EXHIBIT 10.18
FOURTH AMENDMENT TO THE LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER 3, 1997
AMONG X. X. XXXXX DRUG COMPANY, GENERAL DRUG COMPANY,
SBS PHARMACEUTICALS, INC., XXXXX XXXXXXXX COMPANY, INC.,
LASALLE BUSINESS CREDIT, INC., AS A LENDER AND AS AGENT FOR THE
LENDERS, XXXXXX FINANCIAL, INC., AS A LENDER, AMERICAN
NATIONAL BANK & TRUST COMPANY OF CHICAGO, AS A LENDER,
AND CERTAIN OTHER FINANCIAL INSTITUTIONS SIGNATORIES
THERETO AND CONSENT AND WAIVER
THIS FOURTH AMENDMENT (the "Amendment") is made as of the ____ day of July,
1998 to the Loan and Security Agreement dated October 3, 1997 (as amended from
time to time, the "Loan Agreement"; unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Loan
Agreement) among X. X. Xxxxx Drug Company ("CDS"), General Drug Company, SBS
Pharmaceuticals, Inc., Xxxxx Xxxxxxxx Company, Inc. (collectively, "Borrowers"),
Xxxxxx Financial, Inc., as a Lender, American National Bank & Trust Company of
Chicago, as a Lender, certain financial institutions signatories thereto from
time to time (collectively, "Lenders"), and LaSalle Business Credit, Inc.
(individually as a Lender and, in its capacity as agent for Lenders, "Agent").
WHEREAS it is proposed that CDS should authorize the offer, sale, issuance
and delivery through Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, BT
Xxxx Xxxxx and Wheat First Union (the "Underwriters") of an initial public
offering of certain authorized but unissued shares of common stock of CDS, par
value $.01 per share ("Common Stock"), on the New York Stock Exchange or the
Nasdaq National Market, plus the grant to the Underwriters of a thirty (30) day
option to purchase shares to cover over-allotments, if any, on a firm commitment
basis (the "Offering");
WHEREAS it is proposed that contingent on an application (the
"Application") in respect of the Offering being made to The Nasdaq Stock Market,
Inc. or the New York Stock Exchange, CDS take certain steps to give effect to
the Offering by undertaking a common stock split (the "Common Stock Split") and
amending, its Articles of Incorporation (the "Amended Articles") and by amending
and restating its Bylaws (the "Amended Bylaws");
WHEREAS the Borrowers have agreed with Xxxxxxxxx ESOP Capital Partners
("Xxxxxxxxx") that the Subordinated Debt Documents (as defined in the Loan
Agreement) be amended and the parties' rights and obligations thereunder be
waived and released (as appropriate) (the "Xxxxxxxxx Release") and the
liabilities of the Borrowers to Xxxxxxxxx under the Subordinated Debt Documents
be prepaid (the "Xxxxxxxxx Prepayment"), for the purposes of effecting the
Offering, the Application, the Common Stock Split, the Amended Articles and the
Amended Bylaws (together with the Xxxxxxxxx Release and the Xxxxxxxxx
Prepayment, the "Proposals"); and
WHEREAS, in order to effect and ratify the Proposals the Borrowers have
requested that Agent and Lenders amend the Loan Agreement in certain respects,
consent to the Proposals and waive and release certain of the parties' rights
and obligations thereunder and under the Other Agreements, and Agent and Lenders
have agreed to do so subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
herein contained, and such other consideration as the parties mutually agree,
the parties hereto agree as follows:
1. Amendment. Borrowers, Agent and Lenders agree to amend the Loan
Agreement as follows:
(a) Section 11(k) of the Loan Agreement is hereby amended by amending and
restating clause (B) by deleting the phrase "CDS may issue stock
options pursuant to the Employment Agreements" and adding in its place
the following:
CDS may issue stock options pursuant to the Amended and Restated
1996 Equity Compensation Plan;
(b) Section 11(k) of the Loan Agreement is hereby further amended by
adding the following three additional exceptions to the provisions at
the end of the Section:
(C) CDS may enter into all customary and necessary
agreements and arrangements in order to effect the Offering
including, without limitation to the generality of the foregoing,
an agreement with the Underwriters to underwrite the Offering,
subject to certain limitations of their liability and certain
indemnities granted by CDS in their favor;
(D) CDS may issue any shares, warrants or other rights to
receive or purchase any shares of any class of its stock pursuant
to and in order to effect the Common Stock Split and the
Offering; and
(E) CDS may issue shares of Common Stock to Xxxxxxxxx in
connection with the exercise by Xxxxxxxxx of the Warrant issued
to Xxxxxxxxx by CDS as one of the Subordinated Debt Documents;
(c) Section 11(n) of the Loan Agreement is hereby amended to delete the
following phrases in their entirety: (i) "amend its articles of
incorporation (except as otherwise contemplated by Section 6.10 of the
Note Purchase Agreement) or" and (ii) "and CDS shall not amend or
modify the Subordinated Debt Documents";
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(d) Section 14 of Exhibit A - Special Provisions of the Loan Agreement is
hereby amended to delete the Section in its entirety; and
(e) Schedule 10(z) to the Loan Agreement is hereby amended by amending and
restating the first sentence of paragraph 3 as follows:
CDS has established the X.X. Xxxxx Drug Company Amended and
Restated 1996 Equity Compensation Plan whereby options to
purchase up to 2,000,000 shares of common stock may be granted to
employees at prices equal to the fair market value of the shares
on the dates of grant.
2. Consent; Waiver of Rights and Release of Liability. The Agent and
Lenders (and each of them) hereby consent to the Proposals and the actions
described in Section 1(b) of this Amendment taken or to be taken by the
Borrowers in order to effect the Proposals and waive any Event of Default that
would arise under Sections 12(b) or 12(c) of the Loan Agreement as a result of
the consummation of the Proposals but for said consent.
3. Representations and Warranties of Borrowers. Each Borrower represents
and warrants that, as of the date hereof, after giving effect to the
consummation of the transactions contemplated hereby and the other agreements
executed in connection herewith:
(a) Such Borrower has the right and power and is duly authorized to enter
into this Amendment;
(b) No Event of Default or an event or condition which upon notice, lapse
of time or both will constitute an Event of Default has occurred and
is continuing;
(c) The execution, delivery and performance by such Borrower of this
Amendment (i) have been duly authorized by all necessary action on its
part; (ii) do not and will not, by the lapse of time, giving of notice
or otherwise, violate the provisions of the terms of its Amended
Articles of Incorporation or Amended Bylaws, or of any mortgage,
indenture, security agreement, contract, undertaking or other
agreement to which such Borrower is a party; (iii) do not and will
not, by lapse of time, the giving of notice or otherwise, contravene
any governmental restriction to which such Borrower or any of its
properties may be subject, and (iv) do not and will not, except as
contemplated in the Loan Agreement, result in the imposition of any
lien, charge, security interest or encumbrance upon any of such
Borrower's properties under any indenture, mortgage, deed of trust,
loan or credit agreement or other agreement or instrument to which
such Borrower is a party or which purports to be binding on such
Borrower or any of its properties;
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(d) No consent, license, registration or approval of any governmental
authority, bureau or agency is required in connection with the
execution, delivery, performance, validity or enforceability of this
Amendment and the other agreements executed by any Borrower in
connection herewith; and
(e) This Amendment executed by any Borrower in connection herewith has
been duly executed and delivered by such Borrower and is enforceable
against such Borrower in accordance with their terms.
(f) All information, reports and other documents heretofore furnished to
Agent by each Borrower in connection with the Loan Agreement, as
amended by this Amendment, and the Other Agreements are in all
material respects complete and correct. Each Borrower has disclosed to
Agent every fact of which it has knowledge which would reasonably be
expected to materially and adversely affect the business, operations
or financial condition of such Borrower or the ability of such
Borrower to perform its obligations under the Loan Agreement, as
amended by this Amendment, or under any of the Other Agreements.
4. Conditions Precedent. This Amendment shall become effective as of the
date of this Amendment upon the satisfaction of the following conditions
precedent in form and substance satisfactory to Agent, which Agent acknowledges
have been so satisfied:
(a) Agent shall have received the reaffirmation of each of the Guarantees
dated as of October 3, 1997, executed by H.S.S. Consulting Services
Incorporated and C.D.S. Transportation, Inc., respectively, in the
form of the Acknowledgment and Acceptance attached to this Amendment.
(b) No Event of Default or event which, with the giving of notice or the
passage of time, or both, would become an Event of Default, shall have
occurred and be continuing, and, after giving effect to the amendments
contained herein, no Event of Default or event which, with the giving
of notice or the passage of time, or both, would become an Event of
Default, shall have occurred and be continuing, it being acknowledged
and agreed that the Proposals have been consented to by the Agent and
the Lenders and do not and will not constitute Events of Default.
(c) Borrowers shall have executed and delivered all such other documents,
instruments and agreements as Agent shall reasonably require to
maintain its perfected security interest in the Collateral.
5. Notification of Name Change. CDS acknowledges its obligation under
Section 10(m) of the Loan Agreement to notify the Agent in writing of the change
in its name that will take effect upon acceptance of the Amended Articles by the
Missouri Secretary of State within ten days of such name change.
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6. Fees and Expenses. Borrowers agree to pay all reasonable and properly
incurred legal fees and other expenses, whether for in-house or outside counsel,
incurred by Agent and Lenders in connection with this Amendment.
7. Loan Agreement Remains in Force. Except as specifically amended
hereby, all of the terms and conditions of the Loan Agreement shall remain in
full force and effect and this Amendment shall not be a waiver of any rights or
remedies which Agent or Lenders have provided for in the Loan Agreement and all
such terms and conditions are herewith ratified, adopted, approved and accepted.
8. No Novation. This Amendment and all other agreements executed by any
Borrower on the date hereof are not intended to nor shall be construed to create
a novation or accord and satisfaction, and shall only be a modification and
extension of the existing Obligations of such Borrower to Lenders.
9. Entire Agreement. This Amendment and the other documents it refers to
comprise the entire agreement relating to the subject matter they cover and
supersede any and all prior written or oral agreements among Agent, Lenders and
Borrowers relating thereto.
10. Severability. Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Except as expressly provided for herein, the terms and conditions of the
Loan Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, Borrowers and Lenders have caused this Amendment to be
duly executed in their proper duly authorized officers as of the day and year
first set forth above.
X. X. XXXXX DRUG COMPANY LASALLE BUSINESS CREDIT, INC., AS
AGENT AND LENDER
By /s/Xxxxxx Xxxxxxxxx By /s/Xxxxxxxxx Xxxxxxx
-------------------------- -------------------------------
Its [CFO] Its [Vice President]
------------------------ -----------------------------
SBS PHARMACEUTICALS, INC. AMERICAN NATIONAL BANK & TRUST
COMPANY OF CHICAGO
By /s/Xxxxxx Xxxxxxxxx By /s/M. Xxxxxx Xxxxxx
-------------------------- --------------------------------
Its [Treasurer] Its [Vice-President]
------------------------ ------------------------------
GENERAL DRUG COMPANY XXXXXX FINANCIAL, INC., AS A
LENDER
By /s/Xxxxxx Xxxxxxxxx By /s/Xxxxxxxxx Xxxxxxxxxxx
-------------------------- ---------------------------------
Its [Treasurer] Its [Vice President]
------------------------ -------------------------------
XXXXX XXXXXXXX COMPANY, INC.
By /s/Xxxxxx Xxxxxxxxx
-------------------------
Its [Treasurer]
-----------------------
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ACKNOWLEDGMENT AND ACCEPTANCE
Each of the undersigned has executed and delivered to Agent a Guaranty
dated October 3, 1997 (each, a "Guaranty") with respect to the Liabilities of
X. X. Xxxxx Drug Company, Inc., General Drug Company, SBS Pharmaceuticals, Inc.
and Xxxxx Xxxxxxxx Company, Inc. (collectively, "Borrowers") under the Loan and
Security Agreement dated October 3, 1997 among Borrowers, Agent and Lenders (as
amended from time to time, the "Loan Agreement"). Each of the undersigned hereby
acknowledges receipt of the foregoing Fourth Amendment to Loan and Security
Agreement (the "Amendment"), accepts and agrees to be bound by the terms
thereof, ratifies and confirms all obligations under its Guaranty, and agrees
that its Guaranty shall continue in full force and effect upon the effectiveness
of the Amendment. Terms used by not defined herein shall have the meaning
ascribed to such terms in the Loan Agreement.
Acknowledged and Agreed to this ____ day of
July, 1998.
H.S.S. CONSULTING SERVICES
INCORPORATED
By /s/Xxxxxx Xxxxxxxxx
------------------------------
Its [Treasurer]
-----------------------------
C.D.S. TRANSPORTATION, INC.
By /s/Xxxxxx Xxxxxxxxx
-------------------------------
Its [Treasurer]
-----------------------------
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