EXHIBIT 10.19
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
This First Amendment to Second Amended and Restated Loan Agreement,
dated as of December 13, 2001 (this "Agreement"), is by and among aaiPHARMA
INC., a Delaware corporation (the "Borrower"), each of the subsidiaries of the
Borrower identified on the signature pages hereto, the financial institutions
identified on the signature pages hereto and BANK OF AMERICA, N.A., as agent for
the Lenders (in such capacity, the "Agent"). Except as otherwise defined in this
Agreement, terms defined in the Existing Loan Agreement referred to below (as
amended by this Agreement) are used herein as defined therein.
RECITALS:
A. Pursuant to that certain Second Amended and Restated Loan
Agreement dated as of August 17, 2001 (the "Existing Loan Agreement"), the
Lenders have extended a revolving credit facility to the Borrower in the
principal amount of up to $25,000,000 and have made a term loan to the Borrower
in the principal amount of $60,000,000.
B. The Borrower has requested that the Lenders amend the Existing
Loan Agreement to, among other things, provide an additional term loan to the
Borrower in the principal amount of $25,000,000.
C. The Lenders are willing to make such additional term loan
available to the Borrower under, and to make certain other modifications to, the
Existing Loan Agreement based upon and subject to the terms and conditions
specified in this Agreement.
NOW, THEREFORE, based upon the foregoing, and for good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Terms defined in the introductory
paragraph and recitals of this Agreement shall have the meanings ascribed to
them therein. Unless otherwise defined herein or the context otherwise requires,
the following terms used in this Agreement have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):
"Amended Loan Agreement" means the Existing Loan Agreement as
amended hereby.
"Effective Date" shall have the meaning ascribed to such term
in Subpart 3.1.
PART II
AMENDMENTS TO EXISTING LOAN AGREEMENT
Subject to satisfaction of the conditions specified in Part III of this
Agreement, the Existing Loan Agreement is hereby amended in accordance with this
Part II. Except as so amended, the Existing Loan Agreement, the Notes and the
other Loan Documents shall continue in full force and effect.
SUBPART 2.1. New Definitions. Section 1.1 of the Existing Loan
Agreement is amended by adding the following definitions to read as follows:
"Add-On Term Loan" shall have the meaning assigned to such
term in Section 2.3(a).
"Add-On Term Loan Commitment" means, with respect to each
Lender, the commitment of such Lender to make its portion of the Add-On
Term Loan in a principal amount equal to such Lender's Add-On Term Loan
Percentage (if any) of the Add-On Term Loan Committed Amount.
"Add-On Term Loan Committed Amount" shall have the meaning
assigned to such term in Section 2.3(a).
"Add-On Term Loan Percentage" means, for any Lender, the
percentage identified as its Add-On Term Loan Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"BAMC Brethine Fee Letter" means that certain letter
agreement, dated as of December 13, 2001, among BAMC, the Arranger and
the Borrower, as amended, modified, restated or supplemented from time
to time.
"Brethine Product" means the intangible assets, assumed
customer orders and specified inventory of Novartis Pharmaceuticals
Corporation and/or its subsidiaries associated with the following
terbutaline sulfate products marketed and sold for use in conducting
business in the United States and Puerto Rico under the trademark
"Brethine(R)", in all dosage strengths: (i) Brethine(R) tablets and
(ii) Brethine(R) intravenous ampules.
"Brethine Purchase Agreement" means that certain Asset
Purchase Agreement by and among Novartis Pharmaceuticals Corporation,
Novartis Corporation and NeoSan Pharmaceuticals Inc., dated as of
December 13, 2001, as it may be amended on or prior to the Effective
Date.
"Brethine Supplier Consent" means any and all necessary
approvals and consents of the Food and Drug Administration and/or any
other applicable Governmental Authority in connection with a
supplemental New Drug Application ("sNDA") submitted by Novartis
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Pharmaceuticals Corporation and/or one of its affiliates (or NeoSan
and/or one of its affiliates) related to Brethine(R) tablets regarding
the use of and/or referring to Profarmaco's (or another supplier's)
Drug Master File ("DMF") for terbutaline, the active pharmaceutical
ingredient used for the manufacture of the Brethine Product.
"Brethine Transaction" means the Borrower's acquisition of the
Brethine Product from Novartis Pharmaceuticals Corporation and/or
Novartis Corporation and/or their subsidiaries pursuant to the Brethine
Purchase Agreement (including all schedules and exhibits thereto and,
if applicable, any contemplated seller financing and/or third-party
service or supply agreement).
"Brethine Transaction Documents" means the Brethine Purchase
Agreement (including all schedules and exhibits thereto and, if
applicable, any contemplated seller financing and/or third-party
service or supply agreement).
"Initial Term Loan" shall have the meaning assigned to such
term in Section 2.3(a).
"Initial Term Loan Commitment" means, with respect to each
Lender, the commitment of such Lender to make its portion of the
Initial Term Loan in a principal amount equal to such Lender's Initial
Term Loan Percentage (if any) of the Initial Term Loan Committed
Amount.
"Initial Term Loan Committed Amount" shall have the meaning
assigned to such term in Section 2.3(a).
"Initial Term Loan Percentage" means, for any Lender, the
percentage identified as its Initial Term Loan Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
SUBPART 2.2. Amended Definitions. The definitions for the following
terms in Section 1.1 of the Existing Loan Agreement are amended and restated in
their entirety as follows:
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender, the Initial Term Loan Commitment
of such Lender and the Add-On Term Loan Commitment of such Lender, (ii)
with respect to the Swing Line Lender, the Swing Line Committed Amount
and (iii) with respect to the Issuing Lender, LOC Commitments.
"Consolidated EBITDA" means, as of any date, for the
applicable period ending on such date with respect to the Consolidated
Parties on a consolidated basis, the sum of (a) Consolidated Net
Income, plus (b) an amount which, in the determination of Consolidated
Net Income, has been deducted for (i) Consolidated Interest Expense,
(ii) income taxes, (iii) depreciation and amortization expense, (iv)
any other non-cash expenses, (v) scheduled rental payments under the
TROL, (vi) non-recurring cash charges and costs not to exceed
$5,000,000 arising in connection with the Transaction and (vii)
non-recurring cash charges and costs not to exceed $1,200,000 arising
in
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connection with the Brethine Transaction, all as determined in
accordance with GAAP minus (c) non-cash gains included in Consolidated
Net Income minus (d) Excess Royalties; provided, however, that, with
respect to any calculation of Consolidated EBITDA made as of March 31,
2002 or a later date but prior to the date on which the Brethine
Supplier Consent has been obtained (with notice thereof to the Agent),
clauses (a) and (b) above shall exclude any such amounts to the extent
they relate to the Brethine Product.
"Leverage Ratio" means, as of the end of any fiscal quarter of
the Consolidated Parties for the four fiscal quarter period (except as
set forth below) ending on such date with respect to the Consolidated
Parties on a consolidated basis, the ratio of (a) Funded Indebtedness
of the Consolidated Parties on a consolidated basis on the last day of
such period to (b) Consolidated EBITDA for such period; provided,
however, that (i) as of December 31, 2001, Consolidated EBITDA shall be
determined based upon (x) Consolidated EBITDA for the one fiscal
quarter period ending as of such date multiplied by (y) 4, (ii) as of
March 31, 2002, Consolidated EBITDA shall be determined based upon (x)
Consolidated EBITDA for the two fiscal quarter period ending as of such
date multiplied by (y) 2 and (iii) as of June 30, 2002, Consolidated
EBITDA shall be determined based upon (x) Consolidated EBITDA for the
three fiscal quarter period ending as of such date multiplied by (y)
4/3; provided, further, that, as of December 31, 2001, the Funded
Indebtedness of the Consolidated Parties on a consolidated basis on
such day shall be calculated excluding the outstanding principal amount
of the Add-On Term Loan.
"Permitted Acquisition" means the Transaction, the Brethine
Transaction and any other Acquisition by the Borrower or any Subsidiary
of the Borrower permitted pursuant to the terms of Section 8.6(j).
SUBPART 2.3. Deleted Definitions. The definitions of "Term Loan
Commitment", "Term Loan Committed Amount" and "Term Loan Percentage" in Section
1.1 of the Existing Loan Agreement are deleted.
SUBPART 2.4. Term Loan. Sections 2.3(a) and 2.3(b) of the Existing Loan
Agreement are amended in their entirety to read as follows:
(a) Term Loan Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein each Lender severally agrees to make
available to the Borrower (i) on the Closing Date, such Lender's
Initial Term Loan Percentage of a term loan in Dollars (the "Initial
Term Loan") in the aggregate principal amount of SIXTY MILLION DOLLARS
($60,000,000.00) (the "Initial Term Loan Committed Amount") and (ii) on
December 13, 2001, such Lender's Add-On Term Loan Percentage of a term
loan in Dollars (the "Add-On Term Loan") in the aggregate principal
amount of TWENTY-FIVE MILLION DOLLARS ($25,000,000.00) (collectively,
the Initial Term Loan and the Add-On Term Loan may be referred to
herein as the "Term Loan"; each component thereof may be referred to
herein as a "Term Loan"). The Term Loan may consist of Base Rate Loans
or Eurodollar Loans, or a combination
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thereof, as the Borrower may request; provided, however, that no more
than 6 Eurodollar Loans which are Term Loans shall be outstanding
hereunder at any time (it being understood that, for purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with
the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest
Period). Amounts repaid on the Term Loan may not be reborrowed.
(b) Borrowing Procedures. The Borrower shall submit an
appropriate Notice of Borrowing to the Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) or such later time as the Agent and
the Borrower shall agree on the applicable funding date set forth in
Section 2.3(a), with respect to the portion of the Initial Term Loan or
Add-On Term Loan, as applicable, initially consisting of a Base Rate
Loan, or on the third Business Day prior to such applicable funding
date, with respect to the portion of the Initial Term Loan or Add-On
Term Loan, as applicable, initially consisting of one or more
Eurodollar Loans. Such Notice of Borrowing shall be irrevocable and
shall specify (i) that the funding of the Initial Term Loan or Add-On
Term Loan, as applicable, is requested and (ii) whether the funding of
such Term Loan shall be comprised of Base Rate Loans, Eurodollar Loans
or a combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If the Borrower shall fail to deliver such
Notice of Borrowing to the Agent by 11:00 A.M. (Charlotte, North
Carolina time) on the third Business Day prior to the applicable
funding date, then the full amount of the Initial Term Loan or Add-On
Term Loan, as applicable, shall be disbursed on the applicable funding
date as a Base Rate Loan. Each Lender shall make its Initial Term Loan
Percentage or Add-On Term Loan Percentage, as the case may be, of the
applicable Term Loan available to the Agent for the account of the
Borrower at the office of the Agent specified in Schedule 2.1(a), or at
such other office as the Agent may designate in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the applicable funding date in
Dollars and in funds immediately available to the Agent.
SUBPART 2.5. Termination Term Loan Commitments. Section 3.4(b) of the
Existing Loan Agreement is amended in its entirety to read as follows:
(b) Term Loan Commitments. The Initial Term Loan
Commitment of each Lender, if any, shall automatically terminate at
such time as such Lender shall have made available to the Borrower such
Lender's share of the Initial Term Loan. The Add-On Term Loan
Commitment of each Lender, if any, shall automatically terminate at
such time as such Lender shall have made available to the Borrower such
Lender's share of the Add-On Term Loan.
SUBPART 2.6. Financial Condition. Section 6.1(b) of the Existing Loan
Agreement is amended in its entirety to read as follows:
(b) (i) The pro forma consolidated balance sheet of the
Consolidated Parties delivered on the Closing Date giving
effect to the Acquisition in accordance with the terms of the
Purchase Agreement and reflecting estimated purchase
accounting adjustments is based upon reasonable assumptions
made
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known to the Lenders and upon information not known to be
incorrect or misleading in any material respect.
(ii) The pro forma consolidated balance sheet of the
Consolidated Parties delivered on December 13, 2001 giving
effect to the Acquisition in accordance with the terms of the
Brethine Purchase Agreement and reflecting estimated purchase
accounting adjustments is based upon reasonable assumptions
made known to the Lenders and upon information not known to be
incorrect or misleading in any material respect.
SUBPART 2.7. Power; Authorization; Enforceable Obligations. Section 6.4
of the Existing Loan Agreement is amended by inserting "or Brethine Transaction"
after the reference to "Transaction".
SUBPART 2.8. Litigation. Section 6.9 of the Existing Loan Agreement is
amended in its entirety to read as follows:
6.9 LITIGATION.
Except as disclosed in Schedule 6.9, there does not exist (i)
any order, decree, judgment, ruling or injunction which restrains the
consummation of the (x) acquisition of the Acquired Product in the
manner contemplated by the Purchase Agreement or (y) the acquisition of
the Brethine Product in the manner contemplated by the Brethine
Purchase Agreement or (ii) any pending or threatened action, suit or
legal, equitable, arbitration or administrative proceeding against any
Consolidated Party which would be reasonably expected to have a
Material Adverse Effect.
SUBPART 2.9. Disclosure. Section 6.21 of the Existing Loan Agreement is
amended by inserting "or Brethine Transaction Document" after the reference to
"Transaction Document".
SUBPART 2.10. Purpose of Loans and Letters of Credit. Section 6.15 of
the Existing Loan Agreement is amended in its entirety to read as follows:
6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by
the Borrower to effect the Transaction and the Brethine Transaction, to
pay fees and expenses related to the Transaction, the Brethine
Transaction and transactions contemplated by the Loan Documents, to
refinance the outstanding principal amount of existing indebtedness of
the Borrower and to provide for working capital and general corporate
purposes of the Borrower and its Subsidiaries. The Letters of Credit
shall be used only for or in connection with appeal bonds,
reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade
transactions and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the
ordinary course of business.
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SUBPART 2.11. Monthly Financial Statements. Section 7.1(c) of the
Existing Loan Agreement is amended in its entirety to read as follows:
(c) Monthly Financial Statements. As soon as available, and in
any event within 30 days after the end of each of the first two months
of each fiscal quarter, a consolidated balance sheet and income
statement of the Consolidated Parties as of the end of such month,
together with related consolidated statements of stockholders' equity
and cash flows for such month and for the portion of the fiscal year
ending as of the end of such month, in each case setting forth in
comparative form consolidated figures for the corresponding month of
the preceding fiscal year and for the portion of the preceding fiscal
year ending as of the end of such month, all such financial information
described above to be in reasonable form and detail (and to include, in
the case of the consolidated statements of stockholders' equity and
cash flows, revenue and volume data for any products acquired and/or
marketed by NeoSan by product line (to the extent available and in any
event including profit and loss information by product line to the
gross margin level) and reasonably acceptable to the Agent, and
accompanied by a certificate of an Executive Officer of the Borrower to
the effect that such monthly financial statements fairly present in all
material respects the financial condition of the Consolidated Parties
and have been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
SUBPART 2.12. Financial Covenants. Section 7.10(e) of the Existing Loan
Agreement is amended in its entirety to read as follows:
(e) Minimum Consolidated EBITDA. The sum of (i) Consolidated
EBITDA minus (ii) scheduled rental payments under the TROL for the
period from July 1, 2001 through the end of the fiscal quarter
indicated below shall be equal to or greater than the amounts set forth
below:
Minimum Consolidated EBITDA
---------------------------
If the Brethine Supplier Consent If the Brethine Supplier
Quarter Ending has not been obtained Consent has been obtained
-------------- --------------------- -------------------------
September 30, 2001 $ 2,000,000 N/A
December 31, 2001 $ 7,500,000 $ 7,500,000
March 31, 2002 $14,000,000 $15,800,000
June 30, 2002 $20,000,000 $23,500,000
September 30, 2002 $26,000,000 $31,500,000
SUBPART 2.13. Pledged Assets. Clause (i) of the first sentence of
Section 7.12 of the Existing Loan Agreement is amended in its entirety to
read as follows:
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(i) cause all of its owned and leased real and personal Property other
than Excluded Property to be subject at all times to first priority,
perfected and, in the case of owned real Property, title insured Liens
in favor of the Agent to secure the Credit Party Obligations pursuant
to the terms and conditions of the Collateral Documents or, with
respect to any such Property acquired subsequent to the Closing Date,
such other additional security documents as the Agent shall reasonably
request, subject in any case to Permitted Liens and
SUBPART 2.14. Post-Closing Deliveries. Section 7.13(b) of the Existing
Loan Agreement is amended by adding the following parenthetical at the end of
clause (a) thereof:
(it being understood that no estoppel letter shall be required from the
landlord of the Shawnee, Kansas property leased by Kansas City
Analytical Services, Inc.)
SUBPART 2.15. Additional Post-Closing Deliveries. The following new
Sections 7.13(f) and 7.13(g) are added to the Existing Loan Agreement after
Section 7.13(e):
(f) On or before December 20, 2001, the Credit Parties agree
to provide the Agent with such evidence reasonably satisfactory to the
Agent of the assignment, registration of assignment and registration of
name change with the United States Patent and Trademark Office of the
trademark related to Brethine(R) as the Agent may reasonably require.
(g) On or before January 31, 2002, the Credit Parties agree to
provide the Agent (i) in connection with that certain amendment dated
as of December 13, 2001 to the Mortgage Instrument relating to the
Mortgaged Property in North Carolina, a favorable opinion of local
North Carolina real estate counsel, an applicable title insurance
endorsement and any other related documentation as the Agent may
reasonably require, (ii) a certified copy of the resolutions of the
Board of Directors of the Borrower evidencing its ratification of the
execution and performance of this Agreement, the Brethine Transaction
and the other agreements executed in connection herewith and therewith
and its ratification of the other matters contemplated hereby and
thereby and (iii) such information and documentation as the Agent may
reasonably request with respect to perfection on the Agent's Lien on
the Brethine(R) trademark in Puerto Rico.
SUBPART 2.16. Investments. The lead-in to Section 8.6(j) of the
Existing Loan Agreement is amended in its entirety to read as follows:
Investments consisting of (x) the Transaction, (y) the Brethine
Transaction or (z) any other Acquisition by the Borrower or any
Subsidiary of the Borrower, provided that, with respect to any such
other Acquisition:
SUBPART 2.17. Extension Option. Section 12.2 of the Existing Loan
Agreement is amended in its entirety to read as follows:
12.2 EXTENSION OPTION.
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If, on or after the date that is six months from the Closing
Date and prior to September 30, 2002, (i) the Senior Leverage Ratio is
less than or equal to 2.50 to 1.0 (specifically including any unfunded
commitments under this Loan Agreement in the calculation of clause (a)
of such ratio but excluding the principal balance outstanding under the
TROL) as a result of the issuance of Mezzanine Securities as provided
in Section 12.1 or otherwise as evidenced by the officer's certificate
most recently delivered pursuant to Section 7.1(d), (ii) the Leverage
Ratio is less than or equal to 3.50 to 1.0 (specifically including any
unfunded commitments under this Loan Agreement in the calculation of
clause (a) of such ratio but excluding the principal balance
outstanding under the TROL) as evidenced by the officer's certificate
most recently delivered pursuant to Section 7.1(d), (iii) each of the
conditions precedent set forth in Section 5.2 is then satisfied (or
waived by all of the Lenders, as applicable), (iv) the Borrower and the
Lenders have agreed on or prior to September 30, 2002 on the new
financial covenants, pricing levels and other items described in
Section 12.3 below to be negotiated in connection with the Extension
Option, and (v) the Brethine Supplier Consent shall have been obtained,
then the Borrowers may exercise the Extension Option, by notice to the
Agent and the Lenders, to (i) extend the Maturity Date to December 31,
2006, with the Term Loan being subject to scheduled amortization as set
forth in Section 12.3, and (ii) otherwise modify the terms of this Loan
Agreement as set forth in Section 12.3. In connection with the exercise
of the Extension Option, the Borrower shall deliver a certificate
substantially in the form of Exhibit 7.1(d) demonstrating compliance
with the provisions of this Section 12.2.
SUBPART 2.18. Amendments to Schedules. The following schedules to the
Existing Loan Agreement are deleted in their entirety and replaced with the
corresponding substitute schedules attached to this Agreement:
Schedule 1.1 Excluded Property
Schedule 2.1(a) Lenders
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.5 No Conflict
Schedule 6.7 Ownership of Properties
Schedule 6.9 Litigation
Schedule 6.17 Intellectual Property
Schedule 6.27 Affiliate Transactions
Schedule 7.6 Insurance
Schedule 8.9 Transactions with Affiliates
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Effective Date. This Agreement shall be and become
effective as of the date hereof (the "Effective Date") when all of the
conditions set forth in this Subpart 3.1 shall have been satisfied.
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3.1.1. Execution of Agreement. The Agent shall have received
original duly executed counterparts of (i) this Agreement from the
Borrowers, the Guarantors and the Lenders, (ii) the BAMC Brethine Fee
Letter from the Borrower, the Arranger and BAMC, and (iii) an amendment
to the Mortgage Instrument relating to the Mortgaged Property in North
Carolina in form and substance satisfactory to the Agent and its
counsel from the parties thereto.
3.1.2. Resolutions. The Agent shall have received a certified
copy of the resolutions of the Board of Directors of the Borrower and
each other Credit Party evidencing its approval of this Agreement, the
Brethine Transaction (to the extent applicable for the relevant Credit
Party) and the other matters contemplated hereby.
3.1.3. Other Corporate Documents. The Agent shall have
received all documents it may reasonably request relating to the
existence and good standing of the Credit Parties and to the
authorization, execution and delivery of this Agreement and the other
Loan Documents and other matters relevant hereto, including current
incumbency information for the officers of the Credit Parties, all in
form and substance satisfactory to the Agent and its counsel in their
reasonable discretion.
3.1.4. Legal Opinions. The Agent shall have received, in each
case dated as of the Effective Date and in form and substance
reasonably satisfactory to the Agent, (i) a legal opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, outside counsel for the Credit Parties and (ii) a
legal opinion of in-house counsel for the Credit Parties with respect
to various corporate and organizational matters for each Credit Party.
3.1.5. Additional Collateral. The Agent shall have received
from NeoSan a duly executed Notice of Security Interests in Trademarks
relating to the trademark Brethine(R).
3.1.6. Consents. The Agent shall have received evidence that
all governmental, shareholder and material third party consents
(including any necessary ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ clearance) and approvals
necessary or desirable in connection with the Brethine Transaction
(other than the Brethine Supplier Consent) have been obtained and that
there has occurred the expiration of all applicable waiting periods
without any action being taken by any authority that could restrain,
prevent or impose any material adverse conditions on the Brethine
Transaction or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the judgment of the
Agent could have such effect.
3.1.7. Consummation of Brethine Transaction. The Agent's
satisfactory review of the Brethine Purchase Agreement (including all
schedules and exhibits thereto and, if applicable, any contemplated
seller financing and/or third-party service or supply agreement)
(collectively, the "Brethine Transaction Documents") regarding the
acquisition of substantially all of the Brethine Product which shall
provide for an aggregate purchase price not in excess of $26.6 million,
payable at the closing of the acquisition of the Brethine Product. The
Brethine Transaction shall have been consummated in accordance with the
terms of the Brethine Transaction Documents and in material compliance
with applicable law and regulatory approvals, all material conditions
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precedent to the obligations of the buyer under the Brethine Purchase
Agreement shall have been satisfied and the Agent shall be satisfied
that after giving effect to the Brethine Transaction, including the
application on the Effective Date of the proceeds of the related
financings, the Consolidated Parties shall have no Indebtedness except
for Indebtedness permitted under Section 8.1 of the Existing Loan
Agreement. The Brethine Transaction Documents shall not have been
altered, amended or otherwise changed or supplemented in any material
respect or any material condition therein waived, without the prior
written consent of the Agent.
3.1.8. Officer's Certificates. The Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Borrower as of the Effective Date, in form and substance satisfactory
to the Agent, stating that (A) each Credit Party is in compliance with
all existing material financial obligations, (B) all material
governmental, shareholder and third party consents and approvals, if
any, with respect to the Loan Documents and the transactions
contemplated thereby have been obtained, (C) no action, suit,
investigation or proceeding is pending or threatened in any court or
before any arbitrator or governmental instrumentality that purports to
affect any Credit Party or any transaction contemplated by the Loan
Documents, if such action, suit, investigation or proceeding would
reasonably be expected to have a Material Adverse Effect, (D) the
transactions contemplated by the Brethine Purchase Agreement have been
consummated contemporaneously with funding of the Add-On Term Loan
hereunder in accordance with the terms thereof, (E) immediately after
giving effect to the Brethine Transaction, (1) no Default or Event of
Default exists and (2) all representations and warranties contained
herein, in the Amended Loan Agreement and in the other Loan Documents
are true and correct in all material respects and (F) all financial
projections concerning the Borrower and its Subsidiaries and the
Brethine Transaction that have been or are hereafter made available to
the Agent or the Lenders by the Borrower or any of the Borrower's
authorized representatives have been or will be prepared in good faith
based upon assumptions the Borrower believes to be reasonable.
3.1.9. Solvency. The Agent shall have received a certificate
executed by an Executive Officer of the Borrower as of the Effective
Date, in form and substance satisfactory to the Agent, regarding the
Solvency of each of the Credit Parties on a consolidated basis.
3.1.10. Fees and Expenses, Etc. (a) Payment by the Credit
Parties to the Arranger, BAMC and the Agent of all fees and expenses
relating to the Add-On Term Loan which are due and payable on the
Effective Date, including, without limitation, payment of the fees set
forth in the BAMC Brethine Fee Letter and (b) satisfaction of all
conditions set forth in the BAMC Brethine Fee Letter.
3.1.11 Additional Financial Information. The Agent shall have
received and, in each case been satisfied with, a closing balance sheet
giving effect to the Brethine Transaction and the transactions
contemplated hereby and reflecting estimated purchase price accounting
adjustments, all meeting the requirements of Regulation S X under the
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Securities Act of 1933, as amended, applicable to a Registration
Statement under such act on Form S 1.
3.1.12. Litigation, Etc. There shall not exist (a) any order,
decree, judgment, ruling or injunction which restrains the consummation
of the Brethine Transaction in the manner contemplated by the Brethine
Transaction Documents, and (b) any pending or threatened action, suit,
investigation or proceeding, which, if adversely determined, could
materially and adversely affect the Borrower or its subsidiaries, any
transaction contemplated hereby or the ability of the Borrower and its
subsidiaries or any other Guarantor to perform its obligations under
the Amended Loan Agreement or the other Loan Documents or the ability
of the Lenders to exercise their rights thereunder.
3.1.13. No Material Adverse Change. There shall not have
occurred a material adverse change since December 31, 2000 in the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Borrower or the
Brethine Product (other than the release of generic competition for
Brethine(R) tablets, which fact has previously been disclosed to the
Agent), in the case of the Borrower together with its subsidiaries
taken as a whole, or in the facts and information regarding such
entities and assets as represented to date.
3.1.14. Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding
litigation, tax, accounting, labor, insurance, pension liabilities
(actual or contingent), real estate leases, material contracts, debt
agreements, property ownership and contingent liabilities of the
Consolidated Parties.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Agreement to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Agreement.
SUBPART 4.2. Instrument Pursuant to Existing Loan Agreement. This
Agreement is a document executed pursuant to the Existing Loan Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Loan
Agreement.
SUBPART 4.3. Loan Documents. Each Credit Party hereby confirms and
agrees that the Loan Documents are, and shall continue to be, in full force and
effect, except as amended hereby, and except that, on and after the Effective
Date references in each Loan Document to the "Loan Agreement", "thereunder",
"thereof" or words of like import referring to the Existing Loan Agreement shall
mean the Amended Loan Agreement.
SUBPART 4.4. Representations and Warranties. Each Credit Party hereby
represents and warrants that (i) it has the requisite corporate power and
authority to execute, deliver
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and perform this Agreement, (ii) it is duly authorized to, and has been
authorized by all necessary corporate action, to execute, deliver and perform
this Agreement, (iii) this Agreement has been duly executed and delivered by
such Credit Party and constitutes such Credit Party's legal, valid and binding
obligation, enforceable in accordance with its terms, except as such
enforceability may be limited (x) by general principles of equity and conflicts
of laws or (y) by bankruptcy, reorganization, insolvency, moratorium or other
laws of general application relating to or affecting the enforcement, of
creditors' rights, (iv) it has no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of its obligations thereunder, or if such
Credit Party has any such claims, counterclaims, offsets, or defenses to the
Loan Documents or any transaction related to the Loan Documents, the same are
hereby waived, relinquished and released in consideration of the Agent's
execution and delivery of this Agreement, (v) the representations and warranties
contained in the Loan Documents are, subject to the limitations set forth
therein, true and correct in all material respects on and as of the date hereof
as though made on and as of such date (except for those which expressly relate
to an earlier date), (vi) no event of default under any other agreement,
document or instrument to which such Credit Party is a party will occur as a
result of the transactions contemplated hereby, (vii) as of the date of this
Agreement, no Default or Event of Default exists, (viii) no consent, approval,
authorization or order of, or filing, registration or qualification with, any
court or governmental authority or third party is required in connection with
the execution, delivery or performance by such Credit Party of this Agreement,
(ix) the execution and delivery of this Agreement does not diminish or reduce
its obligations under the Loan Documents (including, without limitation, in the
case of each Guarantor, such Guarantor's guaranty pursuant to Section 4 of the
Amended Loan Agreement) in any manner, except as may be specifically set forth
herein.
SUBPART 4.5. Liens. Each Credit Party affirms the Liens and security
interests created and granted by it in the Loan Documents (including, but not
limited to, the Pledge Agreement and the Security Agreement) and agrees that
this Agreement shall in no manner adversely affect or impair such Liens and
security interests.
SUBPART 4.6. Costs and Expenses. The Borrower hereby agrees to pay on
demand all costs and expenses (including without limitation the reasonable fees
and expenses of counsel to the Agent) incurred by the Agent in connection with
the negotiation, preparation, execution, and delivery of this Agreement and the
enforcement or preservation of any rights and remedies of the Agent hereunder
(including without limitation any such fees and expenses subsequently incurred
by the Agent in any subsequent bankruptcy or insolvency proceeding involving a
Credit Party).
SUBPART 4.7. Counterparts, Effectiveness, Telecopy, Etc. This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. Delivery of executed counterparts by telecopy shall
be effective as an original and shall constitute a representation that an
original will be delivered.
SUBPART 4.8. Captions. The captions in this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or any provision hereof.
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SUBPART 4.9. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 4.10. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(signature pages follow)
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
BORROWER: AAIPHARMA INC.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
GUARANTORS: APPLIED ANALYTICAL INDUSTRIES
LEARNING CENTER, INC.
AAI TECHNOLOGIES, INC.
AAI INTERNATIONAL, INC.
AAI PROPERTIES, INC.
KANSAS CITY ANALYTICAL
SERVICES, INC.
MEDICAL & TECHNICAL RESEARCH
ASSOCIATES, INC.
AAI JAPAN, INC.
NEOSAN PHARMACEUTICALS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Second Amended and Restated Loan Agreement
in favor of aaiPharma, Inc.
AGENT: BANK OF AMERICA, N.A.
Individually in its capacity as a
Lender and in its capacity as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LENDERS: BANC OF AMERICA
MEZZANINE CAPITAL LLC
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
FIRST UNION NATIONAL BANK
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
Second Amended and Restated Loan Agreement
in favor of aaiPharma, Inc.