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SECOND AMENDMENT TO FORBEARANCE AGREEMENT
THIS
SECOND AMENDMENT TO FORBEARANCE AGREEMENT, made and entered into
as
of the 9th day of August, 2004, by and
between VIRBAC CORPORATION, a Delaware
corporation ("Virbac"), PM RESOURCES, INC.,
a Missouri corporation ("PM
Resources"), ST. JON LABORATORIES, INC., a
California corporation ("St. JON"),
FRANCODEX LABORATORIES, INC., a Kansas
corporation ("Francodex"), VIRBAC AH,
INC., a Delaware corporation ("Virbac
AH,"), and DELMARVA LABORATORIES, INC., a
Virginia corporation ("Delmarva," and
collectively with Virbac, PM Resources,
St. JON, Francodex and Virbac AH referred
to herein as the "Borrowers"), and
FIRST BANK, a Missouri banking corporation
(the "Lender").
WITNESSETH:
WHEREAS,
Borrowers and Lender have heretofore executed a Credit
Agreement
dated as of September 7, 1999 made by and
among Borrowers and Lender, as
previously amended from time to time (as
amended, the "Credit Agreement"); and
WHEREAS,
Borrowers are presently in default under such Credit Agreement
and the other Security Documents and
Transaction Documents as more fully set
forth in that certain Forbearance Agreement
dated as of April 9, 2004 made by
and among Borrowers and Lender, as
previously amended by a certain Amendment to
Forbearance Agreement dated as of May 10,
2004 made by and among Borrowers and
Lender (as amended, the "Forbearance
Agreement;" capitalized terms used herein
and not otherwise defined shall have the
meanings ascribed to such terms in the
Forbearance Agreement); and
WHEREAS,
Lender's agreement to forebear with respect to Borrowers'
existing events of default as set forth in
the Forbearance Agreement is
presently set to expire on August 9, 2004,
and Borrowers have requested that
Lender extend such agreement to forebear;
and
WHEREAS,
Borrowers and Lender desire to amend the Forbearance Agreement
on
the terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the premises and the mutual
provisions
and agreements hereinafter set forth, the
parties hereto do hereby mutually
promise and agree as follows:
1.
Section
1(b)(iii)(C) of the Forbearance Agreement shall be deleted
in its entirety and in its place shall be
substituted the following:
(C) on or before December 31, 2004, the consolidated balance
sheet of
Borrowers and their Consolidated Subsidiaries as of December
31,
2003 and
the related consolidated statements of income, retained
earnings
and cash
flows for the fiscal year ended as of December 31, 2003, all
with
consolidating disclosures and setting forth in each case, in
comparative
form, the
figures for the previous fiscal year, together with any and all
restated
financial statements (balance sheets and statements of income,
retained
earnings and cash flows) for the fiscal years (or any periods
during the
fiscal years) ending December 31, 2002 and December 31, 2001,
all such
financial statements to be prepared in accordance with
Generally
Accepted
Accounting Principles consistently applied and audited by and
accompanied by the unqualified opinion of PriceWaterhouse
Coopers.
2.
Section
3(a) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
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(a) The Standstill Period shall commence at such time as all
conditions
precedent to this Agreement have occurred or have been
satisfied,
as provided in Section 2 hereof, and shall terminate on
February
7, 2005.
3.
Section
4(d) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(d) The third paragraph beginning with the word "WHEREAS" on
the
first page
of the Credit Agreement shall be deleted in its entirety and in
its place
shall be substituted the following:
WHEREAS, Borrowers, including Virbac AH, Francodex and
Delmarva which have been added as parties to the credit
facilities,
have requested that the aggregate amount thereof be amended to
an
aggregate principal amount of up to Twenty Million Dollars
($20,000,000.00) and otherwise amended on the terms and
conditions
set forth herein, with such loans to mature on February 7, 2005;
and
4.
Section
4(e) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(e) Section 1 of the Credit Agreement shall be deleted in its
entirety
and in its place shall be substituted the following:
The "Term" of this Agreement shall commence on the date hereof
and shall end on February 7, 2005, unless earlier terminated
upon
the occurrence of an Event of Default under this Agreement or
upon
an event of termination as defined in Section 3(b) of that
certain
Forbearance Agreement dated as of April 9, 2004 made by and
among
Borrowers and Lender, as amended.
5.
Section
4(j) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(j)
Section 3.16 of the Credit Agreement shall be deleted in its
entirety
and in its place shall be substituted the following:
3.16 Maturity. All Loans not paid prior to February 7, 2005,
together with all accrued and unpaid interest thereon, shall be
due
and payable on February 7, 2005 (the "Maturity Date").
6.
A new
Section 4(k) shall be added to the Forbearance Agreement
immediately following Section 4(j) therein
as follows:
(k) Addition of a new Monthly Consolidated EBITDA Covenant.
Section
7.1(i) of
the Credit Agreement shall be amended to add a new subsection
7.1(i)(ii)
to such Section immediately following subsection 7.1(i)(i)
therein as
follows:
(ii) Maintain a
minimum Consolidated EBITDA for Borrowers and their
Subsidiaries of not less than: (A) ($124,000.00) for the month
ending
August 31,
2004, (B) ($251,000.00) for the month ending September 30,
2004, (C)
$428,000.00 for the
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month
ending October 31, 2004, (D) ($408,000.00) for the month ending
November
30, 2004, and (E) ($288,000.00) for the month ending December
31,
2004;
7.
Section
5(b) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(b) Borrowers covenant and agree that they will promptly
furnish to
Lender any additional financial or other information as Lender
may
reasonably request from time to time in order to assess the
progress
of
Borrowers' ability to repay or refinance all of the Obligations on
or
before
February 7, 2005, to verify Borrowers' compliance with this
Agreement,
or to ascertain whether any event of termination of the
Standstill
Period has occurred;
8.
Contemporaneously with the execution of this Second Amendment
to
Forbearance Agreement, the Revolving Credit
Note made by the Borrowers payable
to the order of Lender shall be amended and
restated in the form of that certain
Revolving Credit Note made by the Borrowers
payable to the order of Lender
attached hereto as Exhibit B, to extend the
maturity thereof and to make certain
amendments as set forth therein (as the
same may from time to time be amended,
modified, extended or renewed, the "Note").
All references in the Credit
Agreement, the Forbearance Agreement, the
Security Documents and the other
Transaction Documents to the "Note," the
"Revolving Credit Note" and other
references of similar import shall
hereafter be amended and deemed to refer to
the Note in the form of the Revolving
Credit Note, as amended and restated in
the form attached hereto as Exhibit B.
9.
Borrowers
hereby agrees to reimburse Lender, upon demand, for all
out-of-pocket costs and expenses, including
reasonable legal fees and expenses
of the attorneys for the Lender incurred by
Lender in the preparation,
negotiation and execution of this Second
Amendment to Forbearance Agreement and
all other documents, instruments and
agreements relating to this Second
Amendment to Forbearance Agreement with
Lender.
10.
In consideration
of the amendments made by Lender hereunder,
Borrowers shall jointly and severally pay
to Lender on the date hereof an
amendment fee in the amount of $75,000.00,
which fee shall be fully earned by
Lender on the date hereof.
11.
The amendments
set forth herein are expressly conditioned upon the
following:
(a) Execution and delivery by Borrowers of this Second Amendment
to
Forbearance Agreement and of the amended
and restated Revolving Credit Note in
the form attached hereto as Exhibit B;
(b) Payment by the Borrowers of the amendment fee described in
Paragraph 10 above;
(c) Execution and delivery by Bank One, NA of a Consent of
Participant, in form and substance
acceptable to Lender, consenting to the terms
of this Second Amendment; and
(d) Execution and delivery of such other agreements and other
documents reasonably requested by Lender to
complete the transactions
contemplated herein.
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12.
Borrowers hereby
represents and warrants to Lender that:
(a) The execution, delivery and performance by Borrowers of
this
Second Amendment to Forbearance Agreement
are within the corporate powers of the
Borrowers, have been duly authorized by all
necessary corporate action and
require no action by or in respect of, or
filing with, any governmental or
regulatory body, agency or official. The
execution, delivery and performance by
Borrowers of this Second Amendment to
Forbearance Agreement do not conflict
with, or result in a breach of the terms,
cond
