Document:

EXHIBIT 10

EXHIBIT 10.2

EMPLOYMENT AGREEMENT 

THIS EMPLOYMENT AGREEMENT ("Agreement") is made effective as of February 1, 2009, between Oxygen Biotherapeutics, Inc., a Delaware corporation (hereinafter sometimes referred to as "OXBO" or the "Corporation") and Christian (AkA "Chris") J. Stern ("Stern"). 

1. TERM OF EMPLOYMENT. OXBO hereby employs Stern and Stern hereby accepts employment with OXBO for the period beginning on February 1, 2009 and ending on January 31, 2010; thereafter, this Agreement and Stern's employment hereunder shall be automatically renewed on a yearly basis unless canceled or renegotiated. As used herein, the phrase "Employment Term" refers to the entire period of employment of Stern by OXBO hereunder, whether for the period provided above, or whether terminated earlier as hereinafter provided, or extended either by operation of this paragraph or by mutual agreement of OXBO and Stern. In the event OXBO wishes to cancel this agreement as of January 31, 2010, or at the end of any annual renewal period thereafter, it shall give 120 days' prior written notice to Stern. 

2. DUTIES OF STERN. 

2.1 General Duties. Stern shall serve as Chairman of the Board of Directors, and Chief Executive Officer of OXBO. 

2.2 Specific Duties. Stern's responsibilities shall be to act as the Chief Executive Officer of the Corporation with overall responsibility for all of the day to day activities of the Corporation. Subject to election by the OXBO shareholders, Stern shall serve as Chairman of the Board of Directors of OXBO. Stern shall have the duties and responsibilities customarily held or assigned to a Chief Executive Officer, including without limitation overall responsibility for corporate finance, public relations, developing and maintaining relationship with joint venture partners and contacts important to OXBO's business, and overseeing all marketing and product development functions. 

2.3 Work Base. Stern's work base shall be Raleigh, North Carolina. 

2.4 Devotion of Time to OXBO's Business. Stern shall devote whatever time, ability and attention to the business of OXBO during the term of this Agreement as is reasonably required to fulfill his responsibilities. 

2.5 Certain non-competing activities. OXBO acknowledges that Stern has certain other non-competing activities with his own consulting firm where he consults to clients and teaches for an international business school. Also, Stern is explicitly allowed to serve on board of director's of other non-competing companies. As long as these activities do not interfere with Stern's duties for OXBO, OXBO acknowledges and agrees to those activities. 

3. COMPENSATION OF STERN. 

3.1 Change of Contracts. The consulting agreement with Stern's company IFEM Management Consultants, Inc., and the board membership agreement with Stern will be replaced with this agreement. 

3.2 Base Salary. As compensation for services hereunder, OXBO shall pay Stern a base annual salary of $300,000, payable $12,500 bi-weekly. 

3.3 Stock Compensation. Additionally, Stern shall receive for the duration of this agreement 14,000 shares of common stock per month, issued to Stern, or upon Stern's election to Stern's company IFEM Management Consultants, Inc., every month. 

3.4 Additional Compensation. 

(a)
Annual Bonus. Stern shall be eligible for a cash bonus payable at year's end starting December 31, 2009. The bonus shall be based on percent achievement of employer's annual goals and milestones. 100% achievement shall result in a bonus of 50% of annual salary. There is no cap on the bonus for achievements exceeding 100% of goals; an achievement of 200% of goals for example would result in a bonus of 100% of annual salary. 

(b)
Compensation Review. The Board of Directors may from time to time review the compensation of Stern based upon all relevant facts and may increase (but not decrease) said compensation in the discretion of the Board. Additional compensation to be awarded to Stern may be in the form of cash, stock options or other consideration deemed appropriate by the Board. 

3.5 Vacation Pay. Stern shall be entitled to vacation time and pay of four weeks per year for each year during the term of this agreement. Time or times for such vacation shall be proposed by Stern and approved in advance by OXBO. 

3.6 Paid Sick Leave. Stern shall be entitled to such sick leave time and pay in accordance with the then prevailing policies of Employer. 

4. STERN BENEFITS. 

4.1 Use of Automobile. OXBO shall pay all expenses of one automobile to be used in part by Stern in the course of his employment, at a flat expense of Eight Hundred Dollars ($800.00) per month during the term hereof. 

4.2 Medical Dental Insurance Coverage. OXBO shall provide Stern with medical and dental insurance coverage on the same basis as provided for other senior management employees of OXBO. Stern, at his sole discretion, may elect to continue his own medical insurance and OXBO shall compensate Stern with Five Hundred Dollars ($500) in cash for the equivalent of the costs. 

4.3 401(k) Plan. OXBO shall continue to implement and Stern shall be entitled to participate, to the maximum extent allowed by law, in a retirement plan under Internal Revenue Code Section 401 (k). 

4.4 Stock Options and Plans. Stern shall participate in the 1999 Stock Plan and shall be eligible to participate in other OXBO stock option and related plans as determined by the Board of Directors. As of February 1, 2009, Stern has been granted three-year options on 5,000,000 shares of common stock, all such options being currently vested. Stern shall be entitled to cashless exercise of his options at any time. All five million options previously granted will be extended, or reissued to be ten-year options. Stern shall be entitled to participate in additional grants of options on terms and conditions as are specified by the Board of Directors, consistent with the 1999 Stock Plan, or amendments thereto. 

5. BUSINESS EXPENSES. 

5.1 Entertainment Expenses. The services required by OXBO require Stern to incur travel, entertainment, and other expenses on behalf of OXBO. OXBO will promptly reimburse Stern for all reasonable business expenses incurred by Stern in promoting the business of OXBO, including expenditures for entertainment, gifts, and travel. 

5.2 Secretarial Expenses. OXBO will promptly reimburse Stern's company IFEM Management Consultants, Inc. with a payment of $2,500 per month to cover for secretarial expenses in connection with running the Chairman's office of OXBO. 

5.3 Other Business Expenses. OXBO will promptly reimburse Stern for all other business expenses reasonably incurred by Stern in connection with the business of OXBO. 

6. TERMINATION OF EMPLOYMENT. 

6.1 Resignation, Retirement, Death or Disability. Stern's employment hereunder shall be terminated at any time by Stern's resignation or by Stern's retirement at or after attainment of age 70 ("Retirement"), death or his inability to perform his duties under this Agreement, with or without reasonable accommodation, because of a physical or mental illness ("Disability"). 

6.2 Termination for Cause. Stern's employment hereunder may be terminated for Cause. "Cause" shall only mean willful misconduct, conflict of interest or breach of fiduciary duty, or a material breach of any provision of this Agreement. 

6.3 Expiration. Stern's employment hereunder shall be terminated upon expiration of the Employment Term as provided in Section 1. 

6.4 Resignation for Good Reason. Stern may regard Stern's employment as being constructively terminated and may, therefore, resign within ninety (90) days of Stern's discovery of any one of the following events which will constitute "Good Reason" for such resignation: 

(a)
Without Stern's express written consent, the assignment to Stern of any duties materially inconsistent with Stern's current position, duties, responsibilities and status with OXBO, or any subsequent removal of Stern from, or any failure to re-elect Stern to any such position; 

(b)
Without Stern's express written consent, the termination and/or material reduction in Stern's facilities (including office space and general location) and staff reporting and available to Stern; 

(c)
A material reduction or diminution by the Corporation of Stem's compensation. For purposes of this provision, a "material" reduction or diminution shall be deemed to occur if Stern's overall compensation package is reduced by 5% or more from its then-current level. 

(d) 
A failure by Corporation to maintain any of the Stern benefits to which Stern was entitled at a level substantially equal to or greater than the value of those Stern benefits in effect prior to such reduction in benefits, through the continuation of the same or substantially similar plans, programs and policies; or the taking of any action by OXBO or its affiliates which would materially affect Stern's participation in or reduce Stern's benefits under any such plans, programs or policies, or deprive Stern of any material fringe benefits enjoyed by Stern; 

(e)
OXBO or any affiliate requiring Stern to relocate or to be based anywhere other than where Stern was based for the one year period prior to such relocation; except for required travel on OXBO's or affiliate's business to an extent substantially consistent with Stern's business travel obligations; 

(f)
Any purported termination of Stern's employment by OXBO or the Board which is not effected pursuant to the requirements of this Section 6 with respect to Death, Retirement, Disability or Termination for Cause; and 

(g)
Receipt of notice by Stern that the Agreement will not be renewed pursuant to Section 1. 

(h) The occurrence of any of the following: 

(1) 
A merger or consolidation where OXBO is not the consolidated or surviving entity; 

(2) 
A sale or transfer of all or substantially all of the assets of OXBO; 

(3) Voluntary or involuntary dissolution of OXBO; or 

(4) 
A change in control of OXBO. For purposes of this provision, a change in control shall be defined to include: 

(i)
The acquisition by any person, entity or group of affiliated persons or entities of twenty five percent (25%) or more of the issued and outstanding stock of the Company; or 

(ii)
Any transaction or occurrence which results in a majority of the then-current Directors no longer, after such transaction or occurrence, constituting a majority of the entire Board of Directors. 

6.5 Damages for Breach of Agreement. In the event of the breach of this Agreement by either OXBO or Stern resulting in damages to the other party may recover from the party breaching the Agreement any and all damages that may be sustained. 

7. PAYMENTS TO STERN UPON TERMINATION. 

7.1 Death, Disability or Retirement. In the event of Stern's Retirement, Death or Disability, all benefits generally available to OXBO's Sterns as of the date of such an event shall be payable to Stern or Stern's estate without reduction, in accordance with the terms of any plan, contract, understanding or arrangement forming the basis for such payment. Stern shall be entitled to such other payments as might arise from any other plan, contract, understanding or arrangement between Stern and OXBO at the time of any such event. 

7.2 Termination as a Board Member, with or without Cause. In the event Stern is terminated as a board member, with or without cause, he shall receive, in addition to all other severance and termination payments, a payment of 100,000 common shares and the sum of $200,000 in cash payable immediately before termination. 

7.3 Termination for Cause or Resignation without Good Reason. In the event Stern is terminated by OXBO for Cause or Stem resigns for other than a Good Reason, neither OXBO nor an affiliate shall have any further obligation to Stern under this Agreement or otherwise, except to the extent provided in any other plan, contract, understanding or arrangement, or Section 8, or as may be required by law. Any bonuses earned under Section 3(a) hereof shall immediately be paid in full. 

7.4 Termination Without Cause or Resignation For Good Reason. Subject to other provisions in this Section 7 to the contrary, upon the occurrence of a termination without Cause, which shall include but not be limited to, a Resignation for Good Reason as defined in Section 6.4, OXBO shall: 

(a) 
Pay to Stern, or in the event of Stern's subsequent death, to Stern's surviving spouse, or if none, to Stern's estate, as severance pay or liquidated damages, or both, a sum equal to one year of base salary, payable under this Agreement pursuant to Section 3 immediately prior to such termination. 

(b) 
Pay to Stern the economic value of replacement cost for substantially identical benefits during a period of one year for those benefits to which the Stern is entitled to immediately prior to the termination. 

(c)
Notwithstanding any provision in the 1999 Stock Plan or amendments thereto, or in any other plan which may be adopted by the Corporation with respect to stock options, all options granted to or owned by Stern shall immediately become exercisable for cashless exercise. 

(d)
Any bonuses earned under Section 3(a) hereof shall immediately be paid in full. 

8. COVENANT NOT TO COMPETE. 

8.1 Scope of Covenant. Stern agrees that he shall not, either directly or indirectly, carry on, participate, or engage in, either as Stern, employer, principal, agent, consultant, owner, part-owner, co-venturer, officer, director, shareholder, partner, manager, operator, financier, employee, salesman, or in any other individual or representative or participating capacity, any business which develops or markets oxygen biotherapeutics for a period of two (2) years from the date of separation from OXBO in the area of the Continental United States. 

8.2 Interpretation. Should any portion or provision of this covenant not to compete be found by a court of competent jurisdiction to be overly broad, it is the express intent of the parties hereto that such provisions shall nevertheless be enforced to the maximum extent permitted by law and shall govern and apply to as much geographical area and/or time duration, not to exceed that which is set forth above, as possible. This agreement shall not be interpreted for or against either party on the ground that such party drafted the agreement, or any provision thereof. 

9. CONFIDENTIALITY PROVISION. 

9.1 Proprietary Information Defined. The following terms shall have the meanings respectively set forth for them below: 

(a)
"Proprietary Information" shall mean any and all inventions, research, designs, products, processes, formulae, know-how, customer lists, customer requirements information, trade secrets and/or other non-public information or data comprising or related to the business of Corporation as the same is carried on from time to time; 

(b)
"Proprietary Rights" shall mean all trademarks, patents, copyrights, rights of creators and/or similar rights and privileges, whether domestic or foreign, statutory or at common law, filed or not filed, perfected or unperfected, or otherwise, relating to any Proprietary Information; 

(c)
"Proprietary Proceeds" shall mean all proceeds and products of any Proprietary Information and/or Proprietary Rights; and 

(d)
"Proprietary Assets" shall mean Proprietary Information and/or Proprietary Rights and/or Proprietary Proceeds, considered collectively or separately. 

(e)
"Proprietary Information" and "Proprietary Assets" shall not include any information or other item that is known to the public or known in the industry in which OXBO is engaged, or which subsequently becomes publicly known by lawful means. 

9.2 Acknowledgement of OXBO's Proprietary Information. Stern agrees and acknowledges that any and all Proprietary Information (together with all Proprietary Rights and/or Proprietary Proceeds relating thereto) wholly or partially created, developed or further developed, perfected and/or completed by Stern, acting alone or jointly with others at any time during Stern's employment with OXBO, shall immediately upon creation, completion and/or development become or have become, and shall at all times thereafter remain, the sole and exclusive property of OXBO. 

9.3 OXBO's Property. Stern specifically agrees and acknowledges that (a) any and all Proprietary Assets, however, whenever and from whomever acquired by OXBO, are and shall at all times remain the sole and exclusive property of OXBO, (b) Stern shall not use, possess, disclose, transfer and/or otherwise deal with any such Proprietary Assets at any time during his employment with OXBO other than specifically within the scope of his employment and in furtherance of the business and affairs of OXBO, and (c) Stern shall not use, possess, disclose, transfer and/or otherwise deal with any Proprietary Assets at any time after the termination of his employment with OXBO under any circumstances whatsoever. 

9.4 Stern's Duties. Stern agrees that he shall, both throughout the term of his employment with OXBO and at any and all times following the termination thereof, execute and deliver all such further instruments and documents, and do and perform all such further acts and things, as may be necessary or helpful and/or as may be reasonably requested by OXBO in furtherance of the purposes and intent of this Agreement. By way of illustration and not by way of limitation of the foregoing, Stern specifically agrees that he shall: 

(a)
Immediately communicate and thoroughly describe to OXBO in writing any and all such Proprietary Information as is described in Section 9.1 above; 

(b)
Promptly execute and deliver all such instruments or agreements of assignment and/or transfer as OXBO may from time to time request to carry out the purposes and intent of Section 9.1 above; 

(c)
Assist OXBO, at such times and in such manner as OXBO may request, in connection with OXBO's efforts to secure, apply for, renew or otherwise perfect Proprietary Rights with respect to any and all Proprietary Information; and 

(d)
Upon termination of his employment with OXBO, immediately deliver to OXBO any and all written recorded or other physical evidence of any and all Proprietary Assets in his possession or under his control; 

PROVIDED, that in consideration of the foregoing, OXBO agrees that all reasonable costs and expenses incurred by Stern, including reasonable compensation for his time in complying with the provisions of this Section 9 shall be for OXBO's account. 

9.5 Disclosure of Information. Stern will not, during the employment term or after, disclose or use any Proprietary Information or permit disclosure to any person, firm, corporation, association or other entity if such disclosure would be detrimental to OXBO. 

9.6 Survival. It is specifically understood and agreed by both such parties that this Agreement shall survive Stern's employment with OXBO and/or the making and/or termination of any contract or agreement with respect thereto. 

10. GENERAL PROVISIONS. 

10.1 Notices. Any notices to be given hereunder by each party to the other may be effected by personal delivery in writing or by mail registered or certified, postage prepaid with return receipt requested. Notices delivered personally shall be deemed communicated as of actual receipt; mailed notices shall be deemed communicated as of two (2) days after mailing. 

10.2 Violation of Other Agreements. OXBO hereby warrants to Stern that the execution of this Agreement will not violate any outstanding agreements or covenants to which OXBO is a party. Further, OXBO hereby warrants that the execution of this Agreement and the performance of its terms hereunder do not violate any provisions of the By-Laws of OXBO. 

10.3 Applicable Law. This Agreement shall be construed under the laws of the State of California and may not be altered or modified except by an agreement in writing, signed by both parties. 

10.4 Arbitration. Any dispute, controversy or claim arising out of or in respect to this Agreement (or its validity, interpretation or enforcement), the employment relationship, the termination of the employment relationship or the subject matter hereof shall at the request of either party be submitted to and settled by arbitration conducted before a single arbitrator in Orange County, California in accordance with the Employment Dispute Arbitration Rules of the American Arbitration Association. The issue of arbitrability shall be governed by the Federal Arbitration Act (9 U.S.C. Sections 1-16). The arbitrator in such action shall not be authorized to change or modify any provision of this Agreement. Judgement upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. Arbitration shall be the exclusive remedy of Stern and OXBO and the award of the arbitrator shall be final and binding upon the parties. 

10.5 Entire Agreement. This Agreement supersedes any and all other or previous agreements, either oral or in writing, between the parties hereto with respect to the employment of Stern by OXBO and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever. This Agreement shall not supersede, affect or amend the 1999 Stock Plan (or amendments thereto), or any other stock option or similar plans adopted by OXBO, or any other Stern benefit plan in effect during the Employment Term; provided, however, that, should any provision of this Agreement contradict or be inconsistent with any provision of any stock option Plan, or any amendment thereto, or with the terms of any other Stern benefit plan, the terms of this Agreement shall govern. 

10.6 Partial Invalidity. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. 

10.7 Merger or Consolidation. OXBO hereby agrees that it shall not merge or consolidate into or with or sell substantially all its assets to any firm, entity, company or person until such other firm, entity, company or person expressly agrees, in writing, to assume and discharge the duties and obligations of OXBO under this Agreement. This Agreement shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives. 

10.8 Amendments and Waivers. This Agreement shall not be varied, altered, waived, modified, changed or in any way amended in any of its parts except by an instrument in writing, executed by the parties hereto, or by their legal representatives. A waiver by either party of any of the terms of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future or of any subsequent breach thereof. 

10.9 Directors and Officers Liability Insurance. The Corporation shall purchase and maintain in effect Directors and Officers Liability insurance, naming Stern as an insured, in an amount not less than $5,000,000, for the Employment Term. Said Directors and Officers Liability insurance shall provide for coverage for Stern, in the event Stern is terminated, dies, resigns or retires, for any post-termination claims made against Stern that arose during the period Stern served as a director, Stern and/or officer of OXBO. 

Executed at Costa Mesa, California. 
EMPLOYER: 

Oxygen Biotherapeutics, Inc. 

Dated: By: ______________________________
Richard M. Kiral, President and COO 

 

Stern: 

Dated: ______________________________
Chris J. Stern:ex10-1.htm

Exhibit 10.1

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of April 23, 2010

 

by and among

 

ACETO CORPORATION, ACETO AGRICULTURAL CHEMICALS CORPORATION,

CDC PRODUCTS CORPORATION,

ACCI REALTY CORP., ACETO PHARMA CORP.,

ARSYNCO INC. AND ACETO REALTY LLC

 

and

 

JPMORGAN CHASE BANK, N.A.

 

  

  

  

 

TABLE OF CONTENTS

	  	  	  
	
ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS

	
5

	  	  
	  	
SECTION 1.01 Definitions

	
5

	  	  	  
	  	
SECTION 1.02 Terms Generally

	
17

	  	  	  
	
ARTICLE II. LOANS

	
18

	  	  
	  	
SECTION 2.01 Revolving Credit Loans

	
18

	  	  	  
	  	
SECTION 2.02 Revolving Credit Note

	
19

	  	  	  
	  	
SECTION 2.03 Letters of Credit

	
19

	  	  	  
	
ARTICLE III.  PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT; FEES AND PAYMENTS

	
21

	  	  
	  	
SECTION 3.01 Interest Rate; Continuation and Conversion of  Loans

	
21

	  	  	  	  
	  	
SECTION 3.02 Use of Proceeds

	
23

	  	  	  
	  	
SECTION 3.03 Prepayments

	
23

	  	  	  
	  	
SECTION 3.04 Fees

	
23

	  	  	  
	  	
SECTION 3.05 Inability to Determine Interest Rate

	
24

	  	  	  
	  	
SECTION 3.06 Illegality

	
24

	  	  	  
	  	
SECTION 3.07 Increased Costs

	
24

	  	  	  
	  	
SECTION 3.08 Indemnity

	
26

	  	  	  
	  	
SECTION 3.09 Change of Lending Office

	
26

	  	  	  
	  	
SECTION 3.10 Taxes

	
26

	  	  	  
	  	
SECTION 3.11 Payments

	
27

	  	  	  
	  	
SECTION 3.12 Disbursements of Loans

	
27

	  	  
	
ARTICLE IV. REPRESENTATIONS AND WARRANTIES

	
27

	  	  	  
	  	
SECTION 4.01 Organization, Powers

	
27

	  	  	  
	  	
SECTION 4.02 Authorization of Borrowing, Enforceable Obligations

	
28

	  	  	  
	  	
SECTION 4.03 Financial Conditions

	
28

	  	  	  
	  	
SECTION 4.04 Taxes

	
29

	  	  	  
	  	
SECTION 4.05 Title to Properties

	
29

	  	  	  
	  	
SECTION 4.06 Litigation

	
29

 

 

  

i

  

 

	  	
SECTIN 4.07 Agreements

	
29

	  	  	  
	  	
SECTION 4.08 Compliance with ERISA

	
29

	  	  	  
	  	
SECTION 4.09 Federal Reserve Regulations; Use of Proceeds

	
30

	  	  	  
	  	
SECTION 4.10 Approvals

	
30

	  	  	  
	  	
SECTION 4.11 Subsidiaries

	
30

	  	  	  
	  	
SECTION 4.12 Hazardous Materials

	
30

	  	  	  
	  	
SECTION 4.13 Investment Company Act

	
30

	  	  	  
	  	
SECTION 4.14 Pledge Agreements

	
31

	  	  	  
	  	
SECTION 4.15 No Default

	
31

	  	  	  
	  	
SECTION 4.16 Material Contracts

	
31

	  	  	  
	  	
SECTION 4.17 Permits and Licenses

	
31

	  	  	  
	  	
SECTION 4.18 Compliance with Law

	
31

	  	  	  
	  	
SECTION 4.19 Disclosure

	
31

	  	  	  
	
ARTICLE V.  CONDITIONS OF LENDING

	
31

	  	  
	  	
SECTION 5.01 Conditions to Initial Extension

	
31

	  	  	  
	  	
SECTION 5.02 Conditions to All Extension of Credit

	
33

	  	  	  
	
ARTICLE VI. AFFIRMATIVE COVENANTS

	
34

	  	  
	  	
SECTION 6.01 Existence, Properties, Insurance

	
34

	  	  	  
	  	
SECTION 6.02 Payment of Indebtedness and Taxes

	
35

	  	  	  
	  	
SECTION 6.03 Financial Statements, Reports, etc.

	
35

	  	  	  
	  	
SECTION 6.04 Books and Records; Access to Premises

	
36

	  	  	  
	  	
SECTION 6.05 Notice of Adverse Change

	
37

	  	  	  
	  	
SECTION 6.06 Notice of Default

	
37

	  	  	  
	  	
SECTION 6.07 Notice of Litigation

	
37

	  	  	  
	  	
SECTION 6.08 Notice of Default in Other Agreements

	
37

	  	  	  
	  	
SECTION 6.09 Notice of ERISA Event

	
37

	  	  	  
	  	
SECTION 6.10 Notice of Environmental Law Violations

	
38

	  	  	  
	  	
SECTION 6.11 Notice Regarding Material Contracts

	
38

	  	  	  
	  	
SECTION 6.12 Compliance with Applicable Laws

	
38

	  	  	  
	  	
SECTION 6.13 Subsidiaries

	
38

	  	  	  
	  	
SECTION 6.14

	
39

 

  

ii

  

 

	  	  	  
	
ARTICLE VII.  NEGATIVE COVENANTS

	
39

	  	  
	  	
SECTION 7.01 Liens

	
39

	  	  	  
	  	
SECTION 7.02 Indebtedness

	
40

	  	  	  
	  	
SECTION 7.03 Guaranties

	
42

	  	  	  
	  	
SECTION 7.04 Sale of Assets

	
42

	  	  	  
	  	
SECTION 7.05 Sale of Receivables

	
42

	  	  	  
	  	
SECTION 7.06 Loans and Investments

	
43

	  	  	  
	  	
SECTION 7.07 Nature of Business

	
43

	  	  	  
	  	
SECTION 7.08 Sale of Leaseback

	
43

	  	  	  
	  	
SECTION 7.09 Federal Reserve Regulations

	
43

	  	  	  
	  	
SECTION 7.10 Accounting Policies and Procedures

	
43

	  	  	  
	  	
SECTION 7.11 Hazardous Materials

	
43

	  	  	  
	  	
SECTION 7.12 Limitations on Fundamental Changes

	
43

	  	  	  
	  	
SECTION 7.13 Financial Condition Covenants

	
44

	  	  	  
	  	
SECTION 7.14 Dividends

	
44

	  	  	  
	  	
SECTION 7.15 Transactions with Affiliates

	
45

	  	  	  
	  	
SECTION 7.16 Impairment of Security Interest

	
45

	  	  	  
	  	
SECTION 7.17 Governmental Regulations

	
45

	  	  	  
	
ARTICLE VIII. EVENTS OF DEFAULT

	
45

	  	  
	  	
SECTION 8.01

	
45

	  	  	  
	
ARTICLE IX. MISCELLANEOUS

	
48

	  	  
	  	
SECTION 9.01 Notices

	
48

	  	  	  
	  	
SECTION 9.02 Effectiveness; Survival

	
49

	  	  	  
	  	
SECTION 9.03 Expenses

	
49

	  	  	  
	  	
SECTION 9.04 Successors and Assigns; Participations

	
49

	  	  	  
	  	
SECTION 9.05 No Waiver; Cumulative Remedies

	
50

	  	  	  
	  	
SECTION 9.06 APPLICABLE LAW

	
50

	  	  	  
	  	
SECTION 9.07 SUBMISSIONS TO JURISDICTION

	
50

	  	  	  
	  	
SECTION 9.08 Waiver of Special Damages

	
51

	  	  	  
	  	
SECTION 9.09 Jury Waiver

	
51

	  	  	  
	  	
SECTION 9.10 Reinstatement; Certain Payments

	
51

	  	  	  
	  	
SECTION 9.11 Severability

	
51

 

  

iii

  

 

	  	
SECTION 9.12 Right of Setoff

	
51

	  	  	  
	  	
SECTION 9.13 Confidentiality

	
52

	  	  	  
	  	
SECTION 9.14 Headings

	
52

	  	  	  
	  	
SECTION 9.15 Construction

	
52

	  	  	  
	  	
SECTION 9.16 JOINT AND SEVERAL OBLIGATIONS

	
52

	  	  	  
	  	
SECTION 9.17 Counterparts

	
54

 

SCHEDULES

	  	  	  
	
Schedule I

	
-

	
Subsidiaries

	
Schedule II

	
-

	
Existing Liens

	
Schedule III

	
-

	
Existing Indebtedness

	
Schedule IV

	
-

	
Existing Guarantees

	
Schedule V

	
-

	
Material Contracts

	
Schedule VI

	
-

	
Environmental Matters

	
Schedule VII

	
-

	
Litigation

 

EXHIBITS

	  	  	  
	
Exhibit A

	
-

	
Form of Amended and Restated Revolving Credit Note

	
Exhibit B

	
-

	
Form of Reaffirmation Agreement

	
Exhibit C

	
-

	
Form of Opinion of Counsel

 

  

iv

  

 

                AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 23, 2010, by and among ACETO CORPORATION, a New York corporation, ACETO AGRICULTURAL CHEMICALS CORPORATION, a New York corporation, CDC PRODUCTS CORPORATION, a New York corporation, ACETO PHARMA CORP., a Delaware corporation, ACCI REALTY CORP., a New York corporation, ARSYNCO INC., a New Jersey corporation, and ACETO REALTY LLC, a New York limited liability company, jointly and severally, (each a “Company” and, collectively, the “Companies”), and JPMORGAN CHASE BANK, N.A., a national banking association (the “Lender”).

 

A.       The Lender and the Companies (other than Aceto Realty LLC) are parties to a Credit Agreement dated as of May 10, 2002 (as amended prior to the date hereof, the “Original Agreement”).

 

B.    The Lender and the Companies desire to amend and restate the Original Agreement and to join Aceto Realty LLC as a party thereto.

 

NOW  THEREFORE,  the parties hereto agree to amend and restate the Original Agreement in its entirety as follows:

 

RECITALS

 

The Companies have requested the Lender to extend credit from time to time and the Lender is willing to extend such credit to the Companies, subject to the terms and conditions hereinafter set forth.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

 

SECTION 1.01.    ­Definitions.  As used herein, the following words and terms shall have the following meanings:

 

“Aceto” shall mean Aceto Corporation, a New York corporation.

 

“Adjusted Libor Loan” shall mean Loans at such time as they are made and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.

 

“Adjusted One Month LIBOR Rate” means, with respect to a CB Floating Rate Loan for any day, the sum of (i) 2.50% per annum plus (ii) the quotient of (a) the interest rate determined by the Lender by reference to the Page to be the rate at approximately 11:00 a.m. London time, on such date or, if such date is not a Business Day, on the immediately preceding Business Day for dollar deposits with a maturity equal to one (1) month, multiplied by (b) Statutory Reserve Rate applicable to dollar deposits in the London interbank market with a maturity equal to one (1) month.

 

  

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“Affiliate” shall mean with respect to a specified Person, another Person which, directly or indirectly, controls or is controlled by or is under common control with such specified Person.  For the purpose of this definition, “control” of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management or policies of such Person whether through the ownership of voting securities, by contract or otherwise; provided that, in any event, any Person who owns directly or indirectly 20% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 20% or more of the partnership or other ownership interest of any Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.

 

“Aggregate Letters of Credit Outstanding” shall mean, at a particular time, the sum of (a) the aggregate maximum stated amount at such time which is available or available in the future to be drawn under all outstanding Letters of Credit and (b) the aggregate amount of all payments made by the Lender under any Letter of Credit that has not been reimbursed by any Company at such time.

 

“Aggregate Outstandings” shall mean, at a particular time, the sum of (a) the Aggregate Letters of Credit Outstandings at such time and (b) the aggregate outstanding principal amount of all Revolving Credit Loans at such time.

 

“Agreement” shall mean this Credit Agreement dated as of April 23, 2010, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time.

 

 “Amended and Restated Revolving Credit Note” shall have the meaning set forth in Section 2.02.

 

 “Borrowing Date” shall mean, with respect to any Loan, the date on which such Loan is disbursed to the Companies.

 

"Business Day" shall mean any day not a Saturday, Sunday or legal holiday, on which banks in New York City are open for business; provided, however, that when used in connection with an Adjusted Libor Loan the term "Business Day" shall exclude any day on which the Bank is not open for dealings in dollar deposits in the London interbank eurodollar market.

 

“Capital Expenditures” shall mean additions to property and equipment of Aceto and its Subsidiaries which, in conformity with Generally Accepted Accounting Principles, are included as “additions to property, plant or equipment” or similar items which would be reflected in the consolidated statement of cash flow of Aceto and its Subsidiaries, including without limitation, property and equipment which are the subject of Capital Leases.

 

“Capital Lease” shall mean any lease the obligations of which are required to be capitalized on the balance sheet of a Person in accordance with Generally Accepted Accounting Principles.

 

“Carlstadt Real Property” shall mean the real property of Arsynco, Inc. located at 13th Street, Carlstadt, New Jersey 07072.

 

  

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“Cash Collateral” shall mean the pledge and deposit by the Companies with the Lender, as collateral for the Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Lender.

 

“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate shall, on any day, not be less than the Adjusted One Month LIBOR Rate.  The CB Floating Rate is a variable rate and any change in the CB Floating Rate due to any change in the Prime Rate or the Adjusted One Month LIBOR Rate is effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

 

“CB Floating Rate Loans” shall mean Loans at such as they are being made and/or maintained at a rate of interest based on the CB Floating Rate.

 

“Change of Control” shall mean any event which results in (i) any Person, or two or more Persons acting in concert, acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of securities of Aceto (or other securities convertible into such securities) representing 30% or more of the combined voting power of all securities of Aceto entitled to vote in the election of directors; or (ii) during any period of up to 12 consecutive months, individuals who at the beginning of such 12-month period were directors of Aceto, ceasing for any reason to constitute a majority of the Board of Directors of Aceto; or (iii) any Person, or two or more Persons acting in concert, acquiring by contract or otherwise, or entering into a contract or arrangement which upon consummation will results in its or their acquisition of, or control over, securities of Aceto (or securities convertible into such securities) representing 30% or more of the combined voting power of all securities of Aceto entitled to vote in the election of directors.

 

“Chief Financial Officer” shall mean the Chief Financial Officer of Aceto.

 

“Closing Date” shall mean April 23, 2010.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment” shall mean the Revolving Credit Commitment.

 

“Company” shall have the meaning set forth in the preamble hereto.

 

“Consolidated Debt Service Coverage Ratio” shall mean, for any period, the ratio of (a) Consolidated Net Income, plus (i) to the extent deducted in determining Consolidated Net Income, the sum of (A) Consolidated Interest Expense, (B) all depreciation and amortization expenses or charges, and (C) for any calculation which includes the fiscal quarter ended December 31, 2009, up to $3,100,000 representing the addback of the after tax effect of non-recurring severance charges not to exceed $3,802,000 and inventory write downs not to exceed $860,000 both incurred in the fiscal quarter ended December 31, 2009 minus (ii) the sum of (A) Unfunded Capital Expenditures (calculated exclusive of those capital expenditures for capital improvements of up to $2,000,000 in the aggregate in connection with Aceto’s new headquarters building located at 4 Tri Harbor Court, Port Washington, New York incurred during the period from the Closing Date through June 30, 2011) and (B) dividends, distributions, stock repurchases and redemptions (whether paid or declared) for the applicable period, to (b) the sum of (i) Consolidated Interest Expense plus (ii) the scheduled installments of principal on all Indebtedness (including Capital Leases) having a final maturity of one year or more from the date of incurrence thereof.  All the foregoing categories shall be determined on a consolidated basis for Aceto and its Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis and shall be calculated (without duplication) over the four fiscal quarters then most recently ended with the exception of the scheduled installments of principal on all Indebtedness of Aceto and its Subsidiaries with an original maturity of one year or more, which shall each be calculated based upon the next succeeding four fiscal quarters.

 

  

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“Consolidated Domestic EBITDA” shall mean for Aceto and its Domestic Subsidiaries for any period, Consolidated Net Income (or consolidated net loss) for such period, plus the sum, without duplication, of (a) Consolidated Interest Expense, (b) depreciation and amortization expenses or charges, and (c) all income taxes to any government or governmental instrumentality expensed on Aceto’s or any of its Domestic Subsidiaries’ books (whether paid or accrued), in each case, determined on a consolidated basis for Aceto and its Domestic Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis, provided, however, for any calculation which includes the fiscal quarter ended December 31, 2009, Consolidated Domestic EBITDA shall include the add back of nonrecurring charges incurred in the fiscal quarter ended December 31, 2009, not to exceed $4,662,000 in the aggregate representing severance charges not to exceed $3,802,000 and inventory write downs not to exceed $860,000 both incurred in the fiscal quarter ended December 31, 2009.  All of the foregoing categories shall be calculated (without duplication) over the four fiscal quarters then most recently ended.

 

“Consolidated EBITDA” shall mean for Aceto and its Subsidiaries for any period, Consolidated Net Income (or consolidated net loss) for such period, plus the sum, without duplication, of (a) Consolidated Interest Expense, (b) depreciation and amortization expenses or charges, and (c) all income taxes to any government or governmental instrumentality expensed on Aceto’s or any of its Subsidiaries’ books (whether paid or accrued), in each case, determined on a consolidated basis for Aceto and its Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis, provided, however, for any calculation which includes the fiscal quarter ended December 31, 2009, Consolidated EBIDTA shall include the add back of nonrecurring charges incurred in the fiscal quarter ended December 31, 2009, not to exceed $4,662,000 in the aggregate representing severance charges not to exceed $3,802,000 and inventory write downs not to exceed $860,000 both incurred in the fiscal quarter ended December 31, 2009.  All of the foregoing categories shall be calculated (without duplication) over the four fiscal quarters then most recently ended.

 

“Consolidated Total Funded Debt” shall mean the sum of all Indebtedness of Aceto and its Subsidiaries for borrowed money having an original maturity of one year or more (including, without limitation, the outstanding Revolving Credit Loans and the outstanding principal balance of the loans owing by any of Aceto’s Subsidiaries to Deutsche Bank or any of Aceto’s Subsidiaries to ING Bank), in each case determined on a consolidated basis for Aceto and its Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis.

 

“Consolidated Interest Expense” shall mean the consolidated gross interest expense of Aceto and its Subsidiaries determined in accordance with Generally Accepted Accounting Principles applied on a consistent basis and calculated over the four fiscal quarters then most recently ended.

 

  

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“Consolidated Net Income” shall mean, for any period, the net income (or net loss) of Aceto and its Subsidiaries on a consolidated basis for such period determined in accordance with Generally Accepted Accounting Principles applied on a consistent basis.

 

“Default” shall mean any condition or event which upon notice, lapse of time or both would constitute an Event of Default.

 

“Dollar” and the symbol “$” shall mean lawful money of the United States of America.

 

“Domestic Subsidiary” shall mean any Subsidiary of Aceto organized under the laws of any state of the United States of America.

 

“Eligible Investments” shall mean (a) direct obligations of the United States of America or any governmental agency thereof which are fully guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof; or (b) dollar denominated certificates of time deposit maturing within one year issued by any bank organized and existing under the laws of the United States or any state thereof and having aggregate capital and surplus in excess of $1,000,000,000; or (c) money market mutual funds having assets in excess of $2,500,000,000; or (d) commercial paper rated not less than P-1 or A-1 or their equivalent by Moody’s Investor Service, Inc. or Standard & Poor’s Ratings Group, respectively; or (e) tax exempt securities of a U.S. issuer rated A or better by Standard and Poor’s Ratings Group or Moody’s Investor Service, Inc.

 

“Environmental Law” shall mean any law, ordinance, rule, regulation, or policy having the force of law of any Governmental Authority relating to pollution or protection of the environment or to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations promulgated pursuant thereto.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which together with any Company or any Affiliate of any Company would be deemed to be a member of the same “controlled group” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

 “Event of Default” shall have the meaning set forth in Article VIII.

 

“Executive Officer” shall mean any of the President, the Chief Executive Officer, Chief Financial Officer or the Secretary of Aceto or any of its Subsidiaries, as applicable, and their respective successors, if any, designated by the board of directors thereof.

 

  

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“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal fund brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Lender from three Federal fund brokers of recognized standing selected by the Lender.

 

“First-Tier Foreign Subsidiary” shall mean, with respect to Aceto or any Domestic Subsidiary, a Foreign Subsidiary that is directly owned by Aceto and/or such Domestic Subsidiary.

 

“Fixed Rate Loans” shall mean, collectively, Adjusted Libor Loans and Quoted Rate Loans.

 

“Foreign Subsidiary” shall mean any Subsidiary of any Company which is not a Domestic Subsidiary.

 

“Generally Accepted Accounting Principles” shall mean those generally accepted accounting principles in the United States of America, as in effect from time to time.

 

“Governmental Authority” shall mean any nation or government, any state, province, city or municipal entity or other political subdivision thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board or similar body, whether federal, state, provincial, territorial, local or foreign.

 

“Hazardous Materials” shall mean any explosives, radioactive materials, or other materials, wastes, substances, or chemicals regulated as toxic hazardous or as a pollutant, contaminant or waste under any applicable Environmental Law.

 

“IDA Transaction” shall mean the conveyance by Aceto Realty LLC of its fee interest in the real property and improvements located at 4 Tri Harbor Court, Port Washington, New York to the Nassau County Industrial Development Agency (the “Agency”) subject to a lease-back of such property pursuant to the terms of a lease (“Lease”) for a period of ten (10) years and a right of Aceto Realty LLC to repurchase such real property and improvements for $1.00 (i) upon expiration of the Lease from the Agency, or (ii) at any time Aceto Realty LLC determines to do so provided in connection therewith it reimburses the Agency for any benefits that it received from the Lease and the payment in lieu of taxes agreement executed in connection with the Lease, which reimbursement obligations are secured by a so-called “Pilot Mortgage” granted by Aceto Realty LLC in favor of the Agency (the “Pilot Mortgage”).  The IDA Transaction shall include a sublease by Aceto Realty LLC of its rights under the Lease to Aceto.

 

 “Indebtedness” shall mean, without duplication, as to any Person or Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred purchase price of property or services; (c) indebtedness evidenced by bonds, debentures, notes or other similar instruments; (d) obligations and liabilities secured by a Lien upon property owned by such Person, whether or not owing by such Person and even though such Person has not assumed or become liable for the payment thereof; (e) obligations and liabilities directly or indirectly guaranteed by such Person; (f) obligations or liabilities created or arising under any conditional sales contract or other title retention agreement with respect to property used and/or acquired by such Person; (g) obligations of such Person as lessee under Capital Leases; (h) net liabilities of such Person under Rate Management Transaction Agreements and foreign currency exchange agreements, as calculated on a basis satisfactory to the Lender and in accordance with accepted practice; (i) all obligations of such Person in respect of bankers’ acceptance; and (j) all obligations, contingent or otherwise of such Person as an account party or applicant in respect of letters of credit.

 

  

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“Interest Payment Date” shall mean (a) as to any CB Floating Rate Loan, the first day of each calendar month during the term hereof; (b) as to any Fixed Rate Loan, the last day of the Interest Period for such Fixed Rate Loan and, in the case of any Fixed Rate Loan with an Interest Period of more than three months duration, each day prior to the last day of such Interest Period that occurs at intervals of 3 months duration after the first day of such period; and (c) as to any Loan, the date such Loan is paid in full or in part.

 

“Interest Period” shall mean with respect to any Fixed Rate Loan:

 

 (a)           initially, the period commencing on the date such Fixed Rate Loan is made and ending one, two, three or six months thereafter, as selected by the Companies in its Notice of Borrowing or in its notice of conversion from another Type of loan to a Fixed Rate Loan provided, in each case, in accordance with the terms of Articles II and III hereof; and

 

 (b)           thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Fixed Rate Loan and ending one, two, three or six months thereafter, as selected by the Companies by irrevocable written notice to the Lender not later than 11:00 a.m. New York, New York time (I) three Business Days, with respect to Adjusted Libor Loans or (II) one Business Day with respect to a Quoted Rate Loan, prior to the last day of the then current Interest Period with respect to such Fixed Rate Loan; provided, however, that all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(i)           if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(ii)          if the Companies shall fail to give notice as provided in clause (b) above, the Companies shall be deemed to have requested conversion of the affected Fixed Rate Loan to a CB Floating Rate Loan on the last day of the then current Interest Period with respect thereto;

 

(iii)         any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;

 

(iv)         no more than three (3) Interest Periods may exist at any one time; and

 

  

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(v)          the Companies shall select Interest Periods so as not to require a payment or prepayment of any Fixed Rate Loan during an Interest Period for such Fixed Rate Loan.

 

“Lender” shall have the meaning set forth in the preamble hereto.

 

“Letter of Credit” shall mean standby and commercial letter of credit issued by the Issuing Lender for the account of a Company pursuant to the terms of this Agreement.

 

“Leverage Purpose Transaction” shall mean any transaction that (a) causes the ratio of consolidated liabilities to consolidated assets to exceed 75% or (b) causes the ratio of the consolidated liabilities to consolidated assets to exceed 50% and increases the consolidated liabilities by 100% or more, in each case determined in accordance with Generally Accepted Accounting Principles, applied on a consistent basis with respect to Aceto and its consolidated Subsidiaries.

 

“LIBOR Rate” means, with respect to any Adjusted Libor Loan for any Interest Period, the rate determined by the Lender by reference to Reuters Screen LIBOR1, formerly known as Page 3750 of the Moneyline Telerate Service (the “Service”), or any successor to or substitute page of the Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Lender from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market (the “Page”), at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the "LIBOR Rate" with respect to such Adjusted Libor Loan for such Interest Period shall be the rate at which dollar deposits in the approximate amount of principal outstanding on such date and for a maturity comparable to such Interest Period are offered by the Lender to place U.S. dollar deposits with first class banks in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

 

 “Lien” shall mean any lien (statutory or otherwise), security interest, mortgage, deed of trust, pledge, charge, conditional sale, title retention agreement, Capital Lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.

 

“Loans” shall mean the Revolving Credit Loans.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Reaffirmation Agreement, the Security Documents, any Rate Management Transaction Agreement entered into with the Lender and each other agreement executed in connection with the transactions contemplated hereby or thereby, as each of the same may hereafter be amended, restated, supplemented or otherwise modified from time to time.

 

“Material Adverse Effect” shall mean a material adverse effect upon (a) the business, operations, property, prospects or condition (financial or otherwise) of Aceto and its Subsidiaries taken as a whole, or (b) the validity or enforceability of (i) this Agreement or any of the other Loan Documents or (ii) the rights or remedies of the Lenders hereunder or thereunder.

 

  

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“Material Contract” shall mean each contract, instrument or agreement (a) to which Aceto or any of its Subsidiaries is a party which is material to the business, operations or condition (financial or otherwise), prospects, or properties of any Company or of Aceto and its Subsidiaries taken as a whole, or (b) which is not a contract, instrument or agreement to purchase inventory in the ordinary course of business and which requires the payment during the term thereof in excess of $2,500,000.

 

“Note” shall mean the Amended and Restated Revolving Credit Note.

 

“Notice of Borrowing” shall mean the Lender’s form of notice of borrowing or other form of notice of borrowing acceptable to the Lender.

 

“Obligations” shall mean all obligations, liabilities and indebtedness of each Company to the Lender, whether now existing or hereafter created, absolute or contingent, direct or indirect, due or not, whether created directly or acquired by assignment or otherwise, arising under or relating to this Agreement, the Note or any other Loan Document including, without limitation, all obligations, liabilities and indebtedness of any Company with respect to the principal of and interest on the Loans, reimbursement of Letters of Credit, and obligations arising under Rate Management Transaction Agreements with the Lender (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, and interest that but for the filing of a petition in bankruptcy with respect to any Company, would accrue on such obligations, whether or not a claim is allowed against such Company for such interest in the related bankruptcy proceeding), and all fees, costs, expenses and indemnity obligations of the Companies hereunder, under any other Loan Document or under any Rate Management Transaction Agreement.  The Obligations shall be joint and several obligations of the Companies.

 

           “Page” shall have the meaning set forth in the definition of LIBOR Rate.

 

“Payment Office” shall mean the Lender’s office located at 395 North Service Road, Melville, New York 11747 or such other office as the Lender may designate from time to time.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

  

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“Permitted Acquisitions” shall mean any acquisition (whether by merger or otherwise) by Aceto or any Subsidiary of Aceto of more than 50% of the outstanding capital stock, membership interests, partnership interests or other similar ownership interests of a Person which is engaged in a line of business similar to the business of Aceto or such Subsidiary (or reasonable extensions thereof) or the purchase of all or substantially all of the assets owned by such Person; provided (a) the Lender shall have received, within ten (10) Business Days of the closing of such Permitted Acquisition, (i) with respect to a Person which constitutes a Material Domestic Subsidiary, to the extent not previously received, a duly executed Guaranty, and (ii) with respect to a Person which constitutes a First-Tier Foreign Subsidiary, to the extent not previously received, a duly executed Pledge Agreement by the parent of such First-Tier Foreign Subsidiary, to the extent such documents are required to be delivered pursuant to Section 6.13 hereof; (b) the Lender shall have received evidence reasonably satisfactory to it that the shares or other interests in the Person, or the assets of the Person, which is the subject of the Permitted Acquisition are, or will be promptly following the closing of such Permitted Acquisition, free and clear of all Liens, except Permitted Liens, including, without limitation, with respect to the acquisition of shares or other equity interests, free of any restrictions on transfer other than restrictions applicable to the sale of securities under federal and state securities laws and regulations generally or, with respect to the acquisition of any Foreign Subsidiary, restrictions applicable to the sale of securities under applicable laws or regulations of the applicable foreign jurisdiction;  (c) the Lender shall have received not less than five (5) Business Days preceding the closing of such Permitted Acquisition, the documentation governing the proposed acquisition, including, without limitation, the purchase agreement with respect thereto, together with such other additional documentation or information with respect to the proposed acquisition as the Lender may reasonably require; (d) no Default or Event of Default shall have occurred and be continuing immediately prior to or would occur after giving effect to the acquisition on a pro forma basis; (e) the Lender shall have received projections and pro forma financial statements showing that, after giving effect to such acquisition, (i) no Default or Event of Default shall have occurred and (ii) such acquisition will not be a Leveraged Purpose Transaction; (e) the acquisition has either (i) been approved by the Board of Directors or other governing body of the Person which is the subject of the acquisition or (ii) been recommended for approval by the Board of Directors or other governing body of such Person to the shareholders or other members of such Person and subsequently approved by the shareholders or such members if shareholder or such member approval is required under applicable law or the by-laws, certificate of incorporation or other governing instruments of such Person; (f) prior to the closing of any such acquisition, the Companies shall have delivered evidence to the Lender that, on a pro forma basis, the Companies will be in compliance with the financial condition covenants of Section 7.13 hereof upon completion of such acquisition; (g) the aggregate purchase price for such purchase when aggregated with the purchase price of all other Permitted Acquisitions in the same fiscal year in which such Permitted Acquisition shall occur does not exceed $7,500,000, and (h) with respect to each purchase, the purchase price of which exceeds $7,500,000, the Lender shall have provided its prior written consent to the consummation thereof.

 

“Permitted Liens” shall mean the Liens specified in clauses (a) through (i) of Section 7.01.

 

“Person” shall mean any natural person, corporation, limited liability company, limited liability partnership, business trust, joint venture, association, company, partnership or Governmental Authority.

 

“Plan” shall mean any multi-employer or single-employer plan defined in Section 4001 of ERISA, which covers, or at any time during the five calendar years preceding the date of this Agreement covered, employees of Aceto, or any Subsidiary of Aceto or an ERISA Affiliate on account of such employees’ employment by Aceto, or any Subsidiary of Aceto or an ERISA Affiliate.

 

“Pledge Agreements” shall mean, collectively, the Pledge Agreement dated May 10, 2002 by and between Aceto and the Bank and each pledge agreement executed by any Domestic Subsidiary of Aceto who may be required to execute the same pursuant to Section 6.13, as each of the same may hereafter be amended, restated, supplemented or otherwise modified from time to time.

 

  

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 “Prime Rate” shall mean the rate per annum publicly announced by the Lender from time to time as its prime rate in effect at its principal office in New York City, each change in the Prime Rate shall be effective on the date such change is announced to become effective.

 

“Quoted Rate” shall mean a rate of interest per annum quoted to the Companies by the Lender, in its discretion, on the requested Borrowing Date for the requested Quoted Rate Loan.  Such quote rate shall be the fixed rate which would be applicable to a Quoted Rate Loan made by the Lender on the requested date for the proposed Quoted Rate Loan.  Notwithstanding any other provision of this Agreement, (i) the rate so quoted by the Lender shall be determined in the sole discretion of the Lender by reference to such factors and consideration as the Lender shall deem relevant and (ii) the Lender shall not be required to quote any rate at all for any reason whatsoever for any proposed Quoted Rate Loan or upon the termination of any Interest Period relating to any existing Quoted Rate Loan.

 

“Quoted Rate Loans” shall mean loans at such time as they are made and/or maintained at a rate of interest based upon the Quoted Rate.

 

“Rate Management Transaction Agreement” means any agreement between a Company and the Bank with respect to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option, derivative transaction or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

 

“Reaffirmation” Agreement shall mean the Reaffirmation Agreement, substantially in the form attached hereto as Exhibit B to be executed and delivered on the Closing Date by Aceto.

 

 “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time.

 

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan as to which the 30 day notice requirement has not been waived by the PBGC.

 

"Reserve Adjusted LIBOR" means, with respect to any Adjusted LIBOR Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBOR Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Revolving Credit Commitment” shall mean the Lender’s obligation to make Revolving Credit Loans to the Companies in an aggregate amount not to exceed $25,000,000, as such amount may be adjusted in accordance with the terms of this Agreement.

 

  

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“Revolving Credit Commitment Period” shall mean the period from and including the Closing Date to, but not including, the Revolving Credit Commitment Termination Date or such earlier date as the Revolving Credit Commitment shall terminate as provided herein.

 

“Revolving Credit Commitment Termination Date” shall mean December 31, 2012.

 

“Revolving Credit Loans” shall have the meaning set forth in Section 2.01(a).

 

 “Security Documents” shall mean the Pledge Agreements and each other collateral security document delivered to the Lender hereunder.

 

“Solvent” shall mean with respect to any Person as of the date of determination thereof that (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise,” as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required on its debts as such debts become absolute and matured, (c) such Person will not have as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.

 

"Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Bank is subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Adjusted Libor Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to the Bank under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Subsidiaries” shall mean with respect to any Person any corporation, association or other business entity more than 50% of the voting stock or other ownership interests (including, without limitation, membership interests in a limited liability company) of which is at the time owned or controlled, directly or indirectly, by such Person or one or more of its Subsidiaries or a combination thereof.

 

“Taxes” shall have the meaning set forth in Section 3.10.

 

“Type” shall mean as to any Loan its status as a CB Floating Rate Loan, a Adjusted Libor Loan or a Quoted Rate Loan.

 

“Unfunded Capital Expenditures” shall mean Capital Expenditures which are not financed with the proceeds from any Indebtedness.

 

  

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“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, determined in accordance with Section 412 of the Code.

 

SECTION 1.02.   Terms Generally.    The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and the neuter.  Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given to it under Generally Accepted Accounting Principles.  The term “including” shall not be limited or exclusive, unless specifically indicated to the contrary.  The word “will” shall be construed to have the same meaning in effect as the word “shall”.  The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including the exhibits and schedules hereto, all of which are by this reference incorporated into this Agreement.

  

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ARTICLE II.

LOANS

 

SECTION 2.01.  ­Revolving Credit Loans.

 

(a)  Subject to the terms and conditions, and relying upon the representations and warranties, set forth herein, the Lender severally agrees to make loans (individually a “Revolving Credit Loan” and, collectively, the “Revolving Credit Loans”) to  the Companies from time to time during the Revolving Credit Commitment Period up to but not exceeding at any one time outstanding the amount of its Revolving Credit Commitment; provided, however, that no Revolving Credit Loan shall be made if, after giving effect to such Revolving Credit Loan, the Aggregate Outstandings would exceed the Revolving Credit Commitment in effect at such time.  During the Revolving Credit Commitment Period, the Companies may from time to time borrow, repay and reborrow hereunder on or after the date hereof and prior to the Revolving Credit Commitment Termination Date, subject to the terms, provisions and limitations set forth herein.  The Revolving Credit Loans may be (i) Adjusted Libor Loans, (ii) CB Floating Rate Loans, (iii) Quoted Rate Loans or (iv) a combination thereof.

 

(b)  The Companies shall give the Lender irrevocable written notice (or telephonic notice promptly confirmed in writing) not later than 11:00 a.m. (New York, New York time), three Business Days prior to the date of each proposed Adjusted Libor Loan under this Section 2.01 or prior to 11:00 a.m. (New York, New York time) on the date of each proposed CB Floating Rate Loan or Quoted Rate Loan under this Section 2.01.  Such notice shall be irrevocable and shall specify (i) the amount and Type of the proposed borrowing, (ii) the proposed use of the loan proceeds, (iii) the initial Interest Period if a Fixed Rate Loan, and (iv) the proposed Borrowing Date.  Except for borrowings which utilize the full remaining amount of the Revolving Credit Commitment, each borrowing of a CB Floating Rate Loan shall be in an amount not less than $250,000 or, if greater, whole multiples of $100,000 in excess thereof.  Each borrowing of Fixed Rate Loan shall be an amount not less than $500,000 or whole multiples of $100,000 in excess thereof.  Funding of all Loans shall be made in accordance with Section 3.12 of this Agreement.

 

(c)  The Companies shall have the right, upon not less than three Business Days’ prior written notice to the Lender to terminate the Revolving Credit Commitment or from time to time to permanently reduce the amount of the Revolving Credit Commitment; provided, however, that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the Aggregate Outstandings would exceed the Revolving Credit Commitment as then reduced; provided, further, that any such termination or reduction requiring prepayment of any Fixed Rate Loan shall be made only on the last day of the Interest Period with respect thereto or on the date of payment in full of all amounts owing pursuant to Section 3.08 as a result of such termination or reduction.  Any such reduction shall be in the amount of $250,000 or whole multiples of $100,000 in excess thereof, and shall reduce permanently the amount of the Revolving Credit Commitment then in effect.

 

  

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(d)  The agreement of the Lender to make Revolving Credit Loans pursuant to this Section 2.01 shall automatically terminate on the Revolving Credit Commitment Termination Date.  Upon such termination, the Companies shall immediately repay in full the principal amount of the Revolving Credit Loans then outstanding, together with all accrued interest thereon and all other amounts due and payable hereunder.

 

SECTION 2.02.   Revolving Credit Note.   The Revolving Credit Loans made by the Lender shall be evidenced by a promissory note of the Companies (the “Amended and Restated Revolving Credit Note”), substantially in the form attached hereto as Exhibit A, appropriately completed, duly executed and delivered on behalf of the Companies and payable to the order of the Lender in a principal amount equal to the Revolving Credit Commitment of the Lender.  The Amended and Restated Revolving Credit Note shall (a) be dated the Closing Date, (b) be stated to mature on the Revolving Credit Commitment Termination Date, and (c) bear interest from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding as provided in Section 3.01.  The Lender is authorized to record the date, Type and amount of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal of each Revolving Credit Loan in the Lender’s records or on the grid schedule annexed to the Amended and Restated Revolving Credit Note; provided, however, that the failure of the Lender to set forth each such Revolving Credit Loan, payment and other information shall not in any manner affect the obligation of the Companies to repay each Revolving Credit Loan made by the Lender in accordance with the terms of its Amended and Restated Revolving Credit Note and this Agreement.  The Amended and Restated Revolving Credit Note, the grid schedule and the books and records of the Lender shall constitute presumptive evidence of the information so recorded absent manifest error.

 

SECTION 2.03.   ­Letters of Credit.

 

(a)  Generally.   Subject to the terms and conditions set forth in this Agreement, upon the written request of the Companies in accordance herewith, the Lender shall issue Letters of Credit at any time during the Revolving Credit Commitment Period.  Notwithstanding the foregoing, (i) at no time shall the sum of the Aggregate Letters of Credit Outstanding with respect to standby Letters of Credit exceed $1 million and (ii) no Letter of Credit shall be issued if, after giving effect to the same, the Aggregate Outstandings would exceed the Revolving Credit Commitment.  Furthermore, notwithstanding anything contained herein to the contrary, the Lender shall be under no obligation to issue a Letter of Credit if any order, judgment or decree of any court, arbitrator or governmental authority shall purport by its terms, to enjoin, restrict or restrain the Lender in any respect relating to the issuance of such Letter of Credit or a similar letter of credit, or any law, rule, regulation, policy, guideline or directive (whether or not having the force of law) from any governmental authority with jurisdiction over the Lender shall prohibit or direct the Lender in any respect relating to the issuance of such Letter of Credit or a similar letter of credit, or shall impose upon the Lender with respect to any Letter of Credit, any restrictions, any reserve or capital requirement or any loss, cost or expense not reimbursed by the Companies to the Lender. Each request for issuance of a Letter of Credit shall be in writing and shall be received by the Lender by no later than 12:00 p.m. (New York, New York time), on the day which is at least two Business Days prior to the proposed date of issuance.  Such issuance shall occur by no later than 3:00 p.m. on the proposed date of issuance (assuming proper prior notice as aforesaid).  Subject to the terms and conditions contained herein, the expiry date, and the amount and beneficiary of the Letters of Credit will be as designated by the Companies.  Each Letter of Credit issued by the Lender hereunder shall identify: (i) the dates of issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of Credit (which shall be a sum certain), (iii) the beneficiary of such Letter of Credit, and (iv) the drafts and other documents necessary to be presented to the Lender upon drawing thereunder.    No Letter of Credit issued hereunder shall expire more than 365 days from the date of issuance or creation thereof, and in no event shall any Letter of Credit mature after the Business Day which is immediately prior to the Revolving Credit Commitment Termination Date.  The Companies agree to execute and deliver to the Lender such further documents and instruments in connection with any Letter of Credit issued hereunder (including without limitation, applications therefor) as the Lender in accordance with its customary practices may request.

 

  

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(b)  Drawings Under Letters of Credit.   The Companies hereby absolutely and unconditionally promise to pay to the Lender on the date of each drawing under a Letter of Credit, in immediately available funds from its accounts, the amount of such drawing under such Letter of Credit.

 

(c)  Letter of Credit Obligations Absolute.  (i) The obligation of the Companies to reimburse the Lender as provided hereunder in respect of drawings under Letters of Credit shall rank pari passu with the obligation of the Companies to repay the Revolving Credit Loans hereunder, and shall be absolute and unconditional under any and all circumstances.  Without limiting the generality of the foregoing, the obligation of the Companies to reimburse the Lender in respect of drawings under Letters of Credit shall not be subject to any defense based on the non-application or misapplication by the beneficiary of the proceeds of any such drawing or the legality, validity, regularity or enforceability of the Letters of Credit or any related document, even though such document shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Companies, the beneficiary of any Letter of Credit or any financial institution or other party to which any Letter of Credit may be transferred.  The Lender may accept or pay any draft presented to it under any Letter of Credit regardless of when drawn or made and whether or not negotiated, if such draft, accompanying certificate or documents and any transmittal advice are presented or negotiated on or before the expiry date of such Letter of Credit or any renewal or extension thereof then in effect, and is in substantial compliance with the terms and conditions of such Letter of Credit.  Furthermore, neither the Lender nor any of its correspondents shall be responsible, as to any document presented under a Letter of Credit which appears to be regular on its face, and appears on its face to be in substantial compliance with the terms of the Letter of Credit, for the validity or sufficiency of any signature or endorsement, for delay in giving any notice or failure of any instrument to bear adequate reference to the Letter of Credit, or for failure of any Person to note the amount of any draft on the reverse of the Letter of Credit.

 

(ii)           Any action, inaction or omission on the part of the Lender or any of its correspondents under or in connection with any Letter of Credit or the related instruments, documents or property, if in good faith and in conformity with such laws, regulations or customs as are applicable, shall be binding upon the Companies and shall not place the Lender or any of its correspondents under any liability to the Companies in the absence of (x) gross negligence or willful misconduct by the Lender or its correspondents or (y) the failure by the Lender to pay under a Letter of Credit after presentation of a draft and documents strictly complying with such Letter of Credit unless the Lender is prohibited from making such payment pursuant to a court order.  The Lender’s rights, powers, privileges and immunities specified in or arising under this Agreement are in addition to any heretofore or at any time hereafter otherwise created or arising, whether by statute or rule of law or contract.  All Letters of Credit issued hereunder will, except to the extent otherwise expressly provided therein or hereunder, be governed by the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500, and any subsequent revisions thereof.

 

  

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ARTICLE III.

PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;

FEES AND PAYMENTS

 

SECTION 3.01.  ­Interest Rate; Continuation and Conversion of Loans.

 

(a)  Each CB Floating Rate Loan shall bear interest for the period from the date thereof on the unpaid principal amount thereof at a fluctuating rate per annum equal to the CB Floating Rate.

 

(b)  Each Adjusted Libor Loan shall bear interest for the Interest Period applicable thereto on the unpaid principal amount thereof at a rate per annum equal to the Reserve Adjusted Libor determined for each Interest Period thereof in accordance with the terms hereof plus a margin of two percent (2%) per annum.

 

(c)  Each Quoted Rate Loan shall bear interest for the Interest Period applicable thereto on the unpaid principal amount thereof at a rate per annum equal to the Quoted Rate determined for each Interest Period thereof in accordance with the terms hereof.

 

(d)      Upon the occurrence and during the continuance of an Event of Default the outstanding principal amount of the Loans (excluding any defaulted payment of principal accruing interest in accordance with clause (e) below), shall, at the option of the Lender, bear interest payable on demand at a rate of interest 3% per annum in excess of the interest rate otherwise then in effect or, if no rate is in effect, 3% per annum in excess of the CB Floating Rate.

 

(e)      If any of the Companies shall default in the payment of the principal of or interest on any portion of any Loan or any other amount becoming due hereunder, whether with respect to reimbursement of drawings under Letters of Credit, interest, fees, expenses or otherwise, the Companies shall pay interest on such defaulted amount accruing from the date of such default (without reference to any period of grace) up to and including the date of actual payment (after as well as before judgment) at a rate of 3% per annum in excess of the rate otherwise in effect or, if no rate is in effect, 3% per annum in excess of the CB Floating Rate.

 

  

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(f)  The Companies may elect from time to time to convert outstanding Loans from Fixed Rate Loans to CB Floating Rate Loans or a Fixed Rate Loan of another type by giving the Lender at least three Business Day’s prior irrevocable written notice of such election, provided that any such conversion of Fixed Rate Loans shall only be made on the last day of an Interest Period with respect thereto or upon the date of payment in full of any amounts owing pursuant to Section 3.08 as a result of such conversion.  The Companies may elect from time to time to convert outstanding Loans from CB Floating Rate Loans to any Type of Fixed Rate Loan by giving the Lender irrevocable written notice of such election not later than 11:00 a.m. (New York, New York time), (i) three Business Days prior to the date of the proposed conversion., with respect to an Adjusted Libor Loan and (ii) on the date of the proposed conversion, with respect to a Quoted Rate Loan   All or any part of outstanding CB Floating Rate Loans may be converted as provided herein, provided that each conversion shall be in the principal amount of $500,000 or whole multiples of $100,000 in excess thereof, and further provided that no Default or Event of Default shall have occurred and be continuing.  Any conversion to or from any type of Fixed Rate Loans hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all Fixed Rate Loans having the same Interest Period shall not be less than $500,000.

 

(g)  Any Fixed Rate Loan in a minimum principal amount of $500,000 may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Companies with the notice provisions contained in the definition of Interest Period; provided, that no Fixed Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a CB Floating Rate Loan on the last day of the Interest Period in effect when the Lender is notified, or otherwise has actual knowledge, of such Default or Event of Default.

 

(h)  If the Companies shall fail to select the duration of any Interest Period for any Fixed Rate Loan in accordance with the definition of “Interest Period” set forth in Section 1.01, the Companies shall be deemed to have selected an Interest Period of one month.

 

(i)       No Loan may be funded as a Fixed Rate Loan, or converted to or continued as a Fixed Rate Loan, with an Interest Period that extends beyond the Revolving Credit Commitment Termination Date.

 

(j)      Anything in this Agreement or in any Note to the contrary notwithstanding, the obligation of the Companies to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be paid to the Lender to the extent that the charging or receipt thereof would not be permissible under the law or laws applicable to the Lender limiting the rates of interest that may be charged or collected by the Lender.  In each such event payments of interest required to be paid to the Lender shall be calculated at the highest rate permitted by applicable law until such time as the rates of interest required hereunder may lawfully be charged and collected by the Lender.  If the provisions of this Agreement or any Note would at any time otherwise require payment by the Companies to the Lender of any amount of interest in excess of the maximum amount then permitted by applicable law, the interest payments to the Lender shall be reduced to the extent necessary so that the Lender shall not receive interest in excess of such maximum amount.

 

  

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(k)      Interest on each Loan shall be payable in arrears on each Interest Payment Date and shall be calculated on the basis year of 360 days and shall be payable for the actual days elapsed.  Any rate of interest on the Loans or other Obligations which is computed on the basis of the Prime Rate shall change when and as the Prime Rate changes in accordance with the definition thereof.  Each determination by the Lender of an interest rate or fee hereunder shall, absent manifest error, be conclusive and binding for all purposes.

 

SECTION 3.02.  ­Use of Proceeds.   The proceeds of the Revolving Credit Loans shall be used, subject to the terms and conditions of this Agreement, solely (i) for general corporate purposes, (ii) to finance the purchase by Aceto Agricultural Chemicals Corp. on or prior to December 31, 2011, of the rights to market United States Environmental Protection Agency approved products for an aggregate consideration not to exceed $13,000,000 and to support the start up working capital requirements related to such acquired products; and (iii) to fund Permitted Acquisitions, provided that Revolving Credit Loans for the purpose of funding a Permitted Acquisition shall be subject to the prior written consent of the Lender, in its sole discretion.  Commercial Letters of Credit issued by the Lender hereunder shall be for the account of the Companies and shall be issued to provide the primary payment mechanism in connection with the purchase of any materials, goods or services by any Company in the ordinary course of business.  Standby Letters of Credit shall be issued by the Lender to support the Companies’ obligations to third parties in the ordinary course of business.

 

SECTION 3.03. ­  Prepayments.

 

(a)  The Companies may at any time and from time to time  prepay the then outstanding Loans, in whole or in part, without premium or penalty, except as provided in Section 3.08 with respect to any prepayment or payment of a Fixed Rate Loan on a date other than the last day of the Interest Period with respect thereto, upon written notice to the Lender (or telephonic notice promptly confirmed in writing) not later than 11:00 a.m. (New York, New York time), three Business Days before the date of prepayment with respect to prepayments of Fixed Rate Loans, or 11:00 a.m. (New York, New York time) one Business Day before the date of prepayment with respect to CB Floating Rate Loans.  Each notice shall be irrevocable and shall specify the date and amount of prepayment and whether such prepayment is of Adjusted Libor Loans, CB Floating Rate Loans or Quoted Rate Loans, or a combination thereof, and if a combination thereof, the amount of prepayment allocable to each.  If such notice is given, the Companies shall make such prepayment, and the amount specified in such notice shall be due and payable, on the date specified therein.  Each partial prepayment of a Fixed Rate Loan pursuant to this Section 3.03 shall be in a principal amount of $500,000 or whole multiples of $100,000 in excess thereof.  Each partial prepayment of a CB Floating Rate Loan pursuant to this Section 3.03 shall be in a principal amount of $250,000 or whole multiples of $100,000 in excess thereof.

 

(b)  Each prepayment of principal of a Loan pursuant to this Section 3.03 shall be accompanied by accrued interest to the date prepaid on the amount prepaid.  Unless otherwise directed by the Companies pursuant to Section 3.03(a), partial prepayments of any Loan shall be applied first to outstanding CB Floating Rate Loans and then to Fixed Rate Loans in such order as the Lender shall determine in its sole and absolute discretion.

 

SECTION 3.04.  ­Fees.

 

(a)  Each of the Companies agrees to pay to the Lender a commitment fee on the average daily unused portion of the Revolving Credit Commitment from the date of this Agreement until the Revolving Credit Commitment Termination Date at a rate per annum equal to .15%, based on a year of 360 days, payable in arrears on the last day of March, June, September, and December of each year commencing June 30, 2010, on the Revolving Credit Commitment Termination Date and on each date the Revolving Credit Commitment is permanently reduced in whole or in part.

 

  

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(b)  The Companies shall pay to the Lender, on demand, all customary fees charged by the Lender with respect to the processing and administration of letters of credit, (including, without limitation, amendments, renewals or extensions of letters of credit).  In addition, the Companies shall pay to the Lender, a letter credit fee which shall accrue at a rate per annum equal to a percentage per annum to be agreed upon by Aceto and the Lender of the aggregate undrawn amount of all outstanding standby Letters of Credit during the applicable period.  Such letter of credit fee shall be payable in arrears on the last day of each March, June, September and December of each year commencing June 30, 2010, and on the Revolving Credit Commitment Termination Date.  Such letter of credit fee shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.

 

(c)  The Companies agree to pay to the Lender a non-refundable facility fee of $50,000 which shall be paid in full on the Closing Date.

 

SECTION 3.05.  ­Inability to Determine Interest Rate.  In the event that the Lender shall have determined (which determination shall be conclusive and binding upon the Companies) that, by reason of circumstances affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any requested Interest Period with respect to (a) the making of a Adjusted Libor Loan, (b) an Adjusted Libor Loan that will result from the requested conversion of a CB Floating Rate Loan or a Quoted Rate Loan into an Adjusted Libor Loan, or (c) the continuation of an Adjusted Libor Loan beyond the expiration of the then current Interest Period with respect thereto, the Lender shall forthwith give notice by telephone of such determination, promptly confirmed in writing, to the Companies of such determination.  Until the Lender notifies each of the Companies that the circumstances giving rise to the suspension described herein no longer exist, each of the Companies shall not have the right to request or continue an Adjusted Libor Loan or to convert a CB Floating Rate Loan or a Quoted Rate Loan to a Adjusted Libor Loan.

 

SECTION 3.06.  ­Illegality.  Notwithstanding any other provisions herein, if any introduction of or change in any law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for the Lender to make or maintain Fixed Rate Loans as contemplated by this Agreement, the Lender shall forthwith give notice by telephone of such circumstances, promptly confirmed in writing, and (a) the commitment of the Lender to make and to allow conversion to or continuations of Fixed Rate Loans shall forthwith be cancelled for the duration of such illegality and (b) the Loans then outstanding as Fixed Rate Loans, if any, shall be converted automatically to CB Floating Rate Loans on the next succeeding last day of each Interest Period applicable to such Fixed Rate Loans or within such  earlier period as may be required by law.  The Companies shall pay to the Lender, upon demand, any additional amounts required to be paid pursuant to Section 3.08 hereof.

 

SECTION 3.07.  ­Increased Costs.  (a)  In the event that any introduction of or change in, on or after the date hereof, any applicable law, regulation, treaty, order, directive or in the interpretation or application thereof (including, without limitation, any request, guideline or policy, whether or not having the force of law, of or from any central bank or other governmental authority, agency or instrumentality and including, without limitation, Regulation D), by any authority charged with the administration or interpretation thereof shall occur, which:

 

  

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(i)    shall subject the Lender to any tax of any kind whatsoever with respect to this Agreement, any Note, any Loan, or any Letter of Credit or change the basis of taxation of payments to the Lender of principal, interest, fees or any other amount payable hereunder (other than any tax that is measured with respect to the overall net income of the Lender or lending office of the Lender and that is imposed by the United States of America, or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which the Lender’s lending office is located, or by any jurisdiction in which the Lender is organized, has its principal office or is managed and controlled); or

 

(ii)   shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement (whether or not having the force of law) against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of the Lender; or

 

(iii)   shall impose on the Lender any other condition, or change therein;

 

and the result of any of the foregoing is to increase the cost to the Lender of making, renewing or maintaining or participating in advances or extensions of credit hereunder or to reduce any amount receivable hereunder, in each case by an amount which the Lender deems material, then, in any such case, the Companies shall pay the Lender, upon demand, such additional amount or amounts as the Lender shall have determined will compensate the Lender for such increased costs or reduction.

 

(b)           If the Lender shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Lender (or any lending office of the Lender) or the Lender’s holding company, with any request or directive regarding capital adequacy (whether or not having the force of the law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Lender’s capital or on the capital of the Lender’s holding company as a consequence of its obligations hereunder to a level below that which the Lender could have achieved but for such adoption, change or compliance (taking into consideration the Lender’s policies and the policies of the Lender’s holding company with respect to capital adequacy) by an amount deemed by the Lender to be material, then from time to time, the Companies shall pay to the Lender, the additional amount or amounts as the Lender shall have determined will compensate the Lender or the Lender’s holding company for such reduction.  The Lender’s determination of such amounts shall be conclusive and binding on the Companies absent manifest error.

 

  

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(c)           A certificate of the Lender setting forth the amount or amounts payable pursuant to Sections 3.07(a) and 3.07(b) above shall be conclusive absent manifest error.  The Companies shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)            In the event the Lender shall be entitled to compensation pursuant to Section 3.07(a) or Section 3.07(b), it shall promptly notify the Companies of the event by reason of which it has become so entitled; provided, however, no failure on the part of the Lender to demand compensation under clause (a) or clause (b) above on one occasion shall constitute a waiver of its right to demand compensation on any other occasion.

 

SECTION 3.08.   ­Indemnity.   The Companies agree to indemnify the Lender and to hold the Lender harmless from any loss, cost or expense which the Lender may sustain or incur, including, without limitation, interest or fees payable by the Lender to lenders of funds obtained by it in order to maintain Fixed Rate Loans hereunder, as a consequence of (a) default by the Companies in payment of the principal amount of or interest on any Fixed Rate Loan, (b) default by the Companies to accept or make a borrowing of a Fixed Rate Loan or a conversion into or continuation of a Fixed Rate Loan after the Companies have requested such borrowing, conversion or continuation, (c) default by the Companies in making any prepayment of any Fixed Rate Loan after the Companies give a notice in accordance with Section 3.03 of this Agreement and/or (d) the making of any payment or prepayment (whether mandatory or optional) of a Fixed Rate Loan or the making of any conversion of a Fixed Rate Loan to a CB Floating Rate Loan on a day which is not the last day of the applicable Interest Period with respect thereto.  A certificate of the Lender setting forth such amounts shall be conclusive absent manifest error.  The Companies shall pay the Lender the amount shown as due on any certificate within ten days after receipt thereof.

 

SECTION 3.09.   ­Change of Lending Office.  The Lender agrees to use reasonable efforts to designate an alternate lending office with respect to its Adjusted Libor Loans affected by the events or circumstances described in Section 3.05, Section 3.06 or Section 3.07 to avoid or minimize the Companies’ liability thereunder; provided, however, that such efforts shall not cause the imposition on the Lender of any additional cost or legal, regulatory or administrative burdens deemed by the Lender, in its sole discretion, to be material.

 

 

SECTION 3.10.   ­Taxes.    Except as set forth in clause (c) below or as required by law, all payments made by the Companies under this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding income and franchise taxes imposed on the Lender by (i) the United States of America or any political subdivision or taxing authority thereof or therein, (ii) the jurisdiction under the laws of which the Lender is organized or in which it has its principal office or is managed and controlled or any political subdivision or taxing authority thereof or therein, or (iii) any jurisdiction in which the Lender’s lending office is located or any political subdivision or taxing authority thereof or therein (such non-excluded taxes being called “Taxes”).  If any Taxes are required to be withheld from any amounts payable to the Lender hereunder, or under the Note, the amount so payable to the Lender shall be increased to the extent necessary to yield to the Lender (after payment of all Taxes and free and clear of all liability in respect of such Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Note.  Whenever any Taxes are payable by the Companies, as promptly as possible thereafter, the Companies shall send to the Lender, as the case may be, a certified copy of an original official receipt showing payment thereof.  If the Companies fail to pay Taxes when due to the appropriate taxing authority or fails to remit to the Lender the required receipts or other required documentary evidence, the Companies shall indemnify the Lender for any incremental taxes, interest or penalties that may become payable by the Lender as a result of any such failure together with any expenses payable by the Lender in connection therewith.

 

  

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SECTION 3.11.    ­Payments.   All payments (including prepayments) to be made by the Companies on account of principal, interest, fees and reimbursement obligations shall be made without set-off or counterclaim and shall be made to the Lender, at the Payment Office of the Lender in Dollars in immediately available funds.  To effectuate any payment of any Obligations, the Companies hereby authorize the Lender to initiate debit entries to any deposit account of any Company maintained with the Lender and to debit the same to such account.  This authorization to initiate debit entries shall remain in full force and effect until the Lender has received written notification of its termination in such time and in such manner as to afford the Lender a reasonable opportunity to act on it.  Each Company acknowledges (i) that such debit entries may cause an overdraft of any such account which may result in the Lender’s refusal to honor items drawn on any such account until adequate deposits are made to any such account; (ii) that the Lender is under no duty or obligation to initiate any debit entry for any purpose; and (iii) that if a debit is not made because any such account does not have a sufficient available balance, or otherwise, the payment may be late or past due.  Except as otherwise provided in the definition of “Interest Period”, if any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

 

SECTION 3.12.   ­Disbursement of Loans.   The Lender shall make each Loan to be made by it hereunder available to the Companies at the Payment Office by crediting the account of the Companies with such amount and in like funds; provided, however, that if the proceeds of any Loan or any portion thereof are to be used to prepay outstanding Loans, then the Lender shall apply such proceeds for such purpose to extent necessary and credit the balance, if any, to the Companies’ account.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Lender to enter into this Agreement and to extend the credit herein provided for, the Companies, jointly and severally, represent and warrant to the Lender that:

 

SECTION 4.01.   ­Organization, Powers.   Each Company (a) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation or formation, (b) has the power and authority to own its properties and to carry on its business as now being conducted, (c) is duly qualified to do business in every jurisdiction wherein the conduct of its business or the ownership of its properties are such as to require such qualification except those jurisdictions in which the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, and (d) has the power to execute, deliver and perform each of the Loan Documents to which it is a party, including, without limitation, with respect to each Company, the power to obtain extensions of credit hereunder and to execute and deliver the Note.

 

  

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SECTION 4.02.   ­Authorization of Borrowing, Enforceable Obligations.     The execution, delivery and performance by the Companies of this Agreement, and the other Loan Documents to which it is a party, the borrowings and the other extensions of credit to the Companies hereunder, and the execution, delivery and performance by each of its Subsidiaries of the Loan Documents to which such Subsidiary is a party, (a) have been duly authorized by all requisite corporate, limited partnership or limited liability action, (b) will not violate or require any consent (other than consents as have been made or obtained and which are in full force and effect) under (i) any provision of law applicable to any Company or any Subsidiary of any Company, any rule or regulation of any Governmental Authority, or the Certificate of Incorporation or By-laws of any Company or the Certificate of Incorporation, By-Laws, or other organizational documents, as applicable, of any Subsidiary of any Company or (ii) any order of any court or other Governmental Authority binding on any Company or any Subsidiary of any Company or any indenture, agreement or other instrument to which any Company or any Subsidiary of any Company is a party, or by which any Company or any Subsidiary of any Company or any of its property is bound, and (c) will not be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any Lien, of any nature whatsoever upon any of the property or assets of any Company or any Subsidiary of any Company other than as contemplated by this Agreement or the other Loan Documents.  This Agreement and each other Loan Document to which any Company or any of its Subsidiaries is a party constitutes a legal, valid and binding obligation of such Company and each such Subsidiary of such Company, as the case may be, enforceable against such Company and each such Subsidiary of such Company, as the case may be, in accordance with its terms.

 

SECTION 4.03.  ­Financial Condition.

 

(a)   The Companies have heretofore furnished to the Lender the audited consolidated balance sheet of Aceto and its Subsidiaries and the related consolidated statement of income, retained earnings and cash flow of Aceto and its Subsidiaries, audited by BDO Seidman LLP, independent certified public accountants, for the fiscal year ended June 30, 2009.  Such financial statements were prepared in conformity with Generally Accepted Accounting Principles, applied on a consistent basis, and fairly present the consolidated financial condition and consolidated results of operations of Aceto and its Subsidiaries as of the date of such financial statements and for the periods to which they relate and since June 30, 2009, no Material Adverse Effect has occurred.  The Companies shall deliver to the Lender, a certificate of the Chief Financial Officer to that effect on the Closing Date.  Other than obligations and liabilities arising in the ordinary course of business since June 30, 2009, there are no material obligations or liabilities contingent or otherwise, of Aceto or any of its Subsidiaries which are not reflected or disclosed on such audited statements other than obligations of Aceto and any of its Subsidiaries incurred in the ordinary course of business (which shall be deemed to exclude acquisitions by Aceto or any Subsidiary of Aceto of the business or assets (including, without limitation stock) of any Person).

 

  

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(b)   Each of Aceto and its Domestic Subsidiaries on a consolidated basis, Aceto and its  Subsidiaries on a consolidated basis, and Aceto, individually, is Solvent and immediately after giving effect to each Loan and each other extension of credit contemplated by this Agreement and the execution of each Loan Document, will be Solvent.

 

SECTION 4.04.  ­Taxes.   All assessed deficiencies resulting from Internal Revenue Service examinations of the federal income tax returns of Aceto or any of its Subsidiaries have been discharged or reserved against in accordance with Generally Accepted Accounting Principles.  Aceto and each of its Subsidiaries has filed or caused to be filed all federal, state and local tax returns which are required to be filed, and has paid or has caused to be paid all taxes as shown on said returns or on any assessment received by them, to the extent that such taxes have become due, except taxes which are being contested in good faith and which are reserved against in accordance with Generally Accepted Accounting Principles.

 

SECTION 4.05.  ­Title to Properties.   Aceto and each of its Subsidiaries has good title to their respective properties and assets, except for such properties and assets as have been disposed of since the date of such financial statements as no longer used or useful in the conduct of their respective businesses or as have been disposed of in the ordinary course of business, and all such properties and assets are free and clear of all Liens other than Permitted Liens.

 

SECTION 4.06. ­  Litigation.    (a)  Except as set forth on Schedule VII, there are no actions, suits or proceedings (whether or not purportedly on behalf of Aceto or any of its Subsidiaries) pending or, except as set forth on Schedule VII, to the knowledge of the Companies, threatened against or affecting Aceto or any of its Subsidiaries at law or in equity or before or by any Governmental Authority, which involve any of the transactions contemplated herein or which, if adversely determined against Aceto or such Subsidiary, could reasonably be expected to result in a Material Adverse Effect; and (b) neither Aceto nor any of its Subsidiaries is in default with respect to any judgment, writ, injunction, decree, rule or regulation of any Governmental Authority which could reasonably be expected to result in a Material Adverse Effect.

 

SECTION 4.07.  ­Agreements.   Neither Aceto nor any of its Subsidiaries is a party to any agreement or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or regulation which could reasonably be expected to have a Material Adverse Effect.  Neither Aceto nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party, which default could reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.08.  ­Compliance with ERISA.   Each Plan is in compliance with ERISA; no Plan is insolvent or in reorganization, no Plan or Plans have an Unfunded Current Liability, and no Plan has an accumulated or waived funding deficiency; neither Aceto, its Subsidiaries nor any ERISA Affiliate has incurred any liability to or on account of a Plan pursuant to Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA or expects to incur any liability under any of the foregoing sections on account of the prior termination of participation in or contributions to any such Plan; no proceedings have been instituted to terminate any Plan; no condition exists which could reasonably be expected to present a risk to any Company, or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the assets of any Company, or any ERISA Affiliates exists or is likely to arise on account of any Plan and each Company, as applicable, may terminate contributions to any other employee benefit plans maintained by it without incurring any material liability to any Person interested therein.

 

  

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SECTION 4.09.   ­Federal Reserve Regulations; Use of Proceeds.  (a)  Neither Aceto nor any of its Subsidiaries is engaged principally in, nor has as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any “margin stock” (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States, as amended from time to time).

 

(b)          No part of the proceeds of any Loan and no other extension of credit hereunder will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or to carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock, or to refund indebtedness originally incurred for such purposes, or (ii) for any purpose which violates or is inconsistent with the provisions of Regulation T,U, or X of the Board of Governors of the Federal Reserve System.

 

(c)          The proceeds of each Loan, and each other extension of credit hereunder shall be used solely for the purposes permitted under Section 3.02.

 

SECTION 4.10.     ­Approvals.   No registration with or consent or approval of, or other action by, any Governmental Authority or any other Person is required in connection with the execution, delivery and performance of this Agreement by Aceto or any of its Subsidiaries, or with the execution and delivery of other Loan Documents to which it is a party or, with respect to any Company, the borrowings and each other extension of credit hereunder.

 

SECTION 4.11.  ­Subsidiaries.  Attached hereto as Schedule I is a correct and complete list of each of Aceto’s Subsidiaries as of the Closing Date showing as to each Subsidiary, its name, the jurisdiction of its incorporation, its shareholders or other owners of an interest in each Subsidiary and the number of outstanding shares or other ownership interest owned by each shareholder or other owner of an interest.

 

SECTION 4.12.  ­Hazardous Materials.  Except as set forth on Schedule VI hereto, Aceto and each of its Subsidiaries in compliance in all material respects with all applicable Environmental Laws and neither Aceto nor any of its Subsidiaries has used Hazardous Materials on, from, or affecting any property now owned or occupied or previously owned or occupied by any of Aceto or any of its Subsidiaries in any manner which violates any applicable Environmental Law.  To the knowledge of the Companies, no prior owner of any such property or any tenant, subtenant, prior tenant or prior subtenant have used Hazardous Materials on, from, or affecting such property in any manner which violates any applicable Environmental Law.

 

SECTION 4.13.      ­Investment Company Act.   Neither Aceto nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

 

  

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SECTION 4.14.     ­Pledge Agreements.  Each Pledge Agreement executed by Aceto and each Domestic Subsidiary of the Companies, as applicable, shall, pursuant to its terms, constitute a valid and continuing lien on and security interest in the collateral referred to in such Pledge Agreement in favor of the Lender, which shall be prior to all other Liens, claims and rights of all other Persons in such collateral.

 

SECTION 4.15.  ­No Default.  No Default or Event of Default has occurred and is continuing.

 

SECTION 4.16.  ­Material Contracts.  All Material Contracts in effect on the date hereof are disclosed on Schedule V hereto.  Each such Material Contract is in full force and effect and is binding upon and enforceable against Aceto and each of its Subsidiaries, in each case, to the extent they are a party thereto, and, to the Companies’ knowledge, all other parties thereto in accordance with its terms, and there exists no default under any Material Contract by Aceto or any Subsidiary of Aceto or by any other party thereto which has not been fully cured or waived.

 

SECTION 4.17. ­     Permits and Licenses.   Aceto and each of its Subsidiaries  has all permits, licenses, certifications, authorizations and approvals required for it lawfully to own and operate their respective businesses except those the failure of which to have could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.18. ­  Compliance with Law.     Aceto and each of its Subsidiaries are in compliance, with all laws, rules, regulations, orders and decrees which are applicable to Aceto or any of its Subsidiaries, or to any of their respective properties.

 

SECTION 4.19.   ­Disclosure.  Neither this Agreement, any other Loan Document, nor any other document, certificate or written statement furnished to the Lender by or on behalf of Aceto or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made.

 

ARTICLE V.

CONDITIONS OF LENDING

 

SECTION 5.01.  Conditions to Initial Extension of Credit.  The obligation of the Lender to make its initial Loan hereunder, and the obligation of the Lender to issue the initial Letter of Credit, are subject to the following conditions precedent:

 

(a)   Note.    On or prior to the Closing Date, the Lender shall have received the Amended and Restated Revolving Credit Note duly executed by the Companies.

 

(b)   Reaffirmation Agreement.    On or prior to the Closing Date, the Lender shall have received the Reaffirmation Agreement duly executed by the Companies.

 

(c)   Opinion of Counsel.     On or prior to the Closing Date, the Lender shall have received a written opinion of counsel for the Companies dated the Closing Date and addressed to the Lender, substantially in the form of Exhibit C attached hereto and an opinion in form and substance satisfactory to the Lender of foreign counsel with respect to the security interests created pursuant to Pledge Agreement.

 

  

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(d)   Supporting Documents.    On or prior to the Closing Date, the Lender shall have received (i) a certificate of good standing for the Companies from the secretary of state of the states of their organizational jurisdiction dated as of a recent date; (ii) certified copies of the charter documents of the Companies, (iii) a certificate of an authorized officer of each Company dated the Closing Date and certifying:  (x) that the charter documents of such Person have not been amended since the date of their certification (or if there has been any such amendment, attaching a certified copy thereof); (y) that attached thereto is a true and complete copy of resolutions adopted by the Board of Directors of each of the Companies and by the board of directors or other governing body or Persons of each Domestic Subsidiary authorizing the execution, delivery and performance of each Loan Document to which it is a party, the  borrowings and other extensions of credit hereunder; and (z) the incumbency and specimen signature of each officer of each Company and of each officer or other authorized Person of each Domestic Subsidiary executing each Loan Document to which any Company or any Domestic Subsidiary of any Company is a party and any certificates or instruments furnished pursuant hereto or thereto, and a certification by another officer of each Company and each Domestic Subsidiary as to the incumbency and signature of the Secretary or Assistant Secretary of such Company and each such Domestic Subsidiary; and (iv) such other documents as the Lender may reasonably request.

 

(e)    Insurance.    On or prior to the Closing Date, the Lender shall have received a certificate or certificates of insurance from an independent insurance broker or brokers confirming the insurance required to be maintained pursuant to Section 6.01 hereof.

 

(f)       Financial Statements.   Prior to the Closing Date, the Lender shall have received (i) the Companies’ unaudited consolidated financial statements for the six months ended December 31, 2009 and (ii) three year projections incorporating the impact of the acquisition of products contemplated pursuant to Section 3.02(ii) hereof and demonstrating continued compliance with the financial covenants set forth in Section 7.13 hereof, and the Lender shall have been satisfied in its sole discretion with the form and substance of such statements and projections.

 

(g)   Assets Free from Liens.    Prior to the Closing Date, the Lender shall have received UCC-1 financing statement, tax and judgment lien searches evidencing that each Company’s accounts receivable, inventory, equipment and all other assets of each Company are free and clear of all Liens except Permitted Liens.

 

(h)      Fees and Expenses.   On or prior to the Closing Date, the Lender shall have received the fees payable on the Closing Date pursuant to Section 3.04(c) and reimbursement of expenses in accordance with Section 9.03(b).

 

(i)    No Litigation.    There shall exist no action, suit, investigation, litigation or proceeding affecting any Company pending or, to the knowledge of any Company, threatened before any court, governmental agency or arbiter that could reasonably be expected to be adversely determined against such Company and, if so adversely determined, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

  

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(j)       Consents and Approvals.    All governmental and third party consents and approvals necessary in connection with the transactions contemplated by this Agreement and the other Loan Documents shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lender that imposes materially adverse conditions upon the transactions contemplated hereby.

 

      (k)        No Material Adverse Changes.  There shall not have occurred any material adverse change in the business, operations, properties, prospects or condition (financial or otherwise) of Aceto or Aceto and its Subsidiaries taken as a whole, since December 31, 2009.

 

       (l)         Deutsche Bank and ING Bank Documentation.  The Lender and its counsel shall have received a copy of the documents executed in connection with the indebtedness owing by the Foreign Subsidiaries to Deutsche Bank and ING Bank, all of which shall be satisfactory in form and substance to the Lender and its counsel.

 

      (m)        Material Contracts.  The Lender shall have received a copy of each Material Contract and shall be satisfied with the form and substance of each thereof.

 

      (n)         Officer’s Certificate.  On the Closing Date, the Lender shall have received a certificate dated the Closing Date, executed by an Executive Officer confirming compliance with the conditions set forth in clauses (a), (b) and (c) of Section 5.02.

 

      (o)          Other Information, Documentation.  The Lender shall have received such other and further information and documentation as it may reasonably require, including, but not limited to, any information or documentation relating to compliance by each Company and each of its Subsidiaries with the requirements of all Environmental Laws.

 

      (p)          Completion of Proceedings.  All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by the Loan Documents, shall be reasonably satisfactory in form and substance to the Lender, and its counsel.

 

SECTION 5.02.    ­Conditions to All Extensions of Credit.  The obligation of the Lender to make each Loan hereunder and the obligation of the Lender to issue, amend, renew or extend any Letter of Credit, including, without limitation, the initial Loan and initial Letter of Credit, are subject to the conditions precedent set forth in Section 5.01 and the following conditions precedent:

 

      (a)           Representations and Warranties.  The representations and warranties by the Companies pursuant to this Agreement and the other Loan Documents to which each is a party shall be true and correct in all material respects on and as of the Borrowing Date or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, with the same effect as though such representations and warranties had been made on and as of such date unless such representation is as of a specific date, in which case, as of such date.

 

  

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    (b)    No Default.  No Default or Event of Default shall have occurred and be continuing on the Borrowing Date or on the date of issuance, amendment, renewal or extension of a Letter of Credit or will result after giving effect to the Loan requested or the requested issuance, amendment, renewal or extension of a Letter of Credit.

 

    (c)    Availability.  After giving effect to any requested Revolving Credit Loan or Letter of Credit, the Aggregate Outstandings shall not exceed the Revolving Credit Commitment then in effect.

 

    (d)    Notice of Borrowing.  The Lender shall have received a Notice of Borrowing duly executed by an Executive Officer with respect to the requested Loan.

 

    (e)    Additional Documentation.  With respect to the issuance, amendment, renewal or extension of any Letter of Credit, the Lender shall have received the documents and instruments requested by the Lender in accordance with the last sentence of Section 2.05(a).

 

Each borrowing hereunder and each issuance, amendment, renewal or extension of a Letter of Credit shall constitute a representation and warranty of the Companies that the statements contained in clauses (a), (b), and (c) of Section 5.02 are true and correct on and as of the Borrowing Date or as of the date of issuance, amendment, renewal or extension of a Letter of Credit, as applicable, as though such representation and warranty had been made on and as of such date.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

The Companies, jointly and severally, covenant and agree with the Lender that so long as the Commitment remains in effect, or any of the principal of or interest on the Note or any other Obligations hereunder shall be unpaid they will, and will cause each of Aceto’s Subsidiaries to:

 

SECTION 6.01. ­   Existence, Properties, Insurance.  Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate, partnership or limited liability company existence, as applicable, rights and franchises and comply in all material respects with all laws applicable to it; at all times maintain, preserve and protect all franchises and trade names and preserve all of its property, in each case, used or useful in and material to the conduct of its business and keep the same in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted in the ordinary course at all times; and at all times maintain insurance covering its assets and its businesses with financially sound and reputable insurance companies or associations in such amounts and against such risks (including, without limitation, hazard, business interruption, public liability and product liability) as are usually carried by companies engaged in the same or similar business.  The Companies shall provide to the Lender promptly upon receipt thereof evidence of the annual renewal of each such policy.

 

  

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SECTION 6.02.   ­Payment of Indebtedness and Taxes.  Pay all indebtedness and obligations, now existing or hereafter arising, as and when due and payable in accordance with customary trade practices, and (b) pay and discharge or cause to be paid and discharged promptly all taxes, assessments and government charges or levies imposed upon it or upon its income and profits, or upon any of its property, real, personal or mixed, or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided, however, that neither Aceto nor any Subsidiary of Aceto shall be required to pay and discharge or cause to be paid and discharged any such tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, and Aceto or such Subsidiary, as the case may be, shall have set aside on its books adequate reserves determined in accordance with Generally Accepted Accounting Principles with respect to any such tax, assessment, charge, levy or claim so contested; further, provided that, subject to the foregoing proviso, Aceto and each of its Subsidiaries will pay or cause to be paid all such taxes, assessments, charges, levies or claims upon the commencement of proceedings to foreclose any lien which has attached as security therefor.

 

SECTION 6.03.   ­Financial Statements, Reports, etc.   Furnish to the Lender:

 

(a)   as soon as available, but in any event within 90 days after the end of each fiscal year of Aceto, a copy of the audited consolidated balance sheet of Aceto and its Subsidiaries as of the end of such year and the related audited consolidated statements of income, shareholders equity and cash flow for such year, setting forth in each case in comparative form the respective figures as of the end of and for the previous fiscal year, and accompanied by a report thereon of BDO Seidman LLP or other independent certified public accountants of recognized standing selected by Aceto and satisfactory to the Lender (the “Auditor”), which report shall be unqualified, and which statements shall be prepared in accordance with Generally Accepted Accounting Principles, applied on a consistent basis, and accompanied by a certificate to that effect executed by the Chief Financial Officer.

 

(b)   as soon as available, but in any event not later than 45 days after the end of each quarterly period of each fiscal year of Aceto, a copy of the unaudited interim consolidated balance sheet of Aceto and its Subsidiaries as of the end of each such quarter and the related unaudited interim consolidated and consolidating statements of income, shareholders equity and cash flow for such quarter and the portion of the fiscal year through such date and setting forth in each case in comparative form the respective figures for the corresponding date and period in the previous fiscal year, in each case prepared by the Chief Financial Officer in accordance with Generally Accepted Accounting Principles, applied on a consistent basis, and accompanied by a certificate to that effect executed by the Chief Financial Officer;

 

  

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        (c)   an annual debt compliance memorandum in the form previously provided to the Lender signed by the Auditor with each delivery required by clause (a);

 

(d)   a certificate prepared and signed by the Chief Financial Officer with each delivery required by (a) and (b), as to whether or not, as of the close of such preceding period and at all times during such preceding period, each Company was in compliance with all the provisions in this Agreement and the other Loan Documents, showing computation of financial covenants and quantitative negative covenants, and if the Chief Financial Officer shall have obtained knowledge of any default in such compliance or notice of such default, it shall disclose in such certificate such default or defaults or notice thereof and the nature thereof, whether or not the same shall constitute a Default or an Event of Default hereunder;

 

(e)   at all times indicated in clause (a) above a copy of the management letter, if any, prepared by the Auditor;

 

(f)   if applicable, promptly after filing thereof, copies of all regular and periodic financial information, proxy materials and other information and reports which Aceto or any of its Subsidiaries shall file with the Securities and Exchange Commission;

 

(g)   within forty-five (45) days after the end of each fiscal year a schedule of Material Contracts in effect as of the last day of such fiscal year;

 

(h)   within forty-five (45) days after the end of each fiscal quarter, (i) a calculation of Consolidated EBITDA and consolidated revenue of the Immaterial Subsidiaries (as that term is defined in Section 6.13) for such fiscal quarter ended and (ii) a report identifying (x) the cost of the remediation incurred with respect to the Carstadt Real Property during such fiscal quarter ended, (y) the total of such costs incurred to date, and (z) the outstanding Indebtedness, if any, identified in Section 7.02(m);

 

(i)   promptly after submission to any government or regulatory agency, all documents and information furnished to such government or regulatory agency other than such documents and information prepared in the normal course of business and which could not reasonably be expected to result in any materially adverse action to be taken by such agency; and

 

(j)   promptly, from time to time, such other information regarding the operations, business affairs and condition (financial or otherwise) of Aceto or any of its Subsidiaries as the Lender may reasonably request.

 

SECTION 6.04. ­   Books and Records; Access to Premises.  Keep adequate records and proper books of record and account in which complete entries will be made in a manner to enable the preparation of financial statements in accordance with Generally Accepted Accounting Principles, and which shall reflect all financial transactions of each Company and each of its Subsidiaries.  At any time, and from time to time permit the Lender or any agents or representatives thereof, to examine and make copies of and abstracts from the books and records of such information which the Lender deems is necessary or desirable (including, without limitation, the financial records of Aceto and each of its Subsidiaries) and to visit the properties of Aceto or any of its Subsidiaries and to discuss the affairs, finances and accounts of Aceto or any of its Subsidiaries with any of their respective Executive Officers or Aceto’s independent accountants.

 

  

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SECTION 6.05. ­   Notice of Adverse Change.  Promptly notify the Lender in writing of (a) any change in the business or the operations of Aceto or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect, and (b) any information which indicates that any financial statements which are the subject of any representation contained in this Agreement, or which are furnished to the Lender pursuant to this Agreement, fail, in any material respect, to present fairly, as of the date thereof and for the period covered thereby, the financial condition and results of operations purported to be presented therein, disclosing the nature thereof.

 

SECTION 6.06. ­   Notice of Default.    Promptly notify the Lender of any Default or Event of Default which shall have occurred, which notice shall include a written statement as to such occurrence, specifying the nature thereof and the action (if any) which is proposed to be taken with respect thereto.

 

SECTION 6.07.     Notice of Litigation.  Promptly notify the Lender of any action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency which, if adversely determined against Aceto or any Subsidiary of Aceto on the basis of the allegations and information set forth in the complaint or other notice of such action, suit or proceeding, or in the amendments thereof, if any, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.08.   ­Notice of Default in Other Agreements.  Promptly notify the Lender of any default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which Aceto or any Subsidiary of Aceto is a party which default could reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.09. ­   Notice of ERISA Event.  Promptly deliver to the Lender a certificate of the Chief Financial Officer setting forth details as to such occurrence and such action, if any, which a Company, or an ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by such Company, such ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator, with respect thereto: that a Reportable Event has occurred with respect to a Plan, that an accumulated funding deficiency has been incurred or an application may be or has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan, that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA, that one or more Plans have an Unfunded Current Liability giving rise to a Lien under ERISA, that proceedings may be or have been instituted to terminate a Plan, that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan, or that such Company, or any ERISA Affiliate will or may incur any liability (including any contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA.  The Companies will deliver to the Lender a complete copy of the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service.  In addition to any certificates or notices delivered to the Lender pursuant to the first sentence hereof, copies of annual reports and any other notices received by any Company required to be delivered to the Lender hereunder shall be delivered to the Lender no later than ten days after the later of the date such report or notice has been filed with the Internal Revenue Service or the PBGC, given to Plan participants or received by any Company.

 

  

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SECTION 6.10.   ­Notice of Environmental Law Violations.  Promptly notify the Lender of the receipt of any notice of an action, suit, and proceeding before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending against Aceto or any Subsidiary of Aceto relating to any alleged violation of any Environmental Law which could reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.11.   ­Notice Regarding Material Contracts.  Promptly notify the Lender of (a) any termination (prior to the end of its stated term), material amendment, material supplement or other material modification of any Material Contract and (b) the occurrence of a default by Aceto or any of its Subsidiaries, or by any party to any Material Contract of which the Companies are aware.

 

SECTION 6.12.   ­Compliance with Applicable Laws.  Comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority, the breach of which could reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.13.   Subsidiaries.  Give the Lender written notice of the creation, establishment or acquisition, in any manner, of any Subsidiary of Aceto not existing on the Closing Date not less than ten (10) days prior to such creation, establishment or acquisition.  Aceto or any Domestic Subsidiary, as appropriate, (a) shall execute the Lender’s form of pledge agreement, with respect to not more than 65% of the capital stock or equivalent interests of each Subsidiary which is or becomes First-Tier Foreign Subsidiary (together with certificates and powers with respect to such interests duly endorsed in blank, or such other documentation as requested by the Lender in order to grant and perfect a security interest in such interests); (b) shall cause each Subsidiary of Aceto which is a Domestic Subsidiary to execute a joinder agreement in form and substance satisfactory to the Lender pursuant to which such Domestic Subsidiary agrees to be bound by all of the obligations of a Company hereunder and under each Loan Document to which any Company is a party as if such Domestic Subsidiary was originally a party hereto and thereto; (c) deliver an opinion of counsel, simultaneously with the delivery of such pledge agreement executed pursuant to clause (a) above, that such Pledge Agreement is valid and enforceable in the jurisdiction of formation of such Foreign Subsidiary, provided that if such opinion cannot be provided, such Company or such Domestic Subsidiary, as appropriate, shall execute any additional documents that may be required in order to perfect the lien granted by such pledge agreement in such jurisdiction and to enable such counsel to deliver an acceptable opinion with respect thereto; in the case of both (a) and (b), within ten (10) Business Days after the creation, establishment or acquisition of such Subsidiary and in connection therewith shall deliver or cause to be delivered such proof of corporate action, incumbency of officers and other documents (including opinions of counsel) as are consistent with those delivered as to each Company pursuant to Section 5.01 hereof on the Closing Date, or as the Lender may request, each in form and substance satisfactory to the Lender.  The foregoing requirements of this Section 6.13 shall not apply with respect to (i) Aceto Pharmaceutical Shanghai Ltd., unless such pledge may be obtained pursuant to applicable law and is requested by the Lender upon not less than 30 days prior notice to Aceto, and (ii) each of Aceto Japan, Inc., Aceto Agriculture Chemical Corp. Ltd. and Aceto Agriculture Chemicals Corp. MX. S. DE. RI. DE .CV. and each other Foreign Subsidiary formed after the date hereof until the date on which such entity (an “Immaterial Subsidiary”) has (i) gross sales, determined in accordance with GAAP, consistently applied, of US $1,000,000 or more in any consecutive 12 month period, or (ii) a net worth of US $2,000,000 or more, determined in accordance with GAAP consistently applied, except all loans and advances from its Affiliates shall be deemed equity for purposes of determining such net worth.  Notwithstanding the foregoing, in the event that (i) the consolidated revenue of all the Immaterial Subsidiaries exceeds 10% of the consolidated revenues of Aceto and its Subsidiaries for any fiscal quarter or (ii) Consolidated EBITDA (calculated solely with respect to the Immaterial Subsidiaries) exceeds 10% of Consolidated EBITDA of Aceto and its Subsidiaries for any fiscal quarter, the requirements of this Section 6.13 shall again apply to such Immaterial Subsidiaries.

 

  

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SECTION 6.14.   ­Environmental Laws.  Comply in all material respects with the requirements of all Environmental Laws, provide to the Lender all documentation in connection with such compliance that the Lender may reasonably request, and defend, indemnify, and hold harmless the Lender and its respective employees, agents, officers, and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (a) the presence, disposal, or release of any Hazardous Materials on any property at any time owned or occupied by Aceto or any Subsidiary of Aceto; (b) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (c) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Materials, and/or (d) any violation of applicable Environmental Laws, including, without limitation, reasonable attorney and consultant fees, investigation and laboratory fees, court costs, and litigation expenses.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

The Companies, jointly and severally, covenant and agree with the Lender that so long as the Commitment remains in effect or any of the principal of or interest on the Note or any other Obligations hereunder shall be unpaid, it will not, and will not cause or permit any Subsidiary of Aceto, directly or indirectly, to:

 

SECTION 7.01.   ­Liens.      Incur, create, assume or suffer to exist any Lien on any of their respective assets now or hereafter owned, other than:

 

(a)    Liens existing on the date hereof as set forth on Schedule II attached hereto including any renewals or extensions thereof; provided that no such Lien is extended to cover any additional property and that the amount of Indebtedness secured thereby is not increased;

 

  

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(b)    Liens for taxes, assessments or other governmental charges or levies not yet delinquent or which are being contested in good faith by appropriate proceedings, provided, however, that adequate reserves with respect thereto are maintained on the books of the Companies or its Subsidiaries in accordance with Generally Accepted Accounting Principles;

 

(c)    Carriers’, warehousemens’, mechanics’, suppliers’ or other like Liens arising in the ordinary course of business and, to the extent the aggregate of such Liens secure obligations in excess of $300,000 in the aggregate, such Liens are  not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings in a manner which will not jeopardize or diminish the interest of the Lender in any of the collateral subject to the Security Documents;

 

(d)    Liens incurred or deposits to secure the performance of tenders, bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety, performance and appeal bonds, and other obligations of similar nature incurred in the ordinary course of business;

 

(e)    Easements, rights of way, restrictions and other similar charges or encumbrances which in the aggregate do not interfere in any material respect with the occupation, use and enjoyment by Aceto or any of its Subsidiaries of the property or assets encumbered thereby in the normal course of their respective business or materially impair the value of the property subject thereto;

 

(f)        Deposits under workmen’s compensation, unemployment insurance and social security laws;

 

(g)       Liens granted to the Lender under this Agreement or any other Loan Document;

 

(h)       Purchase money liens for fixed assets including obligations with respect to Capital Leases; provided in each case (i) no Default or Event of Default shall have occurred and be continuing or shall occur after giving effect to such lien, (ii) such purchase money lien does not exceed 100% of the purchase price of, and encumbers only, the property acquired, and (iii) such purchase money Lien does not secure any Indebtedness other than in respect of the purchase price of the asset acquired;

 

(i)        Liens on the real property acquired with the proceeds of the mortgage indebtedness permitted pursuant to Section 7.02(i);

 

(j)        Liens granted to the seller in connection with a Permitted Acquisition; provided such Liens (i) encumber solely the assets acquired from such seller and (ii) secure solely indebtedness permitted pursuant to Section 7.02(l); and

 

(k)      The Pilot Mortgage.

 

SECTION 7.02.   Indebtedness.  Incur, create, assume or suffer to exist or otherwise become liable in respect of any Indebtedness, other than:

 

(a)    Indebtedness incurred prior to the date hereof as described in Schedule III attached hereto, including any renewals or extensions thereof; provided such renewal or extension does not result in an increase in the aggregate principal amount of such Indebtedness;

 

  

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(b)   Indebtedness to the Lender under this Agreement, the Note or any other Loan Document;

 

(c)   Indebtedness for trade payables incurred in the ordinary course of business; provided such payables shall be paid or discharged when due;

 

(d)   Indebtedness consisting of guarantees permitted pursuant to Section 7.03;

 

(e)   Indebtedness secured by purchase money liens as permitted under Section 7.01(h); provided such Indebtedness incurred in any fiscal year of Aceto shall not exceed $500,000, and, further, provided no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to the incurrence of such Indebtedness;

 

(f)            Unsecured Indebtedness of Foreign Subsidiaries to (i) Deutsche Bank, in an amount not to exceed 14,000,000 Euros, in the aggregate, at any time, and (ii) ING Bank, in an amount not to exceed 500,000 Euros, in the aggregate, at any time; 

 

(g)          Indebtedness assumed in connection with any Permitted Acquisition,  provided that such Indebtedness shall not exceed $5,000,000, in the aggregate, with respect to all Permitted Acquisitions; and

 

(h)          Indebtedness arising under Capital Leases; provided that the aggregate amount of such Indebtedness incurred in any fiscal year of Aceto shall not exceed $500,000; and

 

(i)           Commercial mortgage indebtedness, having terms reasonably acceptable to the Lender, in an amount not to exceed $4,000,000 in connection with the purchase of the land and improvements located at 4 Tri Harbor Court, Port Washington, New York;

 

(j)   Indebtedness owing from one Company to another Company;

 

(k)          Indebtedness consisting of loans and advances permitted pursuant to Sections 7.06(d) and 7.06(g);

 

(l)   Indebtedness constituting all or a portion of the purchase price owing to the seller in connection with a Permitted Acquisition; provided such Indebtedness shall not exceed $2,000,000 in the aggregate at any one time outstanding;

 

(m)         Unsecured Indebtedness, not to exceed $6,000,000 in the aggregate (exclusive of the portion thereof for which Arsynco is entitled to reimbursement from BASF Corporation pursuant to the terms of the Settlement Agreement dated July 19, 2009 by and between Arsynco and BASF Corporation), with respect to performance bonds or surety bonds required under the “ISRA Remediation Approval” under Industrial Site Recovery Act Case No. E93024 and the U.S. Environmental Protection Agency approval of a Risk Based Clean Up/Disposal of Polychlorinated Biphenyl Remediation Waste.  Both approvals are in reference to Asrynco Inc.’s property at 511 13th Street, Carstadt, New Jersey also being known and designated as Block 91, Lot 1 on the Tax Map of the borough of Carstadt, New Jersey; and

 

  

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(n)   Other Indebtedness, which when aggregated with the aggregate obligations under those guarantees permitted pursuant to Section 7.03(e), shall not exceed $3,000,000 at any one time outstanding.

 

SECTION 7.03.   ­Guaranties.    Guarantee, endorse, become surety for, or otherwise in any way become or be responsible for the Indebtedness or obligations of any other Person, whether by agreement to maintain working capital or equity capital or otherwise maintain the net worth or solvency of any Person or by agreement to purchase the Indebtedness of any other Person, or agreement for the furnishing of funds, directly or indirectly, through the purchase of goods, supplies or services for the purpose of discharging the Indebtedness of any other Person or otherwise, or enter into or be a party to any contract for the purchase of merchandise, materials, supplies or other property if such contract provides that payment for such merchandise, materials, supplies or other property shall be made regardless of whether delivery of such merchandise, supplies or other property is ever made or tendered except:

 

(a)   guaranties executed prior to the date hereof as described on Schedule IV attached hereto but not including any renewals or extension thereof;

 

(b)   endorsements of negotiable instruments for collection or deposit in the ordinary course of business;

 

(c)   guaranties of any Indebtedness under this Agreement or any other Loan Document;

 

(d)   guaranties by any Company of any Indebtedness permitted pursuant to clauses (c), (e), (f), (g), (h), (i), (j)and (l) of Section 7.02 hereof of any other Company;

 

(e)   other guaranties, which when aggregated with the aggregate amount of indebtedness outstanding pursuant to Section 7.02(n), shall not exceed $3,000,000 at any one time outstanding.

 

(f)   guaranties of the obligations of Aceto Realty LLC under the Lease and Pilot Mortgage.

 

SECTION 7.04.  ­Sale of Assets.  Sell, assign, lease, transfer or otherwise dispose of any of their now owned or hereafter acquired respective properties and assets, whether or not pursuant to an order of a federal agency or commission, except for (a) the sale of inventory disposed of in the ordinary course of business, (b) so long as no Event of Default shall have occurred and is continuing or would occur as a result thereof, the sale or other disposition of properties or assets no longer used or useful in the conduct of their respective businesses, (c) the sale of certain real property and improvements of Aceto Realty LLC pursuant to the IDA Transaction and (d) the sale (including any option for purchase) or lease of Arsynco Inc.’s real property and improvements located at Carlstadt, New Jersey.

 

SECTION 7.05.  Sales of Receivables.  Sell, transfer, discount or otherwise dispose of notes, accounts receivable or other obligations owing to Aceto or any of its Subsidiaries, with or without recourse, except for collection in the ordinary course of business.

 

  

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SECTION 7.06.  ­Loans and Investments.  Make or commit to make any advance, loan, extension of credit, or capital contribution to, or purchase or hold beneficially any stock or other securities, or evidence of Indebtedness of, purchase or acquire all or a substantial part of the assets of, make or permit to exist any interest whatsoever in, any other Person except for (a) the ownership of stock of any Subsidiaries existing as of the Closing Date or acquired after the date hereof, provided the Companies has complied with its obligations under Section 6.13 with respect to such Subsidiary, (b) Eligible Investments, (c) Permitted Acquisitions, (d) investments, loans or advances made on or after the Closing Date by the Companies in Foreign Subsidiaries in an aggregate amount not to exceed $5,000,000, during the term of this Agreement, (e) repurchases of stock as permitted pursuant to Section 7.14(ii), (f) loans and advances to customers, suppliers and/or vendors of any Company provided the aggregate principal amount of all such loans and advances shall not exceed $2,000,000, and (g) loans and advances by Foreign Subsidiaries to other Foreign Subsidiaries.

 

SECTION 7.07.  ­Nature of Business.   Change or alter, in any material respect, the nature of its business from the nature of the business engaged in by it on the date hereof.

 

SECTION 7.08. ­  Sale and Leaseback.  Except as contemplated by the IDA Transaction, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, whether real or personal, used or useful in its business, whether now owned or hereafter acquired, of it or any of its Subsidiaries, if the aggregate sales price of all such assets sold or transferred during the term of this Agreement exceeds $100,000, and at the time of such sale or disposition it intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.

 

SECTION 7.09.  Federal Reserve Regulations.  Permit any Loan or the proceeds of any Loan to be used for any purpose which violates or is inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

SECTION 7.10.  ­Accounting Policies and Procedures.  Except as required by applicable law, rule or regulation, permit any change in the accounting policies and procedures of Aceto or any of its Subsidiaries, including a change in fiscal year, provided, however, any Foreign Subsidiary may change its fiscal year to reflect a fiscal year ending on June 30th of each year, and provided, further that any policy or procedure required to be changed by the Financial Accounting Standards Board (or other board or committee thereof) in order to comply with Generally Accepted Accounting Principles may be so changed.

 

SECTION 7.11.  ­Hazardous Materials.  Cause or permit any of its properties or assets to be used to generate, manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce or process Hazardous Materials, except in compliance with all applicable federal, state and local laws or regulations, or cause or permit, a release of Hazardous Materials onto such property or asset or onto any other property in violation of any such local laws or regulations.

 

SECTION 7.12.  Limitations on Fundamental Changes.   Merge or consolidate with, or sell, assign, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now or hereafter acquired) to, any Person, acquire all of the stock or all or substantially all of the assets or the business of any Person (except pursuant to a Permitted Acquisition) or liquidate, wind up or dissolve or suffer any liquidation or dissolution.

 

  

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SECTION 7.13.  ­Financial Condition Covenants.

 

(a)      Consolidated Domestic EBITDA.  Permit Consolidated Domestic EBITDA to be less than the amount set forth below opposite the applicable fiscal quarter ending:

 

Period                                                                                                       Domestic EBITDA

 

Fiscal Quarter Ending 12/31/09                                                             $1,500,000

Fiscal Quarter Ending 3/31/10                                                               $2,500,000

Fiscal Quarter Ending 6/30/10                                                               $4,000,000

Fiscal Quarter ending 9/30/10                                                               $4,300,000

Fiscal Quarter Ending 12/31/10                                                             $4,300,000

Fiscal Quarter Ending 3/31/11                                                               $5,100,000

Fiscal Quarter Ending 6/30/11                                                               $6,300,000

Fiscal Quarter Ending 9/30/11                                                               $6,300,000

Fiscal Quarter Ending 12/31/11                                                             $6,600,000

Fiscal Quarter Ending 3/31/12                                                               $6,600,000

Fiscal Quarter Ending 6/30/12                                                               $6,600,000

Fiscal Quarter Ending 9/30/12                                                               $7,000,000

Fiscal Quarter Ending 12/31/12                                                             $7,000,000

 

(b)  Consolidated Total Funded Debt to Consolidated EBITDA.  Permit the ratio of Consolidated Total Funded Debt to Consolidated EBITDA to be greater than, at the end of any fiscal quarter 2.25:1.00.

 

(c)  Consolidated Debt Service Coverage Ratio.   Permit Consolidated Debt Service Coverage Ratio to be less than 1.50:1.00, at the end of any fiscal quarter.

 

SECTION 7.14.  ­Dividends.   Declare any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of stock of Aceto or any of its Subsidiaries or any warrant to purchase any class of stock of Aceto or any of its Subsidiaries, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash, securities or property or in obligations of Aceto or any of its Subsidiaries or in any combination thereof, or permit any Affiliate to make any payment on account of, or purchase or otherwise acquire, any shares of any class of the stock of Aceto or any of its Subsidiaries or any warrant to purchase any class of stock of Aceto or any of its Subsidiaries from any Person, provided (a) if no Default or Event of Default shall have occurred and is then continuing or could occur as a result thereof, Aceto may (i) make dividends and distributions to its shareholders in any fiscal year not to exceed an amount equal to $7,500,000 in the aggregate and (ii) make buy-backs, redemptions and repurchases of its common stock not in excess of $10,,000,000, in the aggregate, during the term of this Agreement, (b) any wholly-owned Domestic Subsidiary of Aceto may make dividends or distributions to its shareholders or members, and (c) any Subsidiary of Aceto which is a Foreign Subsidiary and which at least 70% of the outstanding capital stock or membership interest is owed by Aceto and/or its Subsidiaries may make dividends or distributions to its shareholders or members.

 

  

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SECTION 7.15.  ­Transactions with Affiliates.  Enter into any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate (other than Aceto or any of Aceto’s Subsidiaries), except in the ordinary course of and pursuant to the reasonable requirements of Aceto or any of its Subsidiaries’ business and upon fair and reasonable terms no less favorable to Aceto or such Subsidiary than they would obtain in a comparable arms-length transaction with a Person not an Affiliate (other than Aceto or any of Aceto’s Subsidiaries).

 

SECTION 7.16.  Impairment of Security Interest.  Take or omit to take any action which could reasonably be expected to have the result of impairing the security interest in any property subject to a security interest in favor of the Lender or grant to any person any interest whatsoever in any property which is subject to a security interest in favor of the Lender.

 

SECTION 7.17.  Governmental Regulation.  (1)  Be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to the Companies or from otherwise conducting business with the Companies, or (2) fail to provide documentary and other evidence of the Companies' identity as may be requested by Lender at any time to enable Lender to verify Company's identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

ARTICLE VIII.

EVENTS OF DEFAULT

 

SECTION 8.01.  ­Events of Default.  In the case of the happening of any of the following events (each an “Event of Default”):

 

(a)   failure to pay the principal of, or interest on, any Loan, any reimbursement obligations with respect to a drawing under any Letter of Credit, or any fee or other amount due under this Agreement, as and when due and payable;

 

(b)   default shall be made in the due observance or performance of (i) any covenant, condition or agreement of Aceto or any of its Subsidiaries to be performed pursuant to Article VII of this Agreement or (ii) any other covenant, condition or agreement of Aceto or any of its Subsidiaries to be performed pursuant to this Agreement or any other Loan Document (other than those specified in clause (a) of this Section 8.01) and such default, if capable of cure, shall continue unremedied for a period of twenty (20) days from the date of such default.

 

(c)   any representation or warranty made or deemed made in this Agreement or any other Loan Document shall prove to be false or misleading in any material respect when made or given or when deemed made or given;

 

  

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(d)   any report, certificate, financial statement or other instrument furnished in connection with this Agreement or any other Loan Document or the borrowings hereunder, shall prove to be false or misleading in any material respect when made or given or when deemed made or given;

 

(e)   default in the performance or compliance in respect of any agreement or condition relating to any Indebtedness of Aceto or any of its Subsidiaries in excess of $1,000,000 individually or in the aggregate (other than the Note) if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder or obligee thereof (or a trustee on behalf of such holder or obligee) to cause such Indebtedness to become due prior to the stated maturity thereof, or, any such Indebtedness shall not be paid when due;

 

(f)           Aceto or any of its Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the employment of a receiver, trustee, custodian, sequestrator or similar official for any Company or any of its Subsidiaries or for a substantial part of its property; (iv) file an answer admitting the material allegations of a petition filed against it in such proceeding, (v) make a general assignment for the benefit of creditors, (vi) take corporate action for the purpose of effecting any of the foregoing; or(vii) become unable or admit in writing its inability or fail generally to pay its debts as they become due;

 

(g)   an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Aceto or any of its Subsidiaries or of a substantial part of their respective property, under Title 11 of the United States Code or any other federal or state bankruptcy insolvency or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for Aceto or any of its Subsidiaries or for a substantial part of their property, or (iii) the winding-up or liquidation of Aceto or any of its Subsidiaries and such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 30 days;

 

(h)   one or more orders, judgments or decrees for the payment of money in excess of $1,000,000 in the aggregate (not fully covered, but subject to customary deductibles, by insurance the coverage of which is not in dispute) shall be rendered against Aceto or any of its Subsidiaries and the same shall not have been paid in accordance with such judgment, order or decree or settlement and either (i) an enforcement proceeding shall have been commenced by any creditor upon such judgment, order or decree, or (ii) there shall have been a period of forty-five (45) consecutive days with respect to Aceto or any Domestic Subsidiary or ninety (90) consecutive days with respect to any Foreign Subsidiary during which a stay of enforcement of such judgment, order or decree, by reason of pending appeal or otherwise, was not in effect;

 

  

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(i)  any Plan shall fail to maintain the minimum funding standard required for any Plan year or part thereof or a waiver of such standard or extension of any amortization period is applied for or granted under Section 412 of the Code, any Plan is terminated by Aceto or any ERISA Affiliate or the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a Reportable Event shall have occurred with respect to a Plan or Aceto, any of its Subsidiaries or any ERISA Affiliate shall have incurred a liability to or on account of a Plan under Section 515, 4062, 4063, 4201 or 4204 of ERISA, and there shall result from any such event or events the imposition of a lien upon the assets of Aceto or any of its Subsidiaries or the granting of a security interest on such assets, or a liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty under Section 4971 of the Code;

 

(j)  any material provision of any Loan Document shall for any reason cease to be in full force and effect in accordance with its terms or Aceto or any of its Subsidiaries shall so assert in writing;

 

(k)  a Change of Control shall have occurred;

 

(l)       any material or adverse change in the financial condition of Aceto or Aceto and its Subsidiaries, taken as a whole, shall have occurred;

 

(m)     any of the Liens purported to be granted pursuant to any Security Document shall fail or cease for any reason to be legal, valid and enforceable liens on the collateral purported to be covered thereby or shall fail or cease to have the priority purported to be created thereby;

 

(n)  The cost of the remediation with respect to the Carlstadt Real Property (exclusive of those costs paid by BASF Corporation) exceeds $6,000,000 in the aggregate, or

 

(o)  the occurrence or existence of any default or other similar condition or event (however described) with respect to any Rate Management Transaction Agreement;

 

then, at any time thereafter during the continuance of any such event, the Lender may, in its sole discretion, by written or telephonic notice to the Companies, take either or both of the following actions, at the same or different times, (a) terminate the Commitment and (b) declare (i) the Note, both as to principal and interest, (ii) an amount equal to the maximum amount that may be drawn under all Letters of Credit then outstanding (whether or not any beneficiary under any Letter of Credit shall have presented or be entitled to present the drafts and other documents required to draw under such Letter of Credit), and (iii) all other Obligations, to be forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Note to the contrary notwithstanding; provided, however, that if an event specified in Section 8.01(f) or (g) shall have occurred, the Commitment shall automatically terminate and interest, principal and amounts referred to in the preceding clauses (i), (ii), and (iii) shall be immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are expressly waived, anything contained herein or in the Note to the contrary notwithstanding.  With respect to all Letters of Credit that shall not have matured or presentment for honor shall not have occurred, the Companies shall provide the Lender with Cash Collateral in an amount equal to the aggregate undrawn amount of the Letters of Credit.  Such Cash Collateral shall be applied by the Lender to reimburse it for drawings under Letters of Credit for which the it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Companies at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other Obligations.

 

  

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ARTICLE IX.

MISCELLANEOUS

 

SECTION 9.01.    ­Notices.               All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including telecopy), and unless otherwise expressly provided herein, shall be conclusively deemed to have been received by a party hereto and to be effective on the day on which delivered by hand to such party or one Business Day after being sent by overnight mail to the address set forth below, or, in the case of telecopy notice, when acknowledged as received, or if sent by registered or certified mail, three (3) Business Days after the day on which mailed in the United States, addressed to such party at such address:

 

(a)           if to the Lender, at

 

JPMorgan Chase Bank, N.A.

395 North Service Road

Melville, New York 11747

Attention:                      Relationship Manager for Aceto Corporation

Telecopy:                      (631 ) 755-5110

 

With a copy to:

 

Farrell Fritz, P.C.

1320 RXR Plaza

Uniondale, New York 11556

Attention:   Stephen F. Melore, Esq.

Telecopy:  (516) 336-2207

 

(b)           if to the Companies, at

 

c/o Aceto Corporation

One Hollow Lane

Lake Success, New York 11042

Attention:    Mr. Douglas Roth

       Vice President and Chief Financial Officer

Telecopy:   (516) 627-6419

 

With a copy to”

 

Fischer & Burstein, P.C.

98 Cutter Mill Road, Suite 294N

Great Neck, New York 11021

Attention:   Stanley H. Fischer, Esq.

Telecopy:  (516) 829-5973

 

- and -

 

  

48

  

 

(c)           as to each such party at such other address as such party shall have designated to the other in a written notice complying as to delivery with the provisions of this Section 9.01.

 

SECTION 9.02.  ­Effectiveness; Survival.  This Agreement shall become effective on the date on which all parties hereto shall have signed a counterpart copy hereof and shall have delivered the same to the Lender.  All representations and warranties made herein and in the other Loan Documents and in the certificates delivered pursuant hereto or thereto shall survive the making by the Lender of the Loans and the issuance of the Letters of Credit, in each case, as herein contemplated and the execution and delivery to the Lender of the Note evidencing the Loans and shall continue in full force and effect so long as the Obligations hereunder are outstanding and unpaid and the Commitments are in effect.  The obligations of the Companies pursuant to Section 3.07, Section 3.08, Section 3.10 and Section 9.03 shall survive termination of this Agreement and payment of the Obligations.

 

SECTION 9.03.  ­Expenses.  The Companies, jointly and severally, agree (a) to indemnify, defend and hold harmless the Lender and its officers, directors, employees, and affiliates (each, an “indemnified person”) from and against any and all losses, claims, damages, liabilities or judgments to which any such indemnified person may be subject and arising out of or in connection with the Loan Documents, the financings contemplated hereby, the use of any proceeds of such financings or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any of such indemnified persons is a party thereto, and to reimburse each of such indemnified persons upon demand for any reasonable, legal or other expenses incurred in connection with the investigation or defending any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities, judgments or related expenses to the extent arising from the willful misconduct or gross negligence of such indemnified person, (b) to pay or reimburse the Lender for all its out-of-pocket costs and expenses incurred in connection with the preparation and execution of and any amendment, supplement or modification to this Agreement, the Note any other Loan Documents, and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including without limitation, the reasonable fees and disbursements of Farrell Fritz, P.C., counsel to the Lender, and the reasonable fees and disbursements of counsel retained by the Lender in connection with the pledge of shares of a Foreign Subsidiary pursuant to Section 6.13, and (c) to pay or reimburse the Lender for all their costs and expenses incurred in connection with the enforcement and preservation of any rights under this Agreement, the Note, the other Loan Documents, and any other documents prepared in connection herewith or therewith, including, without limitation, the reasonable fees and disbursements of counsel (including, without limitation, in-house counsel) to the Lender, including all such out-of-pocket expenses incurred during any work-out, restructuring or negotiations in respect of the Obligations.

 

SECTION 9.04.  Successors and Assigns; Participations.

 

(a)  This Agreement shall be binding upon and inure to the benefit of the Companies, the Lender, all future holders of the Note and their respective successors and assigns, except that no Company may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender.

 

  

49

  

 

(b)  The Lender reserves the right to sell participations in or to sell and assign its rights, duties or obligations with respect to the Loans or the Commitments to such banks, lending institutions or other parties as it may choose and without the consent of the Companies.  The Lender may furnish any information concerning Aceto or any of its Subsidiaries in its possession from time to time to any assignee or participant (or proposed assignee or participant).  The Lender may at any time pledge or assign or grant a security interest in all or any part of its rights under this Agreement and its Note to a Federal Reserve Bank, provided that no such assignment shall release the transferor Lender from its Commitment or its obligations hereunder or substitute any such pledgee or assignee for the Lender as a party to this Agreement.

 

SECTION 9.05.  ­No Waiver; Cumulative Remedies.  Neither any failure nor any delay on the part of the Lender in exercising any right, power or privilege hereunder or under any Note or any other Loan Document shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.  The rights, remedies, powers and privileges herein provided or provided in the other Loan Documents are cumulative and not exclusive of any rights, remedies powers and privileges provided by law.

 

SECTION 9.06.  ­APPLICABLE LAW. THIS AGREEMENT AND THE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.

 

SECTION 9.07. ­  SUBMISSION TO JURISDICTION.  EACH OF THE COMPANIES HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, COUNTY OF QUEENS OR COUNTY OF NASSAU IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE COMPANIES HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF THEREOF MAY NOT BE LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE COMPANIES AGREES NOT TO ASSERT ANY COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM CONSTITUTES A COMPULSORY OR MANDATORY COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL PROCEDURE.  EACH OF THE COMPANIES AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.

 

  

50

  

 

SECTION 9.08.  Waiver of Special Damages.  EACH COMPANY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE LENDER IN ANY LEGAL ACTION OR PROCEEDING ANY  SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

SECTION 9.09.  Jury Waiver.   EACH COMPANY AND THE LENDER HEREBY VOLUNTARILY, KNOWLINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE COMPANIES AND THE LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE OTHER RELATED DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE FINANCING EVIDENCED BY THIS NOTE.

 

SECTION 9.10.  Reinstatement; Certain Payments.  If claim is ever made upon the Lender for repayment or recovery of any amount or amounts received by the Lender in payment or on account of any of the Obligations under this Agreement, the Lender shall give prompt notice of such claim to each Company, and if the Lender repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Lender or any of its property, or (ii) any settlement or compromise of any such claim effected by the Lender with any such claimant, then and in such event each Company agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Company notwithstanding the cancellation of the Note or other instrument evidencing the Obligations under this Agreement or the termination of this Agreement, and each Company shall be and remain jointly and severally liable to the Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Lender.

 

SECTION 9.11.  ­Severability.  In case any one or more of the provisions contained in this Agreement, any Note or any other Loan Document should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby.

 

SECTION 9.12.  ­Right of Setoff.  If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates are each 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 the Lender or any Affiliate of the Lender to or for the credit or the account of any Company against any and all of the Obligations of, irrespective of whether or not the Lender shall have made any demand under this Agreement or any Note and although such obligations may be unmatured.  The rights of the Lender and each Affiliate of the Lender under this Section 9.09 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which they may have.

 

  

51

  

 

SECTION 9.13.  Confidentiality.  The Lender agrees that it will not disclose without the prior consent of the Companies (other than to affiliates of the Lender and its directors, employees, auditors, counsel or other professional advisors and their respective counsel who are advised of the need to maintain the confidentiality thereof) any Confidential Information (as defined below) with respect to Aceto or any of its Subsidiaries which is furnished by such Company; provided that the Lender may disclose any such information (a) that is or has become generally available to the public; (b) as may be required or appropriate (i) in any report, statement or testimony submitted to any municipal, state or federal or other governmental regulatory body having or claiming to have jurisdiction over the Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors or (ii) in connection with any request or requirement of any such regulatory body; (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation; (d) to comply with any law, order, regulation or ruling applicable to the Lender; and (e) to any prospective Transferee in connection with any contemplated transfer of any of the Notes or any interest therein by the Lender; provided that such prospective Transferee agrees to be bound by this Section 9.13 to the same extent as the Lender.  As used herein “Confidential Information” shall mean information with respect to Aceto and any of its Subsidiaries which is not generally available to the public other than such information which after the date hereof becomes generally available to the public through no fault or action by the Lender or becomes available to the Lender on a nonconfidential basis from a source other than any Company which to the Lender’s knowledge is not prohibited from disclosing such information by any contractual, legal or fiduciary obligation owed to any Company.  In the event of disclosure pursuant to the preceding clauses (b), (c) and (d) (other than in connection with bank executions and reporting to bank regulatory authorities) the Lender shall to the extent permitted by applicable law, make commercially reasonable efforts to notify such Company of the disclosure in advance thereof.

 

SECTION 9.14.  ­Headings.  Section headings used herein are for convenience of reference only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.

 

SECTION 9.15. ­  Construction.  This Agreement is the result of negotiations between, and has been reviewed by, each of the Companies, the Lender and their respective counsel.  Accordingly, this Agreement shall be deemed to be the product of each party hereto, and no ambiguity shall be construed in favor of or against the Companies or the Lender.

 

SECTION 9.16. ­  JOINT AND SEVERAL OBLIGATIONS.  (A)    BENEFITS.  THE LOANS WILL DIRECTLY OR INDIRECTLY BENEFIT EACH COMPANY HEREUNDER SEVERALLY, AND ALL OF THEM JOINTLY, REGARDLESS OF THE FACT NO COMPANY RECEIVES ALL OR PART OF THE PROCEEDS OF ANY OF THE LOANS.

 

(B)       ACCEPTANCE OF JOINT AND SEVERAL LIABILITY.  EACH OF THE COMPANIES IS ACCEPTING JOINT AND SEVERAL LIABILITY HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS IN CONSIDERATION OF THE FINANCIAL ACCOMMODATIONS TO BE PROVIDED BY THE LENDERS UNDER THIS AGREEMENT, FOR THE MUTUAL BENEFIT, DIRECTLY AND INDIRECTLY, OF EACH OF THE COMPANIES AND IN CONSIDERATION OF THE UNDERTAKINGS OF EACH OTHER COMPANY TO ACCEPT JOINT AND SEVERAL LIABILITY FOR THE OBLIGATIONS.

 

  

52

  

 

(C)           PAYMENT AND PERFORMANCE.  EACH OF THE COMPANIES, JOINTLY AND SEVERALLY, HEREBY IRREVOCABLY AND UNCONDITIONALLY ACCEPTS, NOT AS A SURETY BUT AS A CO-DEBTOR, JOINT AND SEVERAL LIABILITY WITH THE OTHER COMPANIES, WITH RESPECT TO THE PAYMENT AND PERFORMANCE OF ALL OF THE OBLIGATIONS, IT BEING THE INTENTION OF THE PARTIES HERETO THAT ALL THE OBLIGATIONS SHALL BE THE JOINT AND SEVERAL OBLIGATIONS OF EACH OF THE COMPANIES WITHOUT PREFERENCE OR DISTINCTION AMONG THEM.

 

(D)           FAILURE TO PERFORM.  IF AND TO THE EXTENT THAT ANY OF THE COMPANIES SHALL FAIL TO MAKE ANY PAYMENT WITH RESPECT TO ANY OF THE OBLIGATIONS AS AND WHEN DUE OR TO PERFORM ANY OF THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS THEREOF, THEN IN EACH SUCH EVENT THE OTHER COMPANIES WILL MAKE SUCH PAYMENT WITH RESPECT TO, OR PERFORM, SUCH OBLIGATION.

 

(E)          WAIVER OF NOTICE; ASSENT TO ACTIONS; ETC.  THE OBLIGATIONS OF EACH OF THE COMPANIES UNDER THE PROVISIONS OF THIS SECTION 10.15 CONSTITUTE FULL RECOURSE OBLIGATIONS OF EACH OF THE COMPANIES ENFORCEABLE AGAINST EACH SUCH COMPANY, IRRESPECTIVE OF THE VALIDITY, REGULARITY OR ENFORCEABILITY OF THIS AGREEMENT AS AGAINST ANY PARTICULAR COMPANY.  EACH AND EVERY REPRESENTATION, WARRANTY, COVENANT AND AGREEMENT MADE BY THE COMPANIES, OR ANY OF THEM, HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS SHALL BE JOINT AND SEVERAL, WHETHER OR NOT SO EXPRESSED, AND SUCH OBLIGATIONS OF ANY COMPANY SHALL NOT BE SUBJECT TO ANY COUNTERCLAIM, SETOFF, OR RECOUPMENT BASED UPON ANY CLAIM ANY COMPANY MAY HAVE AGAINST ANY OTHER COMPANY OR THE LENDER, AND SHALL REMAIN IN FULL FORCE AND EFFECT WITHOUT REGARD TO, AND SHALL NOT BE RELEASED, DISCHARGED OR IN ANY WAY AFFECTED BY, ANY CIRCUMSTANCES OR CONDITION AFFECTING ANY OTHER COMPANY, INCLUDING WITHOUT LIMITATION (A) ANY WAIVER, CONSENT, EXTENSION, RENEWAL, INDULGENCE OR OTHER ACTION OR INACTION UNDER OR IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY AGREEMENT OR OTHER DOCUMENT RELATED THERETO WITH RESPECT TO ANY OTHER COMPANY, OR ANY EXERCISE OR NONEXERCISE OF ANY RIGHT, REMEDY, POWER OR PRIVILEGE UNDER OR IN RESPECT OF ANY SUCH AGREEMENT OR INSTRUMENT WITH RESPECT TO ANY OTHER COMPANY, OR THE FAILURE TO GIVE NOTICE OF ANY OF THE FOREGOING TO ANY OTHER COMPANY, (B) ANY INVALIDITY OR UNENFORCEABILITY, IN WHOLE OR IN PART, OF ANY SUCH AGREEMENT OR INSTRUMENT WITH RESPECT TO ANY OTHER COMPANY; (C) ANY FAILURE ON THE PART OF ANY OTHER COMPANY FOR ANY REASON TO PERFORM OR COMPLY WITH ANY TERM OF ANY SUCH AGREEMENT OR INSTRUMENT; (D) ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION, ARRANGEMENT, READJUSTMENT, COMPOSITION, LIQUIDATION OR SIMILAR PROCEEDING WITH RESPECT TO ANY OTHER COMPANY OR ITS PROPERTIES OR CREDITORS; OR (E) ANY OTHER OCCURRENCE WHATSOEVER, WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WITH RESPECT TO ANY OTHER COMPANY.  EACH COMPANY HEREBY WAIVES ANY REQUIREMENT OF DILIGENCE OR PROMPTNESS ON THE PART OF THE LENDERS IN THE ENFORCEMENT OF THEIR RIGHTS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT WITH RESPECT TO THE OBLIGATIONS OF ITSELF OR OF ANY OTHER COMPANY.  WITHOUT LIMITING THE FOREGOING ANY FAILURE TO MAKE ANY DEMAND UPON, TO PURSUE OR EXHAUST ANY RIGHTS OR REMEDIES AGAINST A COMPANY, OR ANY DELAY WITH RESPECT THERETO, SHALL NOT AFFECT THE OBLIGATIONS OF ANY OTHER COMPANY HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT.

 

  

53

  

 

SECTION 9.17.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, taken together, shall constitute one and the same instrument.

 

[The Next Page is the Signature Page]

 

  

54

  

IN WITNESS WHEREOF, the Companies and the Lender have caused this Agreement to be duly executed by their duly authorized officers, as of the day and year first above written.

 

	
ACETO CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

	
ACETO AGRICULTURAL

CHEMICALS CORPORATION

 

By:__________________________

Name: Douglas Roth

Title: Secretary

 

	
CDC PRODUCTS CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACCI REALTY CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO PHARMA CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ARSYNCO INC.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO REALTY LLC

 

By:__________________________

Name:           Vincent Miata

Title:           President

	
JPMORGAN CHASE BANK, N.A.

 

 

By:__________________________

Name:

Title:

 

  

55

  

SCHEDULE I

 

 Subsidiaries

 

	
  

	
Name of Entity

	
State of

Incorporation    

or Formation

	
Owners of Shares or Interests

Names and Percentages 

of Shares Owned

                                       

  

56

  

SCHEDULE II

 

 Existing Liens

 

None

 

  

57

  

SCHEDULE III

 

Existing Indebtedness

 

  

58

  

SCHEDULE IV

 

Existing Guarantees

 

  

59

  

 

SCHEDULE V

 

Material Contracts

 

  

60

  

SCHEDULE VI

 

Environmental Matters

 

  

61

  

SCHEDULE VII

 

Litigation

 

  

62

  

 

EXHIBIT A

 

  

  

  

 

AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

	 $­­­25,000,000  	Uniondale, New York
	 	 April 23, 2010

 

FOR VALUE RECEIVED, ACETO CORPORATION, a New York corporation, ACETO AGRICULTURAL CHEMICALS CORPORATION, a New York corporation, CDC PRODUCTS CORPORATION, a New York corporation, ACETO PHARMA CORP., a  Delaware corporation, ACCI REALTY CORP., a New York corporation, ARSYNCO INC., a New Jersey corporation, and ACETO REALTY LLC, a New York limited liability company (each a “Company” and, collectively, the “Companies”), jointly and severally, promise to pay to the order of JPMORGAN CHASE BANK, N.A. (the “Lender”), on or before the Revolving Credit Commitment Termination Date, the principal amount of the Revolving Credit Commitment or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Lender to the Companies under the Credit Agreement referred to below.

 

The Companies, jointly and severally, also promise to pay interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times which shall be determined, and to make principal repayments on this Note at the times which shall be determined, in accordance with the provisions of the Credit Agreement referred to below.

 

This Note is the “Amended and Restated Revolving Credit Note” referred to in the Amended and Restated Credit Agreement dated as of April 23, 2010, by and among the Companies and the Lender (as the same may be amended, modified or supplemented from time to time, the “Credit Agreement”) and is issued pursuant to and entitled to the benefits of the Credit Agreement to which reference is hereby made for a more complete statement of the terms and conditions under which the Revolving Credit Loans evidenced hereby were made and are to be repaid.  Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

 

Each of the Lender and any subsequent holder of this Note agrees, by its acceptance hereof, that before transferring this Note it shall record the date, Type and amount of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal of each Revolving Credit Loan previously made hereunder on the grid schedule annexed to this Note; provided, however, that the failure of the Lender or holder to set forth such Revolving Credit Loans, payments and other information on the attached grid schedule shall not in any manner affect the obligation of the Companies to repay the Revolving Credit Loans made by the Lender in accordance with the terms of this Note.

 

This Note is subject to prepayments pursuant to Section 3.03 of the Credit Agreement.

 

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note together with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

 

  

  

  

 

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in immediately available funds at the office of JPMorgan Chase Bank, N.A., located at 395 North Service Road, Melville, New York 11747 or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.

 

This Note is an amendment and restatement of, and it is being issued in replacement of and in substitution for, the Revolving Credit Note dated May 10, 2002 (the "Original Note"), issued by the Companies to the order of the Lender; provided, however, that all principal unpaid and all interest accrued and unpaid under the Original Note shall be deemed to be evidenced by this Note and payable hereunder from and after the date thereof.  The execution and delivery of this Note shall not be construed (i) to have constituted repayment of any principal or interest on the Original Note or (ii) to release, cancel, terminate or otherwise impair all or any part of the lien or security interest granted to the Lender as collateral security for the Original Note, all of which liens and security interests shall secure this Note.

 

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligation of the Companies, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

 

The Companies and endorsers of this Note waive presentment, diligence, demand, protest, and notice of any kind in connection with this Note.

 

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

[The Next Page is the Signature Page]

 

  

2

  

IN WITNESS WHEREOF, the each of the Companies has caused this Note to be executed and delivered by its duly authorized officer, as of the day and year and at the place first above written.

 

	
ACETO CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

	
ACETO AGRICULTURAL

CHEMICALS CORPORATION

 

By:__________________________

Name: Douglas Roth

Title: Secretary

 

	
CDC PRODUCTS CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACCI REALTY CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO PHARMA CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ARSYNCO INC.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO REALTY LLC

 

By:__________________________

Name: Vincent Miata

Title: President

	
JPMORGAN CHASE BANK, N.A.

 

 

By:__________________________

Name:

Title:

  

3

  

 

SCHEDULE

 

	
 Date 

	 Principal	 Type	 	 Applicable	 Amount of 	 Notation
	 of 	 Amount of	of 	 Interest	 Interest	 Principal	 Made 
	 Loan	 Loan	            Loan   	 Rate	 Period	 Paid	 By

 

  

4

  

  

EXHIBIT B

 

REAFFIRMATION AGREEMENT

 

Reference is made to the AMENDED AND RESTATED CREDIT AGREEMENT dated the date hereof by and among ACETO CORPORATION, a New York corporation, ACETO AGRICULTURAL CHEMICALS CORPORATION, a New York corporation, CDC PRODUCTS CORPORATION, a New York corporation, ACETO PHARMA CORP., a Delaware corporation, ACCI REALTY CORP., a New York corporation, ARSYNCO INC., a New Jersey corporation, and ACETO REALTY LLC, a New York limited liability company, jointly and severally, (each a “Company” and, collectively, the “Companies”), and JPMORGAN CHASE BANK, N.A., a national banking association (the “Lender”) (the “Amended and Restated Credit Agreement”) and the Pledge Agreement identified on Annex A attached hereto (the “Pledge Agreement”).

 

Each of the undersigned (a) acknowledges and agrees that the term “Credit Agreement” as used in the Pledge Agreement shall mean and be deemed to refer to the Amended and Restated Credit Agreement, as the same may be further amended, modified, supplemented, extended or renewed from time to time, and (b) confirms to the Lender that the Pledge Agreement to which it is a party is in full force and effect and will remain in full force and effect after giving effect to the Credit Agreement.

 

Each of the undersigned represents and warrants to the Lender that (a) its execution, delivery and performance of this Reaffirmation Agreement does not and will not violate any provision of applicable law or regulation or that any agreement or instrument to which it is a party and (b) this Reaffirmation Agreement constitutes its legal and valid and binding obligation enforceable against it in accordance with its terms.

 

This Reaffirmation Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute an agreement.

 

[The Next Page is the Signature Page]

 

  

  

  

 

IN WITNESS WHEREOF, the undersigned have executed this Reaffirmation Agreement as of April 23, 2010.

 

	
ACETO CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

	
ACETO AGRICULTURAL

CHEMICALS CORPORATION

 

By:__________________________

Name: Douglas Roth

Title: Secretary

 

	
CDC PRODUCTS CORPORATION

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACCI REALTY CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO PHARMA CORP.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ARSYNCO INC.

 

By:__________________________

Name: Vincent Miata

Title: President

 

	
ACETO REALTY LLC

 

By:__________________________

Name: Vincent Miata

Title: President

	
JPMORGAN CHASE BANK, N.A.

 

 

By:__________________________

Name:

Title:

  

2

  

 

SCHEDULE “A”

 

	
 

 

Description

of Stock

 

	
 

 

Authorized 

Shares

	
 

 

Outstanding 

Shares

	
% and Number 

of Outstanding 

Shares Owned 

by Pledgor

	
% and Number

of  Outstanding 

Shares Pledged

by Pledgor

	

Common Stock of 

______________________

 

______________________

 

	
 

___

	
 

___

	

100%

 

	

65%

 

  

3

  

 

EXHIBIT C

 

[LETTERHEAD OF COUNSEL TO THE COMPANY]

 

April 23, 2010

 

JPMorgan Chase Bank, N.A.

395 North Service Road,

Melville, New York 11747

 

Ladies and Gentlemen:

 

We have acted as counsel to Aceto Corporation (the “Company”), a New York corporation, Aceto Agricultural Chemicals Corporation, a New York corporation, CDC Products Corporation, a New York corporation, Aceto Pharma Corp., a Delaware corporation, ACCI Realty Corp., a New York corporation, Arsynco Inc., a New Jersey corporation, and Aceto Realty LLC, a New York limited liability company (each, a “Company”; and, collectively, the “Companies”), in connection with the Amended and Restated Credit Agreement (the “Agreement”) dated the date hereof between the Companies and JPMorgan Chase Bank, N.A., pursuant to which the Lender has agreed to extend credit to the Companies in an aggregate principal amount not to exceed $25,000,000.  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Agreement.

 

In acting as such counsel, we have examined:

 

	
  

	
(a)

	
a counterpart of the Agreement executed by each Company;

 

	
  

	
(b)

	
the Amended and Restated Revolving Credit Note executed by each Company in favor of the Lender; and

 

	
  

	
(c)

	
a counterpart of the Reaffirmation Agreement executed by each Company.

 

The documents referred to in items (a) through (c) above are hereinafter referred to collectively as the “Loan Documents”.

 

We have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as certified, conformed or photo static copies and the authenticity of the originals of such copies.  We have also examined originals, or copies certified to our satisfaction, of such corporate records, certificates of public officials, certificates of corporate officers of each Company and such other instruments and documents as we have deemed necessary as a basis for the opinions hereinafter set forth.  As to questions of fact, we have, to the extent that such facts were not independently established by us, relied upon such certificates.

 

  

  

  

 

Based upon the foregoing and subject to the qualifications set forth herein, we are of the opinion that,

 

1.           Each Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation and in good standing in each jurisdiction wherein the conduct of its business or any ownership of its properties requires it to be qualified to do business except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, and each has the corporate power and authority to own its assets and to transact the business in which it is now engaged and to execute and perform each of the Loan Documents to which it is a party.

 

2.           Each Company has the requisite corporate power and authority to execute, deliver and perform the Loan Documents to which it is a party, each of which has been duly authorized by all necessary and proper corporate action.

 

3.           The Loan Documents constitute the legal, valid and binding obligation of each Company (to the extent they are a party thereto) enforceable against each Company, as the case may be, in accordance with their respective terms subject as to enforcement by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally, and by equitable principles of general application.

 

4.           Neither the execution and delivery by the Companies of the Loan Documents to which they are a party nor the performance by the Companies of their respective obligations under the Loan Documents, will (a) violate any law, rule or regulation or, to our knowledge, any order or decree of any court or governmental instrumentality binding upon any Company, (b) contravene the Certificate of Incorporation or By-Laws of any Company or, result in a breach of or constitute a default (with due notice or lapse of time or both) under any agreements to which any Company is bound of which we are aware, or, to our knowledge, result in the creation or imposition of any lien, charge, or encumbrance upon any of the property or assets of any Company other than the liens granted pursuant to the Loan Documents, or (c) require the consent, license, approval or authorization of any governmental or public body or authority.

 

5.           No Company is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.

 

6.           No consent or authorization of, filing with or other act by or in respect of any governmental authority is required to be obtained by any Company for the valid execution, delivery and performance of the Loan Documents to which they are a party.

 

7.           Assuming the proceeds of the Loans are used for the purposes set forth in Section 3.02 of the Agreement, the making of the loans contemplated therein and the application of the proceeds thereof will not violate the provisions of Regulation U or X of the Board of Governors of the Federal Reserve System.

 

  

2

  

 

 8.           To the best of our knowledge there are no actions, suits or proceedings, pending or threatened against the Company or any Guarantor, before any court, governmental agency or arbitrator which challenges the validity or enforceability of any Loan Document or which, if adversely determined, would impair the ability of any Company to perform its obligations under the Loan Documents to which it is a party.

 

                                        Very truly yours,

 

3

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