EXHIBIT 10.3
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of December 22, 2004, is by and among CHATTEM, INC., a Tennessee corporation
(the "Borrower"), each of the Borrower's Domestic Subsidiaries (individually a
"Guarantor" and collectively with the Borrower, the "Credit Parties"), the
Persons identified as lenders on the signature pages hereto (the "Lenders") and
BANK OF AMERICA, N.A., as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Credit Parties, the Lenders, and the Agent have entered
into that certain Credit Agreement dated as of February 26, 2004 (the "Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend the Credit
Agreement as provided herein; and
WHEREAS, the Lenders have agreed to amend the Credit Agreement on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
Unless otherwise defined herein or the context otherwise requires,
terms used in this Amendment, including its preamble and recitals, have the
meanings provided in the Credit Agreement (as amended hereby).
PART II
AMENDMENTS TO CREDIT AGREEMENT
SUBPART 2.1 Section 8.3 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
No Credit Party will, nor will it permit its Subsidiaries to,
alter the character of its business from that conducted as of the
Closing Date or engage in any business other than the business
conducted as of the Closing Date, which with respect to Signal shall be
limited to the ownership of trademarks and tradenames for the purpose
of licensing (a) any or all of such trademarks and tradenames to the
Borrower or any other Credit Party and (b) any or all of such
trademarks and tradenames that are not registered in the United States
or Canada to any Foreign Subsidiary of the Borrower.
SUBPART 2.2 Section 8.5 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
No Credit Party will, nor will it permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its
business or assets whether now owned or hereafter acquired, including,
without limitation, inventory, receivables, real property, leasehold
interests, equipment and securities other than (a) any inventory or
other assets sold, leased or disposed of (or simultaneously replaced
with like goods) in
the ordinary course of business, (b) obsolete, idle or worn-out assets
no longer used or useful in its business, (c) the sale, lease or
transfer or other disposal by a Credit Party other than the Borrower of
any or all of its assets to the Borrower or to any other Credit Party,
(d) the sale, transfer or other disposition of "margin stock" within
the meaning of Regulation U, (e) the non-recourse sale of trade
accounts receivable to a Person that is not an Affiliate of the
Borrower provided that (i) at the time of the sale (and after giving
effect thereto) no Default or Event of Default exists, (ii) as a result
of such sale, no Material Adverse Effect would occur or be reasonably
expected to occur, and (iii) the amount of such receivables subject to
such sales do not exceed, in the aggregate, $7,000,000 at any time
outstanding, (f) other sales of equipment provided that (i) the sale is
for fair market value, (ii) the sale is for cash consideration, (iii)
at the time of the sale (and after giving effect thereto) no Default or
Event of Default exists, (iv) as a result of such sale, no Material
Adverse Effect would occur or be reasonably expected to occur and (v)
such sales do not exceed, in the aggregate, $250,000 during any fiscal
year, (g) sales of product lines (or the right to produce a consumer
product or products) provided that (i) the dispositions permitted under
this subparagraph (g) shall not exceed $10,000,000 during any fiscal
year and, (ii) the dispositions permitted under this subparagraph (g)
during any fiscal year shall be limited to product lines (or the right
to produce a consumer product or products) having aggregate sales for
the twelve-month period ending on the fiscal quarter ending immediately
preceding the sale in an aggregate amount not exceeding ten percent
(10%) of EBITDA for such twelve month period and (iii) the Credit
Parties shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that after giving effect to any such
disposition on a Pro Forma Basis, the Credit Parties and their
Subsidiaries would have been in compliance with all the financial
covenants set forth in Section 7.12, (h) the transfer by the Borrower
of the Capital Stock of Chattem (U.K.) Limited to Chattem Global
Consumer Products Limited and (i) the sale, lease or transfer or other
disposal by a Foreign Subsidiary of the Borrower of any or all of its
assets to any other Foreign Subsidiary of the Borrower.
SUBPART 2.3 Section 8.8 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
No Credit Party will, nor will it permit its Subsidiaries to,
enter into any transaction or series of transactions, whether or not in
the ordinary course of business, with any officer, director,
shareholder, Subsidiary or Affiliate other than on terms and conditions
substantially as favorable as would be obtainable in a comparable
arm's-length transaction with a Person other than an officer, director,
shareholder, Subsidiary or Affiliate except for (a) transactions set
forth on Schedule 8.8 and (b) intercompany transactions that are
otherwise permitted by this Credit Agreement.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Effective Date. This Amendment shall be and become
effective as of November 1, 2004, subject to the satisfaction of the following
conditions:
(a) Execution of Counterparts of Amendment. The Agent shall
have received counterparts of this Amendment, which collectively shall
have been duly executed on behalf of the Borrower, the Guarantors, the
Required Lenders and the Agent.
(b) Fees and Expenses. The Borrower shall have paid to the
Agent, all reasonable costs and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable fees and expenses of the
Agent's legal counsel.
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PART IV
MISCELLANEOUS
SUBPART 4.1 Representations and Warranties. Each Credit Party hereby
represents and warrants to the Agent and the Lenders that (a) no Default or
Event of Default exists under the Credit Agreement or any of the other Credit
Documents on and as of the date hereof, (b) each Credit Party has the requisite
corporate power and authority to execute, deliver and perform this Amendment and
(c) the representations and warranties set forth in Section 6 of the Credit
Agreement are true and correct in all material respects as of the date hereof
(except for those which expressly relate to an earlier date). Each Credit Party
acknowledges and confirms that the Borrower's obligations to repay the
outstanding principal amount of the Loans is unconditional and not subject to
any offsets, defenses or counterclaims.
SUBPART 4.2 Acknowledgment. Each Guarantor hereby acknowledges and
consents to all of the terms and conditions of this Amendment and agrees that
this Amendment does not operate to reduce or discharge the Guarantors'
obligations under the Credit Agreement or the other Credit Documents.
SUBPART 4.3 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.4 Instrument Pursuant to Credit Agreement. This Amendment is
a Credit Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
SUBPART 4.5 References in Other Credit Documents. At such time as this
Amendment shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
SUBPART 4.6 Counterparts/Telecopy. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement. Delivery of executed counterparts of the Amendment by telecopy shall
be effective as an original and shall constitute a representation that an
original shall be delivered.
SUBPART 4.7 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TENNESSEE.
SUBPART 4.8 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.9 General. Except as amended hereby, the Credit Agreement and
all other Credit Documents shall continue in full force and effect.
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IN WITNESS WHEREOF the Borrower, the Guarantors and the Lenders have
caused this Amendment to be duly executed on the date first above written.
BORROWER:
- -------- CHATTEM, INC.,
a Tennessee corporation
By:
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Name:
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Title:
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GUARANTORS: SIGNAL INVESTMENT & MANAGEMENT CO.,
- ---------- a Delaware corporation
By:
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Name:
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Title:
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SUNDEX, LLC,
a Tennessee limited liability company
By:
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Name:
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Title:
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CHATTEM (CANADA) HOLDINGS, INC.,
a Delaware corporation
By:
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Name:
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Title:
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AGENT: BANK OF AMERICA, N.A.,
- ----- in its capacity as Agent
By:
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Name:
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Title:
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LENDERS: BANK OF AMERICA, N.A.,
- ------- in its capacity as a Lender
By:
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Name: John M. Hall
Title: Senior Vice President
SUNTRUST BANK
By:
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Name:
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Title:
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BRANCH BANKING AND TRUST
By:
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Name:
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Title:
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NATIONAL CITY BANK
By:
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Name:
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Title:
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