency.
Section 5. Further Assurances. The Assignor covenants and
agrees, at the request of the Assignee or its managers or
officials, from time to time to do, make and execute all such
further assignments, deeds, documents, acts, matters and things
as may be required by the Assignee or any such manager or
official with respect to all or any of the Collateral and all
security therefor or as may be required to give effect to these
presents or in the exercise of the powers on the Assignee hereby
conferred, and the Assignor hereby constitutes and appoints the
Assignee, the true and lawful attorney of the Assignor,
irrevocable, with full power of substitution, to do, make and
execute all such assignments, deeds, documents, acts, matters and
things as the Assignor has agreed by these presents to do, make
and execute or as may be required to give effect to these
presents or in the exercise of the powers of the Assignee hereby
conferred, with the right to use the name of the Assignor
whenever and wherever it may be deemed necessary or expedient.
Section 6. Filings. The Assignor authorizes the Assignee
to effect all filings or registrations in respect of this
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assignment as may be deemed useful to preserve the interests of
the Assignee and the Banks hereunder.
Section 7. Additional Security; Successor Agent. The
present assignment is given in addition to and not in
substitution for any similar assignment heretofore given to and
still held by the Assignee or the Banks (as the case may be) and
is taken by the Assignee as additional security for the
fulfillment of the aforesaid obligations of the Companies under
the Loan Documents and shall not operate as a merger of any
simple contract debt or in any way suspend the fulfillment of, or
prejudice or affect the rights, remedies and powers of the
Assignee or the Banks (as the case may be) in respect of, the
said obligations or any securities held by the Assignee or the
Banks for the fulfillment thereof. Notwithstanding anything
herein contained, the Assignee may resign as Agent under the
Credit Agreement and a successor Agent may be appointed in the
manner provided in the Credit Agreement. Upon the acceptance of
any appointment as Agent by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent as
Assignee under this Agreement and this Agreement shall continue
to apply mutatis mutandis.
Section 8. Acknowledgement of Receipt of Intercompany Note.
Upon the execution and delivery of this Assignment and the
delivery by the Assignor of the Intercompany Note to the
Assignee, the Assignee shall execute and deliver an
acknowledgement of receipt of the Intercompany Note in
substantially the form attached hereto as Schedule B.
Section 9. Continued Enjoyment. Except to the extent
otherwise provided for herein or in any other Loan Document,
until such time as an Event of Default shall have occurred, the
Assignor shall enjoy all rights and benefits in or to the
Collateral.
Section 10. Successors and Assigns. This Agreement shall
be binding on the Assignor and the heirs, executors,
administrators, successors and assigns of the Assignor and shall
enure to the benefit of the Assignee and the Banks and their
respective successors and assigns.
Section 11. Governing Law. THE PRESENT ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
Section 12. Submission to Jurisdiction. Any legal action
or proceeding with respect to this Assignment, or to enforce any
judgment obtained against the Assignor, may be brought in the
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courts of the State of New York or in the United States Federal
courts in the State of New York sitting in the City of New York,
and, by execution and delivery of this Assignment, the Assignor
hereby consents to the non-exclusive jurisdiction of the
aforesaid courts solely for the purpose of any such action or
proceeding, and irrevocably consents to the service of process
out of the aforesaid courts in any such action or proceeding by
the mailing thereof by United States registered mail to the
Assignor at its address specified on the signature page hereof.
Final judgment against the Assignor (a certified or exemplified
copy of which shall be conclusive evidence of the fact and of the
amount of any Indebtedness of the Assignor therein described) in
any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on such judgment. The
Assignor also hereby irrevocably appoints the person who then is
the Secretary of State of the State of New York as such agent for
service of process. Nothing herein shall affect the right of the
Assignee to commence legal proceedings or otherwise proceed
against the Assignor in any other jurisdiction.
Section 13. WAIVER OF JURY TRIAL. THE UNDERSIGNED
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER,
UNDER THE CREDIT AGREEMENT OR UNDER THE OTHER LOAN DOCUMENTS
RELATIVE TO EACH OF THE FOREGOING.
Section 14. Headings and Titles. The Section titles
contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of
the agreement between the parties hereto.
Section 15. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto were upon the
same instrument.
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IN WITNESS WHEREOF the Assignor has caused this Agreement to
be executed as of the date first above written by its duly
appointed officer.
A.L. PHARMA INC.
By: ________________________
Name:
Title:
Address:
One Executive Drive
P.O. Box 1399
Fort Lee, NJ 07024
Attention: Albert N. Marchio, II
Treasurer
Telecopier: (201) 947-5541
ACCEPTED
UNION BANK OF NORWAY, as Agent
By: _________________________
Name:
Title:
Address:
Kirkegaten 18, Oslo
P.O. Box 1172 Sentrum
N-0107 Oslo
Norway
Attention: Loan Administration
Telecopier: 011-47-22-31-86-40
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Schedule A
ACKNOWLEDGEMENT AND AGREEMENT
The undersigned, A.L. PHARMA A/S, hereby:
- acknowledges having received copies of each of the
Credit Agreement and the foregoing assignment;
- confirms its acceptance of the foregoing assignment;
- specifically agrees that the Assignee may directly claim
from it any and all of its obligations to A.L. Pharma
Inc. (formerly known as A.L. Laboratories, Inc.) under
the Intercompany Note described in the foregoing
assignment and may directly benefit from and enforce any
security therefor;
and agrees to be bound by the terms and conditions of the
foregoing assignment insofar as applicable to it.
Dated: as of October 3, 1994
A.L. PHARMA A/S
By: ________________________
Name:
Title:
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Schedule B
ACKNOWLEDGEMENT OF RECEIPT
The undersigned, UNION BANK OF NORWAY, as Agent for the banks
party to the Credit Agreement, hereby acknowledges receipt of the
Intercompany Note described in the foregoing assignment.
Dated: as of October 3, 1994 UNION BANK OF NORWAY,
as Agent
By:____________________
Name:
Title:
Address:
Kirkegaten 18, Oslo
P.O. Box 1172 Sentrum
N-0107 Oslo
Norway
Attention: Loan Administration
Telecopier: 011-47-22-31-86-40
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EXHIBIT I
NOTICE OF INTEREST PERIOD
_____________, 199__
Union Bank of Norway,
as Agent for
the Banks parties to the
Credit Agreement referred to below
____________________
____________________
Ladies and Gentlemen:
In connection with the Credit Agreement, dated as of
September 28, 1994, among A.L. Restructuring Sub, Inc. (now known
as A.L. Laboratories, Inc.), as Borrower (the "Borrower"), the
Banks named therein, Union Bank of Norway, as Agent, Union Bank of
Norway, as Arranger, and Den norske Bank AS, as Co-Arranger (such
agreement, as it may be amended, supplemented or otherwise
modified, the "Credit Agreement", the terms defined therein being
used herein as therein defined), this notice represents the
Borrower's request, pursuant to Section 5.1 of the Credit
Agreement, that the next Interest Period relating to the [Tranche
A Term Loans] [Tranche B Term Loans] [Revolving Loans] made to the
Borrower on ____________ have a duration of [1] [3] [6] [12]
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months commencing on ______________ and ending on ______________,
19__. [In the event that the Borrower's request for an Interest
Period having a duration of 12 months is denied, then the Borrower
requests that the next Interest Period have a duration of [1] [3]
[6] months commencing on _____________ and ending on
______________, 19__.
The undersigned hereby certifies that, before and after
giving effect to the foregoing, no Event of Default has occurred
and is continuing or would result therefrom.
The undersigned hereby certifies that all representations and
warranties of the undersigned, as Borrower, contained in the
Credit Agreement are true and correct in all material respects as
though such representations and warranties had been made on and as
of the date hereof.
A.L. LABORATORIES, INC.
(formerly known as A.L. Restructuring
Sub, Inc.)
By:________________
Name:
Title:
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2499.6005
October 3, 1994
UNION BANK OF NORWAY,
as Agent, Arranger and Bank
-and-
Den norske Bank AS, as Co-Arranger
and each of the Banks listed on
Exhibit A hereto parties to
the Credit Agreement described
below
Dear Sirs/Madames:
Re: A.L. LABORATORIES, INC.
US$185,000,000 Credit Agreement
We have acted as your special New York counsel in connection
with the transaction contemplated by the Credit Agreement dated
as of September 28, 1994 among A.L. Restructuring Sub, Inc. (to
be renamed A.L. Laboratories, Inc.), a Delaware corporation (the
"Borrower"), each of the banks parties thereto from time to time
(the "Banks"), Union Bank of Norway, as Agent, Union Bank of
Norway, as Arranger, and Den norske Bank AS, as Co-Arranger.
Terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement.
In rendering this opinion, we have examined the documents
listed in Schedule 1 hereto. Documents (1) - (12) thereon are
collectively referred to herein as the "Operative Documents".
We have also examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower
and each other Loan Party, certificates of public officials and
of officers of the Borrower and each other Loan Party, and
agreements, instruments and other documents, as we have deemed
necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, we have, when
relevant facts were not independently established by us, relied
upon representations and warranties of the certificates of the
Loan Parties or their respective officers or of public
officials.
In our examination of the documents referred to above, we
have assumed the genuineness of all signatures on original and
certified documents, the authenticity of all such documents
submitted to us as original documents, and the conformity to
original or certified documents of all documents submitted to us
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Union Bank of Norway, as Agent, et al.
October 3, 1994 133.
as photocopies. We have assumed the due execution and delivery
of the Operative Documents, pursuant to due authorization, by
the Banks, the Agent, the Arranger and the Co-Arranger.
To the extent that our opinions expressed below involve
conclusions as to the matters set forth in the opinions dated
the date hereof of Kirkland & Ellis and of Beth P. Hecht,
Corporate Counsel of the Borrower, we have assumed without
independent investigation the correctness of the matters set
forth in such opinions, our opinion being subject to the
assumptions, qualifications and limitations set forth in each of
the foregoing opinions with respect thereto.
Based upon the foregoing, and having regard for the legal
considerations which we deem relevant, we are of the opinion
that each Operative Document is the legal, valid and binding
obligation of each Loan Party that is a party thereto
enforceable against such Loan Party in accordance with its
terms.
The foregoing opinion is subject to the following
qualifications:
(a) Our opinion above is subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or other similar laws affecting generally
the enforcement of creditors' rights from time to time in
effect.
(b) Our opinion above is subject to the effect of general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or
at law).
(c) Our views with regard to fraudulent conveyance laws are
contained in a separate memorandum dated August 10, 1994, to
which your attention is directed.
(d) We express no opinion as to (i) the last sentence of
Section 5.10 of the Credit Agreement; (ii) the effect of the law
of any jurisdiction (other than the State of New York) wherein
the Lending Office of any Bank may be located or wherein
enforcement of the Credit Agreement and/or the Notes may be
sought that limits the rates of interest which may be charged or
collected by such Bank; (iii) whether a Federal or state court
outside of the State of New York would give effect to the choice
of New York law provided for in the Operative Documents; and
(iv) the first sentence of Section 12.10(a) of the Credit
Agreement, insofar as such sentence relates to the subject
matter jurisdiction of the United States District Court for the
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Union Bank of Norway, as Agent, et al.
October 3, 1994 134.
Southern District of New York to adjudicate any controversy
related to the Credit Agreement or the Notes.
(e) Our opinions expressed above are limited to the law of
the State of New York and the Federal law of the United States
of America, and we do not express any opinion herein concerning
any other law.
This opinion is furnished to you by us as counsel to the
Agent pursuant to Section 6.1(a)(iv) of the Credit Agreement, is
issued solely for the benefit of the Agent, the Arranger, the
Co-Arranger and the Banks listed on Exhibit A hereto, may be
relied upon solely by such parties in connection with the
transaction described herein and is not to be made available to,
or relied upon by, any other person, firm or entity.
Very truly yours,
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EXHIBIT A
to the Opinion dated October 3, 1994
of Watson, Farley & Williams
Banks
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street
Boston, MA 02106
BIKUBEN A/S
8 Silkegade
Ko / benhavn
Denmark
CORESTATES NATIONAL BANK, N.A.
FC 1-1-5-3
1345 Chestnut Street
Philadelphia, PA 19101
THE DAIWA BANK, LIMITED
450 Lexington Avenue
New York, New York 10017
DEN NORSKE BANK AS
Stranden 21
P.O. Box 1171 Sentrum
0107 Oslo
Norway
UNIBANK A/S
2. Torvegade
Kobenhavn
Denmark
UNITED JERSEY BANK
25 East Salem Street
Hackensack, NJ 07602
UNION BANK OF NORWAY
Kirkegaten 18, Oslo
N-0107 Oslo, Norway<PAGE>
SCHEDULE 1
to the Opinion dated October 3, 1994
of Watson, Farley & Williams
16. The Credit Agreement dated as of September 28, 1994 among
the Borrower, the Banks, the Agent, the Arranger and the Co-
Arranger.
17. The Tranche A Term Notes, each dated October 3, 1994, which
were executed and delivered by the Borrower to each of the
Banks making a Tranche A Term Loan.
18. The Tranche B Term Notes, each dated October 3, 1994, which
were executed and delivered by the Borrower to each of the
Banks making a Tranche B Term Loan.
19. The Revolving Notes, each dated October 3, 1994, which were
executed and delivered by the Borrower to each of the Banks
making a Revolving Loan.
20. The Parent Guaranty dated as of September 28, 1994, made by
A.L. Pharma, Inc. in favor of the Banks, the Agent, the
Arranger and the Co-Arranger, guaranteeing, inter alia, the
obligations of the Borrower under the Loan Documents.
21. The Subsidiary Guaranty dated as of October 3, 1994, made by
Barre Parent Corporation in favor of the Banks, the Agent,
the Arranger and the Co-Arranger, guaranteeing, inter alia,
the obligations of the Borrower under the Loan Documents.
22. The Subsidiary Guaranty dated as of October 3, 1994, made by
Barre National, Inc. in favor of the Banks, the Agent, the
Arranger and the Co-Arranger, guaranteeing, inter alia, the
obligations of the Borrower under the Loan Documents.
23. The Subsidiary Guaranty dated as of October 3, 1994, made by
NMC Laboratories, Inc. in favor of the Banks, the Agent, the
Arranger and the Co-Arranger, guaranteeing, inter alia, the
obligations of the Borrower under the Loan Documents.
24. The Subsidiary Guaranty dated as of October 3, 1994, made by
Parmed Pharmaceuticals, Inc. in favor of the Banks, the
Agent, the Arranger and the Co-Arranger, guaranteeing, inter
alia, the obligations of the Borrower under the Loan
Documents.
25. The Subsidiary Guaranty dated as of October 3, 1994, made by
Mikjan Corporation in favor of the Banks, the Agent, the
Arranger and the Co-Arranger, guaranteeing, inter alia, the
obligations of the Borrower under the Loan Documents.
26. The Subsidiary Guaranty dated as of October 3, 1994, made by
Wade Jones Company, Inc. in favor of the Banks, the Agent,
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the Arranger and the Co-Arranger, guaranteeing, inter alia,
the obligations of the Borrower under the Loan Documents.
27. The Assignment of Intercompany Loan dated as of October 3,
1994 made by the Parent Guarantor in favor of the Agent and
relating to certain obligations of A.L. Pharma A/S.
- 137 -
- 137 -<PAGE>
EXHIBIT K
FORM OF NOTICE OF
ASSIGNMENT AND ACCEPTANCE
____________, 199_
Reference is made to the Credit Agreement, dated as of
September 28, 1994, among A.L. Restructuring Sub, Inc. (now
known as A.L. Laboratories, Inc.), as Borrower (the "Borrower"),
the Banks named therein, Union Bank of Norway, as Agent, Union
Bank of Norway, as Arranger, and Den norske Bank AS, as Co-
Arranger (such agreement, as it may be amended, supplemented or
otherwise modified, the "Credit Agreement", the terms defined
therein being used herein as therein defined).
____________________ (the "Assignor") and _________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor,
[an][that] interest in and to [that portion of its rights and
obligations under the Credit Agreement which represents a part
of its Ratable Portion of the Loans totalling $_____________ as
of the effective date of the Assignment and Acceptance (the
"Assignment Effective Date") (as determined below)] [all of the
Assignor's rights and obligations under the Credit Agreement as
of the effective date of the Assignment and Acceptance (the
"Assignment Effective Date") (as determined below) which
- 1 -<PAGE>
represents the Assignor's Ratable Portion of the aggregate
[Tranche A Term Commitments] [Tranche B Term Commitments]
[Revolving Loan Commitments] specified on Schedule II to the
Credit Agreement and of all outstanding Loans under the Credit
Agreement]. After giving effect to such sale and assignment,
the Assignee's Commitment shall be as set forth on Schedule I
hereto.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any
adverse claim; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other document furnished pursuant thereto; and
(iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any
of its obligations under the Credit Agreement or any other
document furnished pursuant thereto.
3. The Assignee confirms and agrees as follows: (i) that
it has received a copy of this Notice of Assignment and
Acceptance Agreement, together with copies of the financial
statements referred to in Section 8.8 of the Credit Agreement
and such other documents and information as it has deemed
- 2 -
- 2 -<PAGE>
appropriate to make its own credit analysis and decision to
enter into this Notice of Assignment and Acceptance; (ii) that
it will, independently and without reliance upon the Agent, the
Arranger, the Co-Arranger, the Assignor or any other Bank and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement; (iii) that it appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Agent
by the terms thereof, together with such powers as are
reasonably incidental thereto; (iv) that it will perform in
accordance with its terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it
as a Bank; and (v) that its Lending Office (and addresses for
notices and for service of process) is the office set forth
beneath its name on the signature page hereof.
4. The Assignment Effective Date shall be
_________________. Following the execution of this Notice of
Assignment and Acceptance, it shall be delivered to the Agent
for acceptance and recording by the Agent together with a
recording fee in the amount of $1,500.
5. [This Notice of Assignment and Acceptance is subject to
the prior written consent of the Borrower.]* Upon [such
* To be inserted if the Assignee is not (a) a Bank, (b)
an Affiliate of a Bank which actually controls, is
controlled by, or is under common control with such
- 3 -
- 3 -<PAGE>
consent by the Borrower and] acceptance and the recording hereof
in the Register by the Agent, as of the Assignment Effective
Date (i) the Assignee shall be a party to the Credit Agreement,
and shall have the rights and obligations of a Bank under the
Credit Agreement and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance and recording by the Agent, from
and after the Assignment Effective Date, the Agent shall make
all payments under the Credit Agreement in respect of the
interests assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto)
to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement
for periods prior to the Assignment Effective Date directly
between themselves.
7. THIS NOTICE OF ASSIGNMENT AND ACCEPTANCE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
8. The Assignee agrees not to sell any assignments of, or
grant participations in, its commitments or its Loans except in
accordance with the Credit Agreement.
Bank, or (c) a Federal Reserve Bank immediately prior
to the Assignment Effective Date.
- 4 -
- 4 -<PAGE>
[ASSIGNOR]
By:__________________
Name:
Title:
[ASSIGNEE]
By:__________________
Name:
Title:
Lending Office:
________________________
________________________
________________________
Address for Notice Purposes:
________________________
________________________
________________________
Attn:
Telephone:
Telecopier:
Address for Service of
Process:
________________________
________________________
________________________
Attn:
Telephone:
Telecopier:
[Approved this day
of ______________, 19__
A.L. LABORATORIES, INC.
(formerly known as A.L. Restructuring Sub, Inc.)
By:__________________
Name:
- 5 -
- 5 -<PAGE>
Title: ]**
Accepted this day
of __________, 19__
UNION BANK OF NORWAY,
as Agent
By:___________________
Name:
Title:
** To be inserted if the Assignee is not (a) a Bank, (b)
an Affiliate of a Bank which actually controls, is
controlled by, or is under common control with such
Bank, or (c) a Federal Reserve Bank immediately prior
to the Assignment Effective Date.
- 6 -
- 6 -<PAGE>
SCHEDULE I
TO
NOTICE OF ASSIGNMENT AND ACCEPTANCE
DATED ____________, 199__
Type of Commitment and Loan Assigned: ________________
Portion Assigned: ________________%
Assignee's Commitment ________________%
- 7 -
- 7 -<PAGE>
CONFORMED COPY
PARENT GUARANTY
GUARANTY, dated as of September 28, 1994, made by A.L.
Laboratories, Inc. (to be renamed A.L. Pharma Inc.), a Delaware
corporation (together with its successors and assigns, the
"Guarantor"), in favor of the banks (the "Banks") parties, from
time to time, to the Credit Agreement (as defined below), Union
Bank of Norway as agent (the "Agent"), Union Bank of Norway, as
arranger (the "Arranger"), and Den norske Bank AS, as co-arranger
(the "Co-Arranger", and collectively with the Banks, the Agent
and the Arranger, the "Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, the Guaranteed Parties have entered into the Credit
Agreement dated as of September 28, 1994 (said agreement, as it
may hereafter be amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement", and the terms defined
therein and not otherwise defined herein being used herein as
therein defined) with A.L. Restructuring Sub, Inc. (to be renamed
A.L. Laboratories, Inc.), a corporation organized and existing
under the laws of the State of Delaware (the "Borrower"), or any
successor thereto;
WHEREAS, it is a condition precedent to the Initial Funding
Date under the Credit Agreement that the Parent Guarantor shall
have executed and delivered this Guaranty;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Banks to make the loans under the Credit
Agreement, the Parent Guarantor hereby agrees as follows (with
terms being used as defined in Section 15):
SECTION 1. Guaranty. The Parent Guarantor hereby
unconditionally and irrevocably guarantees the punctual payment
when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter
existing under the Loan Documents, whether for borrowed money,
interest, fees or any other amounts due thereunder or otherwise
(the "Guaranteed Obligations") and any and all expenses
(including counsel fees and expenses) reasonably incurred by any
Guaranteed Party in enforcing any rights under this Guaranty.
SECTION 2. Guaranty Absolute. The Parent Guarantor
guarantees that the obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any<PAGE>
Guaranteed Party with respect thereto. The liability of the
Parent Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan
Documents (including this Guaranty) or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent
to departure from the Loan Documents;
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Guaranteed Obligations; or
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Borrower, or a
guarantor.
SECTION 3. Waiver. The Parent Guarantor hereby waives all
notices with respect to any of the Guaranteed Obligations and
this Guaranty and any requirement that any Guaranteed Party
protect, secure, perfect or insure any security interests or lien
on any property subject thereto or exhaust any right or take any
action against the Borrower, or any other person or entity or any
collateral.
SECTION 4. Subrogation. (a) The Parent Guarantor shall not
exercise any rights which it may have acquired by way of
subrogation under this Guaranty, by any payment made hereunder or
otherwise nor shall the Parent Guarantor seek any reimbursement
from the Borrower in respect of payments made by the Parent
Guarantor hereunder, unless and until all of the Guaranteed
Obligations shall have been paid and discharged, in full, and if
any payment shall be made to the Parent Guarantor on account of
such subrogation or reimbursement rights at any time when the
Guaranteed Obligations shall not have been paid and discharged,
in full, each and every amount so paid shall forthwith be paid to
the Agent to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured.
(b) If, pursuant to Applicable Law, the Parent Guarantor,
by payment or otherwise, becomes subrogated to all or any of the
rights of the Guaranteed Parties under any of the Loan Documents,
the rights of the Guaranteed Parties to which the Parent
Guarantor shall be subrogated shall be accepted by the Parent
Guarantor "as is" and without any representation or warranty of
any kind by the Guaranteed Parties, express or implied, with
respect to the legality, value, validity or enforceability of any
- 2 -<PAGE>
of such rights, or the existence, availability, value,
merchantability or fitness for any particular purpose of any
collateral and shall be without recourse to the Guaranteed
Parties.
SECTION 5. Representations and Warranties. The Parent
Guarantor hereby represents and warrants as follows:
(a) Incorporation and Good Standing. It is (i) a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware; and (ii) duly
qualified and in good standing as a foreign corporation under the
laws of each other jurisdiction in which the failure so to
qualify would have a Material Adverse Effect.
(b) Corporate Power and Authorization. The execution,
delivery and performance by the Parent Guarantor of this Guaranty
are within the Parent Guarantor's corporate powers, have been
duly authorized by all necessary corporate action, do not
contravene the Parent Guarantor's charter or by-laws, any law or
any contractual restriction binding on or affecting and material
to the Parent Guarantor, and do not result in or require the
creation of any Lien upon or with respect to any of its
properties.
(c) Authorization. No authorization, consent or approval
or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required for the due
execution, delivery and performance by the Parent Guarantor of
this Guaranty, other than (i) consents, authorizations and
approvals that have been obtained, are final and not subject to
review on appeal or to collateral attack, and are in full force
and effect and, in the case of any such required under Applicable
Law as in effect on the Agreement Date, are listed on Schedule
7.2(a)(iv) of the Credit Agreement, (ii) notices, filings or
registrations that have been given or effected, and (iii) the
filing of copies of Loan Documents with the Securities and
Exchange Commission as exhibits to its public filings.
(d) Valid Guaranty. This Guaranty is a legal, valid and
binding obligation of the Parent Guarantor, enforceable against
the Parent Guarantor in accordance with its terms, except where
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditor's rights generally or equitable principles
relating to enforceability.
(e) Litigation. There is no pending or threatened action
or proceeding affecting the Parent Guarantor or its Subsidiaries
before any court, governmental agency or arbitrator, in which,
individually or in the aggregate, there is a reasonable
- 3 -<PAGE>
probability of an adverse decision which could have a Material
Adverse Effect or result in a Material Credit Agreement Change.
(f) Taxes. All federal, and all material state, local and
foreign tax returns, reports and statements required to be filed
by the Parent Guarantor or any of its Subsidiaries have been
filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are
required to be filed. All consolidated, combined or unitary
returns which include the Parent Guarantor or any of its
Subsidiaries have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and
statements are required to be filed except where such filing is
being contested or may be contested. All federal, and all
material state, local and foreign taxes, charges and other
impositions of the Parent Guarantor, its Subsidiaries or any
consolidated, combined or unitary group which includes the Parent
Guarantor or any of its Subsidiaries which are due and payable
have been timely paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by
appropriate proceedings if adequate reserves therefor have been
established on the books of the Parent Guarantor or such
Subsidiary in accordance with GAAP. Proper and accurate amounts
have been withheld by or on behalf of the Parent Guarantor and
each of its Subsidiaries from their respective employees for all
periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have
been timely paid to the respective governmental agencies, in all
material respects. Neither the Parent Guarantor nor any of its
Tax Affiliates has agreed or has been requested to make any
adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise relating to the Borrower or any
of its Subsidiaries which will affect a taxable year of the
Parent Guarantor or a Tax Affiliate ending after December 31,
1993, which has not been reflected in the financial statements
delivered pursuant to Section 6(g) and which would have a
Material Adverse Effect. The Parent Guarantor has no obligation
to any Person other than the Borrower and the Parent Guarantor's
Subsidiaries under any tax sharing agreement or other tax sharing
arrangement.
(g) Financial Information. (i) The reports of the Parent
Guarantor on Form 10-K for the Fiscal Year ended December 31,
1993 and on Form 10-Q for the Fiscal Quarters ended March 31,
1994 and June 30, 1994, the Proxy Statement of the Parent
Guarantor dated August 22, 1994, the report on Form 8-K of the
Parent Guarantor dated August 4, 1994 and the report on Form 8K/A
of the Parent Guarantor dated as of August 22, 1994 which have
been furnished to the Agent and each Bank, are respectively
complete and correct in all material respects as of such
- 4 -<PAGE>
respective dates, and the financial statements therein have been
prepared in accordance with GAAP and fairly present the financial
condition and results of operations of the Parent Guarantor and
its consolidated Subsidiaries as of such respective dates
(subject, in the case of such reports on Form 10-Q, to changes
resulting from normal year-end adjustments).
(ii) Since December 31, 1993 there has been no
Material Adverse Change or Material Credit Agreement Change.
(iii) None of the Parent Guarantor or any Subsidiary
of the Parent Guarantor had at June 30, 1994 any obligation,
contingent liability, or liability for taxes or long-term
leases material to the Parent Guarantor and its Subsidiaries
taken as a whole which is not reflected in the balance
sheets referred to in subsection (i) above or in the notes
thereto.
(h) ERISA.
(i) No liability under Sections 4062, 4063, 4064 or
4069 of ERISA has been or is expected by the Parent
Guarantor to be incurred by the Parent Guarantor or any
ERISA Affiliate with respect to any Plan which is a
Single-Employer Plan in an amount that could reasonably be
expected to have a Material Adverse Effect.
(ii) No Plan which is a Single-Employer Plan had an
accumulated funding deficiency, whether or not waived, as of
the last day of the most recent fiscal year of such Plan
ended prior to the date hereof. Neither the Parent
Guarantor nor any ERISA Affiliate is (A) required to give
security to any Plan which is a Single-Employer Plan
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, or (B) subject to a Lien in favor of such a Plan
under Section 302(f) of ERISA.
(iii) Each Plan of the Parent Guarantor, each of its
Subsidiaries and each of its ERISA Affiliates is in
compliance in all material respects with the applicable
provisions of ERISA and the Code, except where the failure
to comply would not result in any Material Adverse Effect.
(iv) Neither the Parent Guarantor nor any of its
Subsidiaries has incurred a tax liability under Section 4975
of the Code or a penalty under Section 502(i) of ERISA in
respect of any Plan which has not been paid in full, except
where the incurrence of such tax or penalty would not result
in a Material Adverse Effect.
(v) None of the Parent Guarantor, any of its
Subsidiaries or any ERISA Affiliate has incurred or
- 5 -<PAGE>
reasonably expects to incur any Withdrawal Liability under
Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan which will result in
Withdrawal Liability to the Parent Guarantor, any of its
Subsidiaries or any ERISA Affiliate in an amount that could
reasonably be expected to have a Material Adverse Effect.
(i) No Defaults. Neither the Parent Guarantor nor any of
its Subsidiaries is in breach of or default under or with respect
to any instrument, document or agreement binding upon the Parent
Guarantor or such Subsidiary which breach or default is
reasonably probable to have a Material Adverse Effect or result
in the creation of a Lien on any Property of the Parent Guarantor
or its Subsidiaries.
(j) Disclosure. All written information relating to the
Parent Guarantor and any of its Subsidiaries which has been
delivered by or on behalf of the Parent Guarantor or the Borrower
to the Agent or the Banks in connection with the Loan Documents
and all financial and other information furnished to the Agent is
true and correct in all material respects and contains no
misstatement of a fact of a material nature. Any financial
projections and other information regarding anticipated future
plans or developments contained therein was based upon the Parent
Guarantor's best good faith estimates and assumptions at the time
they were prepared.
(k) Intentionally Omitted.
(l) Intentionally Omitted.
(m) Subsidiaries. (i) Schedule 5(m) hereto sets forth all
of the Subsidiaries, their jurisdictions of incorporation and the
percentages of the various classes of their capital stock owned
by the Parent Guarantor or another Subsidiary of the Parent
Guarantor, (ii) the Parent Guarantor or another Subsidiary, as
the case may be, has the unrestricted right to vote, and to
receive dividends and dividends on, all capital stock indicated
on such Schedule as owned by the Parent Guarantor or such
Subsidiary (subject to limitations imposed by Applicable Law or
the Loan Documents) and (iii) such capital stock has been duly
authorized and issued and is fully paid and nonassessable.
(n) Principal Subsidiaries. Schedule 5(n) hereto sets
forth all of the Principal Subsidiaries in existence as of the
Agreement Date.
(o) Insurance. All policies of insurance of any kind or
nature owned by the Parent Guarantor and its Subsidiaries are
maintained with reputable insurers which to the Parent
Guarantor's best knowledge are financially sound. The Parent
Guarantor currently maintains insurance with respect to its
- 6 -<PAGE>
Properties and business and causes its Subsidiaries to maintain
insurance with respect to their respective Properties and
business against loss or damage of the kinds customarily insured
against by corporations engaged in the same or similar business
and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other
corporations including, without limitation, worker's compensation
insurance.
(p) Environmental Protection. (i) There are no known
conditions or circumstances known to the Parent Guarantor
associated with the currently or previously owned or leased
properties or operations of the Parent Guarantor or its
Subsidiaries or tenants which may give rise to any Environmental
Liabilities and Costs which would have a Material Adverse Effect;
and
(ii) No Environmental Lien has attached to any Property of
the Parent Guarantor or any of its Subsidiaries which would have
a Material Adverse Effect.
(q) Regulatory Matters. Except as disclosed in the Parent
Guarantor's Form 10-K for the fiscal year ending December 31,
1993, its Report on Form 10-Q for the fiscal quarter ending June
30, 1994, or in its definitive Proxy Statement relating to the
Restructuring filed with the Securities and Exchange Commission
on August 22, 1994, the Parent Guarantor and its Subsidiaries are
to the best of their knowledge in compliance with all rules,
regulations and other requirements of the Food and Drug
Administration ("FDA") and other regulatory authorities of
jurisdictions in which the Parent Guarantor or any of its
Subsidiaries do business or operate manufacturing facilities,
including without limitation those relating to compliance by the
Parent Guarantor's or any such Subsidiary's manufacturing
facilities with "Current Good Manufacturing Practices" as
interpreted by the FDA, except to the extent any such
noncompliance would not have a Material Adverse Effect. Except
as so disclosed, neither the FDA nor any other such regulatory
authority has requested (or, to the Parent Guarantor's knowledge,
are considering requesting) any product recalls or other
enforcement actions.
(r) Title and Liens. Each of the Parent Guarantor and its
Subsidiaries has good and marketable title to its real properties
and owns or leases all its other material Properties, in each
case, as shown on its most recent quarterly balance sheet, and
none of such Properties is subject to any Lien except for
Permitted Liens.
(s) Compliance with Law. Each of the Parent Guarantor and
its Subsidiaries is in compliance with all Applicable Law,
including, without limitation, all Environmental Laws, except
- 7 -<PAGE>
where any failure to comply with any such laws would not, alone
or in the aggregate, have a Material Adverse Effect on the
business or financial condition of the Parent Guarantor and its
Subsidiaries taken as a whole, or the Parent Guarantor's ability
to perform its obligations under the Loan Documents.
(t) Trademarks, Copyrights, Etc. The Parent Guarantor and
each of its Subsidiaries own or have the rights to use such
trademarks, service marks, trade names, copyrights, licenses or
rights in any thereof, as in the aggregate are adequate in the
reasonable judgment of the Parent Guarantor for the conduct of
the business of the Parent Guarantor and its Subsidiaries as now
conducted.
SECTION 6. Affirmative Covenants. As long as any of the
Guaranteed Obligations or any other amounts shall remain unpaid,
or any Bank shall have any Commitment under the Credit Agreement,
unless otherwise agreed by the written consent of the Majority
Banks:
(a) Compliance with Laws, Etc. The Parent Guarantor shall
comply, and cause each of its Subsidiaries to comply, in all
material respects with all Applicable Law except such
non-compliance as would not have a Material Adverse Effect or
result in a Material Credit Agreement Change.
(b) Payment of Taxes, Etc. The Parent Guarantor and any
consolidated, combined or unitary group which includes the Parent
Guarantor or any of its Subsidiaries shall pay and discharge, and
cause each Subsidiary of the Parent Guarantor to pay and
discharge, before the same shall become delinquent, all lawful
claims, Taxes, assessments and governmental charges or levies
except where contested in good faith, by proper proceedings, and
where adequate reserves therefor have been established on the
books of the Parent Guarantor or such Subsidiary in accordance
with GAAP.
(c) Maintenance of Insurance. The Parent Guarantor shall
maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the
Parent Guarantor or such Subsidiary operates. The Parent
Guarantor will furnish to the Agent from time to time such
information as may be requested as to such insurance.
(d) Preservation of Corporate Existence, Etc. The Parent
Guarantor shall preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, their respective corporate
existences; provided, that this Section 6(d) shall not apply at
any time with respect to the corporate existence of a Subsidiary
- 8 -<PAGE>
of the Parent Guarantor (other than the Borrower and the
Scandinavian Principal Companies) in any case where the Parent
Guarantor's Board of Directors determines in good faith that such
termination of corporate existence is in the best interests of
the Parent Guarantor and its Subsidiaries taken as a whole and
where noncompliance will not have a Materially Adverse Effect on
the Parent Guarantor and its Subsidiaries or any Loan Document
(other than a Loan Document delivered by a Subsidiary that at
such time is no longer a Principal Subsidiary, as determined at
such time); provided, further that this Section 6(d) shall be
without prejudice to the other provisions of this Guaranty and
the Credit Agreement.
(e) Books and Access. The Parent Guarantor shall, and
shall cause each of its Subsidiaries to, keep proper books of
record and accounts in conformity with GAAP, and upon reasonable
notice and at such reasonable times during the usual business
hours as often as may be reasonably requested, permit
representatives of the Agent, at its own initiative or at the
request of any Bank, to make inspections of its Properties, to
examine its books, accounts and records and make copies and
memoranda thereof and to discuss its affairs and finances with
its officers or directors and independent public accountants.
(f) Maintenance of Properties, Etc. The Parent Guarantor
shall maintain and preserve, and cause each of its Subsidiaries
to maintain and preserve, all of their respective Properties
which are used or useful in the conduct of its business in good
working order and condition and, from time to time make or cause
to be made all appropriate repairs, renewals and replacements,
except where the failure to do so would not have a Material
Adverse Effect.
(g) Financial Statements. The Parent Guarantor shall
furnish, or cause to be furnished, to the Agent (with sufficient
copies for the Banks):
(i) as soon as available but not later than fifty-five
(55) days after the close of each of the first three (3)
Fiscal Quarters of each Fiscal Year of the Parent Guarantor,
consolidated and consolidating balance sheets of the Parent
Guarantor and its Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated and consolidating
statements of operations and the consolidated statement of
cash flows of the Parent Guarantor and its Subsidiaries for
such Fiscal Quarter and (in the case of the second and third
Fiscal Quarters) for the period from the beginning of the
then current Fiscal Year to the end of such Fiscal Quarter,
setting forth in each case in comparative form the
consolidated figures for the corresponding periods of the
previous Fiscal Year, all in reasonable detail and certified
by a Responsible Financial Officer of the Parent Guarantor
- 9 -<PAGE>
as fairly presenting, in accordance with GAAP, the financial
condition and results of operations of the Parent Guarantor
and its Subsidiaries, subject to changes resulting from
normal year-end audit adjustments; provided, that to the
extent set forth therein and otherwise complying with the
requirements of this clause, the Parent Guarantor may
satisfy the requirements hereof by delivering its Form 10Q
for the applicable period;
(ii) (1) as soon as available but no later than one-
hundred (100) days after the close of each Fiscal Year of
the Parent Guarantor, consolidated and consolidating balance
sheets of the Parent Guarantor and its Subsidiaries as at
the end of such year and the related consolidated and
consolidating statements of operations and the consolidated
statement of cash flows of the Borrower and its Subsidiaries
for such year, setting forth in each case in comparative
form the consolidated and consolidating figures for the
previous Fiscal Year, all in reasonable detail and certified
in the case of the consolidated financial statements by
Coopers & Lybrand or another firm of nationally recognized
independent public accountants, which report shall state
without qualification as to the scope of the audit or as to
going concern that such consolidated financial statements
present fairly the financial position and the results of
operations as at the dates and for the periods indicated in
conformity with GAAP and that the audit by such accountants
in connection with such consolidated financial statements
has been made in accordance with GAAS, (2) as soon as
available but not later than one hundred twenty (120) days
after the close of each Fiscal Year of the Parent Guarantor,
a certificate from such accounting firm that in the course
of the regular audit of the business of the Parent Guarantor
and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with GAAS, such accounting
firm reviewed the financial covenants included in Section 8
and such review disclosed no evidence that an Event of
Default or Default has occurred based on such financial
covenants or, if in the opinion of such accounting firm,
such an Event of Default or Default has occurred and is
continuing, a statement as to the nature thereof; provided,
that to the extent set forth therein and otherwise complying
with the requirements of this clause, the Parent Guarantor
may satisfy the requirements hereof by delivering its Form
10K for the applicable period;
(iii) together with each delivery of financial
statements of the Parent Guarantor pursuant to clauses (i)
and (ii) above and commencing with the Fiscal Quarter ending
September 30, 1994, a certificate issued by a Responsible
Financial Officer of the Parent Guarantor (1) demonstrating
compliance at the end of the accounting period described in
- 10 -<PAGE>
such statements with the financial covenants contained
herein and (2) containing in reasonable detail the component
figures contained in the respective total figures stated in
such certificate;
(iv) together with each delivery of financial
statements of the Parent Guarantor and its Subsidiaries
pursuant to clauses (i) or (ii) above, and commencing with
the Fiscal Quarter ending December 31, 1994, a certificate
signed by a Responsible Financial Officer of the Parent
Guarantor stating that (1) such officer is familiar with
both this Guaranty and the business and financial condition
of the Parent Guarantor (2) that the representations and
warranties set forth in Section 5 hereof are true and
correct in all material respects as though such
representations and warranties had been made by the Parent
Guarantor on and as of the date thereof (other than those
that are expressly stated to be made as of a certain date),
and (3) no Event of Default or Default has occurred and is
continuing or if an Event of Default or Default has occurred
and is continuing a statement as to the nature thereof, and
whether or not the same shall have been cured; and
(v) together with each delivery of financial statements
of the Parent Guarantor and its Subsidiaries pursuant to
clause (ii) above, a certificate signed by a Responsible
Financial Officer of the Parent Guarantor stating that as of
the date of such certificate, the entities listed on a
schedule attached thereto are all of the Principal
Subsidiaries in existence at such time (describing any
changes in the entities constituting Principal Subsidiaries
since the delivery of the last such certificate).
(h) Reporting Requirements. The Parent Guarantor shall
furnish to the Agent for distribution to the Banks:
(i) from time to time as the Agent may reasonably
request, copies of such statements, lists of Property,
accounts, reports or information prepared by or for the
Parent Guarantor or within the Parent Guarantor's control.
In addition, the Parent Guarantor shall furnish to the Agent
for distribution to the Banks, within five (5) days after
delivery thereof to the Parent Guarantor's Board of
Directors, copies of budgets and forecasts prepared by or
for the Parent Guarantor or within the Parent Guarantor's
control;
(ii) promptly and in any event within thirty (30) days
after the Parent Guarantor, any of its Subsidiaries or any
ERISA Affiliate knows that any ERISA Event has occurred
(other than a Reportable Event for which notice to the PBGC
is waived), a written statement of the chief financial
- 11 -<PAGE>
officer or other appropriate officer of the Parent Guarantor
describing such ERISA Event and the action, if any, which
the Borrower, any of its Subsidiaries or any ERISA Affiliate
proposes to take with respect thereto, and a copy of any
notice filed with the PBGC or the IRS pertaining thereto;
(iii) promptly and in any event within thirty (30) days
after notice or knowledge thereof, notice that the Parent
Guarantor or any of its Subsidiaries becomes subject to the
tax on prohibited transactions imposed by Section 4975 of
the Code, together with a copy of Form 5330;
(iv) promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, against or
affecting the Parent Guarantor or any of its Subsidiaries,
in which there is a reasonable probability of an adverse
decision which would have a Material Adverse Effect;
(v) promptly upon the Parent Guarantor or any of its
Subsidiaries learning of (i) any Event of Default or any
Default, or (ii) any Material Credit Agreement Change,
telephonic or telegraphic notice specifying the nature of
such Event of Default, Default or Material Credit Agreement
Change, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within five
days;
(vi) promptly after the sending or filing thereof,
copies of all reports which the Parent Guarantor sends to
its security holders generally, and copies of all reports
and registration statements which the Parent Guarantor or
any of its Subsidiaries files with the Securities and
Exchange Commission or any national securities exchange;
(vii) promptly upon, and in any event within 30 days
of, the Parent Guarantor or any of its Subsidiaries learning
of any of the following:
(1) notice that any Property of the Parent
Guarantor or any of its Subsidiaries is subject to any
Environmental Liens individually or in the aggregate
which would have a Material Adverse Effect;
(2) any proposed acquisition of stock, assets or
real estate, or any proposed leasing of Property, or
any other action by the Parent Guarantor or any of its
Subsidiaries in which there is a reasonable probability
that the Parent Guarantor or any of its Subsidiaries
would be subject to any material Environmental
Liabilities and Costs, provided, that, in the event of
- 12 -<PAGE>
any such proposed acquisition or lease, the Parent
Guarantor must furnish to the Agent evidence in a form
acceptable to the Agent that the proposed acquisition
will not have a Material Adverse Effect;
(viii) prior to the effectiveness thereof,
information relating to any proposed change in the
accounting treatment or reporting practices of the Parent
Guarantor and its Subsidiaries the nature or scope of which
materially affects the calculation of any component of any
financial covenant, standard or term contained in this
Guaranty; and
(ix) prior to the Parent Guarantor, or any of its
Subsidiaries, (i) entering into any agreement relating to
the sale of, or the granting of a Lien on, assets having a
fair market value of $10,000,000 or more, or (ii) incurring
Indebtedness pursuant to a single transaction the aggregate
principal amount of which is $10,000,000 or more, the Parent
Guarantor shall give the Agent 15 days' notice of its
intention to enter into such an agreement; and
(x) from time to time, such other information and
materials as the Agent (or the Banks through the Agent) may
reasonably request.
(i) Additional Credit Support Documents. The Parent
Guarantor shall deliver, or shall cause to be delivered, within
five (5) Business Days of delivery to the Agent of a certificate
pursuant to Section 6(g)(v) hereof, in respect of each Principal
Subsidiary, disclosed on the schedule attached to such
certificate (a) a Subsidiary Guaranty duly executed by each such
Principal Subsidiary or (b) if any such Principal Subsidiary is a
Non-U.S. Subsidiary, a Pledge Agreement duly executed by the
Shareholders of such Non-U.S. Subsidiary; provided, that this
Section (i) shall not apply to any Principal Subsidiary as to
which there already is at such time a valid and binding
Subsidiary Guaranty or Pledge Agreement (as the case may be).
(j) Delivery of Opinions. Concurrently with the execution
and delivery of any additional Credit Support Documents pursuant
to Section 6(i) hereof, the Parent Guarantor shall deliver, or
shall cause to be delivered, to the Agent an opinion of counsel
relating to such additional Credit Support Document in form and
substance substantially similar to the opinions rendered in
connection with comparable agreements on the Effective Date.
(k) A.L. Labs Transfer. The Parent Guarantor shall
consummate the A.L. Labs Transfer (as defined in the
Restructuring Agreement) as soon as practicable and in any event
within 90 days of the Effective Date.
- 13 -<PAGE>
(l) Stock Exchange Listing. The Parent Guarantor's
securities shall at all times be listed on The New York Stock
Exchange.
SECTION 7. Negative Covenants. So long as any of the
Guaranteed Obligations or any other amounts shall remain unpaid
or any Bank shall have any Commitment under the Credit Agreement,
unless otherwise agreed by the written consent of the Majority
Banks:
(a) Liens, Etc. The Parent Guarantor shall not, directly
or indirectly, create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its Properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, in each case to secure or provide
for the payment of any Indebtedness of any Person, except
Permitted Liens.
(b) Mergers. The Parent Guarantor shall not merge or
consolidate in any transaction in which it or the Borrower is not
the surviving Person. The Parent Guarantor shall not permit
without the consent of the Majority Banks any of its Subsidiaries
to merge or consolidate in any transaction in which such
Subsidiary is not the surviving Person other than in mergers of
any Subsidiary (other than the Borrower) into the Parent
Guarantor, the Borrower or any other wholly owned Subsidiary of
the Parent Guarantor or the Borrower that is incorporated in the
U.S.; provided, that with respect to mergers in which the
surviving entity is not the Parent Guarantor or the Borrower,
then the Parent Guarantor shall cause such surviving entity to
deliver a Subsidiary Guaranty if immediately after the merger the
surviving entity is a Principal Subsidiary (as determined at such
time) in respect of which there is not, at such time, a valid,
legal and binding Subsidiary Guaranty or Pledge Agreement;
provided, further, that the Majority Banks will not unreasonably
withhold their consent to a merger or other combination of A.L.
Pharma AS and New A.L.-Oslo.
(c) Substantial Asset Sale. The Parent Guarantor shall
not, and shall not permit any of its Subsidiaries to, sell,
lease, transfer or otherwise dispose of all or any substantial
part of its or their assets (including any of the stock of the
Scandinavian Principal Companies owned by it or them), except
that this Section 7(c) shall not apply to any disposition of
assets (i) in the ordinary course of business or (ii) any
disposition of assets (other than assets consisting of the stock
of the Scandinavian Principal Companies or assets owned by the
Scandinavian Principal Companies) (A) to the Parent Guarantor,
the Borrower or any Principal Subsidiary (in respect of which
there is in existence a legal, valid and binding Subsidiary
Guaranty or Pledge Agreement) or (B) where the proceeds of such
- 14 -<PAGE>
disposition (I) consist solely of cash or cash equivalents and
(II) the Net Cash Proceeds of such disposition are first applied
towards the prepayment of any Loans then outstanding in
accordance with Section 5.4(a) of the Credit Agreement; provided,
that for purposes of this Section 7(c), any such prepayment shall
be effected on the next succeeding day on which an interest
payment is due in respect of the Loan being prepaid after
consummation of the asset sale, and if such day is not the last
day of the Interest Period in respect of the Loan or Loans being
prepaid, the Borrower shall continue to be liable for any costs
or expenses pursuant to Section 12.4(c) of the Credit Agreement.
(d) Transactions with Affiliates. The Parent Guarantor
shall not engage in, and will not permit any of its Subsidiaries
to engage in, any transaction with an Affiliate of the Parent
Guarantor or of such Subsidiary other than transactions in the
ordinary course of business between a Subsidiary and its parent
or among Subsidiaries of the Parent Guarantor that are on terms
no less favorable to the Parent Guarantor or such Subsidiaries
than as would be obtained in a comparable arms-length transaction
and other than transactions contemplated by, and effected in
accordance with, the Restructuring.
(e) Activities. Following consummation of the A.L. Labs
Transfer, the Parent Guarantor shall not engage in any business
activities, own any Properties or incur any obligations or
Indebtedness other than (a) as contemplated by the Loan Documents
and the Restructuring Agreement, and (b) the ownership of Equity
of its Subsidiaries and of the real estate and improvements
thereon relating to its manufacturing facility in Chicago
Heights, Illinois.
(f) Restrictions on Indebtedness. (i) The Parent Guarantor
shall not incur, and shall not permit its Subsidiaries to incur,
Indebtedness except Permitted Indebtedness (subject to clause
(ii) below); provided, that prior to the incurrence of
Subordinated Indebtedness, the Agent shall have received an
opinion of counsel relating to such Subordinated Indebtedness and
stating that in the opinion of such counsel the Indebtedness of
the Loan Parties under the Loan Documents is senior indebtedness
within the meaning of such term (or a term analogous thereto) as
used in the terms and provisions relating to such Subordinated
Indebtedness.
(ii) Notwithstanding clause (i) above, no Permitted
Indebtedness may be incurred unless (A) with respect to Permitted
Indebtedness described in clauses (3) through (6) of the
definition of Permitted Indebtedness, and except as otherwise
provided in the Loan Documents, the Parent Guarantor or the
Borrower shall have given the Agent at least 7 Business Days'
prior notice of the intention to incur such Indebtedness in
accordance with the terms hereof and (B) if the principal amount
- 15 -<PAGE>
of such Indebtedness is $1,000,000 or more, the Person to whom
the debtor in respect of such Indebtedness shall be obligated
becomes a party to the Intercreditor Agreement (unless it is
already a party to such agreement); provided, however, that
clause (B) hereof shall not apply to (1) Subordinated Debt, (2)
Indebtedness that is otherwise Permitted Indebtedness and that is
issued pursuant to a (x) registration statement filed with the
Securities and Exchange Commission or (y) a private placement
with institutional investors or (3) Permitted Indebtedness that
is secured by Permitted Liens. In the case of such a private
placement with institutional investors, the Parent Guarantor or
the Borrower shall use its reasonable best efforts to ensure that
the institutional investors in such private placement become
parties to the Intercreditor Agreement.
SECTION 8. Financial Covenants. As long as any of the
Guaranteed Obligations shall remain unpaid or any Bank shall have
any Commitment under the Credit Agreement, unless otherwise
agreed by the written consent of the Majority Banks:
(a) Minimum Equity Ratio. The Equity Ratio of the Parent
Guarantor and its Subsidiaries shall not at any time be less than
0.3:1.
(b) Minimum Total Capital. The Total Capital of the Parent
Guarantor and its Subsidiaries shall not be less than (a)
$170,000,000, from the Agreement Date to December 31, 1995, (b)
$185,000,000, from December 31, 1995 to December 31, 1996 and (b)
$200,000,000, at any time thereafter.
(c) Current Ratio. The ratio of Current Assets to Current
Liabilities of the Parent Guarantor and its Subsidiaries shall
not at any time be less than 1.30:1.
(d) Interest Coverage Ratio. The ratio of (i) Earnings
from Operations plus interest income to (ii) Total Cash Interest
Expense shall not be less than (A) 1.75:1 for the period from the
Agreement Date through December 31, 1995 and (B) 1.85:1 at all
times thereafter; provided, however, that for purposes of this
Section 8(d), the calculation of "Earnings from Operations" for
any period during 1994 shall not include any income effect
attributable to (x) the Restructuring Charge or (y) Merger
Expenses specifically expensed in the fourth quarter of 1994;
and, provided, further, that in calculating the Interest Coverage
Ratio for purposes of this Section 8(d), changes in Earnings from
Operations, interest income or Total Cash Interest Expense
attributable to foreign exchange fluctuations shall not be taken
into account.
(e) Minimum Net Worth. The Net Worth of the Parent
Guarantor and its Subsidiaries shall not at any time be less than
$170,000,000.
- 16 -<PAGE>
SECTION 9. Payments and Computations. (a) The Parent
Guarantor shall make each payment payable by it hereunder not
later than 11:00 A.M. (New York City time) on the day when due,
in Dollars, to the Agent at its address referred to in Section
12.2 of the Credit Agreement in immediately available funds
without set-off or counterclaim, for the account of the several
Banks.
(b) No Reductions. (i) Subject to Section 9(b)(ii) and
(iii), payments due to the Agent, the Arranger, the Co-Arranger
or any Bank hereunder, and all other terms, conditions, covenants
and agreements to be observed and performed by the Parent
Guarantor hereunder, shall be made, observed or performed by the
Parent Guarantor without any reduction or deduction whatsoever,
including any reduction or deduction for any set-off, recoupment,
counterclaim (whether sounding in tort, contract or otherwise) or
Tax.
(ii)(x) If any withholding or deduction from any payment to
be made by the Parent Guarantor hereunder is required for any
Taxes under any applicable law, rule or regulation, then the
Parent Guarantor will
(A) pay directly to the relevant taxing authority
the full amount required to be so withheld or deducted;
(B) promptly forward to the Agent an official
receipt or other documentation satisfactory to the Agent
evidencing such payment to such authority; and
(C) pay to the Agent for the account of the Banks
such additional amount or amounts necessary to ensure that
the net amount actually received by each Bank will equal the
full amount such Bank would have received had no such
withholding or deduction been required.
In addition, to the extent permitted by applicable law, the
Parent Guarantor agrees to pay any present or future stamp or
documentary taxes, excise or property taxes, or any other charges
or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise
with respect to, this Guaranty or the Notes (hereinafter referred
to as "Other Taxes").
Each Bank shall use its reasonable best efforts to designate
another of its then existing offices as its Lending Office if the
making of such designation would, without any detrimental effect
to such Bank (as determined by the Bank in its sole discretion),
avoid the need for, or reduce the amount of, such withholding or
deduction from any payment to be made to such Bank by the Parent
Guarantor hereunder required for any Taxes.
- 17 -<PAGE>
The Parent Guarantor will indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes paid by such Bank or
the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be
made within 30 days from the date such Bank or the Agent (as the
case may be) makes written demand therefor.
If the Parent Guarantor fails to pay any Taxes or Other
Taxes when due to the appropriate taxing authority or fails to
remit to the Agent, for the account of the respective Banks, the
required receipts or other required documentary evidence, the
Parent Guarantor shall indemnify the Agent and the Banks for any
incremental Taxes or Other Taxes, penalties, interest or expenses
that may become payable by the Agent or any Bank as a result of
any such failure.
(y) Notwithstanding subsection (x), the Parent Guarantor
shall not be required to indemnify or pay additional amounts for
or on account of:
(A) Taxes imposed on or measured by the net income of the
Agent or any Bank or franchise Taxes imposed on the Agent or any
Bank, but in each case only to the extent imposed by the
jurisdiction under the laws of which the Agent or such Bank is
organized or doing business (other than as a result of the
transactions contemplated by the Loan Documents or the Agent's or
any Bank's enforcement of its rights under any Loan Document) or
any political subdivision or taxing authority thereof or therein,
or by any jurisdiction in which the Agent or such Bank's lending
office or principal executive office is located or any political
subdivision or taxing authority thereof or therein (except, in
each case, to the extent required by the following paragraph to
make payments on a net after-tax-basis), or
(B) any Tax or Other Tax imposed by reason of either (i)
the failure of the certification made by a Bank on any form
provided pursuant to Section 9(b)(iii) to be accurate and true in
all material respects unless any such failure is attributable
solely to a Change in Tax Law that occurs on or after the date on
which such form is provided by such Bank, or (ii) the failure by
a Bank to deliver to the Parent Guarantor (or the Borrower) and
the Agent two duly completed and executed copies of IRS Form 1001
or 4224 (or successor applicable forms) in accordance with the
second sentence of Section 9(b)(iii), certifying that such Bank
is entitled to receive payments under this Guaranty and the Loans
without deduction or withholding of any United States federal
income taxes, provided that this clause (B)(ii) will not apply if
such failure is attributable solely to a Change in Tax Law that
occurs on or after the date hereof.
- 18 -<PAGE>
All amounts payable as additional amounts or indemnities
pursuant to this Section 9(b) shall include an amount necessary
to hold the Agent or the relevant Bank harmless on a net after-
tax-basis from and against all Taxes required to be paid with
respect to or as a result of the payment of such additional
amount or indemnity (including, without limitation, Taxes
described in clause (A) of the preceding paragraph.)
(iii) Each Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees that
it will, on or before the date that the Parent Guarantor delivers
this Guaranty (or, in the case of a Bank that becomes a Bank
pursuant to an assignment described in Section 12.7 of the Credit
Agreement, on or before the date that the Agent records the
Notice of the Assignment and Acceptance by which it becomes a
Bank), deliver to the Parent Guarantor and the Agent two duly
completed and executed copies of IRS Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each
case that such Bank is entitled to receive payments payable to it
under this Guaranty and the Loans without deduction or
withholding of any United States federal income taxes. Each Bank
that undertakes to deliver to the Parent Guarantor and the Agent
an IRS Form 1001 or 4224 under the preceding sentence further
undertakes to deliver to the Agent and the Parent Guarantor two
additional duly completed and executed copies of Form 1001 or
4224 (or successor applicable forms) on or before the date that
any such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form
previously delivered by it to the Parent Guarantor and the Agent,
and such extensions or renewals thereof as may reasonably be
required by the Parent Guarantor, certifying, in the case of a
Form 1001 or 4224, that such Bank is entitled to receive payments
under this Guaranty and the Loans without deduction or
withholding of any United States federal income taxes, unless, in
any such case, an event (including, without limitation, any
Change in Tax Law) has occurred before the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which causes such Bank to be no longer eligible
to complete and deliver any such form with respect to it, in
which case the Bank shall either (1) furnish to the Parent
Guarantor such forms or other certification as the Bank (in its
sole opinion) is legally entitled to furnish evidencing the
Bank's eligibility for a complete exemption from or a reduced
rate of withholding of United States federal income taxes, or (2)
notify the Parent Guarantor that the Bank is not capable of
receiving payments without any deduction or withholding of United
States federal income tax.
SECTION 10. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to the Parent Guarantor,
- 19 -<PAGE>
addressed to it at One Executive Drive, P.O. Box 1399, Fort Lee,
New Jersey 07024, Tel: (201) 947-7774, Fax: (201) 947-5541
Attention: Albert N. Marchio, II, Treasurer, if to the Agent,
addressed to it at the address specified in the Credit Agreement,
or as to each party at such other address as shall be designated
by such party in a written notice to each other party complying
as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed or telegraphed,
respectively, be effective when deposited in the mails or
delivered to the telegraph company, respectively, addressed as
aforesaid, and shall, when delivered or telecopied, be effective
when received.
SECTION 11. No Waiver; Remedies. No failure on the part of
any Guaranteed Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 12. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default (as defined in the
Credit Agreement), each Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit
or the account of the Parent Guarantor against any and all of the
obligations of the Parent Guarantor now or hereafter existing
under this Guaranty, irrespective of whether or not such Bank
shall have made any demand under this Guaranty. Each Bank agrees
promptly to notify the Parent Guarantor after any such set-off
and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this
Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Bank may
have.
SECTION 13. Continuing Guaranty; Transfer of Interest.
This Guaranty is a continuing guaranty and shall (i) remain in
full force and effect until indefeasible payment in full of the
Guaranteed Obligations and all other amounts payable under this
Guaranty, (ii) be binding upon the Parent Guarantor, its
successors and permitted assigns, provided that the Parent
Guarantor may not assign or transfer its obligations hereunder
without the consent of the Majority Banks, and (iii) inure to the
benefit of and be enforceable by any Guaranteed Party and its
respective successors, transferees, and assigns, without limiting
the generality of the foregoing clause (iii), any Bank may assign
or otherwise transfer all or any part of its rights and
- 20 -<PAGE>
obligations under the Credit Agreement in accordance therewith,
and such other person or entity shall thereupon become vested
with all the rights in respect thereof granted to such Bank
herein or otherwise, subject, however, to the provisions of
Article XII of the Credit Agreement.
SECTION 14. Reinstatement. This Guaranty shall remain in
full force and effect and continue to be effective should any
petition be filed by or against any Loan Party (as defined in the
Credit Agreement) for liquidation or reorganization, should any
Loan Party become insolvent or make an assignment for the benefit
of creditors or should a receiver or trustee be appointed for all
or any significant part of any Loan Party's assets, and shall, to
the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and
performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the
Guaranteed Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored, or
returned, the Guaranteed Obligations shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
SECTION 15. Defined Terms. (a) As used in this Guaranty,
the following terms have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of
the terms defined):
"A.L. Labs Transfer" has the meaning specified in the
Restructuring Agreement.
"Allowable Restructuring Charge" means the lesser of (i) the
Restructuring Charge and (ii) $10,000,000.
"Applicable Restructuring Adjustment" means for the
following periods, the percentage of the Allowable Restructuring
Charge set forth below:
Percentage of
Period Allowable Restructuring Charge
Agreement Date to
June 30, 1995 100%
July 1, 1995 to
December 31, 1995 75%
January 1, 1996 to
June 30, 1996 50%
- 21 -<PAGE>
July 1, 1996 to
December 31, 1996 25%
January 1, 1997 and
thereafter 0%
"Current Assets" means, at any time, as to the Parent
Guarantor and its Subsidiaries, the consolidated current assets
of the Parent Guarantor and its Subsidiaries for the then most
recently ended Fiscal Quarter, as shown on the Parent Guarantor's
then most recent consolidated balance sheet at such time.
"Current Liabilities" of the Parent Guarantor and its
Subsidiaries means, at any time, (a) the consolidated current
liabilities of the Parent Guarantor and its Subsidiaries plus (b)
to the extent not included in (a), the current liabilities of any
Person (other than the Parent Guarantor or any of its
Subsidiaries) that are guaranteed by the Parent Guarantor or any
of its Subsidiaries, in each case for the then most recently
ended Fiscal Quarter as shown on the Parent Guarantor's then most
recent consolidated balance sheet at such time.
"Earnings from Operations" means, at any time, operating
income for the Parent Guarantor and its Subsidiaries on a
consolidated basis as set forth in the consolidated statement of
income of the Parent Guarantor and its Subsidiaries for the
immediately preceding four consecutive Fiscal Quarters (or such
fewer number of consecutive Fiscal Quarters as shall have ended
immediately following the Effective Date) for which financial
statements have been delivered to the Banks pursuant to Section
6(g) of this Guaranty.
"Equity Ratio" means, at any time, the ratio of the Parent
Guarantor's and its Subsidiaries Net Worth to total assets as
shown on the Parent Guarantor's then most recent quarterly
consolidated balance sheet.
"Merger Expenses" means any investment banking, legal,
accounting and other transaction expenses, including the
expensing of debt issuance costs related to existing debt
expected to be refinanced, and tax effects relating to the
combination to be incurred and recorded by the Parent Guarantor
subsequent to the signing of the Restructuring Agreement. The
amount of Merger Expense shall not exceed $3.6 million for the
purpose of the allowance permitted under the Interest Coverage
Ratio test in Section 8(d) hereof.
"Net Worth" means, at any time, as to the Parent Guarantor
and its Subsidiaries on a consolidated basis, the excess of total
assets over total liabilities, as shown on the Parent Guarantor's
- 22 -<PAGE>
then most recent consolidated balance sheet, plus the Applicable
Restructuring Adjustment.
"New Permitted Indebtedness" means, at any time,
Indebtedness (a) that does not otherwise constitute Permitted
Indebtedness pursuant to any clause of the definition of
Permitted Indebtedness other than clause (2)) and (b) the
aggregate outstanding principal amount of which, at any time,
when added to all other New Permitted Indebtedness incurred and
then outstanding at such time by the Parent Guarantor and its
Subsidiaries after the Effective Date does not exceed $20,000,000
in the aggregate.
"Permitted Credit Lines" means the lines of credit available
to the Parent Guarantor and its Subsidiaries that are listed on
Schedule 7(e) hereto.
"Permitted Indebtedness" means:
(1) Indebtedness incurred pursuant to the Loan
Documents; or
(2) New Permitted Indebtedness; or
(3) Any Indebtedness if prior to, and immediately
after, the incurrence thereof, the Equity Ratio equals or
exceeds 0.5:1; or
(4) Subordinated Indebtedness the aggregate outstanding
principal amount of which, at any time, when added to all
other Subordinated Indebtedness previously incurred by the
Parent Guarantor and its Subsidiaries pursuant to this
clause (4) and not otherwise constituting Permitted
Indebtedness does not at such time exceed the aggregate
principal amount of Tranche A Term Loans and Tranche B Term
Loans theretofore prepaid by the Borrower pursuant to
Section 5.4(a) of the Credit Agreement,
(5) Subordinated Indebtedness (A) consisting of
convertible debt securities the aggregate outstanding
principal amount of which, at any time, does not exceed
$100,000,000 and (B) which is used first to refinance any
Indebtedness of the Parent Guarantor and/or its Subsidiaries
then outstanding.
(6) Permitted Intercompany Indebtedness.
(7) Indebtedness incurred pursuant to a Permitted
Credit Line up to an aggregate principal amount which does
not exceed the maximum amount of Indebtedness that is
permitted to be incurred under such Permitted Credit Line by
this Agreement.
- 23 -<PAGE>
(8) Indebtedness representing amounts owed to minority
shareholders of New A.L.-Oslo in connection with the
acquisition of shares not tendered in the Exchange Offer (as
defined in the Restructuring Agreement).
(9) Indebtedness under Swap Agreements.
"Permitted Liens" means:
(i) purchase money Liens or purchase money security
interests upon or in any Property acquired or held in the
ordinary course of business to secure the purchase price of
such Property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such Property;
(ii) Liens existing on Property at the time of its
acquisition (other than any such Lien created in
contemplation of such acquisition);
(iii) Liens on Property of Persons which become
Subsidiaries after the Agreement Date securing Indebtedness
existing, with respect to any such Person, on the date such
Person becomes a Subsidiary (other than any such Lien
created in contemplation of such Person becoming a
Subsidiary);
(iv) Liens listed on Schedule 7(a)(iv) hereto; and
(v) Liens securing New Permitted Indebtedness, provided
that (A) such New Permitted Indebtedness by its terms does
not amortize or otherwise require any mandatory installments
of principal earlier than ten years after the incurrence
thereof and (B) the Borrower has given the Agent notice
(including a description in reasonable detail of the nature
of the Lien and the obligations incurred) of the granting of
such Lien within 7 Business Days of the granting thereof;
(vi) Liens securing a tax, assessment or other
governmental charge or levy or the claim of a materialman,
mechanic, carrier, warehouseman or landlord for labor,
materials, supplies or rentals and any other statutory lien
(other than Environmental Liens), but only if (A) such Lien
was incurred in the ordinary course of business and (B) the
liability secured by such Lien (1) is not delinquent or (2)
is being contested in good faith by appropriate proceedings
and adequate reserves or other appropriate provisions have
been provided therefor in an amount not less than the amount
required by GAAP;
(vii) Liens consisting of a deposit or pledge made in
the ordinary course of business in connection with, or to
- 24 -<PAGE>
secure payment of, obligations under worker's compensation,
unemployment insurance or similar legislation;
(viii) Liens constituting an encumbrance in the nature
of zoning restrictions, easements and rights or restrictions
of record on the use of real property that does not have a
materially adverse effect on the Parent Guarantor or its
Subsidiaries;
"Permitted Intercompany Indebtedness" means Indebtedness
incurred by the Parent Guarantor, the Borrower, a Subsidiary
Guarantor or a Pledged Subsidiary and owing to the Parent
Guarantor, the Borrower, a Subsidiary Guarantor or a Pledged
Subsidiary (as the case may be).
"Restructuring Charge" means the amount, on an after tax
basis, of the charge taken by the Parent Guarantor and/or the
Borrower in connection with the Restructuring.
"Subordinated Indebtedness" means, as to the Parent
Guarantor and its Subsidiaries, Indebtedness that (a) is subject
to subordination terms that are no less favorable to the Banks
than those contained in Exhibit A hereto and that are otherwise
satisfactory to the Agent and (b) does not commence to amortize
or otherwise require any mandatory installments of principal
until six months after the Termination Date.
"Total Capital" means, at any time, as to the Parent
Guarantor and its Subsidiaries on a consolidated basis, the sum
for the Parent Guarantor and its Subsidiaries of (a) Net Worth
plus (b) Subordinated Indebtedness.
"Total Cash Interest Expense" means, for any period, the
cash interest expense incurred by the Parent Guarantor and its
Subsidiaries, on a consolidated basis, during the preceding four
consecutive Fiscal Quarters (or such fewer number of consecutive
Fiscal Quarters as shall have ended immediately following the
Effective Date) with respect to the aggregate amount of all
Indebtedness outstanding during such period.
(b) Any terms used in this Guaranty and not otherwise
defined are used with the meaning ascribed thereto in the Credit
Agreement.
SECTION 16. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 17. WAIVER OF JURY TRIAL. THE PARENT GUARANTOR
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER,
- 25 -<PAGE>
UNDER THE CREDIT AGREEMENT OR UNDER THE OTHER LOAN DOCUMENTS
RELATIVE TO EACH OF THE FOREGOING.
- 26 -<PAGE>
IN WITNESS WHEREOF, the Parent Guarantor has caused this
Guaranty to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.
A.L. LABORATORIES, INC.
By: /s/ E.W. Sissener
Name: E.W. Sissener
Title: Chairman & C.E.O.
- 27 -<PAGE>
Schedule 5(m)
Subsidiaries
- 28 -<PAGE>
Schedule 5(n)
Principal Subsidiaries
A. Non-U.S.
1. New A.L. - Oslo
2. A.L.-Pharma A/S
3. A/S Dumex
B. U.S.
1. Barre National, Inc.
2. ParMed Pharmaceuticals, Inc.
3. NMC Laboratories, Inc.
4. Wade Jones Company, Inc.
5. Barre Parent Corporation
6. Mikjan Corporation
- 29 -<PAGE>
Schedule 7(a)(iv)
Permitted Liens
- 30 -<PAGE>
Schedule 7(e)
Permitted Credit Lines
- 31 -<PAGE>
Exhibit A
to
Parent Guaranty
Subordination Terms
[Previously provided. Will be attached at closing.]
- 32 -<PAGE>
AMENDMENT
TO
CONTROL AGREEMENT
WHEREAS, Apothekernes Laboratorium A.S (now known as
A.L Industrier AS), a corporation organized and existing under
the laws of the Kingdom of Norway ("A.L. Oslo"), and A. L.
Laboratories, Inc., a Delaware corporation (the "Company"), are
parties to a Control Agreement (the "Control Agreement") dated as
of February 7, 1986, pursuant to which A.L. Oslo irrevocably
agreed that, prior to November 1, 1994 (the "Termination Date"),
it would not sell or otherwise dispose of the shares of the
Company's Class B Common Stock (the "Class B Stock") that it owns
or exchange or convert any of such shares into the Company's
Class A Common Stock ("Class A Stock");
WHEREAS, A.L. Oslo and the Company are parties to a
Restructuring Agreement (the "Restructuring Agreement") dated as
of May 16, 1994 and modified on July 20, 1994;
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Restructuring Agreement that the
Control Agreement be amended to extend the Termination Date to
November 1, 1997 and to permit A.L. Oslo to pledge, in a bona
fide transaction, up to 2,000,000 shares of the Class B Stock
that it owns; and
WHEREAS, A.L. Oslo and the Company desire to amend the
Control Agreement to extend the Termination Date to November 1,
1997 and to permit A.L. Oslo to pledge, in a bona fide
transaction, up to 2,000,000 shares of the Class B Stock that it
owns.
NOW, THEREFORE, A.L. Oslo hereby agrees irrevocably
that prior to November 1, 1997 it will not sell or otherwise
dispose of any shares of Class B Stock that it owns or exchange
or convert any shares of Class B Stock that it owns into Class A
Stock; provided, however, that A.L. Oslo may pledge, in a bona
fide transaction, up to 2,000,000 shares of the Class B Stock
that it owns.
IN WITNESS WHEREOF, A.L. Oslo has duly executed and
delivered this Control Agreement as of this 3rd day of October,
1994.
A.L INDUSTRIER AS
(formerly known as
Apothekernes Laboratorium A.S)
By: /s/ E.W. Sissener
Its: Managing Director<PAGE>
I:\AL-COMBO\CURRENT\AL125ACA.003
Agreed to and accepted as of
October 3, 1994:
A. L. LABORATORIES, INC.
By: /s/ Jeffrey E. Smith
Its: Executive Vice President and
Chief Financial Officer<PAGE>
LEASE AGREEMENT
by and between
A.L INDUSTRIER AS
as LANDLORD
and
APOTHEKERNES LABORATORIUM AS
as TENANT
Dated as of: October 3, 1994
PREMISES: Harbitzalleen 3, 5 and 5B
0275 Oslo
Norway<PAGE>
TABLE OF CONTENTS
Page
1. Demise of Premises . . . . . . . . . . . . . . . . . . . 1
2. Certain Definitions . . . . . . . . . . . . . . . . . . 1
3. Title and Condition . . . . . . . . . . . . . . . . . . 5
4. Use of Leased Premises; Quiet Enjoyment . . . . . . . . 5
5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. Net Lease; Tenant's Payments . . . . . . . . . . . . . . 10
8. Payment of Impositions; Compliance with Law . . . . . . 10
9. Liens; Recording and Title . . . . . . . . . . . . . . . 11
10. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . 12
11. Maintenance and Repair . . . . . . . . . . . . . . . . . 12
12. Alterations . . . . . . . . . . . . . . . . . . . . . . 13
13. Condemnation . . . . . . . . . . . . . . . . . . . . . . 14
14. Insurance . . . . . . . . . . . . . . . . . . . . . . . 16
15. Restoration . . . . . . . . . . . . . . . . . . . . . . 18
16. Assignment and Subletting . . . . . . . . . . . . . . . 19
17. Permitted Contests . . . . . . . . . . . . . . . . . . . 20
18. Conditional Limitations; Default Provision . . . . . . . 21
19. Additional Rights of Landlord . . . . . . . . . . . . . 24
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . 25
21. Estoppel Certificate . . . . . . . . . . . . . . . . . . 25
22. Surrender . . . . . . . . . . . . . . . . . . . . . . . 25
23. No Merger of Title . . . . . . . . . . . . . . . . . . . 26
- i -<PAGE>
24. Environmental . . . . . . . . . . . . . . . . . . . . . 27
25. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 27
26. Termination by Tenant . . . . . . . . . . . . . . . . . 27
27. Indemnification . . . . . . . . . . . . . . . . . . . . 27
28. Mortgage by Landlord . . . . . . . . . . . . . . . . . . 28
29. Partial Invalidity . . . . . . . . . . . . . . . . . . . 28
30. Parking Area . . . . . . . . . . . . . . . . . . . . . . 28
- ii -<PAGE>
LEASE AGREEMENT, made as of this 3rd day of October, 1994,
between A.L Industrier AS a Norwegian corporation ("Landlord"),
with an address of Postboks 158 Soyen, N-0212 Oslo 2, Norway and
Apothekernes Laboratorium AS, a corporation organized and
existing under the laws of the Kingdom of Norway ("Tenant"), with
an address of Postboks 158 Skoyen, N-212 Oslo 2, Norway.
R E C I T A L S:
A. A. L. Laboratories, Inc., and Apothekernes Laboratorium
A.S are parties to a certain Restructuring Agreement dated as of
May 16, 1994 (the "Restructuring Agreement").
B. Pursuant to the transactions contemplated by the
Restructuring Agreement, Landlord has agreed to lease to Tenant
and Tenant has agreed to lease from Landlord the Leased Premises
(as hereinafter defined) on the terms and conditions herein
contained.
In consideration of the rents and provisions herein stipu-
lated to be paid and performed, Landlord and Tenant hereby
covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets
to Tenant, and Tenant hereby takes and leases from Landlord, for
the term or terms and upon the provisions hereinafter specified,
the following described property (collectively, the "Leased
Premises"): (i) the real property described in Exhibit "A"
attached hereto and made a part hereof, together with all
easements, rights and appurtenances thereunto belonging or
pertaining (collectively, the "Land"); (ii) the buildings,
structures and other improvements now constructed on the Land
(collectively the "Building and Land Improvements") as more
particularly described on Exhibit "B" attached hereto and all
machinery and equipment installed therein or used therewith
exclusive of Trade Fixtures (as hereinafter
defined)(collectively, the "Building Equipment"). The Building
Equipment does not include trade fixtures, production equipment,
machinery and related tools and equipment used by Tenant in
Tenant's business conducted from the Leased Premises (the "Trade
Fixtures"). The Trade Fixtures are owned by Tenant and shall
remain the property of Tenant during and after the term of this
Lease.
2. Certain Definitions.
"Additional Rent" shall mean Additional Rent as defined
in Paragraph 6(b).
- 1 -<PAGE>
"Adjoining Property" shall mean all sidewalks, curbs,
gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions,
improvements or repairs to, all alterations, reconstruction,
renewals or removals of and all substitutions or replacements for
any of the Building and Land Improvements or Building Equipment,
both interior and exterior, structural and nonstructural, and
ordinary and extraordinary, including, without limitation, the
construction of new or additional structures, buildings or other
improvements.
"Award Notice" shall have the meaning ascribed to it in
Section 13(c)
"Basic Rent" shall mean Basic Rent as defined in
Paragraph 6(a).
"Basic Rent Payment Dates" shall mean the Basic Rent
Payments Dates as defined in paragraph 6(a).
"Building Equipment" shall mean the Building Equipment
as defined in Paragraph 1.
"Commencement" or Commencement Date" shall mean the
Commencement Date as defined in Paragraph 5(a)
"Condemnation" shall mean a Taking and/or a
Requisition.
"Condemnation Notice" shall mean notice or knowledge of
the institution of or intention to institute any proceeding for
Condemnation.
"Default Rate" shall mean the Default Rate as defined
in Paragraph 6(c).
"Disputed Amount" shall have the meaning set forth in
Paragraph 6(b).
"Dispute Notice" shall have the meaning set forth in
Paragraph 6(b).
"Escrow" shall mean an escrow account to be established
by Landlord and Tenant with an escrow agent reasonably acceptable
to Landlord and Tenant into which shall be deposited the Net
Proceeds or Net Award, as applicable, from a casualty event or
Condemnation, for disbursement in accordance with the terms of
the Lease and the agreement establishing the Escrow.
"Expense Notice" shall have the meaning set forth in
Paragraph 6(b).
- 2 -<PAGE>
"Event of Default" shall mean an Event of Default as
defined in Paragraph 18(a).
"Impositions" shall mean the Impositions as defined in
Paragraph 8(a).
"Improvements" shall mean the Building and Land
Improvements as defined in Paragraph 1.
"Land" shall mean the Land as defined in Paragraph 1.
"Landlord's Portion shall have the meaning ascribed to
it in Section 13(a).
"Law" shall mean any constitution, statute, rule of
law, code, ordinance, order, judgment, decree, injunction, rule,
regulation or requirement, whether now existing or hereafter
enacted even if unforeseen or extraordinary, of every duly
constituted governmental authority, court, agency, or subdivision
of any of the foregoing.
"Leased Premises" shall mean the Leased Premises as
defined in Paragraph 1.
"Legal Requirements" shall mean all present and future
Laws, and all covenants, restrictions and conditions now or here-
after of record which may be applicable to Landlord, Tenant or to
any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair
or reconstruction of any of the Leased Premises, even if
compliance therewith necessitates structural changes or
improvements or results in interference with the use or enjoyment
of any of the Leased Premises.
"Net Award" shall mean the entire award payable to
Landlord by reason of a Condemnation, less any expenses incurred
by Landlord in collecting such award.
"Net Proceeds" shall mean the entire proceeds of any
insurance required under Paragraph 14(a), to the extent payable
to Landlord, less any expenses incurred by Landlord in collecting
such proceeds.
"Permitted Encumbrances" shall mean all covenants,
restrictions, reservations, liens, conditions and easements
presently of record with respect to the Land, which do not have a
material adverse effect on the operation or use of the Leased
Premises in connection with Tenant's business.
"Permitted Uses" shall have the meaning ascribed to it
in Section 4(a).
- 3 -<PAGE>
"Person" shall mean individual, partnership, associa-
tion, corporation or other entity.
"Reimbursement Cap" shall mean an amount of Norwegian
Kronor equal to the sum amount of $2.5 million based on the
exchange rate quoted by the Oslo Stock Exchange at 12:00 noon on
the date hereof multiplied by a fraction the numerator of which
is a generally recognized cost of living index published by the
Government of Norway and having general applicability as a
measure of the cost of living in Norway for the year in which the
expiration or other termination of the Term occurs and the
denominator of which shall be the same index for the month and
year in which the Commencement Date occurs.
"Remaining Leased Premises" shall have the meaning
ascribed to it in Section 13(c).
"Renewal Term" shall have the meaning given to it in
Paragraph 5(b).
"Rent" shall mean Basic Rent and Additional Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased
Premises by any governmental authority, civil or military,
whether pursuant to an agreement with such governmental authority
in settlement of or under threat of any such requisition or
confiscation, or otherwise.
"Restructuring Agreement" shall have the meaning set
forth in Recital Paragraph A.
"Restoration Sum" shall mean the Restoration Sum as
defined in paragraph 13(c).
"Sale Agreement" shall have the meaning given to in
Paragraph 3(d).
"State" shall mean the Kingdom of Norway.
"Taking" shall mean any taking of any of the Leased
Premises in or by condemnation or other eminent domain proceed-
ings pursuant to any Law, general or special, or by reason of any
agreement with any condemnor in settlement of or under threat of
any such condemnation or other eminent domain proceeding, or by
any other means, or any de facto condemnation.
"Tenant's Portion" shall have the meaning ascribed to
it in Section 13(a).
"Term" shall mean the term as defined in Paragraph 5.
- 4 -<PAGE>
"Termination Date" shall mean the Termination Date as
defined in Paragraph 5.
"Trade Fixtures" shall have the meaning set forth in
Section 1.
3. Title and Condition.
(a) Landlord hereby represents and warrants to Tenant
that the Leased Premises are demised and let subject only to
(i) the Permitted Encumbrances, (ii) any state of facts which an
accurate survey and physical inspection of the Leased Premises
would show, (iii) all Legal Requirements, it being understood and
agreed, however, that the recital of the Permitted Encumbrances
herein shall not be construed as a revival of any thereof which
for any reason may have expired or terminated and (iv) the
matters set forth on Schedule 3.5(c) to the Restructuring
Agreement.
(b) Tenant hereby acknowledges that it is presently in
possession of the Leased Premises and hereby accepts the same in
their current, "as is" condition.
(c) Landlord hereby assigns, without recourse or
warranty whatsoever, to Tenant all warranties, guaranties and
indemnities, express or implied, and similar rights which
Landlord may have against any manufacturer, seller, engineer,
contractor or builder in respect of any of the Leased Premises,
including any rights and remedies existing under contract or
applicable law and including all existing warranties relating to
the construction of the Improvements on the Leased Premises;
provided, however, that such assignment shall terminate and be of
no further force or effect, and all the said warranties,
guaranties, indemnities and other rights shall automatically
revert to Landlord without the requirement of any further action
by the parties, upon the occurrence of an Event of Default
resulting in termination of this Lease, such assignment shall
cease.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Landlord represents and warrants to Tenant that,
to the best of Landlord's knowledge, use of the Leased Premises
by Tenant for the uses and purposes presently conducted thereon
by Tenant (the "Permitted Uses") does not violate any Legal
Requirements existing at Commencement except as to violations the
existence of which do not materially impair the continued use of
the Leased Premises for the Permitted Uses and except as set
forth on Schedule 3(c) of the Restructuring Agreement. Tenant
shall not permit any unlawful occupation, business or trade to be
conducted on any of the Leased Premises or any use to be made
- 5 -<PAGE>
thereof contrary to any applicable Legal Requirement then in
effect. Tenant shall not use or occupy or permit any of the
Leased Premises to be used or occupied, nor do or permit anything
to be done in or on any of the Leased Premises, in a manner which
would or might reasonably be expected to (i) violate any
certificate of occupancy affecting any of the Leased premises,
(ii) make void or voidable any insurance then in force with
respect to any of the Leased Premises, (iii) make it impossible
to obtain fire or other insurance which Tenant is required to
furnish hereunder, (iv) subject to the terms of Paragraph 12
hereof, cause material structural injury to any of the
Improvements, or (v) constitute a public or private nuisance or
waste.
(b) Landlord agrees that, upon Tenant's paying the
Basic Rent, Additional Rent and other charges herein reserved,
and performing and observing the covenants, conditions and
agreements hereof upon the part of Tenant to be performed and
observed, Tenant shall and may peaceably hold and enjoy the
Leased Premises during the Term (as it may be extended), without
interruption or disturbance from Landlord or persons claiming
through or under Landlord, subject, however, to the terms of this
Lease. This covenant shall be construed as running with the land
to and against subsequent owners and successors in interest and
is not, nor shall it operate or be construed as, a personal
covenant of Landlord, except to the extent of Landlord's interest
in the Leased Premises.
5. Term.
(a) Subject to the provisions hereof, Tenant shall
have and hold the Leased Premises for a term (the "Term")
commencing on October 3, 1994 (the "Commencement Date") and
ending on October 3, 2014.
(b) Subject to the following notice requirements, and
provided that at the time of such notice Tenant is not then in
default under the terms of this Lease, Tenant is hereby granted
the further right (each a "Renewal Option") to renew the Term of
this Lease for four (4) additional consecutive five (5) year
terms (each a "Renewal Term"). The Basic Rent for each Renewal
Term shall be the then prevailing fair rental value of the Leased
Premises as determined in accordance with this Paragraph 5(b).
Tenant shall exercise each Renewal Option, if at all, by written
notice to Landlord not less than twelve (12) months prior to the
expiration of the then current Term (a "Renewal Notice"). If
Tenant shall fail to exercise one or more Renewal Options, such
failure shall be deemed for all purposes of this Lease to be a
waiver of all subsequent Renewal Options. All the terms and
provisions of this Lease shall apply to each Renewal Term, except
- 6 -<PAGE>
that: (i) Basic Rent for each year or portion thereof in a
Renewal Term shall be equal to the then current Market Rate (as
hereinafter defined); and (ii) Tenant shall have only the
remaining, unexercised renewal options. In the event that Tenant
timely exercises a Renewal Option, Landlord and Tenant each agree
to execute an amendment to this Lease in a form reasonably
acceptable to Tenant and Landlord reflecting the extension of the
Term by the Renewal Term on the terms and conditions set forth in
this Paragraph 5(b). If Tenant shall exercise a Renewal Option,
on the fifteenth (15) business day after the receipt by Landlord
of the Renewal Notice, Landlord and Tenant shall each submit to
the other in writing each party's proposed rental rate structure
to be applicable to the Renewal Term. Each of Landlord's and
Tenant's proposed rental rate structure (the "Market Rate") shall
address each of the following and shall reflect the current terms
and conditions which each party believes would in good faith be
proposed to third parties seeking comparable lease terms in
accordance with local custom: (a) base rental rate; (b) all
items of additional rent including, without limitation, the
method of real estate tax and operating expense recovery; ( c )
indexed, fixed or stepped increases to lease rental; (d) cash
allowance for tentative improvements; and (e) rental abatement.
If the Market Rates proposed by the two parties differ by less
than ten percent, then such difference shall be split equally
between the two proposed rate structures, and the Market Rate for
purposes of this Paragraph 5(b) shall be the average of the two
proposals. If such difference exceeds ten percent, then Landlord
and Tenant shall have thirty (30) days in which to negotiate in
good faith in an effort to agree upon a Market Rate. If Landlord
and Tenant are unable to agree on the Market Rate in such thirty
(30) day period, then the Market Rate shall be determined in
accordance with the following procedure:
I. Not later than thirty (30) days following the
expiration of the above thirty (30) day period, Landlord and
Tenant shall each appoint an independent real estate appraiser,
who shall have at least ten (10) years of appraisal experience
with respect to commercial and industrial rental properties
similar in nature and location to the Leased Premises
("Landlord's Appraiser" and "Tenant's Appraiser", respectively).
In the event that either Landlord or Tenant shall fail to appoint
their respective appraisers within a period of ten (10) days
after written notice and the other party to make such
appointment, then the appraiser appointed by the party not in
default hereunder shall appoint a second appraiser given the
qualifications set forth above. Not later than fifteen (15) days
after the appointment of the last to be appointed of Landlord's
Appraiser and Tenant's Appraiser, Landlord's Appraiser and
Tenant's Appraiser shall appoint a third appraiser, who shall
have qualifications comparable to the Landlord's Appraiser and
the Tenant's Appraiser (the "Referee"). In the event that
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Landlord's Appraiser and Tenant's Appraiser are unable to agree
on the identity of the Referee within said fifteen (15) day
period, such Referee shall be appointed by generally recognized
commercial arbitration association of good repute, from its
qualified panel of arbitrators, and shall be a person having the
qualifications set forth above.
II. Each of the Referee, Landlord's Appraiser and
Tenant's Appraiser shall promptly prepare its good faith estimate
of the Market Rate. On the fifteenth (15) day after the
appointment of the Referee, the Referee, Landlord's Appraiser and
Tenant's Appraiser shall each simultaneously submit to Landlord
and Tenant in sealed envelopes their respective opinions of
Market Rate, together with such written data in support of said
opinions as each respective appraiser shall deem appropriate. If
all three opinions of Market Rate are within ten percent of one
another, then the Market Rate for purposes of this Paragraph 5(b)
shall be the average of the three opinions of Market Rate. If
any one of the three opinions of Market Rate shall differ from
the other two by ten percent or more, then such opinion shall be
disregarded, and the Market Rate for purposes of this Paragraph
5(b) shall be the average of the remaining two opinions of Market
Rate. If no two of the opinions of Market Rate are within ten
percent of each other, then the Market Rate for purposes of this
Paragraph 5(b) shall be the average of the two closest opinions.
Each party shall pay the costs and expenses associated with the
appraiser selected by such party and shall share equally the
costs and expenses of the Referee.
6. Rent.
(a) Tenant shall pay to Landlord, as annual rent for
the Leased Premises during the Term, the sum of one dollar
($1.00) ("Basic Rent"), commencing on the Commencement Date and
continuing on the first and each subsequent anniversary of the
Commencement Date thereafter during the Term (the said days being
called the "Basic Rent Payment Dates"), and shall pay the same at
Landlord's address set forth above, or at such other places or to
such other Persons as Landlord from time to time may designate to
Tenant in writing. In addition, Tenant shall pay as additional
rent the amounts more particularly set forth below in Paragraph
6(b). Each payment of Rent (Basic or Additional) shall be made
in Norwegian Kronor.
(b) In addition to Basic Rent, Impositions and all
other items of additional rent hereunder, Tenant shall pay and
discharge when the same shall become due, as additional rent, all
expenses of ownership and operation of the Leased Premises other
than expenses that would not be incurred if Tenant rather than
Landlord owned the Leased Premises, together with all other
amounts and obligations which Tenant assumes or agrees to pay or
- 8 -<PAGE>
discharge pursuant to this Lease, together with every fine,
penalty, interest and cost which may be lawfully added by the
third party payee or collecting authority for nonpayment or late
payment thereof (collectively "Additional Rent"). In the event
of any failure by Tenant to pay or discharge any of the
foregoing, Landlord shall have all rights, powers and remedies
provided herein, by law or otherwise, in the event of nonpayment
of Basic Rent. All payments of Additional Rent due hereunder
shall, if not payable directly by Tenant to the party to which
such amounts are owed, be due and payable not later than fifteen
(15) days after receipt by Tenant of an itemized invoice therefor
from Landlord documenting in reasonable detail the amount and
nature of the expenses included therein (an "Expense Notice").
If Tenant shall dispute the nature or amount of any charges
included on an Expense Notice and shall so notify Landlord in
writing (a "Dispute Notice") prior to the expiration of fifteen
(15) days after receipt of such Expense Notice, then Tenant shall
pay the amount not in dispute as required hereby and the amount
so disputed (the "Disputed Amount") shall not become due and
payable until such dispute has been resolved; provided, however,
if the Disputed Amount shall include amounts attributable to
Impositions, Tenant shall pay the portion of the Disputed Amount
allocable to Impositions with all undisputed amounts but shall
for all purposes hereof be deemed to have reserved all rights to
continue to dispute the payment thereof, and, if such dispute is
resolved in favor of Tenant, Tenant shall be entitled to receive
from Landlord a refund of any Disputed Amount so paid. If
Landlord and Tenant cannot or do not reach agreement as to the
payment of the Disputed Amount within fifteen (15) days after
receipt by Landlord of a Dispute Notice, then either party hereto
may submit the matter to binding arbitration pursuant to Chapter
32 of the Norwegian Civil Procedure Act. The costs and expenses
of any arbitrator or arbitrators so engaged shall be shared
equally by the parties; provided, however, that each party shall
be responsible for the payment of all professional fees and
expenses incurred by such party in connection with any such
arbitration. The amount, if any, required to be paid by Tenant
to Landlord as a result of such arbitration shall be paid to
Landlord, with interest at the Default Rate from the date which
is fifteen (15) days after receipt of the Expense Notice not
later than fifteen (15) days after the decision is rendered in
the arbitration.
(c) In the event of and from and after the date of
occurrence of any Event of Default in the payment of any sum
payable hereunder by Tenant as Rent and until such Event of
Default is fully cured, Tenant shall pay to Landlord, within ten
(10) days following demand by Landlord, as Additional Rent,
interest on the principal amount of the unpaid sums at the rate
(the "Default Rate") which is equal to one-month LIBOR plus two
percent (2%) on the following sums until paid in full: (i) all
- 9 -<PAGE>
overdue installments of Basic Rent from the respective due dates
thereof, (ii) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant,
from the date of payment thereof by Landlord, and (iii) on all
other overdue amounts of Additional Rent from the date Landlord
demands payment. If, at any time, any sum paid or payable by
Tenant to Landlord under any provision of this Lease exceeds the
maximum amount permitted by applicable law, such sum shall be
immediately and automatically reduced to the maximum amount
permitted by applicable law and any sum paid in excess of such
maximum amount shall, as of the date of such payment, be
automatically credited to the advance payment of Basic Rent next
becoming due and otherwise unpaid.
(d) In the event of termination of this Lease as to
the entire Leased Premises pursuant to paragraph 13(a) or 14(c)
of this Lease, Tenant's obligation to pay rent or any other sum
payable under this Lease by Tenant shall terminate on the
effective date as such termination.
7. Net Lease; Tenant's Payments.
(a) This is a net lease and Basic Rent, Additional Rent
and all other sums payable hereunder by Tenant shall be paid
without notice or demand, and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduc-
tion, reduction or defense (collectively, a "Set-Off"), except as
expressly set forth in Paragraph 6(b) hereof. It is the
intention of the parties hereto that the obligations of Tenant
hereunder shall be separate and independent covenants and agree-
ments, that Basic Rent, Additional Rent and all other sums
payable by Tenant hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease.
(b) Each and every payment and expenditure due from
Tenant under this Lease, other than Basic Rent, shall be deemed
to be Additional Rent hereunder, whether or not the provisions
requiring payment of such amounts specifically so state, and
shall be payable, unless otherwise provided in this Lease, within
ten (10) days after written demand by Landlord, and in the case
of the non-payment of any such amount, Landlord shall have, in
addition to all of its other rights and remedies, all the rights
and remedies available to Landlord hereunder or by law in the
case of non-payment of Basic Rent. Unless expressly otherwise
provided in this Lease, the performance and observance by Tenant
for all the terms, covenants and conditions of this Lease to be
performed and observed by Tenant shall be at Tenant's sole cost
and expense.
- 10 -<PAGE>
8. Payment of Impositions; Compliance with Law.
(a) Subject to the provisions of Paragraph 17 hereof
(relating to contests), Tenant shall, before interest or
penalties are due thereon, pay and discharge all taxes of every
kind and nature (including real and personal property, income,
franchise, withholding, capital gains, profits and gross receipts
taxes), all charges for any easement or agreement maintained for
the benefit of any of the Leased Premises, all general and
special assessments, levies, permits, inspection and license
fees, all water and sewer rents and charges, all charges for
utility and communication services relating to any of the Leased
Premises, and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, to the
extent imposed upon or assessed against for periods of time
during the Term (collectively, the "Impositions"). Tenant shall
not be required to pay any Imposition assessed specially on the
Leased Premises as the result of non-compliance by Landlord or
the Leased Premises at or prior to Commencement with Legal
Requirements existing at Commencement.
Nothing herein shall obligate Tenant to pay federal,
state or local (i) franchise, capital stock or similar taxes, if
any, of Landlord, (ii) income, excess profits or other taxes, if
any, of Landlord, determined on the basis of its net income,
(iii) any estate, inheritance, succession, gift or similar tax,
or (iv) any capital gains tax imposed on Landlord by the State in
connection with the sale of the Leased Premises to any Person
other than Tenant or Tenant's designee or any capital gains tax.
In the event that any assessment against any of the Leased
Premises may be paid in installments, Tenant shall have the
option to pay such assessment in installments; provided that all
installments of any such assessment relating to a period of time
during the Term shall be paid by Tenant in full prior to the
expiration of the Term by lapse of time or otherwise. Tenant
shall prepare and file all tax reports required by governmental
authorities which relate to the Impositions. Tenant shall
deliver to Landlord, within fifteen (15) days of receipt thereof,
copies of all settlements and notices pertaining to the
Impositions which may be issued by any governmental authority
and, within thirty (30) days after the end of each calendar year
of the Term, receipts for payments of all Impositions made during
such year.
(b) Tenant shall promptly comply with and conform to
all of the Legal Requirements, subject to the provisions of
Paragraph 17 hereof. Tenant shall not be required to correct any
condition of or on the Leased Premises which existed at
Commencement and represented at Commencement a violation or
noncompliance by Landlord or the Leased Premises of or with any
Legal Requirement existing at Commencement.
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9. Liens; Recording and Title.
(a) Subject to the provisions of Paragraph 17 hereof
relating to contests, Tenant shall not, directly or indirectly,
create or permit to be created or to remain, and shall promptly
discharge or remove, any lien on any of the Leased Premises or
Basic Rent, Additional Rent or any other sums payable by Tenant
under this Lease, other than any Permitted Encumbrances and any
mortgage, lien, encumbrance or other charge created by or
resulting from any act or omission of Landlord before or after
Commencement. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO TENANT OR TO ANYONE HOLDING ANY OF THE LEASED
PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS, OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO
OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. Landlord hereby represents and warrants to Tenant that
no such liens or claims for lien exist as of the Commencement
Date.
(b) If requested by Landlord or Tenant the other party
shall, at the expense of the requesting party, execute, deliver
and, when appropriate, record, file or register from time to time
all such instruments as may be required by any present or future
Law in order to evidence the respective interests of Landlord and
Tenant in any of the Leased Premises and shall, at Tenant's
expense, cause this Lease, or a memorandum of this Lease, and any
supplement hereto or to such other instrument, if any, as may be
appropriate, to be recorded, filed or registered and re-recorded,
refiled or re-registered in such manner and in such places as may
be required by any present or future Law in order to publish
notices and protect the validity or priority of this Lease.
(c) Nothing in this Lease and no action or inaction by
Landlord shall be deemed or construed to mean that Landlord has
granted to Tenant any right, power or permission to do any act or
to make any agreement which may create, give rise to, or be the
foundation for, any right, title, interest or lien in or upon the
estate of Landlord, subject to this Lease, in any of the Leased
Premises.
10. [INTENTIONALLY OMITTED]
11. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased
Premises and, to the extent required by applicable Legal
Requirements, the Adjoining Property, in substantially the same
condition of repair and appearance existing at Commencement and
in compliance in all material respects with all Legal
Requirements now or hereafter enacted, except for ordinary wear
- 12 -<PAGE>
and tear and damage by fire or other casualty. Tenant's
obligations under this Paragraph 11 shall include, but not be
limited to, maintaining and repairing the following: (i) the
roof and all structural elements of the Improvements; (ii) all
heating, air-conditioning and ventilating equipment and systems,
and all utility conduits, fixtures and equipment; (iii) all
interior and exterior walls and surfaces; (iv) all floors and
ceilings; (v) all signs; (vi) all glass, windows and doors and
(vii) all landscaping, roadways, parking or other exterior
improvements to the Land (including ice and snow removal).
Tenant shall do or cause others to do all shoring of the Leased
Premises or Adjoining Property or of foundations and walls of the
Improvements and every other act necessary or appropriate for the
preservation and safety thereof, by reason of or in connection
with any excavation or other building operation upon any of the
Leased Premises or Adjoining Property; provided, however, that
with respect to Adjoining Property, Tenant shall take such
actions only to the extent, Landlord shall, by any Legal
Requirement, be required to take such action or be liable for
failure to do so. Landlord shall not be required to make any
Alteration, whether foreseen or unforeseen, or to maintain any of
the Leased Premises or Adjoining Property in any way, unless such
maintenance or Alteration shall represent repair or correction of
conditions existing at Commencement which were not in compliance
with the representation and warranty contained in paragraph 4(a).
Any Alteration made by Tenant pursuant to this Subparagraph (a)
or pursuant to Subparagraph (b) of this Paragraph 11 shall be
made in conformity with the provisions of Paragraph 12.
(b) In the event that any Improvement, constructed by
Tenant after Commencement shall encroach upon any property,
street or right-of-way adjoining any of the Leased Premises or
upon any Adjoining Property, shall violate the provisions of any
restrictive covenant affecting any of the Leased Premises, shall
hinder or obstruct any easement or right-of-way to which any of
the Leased Premises is subject, or shall impair the rights of
others in, to or under any of the foregoing, Tenant shall,
promptly after receiving notice or otherwise acquiring knowledge
thereof, either (i) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, hindrance, obstruction or
impairment, whether the same shall affect Landlord, Tenant or
both, or (ii) take such action as shall be necessary to remove
all such encroachments, hindrances or obstructions and to end all
such violations or impairments, including, if necessary, making
Alterations.
(c) Landlord shall have the right (but no obligation),
upon notice to Tenant (or without notice in case of emergency),
to enter upon any of the Leased Premises for the purpose of
making any Alterations which may be necessary by reason of
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Tenant's failure to comply with any provision of subparagraphs
(a) and (b) of this Paragraph 11. Promptly thereafter, Landlord
shall notify Tenant of such entry (if occurring in an emergency
without prior notice) and shall specify the cost thereof. Except
in case of emergency, the right of entry shall be exercised at
reasonable times and at reasonable hours. The cost of any such
entry, together with the cost of all such Alterations, shall be
Additional Rent; and Tenant shall pay the same to Landlord within
ten (10) days following written demand, therefor by Landlord,
which shall be accompanied by an itemized statement of such
costs. If not paid by Tenant within ten (10) days after proper
demand by Landlord, any sums payable under this paragraph 11(c)
shall thereafter be subject to payment by Tenant of interest
thereon at the Default Rate.
12. Alterations. Provided no default by Tenant has
occurred and is continuing hereunder, and subject to the
limitations hereinafter set forth, Tenant shall have the right to
(a) make any Alterations or (b) construct upon the Land any addi-
tional Improvements, without requirement of any consent or
approval of Landlord, such right to be exercised only in a manner
consistent with the reasonable and prudent business judgment
customarily exercised by owners of properties similar in nature
and use to the Leased Premises. Tenant agrees that (i) all such
Alterations shall be reasonably related to the conduct of
Tenant's business on the Leased Premises and construction or
installations shall be performed in a good and workmanlike
manner, (ii) all such Alterations, construction and installations
shall be expeditiously completed in compliance with all Legal
Requirements, (iii) all work done in connection with any such
Alteration, construction or installation shall comply with the
requirements of all insurance policies required to be maintained
by Tenant hereunder, (iv) prior to commencement of any such work,
Tenant shall give Landlord not less than twenty (20) days' prior
written notice to permit Landlord to file notices of non-
responsibility, and Tenant shall not commence any work until such
notices of non-responsibility have been filed, (v) Tenant shall
promptly pay all costs and expenses of any such Alteration,
construction or installation and shall discharge or remove all
liens filed against any of the Leased Premises arising out of the
same, (vi) Tenant shall procure (with joinder in any application
by Landlord, if necessary) and pay for all permits and licenses
required in connection with any such Alteration, construction or
installation, (vii) all such Alterations, construction and
installations shall be the separate property of Tenant during the
Term; and (viii) Tenant shall give Landlord not less than
seventy-five (75) days written notice prior to the commencement
of the demolition or removal of Improvements located upon the
Leased Premises as of the Commencement Date and having a value in
excess of 10% of the value of the Improvements then located on
the Leased Premises.
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13. Condemnation.
(a) Immediately upon Landlord or Tenant receiving or
acquiring a Condemnation Notice, Landlord or Tenant shall notify
the other party thereof. Landlord, at Landlord's expense, shall
be entitled to participate in any Condemnation proceeding and/or
negotiations under threat thereof and to contest the Condemnation
and/or the amount of the award therefor. Subject to the
provisions of this Paragraph 13, Tenant hereby irrevocably
assigns to Landlord any award or payment to which Tenant is or
may be entitled by reason of any Condemnation, to the extent the
same shall be paid or payable for Tenant's leasehold interest in
the Land and any Improvements and Building Equipment owned by
Landlord and existing thereon as of the Commencement Date (the
"Landlord's Portion); provided, however, Landlord hereby
irrevocably assigns to Tenant any award or payment to which
Landlord is or may be entitled by reason of any Condemnation to
the extent the same is paid or payable for Landlord's interest in
any Alterations (the "Tenant's Portion"). Nothing in this Lease
shall impair Tenant's right to any award or payment on account of
any Alterations or of Tenant's trade equipment, moving expenses
or loss of business, if available, to the extent that and so long
as (i) Tenant shall have the right to make, and does make, a
separate claim therefor against the condemnor, and (ii) such
claim does not otherwise reduce either the amount of the award
otherwise payable to Landlord for the Condemnation of Landlord's
fee interest in the Land.
(b) The entire Net Award for such Condemnation shall
be deposited into the Escrow and shall be disbursed therefrom as
set forth in Paragraph 13(c) hereof.
(c) If any portion of the Improvements, including
Building Equipment, or any appurtenance to the Leased Premises is
taken in Condemnation which Tenant, in Tenant's reasonable
discretion and taking into account the uses and purposes for
which the Leased Premises have been demised and let, considers
necessary to performance of its business operations at the Leased
Premises, then Tenant may elect to: (i) apply the Net Award for
restoration and replacement of the remaining portion of the
Leased Premises affected by such Condemnation (the "Remaining
Leased Premises"); or (ii) to terminate this Lease. Tenant shall
provide written notice of such election to Landlord not later
than one hundred eighty (180) days after the date on which Tenant
shall have received the Condemnation Notice, but in any event, no
later than the date which is sixty days prior to the date on
which possession of the Leased Premises or portion thereof is
required to be turned over to the condemning authority. In the
absence of such notice, Tenant shall be deemed to have elected to
terminate this Lease pursuant to clause (ii) above. If Tenant
elects to repair or restore the Remaining Leased Premises,
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restoration of the Remaining Leased Premises shall be performed
under Paragraph 15 of this Lease. Tenant may elect to restore
less than all of the Remaining Leased Premises. In the event
that Tenant shall elect to terminate this Lease, then such
termination shall be effective on the effective date of the
Condemnation as though the Term had expired on such date. In any
such event, Tenant shall submit a proposed division of the Net
Award setting forth: (i) the amount to be applied to restoration
of the Leased Premises under this Paragraph 13(c) (the
"Restoration Sum") if Tenant shall have elected to apply the Net
Award to repair and restoration of the Remaining Leased Premises;
or, (ii) the proposed allocation of the Net Award between the
Landlord's Portion and the Tenant's Portion if Tenant shall have
elected to terminate this Lease (the "Award Notice"). Landlord
shall have thirty (30) days following receipt of the Award Notice
to accept or reject the same and to provide Tenant with written
notice of Landlord's decision. If Landlord rejects the Award
Notice, Landlord may require that determination of the
Restoration Sum or the allocation of the Net Award between the
Landlord's Portion and the Tenant's Portion (the "Award
Allocation"), as he case may be, be submitted to binding
arbitration under Paragraph 13(d). In the absence of such
written rejection timely given, the Net Award shall be disbursed
from the Escrow in accordance with the Award Notice.
(d) If Landlord gives Tenant notice of election of
arbitration as permitted under to paragraph 13(c), Tenant and
Landlord shall each select an independent real estate appraiser
who is duly licensed to perform such appraisals in the State and
has at least ten(10) years experience in performing appraisals of
industrial plant real property of the nature of the Leased
Premises. The appraisers shall agree to a Restoration Sum or
Award Allocation, as the case may be, and submit same in writing
to Landlord and Tenant within forty-five (45) days following
their appointment. If the two (2) appraisers cannot agree, their
separate determination shall be averaged and shall be deemed to
represent their decision. If Landlord and Tenant both accept the
decision of the two (2) appraisers, the Restoration Sum or Award
Allocation, as the case may be, shall be the amount so
determined. If either Landlord or Tenant rejects the decision of
the two (2) appraisers, the two (2) appraisers shall jointly
select a third appraiser who is qualified hereunder within ten
(10) days following notice of rejection. The third appraiser
shall submit a proposed Restoration Sum or Award Allocation, as
the case may be, within thirty (30) days following appointment.
So long as the third appraiser's proposed Restoration Sum or
Award Allocation, as the case may be, is neither less than 80%
of, nor more than 120% of the original two (2) appraisers'
decision (whether determined by their agreement or by averaging),
it shall be final and binding on Landlord and Tenant. If the
third appraiser's proposed Restoration Sum or Award Allocation,
- 16 -<PAGE>
as the case may be, is less than 80% of the previous appraisers'
decision, it shall be increased to equal 80% of said amount, and
if it is more than 120% of the previous appraisers' decision, it
shall be decreased to equal 120% of said amount and shall
thereafter be final and binding on Landlord and Tenant. In the
event Tenant elects to apply the Net Award for restoration and
replacement of the remaining portion of the Leased Premises, any
Net Award not paid out by Tenant to third parties in connection
with such restoration shall be paid to Landlord to the extent of
the Landlord's Portion (as determined by the procedure set forth
above) with any remaining balance to be retained by Tenant.
14. Insurance.
(a) Tenant, at its sole cost and expense, shall
obtain, maintain and keep in full force and effect "all risks"
property insurance (including flood and earthquake coverage)
which shall insure the Improvements against physical damage or
destruction in the form from time to time in general use in the
State. Said policy or policies shall insure the Improvements and
Building Equipment on a replacement cost basis for their full
insurable value. All such policies shall name Landlord as an
insured and shall include an undertaking by the insurer to notify
Landlord and Tenant in writing not less than thirty (30) days
prior to any material change, cancellation or other termination
thereof. Such policy shall contain a deductible in an amount
determined by Tenant in Tenant's sole discretion. Any deductible
will be for the account of Tenant.
(b) Tenant, at its sole cost and expense, shall also
obtain, maintain and keep in full force and effect the following
insurance:
(i) "All risk" property insurance including flood
and earthquake coverage against physical damage or destruction
upon property of every description and kind owned by Tenant or
owned by third parties and in the custody of Tenant and located
at the Leased Premises.
(ii) Comprehensive general liability insurance
coverage to include personal injury, bodily injury, broad form
property damage, operations hazard, owner's protective coverage,
blanket contractual liability, products and completed operations
liability, naming Landlord as an additional insured, in an amount
per occurrence of not less than what is customary in Norway for
properties similar to the Leased Premises and business similar to
the business of Tenant conducted thereon combined single limit
bodily injury and property damage.
(c) In the event of any casualty resulting in damage
to any of the Improvements and/or Building Equipment, Tenant
- 17 -<PAGE>
shall take all steps reasonably required to recover any claims
available under applicable insurance, and the Net Proceeds
attributable thereto shall be deposited into the Escrow. If
Tenant, in Tenant's reasonable discretion and taking into account
the uses and purposes for which the Leased Premises have been
demised and let, considers the damaged Improvements and/or
Building Equipment necessary to performance of its business
operations at the Leased Premises, and if Tenant shall decide, in
Tenant's reasonable discretion, that such damaged Improvements
and/or Building Equipment cannot be completely restored within
the time period necessary for resumption of use of said
Improvements in Tenant's business operations, then Tenant may
elect to terminate this Lease. In the event of such election by
Tenant, to the extent permitted by applicable Norwegian law, the
Net Proceeds for damage attributable to Alterations and other
property or equipment owned by Tenant shall be disbursed from the
Escrow to Tenant, and the portion of such Net Proceeds
attributable to Improvements and Building Equipment existing on
the Land as of the Commencement Date shall be disbursed from the
Escrow to Landlord. In the event that Landlord and Tenant cannot
agree upon the division of such Net Proceeds, either party may
require that the determination be submitted to binding
arbitration in accordance with the procedure set forth under
Paragraph 13(d).
(d) In the event of any casualty resulting in damage
to any of the Improvements and/or Building Equipment, and
provided that Tenant does not elect to terminate this Lease
pursuant to Paragraph 14(c) hereof, the Term shall continue and
Tenant shall promptly after such casualty, as required in
Paragraph 11(a), commence and diligently continue to restore the
Improvements and Building Equipment as nearly as possible to the
condition and character required by Tenant in connection with the
operation of its business, in accordance with the provisions of
Paragraphs 12 and 15. Tenant shall give written notice to
Landlord of Tenant's election under Paragraph 14(c) hereof within
ninety (90) days after the date of any such casualty and in the
absence of such written notice, Tenant shall be deemed to have
elected to terminate this Lease.
(e) Landlord and Tenant each hereby release the other
from any and all liability or responsibility for any direct or
consequential loss, injury or damage to the Leased Premises, or
its contents, caused by fire or any other casualty, during the
Term, even if such fire or other casualty may have been caused by
the negligence (but not the gross negligence of willful act) of
the other party or one for whom such party may be responsible.
Inasmuch as the above mutual waivers will preclude the assignment
of any aforesaid claim by way of subrogation (or otherwise) to an
insurance company (or any other person), Tenant hereby agrees, if
required by the policies of fire and other property insurance
- 18 -<PAGE>
required to be maintained by Tenant pursuant hereto, to give
written notice of the terms of said mutual waivers, and to have
said insurance policies properly endorsed, if necessary, to
prevent the invalidation of said insurance coverage by reason of
said waivers.
(f) If Tenant shall elect to terminate this Lease in
the event of damage by fire or other casualty, then Tenant shall,
prior to the effective date of such termination, place the
damaged portion of the Leased Premises in a reasonably safe and
secure condition.
15. Restoration.
In the event that Net Proceeds or a Net Award
(including, for purposes of this paragraph, any portion thereof
representing a Restoration Sum) are applied by Tenant for the
restoration of any of the Land, Improvements or Building
Equipment, Tenant shall disburse such Net Proceeds or Net Award
as follows. Disbursements shall be made from time to time in
accordance with such terms and procedures as Tenant shall
reasonably require and upon receipt of (A) satisfactory evidence,
including architects' certificates, of the stage of completion,
of the estimated cost of completion and of performance of the
work to date in a good and workmanlike manner in accordance with
the contracts and plans and specifications, (B) waivers of liens,
and (C) contractors' and subcontractors' sworn statements as to
completed work for which payment is requested.
16. Assignment and Subletting. So long as no default by
Tenant has occurred and is continuing, Tenant may assign this
Lease or sublet all or any of the Leased Premises at any time to
any other party without the prior written consent of Landlord
but subject to all other terms and provisions of this Lease. No
assignment or sublease shall impose any additional obligations on
Landlord under this Lease. Within ten (10) days after the
execution and delivery of any such sublease, Tenant shall deliver
an original counterpart thereof to Landlord. Upon the occurrence
and during the continuance of an Event of Default under this
Lease, Landlord shall have the right immediately or at any time
thereafter to collect and enjoy all rents and other sums of money
payable under any sublease of any of the Leased Premises, and
Tenant hereby irrevocably and unconditionally assigns such rents
and money to Landlord, which assignment may be exercised upon and
after (but not before) the occurrence of an Event of Default.
(Tenant hereby agrees to execute any document (including without
limitation an assignment or waiver) required to effect the
assignment granted by Tenant to Landlord in the foregoing
sentence.) It shall be a condition of the validity of any
assignment or subletting that the assignee or sublessee agrees
directly with Landlord, in form reasonably satisfactory to
- 19 -<PAGE>
Landlord, to be bound by all the obligations of the Tenant
hereunder, including, without limitation, the obligation to pay
the rent and other amounts provided for under the Lease, but
neither such assignment or subletting nor the agreement of said
assignee or subtenant shall relieve the Tenant named herein of
any of the obligations of the tenant hereunder, and Tenant shall
remain fully and primarily liable therefor. No assignment,
subletting or use of the Leased Premises by any third party shall
permit any Alteration which is not otherwise permitted pursuant
to Paragraph 12 of this Lease. Notwithstanding the foregoing:
(i) any assignment of this Lease first made, first taking effect,
or, to the extent continuing after the expiration of the Initial
Term, shall be permitted without the consent of Landlord only if
same is in connection with a sale of the portion of the business
of Tenant conducted from the Leased Premises; (ii) any subletting
of the Leased Premises shall terminate at the end of the Initial
Term unless such subletting is made in connection with a sale of
the portion of the business of Tenant conducted from the Leased
Premises; and (iii) after the Initial Term, no subletting shall
be permitted except in connection with a sale of the portion of
the business of Tenant conducted from the Leased Premises,
provided that Tenant shall be permitted to sublet up to twenty
five percent (25%) of the Leased Premises so long as Tenant
continues to use the remaining seventy five percent (75%) of the
Leased Premises for the Permitted Uses. Any profit received by
Tenant, determined after taking into account all costs and
expenses incurred by Tenant in connection therewith, as a result
of any such assignment or subletting shall be retained by Tenant,
unless, as a result of any such assignment or subletting Tenant
no longer occupies any material portion of the Leased Premises,
and the use then being made of the Leased Premises by the
sublessee or assignee is not reasonably related to the business
previously conducted from the Leased Premises by Tenant.
17. Permitted Contests. In instances where payment,
compliance or performance is otherwise the obligation of Tenant
under this Lease, Tenant shall not be required to (i) pay any
Imposition, (ii) comply with any Legal Requirement,
(iii) discharge or remove any lien referred to in Paragraph 9 or
12, (iv) take any action with respect to any encroachment, viola-
tion, hindrance, obstruction or impairment referred to in
Paragraph 11(b), or (v) comply with a provision of an insurance
policy carried hereunder or a requirement of an insurer there-
under, so long as Tenant shall contest, in good faith and at its
expense, the existence, the amount or the validity thereof, the
amount of the damages caused thereby or the extent of its or
Landlord's liability therefor, by appropriate proceedings which
shall operate during the pendency thereof to prevent (i) the
collection of, or other realization upon, the Imposition, lien or
claim so contested, (ii) the sale, forfeiture or loss of any of
the Leased Premises, any Basic Rent or any Additional Rent to
- 20 -<PAGE>
satisfy the same or to pay any damages caused by the violation of
any such Legal Requirement or by any such encroachment, viola-
tion, hindrance, obstruction or impairment, (iii) any interfer-
ence with the use or occupancy of any of the Leased Premises,
(iv) any interference with the payment of any Basic Rent or any
Additional Rent, and (v) the cancellation or modification of any
fire or other insurance policy, or any restriction on its full
enforceability by Tenant or Landlord in accordance with its terms
or on the right to collect the proceeds thereof. While any
proceedings which comply with the requirements of this Paragraph
17 are pending, Landlord shall not have the right to pay, remove
or cause to be discharged the Imposition, lien or claim thereby
being contested. Tenant further agrees that each such contest
shall be promptly and diligently prosecuted to a final conclu-
sion, except that Tenant shall, so long as the conditions of this
Paragraph 17 are at all times complied with, have the right to
attempt to settle or compromise such contest through negotia-
tions. Tenant shall pay, and save Landlord harmless against, any
and all losses, judgments, decrees and costs (including, without
limitation all reasonable attorneys' fees and expenses) in
connection with any such contest and shall, promptly after the
final determination of such contest, fully pay and discharge the
amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith,
together with all penalties, fines, interest, costs and expenses
thereof or in connection therewith, and perform all acts, the
performance of which shall be ordered or decreed as a result
thereof. No such contest shall subject Landlord to the risk of
any civil or criminal liability.
18. Conditional Limitations; Default Provision.
(a) The occurrence of any one or more of the following
shall constitute an Event of Default under this Lease: (i) a
failure by Tenant to make when due any payment of Basic Rent,
Additional Rent or other sum herein required to be paid by Tenant
which failure shall continue for ten (10) days after written
demand for such payment by Landlord; or (ii) a failure by Tenant
duly to perform and observe, or a violation or breach of, any
other provision hereof which failure, violation or breach shall
continue for thirty (30) or more days after written and specific
demand for its cure is made by Landlord to Tenant unless Tenant
shall have commenced the cure of such failure, violation or
breach and shall be diligently pursuing the same to completion,
or (iii) Tenant vacates or abandons the Leased Premises and such
vacation or abandonment shall continue for a period of thirty
(30) days after notice by Landlord to Tenant.
(b) If an Event of Default shall have occurred,
Landlord shall have the right at its option, then or at any time
- 21 -<PAGE>
thereafter to do any one or more of the following without further
demand upon or notice to Tenant:
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified
in such notice, which date shall not be less than sixty
(60) days following such notice. Upon the date therein
specified, the Term, the estate hereby granted and all
rights of Tenant hereunder, shall expire and terminate
as if such date were the date hereinbefore fixed for
the expiration of the Term. Nevertheless, Tenant shall
be and remain liable for all of its obligations under
this Lease, including its liability for Rent, as
hereinafter provided.
(ii) Landlord may, whether or not the Term of this
Lease shall have been terminated pursuant to clause (i)
above, (A) give Tenant notice to surrender any of the
Leased Premises to Landlord on a date specified in such
notice, which date shall not be less than sixty (60)
days following the giving of such notice, at which time
Tenant shall surrender and deliver possession of the
Leased Premises or the specified portion thereof to
Landlord, or (B) reenter and repossess any of the
Leased Premises, with legal process, or without legal
process upon ninety (90) days notice to Tenant, by
peaceably entering the Leased Premises and changing
locks or by summary proceedings, ejectment or any other
lawful means or procedure. Upon or any time after
taking possession of any of the Leased Premises,
Landlord may, by peaceable means or legal process,
remove any Persons or property therefrom. Landlord
shall be under no liability for or by reason of any
such entry, repossession or removal. No such notice or
demand to Tenant to surrender or deliver possession of
the Leased Premises or entry or repossession shall be
construed as an election by Landlord to terminate this
Lease unless Landlord gives a written notice of such
intention to Tenant pursuant to clause (i) above.
(iii) Whether or not this Lease shall have been
terminated pursuant to clause (i) above or Landlord
shall have taken possession of the Leased Premises
pursuant to clause (ii) above, Landlord shall have the
right (but shall be under no obligation) (A) to reenter
the Leased Premises at any time and from time to time
and/or (B) to relet any of the Leased Premises to such
tenant or tenants, for such term or terms (which may be
greater or less than the period which would otherwise
have constituted the balance of the Term), for such
rent, on such conditions and for such uses as Landlord,
- 22 -<PAGE>
in its absolute discretion, may determine, and Landlord
may collect and receive any rents payable by reason of
such reletting. Any rents received by Landlord, less
Landlord's costs of reletting, shall be credited to
Tenant's Rent liability under this Lease. Landlord
shall have any and all duties to mitigate damages
provided by any applicable law. Landlord shall not
otherwise be responsible or liable for any failure to
relet the Leased Premises or any part thereof or for
any failure to collect any rent due upon any such
reletting. Landlord may make such Alterations as
Landlord, in its sole discretion, may deem advisable.
Such Alterations shall be made at Landlord's expense
unless Landlord is otherwise permitted to make them
under paragraph 11(c) hereof. Landlord may appoint a
receiver to protect Landlord's interest under this
Lease and may eject some, all or no persons from the
Leased Premises. Landlord shall be entitled to receive
and retain all rents, profits and income from the use,
operation or occupance of any of the Leased Premises.
(iv) Landlord at its option may, but shall not be
obligated to, without waiving any default, make any
payment required of Tenant herein or comply with any
agreement, term, covenant or condition required hereby
to be performed by Tenant. The amount so paid,
together with interest at the Default Rate from the
date of such payment by Landlord, shall be for the
account and at the expense of Tenant, and shall be due
and payable by Tenant to Landlord as Additional Rent
five (5) days after notice by Landlord to Tenant.
(v) Landlord may exercise any other right or
remedy now or hereafter existing by Law or in equity.
(vi) If an Event of Default has occurred and
Landlord has exercised its right under this Section 18,
Tenant hereby consents to eviction without a court
decision in accordance wit the Enforcement Act, Section
13-2, 3rd sentence, litera a) and b). Tenant may not
submit a counterclaim to the Landlord or make reduced
payments, unless the counterclaim is approved by the
Landlord.
(c) This Lease shall continue in full force and
effect, all of Tenant's liabilities and obligations hereunder
shall continue and Landlord may enforce all of its rights and
remedies hereunder, including the right to receive Rent and all
other sums payable to Landlord hereunder, unless this Lease shall
terminate or be terminated pursuant to Paragraph 13, 14 or 5,
whether or not (i) Tenant shall have abandoned the Leased
- 23 -<PAGE>
Premises, (ii) Landlord shall have exercised any rights or
remedies hereunder, including the right to make Alterations
pursuant to Paragraph 11(c) hereof, or (iii) a receiver is
appointed to protect Landlord's interest under this Lease.
No expiration or termination of this Lease pursuant to
Paragraph 18(b)(i) or any other provision of this Lease, by
operation of law or otherwise, before the Termination Date
provided in Paragraph 5 or, if applicable, the date of any
termination occurring under Paragraphs 13 or 14, no repossession
of any of the Leased Premises pursuant to Paragraph 18(b)(ii) or
otherwise (unless Landlord shall occupy the Leased Premises or
any portion thereof for use by Landlord or any affiliate of
Landlord for its own business purposes), nor any reletting of any
of the Leased Premises pursuant to Paragraph 18(b)(iii) shall
relieve Tenant of any of its liabilities for Rent (except to the
extent that Tenant is entitled to receive credit for net rents
received by Landlord resulting from reletting of any portion of
the Leased Premises), all of which shall survive such expiration,
termination, repossession or reletting.
(d) With respect to any remedy or proceeding of
Landlord hereunder, Tenant and Landlord waive (i) any right to a
trial by jury.
19. Additional Rights of Landlord
(a) No right or remedy conferred upon or reserved to
Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder or
now or hereafter existing by Law or in equity. Upon the occur-
rence of any Event of Default, Landlord shall have the right (but
no obligation) to perform any act required of Tenant hereunder,
whether as agent for Tenant or otherwise; and the cost thereof
shall be Additional Rent hereunder and shall be paid by Tenant to
Landlord, together with interest thereon at the Default Rate from
the Date payment of such cost is demanded by Landlord, until it
shall be fully paid by Tenant. Tenant acknowledges that time is
of the essence in the performance of its obligations under this
Lease. No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease, or (ii) to
exercise any option, right, power or remedy contained in this
Lease shall be construed as a waiver, modification or
relinquishment thereof. A receipt by Landlord of any Basic or
Additional Rent or other sum due hereunder with knowledge of the
breach of any provision contained in this Lease shall not be
deemed a waiver of such breach, and no waiver by Landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in a writing signed by Landlord. In addition to the
other remedies provided in this Lease, Landlord shall be enti-
- 24 -<PAGE>
tled, to the extent permitted by applicable Law, to injunctive
relief in case of the violation, or attempted or threatened
violation, of any of the provisions of this Lease, or to specific
performance of any of the provisions of this Lease. Tenant shall
likewise have recourse, to the extent permitted by applicable
law, to injunctive relief and specific performance, in the event
of violation, or attempted or threatened violation, of any of the
provisions of this Lease by Landlord.
(b) In the event of any litigation commenced by
Landlord or Tenant for enforcement of or damages for breach of
any term, covenant, provision or obligation of this Lease, the
prevailing party shall be entitled to receive reimbursement from
the other party of all costs and expenses incurred in such
proceedings by the prevailing party, including reasonable
attorneys fees and expenses.
(c) If Landlord shall be made a party to any
litigation commenced by any third party and pertaining to any
obligation assumed or to be performed by Tenant under this Lease
and not performed by Tenant as required hereunder, Tenant shall
pay all costs, including, without limitation, all reasonable
attorney's fees and expenses, incurred or paid by Landlord in
connection with such litigation.
(d) Except for breaches of the representation and
warranty set forth in Paragraph 3(a) hereof, with respect to
which Tenant hereby reserves all remedies it may have hereunder,
at law, or in equity, Tenant shall neither assert nor seek to
enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Leased
Premises, and Tenant agrees to look solely to such interest for
the satisfaction of any liability of Landlord under this Lease,
it being specifically agreed that neither Landlord, nor any
successor, holder of Landlord's interest hereunder, nor any
beneficiary of any trust of which any person from time to time
holding Landlord's interest is trustee, nor any such trustee,
shall ever be personally liable for any such liability.
20. Notices. All notices, demands, requests, consents,
approvals, offers, statements and other instruments or communica-
tions (other than payments of Rent) required or permitted to be
given pursuant to the provisions of this Lease shall be in
writing and shall be deemed to have been given for all purposes
when given in accordance with the provisions of Section 7.1 of
the Restructuring Agreement.
21. Estoppel Certificate. Tenant shall, at any time and
from time to time, upon not less than twenty (20) days' prior
written request by Landlord, execute, acknowledge and deliver to
Landlord a statement in writing, executed by a general partner of
- 25 -<PAGE>
Tenant, certifying (i) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this
Lease is in full force and effect as modified, and setting forth
such modifications, (ii) the dates to which Basic Rent,
Additional Rent and all other sums payable hereunder have been
paid, (iii) that, to the actual knowledge of the signer of such
certificate, no default by either Landlord or Tenant exists
hereunder or specifying each such default of which the signer may
have actual knowledge. It is intended that any such statements
by Tenant may be relied upon by Landlord, any prospective
purchaser from Landlord of the Leased Premises and any
prospective lender to Landlord whose loan is intended to be
secured by the Leased Premises or Landlord's rights under this
Lease, but only if such Persons other than Landlord are
specifically identified to Tenant upon request by Landlord for
the estoppel certificate. Any certificate required under this
Paragraph 21 shall (i) state briefly the nature and scope of the
examination or investigation upon which the statements contained
in such certificate are based, which nature and scope shall be
reasonably satisfactory to Landlord, and (ii) certify to the
correctness of the statements contained therein.
22. Surrender.
(a) Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased
Premises (except for any portion thereof with respect to which
this Lease has previously terminated) to Landlord in
substantially the same condition in which the Leased Premises
were originally received from Landlord at the Commencement except
as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, except for
ordinary wear and tear and for any damage by fire or other
casualty which Tenant is not required by the provisions of this
Lease to repair or restore and except for the removal of Trade
Fixtures and other property of Tenant as hereinafter provided.
Tenant shall remove from the Leased Premises on or prior to such
expiration or earlier termination all Trade Fixtures and Building
Equipment and other property which is owned by Tenant or third
parties other than Landlord and Tenant, and Tenant, at its
expense, shall, on or prior to such expiration or earlier
termination, repair any damage caused by such removal. Property
not so removed shall, at the option of Landlord, become the
property of Landlord. Landlord may thereafter cause such
property to be removed from the Leased Premises subject to the
provisions of any agreement made in writing between Landlord and
any third party having an interest in such property; and the cost
of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall
be borne by Tenant.
- 26 -<PAGE>
(b) Upon surrender of the Leased Premises in
accordance with the provisions of Paragraph 22(a) hereof,
Landlord shall pay to Tenant the then book value of all
Alterations made by Tenant during the Term or any Renewal Term as
reflected in Tenant's books calculated in accordance with United
States generally accepted accounting principles consistently
applied. Notwithstanding the foregoing, Landlord shall not be
required to reimburse Tenant for the book value of any
Alterations made by Tenant during the final five (5)years of the
Term the book value of which at the expiration of the Term shall
exceed the Reimbursement Cap. Further, Landlord's obligation to
reimburse Tenant for the then book value of Alterations
constructed by Tenant during the final five (5) years of the Term
shall, with respect to alterations constructed in any single year
in such five year period, be limited to one-fifth of the
Reimbursement Cap. Landlord's obligations under this Paragraph
22(b) shall not apply with respect to Alterations constructed by
Tenant the cost of which was paid for out of Net Awards or Net
Proceeds pursuant to Sections 13 and 15 hereof, to the extent
such Net Awards or Net Proceeds would have been payable to
Landlord had Tenant elected to terminate this Lease pursuant to
either of such Sections and (ii) Alterations relating to Trade
Fixtures.
23. No Merger of Title. There shall be no merger of this
Lease nor of the leasehold estate created by this Lease with the
fee estate in or ownership of any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or
own, directly or indirectly, (a) the leasehold estate created by
this Lease or any part thereof or interest therein or any
interest of Tenant in this Lease, and (b) the fee estate or
ownership of any of the Leased Premises or any interest in such
fee estate or ownership; and no such merger shall occur unless
and until all Persons having any interest in (i) this Lease as
Tenant or the leasehold estate created by this Lease, and
(ii) this Lease as Landlord or the fee estate in or ownership of
the Leased Premises or any part thereof sought to be merged shall
join in a written instrument effecting such merger and shall duly
record the same.
24. Environmental. The provisions of Section 7.2(b)(v) of
the Restructuring Agreement are incorporated herein by this
reference with respect to the Leased Premises.
25. Miscellaneous. The paragraph headings in this Lease
are used only for convenience in finding the subject matters and
are not a part of this Lease or to be used in determining the
intent of the parties or otherwise interpreting this Lease. As
used in this Lease, the singular shall include the plural as the
context requires. In the event any one or more of the provisions
contained in this Lease shall for any reason be held to be
- 27 -<PAGE>
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed
as if such invalid, illegal or unenforceable provision had never
been contained herein. This Lease shall be governed and con-
strued according to the Laws of the State. Any dispute arising
out of or in connection with this Agreement and/or any agreement
arising out of this Agreement shall, if no amicable settlement
can be reached through negotiations, be finally settled by
arbitration in Oslo, Norway The arbitration proceedings shall
be held in accordance with Chapter 32 of the Norwegian Civil
Procedure Act.
26. Termination by Tenant. Notwithstanding any other term
of this Lease to the contrary, Tenant shall have the right to
terminate this Lease at any time upon not less than twelve (12)
months prior written notice thereof to Landlord. Upon any such
termination, this Lease shall terminate and expire on the date
specified in Tenant's notice as if the Term had expired by lapse
of time.
27. Indemnification. Tenant hereby agrees to indemnify and
defend Landlord, its officers, directors and employees, against,
and hold them harmless from, any loss, liability, claim, damage
or expense (including reasonable legal fees and expenses,
collectively, a "Loss") for or on account of or arising from or
in connection with or otherwise with respect to (i) any liability
assumed by Tenant under this Lease and (ii) the conduct of the
business of Tenant at the Leased Premises after the Commencement
Date and any liability of Tenant incurred in connection therewith
or relating thereto. Pursuant to the terms of this indemnity,
the Landlord shall be indemnified by Tenant against Losses or
claims of third parties arising from the liabilities and business
activities of Tenant described in the preceding sentence and made
against the Landlord's officers or directors and employees by
reason of the fact that such Persons are officers or directors,
and employees of the Landlord, except in cases of Landlord's own
negligence or wilful misconduct, or instances of default under
this Lease by Landlord. The termination of any claim, issue or
matter with respect to Landlord by judgment or settlement shall
not in itself create a presumption that the Landlord is not
entitled to indemnity hereunder.
28. Mortgage by Landlord. Notwithstanding any other
provision of this Lease to the contrary, Landlord shall have the
right to mortgage, pledge, assign or otherwise encumber
(collectively, a "Mortgage") its interest in the Land provided
that any such Mortgage shall be expressly and without
qualification subordinate to this Lease and the rights of Tenant
hereunder, such subordination to be evidenced by a written
- 28 -<PAGE>
agreement in form reasonably satisfactory to Tenant executed by
the party to whom such Mortgage is given.
29. Partial Invalidity. In the event any one or more of the
provisions contained in this Lease shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or enforceability shall not affect any
other provision hereof, but each shall be construed as if such
invalid, illegal or unenforceable provision had never been
included hereunder.
30. Parking Area. By lease agreement dated January 21,
1984, Landlord currently leases from Norges Spatsbaner certain
real property consisting of approximately 4,823 square meters of
land which is used as parking in connection with the Leased
Premises (the "Parking Area"). A true and correct copy of the
lease for the Parking Area (the "Parking Lease"), including all
amendments and modifications thereto, if any, is attached hereto
as Exhibit B. Landlord shall use all commercially reasonable
efforts to obtain the consent required under the Parking Lease to
permit Landlord to sublease the Parking Area to Tenant, and, if
such consent is obtained, Landlord and Tenant shall enter into a
sublease of the Parking Area on substantially the same terms and
conditions as the Parking Lease and the rent payable under such
sublease shall be the rent and other sums payable under the
Parking Lease (the "Parking Sublease"). The Parking Sublease
shall terminate on the first to occur of the termination of the
Parking Lease and the termination of this Lease. Until such time
a Landlord shall obtain the consent required for the Parking
Sublease, Tenant shall be permitted to use the Parking Area on
the same terms and conditions as are applicable to the Leased
Premises pursuant hereto, subject to any additional restrictions
or limitations as may be set forth in the Parking Lease and
Tenant shall reimburse Landlord for all expenses incurred by
Landlord under the Parking lease during such period promptly upon
receipt of an invoice therefor from Landlord. Landlord hereby
covenants and agrees with Tenant that Landlord shall take all
actions reasonably necessary to perform its obligations as the
tenant under the Parking Lease, including, without limitation the
payment of rent thereunder; provided, however, that all costs and
expenses incurred by Landlord in so doing, less the amount of
rent payable by Tenant under the Parking Sublease, if any, shall
be payable by Tenant as additional rent hereunder.
- 29 -<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this
Lease to be duly executed as of the day and year first above
written.
LANDLORD:
A.L INDUSTRIER AS
By: /s/ E.W. Sissener
Title: Managing Director
TENANT:
APOTHEKERNES LABORATORIUM AS
By: /s/ E.W. Sissener
Title: Managing Director
- 30 -<PAGE>
EXHIBIT A
Estate no. 31, lot no. 60 and lot no. 161 in Oslo
municipality (in Norwegian: gnr. 31, bnr. 60 og 161 i Oslo
kommune).<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
Between
A.L. Industrier A.S ("A.L. Industrier"), Harbitzalleen, 3
0275 Oslo, Norway; and
Apothekernes Laboratorium A.S, Harbitzalleen 3, 0275 Oslo,
Norway ("New A.L. Oslo")
this Administrative Services Agreement (the "Agreement") is
entered into on this 3rd day of October, 1994;
1. PURPOSE
A.L. Industrier presently operates the business activities that
are listed in Schedule 1 hereto.
New A.L. Oslo has the required experience, expertise and compe-
tence to provide certain administrative services described below
(the "Services") to A.L. Industrier and its subsidiaries within
its organization ("the A.L. Industrier Group") and desires to
provide the Services to A.L. Industrier.
A.L. Industrier desires to hire New A.L. Oslo to provide the
Services.
2. THE SERVICES
The Services to be provided by New A.L. Oslo shall include all
administrative services required by the A.L. Industrier Group to
assist in the administration of their businesses provided,
however, to the extent that any Services would have a material
adverse effect on New A.L. Oslo, New A.L. Oslo shall not be
obligated to provide such Services. The Services shall initially
be provided by the employees listed in Schedule 2 hereto (it
being expressly understood that in connection with the provision
of the Services New A.L. Oslo may substitute any or all of such
employees). The initial Services shall include (as requested by
A.L. Industrier and the A.L. Industrier Group) the following:
2.1 administrative services relating to the maintenance of
administrative and financial information relating to the
A.L. Industrier Group including, but not limited to: (i)
assisting in preparation and control of annual budgets;
(ii) assisting in providing advice concerning lending and
financing matters; (iii) assisting in cash management;
(iv) assisting in the control and implementation of pay-<PAGE>
ments of liabilities; (v) assisting in the control and
collection of payables and indebtedness; (vi) assisting in
the preparation of the accounts and the Annual Report of
A.L. Industrier; (vii) assisting in the preparation and
filing of VAT filings and other tax returns and similar
forms and documentation; and (viii) assisting with filings
to the Company Register, VAT and customs reporting and
reporting to the Register of Accounts and similar institu-
tions;
2.2 administrative services relating to corporate matters,
including: (i) issuing Notices and Agendas for Meetings of
the Board of Directors, meetings of the General Assembly
and Shareholders Meetings; and (ii) assistance with the
maintenance of the Shareholders' Register; and
2.3 miscellaneous administrative services including: (i) as-
sisting in the implementation and maintenance of insurance;
(ii) assisting in personnel matters; (iii) assisting with
payroll services for the following A.L. Industrier Group
companies: A/S AgroTek, Almedica A/S, A/S Nopal, A/S
Platevern-Kjemi and Dynal A.S.; and (iv) assisting with
inhouse medical and health services for the following A.L.
Industrier Group companies: Almedica A/S, A/S Nopal (em-
ployees at the Billingstad office only) and Dynal A.S.
3. MANAGEMENT OF A.L. INDUSTRIER
A.L. Industrier shall be managed under the exclusive control of
its Board of Directors and all powers that legally or customarily
reside in Board of Directors shall remain with the Board of
Directors and shall not be affected by this Agreement. In addi-
tion, this Agreement shall not affect the rights of the share-
holders of A.L. Industrier under applicable law.
4. PAYMENT TO NEW A.L. OSLO
4.1 All Services rendered hereunder shall be provided and
charged for on an hourly basis other than payroll and
inhouse medical and health services, which shall be calcu-
lated on the basis of the number of the A.L. Industrier
Group employees being serviced by New A.L. Oslo. New A.L.
Oslo shall within 60 days of the end of each calendar year
present the calculations for the hourly rates for the
2<PAGE>
subject year for the various personnel involved in provid-
ing services hereunder (and the per employee charge for
payroll and inhouse medical and health services) and such
calculations shall be subject to the approval in advance of
A.L. Industrier.1 The hourly rate for each employee pro-
viding services (other than employees engaged in providing
payroll and inhouse medical and health services) shall be
calculated based upon (together, the "Pricing Criterion")
(i) all direct costs of the employee to New A.L. Oslo for
the year such Services are to be rendered, and (ii) all
indirect overhead costs for the year such Services are to
be rendered, which shall include allocations for office ex-
penses, occupancy, office equipment expenses, insurance and
similar expenses. The aggregate fee for providing payroll
and inhouse medical and health services to all persons
(including employees of New A.L. Oslo and the A.L.
Industrier Group) shall be based upon New A.L. Oslo's
direct and indirect costs (the "Payroll and Medical Cost
Criterion") of providing such services (to employees of New
A.L. Oslo and the A.L. Industrier Group) divided by the
number of persons being served by such services and multi-
plied by the number of the A.L. Industrier Group employees
being served by such services.
4.2 If New A.L. Oslo and A.L. Industrier shall not agree within
70 days of the end of each calendar year on the hourly
rates and other fees payable in connection with the provi-
sion of Services hereunder, then such disagreement shall be
submitted to and resolved by an independent certified
public accountant selected jointly by A.L. Industrier and
New A.L. Oslo with the cost of such independent certified
public accountant to be paid one-half by New A.L. Oslo and
one-half by A.L. Industrier. The independent certified
public accountant shall calculate the hourly rates and
other fees payable in connection with the provision of
services hereunder by utilizing the Pricing Criterion and
the Payroll and Medical Cost Criterion.
4.3 All personnel rendering services to the A.L. Industrier
Group (other than personnel providing payroll or inhouse
1 Prior to the execution of this Agreement at the
closing of the Restructuring Agreement, the parties
will jointly produce a schedule setting forth the
information required to be calculated for purposes
of this section for 1994.
3<PAGE>
medical and health services) shall prepare time sheets on a
continuous basis, and such time sheets shall include infor-
mation concerning (i) the personnel involved, (ii) the
amount of time expended and (iii) the type of assistance
rendered to the A.L. Industrier Group. The time sheets
shall be made available to A.L. Industrier on a monthly
basis for control purposes.
4.4 A.L. Industrier shall also reimburse New A.L. Oslo for all
out-of-pocket costs and expenses necessarily incurred by
New A.L. Oslo in connection with rendering services to the
A.L. Industrier Group pursuant to this Agreement. The
documentation related to such expenses shall be made avail-
able to A.L. Industrier on a monthly basis for control pur-
poses.
4.5 New A.L. Oslo shall on a monthly basis invoice A.L.
Industrier for services rendered in the prior month to the
A.L. Industrier Group, provided that New A.L. Oslo shall
invoice A.L. Industrier for services provided from January
1, 1994 through the date this Agreement is executed on the
date this Agreement is executed.
4.6 Payment according to the invoice shall be made in cash not
later than 30 days after receipt of such invoice. All in-
voices shall be issued and paid for in the currency in
which the cost is incurred.
4.7 Notwithstanding any other provision contained in this
Section 4, A.L. Industrier shall be required to pay to New
A.L. Oslo a minimum of NOK 5,650,000 with respect to ser-
vices rendered hereunder in 1994, regardless of the date
that this Agreement is executed, a minimum of NOK 4,000,000
with respect to services rendered hereunder in 1995, and a
minimum of NOK 3,000,000 with respect to services rendered
hereunder in 1996. New A.L. Oslo shall determine any
amounts owing under this Section 4.7 within 30 days after
each of December 31, 1994, December 31, 1995 and December
31 1996 and shall invoice A.L. Industrier, if necessary,
for the minimum annual amount less amounts invoiced and
paid pursuant to Section 4.5 for services rendered in such
year. A.L. Industrier shall pay such invoice within 30
days of receipt of any such invoice.
4<PAGE>
5. TERM OF AGREEMENT
This Agreement shall have an initial term of three years begin-
ning as of January 1, 1994. After the expiration of the initial
term, this Agreement shall be extended for successive one year
terms unless terminated by a party pursuant to 6 months prior
written notice.
6. CONFIDENTIALITY
6.1 During the term of this Agreement and for a period of three
years from the date of termination of this Agreement, New
A.L. Oslo is to hold secret and in strict confidence any
and all information and documentation related to the A.L.
Industrier Group and their activities; provided, however,
that this provision shall not apply to information which at
the time of disclosure to New A.L. Oslo is generally avail-
able to and known by the public (other than as a result of
a disclosure directly or indirectly by New A.L. Oslo or its
representatives), or is available to New A.L. Oslo on a
nonconfidential basis from a source other than the A.L.
Industrier Group, provided that such source is not and was
not bound by a confidentiality agreement with any member of
the A.L. Industrier Group. New A.L. Oslo agrees not to
disclose directly or indirectly to any third party, unless
required by applicable laws or regulations, any information
relating to the A.L. Industrier Group or the business
except in the due and proper performance during the term of
this Agreement. Upon any termination of this Agreement,
New A.L. Oslo will upon A.L. Industrier's request either
(i) collect and deliver to A.L. Industrier all documents
obtained or examined by (or derived from documents obtained
or examined by) its representatives who are not employees
of the A.L. Industrier Group then in its possession and any
copies thereof or (ii) cause such representatives to de-
stroy such documents and copies and deliver to A.L.
Industrier certificates of destruction with respect to such
documents and copies.
6.2 All documents, business related information, data and
information otherwise existing prior to or created during
the performance of the Services, shall be the exclusive
property of A.L. Industrier, and New A.L. Oslo shall deliv-
er to A.L. Industrier all such material and copies request-
ed upon termination of this Agreement.
5<PAGE>
7. STANDARD OF PERFORMANCE; INDEMNIFICATION
7.1 New A.L. Oslo warrants that in the performance of the
services hereunder, New A.L. Oslo and its personnel shall
act with diligence, honesty and competence in accordance
with the same standard as it applies to its own affairs;
provided, that New A.L. Oslo shall not be liable to A.L.
Industrier for any claims, demands, causes of action, loss,
investigations, proceedings, damages, penalties, fines,
expenses, insurance, and judgements, including attorneys'
fees (herein collectively "Claims"), incurred by A.L.
Industrier in connection with the Services provided by New
A.L. Oslo hereunder, unless such Claims arise from New A.L.
Oslo's material breach of this Agreement, or the willful
misconduct or gross negligence of New A.L. Oslo.
7.2 A. L. Industrier agrees, to the fullest extent permitted by
law, to hold New A.L. Oslo harmless and to indemnify and
defend New A.L. Oslo from third parties for all Claims
arising out of this Agreement, unless such Claim arose out
of a material breach of this Agreement by New A.L. Oslo, or
the willful misconduct or gross negligence of New A.L.
Oslo. New A.L. Oslo agrees, to the fullest extent permit-
ted by law, to hold A.L. Industrier harmless and to indem-
nify and defend A.L. Industrier from third parties for all
Claims arising out of a material breach of this Agreement
by New A.L. Oslo, or the willful misconduct or gross negli-
gence of New A.L. Oslo.
8. INSURANCE
New A.L. Oslo will obtain and maintain throughout the period of
this Agreement employers liability, employees compensation, and
third party insurance and all other standard insurance relevant
for New A.L. Oslo.
9. COOPERATION
New A.L. Oslo shall cooperate fully with any other contractors or
sub-contractors used by A.L. Industrier and give them all reason-
able assistance when requested to do so by A.L. Industrier.
10. ASSIGNMENT
Subject to the prior written consent of A.L. Industrier (which
consent shall not be unreasonably withheld), New A.L. Oslo shall
have the right to assign or delegate its obligations under this
6<PAGE>
Agreement to a third party, provided that the assignee expressly
assumes and agrees to perform the assigned obligations of New
A.L. Oslo hereunder.
11. ARBITRATION
Any dispute which cannot be resolved by mutual agreement within a
period of sixty (60) days shall be finally resolved by arbitra-
tion in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce ("ICC"). Any such arbi-
tration may be initiated by the delivery of a notice in writing
by either party hereto to the other party following any such
sixty (60) day period. The arbitration panel shall comprise
three (3) arbitrators, one (1) to be appointed by A.L.
Industrier, one (1) to be appointed by New A.L. Oslo, and the
third by the first two (2) arbitrators. If either of the first
two (2) arbitrators are not appointed within the time provided by
said rules, or the two (2) arbitrators fail to agree on the
choice of the third within thirty (30) days after their respec-
tive appointments become effective, such arbitrator(s) shall be
appointed by the International Court of Arbitration of the ICC.
The place of arbitration shall be London, England. The language
to be used in the arbitral proceeding shall be English. The
decision and award of the arbitration panel shall be final, non-
appealable and binding on both parties and their successors and
assigns hereunder, shall include a decision regarding the alloca-
tion of costs relating to any such arbitration and all matters
related thereto, and shall be enforceable in any court of compe-
tent jurisdiction in accordance with the United Nations Conven-
tion on the Recognition and Enforcement of Foreign Arbitral
Awards.
12. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
with respect to the subject matters hereof and supersedes all
previous documentation or understandings between the parties, and
may not be modified except in writing signed by duly authorized
representatives of the parties.
13. NOTICES
Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and shall
be deemed given if delivered personally, sent by reputable
overnight courier or by registered or certified mail (return re-
ceipt requested), postage prepaid, or telecopied (which is con-
7<PAGE>
firmed) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to A.L. Industrier A.S
A.L. INDUSTRIER A.S
Postboks 158 Skoyen
N-0212 Oslo 2
Norway
Attention: Einar W. Sissener
Managing Director
with a copy to
WIERSHOLM MELLBYE & BECH
Kirkegaten 15
Postboks 400 Sentrum
0103 Oslo
Norway
Attention: Per Raustol
(b) if to New A.L. Oslo at any time, to
APOTHEKERNES LABORATORIUM A.S
c/o A.L. LABORATORIES INTERNATIONAL, INC.
One Executive Drive
Fort Lee, NJ 07024
Attention: Jeffrey Smith,
Executive Vice President and
Beth P. Hecht
Corporate Counsel
with copies to
KIRKLAND & ELLIS
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
8<PAGE>
and
ADVOKATFIRMAET FOYEN & CO ANS.
Oscarsgate 52
N-0258 Oslo
Norway
Attention: Heikki Giverholt
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with Norwegian law and the parties hereby submit to the non-
exclusive jurisdiction of the Norwegian courts, the venue to be
in Oslo.
15. COUNTERPARTS
This Agreement may be signed in any number of counterparts, each
of which shall be an original for all purposes, but all of which
taken together shall constitute one Agreement.
9<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of the
parties hereto on the date first hereinabove written.
Signed for and on behalf of Signed for and on behalf of
A.L. INDUSTRIER A.S: APOTHEKERNES LABORATORIUM A.S:
/s/ E.W. Sissener /s/ E.W. Sissener
By: E.W. Sissener By: E.W. Sissener
Title: Managing Director Title: Managing Director
10<PAGE>
Translation from Norwegian
August 10, 1972
Einar W. Sissener
CEO/President
Here
Position of CEO/President
On behalf of the Board of Directors, we hereby take the liberty
of confirming that you have taken office, as of July 1, 1972, as
CEO/President of our company.
Pursuant to our talks, I wish to underline that you may not
assume commissions or assignments outside the company, without
the Board's consent thereto, but must give the company all your
time and labour.
Your salary, working conditions, etc. shall at all times be
determined by the Board. Your salary shall be adjusted on the
Board's decision, having due regard to the company's growth,
general and special working conditions, as well as overall price
and salary trends.
In respect of your appointment, a mutual period of notice of one
year shall apply, entailing resignation at the following year-
end.
In respect of your appointment, the applicable pension age shall
be 67 years. Upon retirement when reaching pension age, you are
entitled to an annual pension amounting to 2/3 of the average
cash salary received during the last 3 years prior to retirement.
The company shall cover this pension commitment by means of an
insurance, insofar as such an arrangement is financially
practical. The amount of pension not covered by insurance shall
be paid directly and on a monthly basis by the company.
Your pension also entails a widow's pension amounting to 60% of
your pension, or 40% of your average annual cash salary during
the last 3 years prior to death, while still occupying a position
in the company. In the event you are survived by children under
the age of 20, the widow's pension shall be increased by 10% of
the amount of widow's pension for every child, until such child
has reached the age of 20.<PAGE>
Retirement pension and widow's pension shall both be indexed each
year on the basis of the consumer price index issued by the
Central Bureau of Statistics, the point of departure being the
index figure as of the 15th of the month prior to retirement or
death.
The Board is of the opinion that your salary, working conditions
and pension terms shall, in standard and in terms, correspond to
those applicable for similar positions in Norwegian industry
which one might naturally compare with.
Should circumstances arise entailing the termination of your
appointment, you are entitled to an indemnity, in addition to
your ordinary salary during the period of notice, corresponding
to two years' salary, if you, from the time of your appointment
with the company on January 1, 1960, have spent less than 20
years in the company's service, and 3 years' salary if you have
spent 20 years or more in the company's service.
You shall be entitled to a corresponding indemnity, in the event
expropriation or similar forced interventions on the part of
Government wholly or partially lead to such a reduction in the
company's activities that you no longer find it reasonable to
continue in your position. In both events, you shall, as far as
necessary, assist our companies with advice and guidance during
the period in which you are receiving indemnity payments.
In the unlikely event that a situation of conflict should arise
between yourself and the company's Board of Directors concerning
your work situation, in the broadest sense of the term, such
conflict shall be settled by arbitration. The arbitration board
shall consist of 3 members, of which you and the Board of
Directors shall appoint one each, the third member being
appointed by the Federation of Norwegian Industries. The
arbitration board's decision is final and binding and shall
comply with the provisions of the statute's arbitration chapter.
We feel confident of continued positive collaboration for the
good of the company.
Yours sincerely
A/S APOTHEKERNES LABORATORIUM
for Specialpraparater
(Illegible signature)<PAGE>
Translation from Norwegian
APOTHEKERNES LABORATORIUM A.S.
Ingrid Wiik Oslo, October 5, 1989
President
Here
RE. EMPLOYMENT CONTRACT
As an addition to your terms of employment (Employment Contract
dated July 5, 1983 with subsequent amendments), the following
shall apply:
"In the event APOTHEKERNES LABORATORIUM A.S. were to undertake
organizational and/or appointment changes, or other significant
changes of your working conditions/sphere of responsibilities,
which you do not wish to accept, and consequently wish to
terminate your employment with the company, you shall be entitled
to receive salary and other benefits for a period of 18 months
counting from the time that said situation arose. It is
presupposed that you give due notice thereof, not later than 30
days following the notification to you of the decision to
undertake any such changes. The above-stated terms shall also
apply if you should withdraw from your position at the company's
request, unless the company were to have just cause for
dismissal/discharge, in which case your Employment Contract and
the provisions of the Working Environment Act shall apply.
Should you wish professional assistance in connection with your
work to find new employment, the company will provide external
consultancy services and cover the costs thereof.
Kindly confirm our common understanding by returning the enclosed
copy, duly signed.
Yours sincerely
E. W. Sissener (signed)
President
Confirmed:
Oslo, October 9, 1989
Ingrid Wiik (signed)<PAGE>
Translation from Norwegian
APOTHEKERNES LABORATORIUM A.S.
Thor Kristiansen Oslo, October 5, 1989
President
Here
RE. EMPLOYMENT CONTRACT
As an addition to your terms of employment (Employment Contract
dated November 28, 1979 with subsequent amendments), the
following shall apply:
"In the event APOTHEKERNES LABORATORIUM A.S. were to undertake
organizational and/or appointment changes, or other significant
changes of your working conditions/sphere of responsibilities,
which you do not wish to accept, and consequently wish to
terminate your employment with the company, you shall be entitled
to receive salary and other benefits for a period of 18 months
counting from the time that said situation arose. It is
presupposed that you give due notice thereof, not later than 30
days following the notification to you of the decision to
undertake any such changes. The above-stated terms shall also
apply if you should withdraw from your position at the company's
request, unless the company were to have just cause for
dismissal/discharge, in which case your Employment Contract and
the provisions of the Working Environment Act shall apply.
Should you wish professional assistance in connection with your
work to find new employment, the company will provide external
consultancy services and cover the costs thereof.
Kindly confirm our common understanding by returning the enclosed
copy, duly signed.
Yours sincerely
E. W. Sissener (signed)
President
Confirmed:
Oslo, October 9, 1989
Thor Kristiansen (signed) <PAGE>
Translation from Norwegian
APOTHEKERNES LABORATORIUM A.S.
October 2, 1991
Dr. med. vet. Knut Moksnes
Tuengv. 24 Vinderen
0374 OSLO
OFFER OF EMPLOYMENT WITH APOTHEKERNES LABORATORIUM A.S.
With reference to the talks conducted between yourself and Mr. E.
W. Sissener, CEO/President, I have the pleasure of offering you
the post of Vice President Aquatic Animal Health. You will
report directly to the CEO/President and the terms of your
employment will be as follows:
1. Date of commencement to be agreed. The company wishes you
to take office as soon as possible, with due regard to the
termination of your current position. Latest date of
commencement: January 1, 1992.
2. Your annual salary will be NOK 525 000, and will be
considered for adjustment in accordance with corporate
guidelines.
3. A company car will be placed at your disposal in accordance
with guidelines in effect.
4. Your telephone subscription and a reasonable number of
tariff counts will be covered.
5. You will be enrolled in A.L.'s pension scheme with Vital, in
accordance with regulations currently in effect.
Information concerning current regulations is herein
enclosed.
6. You will be covered by the company's group life insurance
with Vital and travel insurance with Vesta, the premiums of
which will be covered by the company. See enclosed
information concerning these insurance schemes.
7. A.L. will cover your annual membership fee in the Norwegian
Association of Veterinaries, as well as your annual
subscription for a national newspaper.<PAGE>
<PAGE>
8. The normal working week at A.L. is 37.5 hours. Normal
working hours extend from 08.00 to 16.00, with 1/2 hour
lunch-break. Your post does not entitle to overtime pay.
9. In respect of your appointment, a mutual period of notice of
3 months shall apply, counting from the expiry of the
relevant calendar month. Any notice of termination shall be
given in writing.
10. In this appointment, you will be bound by a duty of
confidentiality, and we enclose herein a Declaration of
Confidentiality, which we request you to return, duly
signed.
11. In all other respects, reference is made to general company
regulations, to be found in the enclosed Personnel Manual.
Should the company decide to terminate the post of Vice President
Aquatic Animal Health, you will be offered another post with A.L.
at the level of vice president or director, and your salary will
be retained. In the alternative, the company may choose to
terminate your employment by means of payment of a remuneration
which in total corresponds to one annual salary, counting from
the date on which notice was given thereof.
We hope you will find the above-stated terms to your
satisfaction, and kindly request you to confirm your appointment
by returning the enclosed copy of this letter, duly signed.
Yours sincerely
APOTHEKERNES LABORATORIUM A.S.
Per Westborg (signed)
Vice President HR
The above-stated terms are hereby accepted.
October 2, 1991
Knut Moksnes (signed)
Enclosures<PAGE>
Exhibit 11
A.L. Pharma Inc.
Computation of Earnings (Loss) per Common Share
Primary and Fully Diluted
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
1994 1993(A) 1992(A)
Computation for Statement of Operations
Primary earnings (loss) per share:
<S> <C> <C> <C>
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (1,703) $ 10,129 $ 13,551
Discontinued operations, net of tax 4,809
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle (1,703) 10,129 18,360
Extraordinary item, net of tax (683)
Cumulative effect of change in accounting
principle 2,614
Net income (loss) $ (2,386) $ 10,129 $ 20,974
Average common shares outstanding 21,568,000 21,510,000 18,264,000
Earnings per common share - Primary
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (0.08) $ 0.47 $ 0.74
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle $ (0.08) $ 0.47 $ 1.01
Extraordinary item, net of tax $ (0.03) $ $
Cumulative effect of change in
accounting principle $ $ $ 0.14
Net income (loss) $ (0.11) $ 0.47 $ 1.15
Additional primary computation (B)
Average common shares outstanding 21,568,000 21,510,000 18,264,000
Dilutive effect of outstanding options
determined by treasury stock method 97,538 70,788 124,062
21,665,538 21,580,788 18,388,062
Earnings (loss) per common share - Primary
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (0.08) $ 0.47 $ 0.74<PAGE>
Income (loss) before extraordinary item
and cumulative effect of change in
accounting period $ (0.08) $ 0.47 $ 1.00
Extraordinary item, net of tax $ (0.03) $ $
Cumulative effect of change in accounting
principle $ $ $ 0.14
Net income (loss) $ (0.11) $ 0.47 $ 1.14<PAGE>
Exhibit 11
A.L. Pharma Inc.
Computation of Earnings (Loss) per Common Share (continued)
Primary and Fully Diluted
(Dollars in thousands, except for per share data)
Twelve Months Ended
December 31,
1994 1993 1992
Computation for Statement of Operations
Fully diluted earnings (loss) per share:
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (1,703) $ 10,129 $ 13,551
Additions:
Interest on convertible debentures,
net of tax 2,448
Amortization of deferred debenture costs,
net of tax 49
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (1,703) $ 10,129 $ 16,048
Discontinued operations, net of tax 4,809
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle (1,703) 10,129 20,857
Extraordinary item, net of tax (683)
Cumulative effect of change in accounting
principle 2,614
Net income (loss) $ (2,386) $ 10,129 $ 23,471
Average common shares outstanding 21,568,000 21,510,000 18,264,000
additions:
Assumed conversion of convertible
debentures as of beginning of period 3,180,067
Dilutive effect of outstanding options
determined by treasury stock method 97,538 70,788 124,062
21,665,538 21,580,788 21,568,129
Earnings (loss) per common share - Fully Diluted
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of change in accounting principle $ (0.08) $ 0.47 $ 0.74
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle $ (0.08) $ 0.47 $ 0.97
Extraordinary item, net of tax $ (0.03) $ $
Cumulative effect of change in accounting<PAGE>
principle $ $ $ 0.12
Net income (loss) $ (0.11) $ 0.47 $ 1.09
(A) Reflects the retroactive effect of the October 1994 merger, accounted for as a
pooling of interest, with A.L. Oslo.
(B) This calculation is submitted in accordance with Regulation S-K, Item 601(b)
(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15
because such calculation results in dilution of less than 3%.<PAGE>
</TABLE>
A.L. PHARMA INC.
SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 21
Jurisdiction
in which
Name Organized
United States:
A. L. Specialty Chemicals, Inc. Delaware
Barre Parent Corporation Delaware
Barre-National, Inc. Maryland
G. F. Reilly Company Delaware
ParMed Pharmaceuticals, Inc. Delaware
Biomed, Inc. Washington
NMC Laboratories, Inc. New York
Able Laboratories, Inc. New Jersey
Wade Jones Company, Inc. Arkansas
MikJan Corporation Arkansas
Foreign:
Apothekernes Laboratorium AS Norway
Norgesplaster Norway
A.L-Pharma A/S Denmark
A/S Dumex (Dumex, Ltd.) Denmark
Dumex AG Switzerland
Dumex B.V. Holland
Dumex Lakemedal AB Sweden
Dumex Limited United Kingdom
Oy Dumex AB Finland
P. T. Dumex Indonesia Indonesia
A/S Dumex Norway Norway<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
Registration Statements of A.L. Pharma, Inc. (formerly A. L.
Laboratories, Inc.) on Form S-8 (File Nos. 2-97830, 33-37516, 33-
14625, 33-28221 and 33-46860) of our report dated March 1, 1995,
on our audits of the financials statements and financial
statement schedule of A.L. Pharma, Inc. and Subsidiaries as of
December 31, 1994 and 1993, and for each of the three years in
the period ended December 31, 1994, which report is included on
page F-2 in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Parsippany, New Jersey
March 30, 1995<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993 DEC-31-1992
<PERIOD-END> DEC-31-1994 DEC-31-1993 DEC-31-1992
<CASH> 15,512 11,647 0
<SECURITIES> 0 0 0
<RECEIVABLES> 119,084 97,306 0
<ALLOWANCES> 0 0 0
<INVENTORY> 106,297 88,132 0
<CURRENT-ASSETS> 250,499 202,913 0
<PP&E> 303,370 250,624 0
<DEPRECIATION> 100,467 79,909 0
<TOTAL-ASSETS> 592,318 527,617 0
<CURRENT-LIABILITIES> 154,650 139,205 0
<BONDS> 0 0 0
<COMMON> 4,370 4,360 0
0 0 0
0 0 0
<OTHER-SE> 176,918 199,573 0
<TOTAL-LIABILITY-AND-EQUITY> 592,318 527,617 0
<SALES> 469,263 402,675 358,632
<TOTAL-REVENUES> 469,263 402,675 358,632
<CGS> 275,543 233,423 194,665
<TOTAL-COSTS> 275,543 233,423 194,665
<OTHER-EXPENSES> 177,742 139,038 128,658
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 15,355 14,996 18,534
<INCOME-PRETAX> 1,736 17,098 20,712
<INCOME-TAX> 3,439 6,969 7,161
<INCOME-CONTINUING> (1,703) 10,129 13,551
<DISCONTINUED> 0 0 4,809
<EXTRAORDINARY> (683) 0 0
<CHANGES> 0 0 2,614
<NET-INCOME> (2,386) 10,129 20,974
<EPS-PRIMARY> (.11) .47 1.15
<EPS-DILUTED> (.11) .47 1.09
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