Entry into a Material Definitive Agreement.
On January 8, 2019 (the “Fourth Amendment
Effective Date”), Aceto Corporation, a New York corporation (the “Company”), amended its existing senior secured
Credit Agreement (as defined below) to, among other things, allow the Company to resume access to up to $23.0 million of its revolving
credit facility, in order to fund vendor and business partner purchases and other payments, the continuation of its previously
announced strategic process and general working capital purposes, on the terms and subject to the conditions described below.
The amendment - constituting a Fourth Amendment
and Limited Waiver (the “January Amendment”), by and among the Company, certain other loan parties party thereto (the
“Loan Parties”), the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (the
“Administrative Agent”) - further amended the Company’s Second Amended and Restated Credit Agreement (the “Credit
Agreement”), dated as of December 21, 2016, by and among the Company, the Loan Parties, the lenders party thereto and the
Administrative Agent. All capitalized terms used herein but not defined herein shall have the meanings ascribed thereto in
the Credit Agreement, unless otherwise defined herein.
The January Amendment contains certain
amendments to the Credit Agreement relating to the revolver access and vendor and business partner payments, under which the Company
(a) on or after the
Fourth Amendment Effective Date, to request and borrow up to an additional $23.0 million as Revolving Loans; and
(b) to purchase, prior
to the repayment of these newly borrowed Revolving Loans and during (x) the Company’s fiscal year 2019, assets in an aggregate
amount not to exceed $6,500,000 or (y) the third quarter of the Company’s fiscal year 2019, assets in an aggregate amount
not to exceed $3,105,000, in each case, consisting of intangible assets relating to strategic product acquisitions, certain data
compensation expenses and certain capital expenditures.
The January Amendment also contains modifications
to the Credit Agreement relating to cash management and liquidity. In general, further compliance with the minimum liquidity covenant
from the Third Amendment to the Credit Agreement has been permanently waived, there is a cash anti-hoarding provision, and there
are restrictions on the Company and Domestic Subsidiaries transferring funds to Foreign Subsidiaries and prohibitions on paying
dividends and making similar distributions.
The January Amendment mandates certain
milestones with respect to the Company’s strategic process. In general, the milestones require delivery to the Administrative
Agent and Lenders of proposals and commitments from financially credible third parties, the proceeds of which would be sufficient
and used to repay both the Revolving Loans borrowed on or after the Fourth Amendment Effective Date and the remaining Obligations.
The Company has been taking steps to meet these milestones, but no assurance may be given that they will be successfully met. The
January Amendment also revises both the Revolving Loan Maturity Date and Term Loan Maturity Date to June 30, 2019, the last day
of the Company’s current fiscal year.
The January Amendment provides for a waiver
of any event of default under the Credit Agreement arising as a result of the failure by the Company (x) to make certain principal
and interest payments under the Credit Agreement that were due on or about December 31, 2018 (which were instead paid pursuant
to the January Amendment on the Fourth Amendment Effective Date) and (y) to pay interest on certain deferred payment amounts to
the sellers under the 2016 Citron product purchase agreement, and (z) as described above, the non-compliance by the Company with
the liquidity financial covenant. The January Amendment provides for the payment of a fee equal to 2.0% of each Lender’s
revolving commitment that is available or borrowed after the Fourth Amendment Effective Date, a 0.25% (of each such Lender’s
aggregate exposure) consent fee to the Lenders who timely consented to the January Amendment, increases the waiver fees imposed
under the Third Amendment from 4.0% to 6.0% but only under certain circumstances, and provides for reimbursement of certain third
party expenses incurred by the Administrative Agent and Lenders.