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EXHIBIT 10.15
AMENDMENT AND FORBEARANCE AGREEMENT
This Amendment and Forbearance Agreement, dated as of August 26, 1999
(this "Agreement"), is by and between APPLIED ANALYTICAL INDUSTRIES, INC., a
Delaware corporation having its principal place of business in Wilmington, North
Carolina (the "Borrower"), each of the direct subsidiaries of the Borrower
identified on the signature pages hereof (the "Guarantors"), and BANK OF
AMERICA, N.A., a national banking association formerly known as NationsBank,
N.A. (the "Lender").
RECITALS:
A. Pursuant to that certain Loan Agreement, dated December 30, 1996, as
amended February 13, 1998 and May 19, 1999 (the "Revolving Credit Agreement"),
the Lender has extended revolving credit loans (the "Revolving Loans") to the
Borrower in the amount of up to $20,000,000. The Borrower's obligations to the
Lender arising under the Revolving Credit Agreement, including without
limitation all principal, interest, fees, and other charges in respect of the
Revolving Loans, shall be referred to herein as the "Revolving Loan
Obligations".
B. Pursuant to (i) that certain promissory note dated December 31, 1997
made by the Borrower in favor of the Lender in the original principal amount of
$2,083,155.00 and having a maturity date of December 31, 2002, and (ii) that
certain promissory note dated March 28, 1996 made by the Borrower in favor of
the Lender in the original principal amount of $998,000.00 and having a maturity
date of December 31, 2000 (collectively, the "Term Notes" and each a "Term
Note"; the Lender's advances to or for the benefit of the Borrower as evidenced
by the Term Notes shall be referred to as the "Term Loans"). The Borrower's
obligations to the Lender arising under the Term Notes, including without
limitation all principal, interest, fees and other charges in respect of the
Term Loans shall be referred to as the "Term Loan Obligations".
C. The Lender has also issued, on the application and request of the
Borrower as account party, four letters of credit described as follows: (i)
letter of credit no. 919888 in the amount of DM 10,000,000 designating Deutsche
Bank as the beneficiary and having an expiry date of August 31, 1999 (the
"Deutsche Bank Letter of Credit"); (ii) letter of credit no. 919887 in the
amount of DM 2,100,000 designating Bayerishe Vereinsbank as the beneficiary and
having an expiry date of August 31, 1999 (the "Vereinsbank Letter of Credit");
(iii) letter of credit no. 972664 in the amount of U.S. $279,756 designating
North Brunswick II LLC as the beneficiary and having an expiry date of July 31,
2000; and (iv) that certain letter of credit no. 035606 in the amount of
$920,625.00 in relation to certain industrial revenue bond financing of the
Borrower and having an expiry date of June 30, 2000 (collectively, the "Letters
of Credit"). For purposes hereof, "LOC Obligations" shall mean, at any time, the
sum of (i) the maximum amount which is, or at any time thereafter may become,
available to be drawn under the Letters of Credit, as amended from time to time,
plus (ii) the aggregate amount of all drawings under the Letters of Credit
honored by the Lender but not therefore reimbursed by the Borrower, and all
fees, charges, expenses and related obligations of the Borrower to the Lender
arising under the applications for the Letters of Credit, any amendments
thereto, or under any documents delivered in connection therewith.
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D. The Lender has also enabled the establishment of a lease financing
facility in favor of the Borrower pursuant to the terms of (i) that certain
Participation Agreement, dated as of October 2, 1998 (the "Participation
Agreement"), among the Borrower, First Security Bank, N.A., as Owner Trustee
(the "Owner Trustee") under the AAI Realty Trust 1998-1, the lenders and holders
identified therein and from time to time party thereto, and NationsBank, N.A.
(now known as Bank of America, N.A.) as Agent; (ii) that certain Lease
Agreement, dated as of October 2, 1998, between the Owner Trustee as lessor and
the Borrower as lessee; (iii) that certain Agency Agreement, dated as of October
2, 1998, between the Borrower as construction agent and the Owner Trustee as
lessor, and (iv) each of the other Operative Agreements (as defined in the
Participation Agreement), in each case as amended, modified, supplemented,
extended or renewed from time to time. The foregoing documents, instruments and
agreements shall be referred to collectively as the "TROL Transaction Documents"
and the Borrower's obligations thereunder, in any capacity, shall be referred to
collectively as the "TROL Obligations". The Revolving Credit Agreement, the Term
Notes, the Letters of Credit, and the TROL Transaction Documents shall be
referred to collectively as the "Existing Credit Documents".
E. The Borrower has failed to comply with the financial covenants set
forth in Section 6.01(p)(v) of the Revolving Credit Agreement for the fiscal
quarter ending June 30, 1999 (the "Existing Default"). The occurrence of the
Existing Default under the Revolving Credit Agreement causes a cross-default
under the terms of the TROL Transaction Documents and the Term Notes.
F. The Borrower has requested that (i) the Lender forbear from
exercising its remedies with respect to the Existing Default, (ii) that the
Lender continue to make available to the Borrower the credit and related
facilities established by the Existing Credit Documents, and (iii) that the
Lender extend the expiry dates on the Deutsche Bank Letter of Credit and the
Vereinsbank Letter of Credit until November 30, 1999.
G. The Lender is willing to forbear from exercising its remedies on
account of the Existing Default, to continue to make available to the Borrower
the credit and related facilities established by the Existing Credit Documents,
and to extend the expiry dates on the Deutsche Bank Letter of Credit and the
Vereinsbank Letter of Credit until November 30, 1999 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:
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PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Terms defined in the 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 Credit Documents" means the Existing Credit Documents as
amended hereby.
"Effective Date" shall have the meaning ascribed to such term in
Subpart 4.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement have the meanings
provided in the Amended Credit Documents.
PART II
FORBEARANCE
SUBPART 2.1. Reaffirmation of Existing Debt. The Borrower
acknowledges and confirms (a) that the outstanding unpaid principal balance of
the Revolving Loans, as of the date hereof, is $10,442,000; (b) the Borrower is
indebted to the Lender in respect of the LOC Obligations in the aggregate
outstanding amount of $7,982,718.30, as of the date hereof; (c) the Borrower is
indebted to the Lender in respect of the Term Loans in the aggregate unpaid
principal balance of $1,765,462.00, as of the date hereof; (d) the Borrower's
obligations arising under or in connection with the TROL Transaction Documents
are valid, binding and enforceable against the Borrower; (e) that the Borrower's
obligation to repay the Revolving Loan Obligations, the Term Loan Obligations,
the LOC Obligations and the TROL Obligations are unconditional and not subject
to any offsets, defenses or counterclaims; (f) that the Lender (in each of its
varying capacities under the Existing Credit Documents) has performed fully all
of its obligations under the Existing Credit Documents; and (g) by entering into
this Agreement, the Lender does not waive or release any term or condition of
the Existing Credit Documents, the Amended Credit Documents, or any of the other
document or instrument, or any of its rights or remedies under such Existing
Credit Documents, Amended Credit Documents, or applicable law or any of the
Borrower's obligations thereunder.
SUBPART 2.2. Agreement to Forbear. Subject to the other terms and
conditions of this Agreement, the Lender agrees that, so long as (a) no Event of
Default (other than the Existing Default) shall have occurred under the Amended
Credit Documents, (b) no other Person or entity shall have commenced any suit or
other legal proceeding against the Borrower or any of its assets to enforce any
obligations for funded indebtedness of the Borrower to such Person or entity,
and (c) the Borrower shall have complied with all of the provisions of this
Agreement and shall have made all payments required to be made by it hereunder
when due, the Lender shall forbear through and including November 30, 1999 (i)
from exercising its rights and remedies
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under the Amended Credit Documents and the Existing Credit Documents in respect
of the Existing Default, and (ii) from demanding immediate repayment of the
Revolving Loan Obligations, Term Loan Obligations, LOC Obligations, and the TROL
Obligations. Nothing herein contained shall be deemed to constitute a waiver of
any rights or remedies the Lender may have under the Amended Credit Documents or
any other documents or instruments or under applicable law.
SUBPART 2.3. Forbearance Fee. The Borrower hereby agrees to pay to
the Lender, on or before the Effective Date, a forbearance fee in the amount of
$50,000.00 (the "Forbearance Fee") in consideration of the Lender's forbearance
as set forth in this Agreement and in consideration of the amendments made to
the Existing Credit Documents as hereinafter described. The Forbearance Fee
shall be fully earned by the Lender as of the Effective Date.
SUBPART 2.4. Release of Claims. In consideration of the Lender's
forbearance set forth herein and the modifications effected by this Agreement
to the Existing Credit Documents, the Borrower hereby releases the Lender and
its affiliates, directors, officers, shareholders, employees, attorneys, and
representatives (collectively, the "Released Parties") from the following to the
extent arising from or in connection with any of the Revolving Loan Obligations,
the Term Loan Obligations, the LOC Obligations, or the TROL Obligations: (i)
damages, claims, liabilities, causes of action, contracts, or controversies of
any type, kind, nature, description or character; (ii) breaches of contract or
duty of any other type of relationship; (iii) acts or omissions, misfeasance or
malfeasance; and (iv) commitments or promises of any type made prior to the date
hereof (the matters described in the preceding clauses (i) through (iv) being
referred to collectively as the "Claims"), whether or not the Claims are now
known, unknown, or unforeseen, or are liquidated or unliquidated, which in any
way arise out of, or relate to, the Existing Credit Documents or any failure of
any of the Released Parties to honor any prior commitment or any documents,
agreements or other instruments in any way related to the Existing Credit
Documents.
PART III
AMENDMENTS TO EXISTING CREDIT DOCUMENTS
Subject to satisfaction of the conditions specified in Part IV of this
Agreement, the Existing Credit Documents are hereby amended in accordance with
this Part III. Except as so amended, the Existing Credit Documents shall
continue in full force and effect.
SUBPART 3.1. AMENDMENTS TO REVOLVING LOAN AGREEMENT. The
Revolving Loan Agreement shall be amended in each of the following respects as
of the Effective Date.
3.1.1 Maturity Date. The definition of "Revolving Loan
Maturity Date" in Section 1.01 of Revolving Loan Agreement is amended
in its entirety so that such definition now reads as follows:
"Revolving Loan Maturity Date" means November 30,
1999.
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3.1.2 Deletion of Definition "Applicable Percentage".
Section 1.01 of the Revolving Loan Agreement is amended by deleting
the definition of "Applicable Percentage."
3.1.3 Addition of Definition of "Funded TROL Obligations".
Section 1.01 of the Revolving Loan Agreement is amended by adding, in
the appropriate alphabetical place, the following definition:
"Funded TROL Obligations" means, at any time, the sum
of the then outstanding amount of each of (i) the Loans, (ii)
the accrued but unpaid interest on the Loans, (iii) the Holder
Advances, and (iv) the accrued but unpaid Holder Yield, as
each of such capitalized terms is defined in the Participation
Agreement.
3.1.4 Addition of Definition of "Participation Agreement".
Section 1.01 of the Revolving Loan Agreement is amended by adding, in
the appropriate alphabetical place, the following definition:
"Participation Agreement" means that certain
Participation Agreement, dated as of October 2, 1998 among the
Borrower, First Security Bank, N.A., as Owner Trustee under
the AAI Realty Trust 1998-1, the lenders and holders
identified therein and from time to time party thereto, and
NationsBank, N.A. (now known as Bank of America, N.A.) as
Agent, such Participation Agreement comprising part of the
documentation relating to the tax retention operating lease
transaction entered into by the Borrower.
3.1.5 Amendment to Section 2.01. Section 2.01 of the
Revolving Loan Agreement is amended in its entirety to read as follows:
2.01 Revolving Loans. Subject to the terms and
conditions and relying upon the representations and warranties
herein set forth, the Bank agrees to make Revolving Loans to
the Borrower, at any time and from time to time on or after
the date hereof and until the Revolving Loan Maturity Date, in
an aggregate principal amount at any time outstanding not to
exceed TWENTY MILLION DOLLARS ($20,000,000.00) (the "Revolving
Loan Committed Amount") for purposes of financing the
Borrower's capital expenditures, acquisitions and working
capital needs. The Borrower may borrow, repay and reborrow
hereunder on or after the date hereof and prior to the
Revolving Loan Maturity Date, subject to the terms, provisions
and limitations set forth herein. The outstanding principal
balance of the Revolving Loans, together with all accrued but
unpaid interest, fees and other charges, shall be due and
payable in full on the Revolving Loan Maturity Date.
3.1.6 Interest Rate. Section 2.03 of the Revolving Loan
Agreement is amended in its entirety so that such section now reads as
follows:
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2.03 Interest. Subject to section 3.01 hereof,
the outstanding principal balance of the Revolving Loans shall
bear interest at a rate equal to the Adjusted LIBOR Rate plus
2.25%. Interest calculated at the foregoing rate shall be due
and payable monthly in arrears on the last day of each
calendar month.
3.1.7 Commitment Fee. Section 2.04 of the Revolving Loan
Agreement is amended in its entirety so that such section now reads as
follows:
2.04 Commitment Fee. The Borrower agrees to pay
the Bank a commitment fee in an amount equal to 0.375% per
annum of the average daily unused portion of the Commitment,
such fee to be paid monthly in arrears on the last day of each
calendar month.
3.1.8 Interim Financial Statements. Section 6.01 of the
Revolving Loan Agreement is amended by deleting section 6.01(b) in its
entirety and replacing it with the following new section 6.01(b):
(b) deliver:
(1) within forty-five (45) days after the end of
each fiscal quarter of each fiscal year, either (i) the copy
of Form 10-Q for such quarter as filed with the Securities and
Exchange Commission or (ii) financial information and reports
as of the end of such fiscal quarter (including a balance
sheet and income statement, in form and detail satisfactory to
the Lender) of the Borrower and its Subsidiaries (in
consolidated form) certified by the chief financial officer of
the Borrower to be true and correct, and
(2) as soon as available, and in any event
within 20 days after the close of each of the first eleven
calendar months of the fiscal year of the Borrower, (i) a
consolidated balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such month,
together with related consolidated statements of operations
and consolidated statements of retained earnings and of cash
flows for such month, in each case setting forth in
comparative form consolidated figures for (A) the
corresponding period of the preceding fiscal year and (B)
management's proposed budget for such period, all such
financial information to be in form and detail reasonably
acceptable to the Lender, and (ii) an accounts receivable
aging, accounts payable aging, and a collateral value
maintenance calculation, each in form and detail reasonably
acceptable to the Lender.
3.1.9 New Financial Covenant. Section 6.01(p) of the
Revolving Loan Agreement is amended by deleting the word "and" at the
end of section 6.01(p)(iv), replacing the period at the end of section
6.01(p)(v) with a semi-colon, followed by the word "and", and adding a
new section 6.01(p)(vi) which reads in its entirety as follows:
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(vi) the Borrower shall maintain a ratio of (i)
Funded Debt minus an amount equal to 85% of the Funded TROL
Obligations to (ii) the sum of the net book value of accounts
receivable and the net book value of equipment (each as stated
on the Borrower's most recent monthly financial statement)
less than or equal to 0.50 to 1.0 at all times.
3.1.10 Shawnee, Kansas Facility. Section 7.01 of the
Revolving Loan Agreement is amended by deleting the word "or" at the
end of section 7.01(j), replacing the period at the end of section
7.01(k) with a semi-colon, followed by the word "or," and adding a new
section 7.01(1) reading in its entirety as follows:
(1) take any action, incur any liability, or
make any financial commitment, or allow or cause any of its
Subsidiaries to do so, to commence construction or development
of the proposed laboratory for the Borrower in Shawnee,
Kansas, or other similar location, prior to November 30, 1999.
SUBPART 3.2. AMENDMENT TO TERM NOTES. Notwithstanding any other
term or condition in either of the Term Notes or any other agreement or
instrument evidencing the Term Loan Obligations, from and after the Effective
Date, the Term Loans shall bear interest at the Adjusted LIBOR Rate plus 2.25%
per annum (except to the extent that a default rate of interest applies under
the specific terms of the Term Notes or such other agreement or instrument). For
purposes hereof, the Adjusted LIBOR Rate means the rate as determined by the
Lender at which deposits in the amount of the outstanding balance of the Term
Loans and for one month interest periods are offered to prime banks in the
London Interbank Market, as published weekly by the Federal Reserve Bank of New
York in its H-15 Statistical Release, such rate being adjusted for the cost of
reserve requirements as prescribed by the Federal Reserve System. The Adjusted
LIBOR Rate for any Saturday or Sunday or any other day on which the London
Interbank Market is not open shall be the Adjusted LIBOR Rate for the
immediately preceding day on which the London Interbank Market is open. Each of
the Term Notes is hereby amended to incorporate the application of this interest
rate to all Term Loan Obligations.
SUBPART 3.3. AMENDMENTS TO LETTERS OF CREDIT.
3.3.1. Extension of Expiry Dates. The expiry date of each of
the Deutsche Bank Letter of Credit and the Vereinsbank Letter of Credit
shall be extended to November 30, 1999.
3.3.2. Increase in Letter of Credit Fees. Notwithstanding
any other term or condition in the reimbursement agreement, the letter
of credit applications, or any other document, instrument or agreement
relating to the Letters of Credit the Borrower shall pay to the Lender
a per annum fee equal to 2.25% on the average daily maximum amount
available to be drawn under each Letter of Credit from the Effective
Date through and including the expiry date of each such Letter of
Credit. Such letter of credit fees shall be payable monthly in arrears
(i) on the last day of each calendar month for the immediately
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preceding calendar month and (ii) on the expiry date of each Letter of
Credit, beginning with the first of such dates to occur after the
Effective Date.
SUBPART 3.4. AMENDMENT TO TROL TRANSACTION DOCUMENTS. The Participation
Agreement shall be amended in each of the following respects as of the Effective
Date.
3.4.1 Amendment to Unused Fee. Section 7.4 of the
Participation Agreement is amended so as to read in its entirety as
follows:
7.4 Unused Fee.
During the Commitment Period the Lessee agrees to pay
or cause to be paid to the Agent for the account of (a) the
Lenders, respectively, an unused fee (the "Lender Unused Fee")
equal to the product of the average daily Available Commitment
of each Lender during the Commitment Period multiplied by a
rate of three-eighths of one percent (0.375%) per annum and
(b) the Holders, respectively an unused fee (the "Holder
Unused Fee") equal to the product of the average daily
Available Holder Commitment of each Holder during the
Commitment Period multiplied by a rate of three-eighths of one
percent (0.375%) per annum. Such Unused Fees are payable
quarterly in arrears on each Unused Fee Payment Date. If all
or a portion of any such Unused Fee shall not be paid when
due, such overdue amount shall bear interest, payable by the
Lessee on demand, at a rate per annum equal to the ABR (or in
the case of Holder Yield, the ABR plus the Applicable
Percentage for Eurodollar Holder Advances) plus two percent
(2%) from the date of such non-payment until such amount is
paid in full (as well as before judgment).
3.4.2 Amendment of Definition of Applicable Percentage. The
definition of "Applicable Percentage," contained in Appendix A to the
Participation Agreement, is amended to read in its entirety as follows:
"Applicable Percentage" shall mean for Eurodollar
Loans, two and thirty-five one-hundredths of one percent
(2.35), and for Eurodollar Holder Advances, three percent
(3.00%).
3.4.3 Amendment of Incorporated Covenants. The Incorporated
Covenants (as defined in the Participation Agreement) are hereby
amended to the extent provided in Subpart 3.1 of this Agreement,
including, without limitation, the addition of the covenants set forth
in Subparts 3.1.9 and 3.1.10.
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PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1 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 4.1 shall have been satisfied.
4.1.1. Execution of Agreement. The Lender shall have
received an original duly executed counterpart of this Agreement from
the Borrower.
4.1.2. Closing Certificate. The Lender shall have received
a certificate from the Borrower, in form and substance satisfactory to
the Lender, certifying inter alia that (i) no Default or Event of
Default (as such terms are defined in the Revolving Loan Agreement and
the TROL Transaction Documents) exists as of the Effective Date other
than the Existing Default, and (iii) the representations and warranties
of the Borrower made in or pursuant to the Existing Credit Documents
are true in all material respects on and as of the Effective Date.
4.1.3. Forbearance Fee. The Lender shall have received the
Borrower's payment of the Forbearance Fee.
4.1.4. Security Agreement and Financing Statements. The
Lender shall have received from the Borrower, and each subsidiary
guarantor designated by the Lender, (i) the duly executed original of
the form of Security Agreement attached hereto as Exhibit "A", (ii)
executed UCC-1 financing statements from the Borrower with respect to
each location in which the Borrower has or maintains personal property,
and (iii) searches of Uniform Commercial Code filings in the
jurisdiction of the Borrower's chief executive office and each
jurisdiction where any Collateral (as defined in such Security
Agreement) is located or where a filing would need to be made in order
to perfect the Lender's security interest in the Collateral, together
with copies of the financing statements on file in each such
jurisdiction and evidence that no Liens exist thereon other than as
expressly approved by the Lender or permitted by the Existing Credit
Documents.
4.1.5. Pledge Agreement. The Lender shall have received from
the Borrower (i) the duly executed original of the form of Pledge
Agreement attached hereto as Exhibit "B" effecting a first priority
pledge of 100% of the Borrower's ownership interests in each of its
domestic subsidiaries and a first priority pledge of 65% of the
Borrower's ownership interests in each of its foreign subsidiaries;
(ii) all stock certificates evidencing the stock pledged to the Lender
pursuant to the Pledge Agreement, together with duly executed in blank
undated stock powers attached thereto, and (iii) evidence and
information satisfactory to the Lender regarding the capital and
ownership structure of the Borrower and its subsidiaries.
4.1.6. Guaranty. Each of the Guarantors shall have executed
this Agreement.
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4.1.7. Corporate Documents. The Lender shall have received,
in form and content satisfactory to the Lender, (i) copies of
resolutions of the board of directors of the Borrower (and each
subsidiary guarantor) approving and adopting the execution and delivery
of this Agreement, the Security Agreement, the Pledge Agreement, and
each other document or instrument executed and delivered in connection
herewith, certificate by a secretary or assistant secretary of the
Borrower (and as applicable, each subsidiary guarantor) to be true and
correct and in force and effect as of the Effective Date; (ii) an
incumbency certified of the Borrower (and each subsidiary guarantor)
certified by a secretary or assistant secretary to be true and correct
as of the Effective Date; and (iii) an opinion of legal counsel to the
Borrower, which shall cover, among other things, authority, legality,
validity, binding effect and enforceability of the Amended Credit
Documents and the attachment, perfection and validity of liens),
addressed to the Lender and dated as of the Effective Date.
PART V
MISCELLANEOUS
SUBPART 5.1 Cross-References. References in this Agreement to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of this
Agreement.
SUBPART 5.2 Instrument Pursuant to Existing Credit Agreement.
This Agreement is a document executed pursuant to the Existing Credit Documents
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Documents.
SUBPART 5.3 Credit Documents. The Borrower hereby confirms and
agrees that the Existing Credit 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 Existing Credit Document to the "Revolving
Loan Agreement", the "Term Notes", the "Letters of Credit", "thereunder",
"thereof" or words of like import referring to any Existing Credit Agreement
shall mean the applicable Amended Credit Document.
SUBPART 5.4. Representations and Warranties. The Borrower hereby
represents and warrants that (i) it has the requisite corporate power and
authority to execute, deliver 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) it has no claims,
counterclaims, offsets, or defenses to the Existing Credit Documents and the
performance of its obligations thereunder, or if the Borrower has any such
claims, counterclaims, offsets, or defenses to the Existing Credit Documents or
any transaction related to the Existing Credit Documents, the same are hereby
waived, relinquished and released in consideration of the Lender's execution and
delivery of this Agreement, (iv) the representations and warranties contained in
the Existing Credit 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), (v) no event of default under any other agreement, document or
instrument to which the Borrower is a party will occur as a result of the
transactions contemplated
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hereby, and (vi) as of the date of this Agreement, no Event of Default (or any
agent or condition which, but for the lapse of time or the giving of notice,
would constitute an "event of default" under any of the Existing Credit
Documents or the Amended Credit Documents) exists except for the Existing
Default.
SUBPART 5.5. 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 Lender) incurred by the Lender in connection
with the negotiation, preparation, execution, and delivery of this Agreement and
the enforcement or preservation of any rights and remedies of the Lender
hereunder (including without limitation any such fees and expenses subsequently
incurred by the Lender in any subsequent bankruptcy or insolvency proceeding
involving the Borrower).
SUBPART 5.6. Counterparts, Effectiveness, 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.
SUBPART 5.7. 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.
SUBPART 5.8 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NORTH
CAROLINA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 5.9 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
PART VI
GUARANTY
SUBPART 6.1 Guaranty of Payment. Subject to Subpart 6.7 below,
each of the Guarantors hereby, jointly and severally, unconditionally guarantees
to the Lender the prompt payment of the Revolving Loan Obligations, the Term
Loan Obligations, the LOC Obligations and the TROL Obligations (collectively,
the "Guaranteed Obligations") in full when due (whether at stated maturity, as a
mandatory prepayment by acceleration or otherwise). This Guaranty is a guaranty
of payment and not of collection and is a continuing guaranty and shall apply to
all Guaranteed Obligations whenever arising.
SUBPART 6.2 Obligations Unconditional. The obligations of the
Guarantors hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Amended Credit
Documents or any other agreement or instrument referred to therein, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each Guarantor agrees that this
Guaranty may be enforced by the Lender
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without the necessity at any time of resorting to or exhausting any other
security or collateral and without the necessity at any time of having recourse
to any of the notes or any other of the Amended Credit Documents or any
collateral, if any, hereafter securing the Guaranteed Obligations or otherwise
and each Guarantor hereby waives the right to require the Lender to proceed
against the Borrower or any other Person (including a co-guarantor) or to
require the Lender to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Guaranteed Obligations for amounts paid under this Guaranty until such time as
the Lender has been paid in full, all Commitments under the Revolving Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lender
in connection with monies received under the Amended Credit Documents. Neither
any Guarantor's obligations under this Guaranty nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Borrower or by reason of the bankruptcy or insolvency of
the Borrower. Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of
or proof of reliance of by the Lender upon this Guarantee or acceptance of this
Guarantee. The Guaranteed Obligations, and any of them, shall conclusively be
deemed to have been created, contacted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee. All dealings between the
Borrower and any of the Guarantors, on the one hand, and the Lender, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee.
SUBPART 6.3 Modifications. Each Guarantor agrees that (a) all or
any part of the Collateral now or hereafter held for the Guaranteed Obligations,
if any, may be exchanged, compromised or surrendered from time to time; (b) the
Leader shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if any,
for the Guaranteed Obligations or the properties subject thereto; (c) the time
or place of payment of the Guaranteed Obligations may be changed or extended, in
whole or in part to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; (d) the Borrower and any other party liable
for payment under the Amended Credit Documents may be granted indulgences
generally; (e) any of the provisions of the notes or any of the other Amended
Credit Documents may be modified, amended or waived; (f) any party (including
any co-guarantor) liable for the payment thereof may be granted indulgences or
be released; and (g) any deposit balance for the credit of the Borrower or any
other party liable for the payment of the Guaranteed Obligations or liable upon
any security therefor may be released, in whole or in part, at, before or after
the stated, extended or accelerated maturity of the Guaranteed Obligations, all
without notice to or further assent by such Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence or release.
SUBPART 6.4 Waiver of Rights. Each Guarantor expressly waives to
the fullest extent permitted by applicable law: (a) notice of acceptance of this
Guaranty by the Lender and of all extensions of credit to the Borrower by the
Lender; (b) presentment and demand for payment or performance of any of the
Guaranteed Obligations; (c) protest and notice of dishonor or of default
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(except as specifically required in the Amended Credit Agreement) with respect
to the Guaranteed Obligations or with respect to any security therefor; (d)
notice of the Lender's obtaining, amending, substituting for, releasing, waiving
or modifying any security interest, lien or encumbrance, if any, hereafter
securing the Guaranteed Obligations, or the Lender's subordinating,
compromising, discharging or releasing such security interests, liens or
encumbrances, if any; (e) all other notices to which such Guarantor might
otherwise be entitled; and (f) demand for payment under this Guaranty.
SUBPART 6.5 Reinstatement. The obligations of the Guarantors
under this Part VI shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of any Person in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by such
Lender in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
SUBPART 6.6 Remedies. The Guarantors agree that, as between the
Guarantors, on the one hand, and the Lender, on the other hand, the Guaranteed
Obligations may be declared to be forthwith due and payable as provided in the
Amended Credit Documents, and that, in the event of such declaration (or such
Guaranteed Obligations being deemed to have become automatically due and
payable), such Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by the Guarantors. The
Guarantors acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Security Agreement and that the Lender may
exercise remedies thereunder in accordance with the terms thereof.
SUBPART 6.7 Limitation of Guaranty. Notwithstanding any provision
to the contrary contained herein or in any of the other Amended Credit
Documents, to the extent the obligations of any Guarantor shall be adjudicated
to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of such Guarantor hereunder shall
be limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
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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.
THE BORROWER: APPLIED ANALYTICAL INDUSTRIES, INC.
a Delaware corporation
/s/ Xxxxxx X. Xxxxx
----------------------- By: /s/ Xxxxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx -------------------------------------
----------------------- Name: Xxxxxxxxx X. Xxxxxxxx
Exec. Vice President -----------------------------------
----------------------- Title: Chief Executive Officer
----------------------------------
THE GUARANTORS: AAI LEARNING CENTER INC.
AAI TECHNOLOGIES, INC.
AAI PROPERTIES, INC.
KANSAS CITY ANALYTICAL SERVICES, INC.
MEDICAL AND TECHNICAL RESEARCH
ASSOCIATES, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Chairman of the Board
----------------------------------
THE LENDER: BANK OF AMERICA, N.A.,
formerly known as NationsBank, N.A.,
in each of its respective capacities under
each of the Existing Credit Documents
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
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