EX-10.3 5 c79086exv10w3.txt AMEND #13 TO PRE-NEGOTIATION AGREEMENT DTD 7/31/03 EXHIBIT 10.3 THIRTEENTH AMENDMENT TO PRE-NEGOTIATION AGREEMENT THIS THIRTEENTH AMENDMENT TO PRE-NEGOTIATION AGREEMENT dated as of July 31, 2003 (this "Thirteenth Amendment"), by and among AKORN, INC., a Louisiana corporation ("Akorn"), AKORN (NEW JERSEY), INC., an Illinois corporation ("Akorn NJ") (Akorn and Akorn NJ being sometimes referred to herein individually as a "Borrower" and collectively as the "Borrowers"), and THE NORTHERN TRUST COMPANY, an Illinois banking corporation (the "Lender"); WITNESSETH: WHEREAS, the parties heretofore entered into the Pre-Negotiation Agreement dated as of September 20, 2002, as amended by the First Amendment dated as of October 18, 2002, the Second Amendment dated as of November 26, 2002, the Third Amendment dated as of December 30, 2002, the Fourth Amendment dated as of January 16, 2003, the Fifth Amendment dated as of January 31, 2003, the Sixth Amendment, dated as of February 14, 2003, the Seventh Amendment dated as of February 28, 2003, the Eighth Amendment dated as of March 14, 2003, the Ninth Amendment dated as of April 4, 2003, the Tenth Amendment dated as of May 1, 2003, the Eleventh Amendment dated as of May 9, 2003 and the Twelfth Amendment dated as of June 30, 2003 (the "Prior Agreement"); WHEREAS, the Borrowers have requested an amendment to Section 4.1 of the Prior Agreement; and WHEREAS, the Lender has agreed to the Borrowers' request, but only on the terms set forth herein; NOW, THEREFORE, in consideration of the premises and the covenants, agreements and acknowledgments contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: Section 1. Defined Terms. All capitalized terms used and not otherwise defined in this Thirteenth Amendment shall have the same meanings as in the Prior Agreement. Section 2. Amendments. 2.1 Section 1.1 of the Prior Agreement is hereby amended by replacing the definition of "Existing Events" with the following: "Existing Events" shall mean the Payment Default and the Events of Default arising under Section 8.1(e) of the Credit Agreement due to defaults by the Borrowers under (i) the Promissory Note dated as of December 20, 2001 made by Akorn in favor of NeoPharm, Inc., as a result of the Borrowers' failure to remove by June 30, 2003 all sanctions arising as a result of the 483 M Warning Letter issued by the FDA and (ii) the Convertible Bridge Loan and Warrant Agreement dated as of July 12, 2001, as amended, between Akorn and the John K. Kapoor Trust Dtd 9/20/89, which are described in the letter dated July 21, 2003 from the John K. Kapoor Trust Dtd 9/20/89 to Akorn. 2.2 Section 4.1 of the Prior Agreement is hereby amended to read as follows: 4.1 Forbearance Period. Subject to compliance by each Borrower with each of the terms and conditions of this Agreement, and without waiving the Existing Events, the Lender hereby agrees to forbear from enforcing its rights or remedies pursuant to the Loan Documents and applicable law (including, without limitation, to make a demand for payment as a result of the Payment Default) as a result of the Existing Events from the Agreement Closing Date until the earlier to occur of the following (as the case may be, the "Forbearance Termination Date"): (i) August 22, 2003 and (ii) the date on which a Borrowing Condition Failure occurs. Section 3. Pre-Negotiation Agreement and Documents to Remain In Effect; Confirmation of Obligations; References. Except as expressly modified and amended by this Thirteenth Amendment, the Prior Agreement shall remain in full force and effect as originally executed and delivered by the parties. In order to induce the Lender to enter into this Thirteenth Amendment, the Borrowers hereby (i) confirm and reaffirm all of their obligations under the Documents, as modified and amended as described above and under the Pre-Negotiation Agreement, as modified and amended as described above; (ii) acknowledge and agree that the Lender, by entering into this Thirteenth Amendment, does not waive any existing or future default or event of default under any of the Documents or the Prior Agreement, or any rights, powers or remedies under any of the Documents or the Pre-Negotiation Agreement; (iii) acknowledge and agree that the Lender has not heretofore waived any Borrowing Condition Failure, or any rights or remedies under any of the Documents or the Prior Agreement; and (iv) acknowledge that they do not have any defense, set-off or counterclaim to the payment or performance of any of their obligations under the Documents or the Prior Agreement, as amended hereby. All references to the Prior Agreement shall henceforth be deemed to refer to the Prior Agreement as modified by this Thirteenth Amendment and as hereafter modified by any amendment, modification or supplement thereto. Section 4. Confirmation of Certifications, Representations and Warranties. In order to induce the Lender to enter into this Thirteenth Amendment the Borrowers hereby certify, represent and warrant to the Lender that, except as otherwise disclosed to the Lender in writing prior to the date hereof, including in the Pre-Negotiation Agreement and in the Exhibits and Schedules attached thereto and/or in documents submitted to the Lender prior to the date hereof (including, but not limited to, any and all financial statements and reports, budgets, statements of cash flow and governmental reports and filings) (collectively referred to herein as "Disclosures"), all certifications, representations and warranties contained in the Documents and in the Pre-Negotiation Agreement and in all certificates heretofore delivered to the Lender are true and correct as of the date hereof in all material respects, and, subject to such Disclosures, all such certifications, representations and warranties are hereby remade and made to speak as of the date of this Thirteenth Amendment. Section 5. RELEASE. EACH BORROWER ON BEHALF OF ITSELF AND ITS AFFILIATES, SUBSIDIARIES, SUCCESSORS, ASSIGNS, PRINCIPALS, -2- SHAREHOLDERS, BENEFICIARIES, OFFICERS, MANAGERS, DIRECTORS, AGENTS, REPRESENTATIVES, ADVISORS, EMPLOYEES AND ATTORNEYS, HEREBY JOINTLY AND SEVERALLY RELEASES, WAIVES AND FOREVER DISCHARGES EACH OF THE LENDER AND ITS AFFILIATES, SUBSIDIARIES, SUCCESSORS, ASSIGNS, PRINCIPALS, SHAREHOLDERS, BENEFICIARIES, OFFICERS, MANAGERS, DIRECTORS, AGENTS, REPRESENTATIVES, ADVISORS, EMPLOYEES AND ATTORNEYS OF, FROM, AND WITH RESPECT TO ANY AND ALL MANNER OF ACTIONS, CAUSES OF ACTIONS, SUITS, DISPUTES, CLAIMS, COUNTERCLAIMS AND/OR LIABILITIES, CROSS CLAIMS, DEFENSES THAT ARE KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, PAST OR PRESENT, ASSERTED OR UNASSERTED, CONTINGENT OR LIQUIDATED, WHETHER OR NOT WELL FOUNDED IN FACT OR LAW, WHETHER IN CONTRACT, IN TORT OR OTHERWISE, AT LAW OR IN EQUITY, BASED UPON, RELATING TO OR ARISING OUT OF ANY AND ALL TRANSACTIONS, RELATIONSHIPS OR DEALINGS WITH OR LOANS MADE TO THE BORROWERS PURSUANT TO THE LOAN DOCUMENTS AND/OR THE PRIOR AGREEMENT PRIOR TO THE EFFECTIVENESS HEREOF. Section 6. Entire Agreement. This Thirteenth Amendment sets forth all of the covenants, promises, agreements, conditions and understandings of the parties relating to the subject matter of this Thirteenth Amendment, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Thirteenth Amendment other than as are herein set forth. Section 7. Successors. This Thirteenth Amendment shall inure to the benefit of and shall be binding upon the parties and their respective successors, assigns and legal representatives. Section 8. Severability. In the event any provision of this Thirteenth Amendment shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 9. Amendments, Changes and Modifications. This Thirteenth Amendment may be amended, changed, modified, altered or terminated only by a written instrument executed by all of the parties hereto: Section 10. Construction. (a) The words "hereof," "herein," and "hereunder," and other words of a similar import refer to this Thirteenth Amendment as a whole and not to the individual Sections in which such terms are used. (b) References to Sections and other subdivisions of this Thirteenth Amendment are to the designated Sections and other subdivisions of this Thirteenth Amendment as originally executed. (c) The headings of this Thirteenth Amendment are for convenience only and shall not define or limit the provisions hereof. -3- (d) Where the context so requires, words used in singular shall include the plural and vice versa, and words of one gender shall include all other genders. (e) Each party to this Thirteenth Amendment and legal counsel for each party have participated in the drafting of this Thirteenth Amendment, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Thirteenth Amendment. Section 11. Execution of Counterparts. This Thirteenth Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 12. Governing Law. This Thirteenth Amendment shall be governed by and be construed and enforced in accordance with the laws of the State of Illinois. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -4- IN WITNESS WHEREOF, the parties hereto have caused this Thirteenth Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above. Address for Notices: AKORN, INC. 2500 Millbrook Drive Buffalo Grove, IL 60089 Attention: Chief Financial Officer By /s/ Ben Pothast ------------------------ Telecopier No.: (847) 279-6191 Name: Ben Pothast Telephone No.: (847) 279-6100 Title: C.F.O AKORN (NEW JERSEY), INC. By /s/ Ben Pothast ------------------------ Name: Ben Pothast Title: C.F.O. 50 South LaSalle Street THE NORTHERN TRUST COMPANY Chicago, Illinois 60675 Attention: Olga Georgiev Telecopier No.: (312) 630-6105 Telephone No.: (312) 444-2438 By /s/ Olga Georgiev ------------------------ Name: Olga Georgiev With a copy to Title: White & Case LLP 200 S. Biscayne Blvd., Suite 4900 Miami, FL 33131 Attention: John K. Cunningham, Esq. -5-