Exhibit 10.2
WAIVER, CONSENT AND AGREEMENT
WAIVER, CONSENT
AND AGREEMENT, dated as of March 31, 2005 (this “
Agreement ”), with respect to the Financing Agreement,
dated as of April 23, 2004 (as amended, restated or otherwise
modified from time to time, the “ Financing Agreement
”), by and among aaiPharma Inc., a Delaware corporation (the
“ Parent ”), Applied Analytical Industries
Learning Center, Inc., a Delaware corporation (“ Applied
Analytical ”), AAI Technologies, Inc., a Delaware
corporation (“ AAI Technologies ”), AAI
Properties, Inc., a North Carolina corporation (“ AAI
Properties ”), AAI Japan, Inc., a Delaware corporation
(“ AAI Japan ”), Kansas City Analytical
Services, Inc., a Kansas corporation (“ Analytical
Services ”), AAI Development Services, Inc., a
Massachusetts corporation (“ AAI Development-MA
”), aaiPharma LLC, a Delaware limited liability company
(“ Pharma LLC ”) and AAI Development Services,
Inc., a Delaware corporation (“ AAI Development-DE
”, and together with the Parent, Applied Analytical, AAI
Technologies, AAI Properties, AAI Japan, Analytical Services, AAI
Development-MA and Pharma LLC, each a “ Borrower
” and collectively, the “ Borrowers ”),
the financial institutions from time to time party hereto (each a
“ Lender ” and collectively, the “
Lenders ”), Silver Point Finance, LLC, a Delaware
limited liability company (“ Silver Point ”), as
collateral agent for the Lenders (in such capacity, and any
successor in such capacity, the “ Collateral Agent
”), and Bank of America, N.A. (“ Bank of America
”), as administrative agent for the Lenders (in such
capacity, and any successor in such capacity, the “
Administrative Agent ” and together with the
Collateral Agent, each an “ Agent ” and
collectively, the “ Agents ”).
WHEREAS, the
Borrowers have advised the Agents and the Lenders that the Parent
has received Net Cash Proceeds in respect of federal tax refunds in
the aggregate amount of $11,287,279.75 (the “ Tax
Refund ”), which Net Cash Proceeds are being held in an
account (the “ Securities Account ”) with Banc
of America Securities LLC (the “ Securities
Intermediary ”) that is subject to that certain
Collateral Account Notification and Acknowledgement Agreement,
dated as of May 21, 2004 (the “ Securities Account
Control Agreement ”), among the Parent, the Collateral
Agent and the Securities Intermediary;
WHEREAS, pursuant
to Section 2.05(c) and Section 2.05(d) of the Financing
Agreement, all of the Net Cash Proceeds of the Tax Refund (subject
to certain exceptions contained in such Sections) are required to
be applied to the Term Loan;
WHEREAS, the
Borrowers have requested that the Agents and the Lenders waive the
requirements under Section 2.05(c) and Section 2.05(d) of
the Financing Agreement that the Net Cash Proceeds of the Tax
Refund be applied to the Term Loan;
WHEREAS, the
Borrowers have further requested that the Agents and the Lenders
forbear from exercising their rights and remedies under the Loan
Documents in respect of the Defaults and Events of Default set
forth on Annex I hereto (the “ Existing
Defaults ”); and
WHEREAS, the
Agents and the Lenders are willing to grant the waiver described
above and forbear from exercising rights and remedies during the
Forbearance Period (as
hereinafter defined) in respect
of the Existing Defaults on the terms and conditions set forth
herein;
NOW, THEREFORE,
the Borrowers, the Agents and the Lenders hereby agree as
follows:
1.
Definitions . Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Financing
Agreement. In addition, as used in this Agreement, the following
terms shall have the respective meanings indicated
below:
“
Budget ” means the cash requirements forecast set
forth on Annex II hereto setting forth the Borrowers’
projected cash receipts and disbursements during the Forbearance
Period.
“
Exclusivity Agreement ” means an exclusivity
agreement, in form and substance reasonably satisfactory to the
Agents, entered into on or prior to the Amendment Effective Date,
between the Potential Purchaser and the Parent relating to a three
week exclusivity period (as such period may be extended by the
parties thereto) in favor of the Potential Purchaser with respect
to its potential purchase of the Borrowers’ Pharmaceuticals
Division.
“
Forbearance Period ” means the period commencing on
the Agreement Effective Date and ending on the Forbearance
Termination Date.
“
Potential Purchaser ” means the potential purchaser of
the Borrowers’ Pharmaceuticals Division identified in writing
by the Parent to the Agents prior to the Agreement Effective Date
(as defined below).
“
Forbearance Termination Date ” means the earliest to
occur of the following dates: (i) April 30, 2005,
(ii) the date on which any Borrower breaches any of its
obligations under this Agreement, and (iii) the date of
occurrence of any Event of Default (other than the Existing
Defaults) under the Financing Agreement or any of the other Loan
Documents.
2.
Tax Refund . Pursuant to the request of the Borrowers and in
accordance with Section 12.02 of the Financing Agreement, the
Agents and the Lenders hereby waive the requirements under
Section 2.05(c) and Section 2.05(d) of the Financing
Agreement that the Net Cash Proceeds of the Tax Refund be applied
to the Term Loan; provided , that such Net Cash Proceeds
shall be applied to the Revolving Loans and used by the Borrowers
as follows:
(a) On
the Agreement Effective Date, the Collateral Agent shall (i)
first , direct the Securities Intermediary to wire transfer
$5,615,030.75 of the Net Cash Proceeds of the Tax Refund from the
Securities Account to the Administrative Agent’s Account for
temporary application thereof to the Revolving Loans (and
concurrently with such application to the Revolving Loans, the
Administrative Agent shall, at the direction of the Collateral
Agent, establish and maintain a corresponding reserve to
Availability in the amount so applied, which reserve shall be
released at such time as the Borrowers re-borrow funds in such
amount to be used in accordance with clause (b) or clause
(c) below) and (ii) second , authorize the Securities
Intermediary to accept and act upon the instructions, directions
and orders of the Parent with respect to the remaining balance in
the Securities Account until such time as the
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Securities Intermediary has
received a subsequent Notice of Exclusive Control in accordance
with the terms of the Securities Account Control Agreement (it
being understood and agreed that a subsequent Notice of Exclusive
Control may be delivered by the Collateral Agent to the Securities
Intermediary solely on or at any time after the Forbearance
Termination Date);
(b) During
the Forbearance Period, the Borrowers may request that the
Revolving Loan Lenders make Revolving Loans (in an aggregate amount
for all such Revolving Loans not to exceed the amount of the Net
Cash Proceeds of the Tax Refund temporarily applied to the
Revolving Loans pursuant to clause (a) above) not more than
once each week to fund the working capital requirements of the
Borrowers strictly in accordance with the Total Cash (Use)
projected for the period commencing with the week ending
April 8, 2005 and ending with such week, on a cumulative
basis, as set forth in the Budget (including the 15% variance
therefrom permitted by Section 5(c) below), in each case, without
satisfying the conditions to borrowing set forth in
Section 5.02 of the Financing Agreement.
(c) Notwithstanding
anything to the contrary contained in the Financing Agreement or
any other Loan Document, each request for a Revolving Loan pursuant
to clause (b) above shall be made by submission by the
Administrative Borrower of a Notice of Borrowing to both the
Administrative Agent and the Collateral Agent, which Notice of
Borrowing shall be (i) submitted to both Agents not later than
11:00 a.m. (New York City time) on the date that is one
(1) Business Day prior to the date of the proposed Revolving
Loan, (ii) accompanied by a certification of an Authorized
Officer of the Administrative Borrower that (A) the aggregate
principal amount of Revolving Loans made during the period
commencing with the week ending April 8, 2005 and ending with
such week, on a cumulative basis, does not exceed 115% of the
projected Total Cash (Use) for such period, on a cumulative basis,
as set forth in the line item in the Budget titled “Total
Cash Generation/(Use)” and (B) in the case of any Notice
of Borrowing submitted to the Agents after April 8, 2005, the
Borrowers were in compliance with Section 5(c) of this Agreement
for the immediately preceding week, and (iii) otherwise in
compliance with Section 2.02 of the Financing Agreement
(without giving effect to any requirement set forth therein
requiring satisfaction of the conditions to borrowing set forth in
Section 5.02 of the Financing Agreement). Upon confirmation by
the Collateral Agent to the Administrative Agent as to the accuracy
of the certification made pursuant to clause (c)(ii) above, the
Administrative Agent will make the proceeds of such Revolving Loan
available to the Borrowers on the day of the proposed Revolving
Loan in accordance with Section 2.02 of the Financing
Agreement (without giving effect to any requirement set forth
therein requiring satisfaction of the conditions to borrowing set
forth in Section 5.02 of the Financing Agreement).
(d) On
the Forbearance Termination Date, unless otherwise agreed to by the
Required Lenders, the Borrowers shall be deemed to have requested,
and the Revolving Loan Lenders shall fund, a Revolving Loan to the
Borrowers in the amount of the unused portion of the Net Cash
Proceeds of the Tax Refund temporarily applied to the Revolving
Loans pursuant to clause (a) above, and the Administrative
Agent shall apply the proceeds of such Revolving Loan to the Term
Loan in accordance with Section 2.05(c) and
Section 2.05(d) of the Financing Agreement.
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3.
Forbearance Period .
(a) Each
Loan Party hereby acknowledges, confirms and agrees that
(i) the Existing Defaults have occurred and are continuing
(or, in the case of the Existing Default set forth in Item 6
on Annex I, may have occurred and be continuing) under the
Financing Agreement and the other Loan Documents and (ii) each
of the Existing Defaults entitles (or, in the case of Existing
Defaults that are Defaults, with the giving of notice or the
passage of time, will entitle) the Agents and the Lenders to
(A) declare the Obligations to be immediately due and payable
under the terms of the Financing Agreement and the other Loan
Documents and (B) exercise the rights and remedies available
to them under the Financing Agreement and the other Loan
Documents.
(b) Subject
to the terms and conditions of this Agreement, the Agents and the
Lenders agree that, during the Forbearance Period, they shall
forbear from exercising their rights and remedies under the Loan
Documents, applicable law and otherwise, with respect to the
Existing Defaults.
(c) From
and after the Forbearance Termination Date, the agreement of the
Agents and the Lenders to forbear as set forth in clause
(b) above shall automatically and without further action
terminate and be of no force and effect, it being understood and
agreed that the effect of such termination will be to permit the
Agents and the Lenders to exercise any and all of their rights and
remedies immediately and at
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