FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is entered
into as of the 28th day of October, 1998 by and among LaSalle National Bank, a
national banking association ("Bank"); and K-V Pharmaceutical Company, a
Delaware corporation, Particle Dynamics, Inc., a New York corporation, and Ethex
Corporation, a Missouri corporation (collectively, the "Borrowers").
W I T N E S S E T H:
WHEREAS, Bank and Borrowers entered into a Loan Agreement dated as of
June 18, 1997 (the "Agreement"), and now desire to amend such Agreement pursuant
to this Amendment to, among other things, increase the amount of the Revolving
Credit Commitment (as defined in the Agreement) to Forty Million Dollars
($40,000,000) and modify certain covenants.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:
1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
2. Amendment of the Agreement. The Agreement is hereby amended as
follows:
(a) The definition of the term "EBITDA" appearing in Paragraph 1.1
of the Agreement is hereby amended by adding the following sentence at the end
of such definition:
In the event any Borrower consummates an acquisition (whether
via stock purchase, asset purchase, merger or otherwise) (the
Person or assets so acquired being referred to herein as the
"Acquired Asset"), EBITDA of Borrowers for the fiscal period
during which such acquisition occurred and all other relevant
"trailing" measuring periods shall be calculated to include
the EBITDA of the Acquired Asset on a pro-forma basis, for the
relevant measuring periods as if such Acquired Asset was a
Borrower hereunder at all such times, to the extent the
results of operations of such Acquired Asset are not reflected
in Borrower's Financials.
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(b) The definition of the term "Funded Debt Ratio" is hereby
appended to the Agreement in Paragraph 1.1 as follows:
"Funded Debt Ratio" means, as of any date, the ratio of (i)
Funded Debt to (ii) EBITDA. It is understood and agreed that
if Borrower consummates an acquisition (whether via stock
purchase, asset purchase, merger or otherwise), Funded Debt of
Borrowers for the fiscal period during which such acquisition
occurred and all other relevant measuring periods shall be
calculated to include the Funded Debt of the Acquired Assets,
if applicable, for the relevant "trailing" measuring periods
as if such Acquired Asset was owned hereunder at all such
times.
(c) The definition of the term "Leverage Ratio" appearing in
Paragraph 1.1 of the Agreement is hereby deleted in its entirety.
(d) The definition of the term "Revolving Note" appearing in
Paragraph 1.1 of the Agreement is hereby amended and restated to read in its
entirety as follows:
"Revolving Note" means that certain Substitute Revolving Note
dated as of October 28, 1998 in the aggregate maximum
principal amount of Forty Million Dollars ($40,000,000), as
the same may be amended, modified or supplemented from time to
time, and together with any renewals thereof or exchanges or
substitutes therefor.
(e) Paragraph 2.1 is hereby amended and restated to read in its
entirety as follows:
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
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 FORTY
MILLION DOLLARS ($40,000,000) (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.
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(f) Paragraph 5.10 is hereby amended and restated to read in its
entirety as follows:
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 the percentage fee determined in
accordance with the table set forth below (the "Percentage
Fee") 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.
Amount of principal
outstanding under the Percentage Fee for First Percentage Fee for Second
Revolving Credit $20,000,000 of Revolving $20,000,000 of Revolving
Commitment Credit Commitment Credit Commitment
- --------------------- ------------------------ -------------------------
Up to $5,000,000 one-quarter of one percent one-quarter of one percent
(1/4%) (1/4%)
Over $5,000,000 one-eighth of one percent one-quarter of one percent
(1/8%) (1/4%)
(g) A new Paragraph 8.1(z) is hereby appended to the Loan
Agreement as follows:
(z) Each Borrower and each of their Subsidiaries have
reviewed the areas within their business and operations which
could be adversely affected by, and have developed or are
developing a program to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications
used by each Borrower and each of their Subsidiaries may be
unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date on or
after December 31, 1999), and have made related appropriate
inquiry of material suppliers and vendors. Based on such
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review and program, each Borrower believes that the "Year 2000
Problem" will not have a material adverse effect on any
Borrower. From time to time, at the request of Bank, each
Borrower and each of their Subsidiaries shall provide to Bank
such updated information or documentation as is requested
regarding the status of their efforts to address the Year 2000
problem.
(h) Paragraph 8.2(g)(i) is hereby deleted in its entirety and the
following paragraph is hereby added to the Agreement in its place and stead:
(i) Maintain a Funded Debt Ratio, at all times, of not greater
than 1.50 to 1.0.
(i) Paragraph 8.2(g)(ii) is hereby amended and
restated in its entirety to read as follows:
(ii) Maintain EBITDA, at all times, of not less than
the amounts set forth below, calculated quarterly for the
preceding twelve-month period on a trailing twelve month
basis:
Period Amount
------ ------
October 28, 1998 through $17,500,000
March 30, 1999
March 31, 1999 through $22,500,000
March 30, 2000
March 31, 2000 and $35,000,000
thereafter
(j) Paragraph 8.2(g)(iii) is hereby deleted in its entirety and
Paragraph 8.2(g)(iv) is hereby re-referenced as Paragraph 8.2(g)(iii) to account
for such deletion.
(k) Paragraph 8.3(b) is hereby amended by adding the following
sentence to the end of such Paragraph:
Notwithstanding the foregoing, so long as an Event of
Default is not then in existence, Borrower may make
acquisitions of assets or properties in an aggregate amount
not to exceed (i) the amount of cash on hand as reflected on
Borrowers' most recent Financials delivered to Bank at the
time of such acquisition, plus (ii) no more than Ten Million
Dollars ($10,000,000) of proceeds of the Revolving Credit
Commitment.
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3. Representations, Covenants and Warranties; No Default. The
representations, covenants and warranties set forth in Paragraph 8 of the
Agreement shall be deemed remade as of the date hereof by each Borrower, except
that any and all references to the Agreement in such representations and
warranties shall be deemed to include this Amendment. No Event of Default has
occurred and is continuing and no event has occurred and is continuing which,
with the lapse of time, the giving of notice, or both, would constitute such an
Event of Default under the Agreement.
4. Fees and Expenses. The Borrowers agree to pay on demand all costs
and expenses of or incurred by Bank in connection with the evaluation,
negotiation, preparation, execution and delivery of this Amendment and the other
instruments and documents executed and delivered in connection with the
transactions described herein (including the filing or recording thereof),
including, but not limited to, the fees and expenses of counsel for the Bank and
any future amendments to the Agreement. Borrowers also agree to pay to Bank, on
demand, a closing fee equal to one-quarter of one percent (0.25%) of the net
aggregate increase in the Revolving Credit Commitment of $20,000,000, amounting
to $50,000.
5. Delivery of Documents. Notwithstanding any of the foregoing, prior
to or contemporaneously with the making of the Substitute Revolving Note, Bank
shall have received from Borrowers the following fully executed documents, 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:
(a) First Amendment to Loan Agreement;
(b) Substitute Revolving Note;
(c) Certificate of Secretary of each Borrower certifying to
board resolutions evidencing each Borrower's authorization of the Amendment, the
Substitute Revolving Note and incumbency of each Borrower; and
(d) Such other documents, opinions or certificates as
Bank may reasonably request.
6. Effectuation. The amendments to the Agreement contemplated by this
Amendment shall be deemed effective immediately upon the full execution of this
Amendment and without any further action required by the parties hereto. There
are no conditions precedent or subsequent to the effectiveness of this
Amendment.
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.
LASALLE NATIONAL BANK K-V PHARMACEUTICAL COMPANY
By: By:
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Its: Its:
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PARTICLE DYNAMICS, INC.
By:
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Its:
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ETHEX CORPORATION
By:
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Its:
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