EXHIBIT 10.1
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FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
November __, 2006, 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 (as amended from
time to time, 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 The following definition is hereby added to Section 1.1 of
the Credit Agreement in the appropriate alphabetical order to read as follows:
"Convertible Senior Notes" means the unsecured convertible notes due
2013 issued by the Borrower containing terms reasonably acceptable to the
Agent.
SUBPART 2.2 The following definitions in Section 1.1 of the Credit
Agreement are hereby amended to read as follows:
"Change of Control" means any of the following events: either (i) a
"person" or a "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more
than 35% of the then outstanding voting stock of the Borrower, (ii) a
majority of the Board of Directors of the Borrower shall consist of
individuals who are not Continuing Directors; "Continuing Director" means,
as of any date of determination, (A) an individual who on the date two
years prior to such determination date was a member of the Borrower's Board
of Directors or (B) any new Director whose nomination for election by the
Borrower's shareholders was approved by a vote of at least 75% of the
Directors then still in office who either were Directors on the date two
years prior to such determination date or whose nomination for election was
previously so approved, (iii) the occurrence of a Change of Control (under
and as defined in the Subordinated Indenture) or (iv) the occurrence of a
"Change of Control (or any comparable term) under, and as defined in, the
indenture governing the Convertible Senior Notes.
"Pro Forma Basis" means, in connection with any Permitted Acquisition,
any Asset Disposition, any Restricted Payment permitted by Section 8.7 or
any prepayment of Subordinated Debt or repayment of the principal amount of
Convertible Senior Notes pursuant to Section 8.11, that such transaction
shall be deemed to have occurred on the first day of the twelve month
period ending on the last day of the Borrower's most recently completed
fiscal quarter for which the Borrower has delivered the officer's
certificate pursuant to Section 7.1(c).
SUBPART 2.3 Section 5.2 of the Credit Agreement is hereby amended to read
as follows:
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make, continue or convert Loans (nor shall the
Issuing Lender be obligated to issue any Letter of Credit) hereunder unless:
(a) Notice. The Borrower shall have delivered (i) in the case of any new
Revolving Loan, a Notice of Borrowing, duly executed and completed, by the time
specified in Section 2.1, (ii) in the case of any Letter of Credit, a Letter of
Credit Application, duly executed and completed, by the time specified in
Section 2.2, (iii) in the case of any new Swingline Loan, a Swingline Loan
Notice, duly executed and completed, by the time specified in Section 2.3 and
(iv) in the case of any continuation or conversion of a Loan, a duly executed
and completed Notice of Continuation/Conversion by the time specified in Section
2.4;
(b) Representations and Warranties. The representations and warranties made
by the Credit Parties in any Credit Document are true and correct in all
material respects at and as if made as of such date;
(c) No Default. No Default or Event of Default shall exist or be continuing
either prior to or after giving effect thereto;
(d) No Material Adverse Effect. There shall not have occurred any Material
Adverse Effect;
(e) Availability. Immediately after giving effect to the making of such
Loan (and the application of the proceeds thereof) or the issuance of such
Letter of Credit, the sum of the Revolving Loans outstanding plus LOC
Obligations outstanding plus the Swingline Loans outstanding shall not exceed
the Revolving Commitment Amount; and
(f) Compliance with Subordinated Indenture. The incurrence by the Borrower
of the Indebtedness evidenced by such Loan or Letter of Credit is permitted by
the Subordinated Indenture, including Section 4.09 thereof, and constitutes
"Senior Indebtedness" as defined therein.
The delivery of each Notice of Borrowing and each Notice of
Extension/Conversion shall constitute a representation and warranty by the
Borrower of the correctness of the matters specified in subsections (b), (c),
(d), (e) and (f) above.
SUBPART 2.4 Section 8.1(j) of the Credit Agreement is hereby amended to
read as follows:
(j) Indebtedness of the Borrower under the Convertible Senior Notes in
an aggregate principal amount not to exceed $125,000,000.
SUBPART 2.5 The following sentence is hereby added at the end of Section
8.7 of the Credit Agreement to read as follows:
For the avoidance of doubt, the parties hereto agree that (a) nothing
contained in this Section 8.7 shall prohibit the Borrower from using $26
million of the proceeds from the issuance of the Convertible Senior Notes
to fund a convertible note hedge transaction with an affiliate of Merrill
Lynch & Co. on the date of the issuance of the Convertible Senior Notes,
which transaction is designed to offset the Borrower's exposure to
potential dilution of its common stock upon the conversion of the
Convertible Senior Notes and (b) the use of such proceeds as described
above shall not be considered a Restricted Payment.
SUBPART 2.6 Section 8.9 of the Credit Agreement is hereby amended to add
the following sentence at the end of such Section to read as follows:
The documentation governing the Convertible Senior Notes may not be amended
or modified in any material manner without the prior written consent of the
Required Lenders.
SUBPART 2.7 Section 8.10 of the Credit Agreement is hereby amended to read
as follows:
(a) 8.10 Prepayments of Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) amend or modify (or permit the amendment or modification of) any of the
terms of any Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the Lenders, including but not
limited to, shortening final maturity or average life to maturity of such
Indebtedness or requiring any payment to be made sooner than originally
scheduled or increasing the interest rate applicable thereto or change any
subordination provision thereof, (b) during the existence of a Default or
Event of Default, or if a Default or Event of Default would be caused as a
result thereof, make (or give any notice with respect thereto) any
voluntary or optional payment or prepayment or redemption or acquisition
for value of (including, without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the purpose
of paying when due), refund, refinance or exchange of any other
Indebtedness and (c) make any repayment in cash for Convertible Senior
Notes that are surrendered by the holders thereof (or otherwise make any
payment on the principal of any Convertible Senior Notes) unless (i) prior
to any such repayment, the Borrower has Sufficient Liquidity (as defined
below), (ii) prior to any such repayment, the Borrower shall deliver to the
Agent a Pro Forma Compliance Certificate demonstrating that after giving
effect to any such payment 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 and (ii) before and after giving effect
to any such repayment, no Default or Event of Default shall have occurred
and be continuing.
For purposes hereof, "Sufficient Liquidity" means cash and Cash
Equivalents (including, without limitation, availability under the
Revolving Committed Amount) in an aggregate amount equal to 125% of the sum
of the principal amount of the Convertible Senior Notes contemplated to be
paid by the Borrower in cash.
SUBPART 2.8 A new clause (o) is hereby added at the end of Section 9.1 of
the Credit Agreement following clause (n) thereof to read as follows:
(o) Convertible Senior Notes. There shall occur an "Event of Default"
(or any comparable term) under, and as defined in, the documentation
governing the Convertible Senior Notes.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Effective Date. This Amendment shall be and become effective
upon the Agent's receipt of counterparts of this Amendment, which collectively
shall have been duly executed on behalf of the Borrower, the Guarantors, the
Required Lenders and the Agent.
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 are 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.
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: /s/ Robert E. Bosworth
Name: Robert E. Bosworth
Title: President and Chief Operating Officer
GUARANTORS: SIGNAL INVESTMENT & MANAGEMENT CO.,
By: /s/ Robert E. Bosworth
Name: Robert E. Bosworth
Title: President
SUNDEX, LLC,
a Tennessee limited liability company
By: /s/ Robert E. Bosworth
Name: Robert E. Bosworth
Title: President
CHATTEM (CANADA) HOLDINGS, INC.,
a Delaware corporation
By: /s/ Robert E. Bosworth
Name: Robert E. Bosworth
Title: President
AGENT: BANK OF AMERICA, N.A.,
- ----- in its capacity as Agent
By: /s/ Brian Chiappetta
Name: Brian Chiappetta
Title: Assistant Vice President
LENDERS: BANK OF AMERICA, N.A.,
- ------- in its capacity as a Lender
By: /s/ John M. Hall
Name: John M. Hall
Title: Senior Vice President
SUNTRUST BANK
By: /s/ Kap Yarbrough
Name: Kap Yarbrough
Title: Banking Officer
BRANCH BANKING AND TRUST
By: /s/ R. Andrew Bream
Name: R. Andrew Bream
Title: Senior Vice President
NATIONAL CITY BANK
By: /s/ Kevin L. Anderson
Name: Kevin L. Anderson
Title: Sr. Vice President