July 13, 2006
Exhibit 10.1
July 13, 2006
Accentia Biopharmaceuticals, Inc.
The Analytica Group, Inc.
TEAMM Pharmaceuticals, Inc.
000 Xxxxx Xxxx Xxxx Xxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Reference is hereby made to that certain Amended and Restated Security Agreement dated as of April 29, 2005, and amended and restated as of February 13, 2006, by and among Accentia Biopharmaceuticals, Inc., a Florida corporation (“Parent”), The Analytica Group, Inc., a Florida corporation (“Analytica”), TEAMM Pharmaceuticals, Inc., a Florida corporation by way of joinder dated as of the date hereof (“Teamm” and, together with Analytica and Parent, the “Companies” and, each a “Company”) and Laurus Master Fund, Ltd. (“Laurus”) (as amended, modified and/or supplemented from time to time, the “Security Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed them in the Security Agreement. Reference is made to the letter agreement, dated as of December 29, 2005, by and between the Parent, Analytica, The Xxxxxxx X. X’Xxxxxxx, Gr. Irrevocable Trust No. 1 and Laurus (the “Existing Overadvance Waiver”), pursuant to the terms of which Laurus agreed with the Parent and Analytica to provide an Overadvance in the maximum amount of $2,500,000 through the period commencing on December 29, 2005 and continuing through July 1, 2006 (the “Existing Overadvance”). In consideration of the agreements set forth below, the receipt and sufficiency of which is hereby acknowledged, notwithstanding the terms of the Existing Overadvance Waiver, the parties hereto each hereby acknowledge that the Existing Overadvance shall be repaid in full on the date hereof and that, from and after the date hereof, the Existing Overadvance Waiver shall be of no further force or effect.
Subject to satisfaction of the Overadvance Conditions (as defined below), Laurus is hereby notifying the Companies of its decision to again exercise the discretion granted to it pursuant to Section 2(a)(ii) of the Security Agreement to make Loans to the Companies during the Period (as defined below) in excess of the Formula Amount on the date hereof (the “Overadvances”). Subject to satisfaction of the Overadvance Conditions, the aggregate principal amount of the Overadvances as of the date hereof shall be $7,500,000 and shall at no time hereafter exceed the Maximum Overadvance Limit (as defined below) . Notwithstanding anything herein to the contrary, the Maximum Overadvance Limit shall at no time be greater
than the remainder of (x) $20,000,000 less (y) the principal amount of all Obligations (other than the Overadvance) outstanding at such time (and shall be reduced as and when necessary to comply with the foregoing)..
In connection with making the Overadvances, during and in respect of the period commencing on the date hereof through and including the January 1, 2007 (or earlier to the extent that the Overadvances are earlier permanently repaid in full per the terms of the proviso set forth at the end of this sentence) (the “Period”), Laurus hereby waives compliance with Section 3 of the Security Agreement, but solely as such provision relates to the immediate repayment requirement for Overadvances. Laurus further agrees that solely for such Period (but not thereafter), (i) the incurrence and existence of the Overadvances in itself shall not trigger an Event of Default under Section 19(a) of the Security Agreement and (ii) notwithstanding anything to the contrary set forth in Section 5(b)(ii) of the Security Agreement, during the Period, the rate of interest applicable to such Overadvances shall be the “prime rate” published in The Wall Street Journal from time to time (the “Prime Rate”), plus two percent (2%) (collectively, the “Overadvance Rate”). Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on August 1, 2006 on the first business day of each consecutive calendar month thereafter through and including the expiration of the Period, whether by acceleration or otherwise. All other terms and provisions of the Security Agreement and the Ancillary Agreements shall remain in full force and effect. For the avoidance of doubt, all proceeds applied by any Company in repayment of its obligations to Laurus hereunder and under the Security Agreement and the Ancillary Agreements shall be first applied as a repayment of the Overadvances unless otherwise agreed by Laurus. Once repaid, Overadvances may be reborrowed during the Period provided that the aggregate amount of all outstanding Overadvances shall not at any time exceed the Maximum Overadvance Limit then in effect.
The Companies hereby each acknowledge and agree that Laurus’ obligation to fund the Funded Overadvance on the date hereof and each permitted reborrowing thereof after the date hereof (subject to the Maximum Overadvance Limit) shall, at the time of such making of such Funded Overadvance or reborrowing, and immediately after giving effect thereto, be subject to the satisfaction of the following conditions (the “Overadvance Conditions”): (i) no Event of Default shall exist and be continuing as of such date; (ii) all representations, warranties and covenants made by the Companies in connection with the Security Agreement and the Ancillary Agreements shall be true, correct and complete as of such date; and (iii) the Companies and their respective Subsidiaries shall, within thirty (30) days of the date hereof have taken all action necessary to grant Laurus “control” over all of the Companies’ and their respective Subsidiaries’ Deposit Accounts (the “Control Accounts”), with any agreements establishing “control” to be in form and substance satisfactory to Laurus. “Control” over such Control Accounts shall be released upon the indefeasible repayment in full and termination of the Overadvance (together with all accrued interest and fees which remain unpaid in respect thereof).
The Companies hereby agree and acknowledge that they shall, on a joint and several basis: (x) permanently and immediately repay in full all amounts outstanding under the Overadvances upon expiration of the Period together with accrued interest and fees which remain unpaid in respect thereof and (y) immediately repay all amounts outstanding under the Overadvances which are at any time in excess of the Maximum Overadvance Limit during the
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Period, together with accrued interest and fees which remain unpaid in respect thereof. The failure to make any required repayment of the Overadvances shall give rise to an immediate Event of Default. The “Maximum Overadvance Limit” shall initially be $7,500,000 and shall be permanently reduced (but not below $0) (x) by an amount equal and limited to $2,500,000 upon the earlier to occur of July 31, 2006 and the date upon which the Companies first borrow funds from Laurus on the basis of the Eligible Accounts of Teamm and (y) by the amount of the net proceeds (as determined by Laurus in its sole discretion) of a Teamm Transaction (as defined below).
The Companies further acknowledge and agree that (x) the proceeds of the Overadvances shall be used to repay in full all outstanding obligations owing to Harbinger Mezzanine Partners, LP and its affiliates (collectively, “Harbinger”) and that as a result of such repayment no further obligations shall be owing by the Parent or any of its Subsidiaries to Harbinger, (y) all guarantees and security interests (and all other interests and obligations related thereto) granted by the Parent or any of its Subsidiaries for the benefit of Harbinger or any of its affiliates shall be terminated (and evidence of same shall be provided to Laurus and be satisfactory to Laurus in its sole discretion) and Laurus shall have a first priority security interest over all assets and equity of Teamm (and the Companies will be permitted to include the Eligible Accounts and Eligible Inventory of Teamm in the borrowing base under the Security Agreement pursuant to the terms conditions set forth in the Security Agreement and the Ancillary Agreements (including, without limitation, the Joinder Agreement, dated as of the date hereof by and between Teamm and Laurus)) and (z) during any time while Section 19(k) of the Security Agreement, Section 5(a) of the Stock Pledge Agreement, dated as of April 29, 2005, and amended and restated as of April 25, 2006 among the Companies and Laurus (as amended, modified or supplemented from time to time, the “Stock Pledge Agreement”) and/or Section 3(g) of the Master Security Agreement, dated as of April 29, 2005 among the Companies and Laurus (as amended, modified or supplemented from time to time, the “Master Security Agreement”) continues to remain in effect, any sale of the Parent’s equity interest in Teamm, or any sale by Teamm of any of its assets (other than inventory in the ordinary course of business or obsolete and worn-out equipment or equipment no longer necessary for its ongoing needs, having an aggregate fair market value of not more than $100,000, subject to further conditions) (either being, a “Teamm Transaction”), will be subject to the prior written consent of Laurus pursuant to the terms of said Security Agreement, Stock Pledge Agreement and Master Security Agreement, and consistent with the terms of said Security Agreement, Stock Pledge Agreement and Master Security Agreement, the Parent and Teamm each acknowledge that Laurus may make such consent conditional on the repayment of all or a portion of the Obligations using 100% of the net proceeds (as determined by Laurus in its sole discretion) of such Teamm Transaction.
In consideration of the foregoing, the receipt and sufficiency of which is hereby acknowledged, the Companies shall, on the date hereof, pay to Laurus Capital Management, LLC, the investment advisor of Laurus (“LCM”), a non-refundable servicing payment in an amount equal to $175,000. The foregoing payment is referred to herein as the “Servicing Payment.” The parties acknowledge that the Servicing Payment is a reasonable estimate of the expenses that LCM will incur in monitoring and servicing the Overadvance, and the Servicing Payment is intended to enable LCM to defray such expenses. Such payment shall be deemed fully earned on the date hereof and shall not be subject to rebate or proration for any reason. In further consideration of the foregoing, the receipt and sufficiency of which is hereby
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acknowledged, the Parent shall issue and transfer to Laurus 100,000 duly authorized and validly issued shares of Common Stock of the Parent, each with a par value of $0.001 per share and each subject to no liens, claims or encumbrances (the “Additional Shares”). With respect to the acquisition of the Additional Shares, Laurus hereby represents, warrants, and agrees that (i) the Additional Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act of 1933, as amended (the “Securities Act”), (ii) Laurus is an “accredited investor” within the meaning of Regulation D under the Securities Act, (iii) Laurus has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Additional Shares and that Laurus has had an opportunity to ask questions and receive answers from the Parent regarding the Parent’s and its subsidiaries’ business, management and financial affairs, (iv) Laurus has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Parent so that it is capable of evaluating the merits and risks of its investment in the Additional Shares and has the capacity to protect its own interests, (v) Laurus must bear the economic risk of an investment in the Additional Shares until the Additional Shares are sold pursuant to an effective registration statement under the Securities Act or an exemption from registration is available with respect to such sale, and (vi) Laurus is acquiring the Additional Shares for its own account for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution.
The Parent further agrees that if at any time after the date hereof there is not an effective Registration Statement covering all of the Additional Shares issued hereunder and the Parent shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Parent shall send to Laurus written notice of such determination and, if within fifteen (15) days after receipt of such notice, Laurus shall so request in writing, the Parent shall include in such registration statement all or any part of such Additional Shares Laurus requests to be registered, to the extent the Company may do so without violating registration rights of others which exist as of the date of this Overadvance Side Letter, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to obtaining any required consent of any selling stockholder(s) to such inclusion under such registration statement.
The Parent understands that it has an affirmative obligation to make prompt public disclosure of material agreements and material amendments to such agreements. It is the Parent’s determination that this letter and the terms and provisions of this letter, (collectively, the “Information”) are material and will be disclosed in an 8-K filing to be filed by the Parent within four (4) days of the date hereof and in the form otherwise prescribed by the SEC. The Parent has had an opportunity to consult with counsel concerning this determination.
This letter may not be amended or waived except by an instrument in writing signed by each of the Companies and Laurus. This letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this letter by facsimile transmission shall
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be effective as delivery of a manually executed counterpart hereof or thereof, as the case may be. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This letter sets forth the entire agreement between the parties hereto as to the matters set forth herein and supersede all prior communications, written or oral, with respect to the matters herein.
The Companies hereby represent and warrant to Laurus that the transaction contemplated by or referred to in this letter (including the repayment of the Overadvance and the repayment of any portion of the Obligations as a condition to a TEAMM Transaction) will not violate or constitute a breach under any provision of the Securities Purchase Agreement, dated May 15, 2006, among Parent and the persons identified as “Buyers” therein (the “Securities Purchase Agreement”), including without limitation Section 4(n) of the Securities Purchase Agreement. Furthermore, the Companies hereby agree to jointly and severally indemnify, defend, and hold harmless Laurus and its officers, directors, affiliates, and employees from and against and all damages, liabilities, expenses, costs, and fees (including reasonable attorneys’ fees) resulting from any claim by a third party against Laurus arising under or related to any provision of the Securities Purchase Agreement, including Section 4(n) thereof.
This Overadvance Side Letter shall for all purposes be deemed to be an Ancillary Agreement.
If the foregoing meets with the Companies’ approval please signify the Companies’ acceptance of the terms hereof by signing below.
| LAURUS MASTER FUND, LTD. | ||
| By: | /s/ Xxxxxx Grin | |
| Name: | Xxxxxx Grin | |
| Title: | Director | |
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AGREED AND ACCEPTED ON THE DATE HEREOF:
| ACCENTIA BIOPHARMACEUTICALS, INC. | ||
| By: | /s/ Xxxx X. Xxxxxx | |
| Name: | Xxxx X. Xxxxxx | |
| Title: | Chief Financial Officer | |
| THE ANALYTICA GROUP, INC. | ||
| By: | /s/ Xxxxx Xxxxxxx | |
| Name: | Xxxxx Xxxxxxx | |
| Title: | Chairman & CEO | |
| TEAMM PHARMACEUTICALS, INC. | ||
| By: | /s/ Xxxxx X. XxXxxxx | |
| Name: | Xxxxx X. XxXxxxx | |
| Title: | Treasurer | |
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