SECOND AMENDMENT DATED AS OF
MARCH 28, 1996 TO THE AMENDED AND
RESTATED LOAN AGREEMENT
DATED AS OF JULY 6, 1995
This Second Amendment (the "Second Amendment") is dated as of March 28,
1996 by and among PDK LABS INC., a New York corporation having its principal
place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the
"Company"), PDI LABS, INC. ("PDI"), a New York corporation having its principal
place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, C&C
ENTERPRISES, INC. ("C&C"), a Delaware corporation, having its principal place of
business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (PDI and C&C, each a
"Guarantor" and collectively, the "Guarantors") and CHEMICAL BANK, a New York
banking corporation, having an office at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 (the "Bank").
WHEREAS, the Bank, the Company and PDI entered into an Amended and
Restated Revolving Credit Agreement dated as of July 15, 1994 (the "Prior
Agreement"); and
WHEREAS, the Prior Agreement was amended and restated pursuant to that
certain third amendment ("Third Amendment") to the Prior Agreement dated as of
July 6, 1995, which Third Amendment, among other things, set forth the terms of
an Amended and Restated Loan Agreement dated July 6, 1995 (the "Amended and
Restated Loan Agreement"); and
WHEREAS, the Amended and Restated Loan Agreement has heretofore been
amended pursuant to that certain First Amendment dated as of August 31, 1995 (as
so amended the "Agreement"); and
WHEREAS, the Bank has heretofore extended credit to the Company on a
revolving credit basis as evidenced by a promissory note of the Company, in the
original principal amount of $7,000,000.00 dated July 6, 1995 (the "Revolving
Credit Note"); and
WHEREAS, the Bank has made a Term Loan to the Company in the original
maximum principal amount of $4,000,000.00 pursuant to the Agreement as evidenced
by a promissory note of the Company, in the original principal amount of
$4,000,000.00 dated July 6, 1995 (the "Term Loan Note"); and
WHEREAS, the Company has requested that the Bank make a term loan to
the Company in the principal amount of $1,500,000.00 and the Bank has agreed to
make such term loan provided that the Company and the Guarantors enter into this
Second Amendment, and provided that certain other provisions contained herein
are met.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Bank, the Company and the
Guarantors agree as follows:
1. Definitions. As used in this Second Amendment, capitalized terms,
unless otherwise defined, shall have the meanings ascribed to them in the
Agreement.
2. Representations and Warranties. As an inducement for the Bank to
enter into this Second Amendment, the Company and the Guarantors each represent
and warrant as follows:
That with respect to the Agreement and the Loan Documents:
(i) On the date hereof, there are no defenses, offsets or
counterclaims to the Company's or the Guarantors' obligations under the
Agreement, the Revolving Credit Note, the Term Loan Note, the Guaranty, the
Security Agreements or any of the other Loan Documents.
(ii) All of the representations and warranties made by the
Company and the Guarantors in the Agreement or in the other Loan Documents are
true and correct in all material respects as if made on the date hereof,
provided that the representations made in Section 4.8 of the Agreement shall
relate to the November 30, 1995 consolidated financial statements of the Company
and its Subsidiary and are subject to any information in the Company's Form 10-K
for November 30, 1995.
(iii) On the date hereof, no Default or Event of Default is
existing under the Agreement or the other Loan Documents or will be caused by
the making of Term Loan II (as defined below).
(iv) As of the date of this Second Amendment, the outstanding
aggregate principal balance of the Revolving Credit Loans evidenced by the
Revolving Credit Note is $5,500,000.00.00, and interest has been paid through
February 29, 1996.
(v) As of the date of this Second Amendment, the outstanding
aggregate principal balance of the Term Loan evidenced by the Term Loan Note is
$3,600,000.00, and interest has been paid through February 29, 1996.
(vi) As of the date of this Second Amendment, the outstanding
aggregate principal balance of the Existing Term Loan evidenced by the Existing
Term Loan Note is $269,777.12, and interest has been paid through March 1, 1996.
3. Conditions. This Second Amendment shall be effective upon (i) the
fulfillment of the conditions precedent described in
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Section 4(I) hereof to the reasonable satisfaction of the Bank, and (ii) receipt
by the Bank of a facility fee of $15,000.00.
4. Amendments. (A) The definition of Interest Period contained in
Section 1.1 of the Agreement is hereby deleted in its entirety and replaced as
follows:
"'Interest Period' shall mean (i) with respect to any
Eurodollar Loan, initially, the period commencing on the date of
borrowing with respect to such Eurodollar Loan and ending one, two or
three months thereafter as selected by the Company in its notice of
borrowing as provided in Section 2.3, 2A.2 or 2B.2 and thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two or three months
thereafter, as selected by the Company by irrevocable notice to the
Bank not less than three (3) Working Days prior to the last day of the
then current Interest Period with respect to such Eurodollar Loan; and
(ii) with respect to any Match Rate Loan the period commencing
on the date of such Match Rate Loan and ending on such date as the
Company may elect after being advised by the Bank as to what maturities
are available with respect to the Match Rate Loan being requested at
that time;
provided that, all of the foregoing provisions relating to the
Interest Periods are subject to the following:
(A) no Interest Period shall end later than the
Termination Date or the Maturity Date, as applicable;
(B) if any Interest Period pertaining to a Match Rate
Loan would end on a day that is not a Business Day, such
Interest Period shall be extended to the next Business Day;
(C) if any Interest Period pertaining to a Eurodollar
Loan would end on a day which is not a Working Day, that
Interest Period shall be extended to the next succeeding
Working Day unless the result of such extension would be to
carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Working Day;
(D) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Working Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Working Day of a calendar month;
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(E) if any requested Interest Period includes a day
on which an installment of principal of the Eurodollar Loan or
Match Rate Loan is due and payable but does not begin or end
on such date, then the requested Eurodollar Loan or Match Rate
Loan shall have an Interest Period (if available) ending on or
before such payment date. "
(B) The definition of Loan or Loans contained in Section 1.1 of the
Agreement is hereby deleted in its entirety and replaced as follows:
"'Loan' or 'Loans' shall mean one or more of the Revolving
Credit Loans, the Term Loan or the Term Loan II as the context may
require and includes Prime Rate Loans, Eurodollar Loans and Match Rate
Loans."
(C) The definition of Match Rate Loan contained in Section 1.1 of the
Agreement is hereby deleted in its entirety and replaced as follows:
"'Match Rate Loan' shall mean a Loan which is bearing interest
at a rate based on the Match Funded Rate in accordance with the
provisions of Section 2A.5(c) or 2B.5(c) hereof."
(D) The definition of Maturity Date contained in Section 1.1 of the
Agreement is hereby deleted in its entirety and replaced as follows:
"'Maturity Date' shall mean in the case of the Term Loan and
the provisions of this Agreement, the Term Loan Note and the other Loan
Documents relating thereto, the last Business Day of August, 2000, and
in the case of Term Loan II and the provisions of this Agreement, the
Term Loan II Note and the other Loan Documents relating thereto, the
last Business Day of February, 2001."
(E) The definition of Note or Notes contained in Section 1.1 of the
Agreement is hereby deleted in its entirety and replaced as follows:
"'Note' or 'Notes' shall mean either or all of the Revolving
Credit Note, the Term Loan Note or the Term Loan II Note (as the
context may require) and all attachments thereto described in Section
2.2, 2A.3 and 2B.3 hereof, respectively."
(F) The following definition is hereby added to Section 1.1 of the
Agreement:
"'Term Loan II' shall have the meaning assigned in
Section 2B.1 hereof."
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(G) The following definition is hereby added to Section 1.1 of the
Agreement:
"'Term Loan II Note' means a promissory note of the Company
payable to the order of the Bank, in substantially the form of Exhibit
D annexed hereto, evidencing the indebtedness of the Company to the
Bank resulting from the Term Loan II made by the Bank to the Company
pursuant to this Agreement."
(H) The following Section 2B is hereby added to the Agreement:
"SECTION 2B. AMOUNT AND TERMS OF TERM LOAN II
2B.1 The Term Loan II. The Bank agrees, on the date of the Second
Amendment, and on the terms and conditions and in reliance upon the
representations and warranties hereinafter set forth in this Agreement, to lend
to the Company the principal amount of One Million Five Hundred Thousand
($1,500,000.00) Dollars, and the Company agrees to borrow such amount from the
Bank by executing and delivering to the Bank the Term Loan II Note. The Term
Loan II, or portions thereof, shall be a Prime Rate Loan or a Fixed Rate Loan
(or a combination thereof) as the Company may request subject to and in
accordance with Section 2B.2 hereof. The Bank may at its option make any
Eurodollar Loan by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Company to repay such Loan in accordance with the terms of Term Loan II Note.
2B.2 Notice of Term Loan II Designations. (a) The Company may elect to
designate the Term Loan II (or a portion thereof) as a Prime Rate Loan or a
Fixed Rate Loan by so specifying in the irrevocable notice given pursuant to
this Section 2B.2; provided, however, that each Fixed Rate Loan for any specific
Interest Period shall be in the minimum principal amount of $500,000.00.
(b) The Company shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days' prior to each election to designate the Term Loan II
(or a portion thereof) as a Eurodollar Loan, (ii) such notice as the Bank may,
in its sole discretion require from time to time, to designate the Term Loan II
(or a portion thereof) as a Match Rate Loan (subject to availability), and (iii)
prior to 11:00 a.m. on the day of each election to designate the Term Loan II
(or a portion thereof) as a Prime Rate Loan, in each case specifying the date
(which shall be a Business Day) thereof and the aggregate principal amount and,
if any portion thereof is to consist of one or more Fixed Rate Loans, the
respective principal amounts and Interest Periods for each such Fixed Rate Loan;
provided that:
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(i) if the Company shall fail to specify the duration of an
Interest Period with regard to any Eurodollar Loan in its notice, the Interest
Period shall be for a period of one month; and
(ii) if the Company shall request a Match Rate Loan when such
Loans are not available, fail to specify the duration of the Interest Period
with regard to a requested Match Rate Loan or fail to specify the type of Loan
requested, the request shall be deemed to be a request for a Prime Rate Loan.
2B.3 Term Loan II Note. The Term Loan II shall be evidenced by the Term
Loan II Note of the Company. The Term Loan II Note shall be dated the date of
the Second Amendment to this Agreement and shall mature on the Maturity Date at
which time the entire outstanding principal balance and all interest thereon
shall be due and payable. The Term Loan II Note shall be entitled to the
benefits and subject to the provisions of this Agreement.
2B.4 Repayment of the Term Loan II Note. The principal balance of the
Term Loan II Note shall be payable in twenty (20) quarterly installments, each
due on the last Business Day of each May, August, November and February of each
year, beginning on the last Business Day of May, 1996. Each of the first
nineteen (19) such quarterly principal installments shall be in the amount of
Seventy Five Thousand ($75,000.00) Dollars and the twentieth (20th) such
quarterly principal installment shall be in an amount equal to the then
outstanding principal balance of the Term Loan II Note.
2B.5 Payment of Interest on the Term Loan II Note. (a) In the case of a
Prime Rate Loan, interest shall be payable at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to the
Prime Rate. Such interest shall be payable on the first Business Day of each
month commencing on the first such date after the date of such Prime Rate Loan,
on the Maturity Date and upon payment or prepayment of such Prime Rate Loan. Any
change in the rate of interest on the Term Loan II Note due to a change in the
Prime Rate shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to 2% above the Eurodollar Rate. Such interest shall
be payable on the last day of each Interest Period applicable thereto, on the
first Business Day of each month and on the Maturity Date. The Bank shall
determine the rate of interest applicable to each requested Eurodollar Loan for
each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, two (2) Working Days prior to the commencement of such
Interest Period and shall notify the Company of the rate of interest so
determined. Such determination shall be conclusive absent manifest error.
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(c) In the case of a Match Rate Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Match Funded Rate. Such interest shall be
payable on the first Business Day of each month, commencing with the first such
date after the date of such Match Rate Loan, on the Maturity Date and on the
last day of each Interest Period applicable thereto. In the event Match Rate
Loans are available, the Bank shall determine the Match Funded Rate applicable
to each requested Match Rate Loan for each Interest Period at 11:00 a.m., New
York City time, or as soon as practicable thereafter, on the day of the making
of such Match Rate Loan, and shall notify the Company of the Match Funded Rate
so determined. Such determination shall be conclusive absent manifest error.
2B.6 Conversion and Continuation of Loans. The Company shall have the
right, at any time, on three (3) Business Days or three (3) Working Days, as
applicable, prior irrevocable written notice to the Bank (which notice, to be
effective, must be received by the Bank not later than 10:00 a.m., New York City
time, on the third (3rd) Business Day or Working Date, as applicable, preceding
the date of any continuation or conversion), (i) to continue the Term Loan II or
a portion thereof as a Fixed Rate Loan into a subsequent Interest Period
(subject to availability), or (ii) to convert the Term Loan II or a portion
thereof to a Fixed Rate Loan at the expiration of an Interest Period with
respect thereto into a Fixed Rate Loan of a different type (subject to
availability), and (iii) to convert the Term Loan II or a portion thereof which
is a Prime Rate Loan into a Fixed Rate Loan (subject to availability), subject
to the following:
(a) no Event of Default shall have occurred and be continuing
at the time of any proposed conversion or continuation;
(b) in the case of a continuation or conversion of less than the total
principal amount of the Term Loan II Note, the aggregate principal amount of the
Term Loan II continued or converted shall be in the minimum amount of
$500,000.00;
(c) each continuation or conversion shall be effected by the Bank
applying the proceeds of the new Loan to the Loan (or portion thereof) being
continued or converted;
(d) if the new Loan made as a result of a continuation or conversion
shall be a Fixed Rate Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month;
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(f) unless sufficient Prime Rate Loans are outstanding or other Fixed
Rate Loans are outstanding with Interest Periods expiring prior to the next
scheduled installment payment of the Term Loan II Note, and are sufficient to
enable the Company to make such installment payment, any Fixed Rate Loan, a
portion of which is required to be repaid on any such installment payment date
shall be automatically converted at the end of such Interest Period into a Prime
Rate Loan;
(g) any request for a Match Rate Loan which shall fail to state an
Interest Period or which shall be made when such Loans are not available shall
be deemed to be a request for a Prime Rate Loan; and
(h) in the event that the Company shall not give notice to continue a
Fixed Rate Loan as provided above, such Loan shall automatically be converted
into a Prime Rate Loan at the expiration of the then current Interest Period.
2B.7 Use of Proceeds. The proceeds of Term Loan II shall be used by the
Company to repay outstanding Revolving Credit Loans. No part of the proceeds of
Term Loan II will be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation G, T, U, or X.
2B.8 Voluntary Prepayment. (a) The Company shall have the right at any
time and from time to time to prepay any Prime Rate Loan, in whole or in part,
without premium or penalty on the same day on which telephonic notice is given
to the Bank (immediately confirmed in writing) of such prepayment provided,
however, that each such prepayment shall be on a Business Day and each partial
prepayment shall be in an aggregate principal amount which is an integral
multiple of $25,000.00.
(b) The Company shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2B.9, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
the last day of the applicable Interest Period and each partial prepayment shall
be in an aggregate principal amount which is an integral multiple of $25,000.00.
(c) The Company shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2B.9, to prepay any Match Rate
Loan, in whole or in part upon at least three (3) Business Days prior
irrevocable written notice to the Bank; provided, however, that each such
prepayment shall be on a Business Day and each partial prepayment shall be in an
aggregate principal amount which is an integral multiple of $25,000.00.
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(d) The notice of prepayment under this Section 2B.8 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Company to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2B.8 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Company. In the absence of such
specification, amounts being prepaid shall be applied first to any Prime Rate
Loan then outstanding and then to Match Rate Loans in the order of the
expiration of their respective Interest Periods. Eurodollar Loans may be prepaid
only in accordance with the provisions of paragraph (b) above. All partial
prepayments of the Term Loan II shall be applied to installments of principal in
the inverse order of maturity.
2B.9 Reimbursement by Company. (a) The Company shall reimburse the Bank
upon the Bank's demand for any loss incurred or to be incurred by it in the
reemployment of the funds released by any prepayment or conversion of any Match
Rate Loan required or permitted by this Agreement, if such Loan is prepaid or
converted (whether voluntarily or by acceleration) other than on the last day of
the Interest Period for such Loan, or if the Company fails to borrow the Match
Rate Loan (or is not able to borrow because of an Event of Default or for any
other reason hereunder) after having given the irrevocable notice provided by
Sections 2B.2 and 2B.6 of this Agreement. Such loss shall be the product of (i)
the difference as determined by the Bank between (x) the rate of interest
applicable to such Match Rate Loan being prepaid or converted for the remainder
of the Interest Period and (y) the rate of interest payable on United States
Treasury obligations in an amount and with a maturity similar to such Loan or
Loans times (ii) the aggregate amount of principal so prepaid or converted times
(iii) the number of days remaining in the applicable Interest Period divided by
360 days.
(b) The Company shall reimburse the Bank upon the Bank's demand for any
loss, cost or expense incurred or to be incurred by it (in the Bank's
determination) as a result of any prepayment or conversion (whether voluntarily
or by acceleration) of any Eurodollar Loan other than on the last day of the
Interest Period for such Loan, or if the Company fails to borrow the Eurodollar
Loan (or is not able to borrow because of an Event of Default or for any other
reason hereunder) after having given the irrevocable notice provided by Sections
2B.2 or 2B.6 of this Agreement. Such reimbursement shall include, but not be
limited to, any loss, cost or expense incurred by the Bank in obtaining,
liquidating or redeploying any funds used or to be used in making or maintaining
the Eurodollar Loan.
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2B.10 Requirements of Law. In the event that any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality:
(i) does or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Term Loan II Note or the
Term Loan II made hereunder, or change the basis of taxation of
payments to the Bank of principal, interest or any other amount payable
hereunder (except for changes in the rate of any tax presently imposed
on the Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Bank which are not
otherwise included in the determination of the Eurodollar Rate or Match
Funded Rate hereunder;
(iii) does or shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank of
making, renewing or maintaining advances or extensions of credit to the Company
or to reduce any amount receivable from the Company thereunder then, in any such
case, the Company shall promptly pay to the Bank, upon its demand, any
additional amounts necessary to compensate the Bank for such additional cost or
reduced amount receivable which the Bank deems to be material as determined by
the Bank with respect to this Agreement, the Term Loan II Note or the Term Loan
II made hereunder. If the Bank becomes entitled to claim any additional amounts
pursuant to this Section 2B.10, it shall promptly notify the Company of the
event by reason of which it has become so entitled. A certificate setting forth
calculations as to any additional amounts payable pursuant to the foregoing
sentence submitted by the Bank to the Company shall be conclusive in the absence
of manifest error.
2B.11 Changes in Capital Requirements. If after the date of the Second
Amendment to this Agreement, the Bank shall have determined that the adoption of
any applicable law, rule or regulation regarding capital adequacy, 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 the Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of
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reducing the rate of return on the Bank's capital as a consequence of its
obligations hereunder to a level below that which the Bank could have achieved
but for such adoption, change or compliance (taking into consideration the
Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 15 days after demand by the
Bank, the Company shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such reduction. The Bank will promptly notify the
Company of any event of which it has knowledge, occurring after the date of the
Second Amendment to this Agreement, which will entitle the Bank to compensation
pursuant to this Section 2B.11.
2B.12 Illegality. Notwithstanding any other provisions herein, if any
law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful for the Bank to
make or maintain Fixed Rate Loans as contemplated by this Agreement, (a) the
Bank's obligation hereunder to make Fixed Rate Loans or convert Prime Rate Loans
to Fixed Rate Loans shall forthwith be canceled and (b) loans then outstanding
as Fixed Rate Loans, if any, shall be converted to Prime Rate Loans on the last
day of the Interest Period applicable thereto or within such earlier period as
required by law. The Company hereby agrees to promptly pay to the Bank, upon its
demand, any amounts required by Section 2B.9 resulting from a prepayment of a
Fixed Rate Loan.
2B.13 Indemnification. The Company agrees to indemnify the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of (i) default by the Company in payment when due of the
principal amount of or interest on any Fixed Rate Loan, (ii) default by the
Company in making a borrowing of, conversion into or continuation of Fixed Rate
Loans after the Company has given a notice requesting the same in accordance
with the provisions of this Agreement or (iii) default by the Company in making
any prepayment after the Company has given a notice thereof in accordance with
the provisions of this Agreement. This covenant shall survive the termination of
this Agreement and the payment of the Term Loan II Note and all other amounts
payable hereunder.
2B.14 Inability to Determine Rate. If with respect to any Interest
Period pertaining to a Fixed Rate Loan, the Bank determines that extraordinary
circumstances affecting the relevant market make it impracticable to ascertain
the interest rate applicable for such Interest Period, the Bank shall promptly
notify the Company of such determination and no conversions to or continuations
of the Fixed Rate shall be made until such notice is withdrawn. If any Fixed
Rate Loan is outstanding on the date of such notice and such notice has not been
withdrawn on the last day of the then current Interest Period applicable
thereto, the Company may on the last day of such Interest Period either convert
such Fixed Rate Loan to a loan maintained at an alternate rate of
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interest available hereunder or prepay the outstanding principal balance thereof
and accrued interest thereon in full.
2B.15 Authorization to Debit Company's Account. The Bank is hereby
authorized to debit the Company's account maintained with the Bank for (i) all
scheduled payments of principal and/or interest under the Term Loan II Note, and
(ii) all other amounts due hereunder; all such debits to be made on the days
such payments are due in accordance with the terms hereof.
2B.16 Default Interest. Upon the occurrence and during the continuation
of a Default, the Company shall pay interest on all amounts owing under the Term
Loan II Note and this Agreement (after as well as before judgment) at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to two (2%) percent in excess of the interest rate otherwise in
effect hereunder.
2B.17 Payments. All payments by the Company hereunder or under the Term
Loan II Note shall be made in U.S. dollars in immediately available funds at the
office of the Bank by 12:00 noon, New York City time on the date on which such
payment shall be due. Interest on the Term Loan II Note shall accrue from and
including the date thereof to but excluding the date on which such Loan is paid
in full or refinanced with a Loan of a different type.
2B.18 Interest Adjustments. (a) If the provisions of this Agreement or
the Term Loan II Note would at any time otherwise require payment by the Company
to the Bank of any amount of interest in excess of the maximum amount then
permitted by applicable law the interest payments shall be reduced to the extent
necessary so that the Bank shall not receive interest in excess of such maximum
amount. To the extent that, pursuant to the foregoing sentence, the Bank shall
receive interest payments hereunder or under the Term Loan II Note in an amount
less than the amount otherwise provided, such deficit (hereinafter called the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the Term Loan II Note for any subsequent period shall be
increased by such maximum amount of the Interest Deficit that may be so added
without causing the Bank to receive interest in excess of the maximum amount
then permitted by applicable law.
(b) To the extent permitted by law, the amount of the Interest Deficit
shall be treated as a prepayment penalty and paid in full at the time of any
optional prepayment by the Company to the Bank of all or part of the Term Loan
II. The amount of the Interest Deficit relating to the Term Loan II Note on the
Maturity Date shall be cancelled and not paid.
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2B.19 Participations, Etc. The Bank shall have the right at any time,
with or without notice to the Company, to sell, assign, transfer or negotiate
all or any part of the Term Loan II Note or grant participations therein to one
or more banks (foreign or domestic, including an affiliate of the Bank),
insurance companies or other financial institutions, pension funds or mutual
funds. The Company and the Guarantors agree and consent to the Bank providing
financial and other information regarding their business and operations to
prospective purchasers or participants and further agree that to the extent that
the Bank should sell, assign, transfer or negotiate all or any part of the Term
Loan II Note, the Bank shall be forever released and discharged from its
obligations under the Term Loan II Note and this Agreement to the extent same is
sold, assigned, transferred or negotiated. Nothing herein shall prevent the Bank
from pledging the Term Loan II Note with a Federal Reserve Bank."
(I) A new Section 3.5 is hereby added to the Agreement as follows:
"3.5 Conditions of the Making of Term Loan II. The obligation of the
Bank to make Term Loan II hereunder shall be subject to the fulfillment of the
following conditions precedent:
(a) Legal Opinion. There shall have been delivered to the Bank
on the date of the Term Loan II Note an opinion of Xxxxxxxxx and
Xxxxxxxxx, Esqs., counsel to the Company, in form and substance
satisfactory to the Bank, dated such date, to the same effect as
Sections 4.1, 4.2, 4.3 and 4.4 hereof and to the further effect that
the Second Amendment to this Agreement, the Term Loan II Note and any
other Loan Document have been duly authorized, executed and delivered
by a duly authorized officer of the Company and each Guarantor and,
assuming due authorization and execution by the Bank, constitute valid
obligations of the Company and the Guarantors, where applicable,
legally binding upon them and enforceable (except as may be limited by
any applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting creditors' rights generally) in accordance
with their terms. The opinion shall also cover such other matters
incident to the matters contemplated by this Agreement as the Bank
shall reasonably require.
(b) Corporate Proceedings. The Company shall have furnished to
the Bank (in form and substance satisfactory to the Bank) (i) a copy,
certified by appropriate officers of the Company and the Guarantors on
such date, of the resolutions of the respective Boards of Directors of
the Company and the Guarantors authorizing the Term Loan II herein
provided for, and the execution, delivery and performance of the Second
Amendment to this Agreement, the Term Loan II Note and any other Loan
Document, (ii) a statement that the by-laws and the
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certificates of incorporation of the Company and the Guarantors have
not changed since the date of the Third Amendment; (iii) copies of the
good standing certificates for the Company and the Guarantors from the
Secretary of State or equivalent officer of their respective states of
incorporation and of each state in which the conduct of the Company's
or such Guarantor's business requires qualification; and (iv) evidence
of the authority of the Person executing the Loan Documents on behalf
of the Company and the Guarantors.
(c) Personal Property Insurance. The Company shall have
delivered to the Bank evidence of property damage insurance acceptable
to the Bank covering the replacement value of all personal property of
the Company and the Guarantors, in an amount satisfactory to the Bank
and naming the Bank as "loss payee".
(d) Invoices, Bills and Contracts. The Company shall have
delivered copies of all invoices, bills, contracts and paid receipts in
connection with the capital expenditures made by the Company, which are
being replenished with the proceeds of the Term Loan II.
(e) Annual Financial Statement. The Bank shall have received
the audited consolidated financial statement of the Company and its
Subsidiary for the fiscal year ended November 30, 1995, prepared by
independent certified public accountants satisfactory to the Bank in
accordance with GAAP.
(f) Representations and Warranties; No Default. The
representations and warranties contained in Section 2 of this Second
Amendment shall be true and correct on and as of the date of the Term
Loan II Note, and no Default or Event of Default or event which with
the passage of time or the giving of notice of both would constitute a
Default or Event of Default shall have occurred and be continuing on
such date or will be caused by the making of the Term Loan II Note.
(g) Legal Matters. All other instruments and legal and
corporate proceedings in connection with the transactions contemplated
by the Second Amendment to this Agreement, shall be satisfactory in
form and substance to the Bank and its counsel, and counsel to the Bank
shall have received copies of all documents which it may have
reasonably requested in connection therewith.
(h) UCC-1 Financing Statements. The Bank shall have received
duly executed UCC-1 financing statements in recordable form covering
all of the assets and personal property of the Company located at 000
Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx."
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(J) Section 4.15 of the Agreement is hereby deleted in its entirety and
replaced as follows:
"4.15 Use of Proceeds. The proceeds of each Loan shall
be used for the purposes set forth in Section 2.13, Section
2A.7 and Section 2B.7 of this Agreement."
(K) The following sentence is hereby added to the end of Section 5.3 of
the Agreement:
"The Company shall cause the Bank to be named at all times as
loss payee and as an additional insured on all such insurance policies
covering the Collateral (as such term is defined in the Security
Agreement)."
(L) Section 6.5 of the Agreement is hereby amended by adding the word
"and" after the ";" following clause (k), by deleting the "; and" at the end of
the clause (l), by deleting clause (m) in its entirety and by inserting a period
at the end of clause (l).
(M) A new Section 6.16 is hereby added to the Agreement as follows:
"6.16 Limitation on Capital Expenditures. Make any Capital
Expenditures (excluding Capital Expenditures resulting from
acquisitions of property, plant and equipment described in Section
6.5(g) of this Agreement) including purchase money indebtedness if,
after giving effect thereto, the aggregate amount of such expenditures
by the Company and its Subsidiaries would exceed $1,500,000.00 during
any fiscal year."
(N) A new Section 6.17 is hereby added to the Agreement as follows:
"6.17 Limitation on Dividends and Stock Acquisitions. Declare
or pay any dividends or make any other distribution (whether in cash or
property) on any shares of its capital stock now or hereafter
outstanding, or purchase, redeem, retire or otherwise acquire for value
any shares of its capital stock or warrants or options therefor now or
hereafter outstanding (all such dividends, distributions, purchases and
other actions being hereinafter collectively called "Stock Payments",
except that (a) a Subsidiary (other than Future) may make Stock
Payments to the Company; (b) the Company may declare stock splits and
pay dividends payable solely in shares of any class of its capital
stock; and (c) the Company may declare or pay dividends on its
preferred stock in an aggregate amount not to exceed $362,000 in the
aggregate in each fiscal year of the Company.
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5. Collateral. It is expressly understood and agreed that all
collateral security for the Loans as set forth in the Agreement prior to this
Second Amendment is and shall continue to be collateral security for the Loans
provided for in the Agreement as herein amended. Without limiting the generality
of the foregoing, the Company and the Guarantors hereby absolutely and
unconditionally confirm that the Loan Documents and any other document or
instrument executed by the Company and the Guarantors pursuant to the Agreement
continue in full force and effect, are ratified and confirmed and are and shall
continue to be applicable to the Agreement, as herein amended.
6. No Waiver. No modification or waiver of any of the provisions of
this Second Amendment or any other agreement or instrument made or issued
pursuant to this Second Amendment or contemplated hereby, nor consent to any
departure by the Company therefrom shall, in any event, be effective unless made
in writing and signed by the Bank and the Company, and then any such
modification or waiver shall be effective only in the specific instance and
purpose for which given unless otherwise specified therein. No notice to, or
demand on, the Company in any case shall, of itself, entitle it to further
notice or demand in similar circumstances.
7. Limits of Amendment. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to or waiver of
any other term or condition of the Agreement or of any of the documents referred
to therein, or (b) prejudice any right or rights which the Bank may now have or
may have in the future or in connection with the Agreement or any of the
documents referred to therein.
8. Governing Law. This Second Amendment shall be governed by the laws
of the State of New York.
9. Waiver of Jury Trial. EACH OF THE COMPANY, THE GUARANTORS AND THE
BANK WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS SECOND AMENDMENT, ANY OF THE OTHER LOAN
DOCUMENTS, OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION WITH
THIS SECOND AMENDMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION
OR ENFORCEMENT THEREOF.
10. Counterparts. This Second Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which, when so executed by the party against whom enforcement thereof is
sought, shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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11. Ratification of Guaranties. The Guarantors, by their execution
hereof, hereby ratify and confirm all of the terms of the Guaranties and
expressly agree and acknowledge that their Guaranties extend to the Term Loan II
Note, the Term Loan II and all other amounts due under this Second Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
PDK LABS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
PDI LABS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
C&C ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
CHEMICAL BANK
By: /s/ Xxxxx Xxxxxx
------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
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