SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is entered
into as of the 11th day of March, 1999 by and among LaSalle National Bank, a
national banking association ("Bank"), and each of K-V Pharmaceutical Company, a
Delaware corporation ("K-V"), 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 that certain Loan Agreement
dated as of June 18, 1997, as amended by that certain First Amendment to Loan
Agreement dated as of October 28, 1998 (collectively, the "Agreement"), and now
desire to amend such Agreement pursuant to this Amendment to, among other
things, advance a new secured term loan to K-V in the original principal amount
of Two Million Three Hundred Thousand Dollars ($2,300,000) and (ii) modify
certain financial 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provisions shall be deemed superseded hereby.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 definitions of the terms "Lakefront Drive Property", "Metro
Court Properties", "Term Loan A", "Term Loan B", "Term Loan Commitment A", "Term
Loan Commitment B", "Term Note A", "Term Note B" and "Term Notes" are hereby
added to the Agreement in Paragraph 1.1 to read in their entirety as follows:
"Lakefront Drive Property" means that certain parcel of real
property owned by K-V located at 13622 Lakefront Drive, St. Louis,
Missouri.
"Metro Court Properties" means those certain parcels of real
property owned by K-V located at 10850-10862 Metro Court and
10876-10888 Metro Court, respectively, in the City of Maryland Heights,
St. Louis County, Missouri.
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"Term Loan A" means all Loans made under Term Loan Commitment
A.
"Term Loan B" means all Loans made under Term Loan Commitment
B.
"Term Loan Commitment A" shall have the meaning assigned to
such term in Paragraph 2.2(a) hereof.
"Term Loan Commitment B" shall have the meaning assigned to
such term in Paragraph 2.2(b) hereof.
"Term Note A" means that certain Term Note dated as of June
28, 1997 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.
"Term Note B" means that certain Term Note B dated as of March
11, 1999 in the original principal amount of TWO MILLION THREE HUNDRED
THOUSAND DOLLARS ($2,300,000), 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.
"Term Note" or "Term Notes" means collectively, Term Note A
and Term Note B, unless the context shall otherwise require.
(b) The definition of the terms "Assignment of Rents", "Environmental
Indemnity Agreement", "Fixed Rate", "Mortgaged Properties", "Mortgages",
"Notes", "Term Loan" and "Term Loan Maturity Date" appearing in Paragraph 1.1 of
the Agreement are hereby amended and restated to read in their entirety as
follows:
"Assignment of Rents" means those certain Assignments of Rents
and Leases between K-V and Bank for each of the Mortgaged Properties,
each dated as of June 28, 1997 in the case of the Metro Court
Properties and March 11, 1999 in the case of the Lakefront Property, as
each of the same may be amended, modified or restated from time to
time.
"Environmental Indemnity Agreement" means those certain
Environmental Indemnity Agreements between K-V and Bank for each of the
Mortgaged Properties, dated as of June 28, 1997 in the case of the
Metro Court Properties and March 11, 1999 in the case of the Lakefront
Property, as the same may be amended, modified or restated from time to
time.
"Fixed Rate" means (a) eight and 53/100 percent (8.53%) with
respect to Term Note A and (b) seven 95/100 percent (7.95%) with
respect to Term Note B.
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"Mortgaged Properties" means the Metro Court Properties and
the Lakefront Property in which K-V has granted a first priority
security interest to Bank pursuant to each of the Mortgages.
"Mortgages" means each of those certain Deeds of Trust made by
K-V in favor of Bank for each of the Mortgaged Properties dated as of
June 28, 1997 with respect to the Metro Court Properties and that
certain Deed of Trust dated as of March 11, 1999 with respect to the
Lakefront Property, as each of the same may be amended, restated or
modified from time to time.
"Notes" means, collectively, the Revolving Note, Term Note A
and Term Note B.
"Term Loan" means, collectively, Term Loan A and Term Loan B,
unless the context in which such term is used shall otherwise require.
"Term Loan Maturity Date" means: (i) with respect to Term Loan
A, the earlier to occur of (A) 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, (B) ninety (90) days after
Borrowers refinance the Revolving Loans with any other Person, and (C)
June 18, 2002; and (ii) with respect to Term Loan B, the earlier to
occur of (A) 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, (B) ninety (90) days after Borrowers refinance
the Revolving Loans with any other Person, and (C) March 11, 2004.
(c) Paragraph 2.2 is hereby amended and restated to read in its
entirety as follows:
2.2 Term Loan Commitments.
(a) Term Loan Commitment A. On the terms and subject
to the conditions set forth in this Agreement, Bank has made
Term Loan A to K-V in the original principal amount of THREE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) (the "Term
Loan Commitment A"). Amounts borrowed in respect of Term Loan
A and repaid may not be reborrowed. Term Loan A was used to
purchase the Metro Court Properties and for no other purpose.
(b) Term Loan Commitment B. On the terms and subject
to the conditions set forth in this Agreement, Bank agrees to
make Term Loan B to K-V in the original principal amount of
TWO MILLION THREE HUNDRED THOUSAND DOLLARS ($2,300,000) ("Term
Loan Commitment B"). Amounts borrowed in respect of Term Loan
B and repaid may not be reborrowed. Term Loan B shall be used
to purchase the Lakefront Drive Property and for no other
purpose.
(d) Paragraph 2.5 is hereby deleted in its entirety.
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(e) Paragraph 3.2 is hereby amended and restated to read in its
entirety as follows:
3.2 Term Notes.
(a) Term Note A. Term Loan A made by Bank under Term
Loan Commitment A is evidenced by Term Note A, payable to the
order of Bank in the original principal amount of THREE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000). The unpaid
principal amount of Term Loan A shall bear interest and be due
and payable as provided in this Agreement and Term Note A.
Payments to be made by K-V under Term Note A shall be made at
the time, in the amounts and upon the terms set forth herein
and therein.
(b) Term Note B. Term Loan B made by Bank under the
Term Loan Commitment B shall be evidenced by Term Note B,
payable to the order of Bank in the original principal amount
of TWO MILLION THREE HUNDRED THOUSAND DOLLARS ($2,300,000).
The unpaid principal amount of Term Loan B shall bear interest
and be due and payable as provided in this Agreement and Term
Note B. Payments to be made by K-V under Term Note B shall be
made at the time, in the amounts and upon the terms set forth
herein and therein.
(f) Paragraph 4.1(b) is hereby amended and restated to read in its
entirety as follows:
(b) K-V hereby promises to pay interest on the unpaid
principal amount of each Term Loan at a rate per annum equal
to the applicable Fixed Rate for Term Loan A or Term Loan B,
as the case may be, for the period commencing on the date of
such Term Loan until such Fixed Rate Loan is paid in full.
Accrued interest and principal on the outstanding principal
amount of each Term Loan shall be payable monthly in arrears
on the last Business Day of each calendar month commencing
immediately in the case of Term Loan A and April 30, 1999 in
the case of Term Loan B, with a final payment of accrued and
unpaid interest due on the applicable Term Loan Maturity Date.
After the applicable Term Loan Maturity Date, accrued interest
and principal on each such Term Loan shall be payable on
demand.
(g) Paragraph 5.11(a) is hereby amended and restated as follows:
5.11 Prepayment. (a) Term Loan Prepayments. K-V may,
from time to time, prepay the Loan evidenced by either Term
Note A or Term Note B in whole or in part prior to the date of
maturity thereof and the same shall pay, subject to Paragraph
5.7 hereof, the Make-Whole Amount (as defined below) plus a
prepayment fee for each Term Loan to be pre-paid equal to (i)
two percent (2%) of the unpaid principal balance of the Term
Loan to be pre-paid prior to the first (1st) anniversary of
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the date of the applicable Term Note to be pre-paid, and
(ii) one percent (1%) of the unpaid principal balance of the
applicable Term Loan to be pre-paid prior to the second (2nd)
anniversary of the date of the applicable Term Note to be
pre-paid; 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 applicable Fixed Rate of the
Term Loan to be prepaid exceeds (B) the yield to
maturity percentage for the United States Treasury
Note (the "Treasury Note") maturing June, 2002 in the
case of Term Note A and March, 2004 in the case of
Term Note B, as published in The Wall Street Journal
on the fifth business day preceding the Prepayment
Date, plus (i) Two Hundred Twenty-Five basis points
(2.25%) in the case of Term Note A, or (ii) Two
Hundred Fifty basis points (2.50%) in the case of
Term Note B ((i) and (ii) above are referred to as
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 applicable Current Yield;
ii. The difference calculated pursuant to clause (i)
above shall be multiplied by the outstanding
principal balance on such Term Note to be prepaid
hereof as of the 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 applicable
Maturity Date on such Term Note to be prepaid, by (B)
365; and
iv. The sum calculated pursuant to clause (iii) above
shall be discounted at the annual rate of the
applicable Current Yield on such Term Note to be
prepaid to the present value thereof as of the
applicable Prepayment Date, on the assumption that
said sum would be received in equal monthly
installments on each monthly anniversary of the
applicable Prepayment Date prior to the Maturity Date
on such Term Note to be prepaid, with the final such
installment to be deemed received on the Maturity
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Date on such Term Note to be prepaid; provided that
Borrowers shall not be entitled in any event to a
credit against, or a reduction of, the Debt being
prepaid if the applicable Current Yield on such Term
Note to be prepaid exceeds the Fixed Rate or for any
other reason.
(h) The proviso at the conclusion of Paragraph 8.2(g)(iv) is amended
and restated to read in its entirety as follows:
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 proceeds of
Funded Debt classified as current liabilities under GAAP and
(b) at all times not in excess of $7,900,000 plus 75% of
Borrower's net income, in accordance with GAAP, for the period
from the Closing Date and thereafter.
(i) Any and all references to the "Term Note" shall refer to the "Term
Notes," unless the context in which such term is used shall otherwise require.
3. Consent Regarding Proposed Acquisition. Notwithstanding the
provisions of Paragraph 8.3(b) of the Agreement to the contrary, Bank hereby
consents to the acquisition by K-V of certain of the assets of Wyeth-Ayerst
Laboratories, a division of American Home Products, a Delaware corporation, in
accordance with the terms and conditions of that certain Asset Purchase
Agreement dated as of February 11, 1999 (the "Acquisition") and waives
compliance with the provisions of Paragraphs 8.3(b) and 8.2(g)(iv) for the
Acquisition only, provided (i) no Event of Default exists or would exist with
the passage of time, the giving of notice or both; (ii) no more than Thirty
Million Dollars ($30,000,000) of proceeds of the Revolving Credit Commitment are
utilized for the Acquisition; and (iii) the Borrowers repay at least Ten Million
Dollars ($10,000,000) of outstanding principal under the Revolving Credit
Commitment within forty-five (45) days of the date of the initial borrowing for
the Acquisition under the Revolving Credit Commitment.
4. 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.
5. 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 percent (1.0%) of the original principal
amount of Term Loan Commitment B of $2,300,000, amounting to $23,000.
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6. Delivery of Documents. Notwithstanding any of the foregoing, prior
to entering into this Amendment, 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) Second Amendment to Loan Agreement;
(b) Term Note B;
(c) Missouri Future Advance Deed of Trust and Security Agreement for
the Lakefront Drive Property;
(d) Assignment of Rents and Leases for the Lakefront Drive Property;
(e) Environmental Indemnity Agreement for the Lakefront Drive Property;
(f) Certificate of Secretary of each Borrower certifying to board
resolutions evidencing each Borrower's authorization of the Amendment, Term Note
B, the real property collateral documents and incumbency of each Borrower;
(g) Lender's Title Policy for the Lakefront Drive Property;
(h) ALTA survey for the Lakefront Drive Property;
(i) Gap-Personal Undertaking for the Lakefront Drive Property;
(j) Officer's Certificate of each Borrower;
(k) Officer's Certificate with respect to (i) the purchase of the
Lakefront Drive Property, (ii) consummation of the Acquisition of certain of the
assets of Wyeth-Ayerst Laboratories, a division of American Home Products and
(iii) true and correct copies of all documentation relating to the Acquisition;
(l) Legal opinion of Borrowers' counsel; and
(m) Such other documents, opinions or certificates as Bank may
reasonably request.
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7. 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.
8. 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment to Loan Agreement 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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