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Exhibit 10.16
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement, dated as of May 31, 2000 (this
"Agreement"), is by and among APPLIED ANALYTICAL INDUSTRIES, INC., a Delaware
corporation having its principal place of business in Wilmington, North Carolina
(the "U.S. Borrower"), AAI APPLIED ANALYTICAL INDUSTRIES DEUTSCHLAND GmbH & CO.,
KG, a German corporation (the "German Borrower" and, together with the U.S.
Borrower, the "Borrowers"), each of the subsidiaries of the U.S. Borrower
identified on the signature pages hereof (the "Guarantors"), and BANK OF
AMERICA, N.A., a national banking association (the "Bank").
RECITALS:
A. Pursuant to that certain Amended and Restated Loan Agreement dated
as of November 30, 1999 (the "Existing Credit Agreement"), the Bank has extended
a revolving credit facility to the U.S. Borrower in the amount of up to
$25,000,000 and has made a term loan to the German Borrower in the principal
amount of DM 12,000,000.
B. The Borrowers have requested that the Bank extend the maturity date
under the Existing Credit Agreement until November 30, 2000.
C. The Bank is willing to extend the maturity date under the Existing
Credit Agreement until November 30, 2000 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 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 Agreement" means the Existing Credit Agreement
as amended hereby.
"Effective Date" shall have the meaning ascribed to such term
in Subpart 3.1.
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 Agreement.
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PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Subject to satisfaction of the conditions specified in Part III of this
Agreement, the Existing Credit Agreement is hereby amended in accordance with
this Part II. Except as so amended, the Existing Credit Agreement, the Notes and
the other Loan Documents shall continue in full force and effect.
SUBPART 2.1. Borrowing Base. The definition of "Borrowing Base" in
Section 1.01 of the Existing Credit Agreement is amended in its entirety so that
such definition now reads as follows:
"Borrowing Base" means, as of any day, the sum of (a) 80% of
Eligible Receivables plus (b) the lesser of (i) 75% of Fixed Asset
Value and (ii) $26,000,000 minus (c) all indebtedness for borrowed
money, howsoever evidenced, or its equivalent (including but not
limited to leases required to be capitalized under Generally Accepted
Accounting Principles and letters of credit), other than Revolving
Loans outstanding hereunder, incurred by, or issued for the benefit of,
the Credit Parties (converted, if necessary, to U.S. dollars at the
Bank's then applicable exchange rate); provided that (A) in the case of
clauses (a) and (b)(i) above, such amounts shall be as set forth in the
most recent Borrowing Base Certificate delivered to the Bank in
accordance with the terms of Section 6.01(b)(3) and (B) the advance
rates set forth above shall be subject to appraisals conducted from
time to time by the Bank and may be increased or decreased by the Bank
at any time and from time to time in the exercise of its reasonable
credit judgment (it being understood that the U.S. Borrower hereby
consents to any such increases or decreases and acknowledges that
decreasing the advance rates or increasing the reserves may limit or
restrict the availability of Revolving Loans requested by the U.S.
Borrower);
SUBPART 2.2. Maturity Date. The definition of "Maturity Date" in
Section 1.01 of the Existing Credit Agreement is amended in its entirety so that
such definition now reads as follows:
"Maturity Date" means November 30, 2000;
SUBPART 2.3. Revolving Loans. Section 2.01 of the Existing Credit
Agreement is amended by adding the words "plus $6,000,000" following "Borrowing
Base" in clause (ii) of the first sentence of such section.
SUBPART 2.4. Commitment Extension Fee. Section 2.04 of the Existing
Credit Agreement is amended by adding the following sentence to the end of such
section:
In addition, the U.S. Borrower agrees to pay the Bank a
monthly commitment extension fee in an amount equal to $3,000 per
month, each such fee to be paid in advance on the first day of each
calendar month, commencing June 1, 2000, and to be deemed fully earned
upon becoming due and payable.
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SUBPART 2.5. Financial Covenants. Section 6.01(p) of the Existing
Credit Agreement is amended in its entirety to read as follows:
(p) satisfy or cause to be satisfied the following financial
tests:
(i) the U.S. Borrower will maintain as of the end of
each fiscal quarter (commencing with the fiscal quarter ending
March 31, 2000) Tangible Net Worth of not less than an amount
(the "Net Worth Floor") initially equal to $50,000,000,
provided that the Net Worth Floor shall increase on the last
day of each fiscal quarter to occur after March 31, 2000 by
50% of the net income of the U.S. Borrower and its
Subsidiaries for the fiscal quarter then ending (computed on a
consolidated basis and in accordance with Generally Accepted
Accounting Principles), such increases to be cumulative (it
being understood that the Net Worth Floor shall not decrease
on the last day of any fiscal quarter as a result of negative
net income for such quarter);
(ii) the U.S. Borrower shall maintain a Cash Flow
Coverage Ratio computed as of the last day of each fiscal
quarter (commencing with the fiscal quarter ending March 31,
2000) of (A) with respect to the fiscal quarter ending March
31, 2000, not less than 1.00 to 1.0, (B) with respect to the
fiscal quarter ending June 30, 2000, not less than 1.20 to 1.0
and (C) with respect to the fiscal quarter ending September
30, 2000, not less than 1.25 to 1.0; provided, however, that,
notwithstanding the definition of Cash Flow Coverage Ratio,
(a) the Cash Flow Coverage Ratio as of March 31, 2000 shall be
calculated using annualized EBITDA for the two fiscal
quarterly periods then ended (i.e. aggregate EBITDA for the
fiscal quarters ending December 31, 1999 and March 31, 2000
times 2.00) and (b) the Cash Flow Coverage Ratio as of June
30, 2000 shall be calculated using annualized EBITDA for the
three fiscal quarterly periods then ended (i.e. aggregate
EBITDA for the fiscal quarters ending December 31, 1999, March
31, 2000 and June 30, 2000 times 1.33);
(iii) the U.S. Borrower shall maintain a ratio of
Funded Debt to EBITDA computed as of the last day of each
fiscal quarter (commencing with the fiscal quarter ending
March 31, 2000) of (A) with respect to the fiscal quarter
ending March 31, 2000, not greater than 3.90 to 1.0, (B) with
respect to the fiscal quarter ending June 30, 2000, not
greater than 3.60 to 1.0 and (C) with respect to the fiscal
quarter ending September 30, 2000, not greater than 3.40 to
1.0; provided, however, that (a) the ratio of Funded Debt to
EBITDA as of March 31, 2000 shall be calculated using
annualized EBITDA for the two fiscal quarterly periods then
ended (i.e. aggregate EBITDA for the fiscal quarters ending
December 31, 1999 and March 31, 2000 times 2.00) and (b) the
ratio of Funded Debt to EBITDA as of June 30, 2000 shall be
calculated using annualized EBITDA for the three fiscal
quarterly periods then ended (i.e. aggregate EBITDA for the
fiscal quarters ending December 31, 1999, March 31, 2000 and
June 30, 2000 times 1.33); and
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(iv) the U.S. Borrower shall maintain at all times
Eligible Receivables such that, on each day, the product of
(A) Eligible Receivables times (B) 80% is no less than
$13,000,000.
SUBPART 2.6. Payment on Business Day. Section 9.08 of the Existing
Credit Agreement is amended in its entirety to read as follows:
9.08 PAYMENT ON BUSINESS DAY.
Should any installment or other payment of the principal of or interest
on the Notes, or any fee or other amount owing under this Loan Agreement, become
due and payable on other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day thereafter and in the case of an
installment of principal, interest shall be payable thereon at the rate per
annum herein specified during such extension.
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.
3.1.1. Execution of Agreement. The Bank shall have received an
original duly executed counterpart of this Agreement from the Borrowers
and the Guarantors.
3.1.2. Closing Certificate. The Bank shall have received a
certificate from the U.S. Borrower, in form and substance satisfactory
to the Bank, certifying inter alia that (i) no Default or Event of
Default exists as of the Effective Date, and (ii) the representations
and warranties of the Credit Parties made in or pursuant to the
Existing Credit Agreement and the other Loan Documents are true in all
material respects on and as of the Effective Date.
3.1.3. Commitment Extension Fee. The Bank shall have received
the U.S. Borrower's payment of a commitment extension fee in the amount
of $18,000 in consideration of the Bank's extension of the Maturity
Date pursuant to the terms of this Agreement. Such fee shall be fully
earned by the Bank as of the Effective Date.
3.1.4. Environmental Consultants. The Bank shall be satisfied
that (a) the U.S. Borrower has engaged appropriate consultants to
perform environmental due diligence on all domestic real estate owned
by the Credit Parties (other than the real estate relating to the
financing which is the subject of the Participation Agreement) and (b)
such environmental due diligence will be completed in form and
substance satisfactory to the Bank prior to June 15, 2000.
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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 Credit Agreement. This
Agreement is a document executed pursuant to the Existing Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.3 Credit 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 "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Existing Credit Agreement
shall mean the Amended Credit 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 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 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 Bank's execution and delivery of this
Agreement, (iv) 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), (v) 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, and (vi) as of the date of this Agreement, no Event of Default exists.
SUBPART 4.5. Costs and Expenses. The U.S. Borrower hereby agrees to pay
on demand all costs and expenses (including without limitation the reasonable
fees and expenses of counsel to the Bank) incurred by the Bank in connection
with the negotiation, preparation, execution, and delivery of this Agreement and
the enforcement or preservation of any rights and remedies of the Bank hereunder
(including without limitation any such fees and expenses subsequently incurred
by the Bank in any subsequent bankruptcy or insolvency proceeding involving a
Credit Party).
SUBPART 4.6. 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.
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SUBPART 4.7. 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 4.8 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 4.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
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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.
U.S. BORROWER: APPLIED ANALYTICAL INDUSTRIES, INC.,
a Delaware corporation
By:_________________________
Name:_______________________
Title:______________________
GERMAN BORROWER: AAI APPLIED ANALYTICAL INDUSTRIES
DEUTSCHLAND GmbH & CO., KG,
a German corporation
By:_________________________
Name:_______________________
Title:______________________
THE GUARANTORS: APPLIED ANALYTICAL INDUSTRIES
LEARNING CENTER, INC.
AAI TECHNOLOGIES, INC.
AAI PROPERTIES, INC.
KANSAS CITY ANALYTICAL SERVICES, INC.
MEDICAL & TECHNICAL RESEARCH
ASSOCIATES, INC.
AAI JAPAN, INC.
APPLIED ANALYTICAL INDUSTRIES
ITALY, S.r.l.
AAI UK LTD.
AAI VERMOGENSVER-
WALTUNGSGESELLSCHAFT mgH
AAI APPLIED ANALYTICAL INDUSTRIES
DEUTSCHLAND VERWALTUNGS-
GESELLSCHAFT mbH
APPLIED ANALYTICAL INDUSTRIES
DEUTSCHLAND GmbH
AAI BENELUX B.V.
AAI APPLIED ANALYTICAL INDUSTRIES
FRANCE S.A.R.L.
NEOSAN ARZNEIMITTEL-
VERTRIEBSGESELLSCHAFT mbH
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I.P.A.- INTERNATIONALE PHARMA
AGENTUR GmbH
INPHARMCO GESELLSCHAFT zur
VERMARKTUNG VON
ARZNEIMITTELN mbH
LAB (GREAT BRITAIN) LIMITED
PROSCIENTIA HOLDING AG
TECHNOPHARM S.A.
By:_________________________
Name:_______________________
Title:______________________
BANK: BANK OF AMERICA, N.A.
By:_________________________
Name:_______________________
Title:______________________