EXHIBIT 10.1
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND WAIVER
(New Credit Agreement)
This First Amendment to Amended and Restated Credit Agreement and Waiver
(this "FIRST AMENDMENT") is entered into as of May 7, 1999 by and among Chattem,
Inc., a Tennessee corporation (the "BORROWER"), each of the Borrower's Domestic
Subsidiaries (individually a "GUARANTOR" and collectively the "GUARANTORS"), the
Persons identified as "New Credit Agreement Lenders" on the signature pages
hereto (the "NEW CREDIT AGREEMENT LENDERS"), and NationsBank, N.A., as agent for
the New Credit Agreement Lenders (in such capacity, the "AGENT").
RECITALS
WHEREAS, the Borrower, the Guarantors, the Agent and the New Credit
Agreement Lenders entered into that certain Amended and Restated Credit
Agreement dated as of December 21, 1998 (as amended or modified from time to
time, the "CREDIT AGREEMENT") pursuant to which the New Credit Agreement Lenders
provided a $50 million credit facility to the Borrower to replace and refinance
that certain Amended and Restated Credit Agreement dated as of March 24, 1998
(as amended or modified from time to time, the "MARCH 1998 NEW CREDIT
AGREEMENT"). The March 1998 New Credit Agreement replaced and refinanced the
credit facilities provided by the lenders pursuant to that certain Amended and
Restated Credit Agreement dated as of June 26, 1997 (as amended or modified from
time to time, the "PRIOR NEW CREDIT AGREEMENT"). The Prior New Credit Agreement
replaced and refinanced the credit facilities provided by the lenders pursuant
to that certain Credit Agreement dated as of April 26, 1996 (as amended or
modified from time to time, the "ORIGINAL NEW CREDIT AGREEMENT"). The credit
facilities provided pursuant to the Original New Credit Agreement replaced and
refinanced the credit facilities provided to the Borrower by The First National
Bank of Chicago, as agent and certain other lenders under the credit agreements
dated as of June 17, 1994. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Credit Agreement.
WHEREAS, the Borrower and the Guarantors are also party to an amended and
restated credit agreement dated as of December 21, 1998 (as amended or modified
from time to time, the "SUPPLEMENTAL CREDIT AGREEMENT");
WHEREAS, the Borrower acknowledges that Events of Default currently exist
under the Credit Agreement as a result of the failure of the Credit Parties to
comply with the terms of (a) Section 7.17(a) of the Credit Agreement (the
"ENVIRONMENTAL EVENT OF DEFAULT") and (b) Section 7.17(b) of the Credit
Agreement (the "FIELD EXAM EVENT OF DEFAULT") (the Environmental Event of
Default and Field Exam Event of Default may be referred to collectively herein
as the "EXISTING DEFAULTS");
WHEREAS, the Borrower has requested that the New Credit Agreement Lenders
waive the Existing Defaults and continue to make available to the Borrower the
Loans provided under the Credit Agreement;
WHEREAS, the New Credit Agreement Lenders are willing to waive the Existing
Defaults subject to the terms and conditions specified in this First Amendment;
and
WHEREAS, the parties hereto have agreed to amend certain terms of the
Credit Agreement as set forth below.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. WAIVERS. Subject to the terms and conditions of this First Amendment,
the New Credit Agreement Lenders agree to (a) waive the Environmental
Event of Default so long as the Credit Parties comply with the terms
of Section 7.17 of the Credit Agreement, as amended and restated in
this First Amendment and (b) waive the Field Exam Event of Default.
Except for the waivers continued herein, this First Amendment does not
modify or effect the obligations of the Credit Parties to comply fully
with all terms, conditions and covenants contained in the Credit
Documents. Nothing contained in this First Amendment shall be deemed
to constitute a waiver of any other rights or remedies the Agent or
any New Credit Agreement Lender may have under the Credit Agreement or
any other Credit Documents or under applicable law.
2. AMENDED DEFINITIONS.
(a) ADDITIONAL SUBORDINATED DEBT. The definition of "ADDITIONAL
SUBORDINATED DEBT" set forth in Section 1.1 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"ADDITIONAL SUBORDINATED DEBT" means the Indebtedness evidenced by the
Second Indenture or by the guarantees thereof in an aggregate amount not to
exceed $275,000,000.
(b) PERMITTED INVESTMENTS. Subclauses (f) and (g) of the definition of
"PERMITTED INVESTMENTS" set forth in Section 1.1 of the Credit Agreement
are hereby amended and restated in their entireties to read as follows:
(f) in addition to the acquisition of the Acquired Assets to be
consummated on the Closing Date, Investments in Permitted
Acquisitions, including any contingency payments associated therewith,
so long as the Borrower shall have provided the Agent with
satisfactory evidence demonstrating that after giving affect to any
such Permitted Acquisition on a pro forma basis, as if such Permitted
Acquisition had occurred on the first day of the twelve month period
ending on the last day of the Borrower's most recently completed
fiscal quarter, the Credit
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Parties and their Subsidiaries would have
been in compliance with all financial covenants set forth in Section
7.12, (g) the purchase, redemption, acquisition or retirement by the
Borrower of any shares of its capital stock of any class or any
warrants or options to purchase any such shares in an amount not to
exceed $10,000,000 in the aggregate in any fiscal year so long as the
Borrower shall have provided the Agent with satisfactory evidence
demonstrating that after giving effect to any such transaction on a
pro forma basis, as if such transaction had occurred on the first day
of the twelve month period ending on the last day of the Borrower's
most recently completed fiscal quarter, the Credit Parties and their
Subsidiaries would have been in compliance with all the financial
covenants set forth in Section 7.12,
(c) The following definitions appearing in Section 1.1 of the Credit
Agreement are hereby deleted: "BORROWING BASE", "BORROWING BASE
CERTIFICATE", "EBIT", "ELIGIBLE INVENTORY", "ELIGIBLE
RECEIVABLES" and "INTEREST COVERAGE RATIO".
3. REVOLVING COMMITTED AMOUNT. The phrase "the lesser of (x) the Revolving
Committed Amount and (y) the Borrowing Base" appearing in Sections 2.1(a),
2.2(a) and 3.3(b)(i) of the Credit Agreement is hereby replaced in each of
Section 2.1(a), 2.2(a) and 3.3(b)(i) with the phrase "the Revolving Committed
Amount".
4. EXCESS CASH FLOW. The following sentence is hereby added at the end of
Section 3.3(b)(ii) of the Credit Agreement and shall read as follows:
Notwithstanding the foregoing, the parties hereto agree that the
Borrower shall not have to make a prepayment of the Loans and Term Loans
with respect to Excess Cash Flow earned during fiscal year 1998.
5. BORROWING BASE. Section 7.1(f) of the Credit Agreement is hereby deleted
in its entirety.
6. USE OF PROCEEDS. Section 7.10 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
7.10 USE OF PROCEEDS.
The Credit Parties will use the proceeds of the Loans solely (a) to
refinance the existing Indebtedness of the Borrower, (b) to finance the
acquisition of the Acquired Assets, (c) to provide working capital, (d) for
general corporate purposes, (e) to finance the redemption or repurchase of
Subordinated Debt permitted by Section 8.11(a) hereof, (f) to finance the
purchase of capital stock of the Borrower permitted hereunder and (g) to finance
Permitted Acquisitions.
7. INTEREST COVERAGE RATIO. Section 7.12(a) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
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(a) [INTENTIONALLY OMITTED.]
8. LEVERAGE RATIO. Section 7.12(c) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
(c) LEVERAGE RATIO. The Leverage Ratio, as of the end of each fiscal
quarter, shall be less than or equal to:
(i) From April 30, 1999 to and including November 29, 1999, 5.25
to 1.0;
(ii) From November 30, 1999 to and including November 29, 2000,
4.5 to 1.0;
(iii) From November 30, 2000 to and including November 29, 2001,
4.0 to 1.0; and
(iv) From November 30, 2001 and thereafter, 3.75 to 1.0.
9. NET WORTH. Section 7.12(e) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(e) NET WORTH. At all times Net Worth shall be no less than
$29,853,000 increased on a cumulative basis, commencing with the fiscal
quarter ending May 31, 1999, by an amount equal to, (i) as of the last day
of each fiscal quarter, 50% of Net Income for the fiscal quarter then ended
(without deductions for any losses) plus (ii) 100% of the Net Cash Proceeds
from any Equity Issuance subsequent to May 7, 1999.
10. ENVIRONMENTAL REPORT. Section 7.17 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
7.17 ENVIRONMENTAL REPORT.
On or before August 5, 1999, the Borrower shall furnish to the Agent
phase 1 environmental reports in form and substance reasonably satisfactory
to the Agent with respect to each of the Mortgaged Properties set forth on
SCHEDULE 6.23(A) (other than the Double Cola Property).
11. SUBORDINATED DEBT. The first sentence of Section 8.11 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
(a) No Credit Party will (i) make or offer to make any principal
payments with respect to the Subordinated Debt, (ii) redeem or offer to
redeem any of the Subordinated Debt, or (iii) deposit any funds intended to
discharge or defease any or all of the
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Subordinated Debt; PROVIDED, HOWEVER, the Borrower may redeem or
repurchase all or any portion of the Subordinated Debt PROVIDED that
after giving effect to such repurchase or redemption (including, without
limitation, any accrued interest, premiums or penalties associated
therewith) on a pro forma basis, as if such repurchase or redemption
had occurred on the first day of the twelve month period ending on the
last day of the Borrower's most recently completed fiscal quarter, the
Credit Parties and their Subsidiaries would have been in compliance with
all the financial covenants set forth in Section 7.12.
12. CONDITIONS. The obligation of the New Credit Agreement Lenders to enter
into this First Amendment is subject to satisfaction of the following conditions
(in form and substance acceptable to the New Credit Agreement Lenders in their
sole discretion):
(a) EXECUTED AMENDMENT. Receipt by the Agent of copies of this
Amendment duly executed by the Credit Parties, the Agent and the Required
Lenders.
(b) OPINION OF COUNSEL. Receipt by the Agent of an opinion, or
opinions (which shall cover, among other things, authority, legality,
validity, binding effect and enforceability), satisfactory to the Agent,
addressed to the Agent and the Lenders from legal counsel to the Credit
Parties.
(c) CERTAIN CONSENTS. Receipt by the Agent of evidence that all
governmental, shareholder and material third party consents and approvals
necessary or desirable in connection with the transactions contemplated
hereby have been received, and expiration of all applicable waiting periods
without any action being taken by any authority that could reasonably be
likely to restrain, prevent or impose any material adverse conditions on
the financings or that could reasonably be likely to seek or threaten any
of the foregoing, and no law or regulation shall be applicable which in the
judgment of the Agent could reasonably be likely to have such effect.
(d) MATERIAL ADVERSE EFFECT. There shall not have occurred any event
since November 30, 1998, that has had or could reasonably be expected to
have a Material Adverse Effect.
(e) LITIGATION. There shall not exist any pending or threatened
action, suit, investigation or proceeding which if adversely determined
against the Borrower or any of its Subsidiaries would have or would
reasonably be expected to have a Material Adverse Effect.
(f) OFFICER'S CERTIFICATE. The Agent shall have received a certificate
executed by the chief financial officer or chief operating officer of the
Borrower as of the date hereof stating that (A) the Borrower and each of
the Borrower's Subsidiaries are in compliance with all existing financial
obligations, (B) all governmental, shareholder and third party consents and
approvals, if any, with respect to this First Amendment, the Credit
Documents and Supplemental Credit Documents and the transactions
contemplated
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thereby have been obtained, (C) no action, suit, investigation
or proceeding is pending or threatened in any court or before any
arbitrator or governmental instrumentality that purports to effect the
Borrower, any of the Borrower's Subsidiaries or any transaction
contemplated by this First Amendment, the Credit Documents or the
Supplemental Credit Documents, or could have or might be reasonably
expected to have a Material Adverse Effect and (D) immediately after giving
effect to this First Amendment, (1) the Borrower and each of the Borrower's
Subsidiaries is Solvent, (2) no Default or Event of Default exists, (3) all
representations and warranties contained in the Credit Documents and the
Supplemental Credit Documents are true and correct in all material
respects, and (4) the Credit Parties are in compliance with each of the
financial covenants set forth in Section 7.12 of the Credit Agreement, as
amended hereby.
(g) ADDITIONAL SUBORDINATED DEBT. The Borrower shall have received
gross proceeds from the sale of Additional Subordinated Debt in an
aggregate principal amount of $75,000,000 and not less than $41,500,000 of
such proceeds shall have been applied to the prepayment of the Term Loans.
The Agent shall have received a copy, certified by an executive officer of
the Borrower as true and complete, of any amendments or modifications to
the Second Indenture or other documentation related to the Additional Notes
(as defined in the Second Indenture) requested by the Agent, as originally
executed and delivered, together with all exhibits and schedules thereto
(which shall be in form and substance reasonably satisfactory to the
Agent).
(h) CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 1998. The Agent
and the New Credit Agreement Lenders shall have received the consolidated
financial statements described in Section 7.1(a) of the Credit Agreement
for the fiscal year ended 1998.
(i) OTHER. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Borrower and its
Subsidiaries.
13. MISCELLANEOUS.
(a) Except as expressly modified and amended in this First Amendment,
all of the terms, provisions and conditions of the Credit Agreement are and
shall remain in full force and effect and are incorporated herein by
reference, and the obligations of the Credit Parties hereunder and under
the other Credit Documents are hereby ratified and confirmed and shall
remain in full force and effect. The Credit Agreement and any and all other
documents heretofore, now or hereafter executed and delivered pursuant to
the terms of the Credit Agreement are hereby amended so that any reference
to the Credit Agreement shall mean a reference to the Credit Agreement as
amended hereby.
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(b) The Borrower and the Guarantors, as applicable, affirm the liens
and security interests created and granted in the Credit Agreement and the
Credit Documents and agree that this First Amendment shall in no manner
adversely affect or impair such liens and security interests.
(c) The Borrower and the Guarantors hereby represent and warrant as
follows:
(i) Each Credit Party has taken all necessary action to authorize
the execution, delivery and performance of this First Amendment.
(ii) This First Amendment has been duly executed and delivered by
the Credit Parties and constitutes each of the Credit Parties' legal,
valid and binding obligations, enforceable in accordance with its
terms, except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental
authority or third party is required in connection with the execution,
delivery or performance by any Credit Party of this First Amendment.
(d) The Credit Parties represent and warrant to the Lenders that (i)
the representations and warranties of the Credit Parties set forth in
Section 6 of the Credit Agreement are true and correct as of the date
hereof, (ii) no event has occurred and is continuing which constitutes a
Default or an Event of Default and (iii) no Credit Party has any
counterclaims, offsets, credits or defenses to the Credit Documents and the
performance of its obligations thereunder, or if any Credit Party has any
such claims, counterclaims, offsets, credits or defenses to the Credit
Documents or any transaction related to the Credit Documents, same are
hereby waived, relinquished and released in consideration of the Lenders'
execution and delivery of this First Amendment.
(e) The Guarantors (i) acknowledge and consent to all of the terms and
conditions of this First Amendment, (ii) affirm all of their obligations
under the Credit Documents and (iii) agree that this First Amendment and
all documents executed in connection herewith do not operate to reduce or
discharge the Guarantors' obligations under the Credit Agreement or the
other Credit Documents.
(f) This First Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this First Amendment to produce
or account for more than one such counterpart.
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(g) This First Amendment together with the other Credit Documents
represent the entire agreement of the parties and supersedes all prior
agreements and understandings, oral or written if any, relating to Credit
Documents or the transactions contemplated herein and therein.
(h) This First Amendment and the Credit Agreement, as amended hereby,
shall be governed by and construed in accordance with, the laws of the
State of Tennessee.
[The remainder of this page is intentionally left blank.]
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Each of the parties hereto has caused a counterpart of this First Amendment
to be duly executed and delivered as of the date first above written.
BORROWER:
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CHATTEM, INC.,
a Tennessee corporation
By:
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Name:
----------------------
Title:
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GUARANTORS: SIGNAL INVESTMENT & MANAGEMENT CO.,
- ----------- a Delaware corporation
By:
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Name:
----------------------
Title:
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NEW CREDIT
- ----------
AGREEMENT LENDERS: NATIONSBANK, N.A.,
- ------------------ individually in its capacity as a New
Credit Agreement Lender and in its
capacity as Agent
By:
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Name:
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Title:
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