LOAN AGREEMENT
Dated as of June 18, 1997
among
K-V PHARMACEUTICAL COMPANY,
PARTICLE DYNAMICS, INC.
and ETHEX CORPORATION
as Borrowers,
and
LASALLE NATIONAL BANK
as Bank
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience only.
1. DEFINITIONS AND TERMS......................................................2
1.1 Certain Definitions......................................2
1.2 Certain UCC and Accounting Terms........................12
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES.......................13
2.1 Revolving Credit Commitment.............................13
2.2 Term Loan Commitment....................................13
2.3 Borrowing Procedures under the Revolving Credit
Commitment..............................................13
2.4 Letters of Credit.......................................14
2.5 Borrowing Procedure Under the Term Loan Commitment......14
3. LOANS: NOTES EVIDENCING LOANS............................................14
3.1 Revolving Note..........................................14
3.2 Term Note...............................................15
3.3 Recordation.............................................15
4. LOANS: AMOUNTS; INTEREST; BALANCES.......................................15
4.1 Applicable Borrowing Amounts; Interest Rates; Default
Rate....................................................15
4.2 Computation of Interest.................................16
4.3 Conversion and Reborrowing of Loans.....................16
4.4 Change of Law...........................................17
4.5 Unavailability of Deposits or Inability to Ascertain
the LIBOR Rate or Adjusted LIBOR Rate...................17
4.6 Yield Protection, Etc...................................18
4.7 Funding Indemnity.......................................19
4.8 Discretion of Bank as to Manner of Funding..............19
4.9 Interest Laws...........................................20
4.10 Letter of Credit Fees...................................20
5. LOANS: GENERAL TERMS.....................................................21
5.1 Payments to Bank........................................21
5.2 Automatic Debit.........................................21
5.3 Application of Payment..................................21
5.4 Reserved................................................21
5.5 Conditions Precedent Events.............................21
5.6 Offset..................................................22
5.7 Credit Termination Date; Continuance of Obligations,
Etc.....................................................22
5.8 Loan Evidence...........................................22
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5.9 Over-Advances...........................................22
5.10 Unused Portion Fee......................................22
5.11 Prepayment..............................................23
5.12 Transaction Fee.........................................24
6. LOANS: CONDITIONS TO LENDING.............................................24
6.1 Initial Loan Conditions Precedent.......................24
7. COLLATERAL FOR TERM LOAN: GENERAL TERMS..................................27
7.1 Grant of Security Interest..............................27
7.2 Perfection of Security Interests........................28
7.3 Inspection of Collateral................................28
7.4 First Lien and Location of Collateral...................28
7.5 Constructive Trust......................................29
7.6 Application of Proceeds of Collateral...................29
7.7 Third Party Collateral Claims...........................29
7.8 Additional Collateral...................................29
7.9 No Custom or Waiver.....................................29
8. REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION; CONTINUING OBLIGATION....................................30
8.1 Representations and Warranties of Borrower..............30
8.2 Affirmative Covenants...................................35
8.3 Negative Covenants......................................42
8.4 Maintenance of Accounts.................................43
9. DEFAULT...................................................................44
9.1 Events of Default.......................................44
9.2 Cumulative Remedies.....................................45
9.3 Acceleration and Termination of Loans...................45
9.4 Rights of Creditor......................................45
9.5 Injunctive Relief.......................................45
10. GENERAL..................................................................45
10.1 Payment Application Date................................45
10.2 Statement of Account....................................45
10.3 Manner of Application; Waiver of Setoff Prohibition.....46
10.4 Survival of Representations and Warranties..............46
10.5 Integration; Amendment; Assignment; Participation.......46
10.6 No Waiver...............................................47
10.7 Severability............................................47
10.8 Successors and Assigns..................................47
10.9 Conflict with Other Agreements..........................47
10.10 No Impairment by Termination............................47
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10.11 Waivers.................................................48
10.12 Costs, Fees and Expenses Related to Agreement and
Other Agreements........................................48
10.13 Environmental Indemnity.................................48
10.14 Release.................................................48
10.15 Governing Law...........................................49
10.16 Notices.................................................49
10.17 Forum; Bank; Venue; Jury Trial Waiver...................49
10.18 Other Costs, Fees and Expenses..........................49
10.19 Revival.................................................50
10.20 Acknowledgments.........................................50
10.21 Section Headings........................................50
10.22 Counterparts............................................50
10.23 Effectiveness...........................................50
10.24 Joint and Several Liability.............................50
iii
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 18th day of
June, 1997, by and among K-V PHARMACEUTICAL COMPANY, a Delaware corporation
("K-V"), PARTICLE DYNAMICS, INC., a New York corporation ("PDI"), ETHEX
CORPORATION, a Missouri corporation ("ETHEX"), jointly and severally (K-V, PDI
and ETHEX are sometimes referred to herein collectively as the "Borrowers" and
individually as "Borrower"), and LASALLE NATIONAL BANK, a national banking
association ("Bank").
W I T N E S E T H:
WHEREAS, K-V owns 100% of the issued and outstanding capital stock of
PDI and 100% of the issued and outstanding capital stock of ETHEX;
WHEREAS, Borrowers desire to borrow funds and obtain other financial
accommodations from Bank for (i) working capital and (ii) to purchase two (2)
real estate parcels located at 10876 Metro Court and 10850-62 Metro Court,
Maryland Heights, Missouri, pursuant to which K-V will be jointly and severally
liable for the total amount of all borrowings hereunder and each of PDI and
ETHEX shall be liable only to the extent of their applicable use of the
borrowings hereunder;
WHEREAS, K-V directly markets and distributes generic pharmaceutical
products through Ethex, its wholly-owned subsidiary;
WHEREAS, K-V develops and markets specialty pharmaceutical raw
materials, including directly compressible and microencapsulated ingredients
used in pharmaceutical processing through its other wholly-owned subsidiary,
PDI;
WHEREAS, K-V manufactures such pharmaceutical products for itself, for
ETHEX and for PDI, and ETHEX and PDI purchase certain products from K-V;
WHEREAS, K-V, PDI and Ethex each derive and shall all derive a material
benefit from their respective relationships with each other and from the funds
to be borrowed and the other financial accommodations from Bank to Borrowers;
WHEREAS, neither K-V, PDI nor Ethex could borrow the necessary funds
from the Bank on as favorable terms as herein set forth without the benefits of
the co- obligations of the other entities; and
WHEREAS, pursuant to Borrowers' request, Bank is willing to lend monies
to Borrowers under the terms and conditions set forth herein;
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NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein, Borrowers agree to borrow from Bank, and Bank
agrees to lend to Borrowers, subject to and upon the following terms and
conditions:
1. DEFINITIONS AND TERMS
1.1 Certain Definitions. The following words, terms and/or phrases
shall have the meanings set forth thereafter and such meanings shall be
applicable to the singular and plural form thereof, giving effect to the
numerical difference.
"Adjusted LIBOR Rate" shall mean a rate per annum
determined pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR
100% - Reserve Percentage
"Affiliate" means any Person (a) that directly or
indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with any Borrower or one or
more Affiliates, (b) that directly or beneficially owns or holds 10% or
more of any equity interest in any Borrower or one or more Affiliates
or (c) 10% or more of whose voting stock (or in the case of a Person
which is not a corporation, 10% or more of any equity interest) is
owned directly or beneficially or held by any Borrower or one or more
Affiliates. For purposes of this definition and this Agreement, the
term "control" shall mean, directly or indirectly, the power to direct
or cause the direction of the management or policies of a Person,
whether through ownership interest or otherwise, including without
limitation the power to elect or appoint, directly or indirectly, a
majority of the members of its governing board or body; provided,
however, the term "Affiliate" shall not include ETHEX or PDI for
purposes of this Agreement.
"Applicable Lending Office" means the "Lending
Office" of Bank (or an Affiliate thereof) designated on the signature
pages hereof or such other office of Bank (or an Affiliate thereof) as
Bank may from time to time specify to Borrowers as the office by which
its Loans are to be made and maintained.
"Assignment of Rents" means those certain Assignments
of Rents and Leases to be delivered subsequent to the date hereof
between K-V and Bank for each of the Mortgaged Properties, as the same
may be amended, restated and modified from time to time.
"Authorized Officer" means Victor M. Hermelin,
Chairman of the Board of K-V, Marc S. Hermelin, Vice Chairman and CEO
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of K-V, Gerald R. Mitchell, Vice President, Finance and CFO of K-V and
Richard H. Chibnall, Corporate Controller of K-V.
"Base Rate" means the rate of interest (expressed as
a percentage per annum) most recently announced or published publicly
from time to time by Bank as its prime lending rate of interest, which
is not necessarily the lowest or most favorable rate of interest
charged by Bank on commercial loans at any one time. The rate of
interest shall change automatically and immediately as and when the
Base Rate shall change, without notice to Borrower, and any notice to
which it may be entitled is hereby waived, and any such change in the
Bank's Base Rate shall not affect any of the terms and conditions of
this Agreement, all of which shall remain in full force and effect.
"Base Rate Loan" shall mean a Loan bearing interest
as specified in Paragraph 4.1(a).
"Borrowers' Liabilities" means all obligations and
liabilities of each Borrower in the aggregate to Bank (including,
without limitation, all debts, claims and indebtedness) whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising,
whether under this Agreement or the Other Agreements, or by oral
agreement or operation of law or otherwise.
"Business Day" means (i) for all purposes other than
as covered by clause (ii) below, any day on which commercial banking
institutions are open for the transaction of commercial banking
business in Chicago, Illinois other than a Saturday or Sunday, and (ii)
with respect to all notices and determinations in connection with, and
payments of principal and interest on, a LIBOR Loan, any day which is a
Business Day described in clause (i) and which is also a day for
trading by and between banks in U.S. dollar deposits in the interbank
eurodollar market.
"Capital Expenditures" means the cost of acquiring
any fixed assets, or any improvements, replacements, substitutions,
accessions or additions thereto or therefor which have a useful life of
more than one year, including without limitation, the cost of direct or
indirect acquisitions of such assets by way of purchase, capital lease
or otherwise.
"Charges" means all national, federal, state, county,
city, municipal and/or other governmental (or any instrumentality,
division, agency, body or department thereof, including, without
limitation, the PBGC) taxes, levies, assessments, charges, liens,
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claims or encumbrances upon and/or relating to Borrowers' Liabilities,
Borrowers' businesses, Borrowers' ownership and/or use of Borrowers'
assets, income and/or gross receipts.
"Closing Date" means June 18, 1997.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated and the
rulings issued thereunder.
"Collateral" shall have the meaning assigned to such
term in Paragraph 7.1 hereof.
"Conversion Date" means the Business Day on which a
Base Rate Loan is converted to a LIBOR Loan.
"Debt" means all of a Person's liabilities,
obligations and indebtedness to any Person of any and every kind and
nature, whether primary, secondary, direct, indirect, absolute,
contingent, fixed or otherwise, heretofore, now and/or from time to
time hereafter owing, due or payable, however evidenced, created,
incurred, acquired or owing and however arising, whether under written
or oral agreement, by operation of law or otherwise. Without in any way
limiting the generality of the foregoing, Debt specifically includes
(i) Funded Debt and (ii) liabilities in respect of unfunded vested
benefits under Plans and Multiemployer Plans covered by Title IV of
ERISA.
"Default Rate" shall have the meaning assigned to
such term in Paragraph 4.1(d) hereof.
"Early Termination Date" means the date, pursuant to
Paragraph 9.3, upon which, whether by notice or by right hereunder, the
Banks' obligation to extend credit hereunder is terminated.
"EBITDA" means, with respect to any fiscal period of
Borrowers, Borrowers' aggregate (a) net income for such period, plus
(b) the aggregate amounts deducted in determining such net income in
respect of (i) Interest Expense, (ii) income taxes, (iii) depreciation
and (iv) amortization minus (c) extraordinary gains, each determined on
a consolidated basis and in accordance with GAAP consistently applied.
"Environmental Claim" means any notice of violation,
claim, demand, abatement order or other order or direction (conditional
or otherwise) by any Governmental Authority for any damage, including,
without limitation, personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution,
4
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, release of any Hazardous Material to
the environment, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or
based upon (i) the occurrence of a Release by any Borrower (whether
sudden or non-sudden or accidental or non-accidental) of, or exposure
to, any Hazardous Material, in, into or onto the environment at, in,
by, from, onto or related to any Facility, (ii) the generation, use,
handling, transportation, storage, treatment or disposal of Hazardous
Materials by any Borrower in connection with the operation of any
Facility, or (iii) the violation, or alleged violation, of any
Environmental Laws or any Governmental Authorizations by any Borrower
relating to environmental matters in connection with the Facilities.
"Environmental Indemnity Agreement" means that
certain Environmental Indemnity Agreement between K-V and Bank to be
delivered subsequent to the date hereof, as the same may be amended,
restated and modified from time to time.
"Environmental Laws" means all applicable statutes,
ordinances, orders, rules, regulations, or decrees and the like
relating to (i) fines, injunctions, penalties, damages, contribution,
cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials, (ii) the
generation, use, handling, transportation, storage, treatment or
disposal of Hazardous Materials or (iii) occupational safety and
health, industrial hygiene, land use or the protection of human, plant
or animal health or welfare related to Hazardous Materials, in any
manner applicable to any Borrower or the Facilities, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss.9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Clean Air
Act (42 U.S.C. ss.7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss.2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. ss.651 et seq.) and the Emergency Planning and Community
Right-To-Know Act (42 U.S.C. ss.11001 et seq.), each as amended or
supplemented.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as the same may be amended from time to time and, unless
the context otherwise requires, the regulations promulgated thereunder
and any successor statute.
"ERISA Affiliate" means each trade or business
(whether or not incorporated) which together with any Borrower or an
Affiliate would be deemed to be a "single employer" within the meaning
5
of Section 4001(b) of ERISA or, where applicable, would be treated as a
"single employer" under Section 412(c)(11) of the Code.
"ERISA Termination Event" means (i) a "Reportable
Event" described in Section 4043 of ERISA (other than a "Reportable
Event" not subject to the 30-day reporting requirement to the PBGC
under applicable regulations), (ii) the withdrawal under Section 4063
or Section 4064 of ERISA of any Borrower or any Affiliate from a Plan
during a plan year in which it was a "substantial employer," as defined
in Section 4001(a)(2) of ERISA, including a cessation of operations
that is treated as a withdrawal by a "substantial employer" under
Section 4062(e) of ERISA, (iii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination
under Section 4041 of ERISA, (iv) the institution of proceedings under
Section 4042 of ERISA to terminate a Plan by the PBGC, (v) any other
event or condition which in the reasonable judgment of any Borrower is
likely to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to or any ERISA
administer, any Plan, or (vi) the partial or complete withdrawal
pursuant to Section 4203 or Section 4205 of ERISA of any Borrower or
any ERISA Affiliate from a Multiemployer Plan.
"ETHEX" means ETHEX Corporation, a Missouri
corporation and wholly-owned Subsidiary of K-V.
"Event of Default" shall have the meaning assigned to
such term in Paragraph 9.1 hereof.
"Excess Interest" shall have the meaning assigned to
such term in Paragraph 4.9 hereof.
"Facilities" means any and all real property
(including, without limitation, all buildings, or other improvements
located thereon) now, hereafter or heretofore, owned, leased, operated
or used by Borrower or any of its respective successors and assigns,
including, but not limited to, the Mortgaged Properties.
"Financials" means those consolidated and
internally-prepared consolidating financial statements of Borrowers
heretofore or concurrently herewith delivered by or on behalf of
Borrowers to Bank.
"Fixed Rate" means the rate determined two (2)
Business Days prior to the date of the execution and delivery by K-V of
the Term Note, as set forth in the Term Note.
6
"Fixed Rate Loan" shall mean a Loan bearing interest
at the Fixed Rate, as described in more detail in Paragraph 4.1(b)
below.
"Funded Debt" means, without duplication, (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) the face amount
of all letters of credit issued for the account of any Borrower and,
without duplication, all drafts drawn thereunder, (iv) obligations to
pay the deferred purchase price of property or services, (v)
obligations as lessee under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (vi) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness
or obligations of other of the kinds referred to in clauses (i) through
(v) above, (vii) all net obligations under any interest rate swap
agreements, any interest rate cap agreement, any interest rate collar
agreement or other similar agreement or arrangement, and (viii) all
obligations to pay a specified purchase price for goods or services
whether or not delivered or accepted (i.e., take-or-pay and similar
obligations).
"GAAP" shall mean generally accepted accounting
principles as in effect from time to time.
"Governmental Authority" means any federal, state or
local governmental authority, department, agency or court.
"Governmental Authorization" means any permit,
license, authorization, plan, directive, consent order or consent
decree of or from any Governmental Authority.
"Hazardous Materials" means (i) any chemical,
material or substance defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "infectious
waste," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of deleterious properties
such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or
words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto, (ii) any oil, petroleum or
petroleum derived substance, (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (iv) any
flammable substances or explosives, (v) any radioactive materials, (vi)
asbestos in any form (which is or could become friable), (vii) urea
formaldehyde foam insulation, (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of
7
polychlorinated biphenyls in excess of fifty parts per million, (ix)
pesticides or (x) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to the health and safety
of the owners, occupants or any Persons.
"Interest Expense" means, for any period, the sum of
all interest in respect of Debt of Borrowers accrued or capitalized
during such period (whether or not actually paid during such period),
determined on a consolidated basis and in accordance with GAAP.
"Interest Period" means with respect to the LIBOR
Loans, the period used for the computation of interest commencing on
the date the relevant LIBOR Loan is effected by conversion or continued
and concluding on the date thirty (30), sixty (60) or ninety (90) days
thereafter, at Borrowers' option, with any subsequent Interest Period
commencing on the last day of the immediately preceding Interest Period
and concluding thirty (30), sixty (60) or ninety (90) days thereafter,
at Borrowers' option; provided, however, that no Interest Period for
any LIBOR Loan made under the Commitment may extend beyond the
Revolving Credit Maturity Date or the Term Loan Maturity Date, as the
case may be. Each Interest Period for a LIBOR Loan which would
otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (unless such next succeeding Business Day
is the first Business Day of a calendar month, in which case such
Interest Period shall end on the next preceding Business Day).
"K-V" means K-V Pharmaceutical Company, a Delaware
corporation.
"Leases" means (a) that certain Metro Court
Office/Warehouse Lease Agreement by and between Public Employee
Retirement System of Nevada, as Landlord, and Designer Blinds of Omaha,
Inc., as Tenant, dated August 14, 1993 for approximately 9,117 square
feet of space at 10850 Metro Court, Maryland Heights, Missouri; (b)
that certain Metro Court Office/Warehouse Lease Agreement by and
between Metro Court Corporation, as Landlord, and Custom Floor Centre,
Inc., as Tenant, dated March 18, 1994 for approximately 4,800 square
feet of space at 10854 Metro Court, Maryland Heights, Missouri; (c)
that certain Metro Court Office/Warehouse Lease Agreement by and
between Metro Court Corporation, as Landlord, and Clean Harbors
Environmental Services, Inc., as Tenant, dated June 1, 1994 for
approximately 11,762 square feet of space at 10862 Metro Court,
Maryland Heights, Missouri; (d) that certain Metro Court
Office/Warehouse Lease Agreement by and between Public Employee
Retirement System of Nevada, as Landlord, and American Remodeling,
8
Inc., as Tenant, dated July 1, 1991 for approximately 10,493 square
feet at 10858 Metro Court, Maryland Heights, Missouri.
"Letter of Credit" means a standby, commercial import
or other letter of credit at any time issued by Bank for the account of
any Borrower.
"Letter of Credit Maturity Date" means June 18, 2000.
"Letter of Credit Termination Date" means the
earliest to occur of (i) the Letter of Credit Maturity Date or (ii) the
Early Termination Date.
"Leverage Ratio" means, as of any date, the ratio of
(i) Liabilities to (ii) Tangible Net Worth.
"Liabilities" means, as of any date, the aggregate
amount of all liabilities of Borrowers, determined on a consolidated
basis and in accordance with GAAP.
"LIBOR" means for each Interest Period the rate of
interest per annum as determined by Bank (rounded upward, if necessary,
to the nearest whole multiple of one-sixteenth of one percent (1/16th
of 1%) or such other integral multiple thereof at which interest rates
for LIBOR-based loans are commonly quoted to major banks in the
interbank eurodollar market) at which deposits of United States Dollars
in immediately available and freely transferable funds would be offered
at 11:00 a.m., Chicago time, three (3) Business Days prior to the
commencement of such Interest Period by the principal offshore funding
office of Bank to major banks in the interbank eurodollar market upon
request by such major banks for a period equal to such Interest Period
and in an amount equal to the principal amount of the LIBOR Loan to be
outstanding from Bank during such Interest Period. Each determination
of LIBOR made by Bank in accordance with this paragraph shall be
conclusive and binding on Borrowers except in the case of manifest
error.
"LIBOR Loan" means all or a portion of a Loan bearing
interest with respect to the Adjusted LIBOR Rate as specified in
Paragraph 4.1(c).
"LIBOR Margin" means two percent (2.00%).
"Lien" means, with respect to any asset of Borrower,
any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the
nature thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code in effect in any
jurisdiction).
9
"Loan" or "Loans" means and includes Letters of
Credit issued and all Base Rate Loans, Fixed Rate Loans and LIBOR Loans
made hereunder, unless the context in which such term is used shall
otherwise require.
"Make Whole Amount" shall have the meaning assigned
to such term in Paragraph 5.11 hereof.
"Maximum Rate" shall have the meaning assigned to
such term in Paragraph 4.9 hereof.
"Mortgages" means those certain Deeds of Trust made
by K-V in favor of Bank to be delivered subsequent to the date hereof
for each of the Mortgaged Properties, as the same may be amended,
restated or modified from time to time.
"Mortgaged Properties" means those certain parcels of
real estate located at 10876-10888 Metro Court and 10850-10862 Metro
Court, in the City of Maryland Heights, St. Louis County, Missouri, in
which K-V has granted a first priority security interest to Bank
pursuant to the Mortgage.
"Multiemployer Plan" means a plan defined as such in
Section 4001(a)(3) of ERISA to which contributions have been made by
Borrower or an ERISA Affiliate.
"Net Worth" means, as of any date of determination
thereof, the total stockholders' equity of Borrowers, all as determined
on a consolidated basis and in accordance with GAAP.
"Notes" means the Revolving Note and the Term Note.
"Other Agreements" means all agreements, instruments
and documents, including, without limitation, letters of credit,
mortgages, deeds of trust, guaranties, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, leases,
financing statements and all other written matter heretofore, now
and/or from time to time hereafter executed by and/or on behalf of
Borrowers and delivered to Bank including, without limitation, the
Revolving Note, the Term Note, the Mortgage, the Assignment of Rents
and the Environmental Indemnity Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under ERISA.
"PDI" means Particle Dynamics, Inc., a New York
corporation and wholly-owned Subsidiary of K-V.
10
"Permitted Debt" means (a) Debt incurred pursuant to
this Agreement or the Other Agreements, (b) Debt incurred pursuant to
purchase money mortgages (including, without limitation, capitalized
lease obligations) not to exceed $750,000.00 at any time outstanding in
the aggregate, (c) trade payables, accrued expenses and obligations not
yet due and payable incurred in the ordinary course of business, and
(d) Subordinated Debt.
"Permitted Investments" shall have the meaning
assigned to such term in Paragraph 8.3(d) hereof.
"Permitted Liens" shall have the meaning assigned to
such term in Paragraph 8.3(a) hereof.
"Person" means and includes an individual, a
partnership, a joint venture, a corporation (whether or not for
profit), a trust, an unincorporated organization, any Governmental
Authority or any other entity or organization.
"Plan" means, at any time, any single-employer plan,
as defined in Section 4001(a)(15) and subject to Title IV of ERISA,
which is maintained, or at any time during the five calendar years
preceding the time in question was maintained, for employees of any
Borrower or an ERISA Affiliate.
"Release" means any actual release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal,
discharge, dumping, leaching, or migration of Hazardous Materials into
the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials in violation of any
Environmental Laws), or into or out of any Facility.
"Representative" shall have the meaning assigned to
such term in Paragraph 2.3 hereof.
"Reserve Percentage" means, for the purpose of
computing the Adjusted LIBOR Rate, the reserve requirement imposed by
the Board of Governors of the Federal Reserve System (or any successor)
under Regulation D on Eurocurrency liabilities (as such term is defined
in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject to any amendments of such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such
Interest Period. For purposes of this definition, LIBOR Loans shall be
deemed to be Eurocurrency liabilities as defined in Regulation D
without benefit of or credit for prorations, exemptions or offsets
under Regulation D.
11
"Revolving Credit Commitment" shall have the meaning
assigned to such term in Paragraph 2.1 hereof.
"Revolving Credit Maturity Date" means June 18, 2000.
"Revolving Credit Termination Date" means the
earliest to occur of (i) the Revolving Credit Maturity Date or (ii) the
Early Termination Date.
"Revolving Loan" means and includes all Loans made
under the Revolving Credit Commitment, unless the context in which such
term is used shall otherwise require.
"Revolving Note" means that certain Revolving Note of
even date herewith in the original aggregate maximum principal amount
of TWENTY MILLION DOLLARS ($20,000,000), as the same may be amended,
modified or supplemented from time to time, and together with any
renewals thereof or exchanges or substitutes therefor.
"Subordinated Debt" means, as of any date, the amount
of Debt which is subordinated in right of payment to Borrowers'
Liabilities on terms satisfactory to Bank in each particular case.
"Subsidiary" means any corporation of which a Person
owns, directly or indirectly through one or more intermediaries, more
than 50% of the voting stock at the time of determination.
"Tangible Net Worth" means as of any date, Net Worth
minus intangible assets (as defined in accordance with GAAP).
"Term Loan Commitment" shall have the meaning
assigned to such term in Paragraph 2.2 hereof.
"Term Loan" means and includes all Loans made under
the Term Loan Commitment, unless the context in which such term is used
shall otherwise require.
"Term Loan Maturity Date" means the earlier to occur
of (i) ninety (90) days after Bank has indicated in writing to K-V that
it is unwilling to renew the Revolving Credit Commitment at the
maturity thereof, (ii) ninety (90) days after Borrowers refinance the
Revolving Loans with any other Person, and (iii) June 18, 2002.
"Term Loan Termination Date" means the earliest to
occur of the (i) Term Loan Maturity Date or (ii) Early Termination
Date.
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"Term Note" means that certain Term Note to be
delivered subsequent to the date hereof in accordance with the terms of
this Agreement in the original principal amount of THREE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($3,500,000), payable by K-V to Bank, as the
same may be amended, modified or supplemented from time to time, and
together with any renewals thereof or exchanges or substitutes
therefor.
"Transaction Fee" shall have the meaning assigned to
such term in Paragraph 5.12 below.
"Unused Portion Fee" shall have the meaning assigned
to such term in Paragraph 5.10 below.
1.2 Certain UCC and Accounting Terms. Except as otherwise defined in
this Agreement or the Other Agreements, all words, terms and/or phrases used
herein and therein shall be defined by the applicable definition therefor (if
any) in the Uniform Commercial Code as adopted by the State of Illinois.
Notwithstanding the foregoing, any accounting terms used in this Agreement which
are not specifically defined herein shall have the meaning customarily given to
them in accordance with GAAP. All financing computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied.
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES
2.1 Revolving Credit Commitment. On the terms and subject to the
conditions set forth in this Agreement, Bank agrees to make revolving credit
available and Letters of Credit available to Borrowers from time to time prior
to the Revolving Credit Termination Date with respect to revolving credit loans
and the Letter of Credit Termination Date with respect to Letters of Credit in
such aggregate amounts as Borrowers may from time to time request but in no
event exceeding TWENTY MILLION DOLLARS ($20,000,000) (the "Revolving Credit
Commitment"). The Revolving Credit Commitment shall be available to Borrowers by
means of Revolving Loans and Letters of Credit, it being understood that
Revolving Loans may be repaid and used again during the period from the date
hereof to and including the Revolving Credit Termination Date, at which time the
Revolving Credit Commitment shall expire.
2.2 Term Loan Commitment. On the terms and subject to the conditions
set forth in this Agreement, Bank agrees to make the Term Loan to K-V in the
principal amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000)
(the "Term Loan Commitment"). Amounts borrowed in respect of the Term Loan and
repaid may not be reborrowed. The Term Loan Commitment shall be used to purchase
the Mortgaged Properties and for no other purpose.
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2.3 Borrowing Procedures under the Revolving Credit Commitment.
Representative shall give Bank irrevocable telephonic notice, written notice or
telecopied notice by no later than 11:00 a.m., Chicago time, on the date it
requests Bank to make a Base Rate Loan hereunder. Representative shall give Bank
irrevocable telephonic notice (which notice shall be promptly confirmed in
writing) no later than 10:00 a.m., Chicago time, three (3) Business Days prior
to the date that it requests Bank to make a LIBOR Loan hereunder or effect a
conversion from a Base Rate Loan to a LIBOR Loan, including a reborrowing as
provided in Paragraph 4.3 below. Each such notice shall be effective upon
receipt by Bank and shall specify the date of the Loan (which shall be a
Business Day), the amount of such Loan, whether the Loan is a Base Rate Loan or
LIBOR Loan and, with respect to a LIBOR Loan, the Interest Period applicable
thereto. Representative agrees that Bank may rely on any notice given by any
person it reasonably believes to be an Authorized Officer of Representative
without the necessity of independent investigation. Each borrowing shall be on a
Business Day. Notwithstanding anything contained in this Agreement to the
contrary, the Borrowers hereby appoint K-V (the "Representative") to act as
their sole and exclusive representative under this Agreement for all purposes,
including without limitation, to receive funds advanced hereunder, to receive
notices and other communications from the Bank hereunder, to make requests for
advances of funds hereunder and to amend this Agreement. The Bank shall have (i)
no obligation to communicate with any Borrower other than the Representative
concerning this Agreement, any note or any matter related to Borrowers'
Liabilities and (ii) no responsibility with respect to the allocation among
Borrowers of the funds advanced hereunder.
2.4 Letters of Credit. (a) Subject to all of the terms and conditions
of this Agreement, if requested to do so by any Borrower, Bank shall issue its,
or cause to be issued, Letters of Credit for the account of such Borrower;
provided that the aggregate face amount of all Letters of Credit outstanding at
any time shall not exceed the availability under the Revolving Credit
Commitment. No Letter of Credit may have an expiration date that is either
greater than one (1) year from the date of issuance of such Letter of Credit or
later than the Letter of Credit Termination Date. Any amounts paid by Bank in
connection with any Letter of Credit (i) shall become part of Borrowers'
Liabilities, (ii) shall be paid from the proceeds of a Revolving Loan requested
pursuant to Paragraph 2.1 above, to the extent Bank is required to make a
Revolving Loan pursuant to the terms hereof, and (iii) otherwise, shall be
payable on demand. In no event shall Bank be required to issue or cause to be
issued Letters of Credit at any time there exists an Event of Default or an
event which with passage of time or giving of notice or both would mature into
an Event of Default.
(b) K-V and any Subsidiary for whose account a Letter of
Credit is issued, jointly and severally, agree to unconditionally, irrevocably
and absolutely pay immediately to Bank the amount drawn under a Letter of
Credit. If any Borrower at any time fails to make such payment, Borrowers shall
14
be deemed to have elected to borrow from Bank on such date Revolving Loans equal
in aggregate amount to the amount paid by Bank under such Letter of Credit.
2.5 Borrowing Procedures Under the Term Loan Commitment. Provided that
all of the conditions precedent to making the Term Loan described in Paragraph
5.5 and 6.1(B) are satisfied, K-V shall give Bank irrevocable telephonic notice
(which notice shall promptly be confined in writing) no later than 10:00 a.m.,
Chicago time, two (2) Business Days prior to the date K-V requests Bank to make
the Term Loan hereunder. K-V agrees that Bank may rely on any notice given by
any person Bank reasonably believes to be an Authorized Officer of K-V, without
the necessity of independent investigation.
3. LOANS: NOTES EVIDENCING LOANS
3.1 Revolving Note. The Revolving Loans made by Bank under the
Revolving Credit Commitment shall be evidenced by the Revolving Note
substantially in the form set forth in Exhibit 3.1 dated the date hereof (or
such other date prior thereto as shall be satisfactory to Bank), payable to the
order of Bank in the maximum principal amount of TWENTY MILLION DOLLARS
($20,000,000). The unpaid principal amount of the Revolving Loan shall bear
interest and be due and payable as provided in this Agreement and the Revolving
Note. Payments to be made by Borrowers under the Revolving Note shall be made at
the time, in the amounts and upon the terms set forth herein and therein.
3.2 Term Note. The Term Loan made by Bank under the Term Loan
Commitment shall be evidenced by the Term Note substantially in the form set
forth in Exhibit 3.2 dated the date hereof (or such other date subsequent hereto
as shall be satisfactory to Bank), payable to the order of Bank in the principal
amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000). The unpaid
principal amount of the Term Loan shall bear interest and be due and payable as
provided in this Agreement and the Term Note. Payments to be made by K-V under
the Term Note shall be made at the time, in the amounts and upon the terms set
forth herein and therein.
3.3 Recordation. The type, date and amount of each Loan made by Bank,
the interest rate, and the date and amount of each repayment of principal
received by Bank shall be recorded by Bank in its records. The aggregate unpaid
principal amount so recorded shall be prima facia evidence of the principal
amount owing and unpaid on the Revolving Note and the Term Note. The failure to
so record any such amount or any error in so recording any such amount shall not
limit or otherwise affect the obligations of Borrowers hereunder or under the
Revolving Note and the Term Note to repay the principal amount of the Loans
together with all interest accrued thereon.
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4. LOANS: AMOUNTS; INTEREST; BALANCES
4.1 Applicable Borrowing Amounts; Interest Rates; Default Rate
(a) Borrowers hereby promise to pay interest on the unpaid
principal amount of each Revolving Loan at a rate per annum equal to the Base
Rate from time to time in effect (the "Base Rate Loan") for the period
commencing on the date of such Loan until such Base Rate Loan is (A) converted
to a LIBOR Loan pursuant to Paragraph 4.3 hereof, or (B) paid in full. Accrued
interest on the outstanding principal amount of Loans shall be payable (i)
monthly in arrears on the last Business Day of each calendar month in the case
of a Base Rate Loan, (ii) on the last day of the applicable Interest Period in
the case of a LIBOR Loan, (iii) upon conversion of any Loan into a LIBOR Loan
(such amount of accrued interest then coming due to be calculated based on the
principal amount of the Loan so converted) and (iv) upon the Revolving Credit
Termination Date (in the case of a Revolving Loan), which payments shall
commence with the last Business Day of June, 1997 in the case of a Base Rate
Loan. After the Revolving Credit Termination Date (in the case of a Revolving
Loan) or the Conversion Date (with respect to accrued interest coming due as a
result of the conversion), as applicable, accrued interest on such Loans shall
be payable on demand.
(b) K-V hereby promises to pay interest on the unpaid
principal amount of the Term Loan at a rate per annum equal to the Fixed Rate
for the period commencing on the date of such Loan until such Fixed Rate Loan is
paid in full. Accrued interest and principal on the outstanding principal amount
of the Term Loan shall be payable monthly in arrears on the last Business Day of
each calendar month which payments shall commence with the last Business Day of
the calendar month in which such Loan is made, with a final payment of accrued
and unpaid interest due on the Term Loan Maturity Date. After the Term Loan
Maturity Date, accrued interest and principal on such Loan shall be payable on
demand.
(c) Each LIBOR Loan shall be in a minimum amount of
$1,000,000 or such greater amount which is an integral multiple of $100,000 and
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such LIBOR Loan is
effected by conversion or continued until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the LIBOR Margin plus the
Adjusted LIBOR Rate, with such interest payable in accordance with Paragraph
4.1(a) above.
(d) If an Event of Default shall have occurred and be
continuing hereunder, the Loans shall bear interest from the date of such Event
of Default, payable on demand, at a rate per annum (the "Default Rate") equal to
the sum of two percent (2%) plus the applicable interest rate from time to time
in effect (computed on the basis of a 360 day year and actual days elapsed).
16
4.2 Computation of Interest. Interest on each Loan shall be computed
for the actual number of days elapsed on the basis of a 360-day year. The
interest rate applicable to each Base Rate Loan shall change simultaneously with
each change in such Base Rate. Upon conversion of less than all the aggregate
principal amount of Base Rate Loans outstanding at any one time to a LIBOR Loan,
interest on the remaining principal amount of Base Rate Loans shall continue to
bear interest at the Base Rate.
4.3 Conversion and Reborrowing of Loans.
(a) Provided that no Event of Default has occurred and is
continuing, Base Rate Loans may, subject to Paragraphs 2.3 and 4.1(a) hereof, at
any time be converted by any Borrower to LIBOR Loans, which LIBOR Loans shall
mature and become due and payable on the last day of the Interest Period
applicable thereto. Provided that no Event of Default has occurred and is
continuing, Borrower shall have the right, subject to the terms and conditions
of this Agreement, to reborrow through a new LIBOR Loan in whole or in part,
subject to Paragraph 4.1(c), any LIBOR Loan from any current Interest Period
into a subsequent Interest Period, provided that Borrower shall give Bank notice
of the reborrowing of any such LIBOR Loan as provided in Paragraph 2.3 hereof.
(b) In the event that (i) Representative fails to give notice
pursuant to Paragraph 2.3 hereof of the reborrowing of any LIBOR Loan or fails
to specify the Interest Period applicable to such reborrowing or (ii) an Event
of Default has occurred and is continuing at the time any such LIBOR Loan is to
be reborrowed hereunder, then such LIBOR Loan shall be automatically reborrowed
as a Base Rate Loan, subject to Paragraphs 4.1(d) (in the case of subpart (ii)
of this Paragraph 4.3(b)) and 9.3 hereof if an Event of Default has occurred and
is continuing, whichever is applicable, unless the relevant LIBOR Loan is paid
in full on the last day of the then applicable Interest Period.
(c) Notwithstanding anything contained herein to the
contrary, Borrowers may not have outstanding at any one time more than four (4)
LIBOR Loans.
4.4 Change of Law. Notwithstanding any other provisions of this
Agreement or the Notes, if at any time Bank shall determine in good faith that
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful or impossible for Bank to effect a conversion of a Base Rate
Loan into a LIBOR Loan or to continue to maintain any LIBOR Loan, Bank shall
promptly give notice thereof (together with an explanation of the reasons
therefor) to Borrowers, and the obligation of Bank to effect by conversion or
continue such LIBOR Loan under this Agreement shall terminate until it is no
longer unlawful or impossible for Bank to effect by conversion or maintain such
LIBOR Loan. Upon the receipt of such notice, Borrowers may elect to either (i)
17
pay or prepay, as the case may be, the outstanding principal amount of any such
LIBOR Loan, together with all interest accrued thereon and all other amounts
payable to Bank under this Agreement, or (ii) convert the principal amount of
such affected LIBOR Loan to a Base Rate Loan available hereunder, subject to the
terms and conditions of this Agreement.
4.5 Unavailability of Deposits or Inability to Ascertain the LIBOR Rate
or Adjusted LIBOR Rate. Notwithstanding any other provision of this Agreement or
the Notes to the contrary, if prior to the commencement of any Interest Period
Bank shall determine in good faith (i) that deposits in the amount of any LIBOR
Loan scheduled to be outstanding are not available to Bank in the relevant
market or (ii) by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBOR rate or
Adjusted LIBOR Rate, then Bank shall promptly give notice thereof to Borrowers,
and the obligation of Bank to effect by conversion or continue any such LIBOR
Loan in such amount and for such Interest Period shall terminate until deposits
in such amount and for the Interest Period selected by Borrower shall again be
readily available in the relevant market and adequate and reasonable means exist
for ascertaining the LIBOR rate or Adjusted LIBOR Rate, as the case may be. Upon
the giving of such notice, Borrowers may elect to either (i) pay or prepay, as
the case may be, the outstanding principal amount of any such LIBOR Loan,
together with all interest accrued thereon and all other amounts payable to Bank
under this Agreement or (ii) convert the principal amount of such affected LIBOR
Loan to a Base Rate Loan available hereunder, subject to all the terms and
conditions of this Agreement.
4.6 Yield Protection, Etc.
(a) Increased Costs. If (x) Regulation D of the Board of
Governors of the Federal Reserve System, or (y) the adoption of any applicable
law, treaty, rule, regulation or guideline, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank or its lending branch with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency,
(i) shall subject Bank, its lending branch or any
Loan to any tax, duty, change, stamp tax, fee, deduction, withholding
or other charge in respect of this Agreement, any Loan, the Notes or
the obligation of Bank to make or maintain any Loan, or shall change
the basis of taxation of payments to Bank of the principal of or
interest on any Loan or any other amounts due under this Agreement in
respect of any Loan or its obligation to make or maintain any Loan
(except for changes in the rate of tax on the overall net income of
Bank imposed by the federal, state or local jurisdiction in which
Bank's principal executive office or its lending branch is located);
18
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, Bank; or
(iii) shall impose on Bank any penalty with respect
to the foregoing or any other condition affecting this Agreement, any
Loan, the Notes or the obligation of Bank to make or maintain any Loan;
and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) Bank of making or maintaining any Loan, or to reduce the amount of
any sum received or receivable by Bank under this Agreement or under the Notes
with respect thereto, then Bank shall notify Borrowers after it receives final
notice of any of the foregoing and, within forty-five (45) days after demand by
Bank (which demand shall be accompanied by a statement setting forth the basis
of such demand), Borrowers shall pay directly to Bank for such additional amount
or amounts as will compensate Bank for such increased cost or such reduction.
(b) Capital Adequacy. If, after the date hereof, either (i)
the introduction of or any change in or change in the interpretation of any law
or regulation or (ii) compliance by Bank with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by Bank or any corporation controlling Bank and Bank determines that
the amount of such capital is increased solely by or solely based upon the
existence of Bank's commitment to lend hereunder and other commitments of this
type, then, upon demand by Bank, Borrower shall immediately pay to Bank, from
time to time as specified by Bank, additional amounts sufficient to compensate
Bank in the light of such circumstances, to the extent that Bank reasonably
determines such increase in capital to be allocable to the existence of Bank's
commitment to lend hereunder.
4.7 Funding Indemnity. In the event Bank shall incur any loss, cost or
expense (including, without limitation, any loss of profit and any loss, cost or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by Bank to fund or maintain any LIBOR Loan or the relending
or reinvesting of such deposits or amounts paid or prepaid to Bank) as a result
of:
(a) any payment of a LIBOR Loan on a date other than the last
day of the then applicable Interest Period;
(b) any failure by any Borrower to effect by conversion or
continue any LIBOR Loan on the date specified in the notice given pursuant to
Paragraph 2.3 hereof;
19
(c) any failure by any Borrower to make any payment of
principal or interest when due on any LIBOR Loan, whether at stated maturity, by
acceleration or otherwise; or
(d) the occurrence of any Event of Default;
then, upon the demand by Bank, Borrowers shall pay to Bank such amount as will
reimburse Bank for such loss, cost or expense. If Bank makes such a claim for
compensation under this Paragraph 4.7, Bank shall provide to Borrower a
certificate setting forth the amount of such loss, cost or expense in reasonable
detail.
4.8 Discretion of Bank as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary other than Paragraph 4.7, Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if Bank had
actually funded and maintained each LIBOR Loan during each Interest Period for
such LIBOR Loan through the purchase of deposits in the London Interbank Market
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the Adjusted LIBOR Rate for such Interest Period.
4.9 Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the Other Agreements, Borrowers shall not be
required to pay, and Bank shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Agreement or in any of
the Other Agreements, then in such event: (a) the provisions of this Paragraph
shall govern and control; (b) Borrowers shall not be obligated to pay any Excess
Interest; (c) any Excess Interest that Bank may have received hereunder shall
be, at Bank's option, (i) applied as a credit against the outstanding principal
balance of Borrowers' Liabilities or accrued and unpaid interest (not to exceed
the maximum amount permitted by law), (ii) refunded to the payor thereof, or
(iii) any combination of the foregoing; (d) the interest rate(s) provided for
herein shall be automatically reduced to the maximum lawful rate allowed from
time to time under applicable law (the "Maximum Rate"), and this Agreement and
the Other Agreements shall be deemed to have been and shall be reformed and
modified to reflect such reduction; and (e) Borrowers shall not have any action
against Bank for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Borrowers' Liabilities is calculated at the Maximum Rate rather
than the applicable rate under this Agreement, and thereafter such applicable
rate becomes less than the Maximum Rate, the rate of interest payable on such
Borrowers' Liabilities shall remain at the Maximum Rate until Bank shall have
20
received the amount of interest which Bank would have received during such
period on such Borrowers' Liabilities had the rate of interest not been limited
to the Maximum Rate during such period.
4.10 Letter of Credit Fees. As additional consideration for issuing, or
causing to be issued, Letters of Credit for Borrowers at Borrowers' request
pursuant to Paragraph 2.4 hereof, Borrower agrees to pay fees in respect to each
Letter of Credit so issued. Said fees shall be payable on the date which such
Letter of Credit is issued and (a) for "standby" Letters of Credit shall be in
an amount equal to one percent (1.0%) per annum of the amount of the Letter of
Credit multiplied by a fraction, the numerator of which is the number of days in
the term of the applicable Letter of Credit and the denominator of which is 360,
payable quarterly in advance, and (b) for "trade" or other Letters of Credit, in
accordance with Bank's published fee schedule then in effect. In the event a
Letter of Credit is renewed or extended, a fee calculated in the manner provided
above shall be payable for any such renewal or extended period. Further,
Borrowers shall pay and/or reimburse Bank for all fees and charges paid by Bank
on account of any Letter of Credit, and Borrowers shall pay to Bank its usual
and customary charges in respect to the issuance, or renewal, of Letters of
Credit.
5. LOANS: GENERAL TERMS
5.1 Payments to Bank. That portion of Borrowers' Liabilities consisting
of: (a) principal payable on account of the Loans made by Bank to Borrowers
pursuant to this Agreement shall be payable by Borrowers to Bank (i) as provided
in the Revolving Note or any Letter of Credit in respect of the Revolving Loans
and (ii) as provided in the Term Note in respect of the Term Loan; (b) costs,
fees and expenses payable pursuant to this Agreement shall be payable by
Borrowers to Bank on demand (except the Unused Portion Fee which shall be
payable as described in Paragraph 5.10 below); (c) interest payable pursuant to
this Agreement shall be payable by Borrowers to Bank as provided in Paragraph
4.1; and (d) the balance of Borrowers' Liabilities, if any, shall be payable by
Borrowers to Bank as and when provided in this Agreement.
5.2 Automatic Debit. In order to cause timely payment to be made to
Bank, for the account of Bank, of all Borrowers' Liabilities as and when due,
Borrowers hereby authorize and direct Bank, at Bank's option, to debit the
amount of such Borrowers' Liabilities to any ordinary deposit account of
Borrowers (including, without limitation, by increasing the principal balance
due under the Revolving Loan).
5.3 Application of Payment. Each Borrower shall, at the time of making
each payment under this Agreement or any Note (whether by account debit or
otherwise), specify to Bank the Loan or other amounts payable by Borrowers
hereunder to which such payment is to be applied (and in the event that it fails
to so specify, or if an Event of Default has occurred and is continuing, Bank
may distribute such payment in such manner as Bank may determine to be
appropriate.
21
5.4 Reserved.
5.5 Conditions Precedent Events. Each Loan made by Bank to Borrowers at
the request of Borrowers pursuant to this Agreement or the Other Agreements
shall in any event be subject to the following conditions precedent: (a) there
shall not then exist an Event of Default (as hereinafter defined) or any event
or condition which with notice, lapse of time and/or the making of such Loan
would constitute an Event of Default; (b) the representations, warranties and
covenants of each Borrower contained in this Agreement shall be true and correct
as of the date of such Loan except for those made as of a particular date with
the same effect as though made on such date; (c) all of the covenants and
agreements of each Borrower in this Agreement, and all of the requirements of
this Agreement with respect to such Loan, shall have been complied with; and (d)
there shall not have occurred, since the date of this Agreement, any material
adverse change in the financial condition, results of operations or business of
any Borrower. Each borrowing by any Borrower hereunder shall be deemed a
representation and warranty by such Borrower that the foregoing conditions have
been fulfilled as of the date of such borrowing. Bank shall have received upon
request a certificate signed by an Authorized Officer of such Borrower dated the
date of such requested Loan certifying satisfaction of the conditions specified
in clauses (a)-(d) of this Paragraph 5.5.
5.6 Offset. Each Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim Bank may
otherwise have, Bank shall be entitled, at its option, to offset balances held
by it for account of such Borrower at any of its offices, in United States
Dollars or in any other currency, against any principal of or interest on any of
its Loans, or any other amount payable to Bank hereunder, which is not paid when
due (regardless of whether such balances are then due to such Borrower).
5.7 Credit Termination Date; Continuance of Obligations, Etc. This
Agreement, Bank's obligation to loan monies to Borrowers, and each Borrower's
ability to borrow monies from Bank shall be in effect until the Revolving Credit
Termination Date or Term Loan Termination Date, as applicable. Notwithstanding
the foregoing and until such date when Borrowers' Liabilities shall be paid in
full, each Borrower's obligations hereunder and under the Other Agreements shall
continue, interest shall continue to be paid in accordance with the foregoing
and Bank shall retain all of its rights and remedies under this Agreement.
5.8 Loan Evidence. Loans made by Bank to Borrowers pursuant to this
Agreement may or may not (at Bank's sole and absolute discretion) be evidenced
by notes or other instruments issued or made by Borrowers to Bank. Where such
loans are not so evidenced, such loans shall be evidenced solely by entries upon
the ledgers, books, records and/or computer records of Bank maintained for that
22
purpose, which entries shall be rebuttably presumptive evidence of such loans in
the absence of manifest error.
5.9 Over-Advances. If, at any time and for any reason, the aggregate
amount of Borrowers' Liabilities outstanding hereunder in respect of the
Revolving Loans exceeds the Revolving Credit Commitment (an "Over-Advance"),
then Borrowers shall immediately pay to Bank, in cash, the amount of such
Over-Advance. If such Over-Advance remains outstanding for more than three (3)
Business Days until such Over-Advance is so repaid to Bank, the amount of such
Over-Advance shall bear interest at the applicable Default Rate.
5.10 Unused Portion Fee. To compensate Bank for the cost of reserving
funds to be made available to Borrowers under this Agreement, Borrowers shall
pay to Bank, on the last day of each calendar quarter an unused revolving line
fee (the "Unused Portion Fee") equal to the sum of the daily amounts by which
the maximum aggregate principal amount of the Revolving Credit Commitment
exceeds the actual principal amount of Revolving Loans made hereunder. The
Unused Portion Fee is calculated for each applicable day of such quarter in an
amount equal to the excess of the maximum aggregate principal amount of the
Revolving Credit Commitment over the principal amount of all outstanding
advances under the Revolving Loans on such day, multiplied by one-eighth of one
percent (1/8%) and divided by three hundred sixty (360). All fees and charges
imposed on Borrowers pursuant to this Agreement including, without limitation,
the Unused Portion Fee accrued through the date of termination, shall be
nonrefundable to Borrowers, notwithstanding any prepayment and termination by
Borrowers of this Agreement.
5.11 Prepayment. (a) Term Loan Prepayment. K-V may, from time to time,
prepay the Loan evidenced by the Term Note in whole or in part and the same
shall pay, subject to Section 5.7 hereof, the Make-Whole Amount (as defined
below) plus a prepayment fee equal to (i) two percent (2%) of the unpaid
principal balance of the Term Loan prior to the first (1st) anniversary of the
Closing Date, and (ii) one percent (1%) of the unpaid principal balance of the
Term Loan prior to the second (2nd) anniversary of the Closing Date; provided,
however, that, prior to the occurrence of an Event of Default, such prepayment
fee shall not be due and payable upon prepayment under circumstances where Bank
has been requested by Borrowers to renew the Revolving Credit Commitment at the
expiration or maturity thereof and either (a) Bank has refused to do so or (b)
Bank has offered such renewal upon terms materially different and adverse to
Borrowers. For the purposes hereof, the "Make- Whole Amount" shall be the amount
calculated as follows:
(i) There shall first be determined, as of the date
fixed for prepayment (the "Prepayment Date"), the amount, if any, by which (A)
the Fixed Rate exceeds (B) the yield to maturity percentage for the United
States Treasury Note maturing June, 2002 (the "Treasury Note") as published in
23
The Wall Street Journal on the fifth business day preceding the Prepayment Date
plus Two Hundred and Twenty-Five basis points (2.25%) (the "Current Yield"). If
(A) publication of The Wall Street Journal is discontinued, or (B) publication
of the Treasury Note in The Wall Street Journal is discontinued, Bank, in its
sole discretion, shall designate another daily financial or governmental
publication of national circulation to be used to determine the Current Yield;
(ii) The difference calculated pursuant to clause (i)
above shall be multiplied by the outstanding principal balance hereof as of
Prepayment Date;
(iii) The product calculated pursuant to clause (ii)
above shall be multiplied by the quotient, rounded to the nearest one-hundredth
of one percent, obtained by dividing (A) the number of days from and including
the Prepayment Date to and including the Maturity Date, by (B) 365; and
(iv) The sum calculated pursuant to clause (iii)
above shall be discounted at the annual rate of the Current Yield to the present
value thereof as of the Prepayment Date, on the assumption that said sum would
be received in equal monthly installments on each monthly anniversary of the
Prepayment Date prior to the Maturity Date, with the final such installment to
be deemed received on the Maturity Date; provided that Borrowers shall not be
entitled in any event to a credit against, or a reduction of, the Debt being
prepaid if the Current Yield exceeds the Fixed Rate or for any other reason.
(b) Revolving Loan Prepayment. The Revolving Loan may be
prepaid in full, and the Revolving Credit Commitment extinguished, if and only
if the Term Loan has been paid in full in accordance with Paragraph 5.11(a)
above.
5.12 Transaction Fee. On or prior to the Closing Date, Borrowers shall
pay an aggregate fee of $85,000, comprised of a fee of $50,000 in respect of the
Revolving Loan and $35,000 in respect of the Term Loan (the "Transaction Fee")
to Bank, of which $25,000 in respect of the Revolving Loan has been previously
paid by K-V.
6. LOANS: CONDITIONS TO LENDING
6.1 Initial Loan Conditions Precedent. In addition to those conditions
set forth in Paragraph 5.5 above with respect to all Loans and advances
hereunder, prior to or contemporaneously with the making of the initial advance
of funds, Bank's obligation to make any Loan is subject to the satisfaction of
the following conditions precedent:
(a) Fees and Expenses. Borrowers shall have paid all fees
owed to Bank and reimbursed Bank for all expenses due and payable hereunder on
or before the date hereof including, but not limited to, counsel fees provided
24
for in Paragraph 10.12 hereof and the Transaction Fee provided for in Paragraph
5.12 hereof.
(b) Documents. (A) Bank shall have received the following
documents with respect to the closing of the Revolving Loan on the Closing Date,
in form and substance satisfactory to Bank, and all of the transactions
contemplated by each such document shall have been consummated or each condition
contemplated by each such document shall have been satisfied (with the exception
of transactions and conditions associated with the closing of the Term Loan,
which will close at a later date as provided in Subparagraph (B) below):
(i) Related Documents. Copies of this Agreement as
required by Bank and one copy of the Revolving Note payable to Bank
conforming to the requirements hereof duly executed by each Borrower,
as applicable.
(ii) Legal Opinion. The Revolving Loan legal opinion
of Borrowers' counsel.
(iii) Officer's Certificate. A certificate executed
by an Authorized Officer of each Borrower stating that (A) no default
or Event of Default has occurred and is continuing, (B) no material
adverse change in the financial condition or operations of the business
of any Borrower has occurred since December 31, 1996, (C) the
representations, warranties and covenants of each Borrower contained
herein are true and correct, and (D) each condition precedent of each
Borrower to the consummation of the Loans contemplated hereby has been
met or satisfied.
(iv) Insurance Policies. Certificates from each
Borrower's insurance carriers evidencing that all insurance policies
and coverage required by Paragraph 8.2(h) below is in effect.
(v) Certificate of Incorporation and Bylaws. A copy
of each Borrower's Articles or Certificate of Incorporation, and all
amendments, certified by the Secretary of State of the applicable
jurisdiction of incorporation and a copy of each of Borrower's Bylaws
certified by an Authorized Officer.
(vi) Good Standing Certificate. A Good Standing
Certificate for each Borrower from the applicable jurisdiction of
incorporation and each state in which each Borrower is required to be
qualified to transact business as a foreign corporation.
(vii) Board Resolutions. Certified copies of
resolutions of the Board of Directors of each Borrower authorizing the
execution and delivery of and the consummation of the transactions
25
contemplated by this Agreement and the Other Agreements and all other
documents or instruments to be executed and delivered in conjunction
herewith and therewith on behalf of each Borrower.
(viii) Incumbency Certificates. A certificate of the
Secretary or an Assistant Secretary of each Borrower certifying the
names of the officer or officers of each Borrower authorized to sign
this Agreement and the Other Agreements on behalf of each Borrower
together with a sample of the true signature of each such officer.
(ix) Pay-Off Letter. Pay-off letter with respect to
all Debt of Borrower previously owed to Foothill Capital Corporation
and a Form UCC-3 Termination Statement with respect to Liens granted in
favor of such lender.
(x) Lender's Loss Payable Endorsement. A Lender's
Loss Payable Endorsement in favor of Bank for each insurance policy of
each Borrower naming Bank as loss payee and additional insured.
(xi) Other Documents. Such other documents as Bank
may reasonably request.
(B) Bank shall have received the following documents on or
before June 30, 1997 with respect to the closing of the Term Loan, in form and
substance satisfactory to Bank, and all of the transactions contemplated by each
such document shall have been consummated or each condition contemplated by each
such document shall have been satisfied:
(i) Mortgages. A Deed of Trust duly executed by K-V
in favor of Bank for each Mortgaged Property.
(ii) Assignment of Rents. An Assignment of Rents and
Leases duly executed by K-V in favor of Bank for each Mortgaged
Property.
(iii) Environmental Indemnity Agreement. An
Environmental Indemnity Agreement duly executed by K-V in favor of
Bank.
(iv) Collateral Assignments of Leases. Collateral
Assignments of leasehold interests and leases from each lessee under
the Lease of each Mortgaged Property;
(v) Estoppel Letters and Leases. A fully executed
original copy by each lessor and lessee under the Leases of an estoppel
letter, and a true and correct copy of each Lease of Borrower related
to each Mortgaged Property.
26
(vi) Title Policy. A loan policy for each Mortgaged
Property issued by a title insurance company acceptable to Bank in the
amount of $3,500,000, which policies shall be in form and substance
acceptable to Bank.
(vii) Form UCC-1 and Form UCC-2 Financing Statements
for each Mortgaged Property to be filed with the Secretary of State of
Missouri and the Recorder of Deeds of St. Louis County, Missouri.
(viii) Survey. ALTA Survey for each Mortgaged
Property in form and substance acceptable to Bank.
(ix) Appraisal and Environmental Report. Appraisal
and Phase I Environmental Assessment covering each Mortgaged Property,
satisfactory in each case to Bank.
(x) ALTA Statement. An ALTA Statement acceptable to
Chicago Title Insurance Company ("Title Company") duly executed by K-V.
(xi) Purchase Contract. Purchase contract for the
purchase of each of the Mortgaged Properties, together with evidence of
transfer of each Mortgaged Property to K-V.
(xii) Environmental Reports. Environmental Reports
for each of the Mortgaged Properties.
(xiii) Gap-Personal Undertaking. A statement by K-V
that, among other things, it shall be liable to Title Company and Bank
for any liens or other title defects placed on the Mortgaged Properties
between the date of the title commitment issued by Title Company and
the date of the recording of the Mortgages.
(xiv) Officer's Certificate. A certificate executed
by an Authorized Officer of K-V stating that (A) no default or Event of
Default has occurred and is continuing, (B) no material adverse change
in the financial condition or operations of the business of K-V has
occurred since December 31, 1996, (C) the representations, warranties
and covenants of K-V contained herein are true and correct, and (D)
each condition precedent of K-V to the consummation of the Term Loan
contemplated hereby has been met or satisfied.
(xv) Good Standing Certificate. A Good Standing
Certificate for K-V from the Secretary of State of Delaware and each
state in which K-V is required to be qualified to transact business as
a foreign corporation.
27
(xiv) Other Documents. Such other documents as Bank
may reasonably request.
7. COLLATERAL FOR TERM LOAN: GENERAL TERMS
7.1 Grant of Security Interest. To secure the prompt payment of
Borrowers' Liabilities in respect of the Term Loan and the prompt, full and
faithful performance by K-V of all of the provisions to be kept, observed or
performed by K-V under the Term Loan, K-V does hereby pledge, assign, transfer
and deliver to Bank, for the benefit of Bank, and grant to Bank, for the benefit
of Bank, a security interest in and to and a first mortgage on each parcel of
Mortgaged Property pursuant to the Mortgage and Assignment of Rents. (All of the
foregoing personal property and real property securing Borrowers' Liabilities in
respect of the Term Loan hereunder, in addition to all rents and proceeds
thereof including, without limitation, proceeds of insurance policies insuring
the same, is hereinafter sometimes individually and sometimes collectively
referred to as "Collateral"). K-V shall make appropriate entries upon its
financial statements and books and records disclosing Bank's security interest
in the Collateral.
7.2 Perfection of Security Interests. K-V shall execute and/or deliver
to Bank, at any time and from time to time hereafter at the request of Bank, all
agreements, instruments, financing statements, documents and other written
matter (sometimes hereinafter individually and collectively referred to as
"Supplemental Documentation") that Bank reasonably may request, in form and
substance acceptable to Bank, to perfect and maintain perfected Bank's security
interest in the Collateral and to consummate the transactions contemplated in or
by this Agreement and the Other Agreements. After an Event of Default, K-V,
irrevocably, hereby makes, constitutes and appoints Bank (and all Persons
designated by Bank for that purpose) as K-V's true and lawful attorney and
agent-in-fact to sign the name of K-V on the Supplemental Documentation and to
deliver the Supplemental Documentation to such Persons as Bank may reasonably
elect. K-V agrees that a carbon, photographic or photostatic copy or other
reproduction of this Agreement or of any financing statement shall be sufficient
as a financing statement.
7.3 Inspection of Collateral. Bank (by any of its officers, employees
and/or agents) shall have the right to inspect the Collateral and all related
records (and the premises upon which it is located) and to verify the amount and
condition of or any other matter relating to the Collateral. After an Event of
Default, all costs, fees and expenses incurred by Bank, or for which Bank has
become obligated, in connection with such inspection and/or verification shall
constitute part of Borrowers' Liabilities, payable by each Borrower to Bank on
demand. Notwithstanding any other provision hereof, the provisions of this
Paragraph 7.3 shall govern and control with respect to matters concerning
inspection and verification of the Collateral.
28
7.4 First Lien and Location of Collateral. K-V warrants and represents
to and covenants with Bank that: (a) as of the Closing Date, Bank's security
interest in the Collateral is and at all times hereafter shall be perfected and
have a first priority; (b) the offices and/or locations where K-V keeps the
Collateral consisting of personal property, and the books and records concerning
the Collateral, consisting of books and records with respect to both real and
personal property, are at the locations specified on Exhibit 7.4 and K-V shall
not remove such books and records and/or the Collateral therefrom and shall not
keep any of such books and records and/or the Collateral at any other office or
location without the prior written consent of Bank; and (c) the addresses
specified on Exhibit 7.4 include and designate K-V's executive offices, chief
place of business and other offices and places of business and are K-V's sole
offices and places of businesses. K-V, by written notice delivered to Bank at
least thirty (30) days prior thereto, shall advise Bank of K-V's opening of any
new office or place of business or its closing of any existing office or place
of business and any new office or place of business shall be within the
continental United States of America. There are no liens on the Collateral other
than the lien of Bank pursuant hereto.
7.5 Constructive Trust. Borrowers shall receive, as the sole and
exclusive property of Bank, and as trustee for Bank, all monies, checks, notes,
drafts and all other payment for and/or proceeds of Collateral which come into
the possession or under the control of Borrowers (or any of its partners,
officers, employees, agents or those Persons acting for or in concert with
Borrowers) and immediately upon receipt thereof, Borrowers shall remit the same
(or cause the same to be remitted), in kind, to Bank at the address described
herein.
7.6 Application of Proceeds of Collateral. Bank, at any time or times
in its sole and absolute discretion, may take control of, in any manner, and may
endorse any Borrower's name, as appropriate, to any of the items of payment or
proceeds described in Paragraph 7.5 above and, pursuant to the provisions of
this Agreement, Bank may, in its sole and absolute discretion, apply the same to
and on account of Borrowers' Liabilities in respect of the Term Loan. For the
purposes of this Paragraph, each Borrower, irrevocably, hereby makes,
constitutes and appoints Bank (and all persons designated by Bank for that
purpose) as each Borrower's true and lawful attorney and agent-in-fact with
power, without notice to any Borrower, to take any such actions.
7.7 Third Party Collateral Claims. Bank, in its sole and absolute
discretion, without waiving or releasing any Event of Default or obligation,
liability, or duty of any Borrower under this Agreement or the Other Agreements,
may at any time or times hereafter, but shall be under no obligation to, pay,
acquire and/or accept an assignment of any security interest, lien, encumbrance,
or claim asserted by any Person against the Collateral. All sums paid by Bank in
respect thereof and all costs, fees and expenses, including reasonable
29
attorney's fees, court costs, expenses and other charges relating thereto that
are incurred by Bank on account thereof shall be part of Borrowers' Liabilities
payable by Borrower to Bank on demand.
7.8 Reserved.
7.9 No Custom or Waiver. No authorization given by Bank pursuant to
this Agreement or the Other Agreements to sell any specified portion of
Collateral or any items thereof, and no waiver by Bank in connection therewith
shall establish a custom or constitute a waiver of the limitation contained in
this Agreement against such sales, with respect to any portion of the Collateral
or any item thereof not covered by said authorization.
8. REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION; CONTINUING OBLIGATION
8.1 Representations and Warranties of Borrower. Each Borrower hereby
represents and warrants to Bank as of the date hereof and with respect to
subsections (a) through (d) and subsections (f) through (y) below, the date of
disbursement of each Loan or advance hereunder, as follows:
(a) Corporate Existence and Authority. Each of K-V, PDI and
ETHEX are corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware, New York and Missouri, respectively,
and each is duly qualified to do business and is in good standing under the laws
of each state in which the ownership of its properties and the nature and extent
of the activities transacted by it makes such qualification necessary except
where the failure to be so qualified could not reasonably be expected to have a
material adverse effect on its performance, business, assets, liabilities,
operations, properties, financial condition or prospects. Each Borrower has the
requisite corporate power and authority to conduct its activities as presently
conducted, to own its properties and to perform its obligations under this
Agreement.
(b) Authorization; No Conflict. The execution, delivery and
performance by each Borrower of this Agreement and the Other Agreements to which
each is a party are within each Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (i) any
Borrower's Certificate or Articles of Incorporation or Bylaws or (ii) any law or
any contractual restriction binding on or affecting each of K-V, PDI and ETHEX
or their respective properties, and do not result in or require the creation of
any Lien (except as may be created under this Agreement or the Other Agreements)
upon or with respect to any of its properties.
(c) No Approval. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
30
body is required for the due execution, delivery and performance by each
Borrower of this Agreement or any Other Agreement to which each Borrower is a
party.
(d) Validity and Binding Nature. This Agreement is, and the
Other Agreements to which each Borrower is a party when delivered hereunder will
be, legal, valid and binding obligations of each Borrower, enforceable against
each Borrower in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency, rehabilitation or moratorium
laws or general principles of equity.
(e) Financial Statements and Condition. The balance sheet
(including the notes thereto) of K-V and its Subsidiaries on a consolidated
basis as at March 31, 1997, and the related statements of operations and
stockholders' equity and statements of cash flows of K-V and its consolidated
Subsidiaries for the fiscal year then ended, have been audited by BDO Seidman,
LLP and are complete and correct, in accordance with GAAP, and fairly present
the financial condition of K-V and its Subsidiaries on a consolidated basis as
at such date and the results of the operations of Borrower for the period ended
on such date and since March 31, 1997, there has been no material adverse change
in any Borrower's financial condition, business, properties or operations. The
interim balance sheet (including the notes thereto) of K- V and its Subsidiaries
on a consolidated basis as at April 30, 1997, and the related statements of
operations and stockholders' equity and statements of cash flows for the period
then ended, are complete and correct and fairly present the financial condition
of K-V and its Subsidiaries on a consolidated basis at such date, in accordance
with GAAP (subject to normal year-end audit adjustments and except as specified
in the notes thereto). No Borrower has on the date hereof, nor will have on the
date of any Loan or advance made by Bank hereunder, any material contingent
obligations, long-term leases or material forward or long-term commitments,
which are required to be reflected in the foregoing statements (and the related
notes thereto) and are not so reflected.
(f) Litigation. There is no pending or, to the best knowledge
of each Borrower, threatened action, suit, inquiry, investigation, or proceeding
affecting, directly or indirectly, any Borrower before any court, governmental
agency or arbitrator, which, in any case, (i) is reasonably likely to materially
and adversely affect the financial condition or operations of any Borrower, (ii)
seeks to restrain or would otherwise have a material adverse effect on the
transactions contemplated herein, or (iii) would affect the validity or
enforceability of this Agreement or the Other Agreements.
(g) Securities Transaction. No proceeds of any Loan or
advance made by Bank to any Borrower hereunder will be used to acquire any
security in any transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, as amended.
31
(h) Regulation U. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Loan or advance made by Bank to any
Borrower hereunder will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
(i) ERISA Termination Event and Funding. No ERISA Termination
Event has occurred with respect to any Plan and all Plans, to the extent
governed by ERISA, meet the minimum funding standards of Section 302 of ERISA.
(j) Withdrawal Liability and Reportable Events. No Borrower
or any ERISA Affiliate has incurred, or expects to incur, any withdrawal
liability under Section 4201 of ERISA to any Multiemployer Plan. No Reportable
Event (as defined in ERISA Section 4043, other than a Reportable Event not
subject to the 30-day reporting requirement to the PBGC under applicable
regulations) has occurred with respect to any Plan.
(k) Taxes. Each Borrower has filed all tax returns (Federal,
state and local) required to be filed and paid all taxes shown thereon to be
due, including interest and penalties, other than such taxes that a Borrower is
contesting in good faith by appropriate legal proceedings and as to which proper
reserves therefor have been established on the books of each Borrower.
(l) Liens. There are no Liens upon or with respect to any of
the properties of any Borrower or the Collateral or any right to receive
revenues of any Borrower or the Collateral other than Permitted Liens.
(m) Conflicts. No Borrower or any Subsidiary thereof is a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument (including corporate charters) which is likely to have a material
adverse effect on the ability of any Borrower to perform its obligations under
this Agreement or the Other Agreements or which would restrict or otherwise
limit the incurring of the Debt represented by this Agreement and the Other
Agreements.
(n) Environmental Matters. Except as disclosed on Exhibit
8.1(n) hereto,
(i) the operations of each Borrower and each
Subsidiary, (including, without limitation, all operations and
conditions at or in the Facilities) and the Mortgaged Properties comply
with all Environmental Laws;
32
(ii) Each Borrower and each Subsidiary have obtained
or have timely applied for all Governmental Authorizations under
Environmental Laws necessary to their respective operations, if any,
and all such Governmental Authorizations as have been obtained are in
good standing, and each Borrower and each Subsidiary is in compliance
with all terms and conditions of such Governmental Authorizations;
(iii) No Borrower nor any Subsidiary has received
from any Person (A) any notice or claim to the effect that it is or may
be liable to any Person as a result of the Release or threatened
Release of any Hazardous Materials or (B) any letter or request for
information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss.9604) or
comparable state laws, and none of the operations of any Borrower or
any Subsidiary is the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a
Release or threatened Release of any Hazardous Materials at any
Facility, the Mortgaged Properties or at any other location;
(iv) no operations of any Borrower or any Subsidiary
are subject to any investigation or judicial or administrative
proceeding alleging the violation of or liability under any
Environmental Laws;
(v) no Borrower nor any Subsidiary or any of their
respective Facilities or operations or the Mortgaged Properties are
subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims;
(vi) no Borrower nor any Subsidiary has any
contingent liability in connection with any Release or threatened
Release of any Hazardous Materials;
(vii) no Borrower nor any Subsidiary or any of their
respective predecessors has filed any notice under any Environmental
Law indicating past or present treatment, storage, disposal or Release
of Hazardous Materials at any Facility or the Mortgaged Properties
except in accordance with Environmental Laws, and no Borrower's nor any
Subsidiary's operations involve the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent;
(viii) no Hazardous Material exists on, under or
about any Facility or the Mortgaged Properties in a manner that is
reasonably likely to give rise to an Environmental Claim no Borrower
33
nor any Subsidiary has filed any notice or report of a Release of any
Hazardous Materials that is reasonably likely to give rise to an
Environmental Claim;
(ix) no Borrower nor any Subsidiary or any of their
respective predecessors has disposed of any Hazardous Materials in a
manner that is reasonably likely to give rise to an Environmental
Claim;
(x) no underground storage tanks or surface
impoundments are on or at any Facility or the Mortgaged Properties; and
(xi) no lien in favor of any Person for (a) any
liability under any Environmental Laws or (b) damages arising from or
costs incurred by such Person in response to a Release or threatened
Release has been filed or has been attached to any Facility or the
Mortgaged Properties.
(o) Investment Company Act. No Borrower nor any Subsidiary is
an "investment company" or a company "controlled by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(p) Compliance with Laws. Each Borrower is in compliance with
all laws, orders, regulations and ordinances of all federal, foreign, state and
local governmental authorities binding upon or affecting the business, operation
or assets of each Borrower including, without limitation, zoning or other
ordinances relating to permissive non-conforming uses of property, except where
the failure to be in compliance could not reasonably be expected to have a
material adverse effect on the business, financial condition or operations of
each Borrower.
(q) Other Agreements. Each Borrower makes each of the
representations and warranties of Borrower contained in the Other Agreements to
which each Borrower is a party operative and applicable for the benefit of Bank
as if the same were set forth at length herein.
(r) Subsidiaries. Except as disclosed on Exhibit 8.1(r), no
Borrower has any Subsidiaries.
(s) Labor. Except as disclosed on Exhibit 8.1(s), none of the
employees of any Borrower is subject to any collective bargaining agreement, and
there are no strikes, work stoppages, election or decertification petitions or
proceedings pending or, to any Borrower's knowledge, threatened involving any
Borrower and any of its employees and no Borrower has received notice of unfair
labor charges, equal employment opportunity proceedings, wage payment or
material unemployment compensation proceedings, material workmen's compensation
proceedings or other material labor or employee-related controversies pending or
threatened involving any Borrower and any of its employees, except for any of
34
of foregoing which would not in the aggregate have a material adverse effect on
the financial condition, results of operations or business of any Borrower.
(t) Solvency. Each Borrower has capital sufficient to carry
on its business and transactions and all businesses and transactions in which it
is about to engage and is solvent and able to pay its debts as they mature, and
each Borrower owns property the fair saleable value of which is greater than the
amount required to pay each Borrower's Debt. No transfer of property is being
made and no Debt is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or defraud
either present or future creditors of any Borrower or any Affiliate.
(u) Title. Each Borrower has good and merchantable title to
and ownership of its assets, free and clear of all Liens, claims, security
interests and other encumbrances except for Permitted Liens.
(v) Credit Agreements. Exhibit 8.1(v) hereto is a complete
and correct list, as of the date of this Agreement, of each credit agreement,
loan agreement, indenture, guarantee or other arrangement providing for or
otherwise relating to any Debt or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, each Borrower (other than this
Agreement) in each case involving, in the aggregate, more than $250,000, and the
aggregate principal or face amount outstanding or which may become outstanding
under each such arrangement is correctly described in such exhibit.
(w) Debt. As of the date of this Agreement, no Borrower has
any Debt except for the Permitted Debt or Debt otherwise permitted by this
Agreement.
(x) Insurance. Each Borrower is adequately insured under its
policies of insurance currently in effect, no notice of cancellation has been
received with respect to such policies and each Borrower is in material
compliance with all conditions contained in such policies.
(y) Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of each Borrower to
Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby (excluding projections referred to below in this Paragraph
and factual information superseded or replaced prior to the date hereof) is, and
all other factual information (taken as a whole) hereafter furnished by or on
behalf of each Borrower to Bank will be true and accurate in every material
respect on the date as of which such information is dated or certified, and no
Borrower has omitted and nor will omit any material fact necessary to prevent
such information from being false or misleading.
35
8.2 Affirmative Covenants. At all times prior to the later of the Term
Loan Termination Date or the Revolving Credit Termination Date and thereafter
for so long as any amounts are due or owing to Bank hereunder, each Borrower
hereby covenants that it will, unless Bank otherwise consents in writing:
(a) Existence, Etc. Do or cause to be done all things
necessary to preserve and maintain each Borrower's corporate existence in good
standing.
(b) Compliance with Laws, Etc. Comply with all applicable
present and future laws, rules, ordinances, regulations and orders including,
without limitation, laws, rules, ordinances, regulations and orders regarding
the operation and maintenance of each Borrower's business.
(c) Payment of Taxes and Other Claims. Pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, all
material Charges levied or imposed upon any Borrower or upon the income, profits
or property of any Borrower, provided, however, that Borrowers shall not be
required to pay or discharge or cause to be paid or discharged any such Charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings to the extent adequate reserves have been
established on the books of Borrowers.
(d) Reporting Requirements. Maintain a system of accounting
in accordance with GAAP consistently applied and shall furnish to Bank:
(i) as soon as possible and in any event within ten
(10) days after the occurrence of an Event of Default or any event
which, with the giving of notice, lapse of time, or both, would
constitute an Event of Default, the statement of an Authorized Officer
setting forth details of such Event of Default or event and the action
which Borrowers have taken or propose to take to cure the same;
(ii) as soon as available, copies of the periodic
Form 10-Q quarterly report or comparable successor report filed by K-V
with the Securities and Exchange Commission or any successor agency;
provided, that if such report is not made available within forty-five
(45) days after the end of each of the first three quarterly accounting
periods in each fiscal year of K-V beginning with the quarter ending
June 30, 1997, K-V shall immediately deliver to Bank an
internally-prepared balance sheet of K-V and its Subsidiaries on a
consolidated basis as at the end of such quarter and the related
statements of operations and statements of cash flows of K-V and its
Subsidiaries on a consolidated basis for such quarter and for the
portion of the fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous
fiscal year, all in reasonable detail and certified (subject to normal
36
year-end adjustments) as to fairness of presentation, in accordance
with GAAP (other than footnotes thereto), by an Authorized Officer or
Controller (if such Controller is a corporate officer) of K-V;
(iii) as soon as available, copies of the Form 10-K
Annual Report or comparable successor report filed by K-V with the
Securities and Exchange Commission or any successor agency; provided,
that if such report is not made available within ninety (90) days after
the close of each fiscal year of K-V, K-V shall immediately deliver to
Bank a balance sheet and the related consolidated statements of
operations and stockholders' equity and statements of cash flows of
Borrower and its Subsidiaries on a consolidated basis as of the end of
such fiscal year, fairly and accurately presenting the financial
condition of K-V and its Subsidiaries on a consolidated basis as at
such date and the results of operations of Borrower and its
Subsidiaries for such fiscal year and setting forth in each case in
comparative form the corresponding figures for the corresponding period
of the preceding fiscal year, all in reasonable detail, prepared in
accordance with GAAP consistently applied, and audited by BDO Seidman,
LLP or such other independent certified public accountants acceptable
to Bank (the "Accountants");
(iv) Together with each delivery of the Annual
Reports or financial statements required by subsection (v) above, K-V
shall deliver to Bank a certificate executed by the President or Chief
Financial Officer of each Borrower stating whether any Event of
Default, or event which, with the passage of time or giving of notice
or both, would constitute such an Event of Default, currently exists
and is continuing and what activities, if any, Borrowers are taking or
proposing to take with respect thereto;
(v) concurrently with the delivery of the reports
and/or financial statements referred to in Sub-paragraphs (ii) and
(iii), a compliance certificate duly completed and executed by both the
Chairman of the Board or President and the Chief Financial Officer of
each Borrower (a) stating that Borrower has observed and performed all
of its covenants and other agreements and satisfied every condition,
contained in this Agreement, the Term Note, the Revolving Note and all
Other Agreements to which Borrower is a party to be observed, performed
or satisfied by it and that such officer has no knowledge of any Event
of Default except as specified in such certificate, (b) stating that,
to the best of such officer's knowledge, all such financial statements
are complete and correct in all respects and have been prepared in
accordance with GAAP consistently applied throughout the periods
reflected therein, and (c) showing calculations of compliance with the
financial covenants set forth in Paragraph 8.2(g) below;
37
(vi) promptly upon receipt and, in any event, within
fifteen (15) days after receipt thereof, copies of all auditors'
letters to management and management's response thereto pertaining to
the balance sheet and related financial statements of K-V and its
Subsidiaries;
(vii) (A) as soon as possible and in any event (i)
within thirty (30) days after any Borrower or any ERISA Affiliate knows
or has reason to know that any ERISA Termination Event described in
clause (i) of the definition of ERISA Termination Event with respect to
any Plan has occurred and (ii) within ten (10) days after any Borrower
or any ERISA Affiliate knows or has reason to know that any other ERISA
Termination Event with respect to any Plan has occurred, a statement of
the Chief Financial Officer (or designee) of such Borrower describing
such ERISA Termination Event and the action, if any, which Borrower, or
any such ERISA Affiliate proposes to take with respect thereto;
(B) promptly and in any event within fifteen
(15) Business Days after receipt thereof by any Borrower or any ERISA
Affiliate from the PBGC, copies of each notice received of the PBGC's
intention to terminate any Plan or to have a trustee appointed to
administer any Plan; and
(C) promptly and in any event within fifteen
(15) Business Days after receipt thereof by any Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor, a copy of each notice
received concerning the imposition or amount of withdrawal liability
which has been assessed pursuant to Section 4202 of ERISA;
(viii) within fifteen (15) Business Days after notice
to any Borrower of the commencement thereof, notice, in writing, of any
action, suit, arbitration or other proceeding instituted, commenced or
threatened against or affecting any Borrower with an amount in
controversy in excess of $750,000;
(ix) at Bank's request, each Borrower's federal,
state and local tax returns as soon as said returns are completed in
the form said returns will be filed with the Internal Revenue Service
and any state or local department of revenue or taxing authority;
(x) promptly upon their becoming available, copies of
(A) all registration statements and regular periodic reports which K-V
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange and (B) all financial statements, reports and proxy statements
so mailed; and
38
(xi) such other information respecting the condition
or operations, financial or otherwise, of any Borrower or any Affiliate
as Bank may from time to time reasonably request.
(e) Visitation Rights. At least once annually, at any time or
times during the regular business hours of Borrowers, permit Bank or any agents
or representatives thereof to perform a field audit with respect to the records
and books of account of and visit and inspect the properties and assets of each
Borrower, and to discuss the affairs and finances and the Mortgaged Properties
of Borrowers with each Borrower's officers or directors.
(f) Environmental Disclosure and Inspection.
(i) Exercise due diligence in order to comply with
all Environmental Laws.
(ii) Permit Bank, from time to time and in their sole
and absolute discretion, to retain, at Bank's expense, an independent
professional consultant to review any report relating to Hazardous
Materials prepared by or for any Borrower and at reasonable times and
subject to reasonable conditions to conduct their own investigation at
Bank's expense of any Facility currently owned, leased, operated or
used by Borrowers or any Subsidiary, and each Borrower agrees to use
its respective best efforts to obtain permission for Bank's
professional consultant to conduct its own investigation of any
Facility previously owned, leased, operated or used by Borrowers or any
Subsidiary. Borrowers hereby grant to Bank, its agents, employees,
consultants, and contractors the right to enter into or on to, at
reasonable times, the Facilities currently owned, leased, operated or
used by Borrowers or any Subsidiary to perform such tests on such
property as are reasonably necessary to conduct such a review and/or
investigation.
(iii) Promptly advise Bank in writing and in
reasonable detail upon obtaining knowledge of (i) any Release of any
Hazardous Materials required to be reported to any federal, state or
local governmental or regulatory agency under any applicable
Environmental Laws, (ii) any and all written communications with
respect to Environmental Claims or any Release of Hazardous Material
required to be reported to any federal, state or local governmental or
regulatory agency, (iii) any remedial action taken by Borrowers or any
other person in response to (1) any Hazardous Material on, under or
about any Facility, the existence of which is reasonably likely to give
rise to an Environmental Claim, or (2) any Environmental Claim that
could have a material adverse effect on Borrowers or any Subsidiary,
(iv) any Borrower's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility that could
39
cause such Facility or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use there
of under any Environmental Laws, and (v) any request for information
from any governmental agency indicating that such agency has initiated
an investigation as to whether Borrower or any Subsidiary may be
potentially responsible for a Release or threatened Release of
Hazardous Materials.
(iv) Promptly notify Bank of (i) any acquisition of
stock, assets, or property by any Borrower or any Subsidiary that
reasonably could be expected to expose such Borrower to, or result in,
Environmental Claims that could have a material adverse effect or that
could be expected to have a material adverse effect on any Governmental
Authorization then held by any Borrower or any Subsidiary, and (ii) any
proposed action outside of the normal course of business to be taken by
any Borrower or any Subsidiary to commence industrial or other
operations that could subject any Borrower or such Subsidiary to
additional laws, rules or regulation, including, without limitation,
laws, rules and regulations requiring additional environmental permits
or licenses.
(v) At its own expense, provide copies of such
documents or information as Bank may reasonably request in relation to
any matters disclosed pursuant to this Paragraph 8.2(f).
(vi) Promptly take any and all necessary remedial
action in connection with the presence, storage, use, disposal,
transportation, Release or threatened Release of any Hazardous
Materials on, under or about any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations. In the
event any Borrower or any Subsidiary undertakes any remedial action
with respect to any Hazardous Material on, under or about any Facility,
such Borrower or such Subsidiary shall conduct and complete such
remedial action in compliance with all applicable Environmental Laws
and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities.
(g) Financial Covenants. Each Borrower warrants and
represents to and covenants with Bank that they shall maintain the following
financial covenants on a consolidated basis:
40
(i) Maintain, at all times, a Tangible Net Worth of
not less than the amounts set forth below, during the following
periods:
Fiscal Year Ended Amount
1997 $23,000,000
1998 $23,500,000
1999 $32,000,000
2000 and thereafter $40,000,000
(ii) Maintain EBITDA, at all times, of not less than
the amounts set forth below, calculated each month for the preceding
twelve-month period on a trailing twelve month basis:
Fiscal Year Ended Amount
1997 $10,000,000
1998 $13,000,000
1999 $25,000,000
2000 and thereafter $40,000,000
(iii) Maintain a Leverage Ratio, at all times, of not
greater than 1.10 to 1.0.
(iv) Not permit Capital Expenditures to exceed the
following amounts for the periods set forth below:
Fiscal Year Ended Amount
1997 $6,500,000
1998 $7,000,000
1999 $14,000,000
2000 and thereafter $17,000,000
41
provided, however, that the amount of Capital Expenditures may exceed
the limits set forth above on a cumulative basis so long as the
aggregate amount of Capital Expenditures are (a) made with funds other
than Loan proceeds or other Funded Debt and (b) at all times do not
exceed $7,900,000 plus 75% of Borrower's net income, in accordance with
GAAP, for the period from the Closing Date and thereafter.
Notwithstanding the foregoing, to the extent that the proceeds of the
Term Loan are used to purchase the Mortgaged Properties, the amount of
such proceeds shall not be included within the calculation of Capital
Expenditures hereunder.
(h) Insurance.
(i) At its sole cost and expense, keep and maintain
business interruption insurance and public liability and property
damage insurance relating to its business and properties and its
ownership and use of its assets. All such policies of insurance shall
be in form and with insurers recognized as adequate by prudent business
persons and all such policies shall be in amounts as may be reasonably
satisfactory to Bank. Each Borrower shall deliver to Bank a certificate
of insurance, and evidence of payment of all premiums then due and
owing for each such policy on or prior to the date of this Agreement.
Such policies shall: (A) contain a lender's loss payable clause naming
Bank as loss payee and additional insured as its interest may appear;
and (B) provide that the insurance companies will give Bank at least
thirty (30) days written notice before any such policy or policies of
insurance shall be altered or canceled.
(ii) In the event any Borrower at any time or times
hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part
relating thereto, then Bank, without waiving or releasing any
obligation or Event of Default by any Borrower hereunder, may at any
time or times thereafter (but shall be under no obligation to) obtain
and maintain such policies of insurance and pay such premium and take
any other action with respect thereto which Bank deems advisable. All
sums so disbursed by Bank, including reasonable attorneys fees, court
costs, expenses and other charges relating thereto, shall be part of
Borrowers' Liabilities, payable by Borrowers to Bank on demand.
Borrowers authorize Bank, in Bank's sole discretion, to cause such sums
to be paid by making an advance in the amount thereof to the applicable
Borrower under the Revolving Loan.
8.3 Negative Covenants. Prior to the later of the Term Loan Termination
Date or the Revolving Credit Termination Date and thereafter for so long as any
amount is due or owing to Bank hereunder, unless Bank shall otherwise consent in
writing, no Borrower nor any Subsidiary shall:
42
(a) Liens, Etc. Create or suffer to exist any Lien or any
other type of preferential arrangement, upon or with respect to any of its
assets or properties, whether now owned or hereafter acquired, or assign any
right to receive income, except for Permitted Liens in each case to secure or
provide for the payment of any Debt of any Person, except for the permitted
Liens set forth on Exhibit 8.3(a) ("Permitted Liens").
(b) Maintain Existence, Merger, Etc. (i) dissolve or
liquidate or amend or modify its Articles or Certificate of Incorporation, as
applicable, or the Articles or Certificate of Incorporation of any Affiliate or
Subsidiary; or (ii) convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) any assets (whether now owned or
hereafter acquired) to any Person except in the ordinary course of business; or
(iii) together with one or more Affiliates convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of the assets of any Borrower and such Affiliates (whether now
owned or hereafter acquired) to any Person; or (iv) purchase, lease or otherwise
acquire all or substantially all of the assets or properties of, or acquire any
capital stock, equity interests, debt or other securities of any Person, or
enter into any joint venture or become a partner in any partnership; (v) engage
in any transaction out of the ordinary course of business; or (vi) merge or
consolidate with any Person, except as permitted under Exhibit 8.3(b).
(c) Debt. Incur, create, assume, become or be liable in any
manner with respect to or permit to exist, any Debt except for Permitted Debt.
(d) Investments or Loans. Make or permit to exist investments
or loans in or to any other Person, except for (i) salaries and reasonable
advances of money to its employees in payment of reasonable expenses incurred by
such employees in the ordinary course of business and consistent with past
practices, (ii) investments in certificates of deposits of a banking institution
having a net worth in excess of $100,000,000 or in securities of the United
States of America or commercial paper with a P1 rating (all of the foregoing
maturing within one year) and (iii) investments already made as of the Closing
Date as set forth or as otherwise listed on Exhibit 8.3(d) ("Permitted
Investments").
(e) Guaranties. Guaranty, endorse or otherwise in any way
directly, indirectly or contingently become liable for the obligations or
liabilities of any other Person, except endorsements of negotiable instruments
for collection in the ordinary course of business.
(f) Stock and Dividends. Redeem, retire, purchase or
otherwise acquire, directly or indirectly, any common capital stock of any
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any common capital stock of any Borrower or make any distribution of
43
Borrowers' property or assets to any stockholders except Ethex and PDI may
declare and pay dividends to K-V. Notwithstanding the foregoing, if no Event of
Default has occurred and is continuing, K-V may pay dividends or make
distributions up to an amount not to exceed twenty-five percent (25%) of K-V's
prior fiscal year's consolidated net income, determined in accordance with GAAP,
in any one fiscal year.
(g) Transactions with Affiliates or Insiders. Enter into, or
be a party to, any transaction with any Affiliate of any Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of Borrowers'
businesses and upon fair and reasonable terms which are fully disclosed to Bank
and are no less favorable to Borrower than would obtain in a comparable arm's
length transaction with a Person not an Affiliate of such Borrower.
8.4 Maintenance of Accounts. Each Borrower agrees to maintain its
primary operational accounts with Bank and shall maintain an average balance of
collected, available funds in a non-interest bearing demand deposit account with
Bank (the "Operating Account") in an amount at least equal to that amount
required to compensate Bank for its services in maintaining such account.
Borrowers acknowledge that Bank will charge Borrowers standard service charges
in effect from time to time for various services performed by Bank in connection
with any aspect of the relationship between Borrowers and Bank, and Borrowers
hereby agree that if such service charges exceed the credit to Borrowers arising
from earnings attributable to funds on deposit with Bank in the applicable
Operating Account, such service charge deficiency shall be deducted by Bank from
any Borrower's Operating Account, monthly, in arrears, within ten (10) days
following the end of each month. Bank may cause interest and other amounts
payable on the obligations of Borrowers to Bank hereunder to be paid by making a
direct charge to the applicable Operating Account in accordance with the terms
hereof.
9. DEFAULT
9.1 Events of Default. The occurrence of any one of the following
events shall constitute a default (an "Event of Default") under this Agreement:
(a) if any Borrower fails or neglects to perform, keep or observe any covenant
or agreement contained in this Agreement or in the Other Agreements which is
required to be performed, kept or observed by any Borrower and such failure
continues for thirty (30) days thereafter; (b) any representation or warranty
made by any Borrower herein or in any Other Agreement is untrue in any material
respect, or any exhibit or certificate furnished by any Borrower or any of its
Affiliates, directors, officers, employees, or agents to Bank is untrue in any
material respect on the date as of which the facts therein set forth are stated
or certified; (c) if any Borrower fails to pay Borrower's Liabilities when due
and payable or declared due and payable; (d) if a material portion of any
Borrower's assets or the Collateral is attached, seized, subjected to a writ or
distress warrant or is levied upon, or come within the possession of any
44
receiver, trustee, custodian or assignee for the benefit of creditors and the
same is not terminated or dismissed within thirty (30) days thereafter; (e) if a
petition under any section or chapter of the Bankruptcy Reform Act of 1978, as
amended, or any similar law or regulation shall be filed by Borrower or if
Borrower shall make an assignment for the benefit of its creditors or if any
case or proceeding is filed by Borrower for its dissolution or liquidation; (f)
if a petition under any section or chapter of the Bankruptcy Reform Act of 1978,
as amended, or any similar law or regulation is filed against any Borrower or if
any case or proceeding is filed against Borrower for its dissolution or
liquidation and the same is not terminated or dismissed within forty-five (45)
days of filing; (g) if an application is made by any Borrower for the
appointment of a receiver, trustee or custodian for any of Borrowers' assets or
the Collateral; (h) if an application is made by any Person other than such
Borrower for the appointment of a receiver, trustee or custodian for the assets
of any Borrower or the Collateral and the same is not dismissed within
forty-five (45) days after the application therefor; (i) if any Borrower is
adjudicated insolvent or admits its inability to pay its debts as they become
due; (j) if any Borrower is in default in the payment of Debt in an amount in
excess of $750,000; (k) if Borrower is in default in the payment of any Debt to
Bank including, without limitation, any reimbursement obligations for letters of
credit issued or to be issued by Bank subsequent to the date hereof in
connection with the Industrial Development Authority of the County of St. Louis,
Missouri, Private Activity Refunding and Revenue Bonds, Series 1989(f) (K-V
Pharmaceutical Company Project); or (l) if a conservator is appointed for all or
any material portion of the assets of any Borrower or the Collateral.
9.2 Cumulative Remedies. All of Bank's rights and remedies under this
Agreement and the Other Agreements are cumulative and non-exclusive.
9.3 Acceleration and Termination of Loans. Upon the occurrence and
during the continuance of an Event of Default, (a) upon notice by Bank to
Borrowers, Borrowers' Liabilities shall be immediately due and payable, unless
there shall have occurred an Event of Default under subparagraphs 9.1(d), (e),
(f), (g), (h), (i) or (l), in which case Borrowers' Liabilities shall
automatically become due and payable without notice or demand, and (b) without
notice by Bank to or demand by Bank of Borrowers, Bank shall have no further
obligation to and may then forthwith cease advancing monies or extending credit
to or for the benefit of Borrowers under this Agreement and the Other
Agreements.
9.4 Rights of Creditor. Upon an Event of Default, Bank, in its sole and
absolute discretion, may exercise any one or more of the rights and remedies
accruing (a) under applicable law upon default by a debtor, (b) under any
instrument, including, without limitation, the Mortgage and the Assignment of
Rents, or (c) under any document or agreement. Nothing contained herein shall
interfere with Bank's right under law to set-off the balances of any deposit
accounts maintained by any Borrower with Bank against Borrowers' Liabilities.
45
9.5 Injunctive Relief. Each Borrower recognizes that in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement or the Other Agreements, no remedy of law will
provide adequate relief to Bank, and agrees that Bank shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages or the posting of bond, surety or other security.
10. GENERAL
10.1 Payment Application Date. Any check, draft, or similar item of
payment by or for the account of any Borrower delivered to Bank on account of
Borrowers' Liabilities shall be applied by Bank on account of Borrowers'
Liabilities on the date final settlement thereof is reflected by irrevocable
credit to Bank.
10.2 Statement of Account. Each statement of account by Bank delivered
to any Borrower relating to Borrowers' Liabilities shall be presumed correct and
accurate, absent manifest error, and shall constitute an account stated between
Borrowers and Bank unless, within ninety (90) days after Borrowers' receipt of
said statement, Borrowers deliver to Bank, by registered or certified mail
addressed to Bank at its Address for Notices specified on the signature pages
hereto, written objection thereto specifying the error or errors, if any,
contained in any such statement.
10.3 Manner of Application; Waiver of Setoff Prohibition. Upon the
occurrence and during the continuance of an Event of Default, each Borrower
waives the right to direct the application of any and all payments at any time
or times hereafter received by Bank on account of Borrowers' Liabilities and
Borrower agrees that Bank shall have the right, in its absolute and sole
discretion, to apply and re-apply any and all such payments toward Borrowers'
Liabilities in such manner as Bank may deem advisable, notwithstanding any entry
by Bank upon any of its books and records. Each Borrower further waives any
right under or benefit of any law that would restrict or limit the right or
ability of Bank to obtain payment of Borrowers' Liabilities, including any law
that would restrict or limit Bank in the exercise of its right to appropriate
any indebtedness owing from Bank to Borrower and any deposits or other property
of Borrower in the possession or control of Bank and apply the same toward or
setoff the same against the payment of Borrowers' Liabilities.
10.4 Survival of Representations and Warranties. Each Borrower
covenants, warrants and represents to Bank that all representations and
warranties of Borrower contained in this Agreement and the Other Agreements
shall be true at the time of each Borrower's execution of this Agreement and the
Other Agreements and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
46
10.5 Integration; Amendment; Assignment; Participation.
(a) This Agreement and the Other Agreements constitute the
entire agreement and understanding between the parties relating to the subject
matter hereof and supersede all prior agreements, whether oral or written. This
Agreement and the Other Agreements may not be modified, altered or amended
except by an agreement in writing signed by each Borrower and Bank, and no
provision of this Agreement may be waived except with the consent in writing of
Bank.
(b) Bank shall have the right to assign to one or more banks
or other financial institutions all or a portion of its rights and obligations
under this Agreement (including, without limitation, the Loans and the Other
Agreements). Upon any such assignment, (i) the assignee shall become a party
hereto and, to the extent of such assignment, have all rights and obligations of
Bank hereunder and under the Other Agreements and (ii) Bank shall, to the extent
of such assignment, relinquish its rights and be released from its obligations
hereunder and under the Other Agreements; provided, however, in the event Bank
assigns all or a portion of its rights and obligations hereunder pursuant to a
transaction in which Bank (including successors thereto) is not the lead agent,
Borrowers will not be subject to the prepayment fee provided for in Paragraph
5.11 hereof as long as K-V has paid in full all Borrowers' Liabilities due and
owing in respect of the Term Loan within ninety (90) days of the date of such
assignment. Each Borrower hereby agrees to execute and deliver such documents,
and to take such other actions, as Bank may reasonably request to accomplish the
foregoing.
(c) In addition to the assignments permitted in subsection
(b) of this Paragraph 10.5, Bank and any assignee pursuant to subsection (b)
above shall have the right to grant participations to one or more banks or other
financial institutions in or to any Loan hereunder (and the Other Agreements)
without notice to or consent from any Borrower.
10.6 No Waiver. Bank's failure at any time or times hereafter to
require strict performance by Borrowers of any provision of this Agreement shall
not waive, affect or diminish any right of Bank thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Bank of an
Event of Default by Borrowers under this Agreement or the Other Agreements shall
not suspend, waive or affect any other Event of Default by Borrowers under this
Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants or representations of Borrowers
contained in this Agreement or the Other Agreements and no Event of Default by
Borrowers under this Agreement or the Other Agreements shall be deemed to have
been suspended or waived by Bank unless such suspension or waiver is by an
instrument in writing by Bank specifying such suspension or waiver and given
pursuant to the requirements of Paragraph 10.16 hereof.
47
10.7 Severability. If any provision of this Agreement or the Other
Agreements or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement and the Other
Agreements and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this Agreement
and the Other Agreements shall be severable in any such instance.
10.8 Successors and Assigns. This Agreement and the Other Agreements
shall be binding upon and inure to the benefit of the successors and assigns of
each Borrowers and Bank. This provision, however, shall not be deemed to modify
Paragraph 10.5 hereof.
10.9 Conflict with Other Agreements. The provisions of the Other
Agreements are incorporated in this Agreement by this reference thereto. Except
as otherwise provided in the Other Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the Other
Agreements, the provision contained in this Agreement shall govern and control.
10.10 No Impairment by Termination. Except to the extent provided to
the contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the Other
Agreements shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of Borrowers or Bank in any way or respect relating to
(a) any transaction or event occurring prior to such termination or cancellation
and/or (b) any of the undertakings, agreements, covenants, warranties and
representations of Borrowers contained in this Agreement or the Other
Agreements. All such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation.
10.11 Waivers. Except as otherwise specifically provided in this
Agreement, Borrowers waive any and all notice or demand which Borrowers might be
entitled to receive with respect to this Agreement or the Other Agreements by
virtue of any applicable statute or law and waives presentment, demand and
protest and notice of presentment, protest, default, dishonor, non-payment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Bank on which Borrowers may in any way
be liable and hereby ratifies and confirms whatever Bank may do in this regard.
10.12 Costs, Fees and Expenses Related to Agreement and Other
Agreements. In accordance with this Agreement on or prior to the date hereof and
thereafter upon demand by Bank therefor, Borrowers shall pay or reimburse Bank
for all reasonable costs, fees and expenses incurred by Bank, or for which Bank
48
becomes obligated, in connection with the negotiation, preparation and
consummation of this Agreement and the Other Agreements, including but not
limited to, attorneys' fees, costs and expenses; search fees, costs and
expenses; and all taxes payable in connection with this Agreement or the Other
Agreements. That portion of Borrowers' Liabilities consisting of costs, expenses
or advances to be reimbursed by Borrowers to Bank pursuant to this Agreement or
the Other Agreements which are not paid on or prior to the date hereof shall be
payable by Borrower to Bank on demand.
10.13 Environmental Indemnity. Borrowers agree to indemnify and save
Bank, its officers, directors, employees and agents, harmless of, from and
against any liability, loss, damage or expense (including reasonable attorneys'
fees) to which Bank or any of such persons may become subject, arising from or
based upon (a) any violation, or claim of violation, by Borrowers of any laws,
regulations or ordinances relating to Hazardous Materials, or (b) any Hazardous
Materials located or disposed of on or released or transported from any property
owned, leased or operated by Borrowers, or any claim of any of the foregoing.
10.14 Release. Borrowers release Bank from any and all causes of
action, claims or rights which Borrowers may now or hereafter have for, or which
may arise from, any loss or damage caused by or resulting from any act or
omission to act on the part of Bank, its officers, agents or employees, except
in each instance for willful misconduct and gross negligence.
10.15 Governing Law. This Agreement and the Other Agreements shall be
governed and controlled by the internal laws of the State of Illinois without
regard to principles of conflicts of laws as to interpretation, enforcement,
validity, construction, effect, and in all other respects including, but not
limited to, the legality of the interest rate and other charges.
10.16 Notices. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given to
any party or parties (a) upon delivery to the address of the party or parties as
specified in the "Address for Notices" below such party or parties' name on the
signature pages hereof if delivered in person or by courier or if sent by
certified or registered mail (return receipt requested), or (b) upon dispatch if
transmitted by telecopy or other means of facsimile transmission, in any case to
the party or parties at the telecopy numbers specified on the same, or to such
other address or telecopy number as any party may hereafter designate by written
notice in the aforesaid manner.
10.17 FORUM; BANK; VENUE; JURY TRIAL WAIVER. TO INDUCE BANK TO ACCEPT
THIS AGREEMENT AND THE OTHER AGREEMENTS, BORROWERS, IRREVOCABLY AGREE THAT ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER, OR RESPECT, ARISING OUT OF OR FROM OR
RELATED TO THIS AGREEMENT OR THE OTHER AGREEMENTS SHALL BE LITIGATED ONLY IN
49
COURTS HAVING SITUS WITHIN CHICAGO, ILLINOIS. BORROWERS HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE. BORROWERS HEREBY IRREVOCABLY APPOINT AND DESIGNATE KURTIS
B. REEG OF GALLOP, JOHNSON & NEUMAN, L.C. WHOSE ADDRESS IS 33 BRONZE POINT,
SUITE 1D, BELLEVILLE, ILLINOIS, OR ANY OTHER PERSON HAVING AND MAINTAINING A
PLACE OF BUSINESS IN SUCH STATE, WHOM BORROWERS MAY FROM TIME TO TIME HEREAFTER
DESIGNATE (HAVING GIVEN FIVE (5) DAYS' WRITTEN NOTICE THEREOF TO BANK) AS
BORROWERS' TRUE AND LAWFUL ATTORNEY AND DULY AUTHORIZED BANK FOR ACCEPTANCE OF
SERVICE OF LEGAL PROCESS. BORROWERS AGREE THAT SERVICE OF SUCH PROCESS UPON SUCH
PERSON SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS UPON EACH BORROWER.
BORROWERS HEREBY WAIVE ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF
ANY LITIGATION BROUGHT AGAINST BORROWERS BY BANK IN ACCORDANCE WITH THIS
PARAGRAPH. BORROWERS HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION IN WHICH A BORROWER IS A PARTY.
10.18 Other Costs, Fees and Expenses. If at any time or times hereafter
Bank: (a) employs counsel for advice or other representation (i) with respect to
this Agreement or the Other Agreements, (ii) to represent Bank in any
litigation, contest, dispute, suit or proceeding or to commence, defend, or
intervene or to take any other action in or with respect to any litigation,
contest, dispute, suit, or proceeding (whether instituted by Bank, any Borrower,
or any other Person) in any way or respect relating to this Agreement or the
Other Agreements or (iii) to enforce any rights of Bank against Borrowers or any
other Person which may be obligated to Bank by virtue of this Agreement or the
Other Agreements; and/or (b) attempts to or enforces any of Bank's rights or
remedies under the Agreement or the Other Agreements, the reasonable costs and
expenses incurred by Bank in any manner or way with respect to the foregoing,
shall be part of Borrowers' Liabilities, payable by Borrower to Bank on demand.
10.19 Revival. To the extent that Bank receives any payment on account
of Borrowers' Liabilities and any such payment(s) and/or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, subordinated and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then, to the extent of such payment(s) and/or proceeds
received, Borrowers' Liabilities or part thereof intended to be satisfied shall
be revived and continue in full force and effect, as if such payment(s) and/or
proceeds had not been received by Bank and applied on account of Borrowers'
Liabilities.
10.20 Acknowledgments. Each Borrower acknowledges that (i) it has been
advised by counsel of its choice with respect to this Agreement and the
50
transactions contemplated hereby, (ii) each of the waivers set forth herein was
knowingly and voluntarily made; and (iii) the obligations of Bank hereunder,
including the obligation to advance and lend funds to Borrowers in accordance
herewith, shall be strictly construed and shall be expressly subject to each
Borrower's compliance in all respects with the terms and conditions herein set
forth.
10.21 Section Headings. Section headings used in this Agreement are for
convenience only and shall not effect the construction or interpretation of this
Agreement.
10.22 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
10.23 Effectiveness. This Agreement shall become effective upon the
execution and delivery to Bank of counterparts of this Agreement by each
Borrower and Bank.
10.24 Joint and Several Liability. The liability of each Borrower for
Borrowers' Liabilities in respect of the Revolving Loan under this Agreement and
the Other Agreements in general shall be joint and several, and each reference
to Borrowers herein shall be deemed to refer to each such Borrower. In
furtherance and not in limitation of Bank's rights and remedies hereunder or at
law, Bank may proceed under this Agreement and the Other Agreements against one
or more of the Borrowers in its absolute and sole discretion for any of
Borrowers' Liabilities in respect of the Revolving Loan.
51
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
ATTEST: K-V PHARMACEUTICAL COMPANY
By:/s/ Gerald R. Mitchell
Title: Vice-President, Finance
Address for Notices:
2503 South Hanley
St. Louis, Missouri 63144-2555
Telephone No.: (314) 645-6600
Telecopier No.: (314) 645-6732
Attention: President
With a copy to:
Title: Secretary
Address for Notices:
2503 South Hanley
St. Louis, Missouri 63144-2555
Telephone No.: (314) 645-6600
Telecopier No.: (314) 645-6732
Attention: President
52
With a copy to:
John P. Walsh, Esq.
Gallop, Johnson & Neuman, L.C.
Interco Corporate Tower
101 South Hanley
St. Louis, Missouri 63105
Telephone No.: (314) 862-1200
Telecopier No.: (314) 862-1219
ATTEST: ETHEX CORPORATION
By: /s/ Gerald R. Mitchell
Title: Vice-President
Address for Notices:
2503 South Hanley
St. Louis, Missouri 63144-2555
Telephone No.: (314) 645-6600
Telecopier No.: (314) 645-6732
Attention: President
With a copy to:
John P. Walsh, Esq.
Gallop, Johnson & Neuman, L.C.
Interco Corporate Tower
101 South Hanley
St. Louis, Missouri 63105
Telephone No.: (314) 862-1200
Telecopier No.: (314) 862-1219
53
LASALLE NATIONAL BANK
By:
Title: Vice President
Address for Notices:
LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Telecopier No.: (312) 904-6546
Telephone No.: (312) 904-2766
Attention: Mr. Charles E. Schroeder, Jr.
Vice President
With a copy to:
Michael A. Nemeroff, Esq.
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street
Chicago, Illinois 60601-1003
Telecopy No.: (312) 609-5005
Telephone No.: (312) 609-7500
54
LIST OF EXHIBITS
Exhibit 3.1 Form of Revolving Note
Exhibit 3.2 Form of Term Note
Exhibit 7.4 Location of Collateral
Exhibit 8.1(n) Environmental Matters
Exhibit 8.1(r) Subsidiaries
Exhibit 8.1(s) Labor
Exhibit 8.1(v) Credit Agreements
Exhibit 8.3(a) Permitted Liens
Exhibit 8.3(b) Permitted Acquisitions
Exhibit 8.3(d) Permitted Investments
EXHIBIT 3.1
to
Loan Agreement
REVOLVING NOTE
$20,000,000 Chicago, Illinois
June 18, 1997
FOR VALUE RECEIVED, on or before June 18, 2000 (or, if such day is not
a Business Day, on the next following Business Day), the undersigned, K-V
PHARMACEUTICAL COMPANY, a Delaware corporation; PDI DYNAMICS, INC., a New York
corporation; and ETHEX CORPORATION, a Missouri corporation, jointly and
severally (herein, collectively and together with their successors and assigns,
called "Borrowers"), promise to pay to the order of LASALLE NATIONAL BANK, a
national banking association (herein, together with its successors and assigns,
called the "Bank"), the maximum principal sum of TWENTY MILLION and 00/100
DOLLARS ($20,000,000) or, if less, the aggregate unpaid principal amount of all
Revolving Loans made by Bank to the undersigned pursuant to that certain Loan
Agreement of even date herewith between Borrowers and Bank (herein, as the same
may be amended, modified or supplemented from time to time, called the "Loan
Agreement") as shown in Bank's records.
The Borrower further promises to pay to the order of Bank interest on
the aggregate unpaid principal amount hereof from time to time outstanding from
the date hereof until paid in full at such rates and at such times as shall be
determined in accordance with the provisions of the Loan Agreement. Accrued
interest shall be payable on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made in the lawful
money of the United States of America in immediately available funds at Bank's
principal office at 135 South LaSalle Street, Chicago, Illinois 60603; or at
such other place as may be designated by Bank to the Borrower in writing.
This Note is the Revolving Note referred to in, evidences indebtedness
incurred under, and is subject to the terms and provisions of, the Loan
Agreement. The Loan Agreement, to which reference is hereby made, sets forth
said terms and provisions, including those under which this Note may or must be
paid prior to its due date or may have its due date accelerated. Terms used but
not otherwise defined herein are used herein as defined in the Loan Agreement.
1
In addition to, and not in limitation of, the foregoing and the
provisions of the Loan Agreement hereinabove referred to, the Borrower further
agrees, subject only to any limitation imposed by applicable law, to pay all
expenses, including attorneys' fees and expenses, incurred by the holder of this
Note in seeking to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
The liability of each Borrower under this Note in general shall be
joint and several, and each reference herein to the Borrowers shall be deemed to
refer to each such Borrower. In furtherance and not in limitation of Bank's
rights and remedies hereunder or at law, Bank may proceed under this Note
against any one or more of the Borrowers in its absolute and sole discretion for
any of Borrowers' Liabilities or any other liability or obligation of the
Borrowers arising hereunder.
This Note is binding upon the undersigned and its successors and
assigns, and shall inure to the benefit of Bank and its successors and assigns.
This Note is made under and governed by the laws of the State of Illinois
without regard to conflict of laws principles.
ATTEST: K-V PHARMACEUTICAL COMPANY, a
Delaware Corporation
By:
Secretary
Borrower's Address: By:
Title:
2503 South Hanley
St. Louis, Missouri 63144-2555
2
ATTEST: PARTICLE DYNAMICS, INC.,
a New York corporation
By:
Secretary
By:
Borrower's Address: Title:
2503 South Hanley
St. Louis, Missouri 63144-2555
ATTEST: ETHEX CORPORATION, a
Missouri corporation
By:
Secretary
Borrower's Address: By:
2503 South Hanley Title:
St. Louis, Missouri 63144-2555
3
EXHIBIT 3.2
to
Loan Agreement
TERM NOTE
$3,500,000 Chicago, Illinois
June __, 1997
FOR VALUE RECEIVED, the undersigned, K-V PHARMACEUTICAL COMPANY, a
Delaware corporation (herein, together with its successors and assigns, called
the "Borrower"), promises to pay to the order of LASALLE NATIONAL BANK, a
national banking association (herein, together with its successors and assigns,
called the "Bank"), the principal sum of THREE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($3,500,000), plus interest at the rate of ___________ percent (___%)
per annum, payable in monthly installments commencing June ___, 1997 of
principal of [NINETEEN THOUSAND FOUR HUNDRED FORTY-FOUR AND 44/100 DOLLARS
($19,444.44),] on the last Business Day of each month through ___________,
_____, with a final payment of the entire principal balance outstanding
hereunder due on ____________, _____, pursuant to that certain Loan Agreement of
even date herewith between the Borrower, Particle Dynamics, Inc., a New York
corporation, ETHEX Corporation, a Missouri corporation, and Bank (herein, as the
same may be amended, modified or supplemented from time to time, called the
"Loan Agreement") as shown in Bank's records, plus interest as described below.
The Borrower further promises to pay to the order of Bank interest on
the aggregate unpaid principal amount hereof from time to time outstanding from
the date hereof until paid in full at the Fixed Rate described above and at such
times as shall be determined in accordance with the provisions of the Loan
Agreement. Accrued interest shall be payable on the dates specified in the Loan
Agreement.
Payments of both principal and interest are to be made in the lawful
money of the United States of America in immediately available funds at Bank's
principal office at 135 South LaSalle Street, Chicago, Illinois 60603, or at
such other place as may be designated by Bank to the Borrower in writing.
This Note is the Term Note referred to in, evidences indebtedness
incurred under, and is subject to the terms and provisions of, the Loan
Agreement. The Loan Agreement, to which reference is hereby made, sets forth
said terms and provisions, including those under which this Note may or must be
paid prior to its due date or may have its due date accelerated. Terms used but
not otherwise defined herein are used herein as defined in the Loan Agreement.
1
In addition to, and not in limitation of, the foregoing and the
provisions of the Loan Agreement hereinabove referred to, the Borrower further
agrees, subject only to any limitation imposed by applicable law, to pay all
expenses, including attorneys' fees and expenses, incurred by the holder of this
Note in seeking to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
This Note is binding upon the undersigned and its successors and
assigns, and shall inure to the benefit of Bank and its successors and assigns.
This Note is made under and governed by the laws of the State of Illinois
without regard to conflict of laws principles.
K-V PHARMACEUTICAL COMPANY, a
Delaware corporation
ATTEST:
By: By:
Secretary Title:
Borrower's Address:
2503 South Hanley
St. Louis, Missouri 63144-2555
2