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THIRD AMENDMENT TO FORBEARANCE AGREEMENT
THIS THIRD
AMENDMENT TO FORBEARANCE AGREEMENT, made and entered into as of
the 7th day of February, 2005, 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 and by a certain Second Amendment to
Forbearance Agreement dated as of
August 9, 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 February 7,
2005, 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 April 1, 2005, 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, December 31, 2001 and
December
31, 2000, 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;
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2. A new
Section 1(b)(iii)(E) shall be added to the Forbearance
Agreement
immediately following Section 1(b)(iii)(D)
therein (which was added by the
Amendment to Forbearance Agreement) as
follows:
(E) on or before April 15, 2005, the consolidated and
consolidating
balance
sheet, income statement projections and cash flow projections
for
Borrowers
and their Consolidated Subsidiaries for their fiscal year
ending
December
31, 2005 on a month-by-month basis, all in form and detail
reasonably
acceptable to Bank.
3. Section
3(a) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(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 May 6,
2005.
4. Section
4(b) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(b) Amendment to Consolidated Net Worth Covenant. Section
7.1(i)(i)
of the Loan Agreement shall be deleted in its entirety and in
its place
shall be substituted the following:.
(i) Maintain a minimum Consolidated Net Worth at all times
during the Term hereof of not less than $26,300,000.00;
5. 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 May 6, 2005; and
6. 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 May 6, 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.
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7. 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 May 6, 2005,
together with all accrued and unpaid interest thereon, shall be
due
and payable on May 6, 2005 (the "Maturity Date").
8. Section
4(k) of the Forbearance Agreement shall be deleted in its
entirety and in its place shall be
substituted the following:
(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) ($440,000.00) for the
month
ending January 31, 2005, (B) ($440,000.00) for the month ending
February 28, 2005, (C) ($55,000.00) for the month ending March
31,
2005, and (D) ($55,000.00) for the month ending April 30, 2005;
9. 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 May 6,
2005, to verify Borrowers' compliance with this Agreement,
or to
ascertain whether any event of termination of the Standstill
Period
has
occurred;
10.
Contemporaneously with the execution of this Third 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.
11.
Contemporaneously with the execution of this Third Amendment to
Forbearance Agreement, the compliance
certificate in the form of Exhibit E to
the Credit Agreement shall be amended and
restated in the form of the compliance
certificate attached hereto as Exhibit E.
All references in the Credit
Agreement, the Forbearance Agreement, the
Security Documents and the other
Transaction Documents to "Exhibit E," to
the "compliance certificate," to a
"certificate of the principal financial
officers or controllers of Borrowers in
the form attached hereto as Exhibit E" and
other references of similar import
shall hereafter be amended and deemed to
refer to the form of compliance
certificate as amended and restated in the
form attached hereto as Exhibit E.
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12.
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 Third
Amendment to Forbearance Agreement and
all other documents, instruments and
agreements relating to this Third Amendment
to Forbearance Agreement with Lender.
13. 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 $37,500.00, which fee shall
be fully earned by Lender on the date
hereof.
14. The
amendments set forth herein are expressly conditioned upon the
following:
(a) Execution and delivery by Borrowers of this Third 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 13 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 Third Amendment; and
(d) Execution and delivery of such other agreements and other
documents reasonably requested by Lender to
complete the transactions
contemplated herein.
15.
Borrowers hereby represents and warrants to Lender that:
(a) The execution, delivery and performance by Borrowers of
this
Third 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 Third Amendment to
Forbearance Agreement do not conflict with,
or result in a breach of the terms,
conditions or provisions of, or constitute a
default under or result in any violation
of, and Borrowers are not now in
default under or in violation of, the terms
of the Articles of Incorporation or
Bylaws of any of the Borrowers, any
applicable law, any rule, regulation, order,
writ, judgment or decree of any court or
governmental or regulatory agency or
instrumentality, or any agreement or
instrument to which any of the Borrowers is
a party or by which any of them is bound or
to which any of them is subject
(other than the existing defaults under the
Credit Agreement and the other
Transaction Documents described herein
above); and
(b) This Third Amendment to Forbearance Agreement has been duly
executed and delivered and consti
