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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996 COMMISSION FILE NUMBER 0-5905
CHATTEM, INC.
A TENNESSEE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 62-0156300
1715 WEST 38TH STREET
CHATTANOOGA, TENNESSEE 37409
TELEPHONE: 423-821-4571
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ------------------- ------------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, WITHOUT PAR VALUE
REGISTRANT HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K WILL BE
CONTAINED IN THE DEFINITIVE PROXY STATEMENT INCORPORATED BY REFERENCE IN PART
III OF THIS FORM 10-K.
AS OF FEBRUARY 21, 1997, THE AGGREGATE MARKET VALUE OF VOTING SHARES HELD BY
NON-AFFILIATES WAS $48,988,537.
AS OF FEBRUARY 21, 1997, 8,612,641 COMMON SHARES WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE:
PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL YEAR ENDED
NOVEMBER 30, 1996 (THE "1996 ANNUAL REPORT TO SHAREHOLDERS") ARE INCORPORATED BY
REFERENCE IN PARTS I, II AND IV OF THIS REPORT. PORTIONS OF THE REGISTRANT'S
DEFINITIVE PROXY STATEMENT DATED MARCH 7, 1997 (THE "PROXY STATEMENT") ARE
INCORPORATED BY REFERENCE IN PART III OF THIS REPORT.
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PART I
ITEM 1. BUSINESS
GENERAL
Chattem, Inc. (the "Company") was incorporated in Tennessee in 1909 after having
commenced business operations in 1879. The Company is a diversified
manufacturer and marketer of consumer products. The Company manufactures and
markets branded over-the-counter ("OTC") pharmaceuticals, such as FLEXALL 454,
ICY HOT, PAMPRIN, PREMSYN PMS, BENZODENT, NORWICH Aspirin, GOLD BOND and
HERPECIN-L and functional toiletries and cosmetics, including CORNSILK,
BULLFROG, ULTRASWIM, SUN-IN, MUDD and PHISODERM. In the OTC drug market, the
Company believes that its topical analgesic, menstrual and premenstrual internal
analgesic brands and medicated powder and cream are among the market leaders in
the U.S. in their categories. Certain of the Company's functional toiletries
and cosmetics products, such as SUN-IN and ULTRASWIM, are believed by the
Company to be brand leaders in the U.S. in their categories.
The Company's growth strategy is to seek continued growth through a combination
of brand acquisitions and internal growth while maintaining high operating
income. As a part of this strategy, the Company continually evaluates its
products and businesses, and in instances in which products or businesses fail
to realize the Company's objectives, the Company will dispose of these products
or businesses and redeploy resulting assets to products and businesses with
greater growth potential or to reduce indebtedness.
The Company conducts certain aspects of its business through four wholly owned
subsidiaries. One subsidiary owns or licenses substantially all of the
trademarks and intangibles associated with its domestic consumer products
business and licenses the Company's use thereof. Certain foreign sales
operations are conducted through Canadian and United Kingdom subsidiaries.
Product liability insurance is provided by a captive insurance subsidiary
incorporated in Bermuda.
For purposes of this report, the "Company" refers to Chattem, Inc. and its
wholly-owned subsidiaries. Trademarks of the Company appear in this report in
all capitalized letters.
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DEVELOPMENTS DURING FISCAL 1996
On April 29, 1996, the Company purchased the worldwide rights for the GOLD
BOND line of medicated powders and anti-itch cream from Martin Himmel Inc.
GOLD BOND is the leading brand in the medicated powder market and has a
growing presence in the anti-itch cream market. The purchase price for the
trademarks and inventory was $40,000,000. Additionally, the Company assumed
certain liabilities of approximately $500,000. The Company financed the GOLD
BOND acquisition and repaid all existing bank indebtedness by entering into a
new $61,500,000 credit agreement, issuing 1,100,000 new shares of Chattem,
Inc. stock to a group of investors, including certain officers, directors
and affiliates and issuing to the seller 155,792 shares of Chattem, Inc.
stock at $6.42 per share.
Also during April, 1996, the Company sold the trademarks and inventory of two of
its minor consumer products brands, SOLTICE and BLIS-TO-SOL. The sales price of
$1,200,000 consisted of $1,000,000 cash received at closing and a $200,000
promissory note requiring payments of $100,000 per year for the next two years
contingent upon the brands meeting specific future sales levels. A gain of
$875,000 from the sale was recognized.
On June 6, 1996, the Company purchased the rights for the HERPECIN-L line of
medicated lip balm from Campbell Laboratories, Inc. HERPECIN-L is a cold
sore and fever blister treatment that also contains a sunscreen. The
purchase price for the trademark, receivables and inventory was $5,607,000 plus
a royalty payment equal to the greater of $214,000 or 5% of net sales.
Additionally, the Company assumed certain liabilities of approximately
$500,000. The royalty payment is payable annually for each of the seven
twelve-month periods beginning July 1, 1996 and ending June 30, 2003. The
purchase was financed by the Company with a $5,000,000 addition to its
existing bank credit agreement with the remaining $607,000 being funded by
the Company.
As a result of the refinancing of the Company's long-term bank debt in
connection with the GOLD BOND and HERPECIN-L product acquisitions, a loss (net
of tax) of $532,000 was recognized in 1996 on the early extinguishment of
existing long-term obligations to banks.
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Unless otherwise indicated, the following discussion relates only to the
continuing operations of the Company, which are the domestic and international
consumer products business. The results of operations and the gain on disposal
of the specialty chemical division in 1995 have been separately classified as
discontinued operations in the accompanying consolidated statements of income.
The Company will continue to seek increases in sales through a combination of
acquisitions and internal growth while maintaining high operating income. As
previously high growth brands mature, sales increases will become even more
dependent on acquisitions and the development of successful line extensions.
On May 1, 1996, the Company began shipping PHISODERM Antibacterial Hand
Cleanser. Also, on May 1, 1996, in an effort to expand the PHISODERM Facial
Cleanser business, the Company began shipping an unfragranced product for
sensitive skin. On July 1, 1996, FLEXALL Ultra Plus was introduced
nationally while the existing FLEXALL line was relaunched with new packaging
and a completely new advertising message.
The Company's operations continue to be affected by the payment of a special
cash dividend ("Special Dividend") of $20.00 per share in June, 1993 to holders
of its common stock. In order to pay the Special Dividend and related fees and
expenses, the Company borrowed approximately $97,000,000. The funding of the
Special Dividend resulted in a substantial negative balance in the Company's
shareholders' equity and significantly increased the use of leverage in the
Company's capital structure. The consequences to the Company have been
significantly increased interest expense and repayment obligations and more
vulnerability to adverse business conditions.
PRODUCTS
The objective of the Company is to offer high quality brand name products in
niche market segments in which its products can be among the market leaders.
The Company strives to achieve its objective by identifying brands with
favorable demographic appeal, being flexible in modifying products and
promotions in response to changing consumer demands and developing creative and
cost-effective marketing and advertising programs. The Company manufactures
substantially all of its products at its manufacturing facility in Chattanooga,
Tennessee, with the exception of GOLD BOND and NORWICH Aspirin, which are
manufactured by contract manufacturers.
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The Company's product brands are:
OTC PHARMACEUTICALS
-------------------
- FLEXALL 454 - topical analgesic
- ICY HOT - topical analgesic
- PAMPRIN - menstrual internal analgesic
- PREMSYN PMS - premenstrual internal analgesic
- NORWICH Aspirin - internal analgesic
- BENZODENT - topical oral analgesic
- GOLD BOND - medicated powders and anti-itch cream
- HERPECIN-L - cold sore and fever blister product
FUNCTIONAL TOILETRIES AND COSMETICS
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- CORNSILK - oil absorbing facial make-up
- BULLFROG - sunscreen and sunblock
- ULTRASWIM - chlorine removing shampoo
- SUN-IN - spray-on hair lightener
- MUDD - facial mask and cleanser
- PHISODERM - facial and hand cleanser
The following table sets forth the Company's net sales attributable to domestic
and international OTC pharmaceutical products, functional toiletries and
cosmetics products, other products and total consumer products during the past
three fiscal years (dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended November 30,
-------------------------------------------------------------------------
1996 1995 1994
---------------------- -------------------- --------------------
Product Class Sales Percentage Sales Percentage Sales Percentage
------------- ----- ---------- ----- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Domestic:
OTC Pharmaceuticals ......................... $ 67,214 56.5% $ 48,700 48.4% $51,673 54.8%
Functional Toiletries and
Cosmetics ................................. 36,232 30.5 37,519 37.3 29,888 31.7
International:
OTC Pharmaceuticals ......................... 2,255 1.9 2,463 2.5 2,243 2.4
Functional Toiletries and
Cosmetics ................................. 12,204 10.3 10,885 10.8 9,484 10.0
Other Products ................................ 998 .8 1,031 1.0 1,082 1.1
--------- ----- -------- ------ ------- ------
Total Consumer Products ................... $ 118,903 100.0% $100,598 100.0% $94,370 100.0%
--------- ----- -------- ------ ------- ------
--------- ----- -------- ------ ------- ------
</TABLE>
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GROWTH STRATEGY
The Company's consumer products have historically grown through acquisition
of new brands and expansion of existing brands. The Company seeks
acquisitions of embryonic brands which have achieved success in limited
geographic regions or of more developed brands with unrealized potential.
With embryonic brands, the Company utilizes its marketing ability, sales
force and manufacturing capabilities to build on the regional strength of the
brand and launch the product nationally. For example, prior to its
acquisition by the Company, FLEXALL 454 had developed a significant market
share in Denver and Phoenix, but was virtually unknown in the balance of the
country. After its acquisition by the Company in 1989, FLEXALL 454, which
had sales of less than $1,000,000 at the time of acquisition, had exceeded
$15,000,000 in gross sales in each of 1996 and 1995. As to brands with
unrealized potential, the Company seeks to acquire from larger firms brands
that have been undermarketed because the products are not of sufficient size
to warrant attention by the larger firms. Two products in this category were
acquired in 1994: BENZODENT, a dental analgesic cream acquired from The
Procter & Gamble Company ("Procter & Gamble"), and PHISODERM, a line of
facial cleaners acquired from Sterling Winthrop Inc. ICY HOT is an earlier
example of this type of acquisition and has experienced significant growth
since its acquisition in 1991. HERPECIN-L is a recent example of the
acquisition of a small brand. Fiscal 1997 will be the first year in the
brand's history in which it will receive a full year of national television
advertising, radio advertising and promotional support. In considering
product acquisitions, the Company also seeks products that complement
existing brands through increased marketing presence, shared promotions and
shared distribution channels.
The Company endeavors to expand its existing products through line extensions of
existing brands, which capitalize on consumer awareness of the brand names.
Examples of this strategy were the introduction and launch of FLEXALL Ultra
Plus and PHISODERM Antibacterial Hand Cleanser during 1996. In February, 1997,
the Company will be launching ICY HOT Arthritis Therapy Gel, GOLD BOND Medicated
Foot Powder, MUDD 5 Minute Masque and the relaunching of CORNSILK with
completely new packaging. Efforts are also made to develop new and creative
marketing strategies and executions to expand both trade distribution and
consumer usage.
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OTC PHARMACEUTICALS
The Company markets a diversified portfolio of brand name OTC pharmaceutical
products, many of which are among the market leaders in the U.S. in their
respective categories.
The GOLD BOND brand, which is approximately 100 years old, competes in the adult
and baby medicated powder and anti-itch cream markets. GOLD BOND is the leading
brand in the medicated powder market and has a rapidly growing presence in the
anti-itch cream market. The product line is heavily supported by national
television and radio advertising, as well as with exciting consumer promotions.
The Company believes GOLD BOND represents a major growth opportunity and is
currently pursuing various key growth directions both in the short and long
term.
FLEXALL 454 is an aloe-vera based topical analgesic used primarily by people
with arthritic symptoms to alleviate pain and irritation in joints and
secondarily by persons suffering from muscle strain. In fiscal 1996 FLEXALL
Ultra Plus, containing menthol, methyl salicylate and camphor as active
ingredients, was added to the line. The Company believes that the advancing age
of the U.S. population and the emphasis on fitness and physical activity will
increase the overall market size of the topical analgesic market. The Company
supports the brand with a marketing program that utilizes extensive television
and print media advertising.
ICY HOT provides the Company with a second entry into the topical analgesic
market segment. ICY HOT is an extra strength dual action product, as
distinguished from FLEXALL 454. The Company supports this brand with national
advertising and strong promotional programs.
BENZODENT is a dental analgesic cream in an adhesive base for use as an oral
topical analgesic for pain related to dentures. The Company acquired BENZODENT
from Procter & Gamble in 1994 and seeks to increase the market share of this
brand through advertising and promotional programs.
NORWICH is a pharmaceutical-quality, aspirin-based analgesic which complements
the Company's other OTC pharmaceuticals by offering consumers another choice in
the analgesic market segment and by permitting shared product promotions. The
Company positions the brand as a reasonably priced alternative between private
label generic aspirin and high-priced, heavily-advertised brands.
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In the lip care category, HERPECIN-L balm stick treats and protects cold sores
three ways. The unique formula moisturizes lips to help prevent cracking,
reduce soreness and promote healing. Also, HERPECIN-L contains an SPF 15
sunblock to help protect lips from the harmful rays of the sun. The Company
supports the brand with television and radio advertising as well as consumer
promotions designed to generate trial during the peak winter and summer cold
sore seasons.
In the menstrual analgesic segment, the Company markets PAMPRIN, a combination
drug specifically designed for relief of menstrual symptoms, and PREMSYN PMS, a
product formulated to relieve mild to moderate symptoms of premenstrual
syndrome. PAMPRIN was developed internally by the Company over 30 years ago,
while PREMSYN PMS was introduced by the Company in 1983. Factors affecting the
menstrual analgesic segment include the introduction of competing general
analgesic brands of ibuprofen for OTC distribution in 1986, the introduction by
Procter & Gamble of another non-steroidal general analgesic product in 1994
along with demographic trends of target consumers, women aged 18 to 49.
FUNCTIONAL TOILETRIES AND COSMETICS
The Company also markets a portfolio of brand name functional toiletries and
cosmetics, many of which are among the market leaders in the U.S. in their
respective categories.
The CORNSILK brand is a line of facial makeup products for women with oily or
combination skin. All CORNSILK products utilize an exclusive ingredient for
absorbing the excess facial oils that break down the color and coverage of other
makeup. The CORNSILK brand includes powder used by women to fix and finish
their makeup and also liquid makeup, blush and concealer. Liquid makeup is used
to even skin tone, blush to add color and concealer to cover blemishes. The
Company supports the brand by a television advertising campaign complemented by
print advertising in selected women's magazines.
In the sunscreen and sunblock category, BULLFROG provides long-lasting, water-
durable protection from the sun. Due to escalating consumer awareness of skin
damage from sun exposure, the Company expects the sun protection segment of the
sun care market to continue to expand rapidly. Positioned as a line of highly
efficacious sunblock products in a unique, highly concentrated formula, the
Company believes that the BULLFROG brand should continue to benefit from this
overall market growth as well as increasing brand awareness, broader product
offerings and increased consumer advertising, promotion and sampling programs.
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ULTRASWIM is a leading line of chlorine removing shampoo, conditioner and soap.
ULTRASWIM has a patented formula that the Company believes makes it superior to
formulations of other products in removing chlorine. ULTRASWIM has also
benefited as it has moved beyond the competitive swim segment to include
exercise and recreational swimmers.
SUN-IN is a leading product line in the spray-on hair lightener market. The
target customers within this market segment are light-haired women between the
ages of 12 and 24. The Company supports SUN-IN's position as a market leader
through recent improvements in the formula and package, seasonal advertising to
teens and consumer promotions in retail stores.
MUDD is a line of clay-based products which provide deep cleansing of the face
for healthier, cleaner skin. Target customers for MUDD are women between the
ages of 18 and 49. In fiscal 1995, the Company relaunched MUDD with improved
formulas and updated packaging. The relaunch is supported by television
advertising and promotional programs.
PHISODERM is a line of facial cleansers consisting of several formulas of liquid
cleansers, including one for infants, and a bar soap. Acquired in 1994,
PHISODERM is the Company's second entry into the facial cleanser category.
Positioned as a deep cleaning but gentle facial cleanser, the Company, in fiscal
1995, improved the formula, updated the packaging and provided television
advertising and promotional support to enable this brand to regain the larger
market share it once enjoyed. In fiscal 1996, PHISODERM Antibacterial Hand
Cleanser was introduced in the domestic and certain international markets.
INTERNATIONAL
The Company's products are also sold in foreign countries. This international
business is concentrated in Canada, Europe and Central and South America.
Sales in Canada and Europe are conducted by subsidiary companies located and
locally staffed in Canada and the United Kingdom. General export sales are
handled by the Company from its offices in Chattanooga. Most of the products
sold in international markets are manufactured by the Company at its Chattanooga
and United Kingdom facilities and are packaged by subsidiary companies in small
facilities in Canada and the United Kingdom with the assistance, from time to
time, of outside contract packagers.
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Many of the Company's major domestic products are currently sold in Canada,
including the FLEXALL 454, PAMPRIN, SUN-IN, CORNSILK, MUDD, ULTRASWIM,
PHISODERM and GOLD BOND brands.
Consumer product sales in the United Kingdom and on the continent of Western
Europe are currently limited to toiletry and cosmetic products. The Company's
hair lightener product is sold on the continent under the SPRAY BLOND trademark
and in the United Kindgom as SUN-IN. MUDD, CORNSILK and ULTRASWIM are the
other primary consumer products sold by the Company's international division in
Europe.
The Company's export division services various distributors primarily located in
the Caribbean, Mexico and Peru. The Company sells various products into these
markets with the primary focus being the development of its OTC pharmaceuticals,
principally ICY HOT, PAMPRIN, MUDD, PHISODERM and GOLD BOND. The Company
continues to look for established distributors in Central and South America.
MANUFACTURING
The Company manufactures a substantial portion of its products at its
Chattanooga plant, with the exception of GOLD BOND and NORWICH Aspirin, which
are manufactured by contract manufacturers. Currently, the Company has adequate
capacity to meet anticipated demand for its products. New products can
generally be manufactured with the adaptation of existing equipment and
facilities, with the addition of new equipment at relatively small cost or
through readily available contract manufacturers. For additional information
about the extent of utilization of the Company's manufacturing facilities, see
"Properties", Item 2 in this report.
To monitor the quality of its products, the Company maintains an internal
quality control system supported by an on-site microbiology laboratory. Outside
consultants also are employed from time to time to monitor product development
and the effectiveness of the Company's operations.
The Company has not experienced any material adverse effect on its business as a
result of shortages of energy or other raw materials used in the manufacture of
its products. At present, the Company does not foresee any significant problems
in obtaining its requirements at reasonable prices, but no assurances can be
given that raw material or energy shortages will not adversely affect its
operations in the future.
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RESEARCH AND DEVELOPMENT
The Company's research and development expenditures were $1,117,000, $1,140,000
and $893,000 in the fiscal years ended November 30, 1996, 1995 and 1994,
respectively. No material customer-sponsored research and development
activities were undertaken during these periods. The Company expects to
maintain the same general level of expenditures in fiscal 1997.
The research and development effort focuses on developing improved formulations
for existing products and on the creation of formulations for product line
extensions. The preservation and improvement of the quality of the Company's
products are also integral parts of its overall strategy.
DISTRIBUTION
The Company's domestic products are sold through thousands of food, drug and
mass merchandiser accounts. Internationally, the products are sold by a
national broker in Canada and the Company's own sales force in the United
Kingdom and by exclusive distributors in Western Europe and Central and South
America to mass distribution channels.
Wal-Mart Stores, Inc. accounts for more than 10% of the sales of the Company's
consolidated net sales. No other customer accounts for more than 10% of
consolidated net sales. Boots Plc, a U.K. retailer, accounts for more than 10%
of the international consumer products segment's sales.
The Company generally maintains sufficient inventories to meet customer orders
as received absent unusual and infrequent situations. At present, the Company
has no significant backlog of customer orders and is promptly meeting customer
requirements.
The Company does not generally experience wide variances in the amount of
inventory it maintains. Inventory levels were increased during fiscal 1996
largely as a result of the acquisitions of the GOLD BOND and HERPECIN-L product
lines in that year. In certain circumstances, the Company allows its customers
to return unsold merchandise and, for seasonal products, provides extended
payment terms to its customers.
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MARKETING
The Company allocates a significant portion of its revenues to the advertising
and promotion of its products. Expenditures for these purposes were 38.3%,
37.0% and 35.3%, respectively, as a percentage of net sales during each of the
fiscal years ended November 30, 1996, 1995 and 1994.
The Company's marketing objective is to develop and execute creative and cost-
effective advertising and promotional programs. The manner in which the Company
executes promotional programs and purchases advertising time creates more
flexibility in terms of adjusting spending levels. The Company believes that
balancing advertising, trade promotions and consumer promotions expenditures on
a cost effective basis is an essential element in its ability to compete
successfully.
The Company develops for each of its major brands advertising strategies and
executions that focus on the particular attributes and market positions of the
products. The Company achieves cost-effective advertising by minimizing certain
expenses, such as production of commercials and payments to advertising
agencies.
The Company works directly with retailers to develop for each brand promotional
calendars and campaigns that are customized to the particular requirements of
the individual retailer. The programs, which include cooperative advertising,
temporary price reductions, in-store displays and special events, are designed
to obtain or enhance distribution at the retail level and to reach the ultimate
consumers of the product. The Company also utilizes consumer promotions such as
coupons, samples and trial sizes to increase the trial and consumption of the
products.
SEASONALITY
During recent fiscal years, the Company's first quarter net sales and gross
profit have trailed the other fiscal quarters on average from 25% to 35% because
of slower sales of international consumer products and the relative absence of
promotional campaigns during this quarter.
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COMPETITION
The OTC pharmaceutical and functional toiletry products' markets in which the
Company competes are highly competitive. The markets are characterized by the
frequent introduction of new products including the movement of prescription
drugs to the OTC market, often accompanied by major advertising and promotional
programs. The Company competes primarily on the basis of product quality,
price, brand loyalty and consumer acceptance. The Company's competitors include
other OTC pharmaceutical companies and large consumer products companies, many
of which have considerably greater financial and marketing resources than the
Company. The products offered by these companies are often supported by much
larger advertising and promotional expenditures and are generally backed by
larger sales forces. In addition, the Company's competitors have often been
willing to use aggressive spending on trade promotions as a strategy for
building market share at the expense of their competitors, including the
Company. The private label or generic category has also become more competitive
in certain of the Company's product markets. Another factor affecting the OTC
pharmaceutical and toiletry products business is the consolidation of retailers
and increasingly more competitive negotiations for access to shelf space.
TRADEMARKS AND PATENTS
The Company's trademarks are of material importance to its business and are
among its most important assets, although, except in the case of the FLEXALL
454, PHISODERM, ICY HOT and GOLD BOND trademarks, its business as a whole is
not materially dependent upon ownership of any one trademark. The Company,
either through a wholly-owned subsidiary or directly, owns or licenses all of
the trademarks associated with its business. All of the Company's brands have
recognized trademarks associated with them, and the Company's significant
domestic trademarks have been registered on the principal register of the United
States Patent and Trademark Office. Federally registered trademarks have a
perpetual life as long as they are timely renewed and used properly as
trademarks, subject to the right of third parties to seek cancellation of the
marks.
The Company also owns patents related to the ULTRASWIM shampoo and CORNSILK
facial powder, both of which expire in 1998, and ICY HOT stick topical
analgesic, which expires in 2007. After expiration of the patents, the Company
expects that these products will continue to compete in the market primarily on
the basis of the goodwill associated with the brands.
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GOVERNMENT REGULATION
The Company's products are generally subject to government regulations,
primarily those of the U. S. Food and Drug Administration ("FDA"). Certain of
the Company's consumer products are regulated by the FDA as OTC drugs, with the
rest of the products being regulated as "cosmetics". All such products must
comply with FDA regulations governing the safety of the products themselves or
the ingredients used in their manufacture. FDA regulations for all
pharmaceutical products also include requirements for product labeling and for
adherence to "current good manufacturing practices".
All of the Company's OTC drug products are regulated pursuant to the FDA's
"monograph" system for OTC drugs. The monographs set out the active ingredients
and labeling indications that are permitted for certain broad categories of OTC
drug products (e.g., topical analgesics). Compliance with monograph provisions
means that the product is generally recognized as safe and effective, and is not
misbranded. Future changes in the monographs could result in the Company having
to revise product labeling and formulations.
The Company responded to certain questions received from the FDA early in 1995
in connection with clinical studies for pyrilamine maleate, one of the active
ingredients used in PAMPRIN and PREMSYN PMS. While the Company addressed
all of the FDA questions in detail, the final monograph for menstrual drug
products will determine if the FDA considers pyrilamine maleate safe and
effective for menstrual relief products. Additional clinical testing of this
ingredient may be required.
The Company has been actively monitoring the process and does not believe that
PAMPRIN and PREMSYN PMS will be materially adversely affected by the FDA review.
The Company believes that any adverse finding by the FDA would likewise affect
the Company's principal competitors in the menstrual product category.
With regard to all of the Company's products, the FDA may revise applicable
regulations or provide new interpretations of existing regulations which could
necessitate product labeling changes, reformulations or other changes in the
Company's products or the conduct of its business. While it is impossible to
predict the impact of future FDA actions, to date the Company has not been
adversely affected as a result of compliance with FDA regulations.
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In addition to the FDA regulations discussed above, the Company is subject to
numerous other statutory and regulatory restrictions, including regulations
relating to product packaging. The application of these product packaging
regulations has required the Company to convert certain of its PAMPRIN products
sold in foil pouches to bottles with child resistant caps. This conversion was
completed in 1995 and involved plant modification and the installation of
additional packaging equipment. To comply with new packaging requirements for
products containing lidocaine, the Company has until January 1998 to develop
new child resistant packaging for its GOLD BOND Cream products that are sold
in tubes or change the product formulation.
ENVIRONMENTAL
The Company is continuously engaged in assessing compliance of its operations
with applicable federal, state and local environmental laws and regulations.
The Company's policy is to record liabilities for environmental matters when
loss amounts are probable and reasonably determinable. The Company's
manufacturing site utilizes chemicals and other potentially hazardous materials
and generates both hazardous and non-hazardous waste, the transportation,
treatment, storage and disposal of which are regulated by various governmental
agencies. The Company is a member of the Chattanooga Manufacturers Association,
a trade association which promotes industry awareness of developments in
environmental matters and has engaged environmental consultants on a regular
basis to assist its compliance efforts. The Company is currently in compliance
with all applicable environmental permits and is aware of its responsibilities
under applicable environmental laws. Any expenditures necessitated by changes
in law and permitting requirements cannot be predicted at this time, although
such costs are not expected to be material to the Company's financial position
or results of operations.
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Since the early 1980's, the U.S. Environmental Protection Agency ("EPA") has
been investigating the extent of, and the health effects resulting from,
contamination of Chattanooga Creek, which runs through a major manufacturing
area of Chattanooga in the vicinity of the Company's manufacturing facilities.
The contamination primarily stems from the dumping of coal tar into the creek
during World War II when the federal government was leasing and operating a coke
and chemical plant adjacent to the creek. However, the EPA has been
investigating virtually all businesses that have discharged any wastewater into
the creek. A 2 1/2 mile stretch of Chattanooga Creek was placed on the National
Priorities List as a Superfund site under the Comprehensive Environmental
Response, Compensation and Recovery Act in September of 1995. The Company could
be named as a potentially responsible party in connection with such site due to
the Company's historical discharge of wastewater into the creek. However,
considering the nature of the Company's wastewater, as well as the fact that the
Company's discharge point is downstream from the old coke and chemical plant
that was operated by the government, and the availability of legal defenses and
expected cost sharing, the Company does not believe that any liability
associated with such site will be material to its financial position or results
of operations.
PRODUCT LIABILITY AND INSURANCE
An inherent risk of the Company's business is exposure to product liability
claims brought by users of the Company's products or by others. The Company has
not had any material claims in the past and is not aware of any material claims
pending or threatened against the Company or its products. While the Company
will continue to attempt to take what it considers to be appropriate
precautions, there can be no assurance that it will avoid significant product
liability exposure. The Company maintains product liability insurance,
principally through a captive insurance subsidiary, that it believes to be
adequate; however, there can be no assurance that it will be able to retain its
existing coverage or that such coverage will be cost-justified or sufficient to
satisfy future claims, if any.
EMPLOYEES
The Company employs approximately 298 persons on a full-time basis in the U.S.
and 34 persons at its foreign subsidiaries' offices. The Company's employees
are not represented by any organized labor union, and management considers its
labor relations to be good.
16
<PAGE>
ITEM 2. PROPERTIES
The Company's headquarters and administrative offices are located at 1715 West
38th Street, Chattanooga, Tennessee. The Company's primary production
facilities are adjacent to the Company's headquarters on land owned by the
Company. The Company leases the primary warehouse and distribution center,
located at 3100 Williams Street, Chattanooga, Tennessee, for its domestic
consumer products. The following table describes in detail the principal
properties owned and leased by the Company:
Facility
--------------------------
Total
Total Area Buildings Square
(Acres) (Square Feet) Use Feet
---------- ------------- ------- --------
Owned Properties:
Chattanooga, Tennessee 10 111,200 Manufacturing 71,800
Office &
Administration 39,400
Leased Properties:
Chattanooga, Tennessee (1) 4.0 100,000 Warehousing 100,000
Chattanooga, Tennessee (2) 1.0 35,200 Warehousing &
Manufacturing 35,200
Mississauga, Ontario,
Canada (3) 0.3 15,000 Warehousing 10,500
Office &
Administration 3,000
Packaging 1,500
Basingstoke, Hampshire,
England (4) 0.3 21,900 Warehousing 13,900
Office &
Administration 6,500
Packaging 1,500
NOTES:
(1) Leased under a five year lease ending January 31, 2001 for a monthly rental
of $23,750.
(2) Leased under a five year lease ending January 31, 2001 for a monthly rental
of $9,430.
(3) Leased under a lease ending November 1999 at a monthly rental including
property taxes and other incidentals, of approximately $7,396.
(4) Leased under leases ending in 2014 and 2015 at a monthly rental, including
property taxes and other incidentals, of approximately $21,535.
17
<PAGE>
The Company is currently operating its facilities at approximately 70% of total
capacity. These facilities are FDA registered and are capable of further
utilization through the use of full-time second and third shifts.
ITEM 3. LEGAL PROCEEDINGS
Note 10 to the Consolidated Financial Statements on page 29 of the Company's
1996 Annual Report to Shareholders is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
18
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The information found on pages 15, 28 and 29 of the Company's 1996 Annual Report
to Shareholders is incorporated herein by reference.
On April 29, 1996, the Company issued in a private offering, 1,100,000 shares
of its common stock to a group of investors, including certain officers,
directors and affiliates, and issued to the seller of GOLD BOND 155,792
shares of Chattem, Inc. stock at $6.42 per share as a portion of the purchase
price for the brand.
ITEM 6. SELECTED FINANCIAL DATA
The information found on page 15 of the Company's 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information found on pages 9 to 14 of the Company's 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information found on pages 15 to 35 of the Company's 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
19
<PAGE>
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
REGISTRANT
(a) DIRECTORS
The information found in the Company's 1997 Proxy Statement under the
heading "Information about Nominees and Continuing Directors" is hereby
incorporated by reference.
(b) EXECUTIVE OFFICERS
The following table lists the names of the executive officers of the
Company as of February 21, 1997, their ages, their positions and offices
with the Company and the year in which they were first elected to these
positions:
POSITION WITH FIRST
NAME AGE REGISTRANT ELECTED
- ------------------- --- -------------------------------------- -------
Zan Guerry 48 Chairman of the Board;
President and Chief Executive Officer;
Director 1990
Robert E. Bosworth 49 Executive Vice President and Chief
Financial Officer; Director 1990
Mr. Guerry was elected to his present positions with the Company in June 1990.
Previously he served as Vice President and Chief Financial Officer from 1980
until 1983, as Executive Vice President from 1983 to 1990, as President of
Chattem Consumer Products from 1989 to 1994 and as Chief Operating Officer from
1989 to 1990. Mr. Guerry was first elected as a director of the Company in
1981.
Mr. Bosworth was elected to his present positions with the Company in June 1990.
Previously he served as Vice President and Chief Financial Officer of the
Company from 1985 to 1990. Mr. Bosworth was first elected as a director of the
Company in 1986.
(c) PROMOTERS AND CONTROL PERSONS
Not applicable.
20
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information found in the Company's 1997 Proxy Statement under the heading
"Executive Compensation and Other Information" is hereby incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information found in the Company's 1997 Proxy Statement under the heading
"Voting Securities and Principal Holders Thereof" is hereby incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. Alexander Taylor II, a director of the Company, is a partner in the law firm
of Miller & Martin, general counsel to the Company.
Louis H. Barnett, a director of the Company, received $33,000 in consulting fees
during fiscal 1996 for services rendered to the Company in a capacity other than
as a director.
21
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORT ON FORM 8-K
(a) 1. The consolidated financial statements and the related report of
independent public accountants required to be filed with this Report are
incorporated by reference from pages 16 to 35 of the Company's 1996
Annual Report to Shareholders.
2. The following documents are filed or incorporated by reference as
exhibits to this report:
Exhibit
Number Description of Exhibit References
- ------- --------------------------------------- ------------
3 Amended and Restated Charter of
Chattem, Inc. (7)
Amended and Restated By-Laws of
Chattem, Inc. (16)
4 Form of Indenture dated August 3, 1994
between Chattem, Inc. and SouthTrust
Bank of Alabama, N.A. relating to the
12.75% Series B Senior Subordinated
Notes due 2004 (13)
10 Material Contracts -
ULTRASWIM License Agreement (1)
BULLFROG Purchase Agreement (2)
Purchase and Sale Agreement dated
March 6, 1989 between Chattem, Inc.
and Ari-Med Pharmaceuticals, Inc.
relating to the products FLEXALL
454 and FLEXALL 5000 (3)
Chattem, Inc. Employee Stock Ownership
Plan dated August 25, 1989 (4)
22
<PAGE>
Exhibit
Number Description of Exhibit References
- ------- --------------------------------------- ------------
10 Chattem, Inc. Savings and Investment
Plan dated June 11, 1990 (5)
Non-Competition and Severance Agree-
ments as Amended -
Zan Guerry
Robert E. Bosworth (6) and (16)
Lease Agreement between Atlantis Real
Estate Corporation and Chattem
(Canada) Inc. and Chattem, Inc. for Unit
1, 2220 Argentia Road, Mississauga,
Ontario, Canada (7)
Lease Agreement between Guildhall
Property Holdings Limited and Chattem
(U.K.) Limited for Unit 7, Ringway
Centre, Edison Road, Basingstoke,
Hampshire, England (7)
Chattem, Inc. Non-Statutory Stock Option
Plan - 1993 (8)
Manufacturing Agreement dated May 12,
1993 between Chattem, Inc. and Procter
& Gamble Pharmaceuticals, Inc. relating
to NORWICH Aspirin products (9)
Stock Purchase Agreement dated June 11,
1993 between Chattem, Inc. and First
Union Capital Partners, Inc. (13)
Registration Agreement dated June 11,
1993 between Chattem, Inc. and First
Union Capital Partners, Inc. (13)
23
<PAGE>
Exhibit
Number Description of Exhibit References
- ------- --------------------------------------- ------------
10 Chattem, Inc. Non-Statutory Stock Option
Plan - 1994 (10)
Chattem, Inc. Non-Statutory Stock
Option Plan for Non-Employee Directors
- 1994 (11)
Asset Purchase and Sale Agreement dated
May 12, 1994 between The Procter &
Gamble Company and Signal Investment
& Management Co. for the BENZODENT business (12)
Purchase Agreement dated June 10, 1994
between Chattem, Inc.and Kidder,
Peabody & Co. Incorporated (13)
Note Registration Rights Agreement dated
June 17, 1994 between Chattem, Inc.
and Kidder, Peabody & Co. Incorporated (13)
Warrant Registration Rights Agreement
dated June 17, 1994 between Chattem,
Inc. and Kidder, Peabody & Co.
Incorporated (13)
Asset Purchase and Sale Agreement dated
June 17, 1994 between Sterling
Winthrop Inc. and Signal Investment
& Management Co. for the PHISODERM business (13)
24
<PAGE>
Exhibit
Number Description of Exhibit References
- ------- --------------------------------------- ------------
Renewal Lease Agreement dated
December 5, 1994 between Atlantis Real
Estate Corporation and Chattem
(Canada) Inc. and Chattem, Inc. for Unit
1, 2220 Argentia Road, Mississauga,
Ontario, Canada (14)
Agreement of Purchase and Sales dated
April 11, 1995, by and among Chattem
Chemicals, Inc., as buyer, Elcat, Inc., as
parent, and Chattem, Inc., as seller, of
Specialty Chemicals division (15)
Non-Competition and Severance
Agreements -
Gary M. Galante
B. Derrill Pitts
Charles M. Stafford (16)
Lease Agreements as amended dated
February 1, 1996 between Tammy
Development Company and Chattem,
Inc. for warehouse space at 3100
Williams Street, Chattanooga, Tennessee (16) and (18)
Asset Purchase Agreement dated April 29,
1996 between Martin Himmel Inc., seller,
and Chattem, Inc. and Subsidiaries,
purchaser, for the GOLD BOND business (17)
Credit Agreement dated April 29, 1996
among Chattem, Inc., as borrower,
Signal Investment & Management Co.,
as guarantor, NationsBank, N.A., as agent
and the lenders named therein (18)
25
<PAGE>
Exhibit
Number Description of Exhibit References
- ------- --------------------------------------- ------------
10 Credit Agreement dated April 29, 1996
(secondary working capital facility)
among Chattem, Inc., as borrower,
Signal Investment & Management Co.,
as guarantor, NationsBank, N.A., as
agent and the Lenders named therein. (18)
10 Asset Purchase Agreement dated June 6,
1996 between Campbell Laboratories,
Inc., seller, and Chattem, Inc. and Signal
Investment & Management Co., purchasers,
for the HERPECIN-L business. (18)
Amendment to the Credit Agreement
(HERPECIN-L Acquisition) dated June 6,
1996 among Chattem, Inc., as borrower,
Signal Investment & Management Co.,
as guarantor, NationsBank, N.A., as
agent and the Lenders named therein. (18)
11 Computation of Per Share Earnings
13 1996 Annual Report to Shareholders of
Chattem, Inc.
22 Subsidiaries of the Company
24 Consent of Independent Public
Accountants
26
<PAGE>
References:
- ----------
Previously filed as an exhibit to and incorporated by reference from:
(1) Form 10-K for the year ended May 31, 1986.
(2) Form 10-Q for the quarter ended February 28, 1987.
(3) Form 10-K for the year end May 31, 1989.
(4) Form S-8 Registration Statement (No. 33-30742).
(5) Form S-8 Registration Statement (No. 33-35386).
(6) Form 10-K for the year ended November 30, 1991.
(7) Form 10-K for the year ended November 30, 1992.
(8) Form S-8 Registration Statement (No. 33-55640).
(9) Form 10-K for the year ended November 30, 1993.
(10) Form S-8 Registration Statement (No. 33-78524).
(11) Form S-8 Registration Statement (No. 33-78522).
(12) Form 8-K dated May 12, 1994.
(13) Form S-2 Registration Statement (No. 33-80770).
(14) Form 10-K for the year ended November 30, 1994.
(15) Form 8-K dated April 11, 1995.
(16) Form 10-K for the year ended November 30, 1995.
(17) Form 8-K dated April 29, 1996.
(18) Form 10-K for the year ended November 30, 1996.
(b) There were no Form 8-K's filed with the Securities and Exchange
Commission during the three months ended November 30, 1996.
(d) The Financial Statements and the related report of independent public
accountants required to be filed with this report pursuant to Rule 3-10(a)
of Article 3 of Regulation S-X are incorporated by reference from pages 7
to 14 of Signal Investment & Management Co.'s Form 10-K for the fiscal year
ended November 30, 1996.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: February 22, 1997 CHATTEM, INC.
By: ____________________________________
Title: Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated:
Signature Title Date
- ----------------------- ------------------------------ ------------
_______________________ Chairman of the Board, 2/22/97
Zan Guerry President and Director
(Chief Executive Officer)
_______________________ Director 2/22/97
Samuel E. Allen
_______________________ Director 2/22/97
Louis H. Barnett
_______________________ Executive Vice President and 2/22/97
Robert E. Bosworth Chief Financial Officer and
Director (Principal Financial
and Accounting Officer)
_______________________ Director 2/22/97
Richard E. Cheney
_______________________ Director 2/22/97
Scott L. Probasco, Jr.
_______________________ Director 2/22/97
A. Alexander Taylor, II
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: February 22, 1997 CHATTEM, INC.
By: /s/ Robert E. Bosworth
----------------------------------------
Title: Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated:
Signature Title Date
- --------------------------- ------------------------------ ----------
/s/ Zan Guerry Chairman of the Board, 2/22/97
- --------------------------- President and Director
Zan Guerry (Chief Executive Officer)
/s/ Samuel E. Allen Director 2/22/97
- ---------------------------
Samuel E. Allen
/s/ Louis H. Barnett Director 2/22/97
- ---------------------------
Louis H. Barnett
/s/ Robert E. Bosworth Executive Vice President and 2/22/97
- --------------------------- Chief Financial Officer and
Robert E. Bosworth Director (Principal Financial
and Accounting Officer)
/s/ Richard E. Cheney Director 2/22/97
- ---------------------------
Richard E. Cheney
/s/ Scott L. Probasco, Jr. Director 2/22/97
- ---------------------------
Scott L. Probasco, Jr.
/s/ A. Alexander Taylor, II Director 2/22/97
- ---------------------------
A. Alexander Taylor, II
29
<PAGE>
CHATTEM, INC. AND SUBSIDIARIES
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------
10.1 Credit Agreement dated April 29, 1996 among Chattem, Inc.,
as borrower, Signal Investment & Management Co., as
guarantor, NationsBank, N.A., as agent, and the lenders
named therein
10.2 Credit Agreement dated April 29, 1996 (secondary working
capital facility) among Chattem, Inc., as borrower, Signal
Investment & Management Co., as guarantor, NationsBank, N.A.,
as agent, and the Lenders named therein
10.3 Asset Purchase Agreement dated June 6, 1996 between
Campbell Laboratories, Inc., seller, and Chattem, Inc.
and Signal Investment & Management Co., purchasers,
for the HERPECIN-L business
10.4 Amendment to the Credit Agreement dated June 6, 1996
(HERPECIN-L Acquisition) among Chattem, Inc., as borrower,
Signal Investment & Management Co., as guarantor,
NationsBank, N.A., as agent, and the Lenders named therein
10.5 First Amendment dated December 2, 1996 to Lease Agreements
dated February 1, 1996 between Tammy Development Company
and Chattem, Inc. for warehouse space at 3100 Williams
Street, Chattanooga, Tennessee
11 Computation of per share earnings
13 1996 Annual Report to Shareholders of Chattem, Inc.
22 Subsidiaries of the Company
24 Consent of Independent Public Accountants
30
<PAGE>
Exhibit 10
CLOSING DOCUMENTS
- --------------------------------------------------------------------------------
$61,500,000.00 CREDIT FACILITIES
BY AND AMONG
CHATTEM, INC.,
AS BORROWER
AND
THE DOMESTIC SUBSIDIARIES OF THE BORROWER,
AS GUARANTORS
AND
NATIONSBANK, N.A.,
AS AGENT
AND
THE LENDERS
APRIL 29, 1996
- --------------------------------------------------------------------------------
VOLUME 1 OF 2 MOORE & VAN ALLEN, PLLC
<PAGE>
Index - Closing Documents
$61,500,000.00 Credit Facilities
dated as of April 29, 1996 by and among
Chattem, Inc., Borrower
and
The Domestic Subsidiaries of the Borrower, Guarantors
and
NationsBank, N.A., Agent
and
the Lenders
- --------------------------------------------------------------------------------
LOAN DOCUMENTS TAB
Credit Agreement............................................................. 1
Working Capital Credit Agreement............................................. 2
Revolving Loan Notes......................................................... 3
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
Tranche A Term Loan Notes.................................................... 4
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
Tranche B Term Loan Notes.................................................... 5
- NationsBank, N.A.
- Creditanstalt Bankverein
- Prime Income Trust/Dean Witter
- Van Kampen American Capital Prime Rate Income Trust
<PAGE>
Revolving Loan Notes - Working Capital Facility.............................. 6
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
COLLATERAL DOCUMENTS - PERSONAL PROPERTY
Security Agreement........................................................... 7
Aircraft Mortgage and Security Agreement..................................... 8
Assignment of Cash Collateral and Security Agreement......................... 9
Pledge Agreement............................................................. 10
Stock Certificates and Stock Powers.......................................... 11
- Signal Investment & Management Co.
- Chattem (Canada) Inc.
- Chattem (U.K.) Limited
- Elcat, Inc.
UCC-1 Financing Statements................................................... 12
A. CHATTEM, INC.
- Tennessee Secretary of State
(File copy not available at time of binding)
- California Secretary of State
- New Jersey Secretary of State
- Hawaii Bureau of Conveyances
- Rhode Island Secretary of State
- New York Secretary of State
- Orange County, New York
- Cortland County, New York
- North Carolina Secretary of State
- Iredell County, North Carolina
- Wisconsin Secretary of State
- Illinois Secretary of State
- Walker County, Georgia
- Rockdale County, Georgia
- Fulton County, Georgia
- Ohio Secretary of State
- Montgomery County, Ohio
- Butler County, Ohio
- Michigan Secretary of State
- 2 -
<PAGE>
- Virginia State Corporation Commission
- Henrico County, Virginia
- Richmond City, Virginia
- Mississippi Secretary of State
(File copy not available at time of binding)
- Desoto County, Mississippi
B. SIGNAL INVESTMENT & MANAGEMENT CO.
- Delaware Secretary of State
- Tennessee Secretary of State
(File copy not available at time of binding)
Notice of Security Interest in Patents and Trademarks (Domestic)............. 13
- Chattem, Inc.
- Signal Investment & Management Co.
Notice of Security Interest in Trademarks (Canadian)......................... 14
- Chattem, Inc.
- Signal Investment & Management Co.
COLLATERAL DOCUMENTS - REAL PROPERTY
Fee Property - Chattanooga, Tennessee........................................ 15
- Deed of Trust and Security Agreement
- Title Insurance Policy
- UCC Fixture Filing
- Zoning Letter
- Survey/Flood Certification
Landlord/Bailee Waivers...................................................... 16
- Tennessee (Landlord/Phase I, Phase II-A and Phase II-B,
South Broad Street Center, and 3110 South Broad
Street, Chattanooga)
- Tennessee (Bailee/520 West 38th Street, Chattanooga)
- California (Bailee/1651 South Carlos Avenue, Ontario)
CORPORATE DOCUMENTS
Secretary's Certificate including Incumbency Certificate
of Chattem, Inc......................................................... 17
- Articles of Incorporation
- Bylaws
- Resolutions
- Good Standing Certificate
- 3 -
<PAGE>
Secretary's Certificate including Incumbency Certificate
of Signal Investment & Management Co. .................................. 18
- Articles of Incorporation
- Bylaws
- Resolutions
- Good Standing Certificate
Officer's Certificate of Borrower............................................ 19
OTHER
First Chicago Termination Letter............................................. 20
Miller & Martin Legal Opinion................................................ 21
Lytle, Soule & Curlee Legal Opinion.......................................... 22
Hart-Scott-Rodino Letter..................................................... 23
Solvency Opinion............................................................. 24
Certified Copy of Subordinated Debt Documents................................ 25
Third Party Consents......................................................... 26
(a) Consent of Martin Himmel, Inc. and Jeffrey S. Himmel to
collateral assignment of Purchase Agreement
(b) Consent of Pharma Tech Industries, Inc. to collateral
assignment of Manufacturing Agreement
(c) Consent of The Woolfoam Corporation to collateral
assignment of the Asset Sale and Purchase Agreement and of
the Inventory Purchase and Sale and Manufacturing Agreement
POST-CLOSING ASSIGNMENT
Assignment Agreement between NationsBank, N.A. and Ceres Finance Ltd......... 27
Tranche B Term Loan Note..................................................... 28
- Ceres Finance Ltd.
- 4 -
<PAGE>
CREDIT AGREEMENT
among
CHATTEM, INC.,
as Borrower,
DOMESTIC SUBSIDIARIES OF BORROWER,
as Guarantors,
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent
DATED AS OF APRIL 29, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods and Other Definitional
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . .25
1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . .26
SECTION 2
CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
2.1 Revolving Loans.. . . . . . . . . . . . . . . . . . . . . . .26
2.2 Term Loans. . . . . . . . . . . . . . . . . . . . . . . . . .28
2.3 Continuations and Conversions.. . . . . . . . . . . . . . . .29
2.4 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . .30
2.5 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS . . . . . . . . . . . . . . . . . . . .31
3.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.2 Place and Manner of Payments. . . . . . . . . . . . . . . . .31
3.3 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . .32
3.4 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
3.5 Payment in Full at Maturity . . . . . . . . . . . . . . . . .35
3.6 Computations of Interest and Fees . . . . . . . . . . . . . .35
3.7 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . .36
3.8 Allocation of Payments After Event of Default . . . . . . . .36
3.9 Sharing of Payments . . . . . . . . . . . . . . . . . . . . .37
3.10 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . .38
3.11 Inability To Determine Interest Rate. . . . . . . . . . . . .39
3.12 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . .39
3.13 Requirements of Law.. . . . . . . . . . . . . . . . . . . . .39
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
3.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . .43
3.16 Replacement of Lenders. . . . . . . . . . . . . . . . . . . .44
SECTION 4
GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
4.1 Guaranty of Payment . . . . . . . . . . . . . . . . . . . . .44
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . . .44
4.3 Modifications . . . . . . . . . . . . . . . . . . . . . . . .45
4.4 Waiver of Rights. . . . . . . . . . . . . . . . . . . . . . .46
4.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . .46
4.6 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . .46
4.7 Limitation of Guaranty. . . . . . . . . . . . . . . . . . . .47
4.8 Rights of Contribution. . . . . . . . . . . . . . . . . . . .47
- i -
<PAGE>
SECTION 5
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
5.1 Closing Conditions. . . . . . . . . . . . . . . . . . . . . .48
5.2 Conditions to All Extensions of Credit. . . . . . . . . . . .55
SECTION 6
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . .56
6.1 Financial Condition . . . . . . . . . . . . . . . . . . . . .56
6.2 No Material Change. . . . . . . . . . . . . . . . . . . . . .56
6.3 Organization and Good Standing. . . . . . . . . . . . . . . .56
6.4 Due Authorization . . . . . . . . . . . . . . . . . . . . . .56
6.5 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . .57
6.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . .57
6.7 Enforceable Obligations . . . . . . . . . . . . . . . . . . .57
6.8 No Default. . . . . . . . . . . . . . . . . . . . . . . . . .57
6.9 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . .57
6.10 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . .57
6.11 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .58
6.12 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . .58
6.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . .58
6.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
6.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . .59
6.16 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . .60
6.17 Government Regulation . . . . . . . . . . . . . . . . . . . .60
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . .60
6.19 Intellectual Property . . . . . . . . . . . . . . . . . . . .62
6.20 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .62
6.21 Investments . . . . . . . . . . . . . . . . . . . . . . . . .62
6.22 No Financing of Corporate Takeovers . . . . . . . . . . . . .62
6.23 Location of Collateral. . . . . . . . . . . . . . . . . . . .62
6.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .62
6.25 Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . .63
6.26 No Burdensome Restrictions. . . . . . . . . . . . . . . . . .63
6.27 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . .63
6.28 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . .63
6.29 Collateral Documents. . . . . . . . . . . . . . . . . . . . .63
6.30 Related Transactions. . . . . . . . . . . . . . . . . . . . .63
6.31 Representations and Warranties Incorporated from Purchase
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .63
6.32 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 7
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
7.1 Information Covenants . . . . . . . . . . . . . . . . . . . .64
7.2 Preservation of Existence and Franchises. . . . . . . . . . .68
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . .68
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . .68
7.5 Payment of Taxes and Other Indebtedness . . . . . . . . . . .68
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .69
7.7 Maintenance of Property . . . . . . . . . . . . . . . . . . .70
7.8 Performance of Obligations. . . . . . . . . . . . . . . . . .70
7.9 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . .70
7.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . .70
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7.11 Audits/Inspections. . . . . . . . . . . . . . . . . . . . . .71
7.12 Financial Covenants . . . . . . . . . . . . . . . . . . . . .71
7.13 Additional Credit Parties . . . . . . . . . . . . . . . . . .72
7.14 Interest Rate Protection Agreements . . . . . . . . . . . . .73
7.15 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . .73
7.16 Appraisal Reports . . . . . . . . . . . . . . . . . . . . . .73
SECTION 8
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
8.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . .74
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
8.3 Nature of Business. . . . . . . . . . . . . . . . . . . . . .74
8.4 Consolidation and Merger. . . . . . . . . . . . . . . . . . .75
8.5 Sale or Lease of Assets . . . . . . . . . . . . . . . . . . .75
8.6 Advances, Investments and Loans . . . . . . . . . . . . . . .75
8.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .75
8.8 Transactions with Affiliates. . . . . . . . . . . . . . . . .76
8.9 Fiscal Year; Organizational Documents . . . . . . . . . . . .76
8.10 Prepayments of Indebtedness . . . . . . . . . . . . . . . . .76
8.11 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . .76
8.12 Limitations . . . . . . . . . . . . . . . . . . . . . . . . .76
8.13 Sale Leasebacks . . . . . . . . . . . . . . . . . . . . . . .77
8.14 Negative Pledges. . . . . . . . . . . . . . . . . . . . . . .77
8.15 Capital Expenditures. . . . . . . . . . . . . . . . . . . . .77
8.16 Operating Leases. . . . . . . . . . . . . . . . . . . . . . .77
8.17 Payment Blockage Notice . . . . . . . . . . . . . . . . . . .77
SECTION 9
EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . .77
9.2 Acceleration; Remedies. . . . . . . . . . . . . . . . . . . .81
SECTION 10
AGENCY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . .82
10.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . .82
10.3 Exculpatory Provisions. . . . . . . . . . . . . . . . . . . .82
10.4 Reliance on Communications. . . . . . . . . . . . . . . . . .83
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . .83
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . .84
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . .84
10.8 Agent in Its Individual Capacity. . . . . . . . . . . . . . .85
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . .85
SECTION 11
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .85
11.2 Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . .86
11.3 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . .86
11.4 No Waiver; Remedies Cumulative. . . . . . . . . . . . . . . .89
11.5 Payment of Expenses; Indemnification. . . . . . . . . . . . .89
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11.6 Amendments, Waivers and Consents. . . . . . . . . . . . . . .90
11.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .91
11.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . .91
11.9 Defaulting Lender . . . . . . . . . . . . . . . . . . . . . .92
11.10 Survival of Indemnification and Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . .92
11.11 Governing Law; Venue. . . . . . . . . . . . . . . . . . . . .92
11.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . .93
11.13 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
11.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . .93
11.15 Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . .93
11.16 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . .93
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Existing Permitted Investments
Schedule 5.1(h) Mortgaged Properties and Leasehold Properties
Schedule 6.10 Indebtedness
Schedule 6.11 Litigation
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.23(a) Real Property Locations
Schedule 6.23(b) Personal Property Locations
Schedule 6.23(c) Chief Executive Offices
Schedule 7.6 Insurance
Schedule 8.2 Liens
Schedule 8.8 Affiliate Transactions
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1 Form of Notice of Borrowing
Exhibit 2.4 Form of Notice of Continuation/Conversion
Exhibit 2.5(a) Form of Revolving Loan Note
Exhibit 2.5(b) Form of Tranche A Term Loan Note
Exhibit 2.5(c) Form of Tranche B Term Loan Note
Exhibit 7.1(e) Form of Officer's Certificate
Exhibit 7.1(g) Form of Borrowing Base Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "CREDIT AGREEMENT"), is entered into as of
April 29, 1996 among CHATTEM, INC., a Tennessee corporation (the "BORROWER"),
each of the Borrower's Domestic Subsidiaries, individually a "GUARANTOR" and
collectively the "GUARANTORS"), the Lenders (as defined herein), and
NATIONSBANK, N.A., as agent for the Lenders (in such capacity, the "AGENT").
RECITALS
WHEREAS, the Borrower and the Guarantors have requested that the Lenders
provide a $55,000,000 credit facility to the Borrower to replace and refinance
certain credit facilities provided by The First National Bank of Chicago, as
agent and certain other lenders under the credit agreements dated as of June 17,
1994, making this Credit Agreement the New Credit Agreement under the Indenture
(as hereinafter defined); and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires. Defined terms
herein shall include in the singular number the plural and in the plural the
singular:
"ACQUIRED ASSETS" means, collectively, those assets acquired under and
pursuant to the Purchase Agreement.
"ADDITIONAL CREDIT PARTY" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.13.
"ADJUSTED BASE RATE" means the Base Rate plus the Applicable
Percentage.
"ADJUSTED EURODOLLAR RATE" means the Eurodollar Rate plus the
Applicable Percentage.
"AGENT" means NationsBank, N.A. or any successor administrative agent
appointed pursuant to Section 10.9.
<PAGE>
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such corporation or
(ii) to direct or cause direction of the management and policies of such
corporation, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, First Union Capital
Partners, Inc. shall not be deemed an Affiliate of the Borrower.
"AGENCY SERVICES ADDRESS" means NationsBank, N.A., NC1-001-15-04, 101
South Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services,
or such other address as may be identified by written notice from the Agent
to the Borrower.
"APPLICABLE PERCENTAGE" means:
(a) For Tranche B Term Loans which are (i) Eurodollar Loans, 3.25%
and (ii) Base Rate Loans, 2.25%.
(b) For Revolving Loans and Tranche A Term Loans, the appropriate
applicable percentages corresponding to the Leverage Ratio in effect
as of the most recent Calculation Date as shown below:
Applicable Applicable
Percentage For Percentage For
Pricing Leverage Eurodollar Base Rate
Level Ratio Loans Loans
----- ----- ----- -----
I < 4.0 to 1.0 2.25% 1.25%
II >= 4.0 to 1.0 but 2.50% 1.50%
< 4.5 to 1.0
III >= 4.5 to 1.0 but 2.75% 1.75%
< 5.0 to 1.0
IV >= 5.0 to 1.0 3.00% 2.00%
The Applicable Percentage for Revolving Loans and Tranche A Term Loans
shall, in each case, be determined and adjusted quarterly on the date (each
a "CALCULATION DATE") five Business Days after the date by which the
Borrower is required to provide the officer's certificate in accordance
with the provisions of Section 7.1(e); provided, however that (i) the
initial Applicable Percentage for Revolving Loans and Tranche A Term Loans
shall be based on Pricing Level III (as shown above) and shall remain at
Pricing Level III until the first Calculation Date subsequent to the
Closing Date and,
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<PAGE>
thereafter, the Pricing Level shall be determined by the then current
Leverage Ratio, and (ii) if the Borrower fails to provide the officer's
certificate required by Section 7.1(e) on or before the most recent
Calculation Date or fails to deliver a copy of such officer's certificate
to the Agency Services Address as required by Section 7.1(e), the
Applicable Percentage for Revolving Loans and Tranche A Term Loans from
such Calculation Date shall be based on Pricing Level IV until such time
that an appropriate officer's certificate is provided whereupon the Pricing
Level shall be determined by the then current Leverage Ratio. Each
Applicable Percentage shall be effective from one Calculation Date until
the next Calculation Date. Any adjustment in the Applicable Percentage
shall be applicable to all existing Loans as well as any new Loans made or
issued.
"ASSET DISPOSITION" means the disposition of any or all of the assets
of the Borrower, or any of its Subsidiaries, whether by sale, lease,
transfer or otherwise unless such disposition is permitted by the terms of
Section 8.5(a), (b) or (c) hereof.
"ASSIGNMENT OF CASH COLLATERAL ACCOUNT" means the assignment of cash
collateral account and security agreement by and between the Borrower and
the Agent dated as of the date hereof.
"BANKRUPTCY CODE" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"BASE RATE" means, for any day, the rate per annum (rounded upwards,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Rate in effect on such day PLUS 1/2 of 1%
or (b) the Prime Rate in effect on such day. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
manifest error) that it is unable after due inquiry to ascertain the
Federal Funds Rate for any reason, including the inability or failure of
the Agent to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on
the effective date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
"BASE RATE LOAN" means any Loan bearing interest at a rate determined
by reference to the Base Rate.
"BLIS-TO-SOL/SOLTICE SALE" means that certain sale pursuant to the
Blis-To-Sol/Soltice Sale Agreement.
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<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Borrower, Signal
and The Woolfoam Corporation, dated as of April 24, 1996.
"BORROWER" means the Person identified as such in the heading hereof,
together with any successors and permitted assigns.
"BORROWING BASE" means, as of any day, the sum, calculated in Dollars,
of (a) 80% of Eligible Receivables PLUS (b) 50% of Eligible Inventory in
each case as set forth in the most recent Borrowing Base Certificate
delivered to the Agent and the Lenders in accordance with the terms of
Section 7.1(g) PLUS (c) 100% of the balance in the Cash Collateral Account
PLUS (d) $3 million until August 31, 1996.
"BORROWING BASE CERTIFICATE" means a Borrowing Base Certificate
substantially in the form of EXHIBIT 7.1(g).
"BUSINESS DAY" means any day other than a Saturday, a Sunday, a legal
holiday or a day on which banking institutions are authorized or required
by law or other governmental action to close in Charlotte, North Carolina;
provided that in the case of Eurodollar Loans, such day is also a day on
which dealings between banks are carried on in U.S. dollar deposits in the
London interbank market.
"CALCULATION DATE" has the meaning set forth in the definition of
Applicable Percentage.
"CAPITAL EXPENDITURES" means all expenditures of the Credit Parties
and their Subsidiaries which, in accordance with GAAP, would be classified
as capital expenditures, including, without limitation, Capital Leases.
"CAPITAL LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"CASH COLLATERAL ACCOUNT" means that certain deposit account no.
2006266718 of the Borrower established with the Agent and assigned to the
Agent pursuant to the Assignment of Cash Collateral Account.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
dollar denominated (or with respect to Foreign Subsidiaries, U.S. dollar
denominated and non U.S. dollar denominated) time
- 4 -
<PAGE>
deposits and certificates of deposit of (i) any Lender and SunTrust Bank,
Chattanooga, N.A., (ii) any domestic (or with respect to Foreign
Subsidiaries, any domestic or nondomestic) commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 or (iii) any
bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "APPROVED BANK"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of acquisition,
(d) repurchase agreements with a bank or trust company (including any of
the Lenders and SunTrust Bank, Chattanooga, N.A.) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States of America
in which the Borrower shall have a perfected first priority security
interest (subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered
under the Investment Company Act of 1940, as amended, which are
administered by SunTrust Bank, Chattanooga, N.A. or reputable financial
institutions having capital of at least $500,000,000 and the portfolios of
which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"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 or (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.
"CLOSING DATE" means the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended, modified,
succeeded or replaced from time to time.
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<PAGE>
"COLLATERAL" means all collateral referred to in and covered by the
Collateral Documents.
"COLLATERAL DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Mortgage Documents, the Assignment of Cash Collateral
Account and such other documents executed and delivered in connection with
the attachment and perfection of the Lenders' security interests in the
assets of the Credit Parties, including, without limitation, UCC financing
statements and patent and trademark filings.
"COMMITMENT FEES" means the fees payable to the Lenders pursuant to
Section 3.4(a).
"COMMITMENTS" means the Revolving Committed Amount, the Tranche A Term
Loan Committed Amount and the Tranche B Term Loan Committed Amount.
"CREDIT DOCUMENTS" means this Credit Agreement, the Notes, any Joinder
Agreement, the Collateral Documents, the Fee Letter and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
"CREDIT PARTIES" means the Borrower and the Guarantors and "CREDIT
PARTY" means any one of them.
"CREDIT PARTY OBLIGATIONS" means, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders and the Agent, whenever
arising, under this Credit Agreement, the Notes, the Collateral Documents
or any of the other Credit Documents to which the Borrower or any other
Credit Party is a party and (b) all liabilities and obligations owing from
a Credit Party to any Lender, or any Affiliate of a Lender, arising under
interest rate protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or exchange rate
or commodity price hedging agreements (collectively, the "HEDGING
AGREEMENTS").
"DEBT ISSUANCE" means the issuance of any Indebtedness by a Credit
Party or any of its Subsidiaries, other than Indebtedness permitted by
Section 8.1.
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time
(a) has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement or Working Capital Credit
Agreement, (b) has failed to pay to the Agent or any Lender an amount owed
by such Lender pursuant to the terms of this Credit Agreement or Working
Capital Credit Agreement or (c) has been deemed
- 6 -
<PAGE>
insolvent or has become subject to a bankruptcy or insolvency proceeding or
to a receiver, trustee or similar official.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries of the Borrower that
are domiciled, incorporated or organized under the laws of any state of the
United States or the District of Columbia.
"DOLLARS" and "$" means dollars in lawful currency of the United
States of America.
"EBIT" means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring
gains or losses outside of the ordinary course of business) PLUS (b) an
amount which, in the determination of Net Income for such period has been
deducted for (i) Interest Expense for such period and (ii) total Federal,
state, foreign or other income taxes for such period, all as determined in
accordance with GAAP.
"EBITDA" means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring
gains or losses outside of the ordinary course of business) plus (b) an
amount which, in the determination of Net Income for such period has been
deducted for (i) Interest Expense for such period, (ii) total Federal,
state, foreign or other income taxes for such period and (iii) all
depreciation, amortization and other non-cash charges for such period, all
as determined in accordance with GAAP.
"EFFECTIVE DATE" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of
the Lenders) and on which the initial Loans shall have been made.
"ELIGIBLE ASSIGNEE" means (a) any Lender or Affiliate or subsidiary of
a Lender and (b) any other commercial bank, financial institution or
"accredited investor" (as defined in Regulation D of the Securities and
Exchange Commission) reasonably acceptable to the Agent and the Borrower.
"ELIGIBLE INVENTORY" means, as of any date of determination and
without duplication, the lower of (a) the aggregate book value (based on a
FIFO or a moving average cost valuation, consistently applied) or (b) fair
market value of all raw materials and finished goods inventory owned by the
Borrower, in either case, less appropriate reserves determined in
accordance with GAAP, but excluding in any event (i) inventory subject to
any Lien, other than Liens securing Credit Party Obligations (ii) inventory
which is not in good condition or fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions having
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<PAGE>
regulatory authority over such goods, (iii) inventory which is not useable
or saleable at prices approximating their cost in the ordinary course of
the Borrower's business (including without duplication the amount of any
reserves for obsolescence, unsalability or decline in value), (iv)
inventory located outside of the United States, (v) inventory located at a
location not owned or leased by the Borrower, (vi) inventory located at a
location leased by the Borrower or in a public warehouse facility with
respect to which the Agent shall not have received a landlord, bailee
and/or warehousemen's access and lien waiver satisfactory to the Agent,
(vii) inventory which is leased or on consignment, (viii) inventory
consisting of packaging materials and supplies, (ix) inventory which
consists of goods in transit, (x) inventory with respect to which the
Agent does not have a valid and perfected first-priority security interest
and (xi) inventory which fails to meet such other specifications and
requirements as may from time to time be established by the Agent in its
reasonable discretion.
"ELIGIBLE RECEIVABLES" means, at any time, the aggregate book value of
all accounts receivable, receivables, and obligations for payment created
or arising from the sale of inventory or the rendering of services in the
ordinary course of business (collectively, the "RECEIVABLES"), owned by or
owing to the Borrower, net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with the Borrower's
internal policies and in any event in accordance with GAAP, but excluding
in any event Receivables subject to any Lien, other than Liens securing
Credit Party Obligations Receivables which are more than 60 days past due
(net of reserves for bad debts in connection with any such Receivables),
Receivables not otherwise excluded by clause (ii) above but owing from an
account debtor having twenty percent (20%) of the balance owing by such
account debtor to the Borrower (calculated without taking into account any
credit balances of such account debtor) more than sixty (60) days past due,
Receivables evidenced by notes, chattel paper or other instruments, unless
such notes, chattel paper or instruments have been delivered to and are in
the possession of the Agent, Receivables owing by an account debtor which
is not solvent or is subject to any bankruptcy or insolvency proceeding of
any kind, Receivables owing by an account debtor located outside of the
United States (unless payment for the goods shipped is secured by an
irrevocable letter of credit in a form and from an institution acceptable
to the Agent), Receivables which are contingent or subject to offset,
deduction, counterclaim, dispute or other defense to payment, in each case
to the extent of such offset, deduction, counterclaim, dispute or other
defense, Receivables for which any direct or indirect Subsidiary of the
Borrower or any Affiliate of the Borrower is the account debtor,
Receivables representing a sale to the government of the United States of
America or any subdivision thereof unless the Borrower has complied (to the
satisfaction
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of the Agent), with respect to the granting of a security interest in such
Receivable, with the Federal Assignment of Claims Act or other similar
applicable law, (x) Receivables from any single account debtor and its
Affiliates which otherwise constitute Eligible Receivables comprising more
than twenty five percent (25%) of all Eligible Receivables and (xi)
Receivables which fail to meet such other specifications and requirements
as may from time to time be established by the Agent in its reasonable
discretion.
"ENVIRONMENTAL CLAIM" means any investigation, written notice,
violation, written demand, written allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding, or
written claim (whether administrative, judicial, or private in nature)
arising (a) pursuant to, or in connection with, an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal, remedial,
corrective, or other response action in connection with an Environmental
Law or other order of a Governmental Authority or (d) from any actual or
alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.
"ENVIRONMENTAL LAWS" means any current or future legal requirement of
any Governmental Authority pertaining to (a) the protection of health,
safety, and the indoor or outdoor environment, (b) the conservation,
management, or use of natural resources and wildlife, (c) the protection or
use of surface water and groundwater, (d) the management, manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, release, threatened release, abatement, removal, remediation or
handling of, or exposure to, any hazardous or toxic substance or material
or (e) pollution (including any release to air, land, surface water, and
groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 ET
SEQ., Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42
USC 6901 ET SEQ., Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USC 1251 ET SEQ., Clean Air Act of 1966, as
amended, 42 USC 7401 ET SEQ., Toxic Substances Control Act of 1976, 15 USC
2601 ET SEQ., Hazardous Materials Transportation Act, 49 USC App. 1801 ET
SEQ., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 ET
SEQ., Oil Pollution Act of 1990, 33 USC 2701 ET SEQ., Emergency Planning
and Community Right-to-Know Act of 1986, 42 USC 11001 ET SEQ., National
Environmental Policy Act of 1969, 42 USC 4321 ET SEQ., Safe Drinking Water
Act of 1974, as amended, 42 USC 300(f) ET SEQ., any analogous implementing
or successor law, and any amendment, rule, regulation, order, or directive
issued thereunder.
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<PAGE>
"EQUITY ISSUANCE" means any issuance by the Borrower to any Person of
(a) shares of its capital stock or other equity interests, (b) any shares
of its capital stock or other equity interests pursuant to the exercise of
options (other than stock issued to employees and directors pursuant to
employees or directors stock option plans) or warrants or (c) any shares of
its capital stock or other equity interests pursuant to the conversion of
any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect form time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA AFFILIATE" means an entity, whether or not incorporated, which
is under common control with any Credit Party or any of its Subsidiaries
within the meaning of Section 4001(a)(14) of ERISA, or is a member of a
group which includes any Credit Party or any of its Subsidiaries and which
is treated as a single employer under Sections 414(b), (c), (m), or (o) of
the Code.
"EURODOLLAR LOAN" means a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
"EURODOLLAR RATE" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:
Eurodollar Rate = London Interbank Offered Rate
-----------------------------------
1 - Eurodollar Reserve Percentage
"EURODOLLAR RESERVE PERCENTAGE" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate
of Eurodollar Loans is determined), whether or not Lender has any
Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and
as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
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"EVENT OF DEFAULT" has the meaning specified in Section 9.1.
"EXCESS CASH FLOW" means, with respect to any fiscal year period of
the Borrower and its Subsidiaries, on a consolidated basis, an amount equal
to (a) EBITDA for such period minus (b) Capital Expenditures for such
period minus (c) cash Interest Expense for such period minus (d) Federal,
state and other income taxes actually paid during such period minus (e)
Principal Amortization Payments made during such period minus (f) voluntary
prepayments made with respect to the Term Loans during such period minus
(g) increases in Working Capital for such period plus (h) decreases in
Working Capital for such period, minus (i) any cash gain from an Asset
Disposition (to the extent included in EBITDA and paid to the Lenders as a
mandatory prepayment pursuant to Section 3.3(b)(iii)).
"EXTENSION OF CREDIT" means, as to any Lender, the making of a Loan by
such Lender (or a participation therein by a Lender).
"FEDERAL FUNDS RATE" means for any day the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (b) if no such
rate is so published on such next preceding Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to the Agent on such day
on such transactions as determined by the Agent.
"FEE LETTER" means that certain letter agreement, dated as of April
10, 1996, between the Agent and the Borrower, as amended, modified,
supplemented or replaced from time to time.
"FIXED CHARGE COVERAGE RATIO" means, as of the end of each fiscal
quarter of the Borrower, for the twelve month period ending on such date,
with respect to the Borrower and its Subsidiaries on a consolidated basis,
the ratio of (a) EBITDA for the applicable period minus Capital
Expenditures for the applicable period to (b) the sum of (i) cash Interest
Expense for the applicable period plus (ii) Federal, state and other income
taxes paid in cash for the applicable period plus (iii) Scheduled Funded
Debt Payments for the applicable period.
"FOREIGN SUBSIDIARIES" means all Subsidiaries of the Borrower that are
not Domestic Subsidiaries.
"FUNDED DEBT" means, without duplication, the sum of (a) all
Indebtedness of the Borrower and its Subsidiaries for
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borrowed money (provided, however, for purposes of calculating Indebtedness
outstanding under this Credit Agreement and the Working Capital Credit
Agreement, the amount of such Indebtedness shall be deemed reduced by the
balance (if any) held in the Cash Collateral Account at the time of such
calculation), (b) all purchase money Indebtedness of the Borrower and its
Subsidiaries, (c) the principal portion of all obligations of the Borrower
and its Subsidiaries under Capital Leases, (d) commercial letters of credit
and the maximum amount of all performance and standby letters of credit
issued or bankers' acceptance facilities created for the account of the
Borrower or any of its Subsidiaries, including, without duplication, all
unreimbursed draws thereunder, (e) all Guaranty Obligations of the Borrower
and its Subsidiaries with respect to Funded Debt of another person, (f) all
Funded Debt of another entity secured by a Lien on any property of the
Borrower or any of its Subsidiaries whether or not such Funded Debt has
been assumed by a Borrower or any of its Subsidiaries, (g) all Funded Debt
of any partnership or unincorporated joint venture to the extent the
Borrower or one of its Subsidiaries is legally obligated or has a
reasonable expectation of being liable with respect thereto, net of any
assets of such partnership or joint venture and (h) the principal balance
outstanding under any synthetic lease, tax retention operating lease, off-
balance sheet loan or similar off-balance sheet financing product pursuant
to which a Borrower or any of its Subsidiaries is the obligor where such
transaction is considered borrowed money indebtedness for tax purposes but
is classified as an operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local, provincial
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"GUARANTOR" means each of the Domestic Subsidiaries of the Borrower
and each Additional Credit Party which has executed a Joinder Agreement,
together with their successors and assigns.
"GUARANTY OBLIGATIONS" means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations of any other Person in any manner, whether direct or
indirect, and including without limitation any obligation, whether or not
contingent, (a) to purchase any such Indebtedness or other obligation or
any property constituting security therefor, (b) to advance or provide
funds or other support for the payment or purchase of such indebtedness or
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obligation or to maintain working capital, solvency or other balance sheet
condition of such other Person (including, without limitation, maintenance
agreements, comfort letters, take or pay arrangements, put agreements or
similar agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation, or (d) to otherwise assure or hold
harmless the owner of such Indebtedness or obligation against loss in
respect thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Guaranty Obligation is
made.
"HAZARDOUS MATERIALS" means any substance, material or waste defined
or regulated in or under any Environmental Laws.
"HEDGING AGREEMENTS" has the meaning set forth in the definition of
Credit Party Obligations.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person to the extent of the value of
such property (other than customary reservations or retentions of title
under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations, including without limitation, intercompany
items, of such Person issued or assumed as the deferred purchase price of
property or services purchased by such Person which would appear as
liabilities on a balance sheet of such Person, (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, property owned or acquired
by such Person, whether or not the obligations secured thereby have been
assumed, (f) all Guaranty Obligations of such Person, (g) the principal
portion of all obligations of such Person under (i) Capital Leases and (ii)
any synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product of such Person where such
transaction is considered borrowed money indebtedness for tax purposes but
is classified as an operating lease in accordance with GAAP (collectively,
"TROLS"), (h) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements, or other
interest or exchange rate or commodity price hedging agreements, (i) the
maximum amount of all performance and standby letters of credit issued or
bankers' acceptances facilities created for the account of such Person
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<PAGE>
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (j) all preferred stock issued by such Person and required
by the terms thereof to be redeemed, or for which mandatory sinking fund
payments are due, by a fixed date and (k) the aggregate amount of
uncollected accounts receivable of such Person subject at such time to a
sale of receivables (or similar transaction) regardless of whether such
transaction is effected without recourse to such Person or in a manner that
would not be reflected on the balance sheet of such Person in accordance
with GAAP. The Indebtedness of any Person shall include the Indebtedness
of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with
respect thereto.
"INDENTURE" means that certain Indenture dated as of August 3, 1994
among the Borrower as issuer, Signal Investment & Management Co. as
guarantor and SouthTrust Bank of Alabama, National Association, as trustee,
as the same may be modified, supplemented or amended from time to time.
"INTEREST COVERAGE RATIO" means, as of the end of each fiscal quarter
of the Borrower, for the twelve month period ending on such date, with
respect to the Borrower and its Subsidiaries on a consolidated basis, the
ratio of (a) EBIT for the applicable period to (b) cash Interest Expense
for the applicable period.
"INTEREST EXPENSE" means, for any period, with respect to the Borrower
and its Subsidiaries on a consolidated basis, all interest expense,
including the interest component under Capital Leases, as determined in
accordance with GAAP.
"INTEREST PAYMENT DATE" means (a) as to Base Rate Loans, the last day
of each fiscal quarter of the Borrower and on the Revolving Loan Maturity
Date, the Tranche A Term Loan Maturity Date or the Tranche B Term Loan
Maturity Date, as applicable, and (b) as to Eurodollar Loans, on the last
day of each applicable Interest Period and on the Revolving Loan Maturity
Date, the Tranche A Term Loan Maturity Date or the Tranche B Term Loan
Maturity Date, as applicable.
"INTEREST PERIOD" means as to Eurodollar Loans, a period of one, two
or three months' duration, as the Borrower may elect, commencing, in each
case, on the date of the borrowing (including continuations and conversions
thereof); provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (except that where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (b) no Interest Period shall extend beyond the
Revolving Loan Maturity Date, the Tranche A Term Loan Maturity Date or the
Tranche B Term Loan Maturity Date, as applicable, (c) with regard to the
Term Loans, no Interest Period shall extend
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<PAGE>
beyond any Principal Amortization Payment Date unless the portion of
Tranche A Term Loans or the Tranche B Term Loans comprised of Base Rate
Loans together with the portion of Tranche A Term Loans or the Tranche B
Term Loans comprised of Eurodollar Loans with Interest Periods expiring
prior to the date such Principal Amortization Payment is due, is at least
equal to the amount of such Principal Amortization Payment due on such date
and (d) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall end on the last Business Day
of such calendar month.
"INVESTMENT" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of capital stock, bonds, notes, debentures,
partnership, joint venture or other ownership interests or other securities
of such other Person or (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than deposits made in connection
with the purchase of equipment or other assets in the ordinary course of
business) or (c) any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty Obligation incurred for
the benefit of such person.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in the
form of EXHIBIT 7.13.
"LEASEHOLD PROPERTIES" has the meaning set forth in Section 5.1(h).
"LENDER" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"LEVERAGE RATIO" means, as of the end of each fiscal quarter of the
Borrower, with respect to the Borrower and its Subsidiaries on a
consolidated basis, the ratio of (a) Funded Debt on such date to (b) EBITDA
for the twelve month period ending on such date.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including, without limitation,
any agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and any
lease in the nature thereof).
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<PAGE>
"LOAN" or "LOANS" means the Revolving Loans, the Tranche A Term Loans
and/or the Tranche B Term Loans (or a portion of any Revolving Loan, the
Tranche A Term Loans or the Tranche B Term Loans), individually or
collectively, as appropriate.
"LONDON INTERBANK OFFERED RATE" means, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Telerate Page 3750, the applicable rate shall be
the arithmetic mean of all such rates. If, for any reason, such rate is
not available, the term "LONDON INTERBANK OFFERED RATE" shall mean, with
respect to any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if
more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates.
"MATERIAL ADVERSE EFFECT" means a material adverse effect, after
taking into account applicable insurance (to the extent the provider
thereof has the financial ability to support its obligations with respect
thereto and is not disputing same), on (a) the operations, financial
condition, business or prospects of the Borrower and its Subsidiaries taken
as a whole, (b) the ability of a Credit Party to perform its respective
obligations under this Credit Agreement, or any of the other Credit
Documents, the Working Capital Credit Agreement or any of the other Working
Capital Credit Documents, (c) the validity or enforceability of this Credit
Agreement, or any of the other Credit Documents, the Working Capital Credit
Agreement or any of the other Working Capital Credit Documents, or the
rights and remedies of the Lenders hereunder or thereunder taken as a
whole, or (d) the Acquired Assets.
"MOODY'S" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"MORTGAGE DOCUMENTS" means the Mortgages, the Mortgage Policies and
such other documents and agreements executed or delivered in connection
with the Real Properties.
"MORTGAGE POLICIES" has the meaning set forth in Section 5.1(h).
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"MORTGAGES" has the meaning set forth in Section 5.1(h).
"MORTGAGED PROPERTIES" has the meaning set forth in Section 5.1(h).
"MULTIEMPLOYER PLAN" means a Plan covered by Title IV of ERISA which
is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of
ERISA.
"MULTIPLE EMPLOYER PLAN" means a Plan covered by Title IV of ERISA,
other than a Multiemployer Plan, which any Credit Party or any of its
Subsidiaries or any ERISA Affiliate and at least one employer other than a
Credit Party or any of its Subsidiaries or any ERISA Affiliate are
contributing sponsors.
"NET CASH PROCEEDS" means the gross cash proceeds (including cash
actually received by way of deferred payment pursuant to a promissory note,
receivable, or otherwise) received from an Asset Disposition, an Equity
Issuance, a Debt Issuance or Recovery Event net of (a) transaction costs
payable to third parties or (b) a good faith estimate of the taxes payable
with respect to such proceeds (including, without duplication, withholding
taxes).
"NET INCOME" means, for any period, the net income after taxes for
such period of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"NET WORTH" means, as of any date, shareholders' equity or net worth
of the Borrower and its Subsidiaries on a consolidated basis, as determined
in accordance with GAAP.
"NON-EXCLUDED TAXES" has the meaning set forth in Section 3.14.
"NOTE" or "NOTES" means the Revolving Loan Notes, the Tranche A Term
Loan Notes and/or the Tranche B Term Loan Notes, individually or
collectively, as appropriate.
"NOTICE OF BORROWING" means a request by the Borrower for a Revolving
Loan, in the form of EXHIBIT 2.1.
"NOTICE OF CONTINUATION/CONVERSION" means a request by the Borrower to
continue an existing Eurodollar Loan to a new Interest Period or to convert
a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar
Loan, in the form of EXHIBIT 2.5.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any property (whether real, personal or mixed) which
is not a Capital Lease other than any such lease in which that Person is
the lessor.
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"PARTICIPATION INTEREST" means the Extension of Credit by a Lender by
way of the issuance of or a purchase of a participation in any Loans as
provided in Section 3.9.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"PERMITTED ACQUISITION" means the acquisition of all of the capital
stock of another Person, all or substantially all of the assets of another
Person or a brand or product line of another Person, provided that each of
the following conditions are satisfied: (v) prior to such acquisition, the
Borrower shall deliver to the Agent and Lenders evidence reasonably
satisfactory to the Agent and Required Lenders demonstrating that after
giving effect to such acquisition on a pro forma basis, as if such
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 Parties and their Subsidiaries would have been in compliance
with all the financial covenants set forth in Section 7.12, (w)
simultaneously with any such acquisition, the Borrower shall have taken all
action required under applicable law, or reasonably requested by the Agent,
to grant to the Agent, for the benefit of the Lenders, a valid and
perfected first-priority security interest in all the assets acquired
pursuant to such acquisition, (x) the acquisition is consummated pursuant
to a negotiated acquisition agreement and involves the purchase of a
consumer product or product line similar to those manufactured, distributed
or sold by the Borrower as of the date hereof, or of a business that
manufactures, distributes or sells one or more consumer products or product
lines, similar to those manufactured, distributed or sold by the Borrower
as of the date hereof, (y) after giving effect to the acquisition, the
representations and warranties set forth in Section 6 hereof shall be true
and correct in all material respects on and as of the date of such
acquisition with the same effect as though made on and as of such date, and
(z) no Default or Event of Default exists and is continuing or would result
from such acquisition.
"PERMITTED INVESTMENTS" means Investments which are (a) cash or Cash
Equivalents, (b) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms, (c) Investments in a Domestic Subsidiary of a Credit
Party, (d) loans to directors, officers, employees, agents, customers or
suppliers in the ordinary course of business for reasonable business
expenses, not to exceed in the aggregate $500,000.00 at any one time, (e)
Investments subsequent to the Closing Date in (i) Chattem (Canada) Inc. not
to exceed $500,000.00 in the aggregate, (ii) Chattem (U.K.) Limited not to
exceed $500,000.00 in the aggregate, and (iii) HBA Insurance, Ltd. not to
exceed $500,000.00 in the aggregate, (f) Investments in Permitted
Acquisitions, including any
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<PAGE>
contingency payments associated therewith, not to exceed $3,000,000 in the
aggregate during the term of this Credit Agreement and (g) all those
existing Investments of the Borrower identified on Schedule 1.1(b) attached
hereto.
"PERMITTED REBORROWING CONDITIONS" means that each of the following
conditions is satisfied: (i) the sum of (A) the outstanding principal
balance of the Term Loans plus (B) the Revolving Committed Amount, is less
than $50,000,000, (ii) the Working Capital Committed Amount has been
terminated in its entirety and the Working Capital Credit Agreement has
been terminated, and (iii) neither Section 4.09 nor Section 10.02 of the
Indenture has been amended to reduce the $50,000,000 threshold amount
referred to therein.
"PERMITTED LIENS" means (a) Liens securing Credit Party Obligations,
(b) Liens for taxes not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the property
subject to any such Lien is not yet subject to foreclosure, sale or loss on
account thereof), (c) Liens in respect of property imposed by law arising
in the ordinary course of business such as materialmen's, mechanics',
warehousemen's, carrier's, landlords' and other nonconsensual statutory
Liens which are not due and payable or, if due and payable, are being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and as
to which the property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof), (d) pledges or deposits made
in the ordinary course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social security
programs, (e) Liens arising from good faith deposits in connection with or
to secure performance of tenders, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (other than obligations in
respect of the payment of borrowed money), (f) Liens arising from good
faith deposits in connection with or to secure performance of statutory
obligations and surety and appeal bonds, (g) easements, rights-of-way,
restrictions (including zoning restrictions), minor defects or
irregularities in title and other similar charges or encumbrances not, in
any material respect, impairing the use of the encumbered property for its
intended purposes, (h) judgment Liens that would not constitute an Event of
Default, (i) Liens in connection with Indebtedness allowed under Section
8.1(c), (j) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights as
to deposit accounts or other funds maintained with a creditor depository
institution and (k) Liens existing on the date hereof and identified on
SCHEDULE 8.2; provided that no such Lien shall extend to any property other
than the property subject thereto on the Closing Date.
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"PERSON" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any Governmental Authority.
"PLAN" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any Credit Party
or any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" within the meaning of Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means the Pledge Agreements, executed and
delivered by each of the applicable Credit Parties in favor of the Agent,
for the benefit of the Lenders, to secure their obligations under the
Credit Documents, as amended, modified, extended, renewed or replaced from
time to time.
"PRIME RATE" means the per annum rate of interest established from
time to time by the Agent as its Prime Rate. Any change in the interest
rate resulting from a change in the Prime Rate shall become effective as of
12:01 a.m. of the Business Day on which each change in the Prime Rate is
announced by the Agent. The Prime Rate is a reference rate used by the
Agent in determining interest rates on certain loans and is not intended to
be the lowest rate of interest charged on any extension of credit to any
debtor.
"PRINCIPAL AMORTIZATION PAYMENT" means a principal payment on the Term
Loans as set forth in Section 2.2(d).
"PRINCIPAL AMORTIZATION PAYMENT DATE" means the date a Principal
Amortization Payment is due.
"PURCHASE AGREEMENT" means that certain Asset Purchase Agreement, as
amended and modified from time to time, by and among the Borrower, Signal,
Martin Himmel Inc. and Jeffrey S. Himmel, dated as of April 10, 1996.
"REAL PROPERTIES" means the Mortgaged Properties.
"RECOVERY EVENT" means the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceed, condemnation award payable or
indemnification payments from other third parties by reasons of theft,
loss, physical destruction or damage, taking or similar event with respect
to any of their respective property or assets.
"REGULATION D, G, U, OR X" means Regulation D, G, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
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<PAGE>
"REPORTABLE EVENT" means a "reportable event" as defined in Section
4043 of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
"REQUIRED LENDERS" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 67% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the preceding
sentence, the term "Credit Exposure" as applied to each Lender shall mean
(a) at any time prior to the termination of the Commitments, the sum of (i)
the Revolving Loan Commitment Percentage of such Lender multiplied by the
Revolving Committed Amount, plus (ii) the Working Capital Revolving Loan
Commitment Percentage of such Lender multiplied by the Working Capital
Committed Amount plus (iii) the Tranche A Term Loan Commitment Percentage
of such Lender multiplied by the aggregate principal amount of Tranche A
Term Loans outstanding at such time, plus (iv) the Tranche B Term Loan
Commitment Percentage of such Lender multiplied by the aggregate principal
amount of Tranche B Term Loans outstanding at such time and (b) at any time
after the termination of the Commitments and the Working Capital Committed
Amount, the sum of (i) the principal balance of the outstanding Loans of
such Lender plus (ii) the principal balance of the outstanding Working
Capital Revolving Loans of such Lender.
"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation
or final, non-appealable determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or to which any of its material property is subject.
"REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each Lender, the
percentage identified as its Revolving Loan Commitment Percentage on
SCHEDULE 1.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"REVOLVING COMMITTED AMOUNT" means SEVENTEEN MILLION FIVE HUNDRED
THOUSAND DOLLARS ($17,500,000) or such lesser amount as the Revolving
Committed Amount may be reduced pursuant to Section 2.1(d) or Section 3.3.
"REVOLVING LOANS" means the Revolving Loans made to the Borrower
pursuant to Section 2.1.
"REVOLVING NOTE" or "REVOLVING NOTES" means the promissory notes of
the Borrower in favor of each of the
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Lenders evidencing the Revolving Loans provided pursuant to Section 2.1,
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, supplemented, extended, renewed or replaced from time
to time and as evidenced in the form of EXHIBIT 2.5(a).
"REVOLVING LOAN MATURITY DATE" means the earlier of (i) April 29, 2001
and (ii) the date on which the Tranche A Term Loans are repaid in full.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such division
in the business of rating securities.
"SCHEDULED FUNDED DEBT PAYMENTS" means, as of the date of
determination, for the Borrower and its Subsidiaries, on a consolidated
basis, the sum of all scheduled payments of principal on Funded Debt for
the applicable period ending on the date of determination (including the
principal component of payments due on Capital Leases during the applicable
period ending on the date of determination); it being understood that
Scheduled Funded Debt Payments shall not include voluntary prepayments or
the mandatory prepayments required pursuant to Section 3.3.
"SECURITY AGREEMENTS" means the Security Agreements, including without
limitation, a separate Security Agreement for aircraft, executed and
delivered by each of the Credit Parties in favor of the Agent for the
benefit of the Lenders to secure their obligations under the Credit
Documents, as such may be amended, modified, extended, renewed, restated or
replaced from time to time.
"SENIOR LEVERAGE RATIO" means as of the end of each fiscal quarter of
the Borrower, with respect to the Borrower and its Subsidiaries on a
consolidated basis, the ratio of (a) Funded Debt minus Subordinated Debt on
such date to (b) EBITDA for the twelve month period ending on such date.
"SIGNAL" means Signal Investment & Management Co., a Delaware
corporation, which is a wholly-owned subsidiary of the Borrower.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SOLVENT" means, with respect to any Person as of a particular date,
that on such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature in
the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature in their ordinary
course, (c) such Person is not engaged in a
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<PAGE>
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's assets would constitute unreasonably
small capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (d) the fair
value of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person and (e) the present fair saleable value of the assets of such Person
is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured.
In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
"SUBORDINATED DEBT" means the Indebtedness evidenced by the Indenture
or by the guarantees thereof.
"SUBSIDIARY" means, as to any Person, (a) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity in which such person directly or
indirectly through Subsidiaries has more than a 50% equity interest at any
time.
"TERM LOANS" means the Tranche A Term Loans and the Tranche B Term
Loans.
"TERMINATION EVENT" means (a) with respect to any Plan, the occurrence
of a Reportable Event or the substantial cessation of operations (within
the meaning of Section 4062(e) of ERISA); (b) the withdrawal of any Credit
Party or any of its Subsidiaries or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a substantial employer (as
such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan; (c) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section
4042 of ERISA; (e) any event or condition which might reasonably constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; or (f) the complete or
partial withdrawal of any Credit Party or any of its Subsidiaries or any
ERISA Affiliate from a Multiemployer Plan.
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<PAGE>
"TRANCHE A TERM LOANS" means the Term Loans made to the Borrower
pursuant to Section 2.2(a).
"TRANCHE A TERM LOAN COMMITMENT PERCENTAGE" means, for each Lender,
the percentage identified as its Tranche A Term Loan Commitment Percentage
on SCHEDULE 1.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 11.3.
"TRANCHE A TERM LOAN COMMITTED AMOUNT" means TWENTY MILLION DOLLARS
($20,000,000.00).
"TRANCHE A TERM LOAN MATURITY DATE" means April 29, 2001.
"TRANCHE A TERM LOAN NOTE" or "TRANCHE A TERM LOAN NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders evidencing
the Tranche A Term Loans provided pursuant to Section 2.2(a), individually
or collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time as
evidenced in the form of EXHIBIT 2.5(b).
"TRANCHE B TERM LOAN" means the Term Loans made to the Borrower
pursuant to Section 2.2(b).
"TRANCHE B TERM LOAN COMMITMENT PERCENTAGE" means, for each Lender,
the percentage identified as its Tranche B Term Loan Commitment Percentage
on SCHEDULE 1.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 11.3.
"TRANCHE B TERM LOAN COMMITTED AMOUNT" means SEVENTEEN MILLION FIVE
HUNDRED THOUSAND DOLLARS ($17,500,000.00).
"TRANCHE B TERM LOAN MATURITY DATE" means October 29, 2003.
"TRANCHE B TERM LOAN NOTE" or "TRANCHE B TERM LOAN NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders evidencing
the Tranche B Term Loans provided pursuant to Section 2.2(b), individually
or collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time as
evidenced in the form of EXHIBIT 2.5(c).
"TROLS" has the meaning set forth in the definition of Indebtedness.
"UNUSED COMMITMENT" means, for any period, the amount by which (a) the
then applicable aggregate Revolving Committed Amount exceeds (b) the daily
average sum for such period of the outstanding aggregate principal amount
of all Revolving Loans.
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<PAGE>
"WORKING CAPITAL" means, at any time, with respect to the Borrower and
its Subsidiaries on a consolidated basis, the excess of current assets
(excluding cash and Cash Equivalents) over current liabilities (excluding
the current portion of Funded Debt), as determined in accordance with GAAP.
"WORKING CAPITAL COMMITTED AMOUNT" means SIX MILLION FIVE HUNDRED
THOUSAND DOLLARS ($6,500,000) or such lesser amount as the Working Capital
Committed Amount may be reduced pursuant to Section 2.1(d) or Section 3.3
of the Working Capital Credit Agreement.
"WORKING CAPITAL CREDIT AGREEMENT" means that certain Working Capital
Credit Agreement dated as of the date hereof among the Borrower, the
Guarantors, NationsBank, N.A., as agent, and certain other lenders named
therein, providing for a $6.5 million working capital credit facility in
favor of the Borrower.
"WORKING CAPITAL CREDIT DOCUMENTS" means the Working Capital Credit
Agreement, the Working Capital Revolving Notes, the Collateral Documents,
the Fee Letter and all other related agreements and documents issued or
delivered thereunder or pursuant thereto.
"WORKING CAPITAL REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each
Lender, the percentage identified as its Working Capital Revolving Loan
Commitment Percentage on SCHEDULE 1.1(a) of the Working Capital Credit
Agreement, as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3 of the
Working Capital Credit Agreement.
"WORKING CAPITAL REVOLVING LOANS" means the revolving loans made to
the Borrower pursuant to Section 2.1 of the Working Capital Credit
Agreement.
"WORKING CAPITAL REVOLVING NOTE" or "WORKING CAPITAL REVOLVING NOTES"
means the promissory notes of the Borrower in favor of each of the Lenders
evidencing the Working Capital Revolving Loans provided pursuant to Section
2.1 of the Working Capital Credit Agreement, individually, or collectively,
as appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Agreement to "Articles", "Sections", "Schedules"
or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
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1.3 ACCOUNTING TERMS. Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All financial statements delivered to the Lenders hereunder
shall be accompanied by a statement from the Borrower that GAAP has not changed
since the most recent financial statements delivered by the Borrower to the
Lenders or if GAAP has changed describing such changes in detail and explaining
how such changes affect the financial statements. All calculations made for the
purposes of determining compliance with this Credit Agreement shall (except as
otherwise expressly provided herein) be made by application of GAAP applied on a
basis consistent with the most recent annual or quarterly financial statements
delivered pursuant to Section 7.1 (or, prior to the delivery of the first
financial statements pursuant to Section 7.1, consistent with the financial
statements described in Section 5.1(c)); provided, however, if (a) the Borrower
shall object to determining such compliance on such basis at the time of
delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) either Agent or the Required Lenders
shall so object in writing within 60 days after delivery of such financial
statements (or after the Lenders have been informed of the change in GAAP
affecting such financial statements, if later), then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) REVOLVING LOAN COMMITMENT. Subject to the terms and conditions
set forth herein, each Lender that has a Revolving Loan Commitment
Percentage severally agrees to make revolving loans (each a "REVOLVING
LOAN" and collectively the "REVOLVING LOANS") to the Borrower, in Dollars,
at any time and from time to time, during the period from and including the
Effective Date to but not including the Revolving Loan Maturity Date (or
such earlier date if the Revolving Committed Amount has been terminated as
provided herein); PROVIDED, HOWEVER, that (i) the sum of the aggregate
amount of Revolving Loans outstanding plus the aggregate amount of Working
Capital Revolving Loans outstanding shall not exceed the lesser of (x) the
sum of the Revolving Committed Amount plus the Working Capital Committed
Amount and (y) the Borrowing Base, and (ii) with respect to each individual
Lender, such Lender's outstanding Revolving Loans plus such Lender's
outstanding Working Capital Revolving Loans shall not exceed the sum of (x)
such Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount and (II) such Lender's Working
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Capital Revolving Loan Commitment Percentage of the Working Capital
Committed Amount.
(b) METHOD OF BORROWING FOR REVOLVING LOANS. By no later than 11:00
a.m. (i) one Business Day prior to the date of the requested borrowing of
Revolving Loans that will be Base Rate Loans or (ii) three Business Days
prior to the date of the requested borrowing of Revolving Loans that will
be Eurodollar Loans, the Borrower shall submit a written Notice of
Borrowing in the form of EXHIBIT 2.1 to the Agent setting forth (A) the
amount requested, (B) whether such Revolving Loans shall accrue interest at
the Adjusted Base Rate or the Adjusted Eurodollar Rate, (C) with respect to
Revolving Loans that will be Eurodollar Loans, the Interest Period
applicable thereto and (D) evidence that the Borrower has complied in all
respects with Section 5.2.
(c) FUNDING OF REVOLVING LOANS. Upon receipt of a Notice of
Borrowing, the Agent shall promptly inform the applicable Lenders as to the
terms thereof. Each such Lender shall make its Revolving Loan Commitment
Percentage of the requested Revolving Loans available to the Agent by 1:00
p.m. on the date specified in the Notice of Borrowing by deposit, in
Dollars, of immediately available funds at the offices of the Agent at its
principal office in Charlotte, North Carolina or at such other address as
the Agent may designate in writing. The amount of the requested Revolving
Loans will then be made available to the Borrower by the Agent by crediting
the account of the Borrower on the books of such office of the Agent, to
the extent the amount of such Revolving Loans are made available to the
Agent.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Revolving Loans hereunder; provided,
however, that the failure of any Lender to fulfill its obligations
hereunder shall not relieve any other Lender of its obligations hereunder.
Unless the Agent shall have been notified by any Lender prior to the date
of any such Revolving Loan that such Lender does not intend to make
available to the Agent its portion of the Revolving Loans to be made on
such date, the Agent may assume that such Lender has made such amount
available to the Agent on the date of such Revolving Loans, and the Agent
in reliance upon such assumption, may (in its sole discretion but without
any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Agent, the Agent shall be able to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent will promptly notify
the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Agent. The Agent shall also be entitled to recover from the
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made
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available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for such Revolving Loan pursuant to the
Notice of Borrowing and (ii) from a Lender at the Federal Funds Rate.
(d) REDUCTIONS OF REVOLVING COMMITTED AMOUNT. Upon at least three
Business Days' notice, the Borrower shall have the right to permanently
terminate or reduce the aggregate unused amount of the Revolving Committed
Amount at any time or from time to time; provided that (i) each partial
reduction shall be in an aggregate amount at least equal to $1,000,000 and
in integral multiples of $500,000 above such amount and (ii) no reduction
shall be made which would reduce the Revolving Committed Amount to an
amount less than the aggregate amount of outstanding Revolving Loans. In
addition, any repayment of Revolving Loans previously extended hereunder
shall result in an automatic reduction of the Revolving Committed Amount as
provided in Section 3.3(a) and Section 3.3(e) hereof; provided, however,
the automatic reduction requirement contained in this sentence shall
terminate upon satisfaction of the Permitted Reborrowing Conditions. Any
reduction in (or termination of) the Revolving Committed Amount shall be
permanent and may not be reinstated.
2.2 TERM LOANS.
(a) TRANCHE A TERM LOAN. Subject to the terms and conditions set
forth herein, each Lender that has a Tranche A Term Loan Commitment
Percentage severally agrees, on the Effective Date, to make a term loan
(collectively, the "TRANCHE A TERM LOANS") to the Borrower, in Dollars, in
an amount equal to such Lender's Tranche A Term Loan Commitment Percentage
of the Tranche A Term Loan Committed Amount; provided that the aggregate
amount of such Tranche A Term Loans made on the Effective Date shall not
exceed the Tranche A Term Loan Committed Amount. Once repaid, Tranche A
Term Loans cannot be reborrowed.
(b) TRANCHE B TERM LOAN. Subject to the terms and conditions set
forth herein, each Lender that has a Tranche B Term Loan Commitment
Percentage severally agrees, on the Effective Date, to make a term loan
(collectively, the "TRANCHE B TERM LOANS") to the Borrower, in Dollars, in
an amount equal to such Lender's Tranche B Term Loan Commitment Percentage
of the Tranche B Term Loans Committed Amount; provided that the aggregate
amount of such Tranche B Term Loans made on the Effective Date shall not
exceed the Tranche B Term Loan Committed Amount. Once repaid, Tranche B
Term Loans cannot be reborrowed.
(c) FUNDING OF TERM LOANS. On the Effective Date, each applicable
Lender will make its Tranche A Term Loan Commitment Percentage of the
Tranche A Term Loan Committed Amount and its Tranche B Term Loan Commitment
Percentage of the Tranche B
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Term Loan Committed Amount available to the Agent by deposit, in Dollars
and in immediately available funds, at the offices of the Agent at its
principal office in Charlotte, North Carolina or at such other address as
the Agent may designate in writing. The amount of the Term Loans will
then be made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office of the Agent, to the
extent the amount of such Term Loans are made available to the Agent. All
Term Loans on the Effective Date shall be Base Rate Loans. Thereafter, all
or any portion of the Term Loans may be converted into Eurodollar Loans in
accordance with the terms of Section 2.3.
(d) AMORTIZATION. The principal amount of the Term Loans shall be
repaid in quarterly payments in the amounts and on the dates set forth
below:
Tranche A Tranche B Term Loan
Principal Amortization Term Loan Principal Principal Amortization
Payment Dates Amortization Payment Payment
- ---------------------- -------------------- ----------------------
August 31, 1996 $625,000 $43,750
November 30, 1996 $625,000 $43,750
February 28, 1997 $625,000 $43,750
May 31, 1997 $625,000 $43,750
August 31, 1997 $875,000 $43,750
November 30, 1997 $875,000 $43,750
February 28, 1998 $875,000 $43,750
May 31, 1998 $875,000 $43,750
August 31, 1998 $1,000,000 $43,750
November 30, 1998 $1,000,000 $43,750
February 28, 1999 $1,000,000 $43,750
May 31, 1999 $1,000,000 $43,750
August 31, 1999 $1,250,000 $43,750
November 30, 1999 $1,250,000 $43,750
February 28, 2000 $1,250,000 $43,750
May 31, 2000 $1,250,000 $43,750
August 31, 2000 $1,250,000 $43,750
November 30, 2000 $1,250,000 $43,750
February 28, 2001 $1,250,000 $43,750
May 31, 2001 $1,250,000 $43,750
August 31, 2001 $1,662,500
November 30, 2001 $1,662,500
February 28, 2002 $1,662,500
May 31, 2002 $1,662,500
August 31, 2002 $1,662,500
November 30, 2002 $1,662,500
February 28, 2003 $1,662,500
May 31, 2003 $1,662,500
August 31, 2003 $1,662,500
October 29, 2003 $1,662,500
Total $20,000,000 $17,500,000
2.3 CONTINUATIONS AND CONVERSIONS. Subject to the terms of Section
5.2, the Borrower shall have the option, on any Business Day, to continue in
existence Eurodollar Loans for a subsequent Interest Period, to convert Base
Rate Loans into Eurodollar Loans
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or to convert Eurodollar Loans into Base Rate Loans; provided, however, that (a)
each such continuation or conversion must be requested by the Borrower pursuant
to a written Notice of Continuation/Conversion, in the form of EXHIBIT 2.3, in
compliance with the terms set forth below, (b) except as provided in Section
3.12, Eurodollar Loans may only be continued or converted into Base Rate Loans
on the last day of the Interest Period applicable thereto, (c) Eurodollar Loans
may not be continued nor may Base Rate Loans be converted into Eurodollar Loans
during the existence and continuation of a Default or Event of Default and (d)
any request to extend a Eurodollar Loan that fails to comply with the terms
hereof or any failure to request an extension of a Eurodollar Loan at the end of
an Interest Period shall constitute a request for a conversion to a Base Rate
Loan on the last day of the applicable Interest Period. Each continuation or
conversion must be requested by the Borrower no later than 11:00 a.m. (i) one
Business Day prior to the date for a requested conversion of a Eurodollar Loan
to a Base Rate Loan or (ii) three Business Days prior to the date for a
requested extension of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent which shall set forth (A) whether
the Loans to be continued or converted are Revolving Loans, Tranche A Term Loans
or Tranche B Term Loans, (B) whether the Borrower wishes to continue or convert
such Loans and (C) if the request is to continue a Eurodollar Loan or convert a
Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto.
2.4 MINIMUM AMOUNTS. Each request for a borrowing, conversion or
continuation shall be subject to the requirements that (a) each Eurodollar Loan
shall be in a minimum amount of $1,000,000 and in integral multiples of $500,000
in excess thereof, (b) each Base Rate Loan shall be in a minimum amount of the
lesser of $1,000,000 (and integral multiples of $500,000 in excess thereof) or
the remaining amount available under the Revolving Committed Amount, the Tranche
A Term Loan Committed Amount or the Tranche B Term Loan Committed Amount, as
applicable and (c) no more than ten Eurodollar Loans shall be outstanding
hereunder at any one time. For the purposes of this Section, all Eurodollar
Loans with the same Interest Periods shall be considered as one Eurodollar Loan,
but Eurodollar Loans with different Interest Periods, even if they begin on the
same date, shall be considered as separate Eurodollar Loans.
2.5 NOTES.
(a) REVOLVING LOAN NOTES. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower to
each applicable Lender in the face amount of its Revolving Loan Commitment
Percentage of the Revolving Committed Amount in substantially the form of
EXHIBIT 2.5(a).
(b) TRANCHE A TERM LOAN NOTES. The Tranche A Term Loan made by each
Lender shall be evidenced by a duly executed
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promissory note of the Borrower to each applicable Lender in the face
amount of its Tranche A Term Loan Commitment Percentage of the Tranche A
Term Loan Committed Amount in substantially the form of EXHIBIT 2.5(b).
(c) TRANCHE B TERM LOAN NOTES. The Tranche B Term Loan made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrower to each applicable Lender in the face amount of its Tranche B Term
Loan Commitment Percentage of the Tranche B Term Loan Committed Amount in
substantially the form of EXHIBIT 2.5(c).
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 INTEREST.
(a) INTEREST RATE. All Base Rate Loans shall accrue interest at the
Adjusted Base Rate and all Eurodollar Loans shall accrue interest at the
Adjusted Eurodollar Rate.
(b) DEFAULT RATE OF INTEREST. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents (including without limitation
fees and expenses) shall bear interest, payable on demand, at a per annum
rate equal to 2% plus the rate which would otherwise be applicable (or if
no rate is applicable, then the rate for Revolving Loans that are Base Rate
Loans plus two percent (2%) per annum).
(c) INTEREST PAYMENTS. Interest on Loans shall be due and payable in
arrears on each Interest Payment Date. If an Interest Payment Date falls
on a date which is not a Business Day, such Interest Payment Date shall be
deemed to be the next succeeding Business Day (subject to accrual of
interest for the period of such extension), except that in the case of
Eurodollar Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day.
3.2 PLACE AND MANNER OF PAYMENTS. All payments of principal, interest,
fees, expenses and other amounts to be made by a Credit Party under this Credit
Agreement shall be received not later than 2:00 p.m. on the date when due, in
Dollars and in immediately available funds, by the Agent at its offices at
NationsBank Corporate Center, Charlotte, North Carolina. Payments received
after such time shall be deemed to have been received on the next Business Day.
The Borrower shall, at the time it makes any payment under this Agreement,
specify to the Agent, the Loans, fees or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it fails
to
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specify, or if such application would be inconsistent with the terms hereof, the
Agent shall, subject to Section 3.7, distribute such payment to the Lenders in
such manner as the Agent may deem appropriate). The Agent will distribute such
payments to the applicable Lenders on the date received if any such payment is
received prior to 2:00 p.m.; otherwise the Agent will distribute such payment to
the applicable Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would cause the
payment to be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day.
3.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that Eurodollar Loans may only be prepaid on
three Business Days' prior written notice to the Agent and any prepayment
of Eurodollar Loans will be subject to Section 3.15; each such partial
prepayment of Term Loans shall be in the minimum principal amount of
$1,000,000 and integral multiples of $1,000,000 in excess thereof;
voluntary prepayments with respect to the Term Loans shall be applied pro
rata between the outstanding Tranche A Term Loans and Tranche B Term Loans
(pro rata among the remaining Principal Amortization Payments in inverse
order of maturity thereof); no prepayment of Term Loans shall be made
within six (6) months of the Closing Date; any prepayment of Term Loans
made after six months of the Closing Date and on or before two years after
the Closing Date shall be subject to the prepayment penalty provisions of
Section 3.3(d) hereof; and once repaid, Loans may not be reborrowed and
any repayment of any Revolving Loan shall result in an automatic permanent
reduction of the Revolving Committed Amount equal to the amount of such
repayment; provided, however, the terms of this subclause (vi) shall not
apply if and so long as the Permitted Reborrowing Conditions are satisfied.
(b) MANDATORY PREPAYMENTS.
(i) REVOLVING COMMITTED AMOUNT. If at any time the sum of
the aggregate amount of Revolving Loans outstanding plus the aggregate
amount of Working Capital Revolving Loans outstanding exceeds the
lesser of (x) the sum of the Revolving Committed Amount plus the
Working Capital Committed Amount and (y) the Borrowing Base, the
Borrower shall immediately make a principal payment to the Agent in
the manner and in an amount necessary to be in compliance with Section
2.1.
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(ii) EXCESS CASH FLOW. Within 10 days after the date the
audited financial statements are required to be delivered pursuant to
Section 7.1(a) (commencing with the fiscal year ending November 30,
1996), the Borrower shall make a prepayment of the Loans in an amount
equal to 75% of the Excess Cash Flow earned during such prior fiscal
year (to be applied as set forth in Section 3.3(c) below).
(iii) ASSET DISPOSITIONS. Immediately upon receipt by the
Borrower or any of its Subsidiaries of proceeds from any Asset
Disposition, the Borrower shall forward 100% of the Net Cash Proceeds
of such Asset Disposition to the Lenders as a prepayment of the Loans
(to be applied as set forth in Section 3.3(c) below).
(iv) ISSUANCES OF EQUITY. Immediately upon receipt by the
Borrower or any of its Subsidiaries of proceeds from any Equity
Issuance (other than the issuance of shares of capital stock of the
Borrower in the amount of $6.5 million in connection with the
Borrower's purchase of the Acquired Assets), the Borrower shall
forward 50% of the Net Cash Proceeds of such Equity Issuance to the
Lenders as a prepayment of the Loans (to be applied as set forth in
Section 3.3(c) below).
(v) RECOVERY EVENT. Subject to the terms and conditions of
Section 7.6 hereof, immediately upon receipt by the Borrower or any of
its Subsidiaries of proceeds from any Recovery Event, the Borrower
shall forward 100% of the Net Cash Proceeds from such Recovery Event
to the Lenders as a prepayment of the Loans (to be applied as set
forth in Section 3.3(c) below).
(c) APPLICATION OF PREPAYMENTS. All amounts required to be paid
pursuant to Section 3.3(b)(i) shall be applied first to Working Capital
Revolving Loans and second to Revolving Loans. All amounts required to be
paid pursuant to Section 3.3(b)(ii), (iii), (iv) and (v) above shall be
applied, first pro rata between the outstanding Tranche A Term Loans and
the Tranche B Term Loans (which amounts shall then be applied to the
remaining Principal Amortization Payments due with respect to the Tranche A
Term Loans and the Tranche B Term Loans in inverse order of maturity
thereof), second to the Working Capital Revolving Loans (with a
corresponding reduction in the Working Capital Committed Amount) and third
to Revolving Loans (with a corresponding reduction in the Revolving
Committed Amount). One or more holders of the Tranche B Term Loans may
decline to accept a mandatory prepayment under Sections 3.3(b)(ii), (iii),
(iv) or (v) (to the extent there is sufficient Tranche A Term Loans
outstanding to be paid with such prepayment) in which case such declined
prepayments shall be allocated pro rata among the Tranche A Term Loans and
Tranche B Term Loans held by Lenders accepting such prepayments. Within
the parameters of the application set
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forth above, prepayments shall be applied first to Base Rate Loans and then
to Eurodollar Loans in direct order of Interest Period maturities. All
prepayments hereunder shall be subject to Section 3.15.
(d) PREPAYMENT PENALTY. In the event the Borrower voluntarily elects
to prepay any Term Loan after six months following the Closing Date as
permitted by Section 3.3(a) hereof and such prepayment is made with the
proceeds of any other Indebtedness and occurs on or before two years after
the Closing Date, the Borrower shall be obligated to pay a prepayment fee
equal to (i) one percent (1%) of the principal amount prepaid if the
prepayment occurs on or before one year after the Closing Date, and (ii)
one-half percent (1/2%) of the principal amount prepaid if the prepayment
occurs after one year following the Closing Date but on or before two years
after the Closing Date; provided, however, the prepayment fees referred to
in this Section 3.3(d) shall not apply to any voluntary prepayment made
with any part of the fifty percent (50%) portion of proceeds from an Equity
Issuance that the Borrower is permitted to retain pursuant to Section
3.3(b)(iv) hereof. After two years from the Closing Date, the Borrower may
prepay any Term Loan without a prepayment penalty or fee.
(e) REBORROWING. Once repaid, Loans cannot be reborrowed, any
repayment of Revolving Loans shall result in an automatic reduction of
Revolving Committed Amount, and any reduction in (or termination of) the
Revolving Committed Amount shall be permanent and may not be reinstated;
provided, however, the terms of this Section 3.3(e) shall not apply if and
so long as the Permitted Reborrowing Conditions are satisfied.
3.4 FEES.
(a) COMMITMENT FEES. In consideration of the Revolving Committed
Amount being made available by the Lenders hereunder, the Borrower agrees
to pay to the Agent, for the pro rata benefit of each applicable Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount), a fee equal to one-half of one percent (.5%)
per annum on the Unused Commitment (the "COMMITMENT FEES"). The accrued
Commitment Fees shall commence to accrue on the Closing Date and shall be
due and payable in arrears on the last Business Day of each fiscal quarter
of the Borrower (as well as on the Revolving Loan Maturity Date and on any
date that the Revolving Committed Amount is reduced) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the first of
such dates to occur after the Closing Date.
(b) ADMINISTRATIVE FEES. The Borrower agrees to pay to the Agent,
for its own account, an annual fee as agreed to between the Borrower and
the Agent in the Fee Letter.
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3.5 PAYMENT IN FULL AT MATURITY.
(a) On the Revolving Loan Maturity Date, the entire outstanding
principal balance of all Revolving Loans, together with accrued but unpaid
interest and all other sums owing with respect thereto, shall be due and
payable in full, unless accelerated sooner pursuant to Section 9.
(b) On the Tranche A Term Loan Maturity Date, the entire outstanding
principal balance of all Tranche A Term Loans, together with accrued but
unpaid interest and all other sums owing with respect thereto, shall be due
and payable in full, unless accelerated sooner pursuant to Section 9.
(c) On the Tranche B Term Loan Maturity Date, the entire outstanding
principal balance of all Tranche B Term Loans, together with accrued but
unpaid interest and all other sums owing with respect thereto, shall be due
and payable in full, unless accelerated sooner pursuant to Section 9.
3.6 COMPUTATIONS OF INTEREST AND FEES.
(a) Except for Base Rate Loans, in which case interest shall be
computed on the basis of a 365 or 366 day year as the case may be (unless
the Base Rate is determined by reference to the Federal Funds Rate), all
computations of interest and fees hereunder shall be made on the basis of
the actual number of days elapsed over a year of 360 days. Interest shall
accrue from and include the date of borrowing (or continuation or
conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to conform
to and contract in strict compliance with applicable usury law from time to
time in effect. All agreements between the Lenders and the Borrower are
hereby limited by the provisions of this paragraph which shall override and
control all such agreements, whether now existing or hereafter arising and
whether written or oral. In no way, nor in any event or contingency
(including but not limited to prepayment or acceleration of the maturity of
any obligation), shall the interest taken, reserved, contracted for,
charged, or received under this Credit Agreement, under the Notes or
otherwise, exceed the maximum nonusurious amount permissible under
applicable law. If, from any possible construction of any of the Credit
Documents or any other document, interest would otherwise be payable in
excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this paragraph and such documents shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been
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excessive interest shall, without penalty, be applied to the reduction of
the principal amount owing on the Loans and not to the payment of interest,
or refunded to the Borrower or the other payor thereof if and to the extent
such amount which would have been excessive exceeds such unpaid principal
amount of the Loans. The right to demand payment of the Loans or any other
indebtedness evidenced by any of the Credit Documents does not include the
right to receive any interest which has not otherwise accrued on the date
of such demand, and the Lenders do not intend to charge or receive any
unearned interest in the event of such demand. All interest paid or agreed
to be paid to the Lenders with respect to the Loans shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term (including any renewal or extension) of the
Loans so that the amount of interest on account of such indebtedness does
not exceed the maximum nonusurious amount permitted by applicable law.
3.7 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
each Loan borrowing, each Working Capital Revolving Loan borrowing, each payment
or prepayment of principal of any Loan or the Working Capital Revolving Loan,
each payment of fees (other than the Administrative Fees retained by the Agent
for its own account), each reduction of the Revolving Committed Amount, each
reduction of the Working Capital Committed Amount, and each conversion or
continuation of any Loan or the Working Capital Revolving Loan, shall be
allocated pro rata among the relevant Lenders in accordance with the respective
Revolving Loan Commitment Percentages, Working Capital Revolving Loan Commitment
Percentages, Tranche A Term Loan Commitment Percentages and Tranche B Term Loan
Commitment Percentages, as applicable, of such Lenders (or, if the Commitments
or Working Capital Committed Amount of such Lenders have expired or been
terminated, in accordance with the respective principal amounts of their
outstanding Loans, Working Capital Revolving Loans and Participation Interests
of such Lenders); PROVIDED that, if any Lender shall have failed to pay its
applicable pro rata share of any Loan or Working Capital Revolving Loan, then
any amount to which such Lender would otherwise be entitled pursuant to this
Section shall instead be payable to the Agent; PROVIDED FURTHER, that in the
event any amount paid to any Lender pursuant to this Section is rescinded or
must otherwise be returned by the Agent, each Lender shall, upon the request of
the Agent, repay to the Agent the amount so paid to such Lender, with interest
for the period commencing on the date such payment is returned by the Agent
until the date the Agent receives such repayment at a rate per annum equal to,
during the period to but excluding the date two Business Days after such
request, the Federal Funds Rate, and thereafter, the Base Rate PLUS two percent
(2%) per annum.
3.8 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding any
other provisions of this Credit Agreement or the Working Capital Credit
Agreement, after the occurrence and during the continuance of an Event of
Default, all amounts
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collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or any of the Working Capital
Credit Documents or in respect of the Collateral shall be paid over or delivered
as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and Working Capital Credit Documents and any protective
advances made by the Agent with respect to the Collateral under or pursuant
to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent in its capacity as
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses, (including, without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents and Working Capital Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to the
Lenders hereunder and under the Working Capital Credit Agreement;
FIFTH, to the payment of the outstanding principal amount of the Loans
and Working Capital Revolving Loans, and to any principal amounts
outstanding under Hedging Agreements, pro rata, as set forth below;
SIXTH, to all other obligations which shall have become due and
payable under the Credit Documents and Working Capital Credit Documents,
pro rata, and not repaid pursuant to clauses "FIRST" through "FIFTH" above;
and
SEVENTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
outstanding Working Capital Revolving Loans and obligations under Hedging
Agreements held by such Lender bears to the aggregate then outstanding Loans,
Working Capital Revolving Loans and obligations under Hedging Agreements) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH,"
and "SIXTH" above.
3.9 SHARING OF PAYMENTS. The Lenders agree among themselves that,
except to the extent otherwise provided herein, in the event that any Lender
shall obtain payment in respect of any Loan or Working Capital Revolving
Loan, or any other obligation owing to such Lender under this Credit
Agreement or the Working Capital
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Credit Agreement through the exercise of a right of setoff, banker's lien or
counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, in excess of its pro rata
share of such payment as provided for in this Credit Agreement, such Lender
shall promptly purchase from the other Lenders for cash an interest in such
Loans or Working Capital Revolving Loans, and other obligations in such amounts,
and make such other adjustments from time to time, as shall be equitable to the
end that all Lenders share such payment in accordance with their respective
ratable shares as provided for in this Credit Agreement. The Lenders further
agree among themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker's lien, counterclaim or other
event as aforesaid shall be rescinded or must otherwise be restored, each Lender
which shall have shared the benefit of such payment shall, by repurchase of the
interest theretofore sold, return its share of that benefit (together with its
share of any accrued interest payable with respect thereto) to each Lender whose
payment shall have been rescinded or otherwise restored. The Borrower agrees
that any Lender so purchasing such an interest may, to the fullest extent
permitted by law, exercise all rights of payment, including setoff, banker's
lien or counterclaim, with respect to such interest as fully as if such Lender
were a holder of such Loan or Working Capital Revolving Loan or other obligation
in the amount of such interest. Except as otherwise expressly provided in this
Credit Agreement, if any Lender or the Agent shall fail to remit to the Agent or
any other Lender an amount payable by such Lender or the Agent to the Agent or
such other Lender pursuant to this Credit Agreement on the date when such amount
is due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.9 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 3.9 to share in the benefits of any recovery on such secured claim.
3.10 CAPITAL ADEQUACY. If, after the date hereof, any Lender has
determined that the adoption or the becoming effective of, or any change in, or
any change by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender 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 reducing the
rate of return on such Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender
could
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have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy),
then, upon notice from such Lender to the Borrower, the Borrower shall be
obligated to pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. Each determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto.
3.11 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period, the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Agent shall
promptly give telecopy or telephonic notice thereof to the Borrower and the
Lenders. If such notice is given (a) any Eurodollar Loans requested to be made
on the first day of such Interest Period shall be made as Base Rate Loans, (b)
any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurodollar Loans shall be converted to or continued as
Base Rate Loans and (c) any outstanding Eurodollar Loans shall be converted, on
the first day of such Interest Period, to Base Rate Loans. Until such notice
has been withdrawn by the Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Base Rate
Loans to Eurodollar Loans.
3.12 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it unlawful for
any Lender to make or maintain Eurodollar Loans as contemplated by this Credit
Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Agent (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Loans, such Lender shall then have a commitment only to make
a Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days or the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.15.
3.13 REQUIREMENTS OF LAW. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law)
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from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Eurodollar Loans made by it or its obligation to make
Eurodollar Loans, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by Section
3.14 (including Non-Excluded Taxes imposed solely by reason of any failure
of such Lender to comply with its obligations under Section 3.14(b)) and
changes in taxes measured by or imposed upon the overall net income, or
franchise tax (imposed in lieu of such net income tax), of such Lender or
its applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition (excluding any
tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, upon
notice to the Borrower from such Lender, through the Agent, in accordance
herewith, the Borrower shall be obligated to promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable, PROVIDED that, in any such case,
the Borrower may elect to convert the Eurodollar Loans made by such Lender
hereunder to Base Rate Loans by giving the Agent at least one Business Day's
notice of such election, in which case the Borrower shall promptly pay to such
Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 3.15. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 3.13, it shall provide prompt notice
thereof to the Borrower, through the Agent, certifying (x) that one of the
events described in this Section 3.13 has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this Section 3.13
submitted by such Lender, through the Agent, to the Borrower shall be conclusive
and binding on the parties hereto in the absence of manifest error. This
covenant shall survive the termination of
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this Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.14 TAXES.
(a) Except as provided below in this Section 3.14, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by or
imposed upon the overall net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes on the overall capital or net worth
of any Lender or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of net income taxes: (i) by the
jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax and
such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations, or received payment under or enforced, this
Credit Agreement or any Notes. If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED
TAXES") are required to be withheld from any amounts payable to an Agent or
any Lender hereunder or under any Notes, (A) the amounts so payable to an
Agent or such Lender shall be increased to the extent necessary to yield to
an Agent or such Lender (after payment of all Non-Excluded Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, PROVIDED, HOWEVER, that
the Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the requirements of
paragraph (b) of this Section 3.14 whenever any Non-Excluded Taxes are
payable by the Borrower, and (B) as promptly as possible thereafter the
Borrower shall send to such Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and
the Lenders for any incremental taxes, interest or
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penalties that may become payable by an Agent or any Lender as a result of
any such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i)(A) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (x) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without deduction
or withholding of any United States federal income taxes and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be, certifying that it is entitled to an
exemption from United States backup withholding tax;
(B) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Agent; or
(ii) in the case of any such Lender that is not a "bank" within
the meaning of Section 881(c)(3)(a) of the Internal Revenue Code, (A)
represent to the Borrower (for the benefit of the Borrower and the
Agent) that it is not a bank within the meaning of Section
881(c)(3)(a) of the Internal Revenue Code, (B) agree to furnish to the
Borrower, on or before the date of any payment by the Borrower, with a
copy to the Agent, two accurate and complete original signed copies of
Internal Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Internal Revenue Code with respect
to payments to be made under this Credit Agreement and any Notes (and
to deliver to the Borrower and the Agent two further copies of such
form on or before the date it expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Agent for filing and
completing such forms), and (C) agree, to the extent legally entitled
to
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do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent then such Lender shall be
exempt from such requirements. Each Person that shall become a Lender or a
participant of a Lender pursuant to Section 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the
forms, certifications and statements required pursuant to this subsection
(b); PROVIDED that in the case of a participant of a Lender, the
obligations of such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.
3.15 INDEMNITY. The Borrower promises to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Credit Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in
accordance with the provisions of this Credit Agreement and (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal
to (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. The agreements in this Section shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
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3.16 REPLACEMENT OF LENDERS. If any Lender delivers a notice to the
Borrower pursuant to Sections 3.10, 3.13 or 3.14, then the Borrower shall have
the right, if no Default or Event of Default then exists, to replace such Lender
(the "REPLACED LENDER") with one or more additional banks or financial
institutions (collectively, the "REPLACEMENT LENDER"), PROVIDED that (A) at the
time of any replacement pursuant to this Section 3.16, the Replacement Lender
shall enter into one or more assignment agreements substantially in the form of
EXHIBIT 11.3 pursuant to, and in accordance with the terms of, Section 11.3(b)
(and with all fees payable pursuant to said Section 11.3(b) to be paid by the
Replacement Lender) pursuant to which the Replacement Lender shall acquire all
of the rights and obligations of the Replaced Lender hereunder and, in
connection therewith, shall pay to the Replaced Lender in respect thereof an
amount equal to the sum of (a) the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Lender, and (b) all accrued, but
theretofore unpaid, fees owing to the Replaced Lender pursuant to Section 3.4,
and (B) all obligations of the Borrower owing to the Replaced Lender (including
all obligations, if any, owing pursuant to Section 3.10, 3.13 or 3.14, but
excluding those obligations specifically described in clause (A) above in
respect of which the assignment purchase price has been, or is concurrently
being paid) shall be paid in full to such Replaced Lender concurrently with such
replacement.
SECTION 4
GUARANTY
4.1 GUARANTY OF PAYMENT. Subject to Section 4.7 below, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Lender, each Affiliate of Lender that enters into a Hedging Agreement and the
Agent the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise). The Guarantors additionally, jointly and severally, unconditionally
guarantee to each Lender the timely performance of all other obligations under
the Credit Documents and Hedging Agreements. This Guaranty is a guaranty of
payment and not of collection and is a continuing guaranty and shall apply to
all Credit Party Obligations whenever arising.
4.2 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or the Hedging Agreements, or any other agreement or instrument
referred to therein, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Guarantor agrees that this Guaranty may be enforced by the Lenders without
the necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time
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of having recourse to the Notes or any other of the Credit Documents or any
collateral, if any, hereafter securing the Credit Party Obligations or otherwise
and each Guarantor hereby waives the right to require the Lenders to proceed
against the Borrower or any other Person (including a co-guarantor) or to
require the Lenders to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Guaranty until such time as
the Lenders (and any Affiliates of Lenders entering into Hedging Agreements)
have been paid in full, all Commitments under the Credit Agreement have been
terminated and no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor further agrees that
nothing contained herein shall prevent the Lenders from suing on the Notes or
any of the other Credit Documents or any of the Hedging Agreements or
foreclosing its security interest in or Lien on any collateral, if any, securing
the Credit Party Obligations or from exercising any other rights available to it
under this Credit Agreement, the Notes, any other of the Credit Documents, or
any other instrument of security, if any, and the exercise of any of the
aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of any of any Guarantor's obligations hereunder; it being
the purpose and intent of each Guarantor that its Guarantor's obligations
hereunder shall be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Borrower or by reason of the
bankruptcy or insolvency of the Borrower. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Credit Party
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee. The Credit Party Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors, on the
one hand, and the Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee.
4.3 MODIFICATIONS. Each Guarantor agrees that (a) all or any part of the
security now or hereafter held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Lenders shall
not have any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Credit
Party Obligations or the properties subject thereto; (c) the time or place of
payment of the Credit Party Obligations may be changed or extended, in whole or
in part, to a time certain or otherwise, and may be renewed or accelerated, in
whole or in part; (d) the
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Borrower and any other party liable for payment under the Credit Documents may
be granted indulgences generally; (e) any of the provisions of the Notes or any
of the other Credit Documents may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Borrower or any other party liable for the payment of the Credit Party
Obligations or liable upon any security therefor may be released, in whole or in
part, at, before or after the stated, extended or accelerated maturity of the
Credit Party Obligations, all without notice to or further assent by the
Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
4.4 WAIVER OF RIGHTS. Each Guarantor expressly waives: (a) notice of
acceptance of this Guaranty by the Lenders and of all extensions of credit to
the Borrower by the Lenders; (b) presentment and demand for payment or
performance of any of the Credit Party Obligations; (c) protest and notice of
dishonor or of default (except as specifically required in the Credit Agreement)
with respect to the Credit Party Obligations or with respect to any security
therefor; (d) notice of the Lenders obtaining, amending, substituting for,
releasing, waiving or modifying any security interest, lien or encumbrance, if
any, hereafter securing the Credit Party Obligations, or the Lenders'
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; (e) all other notices to which the Guarantor
might otherwise be entitled; and (f) demand for payment under this Guaranty.
4.5 REINSTATEMENT. The obligations of the Guarantors under this
Section 4 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the Credit
Party Obligations is rescinded or must be otherwise restored by any holder of
any of the Credit Party Obligations, whether as a result of any proceedings
in bankruptcy or reorganization or otherwise, and each Guarantor agrees that
it will indemnify the Agent and each Lender on demand for all reasonable
costs and expenses (including, without limitation, reasonable fees of
counsel) incurred by an Agent or such Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
4.6 REMEDIES. The Guarantors agree that, as between the Guarantors, on
the one hand, and the Agent and the Lenders, on the other hand, the Credit
Party Obligations may be declared to be forthwith due and payable as provided
in Section 9 (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 9) notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing
such Credit Party Obligations from becoming automatically due and payable) as
against any other Person and
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that, in the event of such declaration (or such Credit Party Obligations being
deemed to have become automatically due and payable), such Credit Party
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors. The Guarantors acknowledge and agree
that their obligations hereunder are secured in accordance with the terms of the
Security Agreements and the other Collateral Documents and that the Lenders may
exercise their remedies thereunder in accordance with their terms.
4.7 LIMITATION OF GUARANTY. Notwithstanding any provision to the contrary
contained herein or in any of the Credit Documents, to the extent the
obligations of any Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence hereof), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.8 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "EXCESS FUNDING GUARANTOR" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "GUARANTEED
OBLIGATIONS"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guaranteed Obligations; (ii) "EXCESS PAYMENT" shall mean, in
respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and
(iii) "PRO RATA SHARE", for the purposes of this Section 4.8, shall mean, for
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
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Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section 4.8 such subsequent Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the information pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor became
a Guarantor shall be deemed true as of the Closing Date).
SECTION 5
CONDITIONS PRECEDENT
5.1 CLOSING CONDITIONS. The obligation of the Lenders to enter into
this Credit Agreement and make the initial Extension of Credit is subject to
satisfaction of the following conditions (in form and substance acceptable to
the Lenders in their sole discretion):
(a) EXECUTED CREDIT DOCUMENTS. Receipt by the Agent of duly executed
copies of: (i) this Credit Agreement; (ii) the Notes; (iii) the Collateral
Documents and (iv) all other Credit Documents.
(b) CORPORATE DOCUMENTS. Receipt by the Agent of the following:
(i) CHARTER DOCUMENTS. Copies of the articles or certificates
of incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction
of its incorporation and certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of the
Effective Date.
(ii) BYLAWS. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(iii) RESOLUTIONS. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by
a secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Effective Date.
(iv) GOOD STANDING. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other
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jurisdiction in which the failure to so qualify and be in good
standing would have a Material Adverse Effect on the business or
operations of a Credit Party in such jurisdiction and (B) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) INCUMBENCY. An incumbency certificate of each Credit
Party certified by a secretary or assistant secretary to be true
and correct as of the Effective Date.
(c) FINANCIAL STATEMENTS. Receipt by the Agent and the Lenders of
the consolidated financial statements of Martin Himmel Inc. ("Martin
Himmel") for each of the three years ending December 31, 1993, 1994 and
1995, including balance sheets and income and cash flow statements, in each
case audited by Ernst & Young and containing an unqualified opinion of such
firm that such statements present fairly, in all material respects, the
consolidated financial position and results of operations of Martin Himmel,
and are prepared in conformity with GAAP, the consolidated financial
statements of the Borrower for each of the three years ending November 30,
1993, 1994 and 1995, including balance sheets and income and cash flow
statements, in each case audited by Arthur Andersen and containing an
unqualified opinion of such firm that such statements present fairly, in
all material respects, the consolidated financial position and results of
operations of the Borrower, and are prepared in conformity with GAAP, a
satisfactory proforma consolidated balance sheet of the Borrower as of the
Closing Date giving effect to the acquisition of the Acquired Assets and
the transactions contemplated by the Purchase Agreement and reflecting
estimated purchase price accounting adjustments, prepared by the Borrower,
satisfactory projections (the "PROJECTIONS") for each twelve month period
through the twelve month period ending November 30, 1996 and such other
information relating to the Acquired Assets as the Agent may reasonably
require in connection with the structuring and syndication of credit
facilities of the type described herein.
(d) OPINION OF COUNSEL. Receipt by the Lenders of an opinion, or
opinions (which shall cover, among other things, authority, legality,
validity, binding effect, enforceability and attachment and perfection of
liens), satisfactory to the Agent, addressed to the Agent on behalf of the
Lenders and dated as of the Effective Date, from legal counsel to the
Credit Parties.
(e) AUDIT. Receipt by the Agent of a field examination, in form and
substance satisfactory to the Agent, of the accounts receivable, inventory,
payables, controls and systems of the Borrower and its Subsidiaries
(including the Acquired Assets).
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(f) APPRAISAL REPORT. Receipt by the Lenders of asset appraisal
reports with respect to trademarks and patents indicating a fair market
value for such assets of at least $150,000,000, and otherwise in form and
substance satisfactory to the Agent.
(g) PERSONAL PROPERTY COLLATERAL. The Agent shall have received, in
form and substance satisfactory to the Agent:
(i) searches of Uniform Commercial Code ("UCC") filings in
the jurisdiction of the chief executive office of each Credit Party
and each jurisdiction where any Collateral is located or where a
filing would need to be made in order to perfect the Lenders'
security interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens
exist other than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Lenders' security interest in the
Collateral;
(iii) searches of ownership of intellectual property in the
appropriate governmental offices and such patent/trademark/copyright
filings as requested by the Agent in order to perfect the Agent's
security interest in the Collateral;
(iv) all stock certificates evidencing the stock pledged to
the Agent pursuant to the Pledge Agreements, together with duly
executed in blank undated stock powers attached thereto; and
(v) all instruments and chattel paper in the possession of a
Credit Party together with allonges or assignments as may be necessary
or appropriate to perfect the Lenders' security interest in the
Collateral; and
(vi) all material contracts or agreements to which a Credit
Party is a party including, without limitation, the Purchase
Agreement and the Blis-To-Sol/Soltice Sale Agreement, together with
assignments and third party consents as may be necessary or
appropriate to perfect the Lenders' security interest in the
Collateral.
(h) REAL PROPERTY COLLATERAL. The Agent shall have received, in form
and substance satisfactory to the Agent:
(i) fully executed and notarized mortgages, deeds of
trust or deeds to secure debt (each a "MORTGAGE" and collectively the
"MORTGAGES") encumbering the fee interest of the Credit Parties in
each real property asset owned by a Credit Party set forth on SCHEDULE
5.1(h) (each a "MORTGAGED PROPERTY" and collectively the
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"MORTGAGED PROPERTIES"), together with such UCC-1 financing statements
as the Agent shall deem appropriate with respect to each such
Mortgaged Property;
(ii) an opinion of counsel (which counsel shall be satisfactory
to the Agent) in the state in which each Mortgaged Property is located
with respect to the enforceability of the form of Mortgage and
sufficiency of the form of UCC-1 financing statements to be recorded
or filed in such state and such other matters as the Agent may
request, in form and substance satisfactory to the Agent;
(iii) in the case of each leasehold estate of the Credit
Parties set forth on SCHEDULE 5.1(h) (each a "LEASEHOLD PROPERTY" and
collectively the "LEASEHOLD PROPERTIES"), such estoppel letters,
consents and waivers from the landlords of such real property as may
be reasonably required by the Agent, which estoppel letters shall be
in form and substance reasonably satisfactory to the Agent;
(iv) ALTA mortgagee title insurance policies (the "MORTGAGE
POLICIES") issued by title insurers satisfactory to the Agent (the
"TITLE INSURANCE COMPANY"), in amounts satisfactory to the Agent with
respect to all Real Properties, assuring the Agent that the applicable
Mortgages, as applicable, create valid and enforceable first priority
mortgage liens on the respective Real Properties, free and clear of
all defects and encumbrances except Permitted Liens which Mortgage
Policies shall be in form and substance satisfactory to the Agent and
containing such endorsements as shall be satisfactory to the Agent and
for any other matters that the Agent may request, and shall provide
for affirmative insurance and such reinsurance as the Agent may
request, all of the foregoing in form and substance satisfactory to
the Agent;
(v) certification from a registered engineer or land
surveyor in a form reasonably satisfactory to the Agent or other
evidence acceptable to the Agent that none of the improvements on
the Real Properties are located within any area designated by the
Director of the Federal Emergency Management Agency as a "special
flood hazard" area or if any improvements on the Mortgaged
Properties are located within a "special flood hazard" area,
evidence of a flood insurance policy from a company and in an
amount satisfactory to the Agent for the applicable portion of the
premises, naming the Agent for the benefit of the Lenders, as
mortgagee;
(vi) evidence satisfactory to the Agent that each of the Real
Properties, and the uses of the Real Properties, are in compliance
with all applicable laws,
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regulations and ordinances including without limitation health and
environmental protection laws, erosion control ordinances, storm
drainage control laws, doing business and/or licensing laws, zoning
laws (the evidence submitted as to zoning should include the zoning
designation made for each of the Real Properties, the permitted uses
of each such Real Properties under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building
setbacks) and laws regarding access and facilities for disabled
persons including, but not limited to, the federal Architectural
Barriers Act, the Fair Housing Amendments Act of 1988, the
Rehabilitation Act of 1973 and the Americans with Disabilities Act of
1990.
(i) AVAILABILITY. After giving effect to the initial Loans and
initial Working Capital Revolving Loans made on the Effective Date, the
lesser of (x) the sum of the Revolving Committed Amount and Working Capital
Committed Amount or (y) the Borrowing Base shall be at least $3,000,000 in
excess of the sum of the aggregate amount of the Revolving Loans
outstanding plus Working Capital Revolving Loans outstanding.
(j) EVIDENCE OF INSURANCE. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Borrower and its
Subsidiaries evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not limited
to, naming the Agent as sole loss payee on behalf of the Lenders.
(k) CORPORATE STRUCTURE. The corporate capital and ownership
structure of the Borrower and its Subsidiaries (after giving effect to the
purchase of the Acquired Assets) shall be satisfactory in form and
substance to the Agent.
(l) EQUITY INVESTMENT. Receipt by the Agent of evidence that a cash
equity investment of at least $6.5 million shall have been made in the
Borrower on the Closing Date in exchange for common stock of the Borrower
on terms that are satisfactory to the Agent, and subscription agreements
shall have been executed among the providers of such cash equity in a form
satisfactory to the Agent in its reasonable discretion.
(m) CERTAIN CONSENTS. Receipt by the Agent of evidence that all
governmental, shareholder and material third party consents (including,
without limitation, Hart-Scott-Rodino clearance, (ii) written consent of
all manufacturers party to manufacturing contracts with Martin Himmel Inc.
being acquired by Borrower or Signal pursuant to the Purchase Agreement or
other evidence satisfactory to the Agent that the consent of any
manufacturers is not required and (iii) written consent, if necessary in
the sole discretion of the Agent, of any existing lenders or bondholders)
and approvals necessary or desirable in connection with the acquisition of
the Acquired Assets and the related financings and other transactions
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contemplated hereby 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 acquisition of the Acquired Assets or such other transactions 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.
(n) MATERIAL ADVERSE EFFECT. There shall not have occurred a change
since November 30, 1995 that has had or could reasonably be expected to
have a Material Adverse Effect, including specifically without limitation
any such change resulting from any matter not disclosed in the Purchase
Agreement or resulting from a change in status of any matter disclosed in
the Purchase Agreement (including matters related to litigation, tax,
accounting, labor, insurance and pension liabilities).
(o) LITIGATION. There shall not exist any (i) order, decree,
judgment, ruling or injunction which restrains the consummation of the
acquisition of the Acquired Assets in the manner contemplated by the
Purchase Agreement or (ii) 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.
(p) OTHER INDEBTEDNESS. Receipt by the Agent of evidence that after
the acquisition of the Acquired Assets, the Borrower and its Subsidiaries
(A) shall have no borrowed money Indebtedness other than the Indebtedness
under the Credit Documents and Working Capital Credit Documents, the
Subordinated Debt and (iii) other indebtedness disclosed on SCHEDULE 6.10
attached hereto.
(q) SOLVENCY OPINION. Receipt by the Lenders of an opinion from an
independent auditor or appraiser acceptable to the Agent in usual and
customary form as to the financial condition, solvency and related matters
of the Borrower and its Subsidiaries, in each case after giving effect to
the acquisition of the Acquired Assets and the initial borrowings under the
Credit Documents.
(r) PURCHASE AGREEMENT. There shall not have been any material
modification, amendment, supplement or waiver to the Purchase Agreement
without the prior written consent of the Lenders, including, but not
limited to, any modification, amendment, supplement or waiver relating to
the amount or type of consideration to be paid in connection with the
acquisition of the Acquired Assets and the contents of all disclosure
schedules and exhibits, and the acquisition of the Acquired Assets shall
have been consummated in accordance with the terms of the Purchase
Agreement and the aggregate amount paid in connection with such acquisition
shall not exceed $39
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million. Receipt by the Agent of the final Purchase Agreement, together
with all exhibits and schedules thereto, certified by an officer of the
Borrower.
(s) BLIS-TO-SOL/SOLTICE SALE AGREEMENT. Receipt by the Agent of the
Blis-To-Sol/Soltice Sale Agreement, together with all exhibits and
schedules thereto, certified by an officer of the Borrower.
(t) CHANGE IN MARKET. The absence of any material adverse change in
the market for syndicated bank credit facilities similar in nature to the
transactions described herein or a material disruption of, or a material
adverse change in, financial, banking or capital market conditions.
(u) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate or certificates executed by the chief financial officer of the
Borrower as of the Effective Date 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 the Credit Documents and the
transactions contemplated 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 the Credit Documents, or could have or might be reasonably
expected to have a Material Adverse Effect, (D) the transactions
contemplated by the Purchase Agreement have been consummated in accordance
with the terms thereof, (E) the Projections (as defined in Section 5.1(c))
were prepared in good faith and using reasonable assumptions and (F)
immediately after giving effect to this Credit Agreement, the Working
Capital Credit Agreement, the other Credit Documents and all the
transactions contemplated herein or therein to occur on such date, (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 herein and in the other 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.
(v) FEES AND EXPENSES. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Fee Letter.
(w) ACCOUNTANT CERTIFICATE. Receipt from Arthur Andersen of a
calculation satisfactory to the Agent calculating the Fixed Charge Coverage
Ratio (as defined in the Indenture) after giving effect to the acquisition
of the Acquired Assets.
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(x) PAYOFF LETTER. Receipt by the Agent or its counsel of a payoff
letter acceptable to the Agent in connection with the replacement of The
First National Bank of Chicago credit facilities.
(y) OTHER. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to (after giving effect to the purchase
of the Acquired Assets), 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.
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 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 and (ii) 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 2.2;
(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), the sum of the
Revolving Loans outstanding shall not exceed the Revolving Commitment
Amount;
(f) SECTION 4.09 OF INDENTURE. The Borrower is entitled to obtain
such Loan or convert or continue such Loan, as the case may be, in
accordance with Section 4.09 of the Indenture, and in connection with any
new Revolving Loan the Agent is furnished with a calculation satisfactory
to the Agent from a nationally recognized accounting firm reasonably
satisfactory to the Agent computing the Fixed Charge Coverage Ratio (as
defined in the Indenture).
The delivery of each Notice of Borrowing and each Notice of Extension/Conversion
shall constitute a representation and warranty
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by the Borrower of the correctness of the matters specified in subsections (b),
(c), (d), (e) and (f) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 FINANCIAL CONDITION. The financial statements delivered to the
Lenders pursuant to Section 5.1(c)(ii), (a) have been prepared in accordance
with GAAP and (b) present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated financial condition, results of
operations and cash flows of the Credit Parties and their Subsidiaries as of
such date and for such periods. Since November 30, 1995, there has been no
sale, transfer or other disposition by the Borrower or any of its Subsidiaries
of any material part of the business or property of the Borrower or any of its
Subsidiaries except pursuant to the Blis-To-Sol/Soltice Agreement, and no
purchase or other acquisition by any of them of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated financial condition of the Borrower and its Subsidiaries, in each
case, which, is not reflected in the foregoing financial statements or in the
notes thereto.
6.2 NO MATERIAL CHANGE. Since November 30, 1995, (a) there has been no
development or event relating to or affecting Borrower or any of its
Subsidiaries which has had or would be reasonably expected to have a Material
Adverse Effect and (b) no dividends or other distributions have been declared,
paid or made upon the capital stock or other equity interest in Borrower or any
of its Subsidiaries nor, except as otherwise permitted under this Credit
Agreement, has any of the capital stock or other equity interest in a Credit
Party been redeemed, retired, purchased or otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING. The Borrower and each of its
Subsidiaries (a) is a corporation duly incorporated, validly existing and in
good standing under the laws of the State (or other jurisdiction) of its
incorporation, (b) is duly qualified and in good standing as a foreign
corporation authorized to do business in every jurisdiction where the failure to
be so qualified would have a Material Adverse Effect and (c) has the requisite
corporate power and authority to own its properties and to carry on its business
as now conducted and as proposed to be conducted.
6.4 DUE AUTHORIZATION. Each Credit Party (a) has the requisite corporate
power and authority to execute, deliver and perform this Credit Agreement and
the other Credit Documents to which it is a party and to incur the obligations
herein and therein provided for and (b) is duly authorized to, and has been
authorized by all necessary corporate action, to execute, deliver and perform
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this Credit Agreement and the other Credit Documents to which it is a party.
6.5 NO CONFLICTS. Neither the execution and delivery of the Credit
Documents, nor the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof by such
Credit Party will (a) violate or conflict with any provision of its articles or
certificate of incorporation or bylaws, (b) violate, contravene or materially
conflict with any Requirement of Law or any other law, regulation (including,
without limitation, Regulation U or Regulation X), order, writ, judgment,
injunction, decree or permit applicable to it, (c) violate, contravene or
conflict with contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other agreement
or instrument to which it is a party or by which it may be bound, the violation
of which could have or might be reasonably expected to have a Material Adverse
Effect, or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect to its properties.
6.6 CONSENTS. No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of a Credit Party is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Credit
Documents by a Credit Party, or if required, such consent, approval and
authorization has been obtained.
6.7 ENFORCEABLE OBLIGATIONS. This Credit Agreement and the other Credit
Documents have been duly executed and delivered and constitute legal, valid and
binding obligations of each Credit Party enforceable against such Credit Party
in accordance with their respective terms, except as may be limited by
bankruptcy or insolvency laws or similar laws affecting creditors' rights
generally or by general equitable principles.
6.8 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default in any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its properties is bound which default would have or
would be reasonably expected to have a Material Adverse Effect. No Default or
Event of Default has occurred or exists except as previously disclosed to the
Lenders.
6.9 OWNERSHIP. The Borrower and each of its Subsidiaries is the owner
of and has good and marketable title to all of its assets and none of such
assets are subject to any Lien other than Permitted Liens.
6.10 INDEBTEDNESS. The Borrower and its Subsidiaries have no Indebtedness
except (a) as disclosed in the financial statements
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referenced in Section 6.1, (b) as set forth on SCHEDULE 6.10 and (c) as
otherwise permitted by this Credit Agreement.
6.11 LITIGATION. Except as disclosed in SCHEDULE 6.11, there are no
actions, suits or legal, equitable, arbitration or administrative proceedings,
pending or, to the knowledge of any Credit Party, threatened against the
Borrower or any of its Subsidiaries which, if adversely determined, would have
or would be reasonably expected to have a Material Adverse Effect.
6.12 TAXES. Each of the Borrower and its Subsidiaries has filed, or
caused to be filed, all tax returns (federal, state, local and foreign) required
to be filed and paid (a) all amounts of taxes shown thereon to be due (including
interest and penalties) and (b) all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware of any proposed tax assessments
against it, any of its Subsidiaries or any other Credit Party.
6.13 COMPLIANCE WITH LAW. Each of the Borrower and its Subsidiaries is
in compliance with all Requirements of Law and all other laws, rules,
regulations, orders and decrees (including without limitation Environmental
Laws) applicable to it, or to its properties, unless such failure to comply
would not have or would not be reasonably expected to have a Material Adverse
Effect. No Requirement of Law would be reasonably expected to cause a Material
Adverse Effect.
6.14 ERISA. Except as would not result in a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination Event
could reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan; (iii) each Plan has been maintained, operated, and
funded in compliance with its own terms and in material compliance with the
provisions of ERISA, the Code, and any other applicable federal or state
laws; and (iv) no lien in favor or the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under
each Single Employer Plan (determined within the meaning of Section
401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
such Plans), whether or
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not vested, did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the current
value of the assets of such Plan allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties,
are reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower,
nor any of its Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the
Credit Parties, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Borrower or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided and
the employees participating) of the liability of the Borrower and its
Subsidiaries and each ERISA Affiliate for post-retirement welfare benefits
to be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA), net of all
assets under all such Plans allocable to such benefits, are reflected on
the Financial Statements in accordance with FAS 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in compliance in all material respects with
such sections.
6.15 SUBSIDIARIES. Set forth on SCHEDULE 6.15 is a complete and accurate
list of all Subsidiaries of each Credit Party. Information on SCHEDULE 6.15
includes jurisdiction of incorporation, the number of shares of each class of
capital stock or other equity interests outstanding, the number and percentage
of outstanding shares of each class owned (directly or indirectly) by such
Credit Party; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or purchase and all other similar rights
with respect thereto. The outstanding
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capital stock and other equity interests of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such Credit Party,
directly or indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents). Other than as
set forth in SCHEDULE 6.15, neither any Credit Party nor any Subsidiary thereof
has outstanding any securities convertible into or exchangeable for its capital
stock nor does any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to its capital stock.
6.16 USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Loans hereunder
will be used solely for the purposes specified in Section 7.10. None of the
proceeds of the Loans will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X or Regulation G, or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry "margin stock" or any "margin security" or for
any other purpose which might constitute this transaction a "purpose credit"
within the meaning of Regulation U, Regulation X, Regulation G or Regulation T.
None of the Credit Parties owns any "margin stock".
6.17 GOVERNMENT REGULATION. No Credit Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 or the Interstate Commerce Act, each as amended.
In addition, no Credit Party is an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as amended, or
controlled by such a company, or a "holding company," or a "Subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"Subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. No director, executive officer or
principal shareholder of the Borrower or any of its Subsidiaries is a director,
executive officer or principal shareholder of any Lender. For the purposes
hereof the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings assigned
thereto in Regulation O issued by the Board of Governors of the Federal Reserve
System.
6.18 ENVIRONMENTAL MATTERS. (a) Except as set forth on SCHEDULE 6.18.
(i) each of the Real Properties and all operations at the
Real Properties are in compliance with all applicable Environmental
Laws, and there is no violation of any Environmental Law with
respect to the Real Properties or the businesses operated by the
Borrower or any of its Subsidiaries (the "BUSINESSES"), and there
are no conditions relating to the Businesses, Real Properties that
could give rise to liability under any applicable Environmental
Laws.
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(ii) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real Properties
in amounts or concentrations that, if released, constitute or
constituted a violation of, or could give rise to liability under,
Environmental Laws.
(iii) Neither the Borrower nor any of its Subsidiaries has
received any written or oral notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding Hazardous
Materials or compliance with Environmental Laws with regard to any of
the Real Properties, Leasehold Properties or the Businesses, nor does
the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice is being threatened.
(iv) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated, stored
or disposed of at, on or under any of the Real Properties or any
other location, in each case by, or on behalf or with the
permission of, the Borrower or any of its Subsidiaries in a manner
that would reasonably be expected to give rise to liability under
any applicable Environmental Law.
(v) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened, under any Environmental Law to which the
Borrower or any of its Subsidiaries is or will be named as a party,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to the Borrower or any of its Subsidiaries, the Real
Properties or the Businesses.
(vi) There has been no release or threat of release of
Hazardous Materials at or from the Real Properties or arising from
or related to the operations (including, without limitation,
disposal) of the Borrower or any of its Subsidiaries in connection
with the Real Properties or otherwise in connection with the
Businesses.
(vii) Neither the Borrower nor any of its Subsidiaries has
assumed any liability of any Person (other than another Credit Party)
under any Environmental Law.
(b) The Borrower has adopted procedures that are designed to (i)
ensure that each Credit Party and their Subsidiaries, any of their
operations and each of the properties owned or leased by each Credit Party
and their
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Subsidiaries remains in compliance with applicable Environmental Laws and
(ii) minimize any liabilities or potential liabilities that each Credit
Party and their Subsidiaries, any of their operations and each of the
properties owned or leased by each Credit Party and their Subsidiaries may
have under applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or has the legal right to use, all trademarks, tradenames, copyrights,
technology, know-how and processes (the "INTELLECTUAL PROPERTY") necessary for
each of them to conduct its business as currently conducted except for those the
failure to own or have such legal right to use would not have or be reasonably
expected to have a Material Adverse Effect. Set forth on SCHEDULE 6.19 is a
list of all Intellectual Property owned by the Borrower and its Subsidiaries or
that the Borrower or one of its Subsidiaries has the right to use (which list
shall identify the Person that owns or has the right to use each such item of
Intellectual Property). Except as provided on SCHEDULE 6.19, no claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and to
the Credit Parties' knowledge the use of such Intellectual Property by the
Borrower or any of its Subsidiaries does not infringe on the rights of any
Person, except for such claims and infringements that in the aggregate, would
not have or be reasonably expected to have a Material Adverse Effect.
6.20 SOLVENCY. Each Credit Party is and, after consummation of the
transactions contemplated by this Credit Agreement, will be Solvent.
6.21 INVESTMENTS. All Investments of the Borrower and each of its
Subsidiaries are either Permitted Investments or otherwise permitted by the
terms of this Credit Agreement.
6.22 NO FINANCING OF CORPORATE TAKEOVERS. No proceeds of the Loans
hereunder have been or will be used to acquire, directly or indirectly, any
security in any transaction which is subject to Sections 13 or 14 of the
Securities Exchange Act of 1934, as amended (including, without limitation,
Sections 13(d) and 14(d) thereof) or to refinance any Indebtedness used to
acquire any such securities.
6.23 LOCATION OF COLLATERAL. Set forth on SCHEDULE 6.23(a) is a list of
all Real Properties and Leasehold Properties with street address, county and
state where located. Set forth on SCHEDULE 6.23(b) is a list of all locations
where any personal property of a Credit Party is located, including county and
state where located. Set forth on SCHEDULE 6.23(c) is the chief executive
office and principal place of business of each Credit Party.
6.24 DISCLOSURE. Neither this Agreement nor any financial statements
delivered to the Lenders nor any other document,
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certificate or statement furnished to the Lenders by or on behalf of any Credit
Party in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein or herein not misleading.
6.25 LICENSES, ETC. The Borrower and each of its Subsidiaries has
obtained and holds in full force and effect, all franchises, licenses,
permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which are
necessary for the operation of their respective businesses as presently
conducted.
6.26 NO BURDENSOME RESTRICTIONS. Neither the Borrower nor any Subsidiary
of the Borrower is a party to any agreement or instrument or subject to any
other obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
would have or be reasonably expected to have a Material Adverse Effect.
6.27 BROKERS' FEES. No Credit Party has any obligation to any Person in
respect of any finder's, broker's, investment banking or other similar fee in
connection with any of the transactions contemplated under the Credit
Documents.
6.28 LABOR MATTERS. There are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrower or any Subsidiary
of the Borrower and none of such Persons has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years.
6.29 COLLATERAL DOCUMENTS. The Collateral Documents create valid
security interests in, and first Liens on, the Collateral purported to be
covered thereby, which security interests and Liens are and will remain
perfected security interests and Liens, prior to all other Liens other than
Permitted Liens. Each of the representations and warranties made by the
Borrower and its Subsidiaries in the Collateral Documents is true and correct.
6.30 RELATED TRANSACTIONS. The closing of the acquisition of the
Acquired Assets will occur simultaneously with the making of the initial Loans
hereunder and no party has waived, without the consent of the Required Lenders,
any condition precedent to their obligations to close as set forth in the
Purchase Agreement. True and complete copies of the Purchase Agreement have
been delivered to each of the Lenders, together with a true and complete copy of
each document to be delivered at the closing of the acquisition of the Acquired
Assets.
6.31 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM PURCHASE AGREEMENT.
As of the Closing Date, each of the representations and warranties made in the
Purchase Agreement by each of the parties thereto is true and correct in all
material respects, and such representations and warranties are hereby
incorporated herein by
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reference with the same effect as though set forth in their entirety herein, as
qualified therein.
6.32 SENIOR DEBT. The Loans are Senior Debt under Article 10.02 of the
Indenture, meaning the Agent, for the benefit of the Lenders, shall have all of
the rights and privileges of a holder of Senior Debt under the Indenture,
including but not limited to, the rights set forth in Article 10 of the
Indenture.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated:
7.1 INFORMATION COVENANTS. The Borrower will furnish, or cause to be
furnished, to the Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any
event within 90 days after the close of each fiscal year of the Borrower, a
consolidated and consolidating balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal year, together
with related consolidated and consolidating statements of operations and
retained earnings and of cash flows for such fiscal year, setting forth in
comparative form consolidated figures for the preceding fiscal year, all
such financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and whose
opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit
or qualified in any manner.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the Borrower
(other than the fourth fiscal quarter, in which case 90 days after the end
thereof) a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal quarter,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal quarter in each case setting
forth in comparative form consolidated figures for the corresponding period
of the preceding fiscal year, all such financial information described
above to be in reasonable form and detail and reasonably acceptable to the
Agent, and accompanied by a certificate of the chief financial officer of
the Borrower to the effect that such quarterly financial statements fairly
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present in all material respects the financial condition of the Borrower
and its Subsidiaries and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments.
(c) MONTHLY FINANCIAL STATEMENTS. As soon as available and in any
event within 20 days after the end of each month of the Borrower (other
than the last month of the first three fiscal quarters in which case 45
days after the end thereof), a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries as at the end of such month
together with (i) related consolidated statements of operations and
retained earnings for such month in each case setting forth in comparative
form consolidated figures for the corresponding period of the preceding
fiscal year and (ii) a separate income statement for each Foreign
Subsidiary (and such other financial information as reasonably requested by
the Agent or the Required Lenders), all such financial information
described above to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of the chief
financial officer of the Borrower to the effect that such monthly financial
statements fairly present in all material respects the financial condition
of the Borrower and its Subsidiaries and have been prepared in accordance
with GAAP, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) [INTENTIONALLY DELETED]
(e) OFFICER'S CERTIFICATE. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer of the Borrower substantially in the form of
EXHIBIT 7.1(e), (i) demonstrating compliance with the financial covenants
contained in Section 7.12 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take with respect
thereto. The Borrower shall also deliver a copy of such certificate to the
Agency Services Address.
(f) ANNUAL BUSINESS PLAN AND BUDGETS. At least 60 days after the end
of each fiscal year of the Borrower, beginning with the fiscal year ending
November 30, 1996, an annual business plan and budget of the Borrower and
its Subsidiaries containing, among other things, pro forma financial
statements for the next fiscal year.
(g) BORROWING BASE CERTIFICATE. Within 15 days after the end of each
calendar month, a Borrowing Base Certificate as of the end of the
immediately preceding month, substantially in the form of EXHIBIT 7.1(g)
and certified by the chief financial officer of the Borrower to be true and
correct as of such date.
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(h) COMPLIANCE WITH CERTAIN PROVISIONS OF THE CREDIT AGREEMENT.
Within 90 days after the end of each fiscal year of the Borrower, the
Borrower shall deliver a certificate, containing information regarding (i)
the calculation of Excess Cash Flow and (ii) the amount of any Asset
Dispositions, Debt Issuances, Equity Issuances and Recovery Events that
were made during the prior fiscal year.
(i) ACCOUNTANT'S CERTIFICATE. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof.
(j) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy of any
"management letter" submitted by independent accountants to the Borrower or
any of its Subsidiaries in connection with any annual, interim or special
audit of the books of the Borrower or any of its Subsidiaries.
(k) REPORTS. Promptly upon transmission or receipt thereof, (a)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as the
Borrower or any of its Subsidiaries shall send to its shareholders
generally or to a holder of any Indebtedness owed by the Borrower or any of
its Subsidiaries in its capacity as such a holder and (b) upon the written
request of an Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency responsible
for health and safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(l) NOTICES. Upon a Credit Party obtaining knowledge thereof, such
Credit Party will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following with respect to a the Borrower or any of its
Subsidiaries (i) the pendency or commencement of any litigation, arbitral
or governmental proceeding against the Borrower or any of its Subsidiaries
which if adversely determined would have or would be reasonably expected to
have a Material Adverse Effect, or (ii) the institution of any proceedings
against the Borrower or any of its Subsidiaries with respect to, or the
receipt of notice by such Person of potential liability or responsibility
for
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violation, or alleged violation of any federal, state or local law, rule or
regulation, including but not limited to, Environmental Laws, the violation
of which would have or would be reasonably expected to have a Material
Adverse Effect.
(m) ERISA. Upon any of the Credit Parties or any ERISA Affiliate
obtaining knowledge thereof, Borrower will give written notice to the Agent
and each of the Lenders promptly (and in any event within five Business
Days) of: (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, a
Termination Event; (ii) with respect to any Multiemployer Plan, the receipt
of notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Borrower or any of its ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (iii) the failure to make
full payment on or before the due date (including extensions) thereof of
all amounts which the Borrower or any of its Subsidiaries or ERISA
Affiliate is required to contribute to each Plan pursuant to its terms and
as required to meet the minimum funding standard set forth in ERISA and the
Code with respect thereto; or (iv) any change in the funding status of any
Plan that could have a Material Adverse Effect; together, with a
description of any such event or condition or a copy of any such notice and
a statement by the principal financial officer of the Borrower briefly
setting forth the details regarding such event, condition, or notice, and
the action, if any, which has been or is being taken or is proposed to be
taken by the Credit Parties with respect thereto. Promptly upon request,
the Borrower shall furnish the Agent and each of the Lenders with such
additional information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form
5500 series), as well as all schedules and attachments thereto required to
filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
(n) ENVIRONMENTAL.
(i) Upon the reasonable written request of an Agent, the
Borrower will furnish or cause to be furnished to the Agent, at the
Borrower's expense, an environmental assessment of reasonable scope,
form and depth, (including, where appropriate, invasive soil or
groundwater sampling) by a consultant reasonably acceptable to the
Agent as to the nature and extent of the presence of any Hazardous
Materials on any property owned, leased or operated by the Borrower or
any of its Subsidiaries and as to the compliance by the Borrower and
each of its Subsidiaries with Environmental Laws. If the Borrower
fails to deliver such an environmental report within seventy-five (75)
days after receipt of such
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written request then the Agent may arrange for same, and the Borrower
hereby grants to the Agent and their representatives access to the
Real Properties and a license to undertake such an assessment
(including, where appropriate, invasive soil or groundwater sampling).
The reasonable cost of any assessment arranged for by the Agent
pursuant to this provision will be payable by the Borrower on demand
and added to the obligations secured by the Collateral Documents.
(ii) The Borrower and each of its Subsidiaries will conduct and
complete all investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property owned or
leased by the Borrower or its Subsidiaries to the extent necessary to
be in compliance with all Environmental Laws and all other applicable
federal, state, and local laws, regulations, rules and policies and
with the orders and directives of all Governmental Authorities
exercising jurisdiction over such real property to the extent any
failure would have or be reasonably expected to have a Material
Adverse Effect.
(o) OTHER INFORMATION. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Borrower and its Subsidiaries as the Agent or
the Required Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES. Each of the Credit
Parties will, and will cause each of its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence, rights,
franchises and authority.
7.3 BOOKS AND RECORDS. Each of the Credit Parties will, and will cause
each of its Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW. Each of the Credit Parties will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property (including, without limitation, Environmental
Laws) if noncompliance with any such law, rule, regulation, order or restriction
would have or reasonably be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Each of the Credit
Parties will, and will cause its Subsidiaries to, pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (b) all
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lawful claims (including claims for labor, materials and supplies) which, if
unpaid, might give rise to a Lien upon any of its properties, and except as
prohibited hereunder, all of its other Indebtedness as it shall become due;
provided, however, that a Credit Party or its Subsidiary shall not be required
to pay any such tax, assessment, charge, levy, claim or Indebtedness which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) would give rise to an immediate right
to foreclose on a Lien securing such amounts or (ii) would have a Material
Adverse Effect.
7.6 INSURANCE. Each of the Credit Parties will, and will cause each of
its Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice. All liability policies shall
have each Lender as an additional insured and all casualty policies shall have
the Agent, on behalf of the Lenders, as loss payee.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such damage or destruction. Subsequent to any loss, damage
to or destruction of the Collateral of any Credit Party or any part thereof,
such Credit Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose, at
such Credit Party's cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed; provided,
however, that such Credit Party shall not be obligated to repair or replace any
Collateral so lost, damaged or destroyed to the extent the failure to make such
repair or replacement (a) is desirable to the proper conduct of the business of
such Credit Party in the ordinary course and otherwise is in the best interest
of such Credit Party and (b) would not materially impair the rights and benefits
of the Agents or the Lenders under this Credit Agreement or any other Credit
Document. In the event a Credit Party shall receive any insurance proceeds, as
a result of any loss, damage or destruction, in a net amount in excess of
$100,000, such Credit Party will immediately pay over such proceeds to the Agent
as cash collateral for the Credit Party Obligations. The Agent agrees to
release such insurance proceeds to such Credit Party for replacement or
restoration of the portion of the Collateral of such Credit Party lost, damaged
or destroyed if, (A) within 120 days from the date the Agent receives such
insurance proceeds, the Agent has received written application for such release
from such Credit Party together with evidence reasonably satisfactory to it that
the Collateral lost, damaged or destroyed has been or will be replaced or
restored to its condition (or by Collateral having a value at least equal to the
condition of the asset subject to the loss,
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damage or destruction) immediately prior to the loss, destruction or other event
giving rise to the payment of such insurance proceeds and (B) on the date of
such release no Default or Event of Default exists. If the conditions in the
preceding sentence are not met, the Agent shall, on the first Business Day
subsequent to the date 120 days after it received such insurance proceeds, apply
such insurance proceeds as a mandatory prepayment of the Credit Party
Obligations for application in accordance with the terms of Section 3.3(b)(v)
and Section 3.3(c). All insurance proceeds shall be subject to the security
interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is outlined
as to carrier, policy number, expiration date, type and amount on SCHEDULE 7.6,
as SCHEDULE 7.6 may be amended from time to time by written notice to the Agent.
7.7 MAINTENANCE OF PROPERTY. Each of the Credit Parties will, and will
cause its Subsidiaries to, maintain and preserve its properties and equipment in
good repair, working order and condition, normal wear and tear excepted, and
will make, or cause to be made, in such properties and equipment from time to
time all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS. Each of the Credit Parties will, and
will cause its Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a party or by which
it is bound.
7.9 COLLATERAL. If, subsequent to the Closing Date, a Credit Party
shall (a) acquire or lease any real property or (b) acquire any intellectual
property, securities instruments, chattel paper or other personal property
required to be delivered to the Agent as Collateral hereunder or under any of
the Collateral Documents, the Borrower shall immediately notify the Agent of
same. Each Credit Party shall take such action (including, but not limited to,
the actions set forth in Sections 5.1(g) and (h)), as requested by the Agent and
at its own expense, to ensure that the Lenders have a first priority perfected
Lien in all owned real property (and in such leased real property as requested
by the Agent or the Required Lenders) and all personal property of the Credit
Parties (whether now owned or hereafter acquired), subject only to Permitted
Liens. Each Credit Party shall adhere to the covenants regarding the location
of personal property as set forth in the Security Agreements.
7.10 USE OF PROCEEDS. The Credit Parties will use proceeds of the Loans
solely (a) to refinance on the Closing Date the outstanding principal balance of
up to $23.0 million in existing Indebtedness of the Borrower, (b) to pay on the
Closing Date up to $38 million of the cash portion of the purchase price for the
Acquired Assets pursuant to the Purchase Agreement, (c) to pay
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related fees and expenses in connection with the foregoing, (d) to provide
working capital and (e) for general corporate purposes.
7.11 AUDITS/INSPECTIONS. Upon reasonable notice and during normal
business hours, each Credit Party will, and will cause its Subsidiaries to,
permit representatives appointed by the Agent or any Lender, including,
without limitation, independent accountants, agents, attorneys and appraisers
to visit and inspect such Credit Party's (or its Subsidiary's) property,
including its books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information such
representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders
and to discuss all such matters with the officers, employees and
representatives of the Credit Parties and their Subsidiaries. The Credit
Parties agree that the Agent, and its representatives, may conduct an annual
audit of the Collateral, at the expense of the Borrower.
7.12 FINANCIAL COVENANTS.
(a) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as of the
end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including February 27, 1997,
1.30 to 1.0;
(ii) From February 28, 1997 to and including February 27, 1999,
1.5 to 1.0; and
(iii) From February 28, 1999 and thereafter, 2.0 to 1.0.
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio, as
of the end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including February 27, 1997,
1.1 to 1.0; and
(ii) From February 28, 1997 and thereafter, 1.2 to 1.0.
(c) LEVERAGE RATIO. The Leverage Ratio, as of the end of each fiscal
quarter, shall be less than or equal to:
(i) From the Effective Date to and including August 30, 1996,
7.0 to 1.0;
(ii) From August 31, 1996 to and including November 29, 1996,
6.75 to 1.0;
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(iii) From November 30, 1996 to and including May 30, 1997, 6.0 to
1.0;
(iv) From May 31, 1997 to and including February 27, 1998, 4.5 to
1.0;
(v) From February 28, 1998 to and including February 27, 1999,
4.0 to 1.0.
(vi) From February 28, 1999 and thereafter, 3.5 to 1.0.
(d) SENIOR LEVERAGE RATIO. The Senior Leverage Ratio, as of the end
of each fiscal quarter, shall be less than or equal to:
(i) From the Effective Date to and including November 29, 1996,
3.5 to 1.0;
(ii) From November 30, 1996 to and including May 30, 1997, 3.0 to
1.0;
(iii) From May 31, 1997 to and including February 27, 1999, 2.0 to
1.0;
(iv) From February 28, 1999 and thereafter, 1.5 to 1.0.
(e) NET WORTH. At all times Net Worth shall be no less than negative
Eleven Million Five Hundred Thousand ($11,500,000) increased on a
cumulative basis 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 the Closing Date (other than the
issuance of shares of capital stock of the Borrower in the amount of $6.5
million in connection with the Borrower's purchase of the Acquired Assets).
7.13 ADDITIONAL CREDIT PARTIES. At the time any Person becomes a
Subsidiary of a Credit Party, the Borrower shall so notify the Agent and
promptly thereafter (but in any event within 30 days after the date thereof)
shall cause such Person to if it is a Domestic Subsidiary, execute a Joinder
Agreement in substantially the same form as EXHIBIT 7.13, (b) cause all of the
capital stock of such Person (if such Person is a Domestic Subsidiary) or 65% of
the capital stock of such Person (if such Person is a Foreign Subsidiary) to be
delivered to the Agent (together with undated stock powers signed in blank) and
pledged to the Agent pursuant to an appropriate pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
acceptable to the Agent, (c) if such Person is a Domestic Subsidiary, pledge all
of its assets to the Lenders pursuant to a security agreement in substantially
the form of the Security Agreements and otherwise in a form acceptable to the
Agent, (d) if
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such Person has any Subsidiaries, (i) deliver all of the capital stock of such
Domestic Subsidiaries and 65% of the capital stock of such Foreign Subsidiaries
(together with undated stock powers signed in blank) to the Agent and (ii)
execute a pledge agreement in substantially the form of the Pledge Agreements
and otherwise in a form acceptable to the Agent, (e) if such Person owns or
leases any real property in the United States of America, execute any and all
necessary mortgages, deeds of trust, deeds to secure debt, leasehold mortgages,
collateral assignments of leaseholds or other appropriate real estate collateral
documentation in a form acceptable to the Agent and (f) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord waivers, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form, content and
scope reasonably satisfactory to the Agent.
7.14 INTEREST RATE PROTECTION AGREEMENTS. The Borrower shall, within 30
days of the Closing Date, enter into interest rate protection agreements, in
form and substance acceptable to the Agent, protecting against fluctuations in
interest rates which agreements shall provide coverage for a period of three (3)
years, and in a notional amount of at least $15 million of the Term Loans.
7.15 OWNERSHIP OF SUBSIDIARIES. The Borrower shall at all times own 100%
of the capital stock of its Subsidiaries (other than to the extent necessary for
Chattem (U.K.) Limited and HBA Insurance Limited to qualify for incorporation in
their respective countries of incorporation, any nominal qualifying shares owned
by any necessary governmental authorities) and may not sell, transfer or
otherwise dispose of any shares of capital stock of any of its Subsidiaries.
7.16 APPRAISAL REPORTS. The Borrower and its Subsidiaries shall provide
the Agent, upon the request of the Agent, with asset appraisal reports with
respect to the real and personal property of the Borrower and its Subsidiaries
including, without limitation, appraisals of brand values (provided, however,
the Agent shall not require more than one appraisal of brand values per year).
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated:
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8.1 INDEBTEDNESS. No Credit Party will, nor will it permit any of its
Subsidiaries to, contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement, the other
Credit Documents and the Working Capital Credit Documents;
(b) the Subordinated Debt;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 6.10 (and renewals, refinancings or extensions thereof on terms and
conditions no more favorable, in the aggregate, to such Person than such
existing Indebtedness and in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension);
(d) Indebtedness owing by one Credit Party to another Credit Party;
(e) purchase money Indebtedness (including Capital Leases) incurred
by the Borrower or any of its Subsidiaries to finance the purchase of fixed
assets; PROVIDED that (i) the total of all such Indebtedness for all such
Persons taken together shall not exceed an aggregate principal amount of
$1,000,000.00 at any one time outstanding (including any such Indebtedness
referred to in subsection (c) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and (iii) no
such Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such refinancing;
(f) obligations of the Credit Parties evidenced by the interest rate
protection agreements referred to in Section 7.14; and
(g) Indebtedness incurred by Foreign Subsidiaries not to exceed
$500,000.00, in the aggregate, at any one time outstanding (including any
such Indebtedness referred to in subsection (c) above).
8.2 LIENS. No Credit Party will, nor will it permit its Subsidiaries to
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS. 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.
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8.4 CONSOLIDATION AND MERGER. No Credit Party will, nor will it permit
its Subsidiaries to, enter into any transaction of merger or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that notwithstanding the foregoing provisions of this
Section 8.4, the following actions may be taken if (a) the Agent is given prior
written notice of such action, and the Credit Parties execute and deliver such
documents, instruments and certificates as the Agent may request in order to
maintain the perfection and priority of the Liens on the assets of the Credit
Parties and (b) after giving effect thereto no Default or Event of Default
exists:
(i) any Credit Party may be merged or consolidated with or into the
Borrower or any Credit Party (other than the Borrower) may be merged or
consolidated with or into any other Credit Party; provided that if such
transaction shall be between the Borrower and another Credit Party, the
Borrower shall be the continuing or surviving corporation; and
(ii) any Foreign Subsidiary may merge or consolidate with any other
Foreign Subsidiary.
8.5 SALE OR LEASE OF ASSETS. 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, or (d)
sales of product lines (or the right to produce a consumer product or
products) provided that the dispositions permitted under this subparagraph
(d) during the term of this Credit Agreement shall be limited to product
lines (or the right to produce a consumer product or products) having sales
for the twelve-month period ending on the fiscal quarter ending immediately
preceding the sale in an aggregate amount of $3,000,000 or less.
8.6 ADVANCES, INVESTMENTS AND LOANS. No Credit Party will, nor will it
permit any of its Subsidiaries to, make any Investments except for Permitted
Investments.
8.7 DIVIDENDS. No Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly, declare or pay any dividends (whether
cash or otherwise) or make any other distribution upon any shares of its capital
stock of any class or purchase, redeem or otherwise acquire or retire or make
any provisions for redemption, acquisition or retirement of any shares of its
capital stock of any class or any warrants or options to purchase any such
shares other than a Permitted Investment;
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provided that Subsidiaries of the Borrower may pay dividends to the Borrower.
8.8 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 8.8,
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.
8.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS. No Credit Party will, nor will
it permit any of its Subsidiaries to, change its fiscal year or materially
change its articles or certificate of incorporation or its bylaws without the
prior written consent of the Required Lenders.
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.
8.11 SUBORDINATED DEBT. No Credit Party will (a) make or offer to make any
principal payments with respect to the Subordinated Debt, (b) redeem or offer to
redeem any of the Subordinated Debt, or (c) deposit any funds intended to
discharge or defease any or all of the Subordinated Debt. The Subordinated Debt
may not be amended or modified in any material manner without the prior written
consent of the Required Lenders, it being specifically understood and agreed
that no amendment to Article 4 or Article 10 of the Indenture shall be made
without the prior written consent of the Required Lenders.
8.12 LIMITATIONS. No Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual encumbrance
or restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's capital stock,
(b) pay any Indebtedness owed to the Borrower or any other Credit Party,
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(c) make loans or advances to any other Credit Party or (d) transfer any of its
property to any other Credit Party, except for encumbrances or restrictions
existing under or by reason of (i) customary non-assignment provisions in any
lease governing a leasehold interest, (ii) this Credit Agreement and the other
Credit Documents and (iii) the Indenture.
8.13 SALE LEASEBACKS. No Credit Party will, nor will it permit any of
its Subsidiaries to, directly or indirectly become or remain liable as lessee or
as guarantor or other surety with respect to any lease, of any property (whether
real or personal or mixed), whether now owned or hereafter acquired, (a) which
such Credit Party or Subsidiary has sold or transferred or is to sell or
transfer to any other Person other than a Credit Party or (b) which such Credit
Party or Subsidiary intends to use for substantially the same purpose as any
other property which has been sold or is to be sold or transferred by such
Credit Party or Subsidiary to any Person in connection with such lease.
8.14 NEGATIVE PLEDGES. Other than as set forth in Section 4.12 of the
Indenture, none of the Credit Parties will, nor will it permit any of its
Subsidiaries to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
8.15 CAPITAL EXPENDITURES. The Credit Parties and their Subsidiaries
will not make Capital Expenditures, in any fiscal year, that would exceed
$3,500,000.00 in the aggregate.
8.16 OPERATING LEASES. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume or permit to exist obligations under Operating
Leases which require aggregate annual payments in excess of $1,500,000.00.
8.17 PAYMENT BLOCKAGE NOTICE. The Borrower (i) covenants and agrees
that it will not give the Payment Blockage Notice (as defined in the
Indenture) without the consent of the Required Lenders and (ii) hereby
designates and appoints the Agent, as attorney-in-fact of the Borrower,
irrevocably and with full power of substitution, to deliver any Payment
Blockage Notice that the Borrower has the right to deliver pursuant to the
terms of the Indenture.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "EVENT OF
DEFAULT"):
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(a) PAYMENT. Any Credit Party shall:
(i) default in the payment when due of any principal of any of
the Loans; or
(ii) default, and such default shall continue for three or more
days, in the payment when due of any interest on the Loans or of any
fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith.
(b) REPRESENTATIONS. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was made or deemed to have been made.
(c) COVENANTS. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.4, 7.5, 7.6, 7.9,
7.10, 7.12, 7.13, 7.14, 7.15, 7.16 or 8.1 through 8.17 inclusive; or
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 7.1 and such default
shall continue unremedied for a period of five Business Days after the
earlier of an officer of a Credit Party becoming aware of such default
or notice thereof given by the Agent; or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) or (ii) of this Section 9.1) contained
in this Credit Agreement and such default shall continue unremedied
for a period of at least 30 days after the earlier of an officer of a
Credit Party becoming aware of such default or notice thereof given by
the Agent.
(d) OTHER CREDIT DOCUMENTS. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in any
of the other Credit Documents and such default shall continue unremedied
for a period of at least 30 days after the earlier of an officer of a
Credit Party becoming aware of such default or notice thereof given by an
Agent, or (ii) any Credit Document shall fail to be in full force and
effect or to give the Agent and/or the Lenders the security interests,
liens, rights, powers and privileges purported to be created thereby.
(e) GUARANTIES. The guaranty given by the Credit Parties hereunder
or by any Additional Credit Party hereafter
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or any provision thereof shall cease to be in full force and effect, or any
guarantor thereunder or any Person acting by or on behalf of such guarantor
shall deny or disaffirm such Guarantor's obligations under such guaranty.
(f) BANKRUPTCY, ETC. The occurrence of any of the following with
respect to the Borrower or any of its Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of any of the Borrower or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up or liquidation
of its affairs; or (ii) an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against the Borrower or any of its Subsidiaries and such petition
remains unstayed and in effect for a period of 60 consecutive days; or
(iii) the Borrower or any of its Subsidiaries shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any substantial part of
its property or make any general assignment for the benefit of creditors;
or (iv) the Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts generally as they become due or any action shall
be taken by such Person in furtherance of any of the aforesaid purposes.
(g) DEFAULTS UNDER OTHER AGREEMENTS. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) of the Borrower or any of its Subsidiaries in a principal amount
in excess of $500,000.00, including, without limitation, the Subordinated
Debt and any indebtedness under the Working Capital Credit Agreement (i) a
Credit Party shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such Indebtedness,
or (B) default (after giving effect to any applicable grace period) in the
observance or performance of any term, covenant or agreement relating to
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall occur
or condition exist, the effect of which default or other event or condition
is to cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (determined without
regard to whether any notice or lapse of time is required) any such
Indebtedness to become due prior to its stated maturity; or (ii) any such
Indebtedness shall be declared due and payable, or required to be prepaid
other than
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by a regularly scheduled required prepayment, prior to the stated maturity
thereof.
(h) JUDGMENTS. One or more judgments, orders, or decrees shall be
entered against any one or more of the Borrower or any of its Subsidiaries
involving a liability of $500,000.00 or more, in the aggregate, (to the
extent not paid or covered by insurance provided by a carrier who has
acknowledged coverage) and such judgments, orders or decrees shall continue
unsatisfied, undischarged and unstayed for a period ending on the first to
occur of (i) the last day on which such judgment, order or decree becomes
final and unappealable or (ii) 30 days.
(i) ERISA. Any of the following events or conditions: (A) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of the Borrower
or any of their Subsidiaries or any ERISA Affiliate in favor of the PBGC or
a Plan; (B) a Termination Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA;
(C) a Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of Title
IV of ERISA, or (ii) the Borrower or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency or (within the meaning of Section 4245 of ERISA) such Plan; or
(D) any prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject the Borrower or any of its Subsidiaries or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower or any of its Subsidiaries or any
ERISA Affiliate has agreed or is required to indemnify any person against
any such liability.
(j) OWNERSHIP. There shall occur a Change of Control.
(k) SUBORDINATED DEBT. (i) Any holder of the Subordinated Debt
alleges (or any Governmental Authority with applicable jurisdiction
determines) that the Lenders are not holders of Senior Debt (as defined in
the Indenture) or (ii) the subordination provisions in the Indenture shall,
in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of the
Subordinated Debt.
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(l) BUSINESS. The Borrower commences to engage in a line of business
or activity other than the business of manufacturing and marketing of brand
name over-the-counter pharmaceuticals and functional toiletries and
cosmetics.
(m) INDENTURE/CHANGE OF CONTROL. There shall occur a Change of
Control Triggering Event (as defined in the Indenture) under the Indenture.
9.2 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by the Required Lenders (or the Lenders as may be required
hereunder), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Borrower, take any of the following actions:
(a) TERMINATION OF COMMITMENTS. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) ACCELERATION OF LOANS. Declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other indebtedness
or obligations of any and every kind owing by a Credit Party to any of the
Lenders hereunder to be due whereupon the same shall be immediately due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Credit Parties.
(c) ENFORCEMENT OF RIGHTS. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
setoff.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Agent or the Lenders, which notice or other action is expressly
waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has a separate right of payment and shall be considered a
separate "creditor" holding a separate "claim" within the meaning of Section
101(5) of the Bankruptcy Code or any other insolvency statute.
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SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT. Each Lender hereby designates and appoints NationsBank,
N.A. as Agent of such Lender to act as specified herein and the other Credit
Documents, and each such Lender hereby authorizes the Agent, as the agents for
such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and none of the Credit Parties shall have any rights
as a third party beneficiary of the provisions hereof. In performing its
functions and duties under this Credit Agreement and the other Credit Documents,
each Agent shall act solely as an agent of the Lenders and does not assume and
shall not be deemed to have assumed any obligation or relationship of agency or
trust with or for any Credit Party.
10.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
hereunder or under the other Credit Documents by or through agents or attorneys-
in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. An Agent shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
10.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be liable
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection herewith or in connection with any of the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct) or responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any of the Credit
Parties contained herein or in any of the other Credit Documents or in any
certificate, report, document, financial statement or other written or oral
statement referred to or provided for in, or received by an Agent under or in
connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents, or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any
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representations, warranties, recitals or statements made herein or therein or
made by the Borrower or any Credit Party in any written or oral statement or in
any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by the
Agent to the Lenders or by or on behalf of the Credit Parties to the Agent or
any Lender or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default or to
inspect the properties, books or records of the Credit Parties. The Agent is
not a trustee for the Lenders and owe no fiduciary duty to the Lenders.
10.4 RELIANCE ON COMMUNICATIONS. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care). The
Agent may deem and treat the Lenders as the owner of its interests hereunder for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent in accordance with Section 11.3(b).
The Agent shall be fully justified in failing or refusing to take any action
under this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.
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10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent or any affiliate thereof
hereinafter taken, including any review of the affairs of any Credit Party,
shall be deemed to constitute any representation or warranty by the Agent to
any Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties and made
its own decision to make its Loans hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Credit Parties which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective percentage of the Commitments (or if the Commitments have expired or
been terminated, in accordance with the respective principal amounts of
outstanding Loans and Participation Interest of the Lenders), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following payment in
full of the Credit Party Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be
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insufficient or become impaired, the Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section shall survive the
payment of the Credit Party Obligations and all other amounts payable hereunder
and under the other Credit Documents.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower or any other Credit Party as though the Agent were not the
Agent hereunder. With respect to the Loans made and all obligations owing to
it, the Agent shall have the same rights and powers under this Credit Agreement
as any Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
10.9 SUCCESSOR AGENT. The Agent may, at any time, resign upon 20 days
written notice to the Lenders. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 45 days after the notice of resignation, then the retiring
Agent shall select a successor Agent provided such successor is a Lender
hereunder or a commercial bank organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $400,000,000. Upon the acceptance of any appointment as the Agent
hereunder by a successor, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations as an Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
the Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be effective (a)
when delivered, (b) when transmitted via telecopy (or other facsimile device) to
the number set out below, (c) the Business Day following the day on which the
same has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on SCHEDULE
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
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11.2 RIGHT OF SET-OFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement of
remedies described in Section 9.2, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Credit Party to the Lenders hereunder, under the Notes, the
other Credit Documents or otherwise, irrespective of whether the Agent or the
Lenders shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of such Lender subsequent thereto. The Credit Parties hereby agree that any
Person purchasing a participation in the Loans and Commitments hereunder
pursuant to Section 11.3(c) or 3.9 may exercise all rights of set-off with
respect to its participation interest as fully as if such Person were a Lender
hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) GENERALLY. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; PROVIDED that none of the Credit Parties may
assign and transfer any of its interests without the prior written consent
of the Lenders; and PROVIDED FURTHER that the rights of each Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3.
Notwithstanding the above, nothing herein shall restrict, prevent or
prohibit any Lender from (i) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank, or (ii) granting assignments or participation in such
Lender's Loans and/or Commitments hereunder to its parent company and/or to
any Affiliate of such Lender or to any existing Lender or Affiliate
thereof.
(b) ASSIGNMENTS. Each Lender may, with the prior written consent of
the Borrower and the Agent (provided that no consent of the Borrower shall
be required during the existence and continuation of an Event of Default),
which consent shall not be unreasonably withheld or delayed, assign all or
a portion of its rights and obligations hereunder pursuant to an assignment
agreement substantially in the form of EXHIBIT 11.3 to one or more Eligible
Assignees; PROVIDED that any such assignment shall be in a minimum
aggregate amount of $5,000,000 of the Loans or Commitments and in integral
multiples of $1,000,000 above such amount (or the
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remaining amount of Loans or Commitments held by such Lender), each such
assignment shall be of a constant, not varying, percentage of all of the
assigning Lender's rights and obligations under the Loans or Commitment
being assigned and (iii) if such Lender is a working Capital Lender, such
Lender shall simultaneously assign an identical percentage of the Working
Capital Revolving Committed Amount of such Lender to such Eligible
Assignee(s). Any assignment hereunder shall be effective upon satisfaction
of the conditions set forth above and delivery to the Agent of a duly
executed assignment agreement together with a transfer fee of $3,500
payable to the Agent for its own account. Upon the effectiveness of any
such assignment, the assignee shall become a "Lender" for all purposes of
this Credit Agreement and the other Credit Documents and, to the extent of
such assignment, the assigning Lender shall be relieved of its obligations
hereunder to the extent of the Loans and Commitment components being
assigned. Along such lines the Borrower agrees that upon notice of any
such assignment and surrender of the appropriate Note or Notes, it will
promptly provide to the assigning Lender and to the assignee separate
promissory notes in the amount of their respective interests substantially
in the form of the original Note or Notes (but with notation thereon that
it is given in substitution for and replacement of the original Note or
Notes or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with this
Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Lender warrants that it
is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim; (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any of
the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of
its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee
confirms that it has received a copy of this Credit Agreement, the other
Credit Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such
- 87 -
<PAGE>
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents; (vi) such assignee appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Credit Agreement or any other Credit Document as are
delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations
which by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) PARTICIPATIONS. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder; PROVIDED that (i) such selling Lender shall remain a
"Lender" for all purposes under this Credit Agreement (such selling
Lender's obligations under the Credit Documents remaining unchanged) and
the participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or the other Credit Documents
except to the extent any such amendment or waiver would (A) reduce the
principal of or rate of interest on or fees in respect of any Loans in
which the participant is participating, (B) postpone the date fixed for any
payment of principal (including extension of the Termination Date or the
date of any mandatory prepayment), interest or fees in which the
participant is participating, or (C) release all or substantially all of
the collateral or guaranties (except as expressly provided in the Credit
Documents) supporting any of the Loans or Commitments in which the
participant is participating, (iii) sub-participations by the participant
(except to an Affiliate, parent company or Affiliate of a parent company of
the participant) shall be prohibited, (iv) any such participations shall be
in a minimum aggregate amount of $5,000,000 of the Loans or Commitments and
in integral multiples of $1,000,000 in excess thereof and (v) if such
selling Lender is a Working Capital Lender, such selling Lender
simultaneously grants or assigns a participation, in like percentage, of
the Working Capital Committed Amount of such Lender to such participant.
In the case of any such participation, the participant shall not have any
rights under this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of such
participation to be those set forth in the participation agreement with
such Lender creating such participation) and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation; PROVIDED, however, that such participant shall be entitled
to receive additional amounts under Section 3.15 to the same extent that
the Lender from which such
- 88 -
<PAGE>
participant acquired its participation would be entitled to the benefit of
such cost protection provisions.
(d) REGISTRATION. The Agent, acting for this purpose solely on
behalf of the Borrower, shall maintain a register (the "Register") for the
recordation of the names and addresses of the Lenders and the principal
amount of the Loans owing to each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of a Loan or other obligation
hereunder for all purposes of this Credit Agreement and the other Credit
Documents, notwithstanding notice to the contrary. Any assignment of any
Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
11.4 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
an Agent or any Lender in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Borrower or
any Credit Party and the Agent or any Lender shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on any Credit Party in any case shall
entitle any Credit Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION. The Credit Parties agree to:
(a) pay all reasonable out-of-pocket costs and expenses of (i) the Agent in
connection with the negotiation, preparation, execution and delivery and
administration of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, special counsel to the
Agent and the fees and expenses of counsel for the Agent in connection with
collateral or foreign issues), and any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments, waivers
or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (ii) the Agent and the Lenders in connection with enforcement of
the Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders) and
- 89 -
<PAGE>
(b) indemnify each Lender, its officers, directors, employees, representatives
and agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not any Lender is a party thereto)
related to (i) the entering into and/or performance of any Credit Document or
the use of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of gross negligence
or willful misconduct on the part of the Person to be indemnified), (ii) any
Environmental Claim and (iii) any claims for Non-Excluded Taxes.
11.6 AMENDMENTS, WAIVERS AND CONSENTS. Neither this Credit Agreement nor
any other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing and signed by the Required Lenders and
the Credit Parties; PROVIDED that no such amendment, change, waiver, discharge
or termination shall
(a) without the consent of each Lender affected thereby,
(i) extend the final maturity of any Loan or the Working
Capital Revolving Loan, or extend or waive any Principal Amortization
Payment of any Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder,
(iii) reduce or waive the principal amount of any Loan or the
Working Capital Revolving Loan,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of any
Default or Event of Default or mandatory reduction in the Commitments
shall not constitute a change in the terms of any Commitment of any
Lender),
(v) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Agent may, without consent from any other Lender, release any
Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5) or release any cash collateral in the
Cash
- 90 -
<PAGE>
Collateral Account in accordance with the terms of the Assignment of
Cash Collateral Account,
(vi) release the Borrower or substantially all of the other
Credit Parties from its obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section
or Section 3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a), 11.2,
11.3 or 11.5,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower
(or another Credit Party) of any of its rights and obligations under
(or in respect of) the Credit Documents except as permitted thereby;
and
(b) without the consent of Lenders holding in the aggregate more than
50% of the outstanding Tranche A Term Loans and more than 50% of the
outstanding Tranche B Term Loans, extend the time for or the amount or the
manner of application of proceeds of any mandatory prepayment required by
Section 3.3(b)(ii), (iii), (iv) or (v) hereof. No provision of Section 10
may be amended without the consent of the Agent.
(c) Notwithstanding the above, the right to deliver a Payment
Blockage Notice (as defined in the Indenture) shall reside solely with the
Agent and the Agent shall deliver such Payment Blockage Notice only upon
the direction of the Required Lenders.
(d) Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization
plan that affects the Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required Lenders
may consent to allow a Credit Party to use cash collateral in the context
of a bankruptcy or insolvency proceeding.
11.7 COUNTERPARTS. This Credit Agreement may be executed in any number of
counterparts, each of which where 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 Credit Agreement to produce or
account for more than one such counterpart.
11.8 HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way
- 91 -
<PAGE>
affect the meaning or construction of any provision of this Credit Agreement.
11.9 DEFAULTING LENDER. Each Lender understands and agrees that if such
Lender is a Defaulting Lender then it shall not be entitled to vote on any
matter requiring the consent of the Required Lenders or to object to any matter
requiring the consent of all the Lenders; provided, however, that all other
benefits and obligations under the Credit Documents shall apply to such
Defaulting Lender.
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
All indemnities set forth herein and all representations and warranties made
herein shall survive the execution and delivery of this Credit Agreement, the
making of the Loans, the repayment of the Loans and other obligations and the
termination of the Commitments hereunder.
11.11 GOVERNING LAW; VENUE.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina or of the United
States for the Western District of North Carolina and, by execution
and delivery of this Credit Agreement, each Credit Party hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Credit Party further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to
Section 11.1, such service to become effective 30 days after such
mailing. Nothing herein shall affect the right of a Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against a Credit Party in any
other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Credit Document brought in
the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
- 92 -
<PAGE>
11.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME. All references to time herein shall be references to
Eastern Standard Time or Eastern Daylight time, as the case may be, unless
specified otherwise.
11.14 SEVERABILITY. If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
11.15 ENTIRETY. This Credit Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.16 BINDING EFFECT. This Credit Agreement shall become effective
at such time when all of the conditions set forth in Section 5.1 have been
satisfied or waived by the Lenders and it shall have been executed by the
Borrower, the Guarantors and the Agent, and the Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the signatures
of each Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Borrower, the Guarantors, the Agent and each Lender
and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 93 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
CHATTEM, INC.,
a Tennessee corporation
By: /s/ Robert E. Bosworth
------------------------------------
Name: Robert E. Bosworth
----------------------------------
Title: Executive Vice President
---------------------------------
GUARANTORS: SIGNAL INVESTMENT & MANAGEMENT CO.,
a Delaware corporation
By: /s/ Robert E. Bosworth
------------------------------------
Name: Robert E. Bosworth
----------------------------------
Title: President
---------------------------------
LENDERS:
NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By: /s/ Nancy B. Chastain
------------------------------------
Name: Nancy B. Chastain
----------------------------------
Title: Senior Vice President
---------------------------------
<PAGE>
Signature page to Credit Agreement dated April 29, 1996 among Chattem, Inc., as
Borrower, each of the Borrower's Domestic Subsidiaries, as Guarantors, the
Lenders, and NationsBank, N.A., as agent for the Lenders
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Michael P. Civehta
------------------------------------
Name: Michael P. Civehta
----------------------------------
Title: Vice President
---------------------------------
CREDITANSTALT BANKVEREIN
By: /s/ W. Craig Stamm By: /s/ Robert M. Biringer
--------------------- ------------------------------------
Name: W. Craig Stamm Name: Robert M. Biringer
------------------- ----------------------------------
Title: Senior Associate Title: Senior Vice President
------------------- ---------------------------------
FIRST AMERICAN NATIONAL BANK
By: /s/ Mary E. Buckner
------------------------------------
Name: Mary E. Buckner
----------------------------------
Title: Vice President
---------------------------------
PRIME INCOME TRUST
By: /s/ Rafael Soolari
------------------------------------
Name: Rafael Soolari
----------------------------------
Title: Vice President/Portfolio Manager
---------------------------------
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
------------------------------------
Name: Jeffrey W. Maillet
----------------------------------
Title: Sr. Vice Pres.-Portfolio Mgr.
---------------------------------
<PAGE>
SCHEDULE 1.1(a)
LENDERS AND COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Revolving Tranche A Tranche A Tranche B Tranche B
Revolving Loan Term Loan Term Loan Term Loan Term Loan
Committed Commitment Committed Committed Committed Committed
Operations Contact Credit Contact Amount Percentage Amount Percentage Amount Percentage
- ------------------ -------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NationsBank, N.A. NationsBank, N.A. $5,965,909 34.09090857% $6,818,182 34.09091% $5,000,000 28.571428571%
One Independence Center 633 Chestnut Street
15th Floor Chattanooga,
Charlotte, Tennessee 37450
North Carolina Attn: Nancy Chastain
Attn: Dana Weir Tel: (423) 755-0662
Tel: (704) 388-3917 Fax: (423) 755-0689
Fax: (704) 386-9923
The First National Bank The First National Bank $4,772,727 27.27272571% $5,454,545 27.272725%
of Chicago of Chicago
One First National One First National
Plaza, Suite 0086 Plaza
Chicago, Illinois 60670 Chicago, Illinois 60670
Attn: Ed Sheridan Attn: John Runger
Tel: (312) 732-8918 Tel: (312) 732-6166
Fax: (312) 732-2715 Fax: (312) 732-1117
Creditanstalt Bankverein Creditanstalt Bankverein $3,778,409 21.59090857% $4,318,182 21.59091% $2,500,000 14.285714286%
Creditanstalt Corporate Creditanstalt Corporate
Finance, Inc. Finance, Inc.
Two Ravinia Drive, Two Ravinia Drive,
Suite 1680 Suite 1680
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Attn: Lisa Herman Attn: Bob Beringer
Tel: (770) 390-1850 Tel: (770) 390-1850
Fax: (770) 390-1851 Fax: (770) 390-1851
First American National First American National $2,982,955 17.04545714% $3,409,091 17.045455%
Bank Bank
4th and Union 725 Broad Street
Nashville, Tennessee Chattanooga, Tennessee
37237=0001 37401
Attn: Frenisa Joy Attn: Mary Buckner
Tel: (615) 736-6747 Tel: (423) 755-6022
Fax: (615) 748-6098 Fax: (423) 755-6014
Van Kampen American Van Kampen American $5,000,000 28.571428571%
Capital Capital
c/o State Street Bank One Parkview Plaza
& Trust Oakbrook Terrace,
Corporate Trust Illinois 60181
Department Attn: Jeffrey Maillet
P.O. Box 778 Tel: (708) 684-6438
Boston, Massachusetts Fax: (708) 684-6740
02102
Attn: Laura Magazu
Tel: (617) 664-5481
Fax: (617) 664-5366, 5367
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Revolving Tranche A Tranche A Tranche B Tranche B
Revolving Loan Term Loan Term Loan Term Loan Term Loan
Committed Commitment Committed Committed Committed Committed
Operations Contact Credit Contact Amount Percentage Amount Percentage Amount Percentage
- ------------------ -------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Income Trust Prime Income Trust $ 5,000,000 28.571428571%
Two World Trade Center Two World Trade Center
72nd Floor New York, New York 10048
New York, New York 10048 Attn: Louis Pistecchia
Attn: April Chrysostomas Tel: (212) 392-5845
Tel: (212) 392-5709 Fax: (212) 392-5345
Fax: (212) 392-5345
Total $17,500,000 100% $20,000,000 100% $17,500,000 100%
</TABLE>
- 2 -
<PAGE>
SCHEDULE 1.1(B)
EXISTING INVESTMENTS
1. 40,000 shares of 13.125% Cumulative, Convertible Preferred Stock, par
value $125 per share, of Elcat, Inc.
2. Investments in foreign subsidiaries of Chattem, Inc., as follows (in U.S.
dollars, subject to exchange rate fluctuations):
Chattem (Canada) Inc. $5,880,948
Chattem (U.K.) Limited $6,504,890
HBA Insurance Ltd. $ 120,000
<PAGE>
SCHEDULE 5.1(h)
MORTGAGED PROPERTIES AND LEASEHOLD PROPERTIES
Mortgage Property:
1. Real Property located at 1715 West 38th Street, Chattanooga, Tennessee
consisting of approximately 5.56 acres.
2. Real Property located on Wauchitchie Pike, Chattanooga, Tennessee
consisting of approximately .02 acres.
3. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .13 acres.
4. Real Property located at 1810 W. 37th Street, Chattanooga, Tennessee.*
5. Real Property located at 1808 W. 37th Street, Chattanooga, Tennessee.*
6. Real Property located at 1801 W. 38th Street, Chattanooga, Tennessee.*
7. Real Property located on W. 38th Street, Chattanooga, Tennessee.*
8. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .16 acres.
9. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately 2.4 acres.
*4, 5, 6 & 7 together consist of approximately 1.89 acres.
Leasehold Properties:
1. Commercial Lease by and between Tammy Development Company as "Landlord"
and Chattem, Inc. as "Tenant" dated August 1, 1995 for 100,000 square feet
known as Phase II-A and Phase II-B, South Broad Street Center, Chattanooga,
Tennessee.
2. Commercial Lease by and between Tammy Development Company as "Landlord"
and Chattem, Inc. as "Tenant" dated August 1, 1995 for 9,600 square feet
known as Phase I, South Broad Street Center, Chattanooga, Tennessee.
<PAGE>
3. Sublease Agreement by and between Provident Life and Accident Insurance
Company as "Sublessor" and Chattem, Inc. as "Sublessee" dated March 22,
1996 for 25,600 square feet located at 3110 South Broad Street,
Chattanooga, Tennessee.
<PAGE>
SCHEDULE 6.10
INDEBTEDNESS
AMOUNT AT NOVEMBER 30, 1995
----------------------------------------------
(Loans on CSV of life
insurance policies for Face CSV Loans Remaining
directors) Amount Outstanding Outstanding CSV
---------------------- ------ ----------- ----------- ---
1. Northwestern Mutual Life $2,055,943 $ 449,988 $ 435,499 $ 14,499
2. National Life of Vermont 2,198,978 1,117,152 1,008,611 108,542
----------- ---------- ---------- --------
$4,254,921 $1,567,150 $1,444,110 $123,040
<PAGE>
SCHEDULE 6.11
LITIGATION
None
<PAGE>
SCHEDULE 6.15
SUBSIDIARIES
CHATTEM (CANADA) INC.
Jurisdiction of Incorporation: Canada
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 1,000 shares of
Common Stock
5,587,600 shares of
Preferred Stock
Options, Warrants, Rights, etc.: None
CHATTEM (U.K.) LTD.
Jurisdiction of Incorporation: United Kingdom
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 20,000 shares of
Common Stock
2,953,094 shares of
Preferred Stock
Options, Warrants, Rights, etc.: None
SIGNAL INVESTMENT & MANAGEMENT CO.
Jurisdiction of Incorporation: State of Delaware (USA)
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 250
Options, Warrants, Rights, etc.: None
HBA INSURANCE, LTD.
Jurisdiction of Incorporation: Bermuda
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 120,000
Options, Warrants, Rights, etc.: None
<PAGE>
SCHEDULE 6.18
ENVIRONMENTAL MATTERS
1. Those matters disclosed in Request for Information from the U.S. EPA to
Chattem concerning the EPA's investigation of Chattanooga Creek
(received by Chattem on July 12, 1990), and Chattem's Response to the
Request for Information dated July 25, 1990.
2. Those matters disclosed in Level I Environmental Assessment by Philip
A. Lutin dated October 2, 1991.
3. Those matters disclosed in June 7, 1993 letter by Philip A. Lutin to
Charles N. Jolly and attachments thereto.
4. Those matters disclosed in Consent Agreement and Order Assessing
Administrative Penalty [Assessment] Docket CWA-IV 93-513 dated
January 7, 1994.
5. Those matters disclosed in March 9, 1994 memorandum from Brian E.
Humphrey to Robert E. Bosworth and others with attachments thereto.
6. Those matters disclosed in March 11, 1994 letter by Philip A. Lutin to
Brian E. Humphrey.
7. Those matters disclosed in April 8, 1994 letter by Ray Smith to Rick
Tate.
8. Those matters disclosed in April 13, 1994 letter by Guy M. Moose to Ray
Smith and response letter dated April 22, 1994 by Philip A. Lutin to
Guy M. Moose.
9. Those matters disclosed in October 20, 1994 letter from Sims Crownover
to Ray Smith, and response letter dated November 1, 1994 from Ray Smith
to Sims Crownover.
10. Those matters disclosed in March 10, 1995 letter from John K. Mason to
Ray Smith and response letter dated April 25, 1995 by Philip A. Lutin to
John K. Mason with attachments thereto.
11. Those matters disclosed in April 4, 1995 letter with attachments from
Philip L. Stewart to Ray Smith, and response letter with attachments
dated May 9, 1995 from Ray Smith to Phillip L. Stewart.
12. Those matters disclosed in May 22, 1995 letter from Ray Smith to Rick
Tate.
<PAGE>
13. Pursuant to that certain Agreement of Purchase and Sale By and Among
Chattem Chemicals, Inc., as Buyer, Elcat, Inc., as Parent, and Chattem,
Inc., as Seller, dated April 11, 1995, Chattem, Inc. represented that it
was in compliance with environmental laws and knew of no conditions or
events that would lead to any claims being made for environmental matters
except for such matters disclosed in the Agreement. Chattem, Inc., agreed
to indemnify, defend and hold harmless the Buyer and Parent and their
respective officers, directors, shareholders, subsidiaries, affiliated
companies, successors and assigns from and against all losses arising out
of or resulting from any breach of warranty or misrepresentation by
Chattem, Inc.
<PAGE>
SCHEDULE 6.19
INTELLECTUAL PROPERTY RIGHTS
PATENTS OWNED BY CHATTEM, INC.
TITLE COUNTRY REG. NO.
- ------------------------------------------------------------------------
Cosmetic Facial Powder Containing United States 4,279,890
Walnut Shell Flour
Process and Composition for Reducing United States 4,251,507
Dental Plaque
Rose Plant Patent United States PP4,564
External Analgesic Compositions United States 4,892,890
PATENTS LICENSED BY ELJENN INTERNATIONAL
TO CHATTEM, INC.
TITLE COUNTRY REG. NO.
- ------------------------------------------------------------------------
Method of Removal of Chlorine United States 4,295,985
Retained by Human Skin and Hair
TRADEMARKS OWNED BY CHATTEM, INC.
RENEWAL
MARK COUNTRY REG. NO. DATE
- ----------------------------------------------------------------------------
Amphibious Formula California 67887 11/12/2002
Amphibious Formula Canada 332,073 09/18/2002
Amphibious Formula Florida 928164 11/05/2002
Amphibious Formula Hawaii 149564 12/09/2002
Amphibious Formula Texas 40988 11/08/2002
Bronz Silk United Kingdom -- --
Bullfrog California 67888 11/12/2002
Bullfrog Canada 332,935 10/09/2002
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- ----------------------------------------------------------------------------
Bullfrog Florida 928165 11/05/2002
Bullfrog Hawaii 149562 12/09/2002
Bullfrog Mexico 422988 12/30/2001
Bullfrog Peru 102006 03/05/2003
Bullfrog Texas 40989 11/08/2002
Bullfrog (design only) United States 1,763,958 04/13/2003
Cardui (Calendars) United States 1,738,319 12/08/2007
Chattem Uruguay 267255 07/03/2005
Chattem, Inc. Hong Kong 831 of 1979 12/14/1999
CORN SILK Australia A208,545 06/03/2002
CORN SILK Benelux 011,672 03/05/2005
CORN SILK Brunei 19394 12/21/2000
CORN SILK Canada 144,355 03/11/1996
CORN SILK Chile 374.978 09/23/2001
CORN SILK China 753821 07/06/2005
CORN SILK Costa Rica 36,183 R:6856 10/11/2002
CORN SILK El Salvador 241 05/24/2002
CORN SILK Great Britain 1,160,480 08/29/2002
CORN SILK Guatemala 18,987 11/14/1997
CORN SILK Honduras 40,059 06/15/2002
CORN SILK Indonesia -- --
CORN SILK Ireland 99,464 08/24/2002
CORN SILK Italy 433,426 08/23/2004
CORN SILK Japan 1,571,445 03/28/2003
CORN SILK Malaysia 93/08798 11/09/2000
CORN SILK Mexico -- --
CORN SILK New Zealand B78,955 06/30/2001
2
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
CORN SILK Nicaragua 22,811 06/04/2000
CORN SILK Panama 25.020 07/01/2000
CORN SILK Philippines 25,031 10/07/1997
CORN SILK Singapore -- --
CORN SILK South Africa 65/2799 07/14/2005
CORN SILK South Africa 7014734 10/22/2000
CORN SILK Spain 1797781 --
CORN SILK Venezuela 53,774 12/05/1997
CORN SILK & DESIGN Puerto Rico 24,727 05/20/2003
CORN SILK (Words) Puerto Rico 24,726 05/20/2003
EXELLE United States 1,229,147 03/08/2003
FLEXALL Austria 127,693 10/13/1999
FLEXALL ICE Canada 806,665 Pending
FLEX ALL 454 & Switzerland 374890 7/21/2009
Design
FLEX-ALL Benelux 515044 07/17/1999
FLEX-ALL Benelux 464430 07/10/2002
FLEX-ALL Canada 374,278 10/12/2005
FLEX-ALL Denmark 0534/1991 01/25/2001
FLEX-ALL Finland 116,143 01/20/1992
FLEX-ALL France 1,542,430 07/20/1999
FLEX-ALL Greece 1995 610 09/14/1999
FLEX-ALL Ireland 136135 07/21/1996
FLEX-ALL Italy 570,574 7/20/1999
FLEX-ALL Japan -- --
FLEX-ALL Mexico 471468 12/30/2001
FLEX-ALL Norway 146157 07/25/2001
FLEX-ALL Portugal 257,341 12/10/2002
3
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
FLEX-ALL Sweden 225,489 08/20/2001
FLEX-ALL Switzerland -- --
FLEX-ALL United Kingdom -- 00/00/1996
FLEX-ALL 454 Germany 39504534 07/26/2005
FLEX-ALL 454 Spain 1,513,722 12/05/1999
FLEX-ALL 454 Spain 1,535,531 12/05/1999
GO ZONE New Zealand Z17068 03/23/1999
GO-ZONE Australia Pending --
MUDD Argentina -- --
MUDD Australia -- --
MUDD Bahamas 11,119 11/24/1997
MUDD Barbados 81/2822 (new) 11/29/2000
MUDD Benelux 352,798 06/05/1998
MUDD Canada 319,044 --
MUDD Chile 374,979 09/23/2001
MUDD Costa Rica 59,614 10/16/1991
MUDD Denmark 807/1979 03/23/1999
MUDD Dominican Republic 37,144 06/30/2004
MUDD Ecuador 5442-90 12/20/2000
MUDD Finland 77,509 05/05/2001
MUDD France 1457621 03/25/1998
MUDD France 1,052,859 03/25/1998
MUDD Guatemala 41,967 09/30/2001
MUDD Haiti 478/62 01/23/2001
MUDD Honduras 29,800 08/03/2001
MUDD Italy 946171 08/23/2004
MUDD Jamaica 19,636 03/05/2002
MUDD Japan 2,348,136 10/30/2001
4
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
MUDD Mexico 422,990 12/30/2001
MUDD New Zealand B123,667 06/06/1999
MUDD Nicaragua 12.301C.C. 01/29/2001
MUDD Panama 027001 09/01/2001
MUDD SCRUB Peru 4365 12/24/2003
MUDD Puerto Rico 23,176 11/07/2000
MUDD Scandinavia -- --
MUDD South Africa B78/2675 06/06/1998
MUDD Spain 922,501 10/20/2000
MUDD Sweden 168,193 06/21/1999
MUDD Trinidad/Tobago 11,892 03/16/2008
MUDD United Kingdom 1274157 08/09/2007
MUDD Uruguay 267256 07/03/2005
MUDD Venezuela 96,629 01/09/1996
MUDD & Design Great Britain B1,096,797 06/08/1999
MUDD (Katakana Japan 1,597,970 03/30/1993
Characters)
MUDD State of Tennessee -- 04/06/2000
NORDIC LOOK Benelux 480,589 04/05/2000
NORDIC LOOK France 831290
NORDIC LOOK Germany 1,191,126 03/29/2000
NORDIC LOOK Italy 583,576 04/06/2000
NORWICH Canada UCA017,241 08/27/2002
PAMPRIN Argentina 1,206,098 08/05/1996
PAMPRIN Australia A314,192 12/21/1998
PAMPRIN Bahamas 11,118 11/24/1997
PAMPRIN Barbados 8,298 11/29/1991
PAMPRIN Benelux 350,181 12/29/1997
5
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
PAMPRIN Colombia 94033538 --
PAMPRIN Costa Rica 21618 05/17/1998
PAMPRIN Denmark 2186/1978 06/23/1998
PAMPRIN Dominican Republic 27745 07/28/1998
PAMPRIN Ecuador 5441-90 12/20/1995
PAMPRIN El Salvador 100 07/21/2001
PAMPRIN Finland 76987 03/20/2001
PAMPRIN France 1,433,022 10/30/1997
PAMPRIN Great Britain 1,088,745 12/28/1998
PAMPRIN Guatemala 35,443 09/28/1988
PAMPRIN Haiti 476/62 01/23/1991
PAMPRIN Honduras 25,094 09/05/1998
PAMPRIN Ireland 92259 12/22/1998
PAMPRIN Italy 357789 01/18/1998
PAMPRIN Mexico 254,691 --
PAMPRIN Netherland Antilles -- --
PAMPRIN New Zealand 122,127 12/22/1998
PAMPRIN Nicaragua 8968C.C. 09/09/1998
PAMPRIN Norway 102,879 08/28/1999
PAMPRIN Panama 22,932 01/05/1999
PAMPRIN Peru 102005 03/05/2003
PAMPRIN Puerto Rico 21,511 07/21/1998
PAMPRIN Singapore 446/93 06/14/2003
PAMPRIN South Africa 77/5755 12/20/1997
PAMPRIN Sweden 167,905 06/01/1999
PAMPRIN Switzerland 314910 --
PAMPRIN Trinidad 14,470 12/07/1997
PAMPRIN Venezuela 94,884 06/20/1995
6
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
PAMPRIN West Germany 993,141 01/02/1998
PAMPRIN (Block Canada 234,475 07/20/2009
Letters)
PAMPRIN (Block Honduras 25,094 09/05/1998
Letters)
PREMESYN PMS France 1,253,522 12/08/2003
(Stress mark over
"E")
PREMESYN PMS Italy 94 6167 08/23/2004
(Stress mark over
"E")
PREMESYN PMS United Kingdom 1,327,285 11/18/2004
(Stress mark over
"E")
SHY (Applicator) Canada N.S.177/45151 11/27/1997
SHY (Liquid Douche) Canada TMA192,381 06/29/2003
SOLTICE Hong Kong -- --
SOLTICE Taiwan -- --
SOMETHING PERSONAL Canada 259,143 05/22/1996
SPRAY BLOND Benelux 431,162 04/29/1997
SPRAY BLOND Denmark 2330/1989 05/12/1999
SPRAY BLOND France 1,385,650 07/29/1996
SPRAY BLOND France (International IR,548,336
Mark for Madrid
Convention
Registrations)
SPRAY BLOND Italy 94 6170 08/23/2004
SPRAY BLOND Switzerland 374349 --
SUMBRELLA Australia -- --
SUMBRELLA New Zealand -- --
SUMMER HIGHLIGHTS United States 1784718 07/27/2003
SUN IN Australia A235,497 01/06/2005
7
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
SUN IN Bahamas 11,120 11/24/1997
SUN IN Benelux 365,077 03/20/1990
SUN IN Bophuthatswana 69/6154 12/22/1999
SUN IN Canada 171,191 09/11/1985
SUN IN Great Britain B1,123,580 11/06/2000
SUN IN Ireland 102,340 03/14/2001
SUN IN New Zealand B96253 02/24/2006
SUN IN Puerto Rico -- --
SUN IN South Africa 69/6154 12/22/1999
SUN IN State of Tennessee -- 04/06/2002
SUN IN Transkei 69/6154 12/22/1999
SUN-IN Bophuthsatswana 69/6154 12/22/1999
SUN-IN New Zealand B96,253 02/24/2006
SUN-IN Peru 421 06/23/2003
SUN-IN Puerto Rico 32,056 11/16/2002
SUN-IN Venda 69/6154 12/22/1999
THERA CARE Canada TMA239,954 02/15/2010
THERA CARE & Design Canada TMA269,249 05/21/1997
THERACARE (One Great Britain 1,083,159 09/03/1998
Word)
THERACARE (One Great Britain 1,083,160 09/03/1998
Word)
ULTRASWIM Italy M193C002313 --
ULTRASWIM (Swimmer United States 1760924 03/30/2003
Design)
8
<PAGE>
TRADEMARKS LICENSED BY ELJENN TO CHATTEM, INC.
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
ULTRASWIM Argentina 1,126,019 02/04/1995
ULTRASWIM Australia A38,027 09/14/2003
ULTRASWIM Bahamas 11,284 05/09/1998
ULTRASWIM Barbados 81/2968 05/17/2001
ULTRASWIM Benelux 397,277 03/01/2004
ULTRASWIM Bermuda 10,234 05/23/2005
ULTRASWIM Canada 280,281 06/10/1998
ULTRASWIM Denmark 1694-1986 07/25/1996
ULTRASWIM Finland 96011 09/05/1996
ULTRASWIM France 1,212,873 09/14/2002
ULTRASWIM Germany 1,054,979 09/17/2002
ULTRASWIM Italy M193C002313 03/30/2003
ULTRASWIM Japan 137833/87 05/31/2000
ULTRASWIM Malaysia 85/00685 02/12/2006
ULTRASWIM Mexico 12/30/2001
ULTRASWIM Norway 124,666 04/03/1996
ULTRASWIM Panama 037265 09/23/1995
ULTRASWIM Singapore 2664/84 05/17/2001
ULTRASWIM South Africa/Clsk 84/3387 04/13/1994
ULTRASWIM Sweden 200155 03/07/1996
ULTRASWIM Thailand KOR12235 06/04/2004
ULTRASWIM United Kingdom 1,181,836TM 09/16/2003
ULTRASWIM (Block United States 1,197,606 06/15/2006
Ltrs Soap &
Shampoo)
ULTRASWIM United States 1,681,731 04/07/2002
(Conditional & Body
Lotion)
9
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
ULTRASWIM (Shampoo Puerto Rico 26,209 07/03/1995
& Conditioner)
ULTRASWIM (With United States 1,417,131 01/05/2008
Dolphin Design)
10
<PAGE>
OWNED BY SIGNAL MANAGEMENT & INVESTMENT CO.
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
454 United States 75/005550 Pending
AMPHIBIOUS FORMULA United States 1,279,505 05/29/2004
APPLE-HYDROXY United States -- --
BENZODENT Algeria 041014 --
BENZODENT Argentina 1.213.551 11/11/1996
BENZODENT Australia 123157 --
BENZODENT Austria 64286 --
BENZODENT Benelux 073989 11/05/2005
BENZODENT Bophuthatswana 68/5776 --
BENZODENT Canada UCA49940 04/24/1999
BENZODENT Cuba 92753 04/05/2005
BENZODENT Denmark 8454/1995 12/15/2005
BENZODENT Denmark VR01.19391955 11/05/1995
BENZODENT Finland 79829 12/21/2001
BENZODENT France 1,517,062 --
BENZODENT Germany 670,221 04/30/2004
BENZODENT Greece 52099 01/29/2004
BENZODENT Hong Kong A1202/69 --
BENZODENT Iceland 458/1989 --
BENZODENT Ireland 57722 --
BENZODENT Italy 303,156 --
BENZODENT Jordan 10491 --
BENZODENT Lebanon 45293 --
BENZODENT Monaco R-83.956613 --
BENZODENT New Zealand 56682 --
11
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
BENZODENT Norway 106535 --
BENZODENT Portugal 152583 --
BENZODENT South Africa 68/5776-A --
BENZODENT Sweden 174246 11/07/2000
BENZODENT Switzerland 270209 --
BENZODENT Transkei Tr68/5776 --
BENZODENT United Kingdom BR742143 --
BENZODENT United States 595,101 09/14/2004
BENZODENT Venda 68/5776 --
BENZOGEL United States 1767890 04/27/2003
BENZOGEL United States 74/650485 Pending
BULLFROG United States 74/654831 --
BULLFROG United States 1,279,506 05/29/2004
CAPSALOE United States 74/715332 Pending
CORN SILK United States 799,233 11/23/2005
CHILL STICK United States 74/630796 Pending
CHILL STICK Canada -- --
CORN SILK United States 799,233 11/23/2005
CORN SILK & DESIGN United States 1,457,919 09/22/2007
CORN SILK (Block United States 1,193,832 04/20/2002
Letters & Bckgrnd)
DAY ONE United States 1,608,789 08/07/2000
FLEX ALL United States 75/005548 Pending
FLEX-ALL 454 (Block United States 1,569,189 12/05/1999
Letters
FLEX-ALL 454 United States 1,481,352 03/22/2008
(Stylized)
FLEX-ALL OF United States COMMONLAW --
COLORADO
12
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
FLEX-ALL-SOUTHWEST United States COMMONLAW --
FOR THE PERIOD United States 1,674,764 02/11/2002
BEFORE YOUR PERIOD
GOLD BOND Benelux 525,883 01/22/2003
GOLD BOND Bulgaria 23234 03/26/2003
GOLD BOND Canada TMA368196 04/27/2005
GOLD BOND Czech Republic 187,034 03/30/2003
GOLD BOND Indonesia 310,981 02/27/2003
GOLD BOND Israel 86,125 01/21/2000
GOLD BOND Mexico 448,844 02/19/2003
GOLD BOND Morocco 50,654 02/19/2013
GOLD BOND Slovak Republic 172,163 03/25/2003
GOLD BOND United Kingdom 1,422,292 04/18/1997
GOLD BOND United States 1,209,453 09/21/2002
GOLD BOND Ghana -- Pending
GOLD BOND India 590,366 Pending
GOLD BOND Malaysia 93/00761 Pending
GOLD BOND Singapore S/1856/93 Pending
GOLD BOND Spain 1,745,203 Pending
GOLD BOND United Arab Emirates 8,458 Pending
GOLD BOND Venezuela 1233-95 Pending
HALF-AS-MUCH United States 1,060,586 03/08/1997
HERBALAX United States 74/650559 --
HI-THERM United States 708,677 12/20/2000
ICY HOT Bophuthatswana 77/2159 05/24/1997
ICY HOT Canada TMA409,013 03/05/2008
ICY HOT Mexico 384016 10/03/2004
ICY HOT Panama 69596 09/29/2005
13
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
ICY HOT Singapore -- 06/14/2000
ICY HOT South Africa 77/2159 05/24/1997
ICY HOT Taiwan 161832 10/31/2001
ICY HOT Venda 77/2159 05/24/1997
ICY-HOT Argentina 1376579 03/30/2000
ICY-HOT Australia A310924 09/05/1998
ICY-HOT Barbados 6708 07/31/1999
ICY-HOT Benelux 345750 05/17/1997
ICY-HOT Bolivia 36996-A 09/19/1997
ICY-HOT Brazil 770139868 02/07/2004
ICY-HOT Colombia Pending --
ICY-HOT Costa Rica 55381 04/06/1999
ICY-HOT Costa Rica 87581 07/20/2004
ICY-HOT Denmark VR00.611 1978 02/17/1998
ICY-HOT Dominican Republic 26636 07/26/1997
ICY-HOT Dutch Antilles 10476 11/22/2007
ICY-HOT Ecuador 409-88 1122/1992
ICY-HOT El Salvador 170/84 09/02/2000
ICY-HOT France 1,409,746 06/08/1997
ICY-HOT Greece 60897 04/05/1998
ICY-HOT Guatemala 34605/226/84 05/21/1998
ICY-HOT Haiti 74/80 10/28/1997
ICY-HOT Honduras 24388 01/17/1998
ICY-HOT Indonesia 247,234 03/04/1999
ICY-HOT Italy 344450 05/23/1997
ICY-HOT Jamaica B18633 06/09/1998
ICY-HOT Malaysia M/B75961 (new) 08/11/1998
ICY-HOT Nicaragua 7766-CC 12/19/1997
14
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
ICY-HOT Paraguay 126,430 10/19/1997
ICY-HOT Peru 82345 12/15/2004
ICY-HOT Philippines 36,541 01/21/2007
ICY-HOT Spain 868743 07/17/1998
ICY-HOT Trinidad B10689 05/21/2006
ICY-HOT United States 970,575 10/16/1993
ICY-HOT Uruguay 218786 10/10/2000
ICY-HOT Venezuela 99.844-F 07/06/1997
ICYHOT United Kingdom B1078443 05/13/1996
ICYHOT Ireland B92568 05/17/1998
ICYHOT Malaysia M/B75961 08/11/1998
ICYHOT Sarawak B17,092 08/15/1998
META CINE United States 372,963 11/21/1999
MICRON United States 1,499,169 08/09/2008
MUDD United States 1,011,938 05/27/2005
MUDD FACIAL United States 74/571539 Pending
TREATMENT
MUDD United States 1,290,647 08/21/2004
MUDD SPA TREATMENT United States 74/537103 Pending
N & Design United States 1,765,513 04/20/2003
NORWICH Puerto Rico 6172 08/08/1996
NORWICH United States 1732425 11/17/2002
PAMPRIN Panama 22,932 01/05/1999
PAMPRIN Philippines -- --
PAMPRIN United States 709,866 01/17/2001
PAMPRIN IB United States 1,499,182 08/09/2008
PAMPRIN United States 74/702071 Pending
15
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
PREMSYN PMS (stress United States 1,471,156 01/05/2008
mark over "E")
QUIK GEL United States 1,951,563 01/23/2006
QUIK GEL United States 74/654830 Pending
SILKENOL United States 1,604,279 07/03/2000
SUNCLYME United States 343,858 03/09/1997
SUN IN (without United States 908,769 02/03/2001
hyphen)
SUN-IN (Block United States 1,456,006 09/08/2007
Letters)
SUN-IN (design) United States 1,059,766 02/22/1997
SUN IN STREAKER United Kingdom 1197101 06/03/2004
TADPOLE United States 1,339,919 06/11/2005
THE ONCE A DAY, ALL United States -- --
DAY SUNSCREEN
THE ULTIMATE United States 74/597971 Pending
WATERPROOF SUNBLOCK
THERA CARE United States 1,092,610 06/06/1998
TRAINER'S CHOICE United States 74/609,150 Pending
VERALAX United States 74/650560 Pending
VFW United States 75/026992 Pending
TRADEMARKS LICENSED BY VALMONT TO
SIGNAL MANAGEMENT & INVESTMENT CO.
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
PHISO Canada 157674 07/12/1998
PHISOAC Canada 118977 07/29/2005
16
<PAGE>
MARK COUNTRY REG. NO. RENEWAL DATE
- ------------------------------------------------------------------------------
PHISOAC (Stylized) United States 699720 06/21/2000
PHISOCARE Canada 196899 01/18/2004
PHISODAN Canada 132672 09/13/2008
PHISODAN Puerto Rico 13379 06/01/1995
PHISODAN (Stylized) United States 764556 02/11/2004
PHISODERM Canada 78/20300 03/15/2003
PHISODERM Puerto Rico 19097 09/18/1994
PHISODERM United States 408558 08/15/2004
PHISOFOAM Canada 157673 07/12/1998
PHISOLAN Canada 240802 03/07/1995
PHISOPUFF (Block) United States 1294345 09/11/2004
17
<PAGE>
SCHEDULE 6.23(a)
REAL PROPERTY LOCATIONS
1. 1715 38th Street, Chattanooga, Hamilton County, Tennessee, 37409 (owned).
2. Phase I, Phase II-A and Phase II-B, South Broad Street Center,
Chattanooga, Hamilton County, Tennessee, 37408 (leased).
3. 3110 South Broad Street, Chattanooga, Tennessee, 37408 (subleased).
4. Real Property located on Wauchitchie Pike, Chattanooga, Tennessee
consisting of approximately .02 acres (owned).
5. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .13 acres (owned).
6. Real Property located at 1810 W. 37th Street, Chattanooga, Tennessee
(owned). *
7. Real Property located at 1808 W. 37th Street, Chattanooga, Tennessee
(owned). *
8. Real Property located at 1801 W. 38th Street, Chattanooga, Tennessee
(owned). *
9. Real Property located on W. 38th Street, Chattanooga, Tennessee (owned). *
10. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .16 acres (owned).
11. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately 2.4 acres (owned).
* 4, 5, 6 & 7 together consist of approximately 1.89 acres.
<PAGE>
SCHEDULE 6.23(b)
PERSONAL PROPERTY LOCATIONS
1. 1715 West 38th Street, Chattanooga, Hamilton County, Tennessee, 37409.
2. Signal Investment & Management Co., 1105 North Market Street, Suite 1300,
Wilmington, Delaware 19890.
3. Phase I, Phase II-A and Phase II-B, South Broad Street Center, Chattanooga,
Hamilton County, Tennessee, 37408.
4. 3110 South Broad Street, Chattanooga, Tennessee, 37408.
5. Morgan and Sampson
P.O. Box 2646
6433 Gayhart Street
Los Angeles, Los Angeles County, California
6. Island Sales
P.O. Box 729
497-563 Kam Highway
Kaneohe, Honolulu County, Hawaii
7. Fluid Packaging
800 Airport Road
Lakewood, Ocean County, New Jersey
8. Bradford Soap Works
CS 1007
West Warwick, Kent County, Rhode Island
9. Kolmar
Skyline Division
Port Jervis, Orange County, New York
10. Niemond Industries
2500 Taylorsville Road
Statesville, Iredell County, North Carolina
11. Prent Corporation
2225 Kennedy Road
Janesville, Rock County, Wisconsin
12. Marietta Corporation
P.O. Box 5250
Cortland, Cortland County, New York
13. Vee Pac
5321 Danshu Road
<PAGE>
Countryside, Cook County, Illinois
14. Walker Co. Work Center
Euclid Avenue
Route 2, Box 700
Chickamauga, Walker County, Georgia
15. Hewitt Packaging
333 Lindon Avenue
Dayton, Mongomery County, Ohio
16. Walco Packaging
805 Commerce Drive
Conyers, Rockdale County, Georgia
17. 3102 Williams St.
Chattanooga, Hamilton County, Tennessee
18. Light Manufacturing, Inc.
1615 Sholar Avenue
Chattanooga, Hamilton County, Tennessee
19. Cherokee Warehouses, Inc.
520 West 31st Street
Chattanooga, Hamilton County, Tennessee
20. Morgan and Sampson, Inc.
1651 South Carlos Avenue
Ontario, San Bernadino County, California
21. J B Labs
130 Central Avenue
Holland, Ottawa County, Michigan
22. Mikart, Inc.
2909 Marietta Blvd., NW
Atlanta, Fulton County, Georgia
23. PCI of Virginia
5300 Klockner Drive
Richmond, Henrico County, Virginia
24. Taylor Whse. Cold Storage
449 Howard Avenue
Holland, Ottawa County, Michigan
25. Winn Packaging
c/o Package Supply
931 LeSaint Drive
Fairfield, Butler County, Ohio
26. Menasha
<PAGE>
10333 High Point Road
Olive Branch, De Soto County, Mississippi
27. Ivers Lee
174 Clinton Road
West Caldwell, Essex County, New Jersey
<PAGE>
SCHEDULE 6.23 (c)
-----------------
CHIEF EXECUTIVE OFFICES
-----------------------
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Signal Investment & Management Co.
1105 North Market Street, Suite 1300
Wilmington, Delaware 19890
<PAGE>
SCHEDULE 7.6
------------
INSURANCE
---------
<PAGE>
ACORD. INSURANCE BINDER ISSUE DATE (MM/DD/YY)
04/01/96
- -------------------------------------------------------------------------------
THIS BINDER IS A TEMPORARY INSURANCE CONTRACT, SUBJECT TO THE CONDITIONS
SHOWN ON THE REVERSE SIDE OF THIS FORM.
- -------------------------------------------------------------------------------
COMPANY COMPANY BINDER NO.
ASSOCIATED GENERAL AGENCY, INC. KEMPER NATIONAL 1768
620 Lindsay Street -----------------------------------------
P.O. Box 11248 Effective Expiration
Chattanooga TN 37401 Date Time Date Time
-----------------------------------------
04/01/96 12:01 X AM 01/01/96 12:01 X AM
PM noon
-----------------------------------------
THIS BINDER IS ISSUED TO EXTEND COVERAGE
CODE SUBCODE IN THE ABOVE NAMED COMPANY PER EXPIRING
POLICY NO.:
- -------------------------------------------------------------------------------
INSURED DESCRIPTION OF OPERATIONS/VEHICLES/
PROPERTY (Including Location)
#1-1715 WEST 38TH ST., BLDG. #31, BLDG.
#16 CHURCH ST., CHATTANOOGA, TN /
#2-3100 WILLIAMS STREET, CHATTANOOGA, TN
CHATTEM, INC. #3-3110 S. BROAD STREET, CHATTANOOGA, TN
ETAL / #4-RING WAY CENTER, EDISON ROAD,
1715 West 38th Street BASINGSTOKE, UK / #5-1651 S. CARLOS AVE.
Chattanooga, TN 37408-0000 ONTARIO, CA / #6-520 W. 31ST STREET,
CHATTANOOGA, TN / #7-UNNAMED LOCATIONS /
#8-2220 ARGENTIA ROAD, MISSISSAUGA, ON
- -------------------------------------------------------------------------------
COVERAGES RATES
- -------------------------------------------------------------------------------
TYPE OF INSURANCE COVERAGE FORMS AMOUNT DEDUCTIBLE COINSUR.
- -------------------------------------------------------------------------------
PROPERTY CAUSES OF LOSS POLICY AMOUNT - BLANKET 112,335,648/50,000
LIMIT FOR LOC #1 & #8
_ BASIC _ BROAD FOR REAL PROP, PERSONAL
X SPEC. PROPERTY, BUS. INCOME BALANCE
- ---------------- OF LOC'S SUBLIMITED
- -------------------------------------------------------------------------------
GENERAL LIABILITY GENERAL AGGREGATE $
_ COM. SPECIAL GENERAL LIABILITY PRODUCTS-COMP AGL $
_ CLAIMS MADE _ OCCUR PERSONAL & ADM. INJURY $
_ OWNERS & CONTRACTORS PROT. EACH OCCURRENCE $
- ---------------------- RETRO DATE FOR FIRE DAMAGE (Any one fire) $
CLAIMS MADE: MED. EXPENSE (Any one person) $
- -------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $
_ ANY AUTO BODILY INJURY (Per person) $
_ ALL OWNED AUTOS BODILY INJURY (Per accident) $
_ SCHEDULED AUTOS PROPERTY DAMAGE $
_ HIRED AUTOS MEDICAL PAYMENTS $
_ NON OWNED AUTOS PERSONAL INJURY PROT. $
_ LIM. OF LIABILITY UNINSURED MOTORIST $
_ $
- -------------------------------------------------------------------------------
AUTO MEDICAL DAMAGE _ ALL VEHICLES ACTUAL CASH VALUE $
_ DEDUCTIBLE _ SCHEDULED VEHICLES STATED AMOUNT $
_ COL. NON: _______ OTHER $
_ OTHER THAN COL.
- -------------------------------------------------------------------------------
EXCESS LIABILITY EACH OCCURRENCE $
_ UMBRELLA FORM AGGREGATE $
_ OTHER THAN RETRO DATE FOR SELF-INSURED
UMBRELLA FORM CLAIMS MADE: RETENTION $
- -------------------------------------------------------------------------------
WORKERS' STATUTORY LIMITS
COMPENSATION EACH ACCIDENT $
AND EMPLOYERS DECREASE-POLICY LIMIT $
LIABILITY DECREASE-EACH EMPLOYEE $
- -------------------------------------------------------------------------------
SPECIAL CONDITIONS/OTHER COVERAGES
CONDITIONS AND COVERAGE EXTENSIONS AS PRESENTED ON OUR PROPOSAL DATED
APRIL 1, 1996 APPLY, AGREED AMOUNT ENDORSEMENT INCLUDED FOR 60 DAYS.
- -------------------------------------------------------------------------------
NAME & ADDRESS
- -------------------------------------------------------------------------------
_ MORTGAGEE _ ADDITIONAL INSURED
NATIONSBANK - TENNESSEE X LOSS PAYEE
633 CHESTNUT STREET LOAN #
CHATTANOOGA TN 37402 -------------------------------------
AUTHORIZED REPRESENTATIVE
Mark Chesnutt
--------------------
/s/ Mark A. Chesnutt
- -------------------------------------------------------------------------------
ACORD (7/90) ACORD CORPORATION
- -------------------------------------------------------------------------------
SMR
<PAGE>
[LOGO]
CHATTEM, INC.
Chattanooga, TN
HPR PROPERTY PROPOSAL
KEMPER (AMERICAN PROTECTION INS. CO.)
(Cont'd)
COVERAGE
Insures against all risks, except as excluded under Kemper National's policy
form, of direct physical loss or damage to property insured and for the
coverage designated in the schedule of locations attached.
LIMITS OF LIABILITY
Property Damage - blanket coverage for Included in
Loc. #1 which includes 1715 W. 38th St., Policy Amount
Bldg. #16 Church St., Bldg. #31 and Loc. #6 of $112,335,646
520 W. 31st St. Separate sublimits for all
other locations per schedule.
Business Interruption - included for Loc. #1 Included in
and #6 on blanket basis. Separate sublimits for Policy Amount
all other locations per schedule. of $112,335,646
Ordinary payroll is included.
Extra Expense - sublimit per location $1,000,000
Does not apply to Unnamed locations.
Miscellaneous Unnamed Locations 1,000,000
Contingent Business Income - need underwriting NOT INCLUDED
information in order to provide quote
Earthquake - per occurrence/annual aggregate 50,000,000
excluding coverage for California
Flood - per occurrence/annual aggregate 50,000,000
Accounts Receivable - sublimit of liability 1,000,000
6
<PAGE>
Value Papers - sublimit of liability 1,000,000
Newly Acquired Property for a period of 90 days 1,000,000
Transit Coverage - per occurrence 500,000
Pollution sublimit 25,000
Demolition/increased cost of construction sublimit 10,000,000
Debris Removal 25% or 5,000,000
Off Premises Power - including transmission 1,000,000
facilities (property damage and time element)
Does not include telecommunications or sewer.
Errors & Omissions Coverage 1,000,000
Trade Shows, Exhibitions 100,000
Electronic Data Processing Included in Policy Amount
Boiler & Machinery Coverage:
Limits of Liability: Per limits as shown on the schedule attached
Property Damage: Expediting Expense Limitation 100,000
Ammonia Contamination Limitation 100,000
Water Damage Limitation 100,000
DEDUCTIBLES:
A $50,000 combined deductible applies except for the following:
Flood $50,000 Straight Deductible
Earth Movement 50,000 Straight Deductible
Transit 10,000 Straight Deductible
Data Processing 5,000 Straight Deductible
Boiler and Machinery (PD/TE) 50,000 Straight Deductible
Trade Shows, Exhibitions 5,000 Straight Deductible
A 24 hour waiting period (in addition to the applicable deductible) applies
to Off Premises Power (time element).
7
<PAGE>
LOCATION SCHEDULE:
1. Consumer Products Real & Personal Property --
Includes Bldg. #16 Business Interruption --
1715 W. 38th Street Extra Expense 1,000,000
Chattanooga, TN Accounts Receivable 1,000,000
37409-1248 Valuable Papers 1,000,000
Flood 50,000,000
Earth Movement 50,000,000
Off Premises Power-Property Damage 1,000,000
Off Premises Power-Time Element Incl. w/OPP
Demolition-Increased Cost of Constr. 10,000,000
2. Williams St. Warehouse Personal Property 14,215,235
3100 Williams Street Business Interruption 500,000
Chattanooga, TN Extra Expense 1,000,000
37410-1031 Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 17,715,235
Earth Movement 17,715,235
3. 3110 Broad Street Personal Property 336,250
Chattanooga, TN Business Interruption 500,000
37408-3057 Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 3,836,250
Earth Movement 3,836,250
4. Ring Way Center Real & Personal Property 3,681,864
Edison Road Business Interruption 500,000
Basingstoke Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 7,181,864
Earth Movement 7,181,864
Demolition-Increased Cost of Constr. 7,181,864
5. 1651 S. Carlos Avenue Personal Property 1,651,250
Ontario, CA 91761-7649 Business Interruption 500,000
Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 5,151,250
6. 520 W. 31st Street Personal Property --
Chattanooga, TN Business Interruption 500,000
37410-1115 Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 3,607,000
Earth Movement 3,607,000
8
<PAGE>
7. Unnamed Locations Real Property, Personal Property ***
and Extra Expense
Combined Sublimits of Liability 1,000,000
8. 2220 Argentia Road Real & Personal Property 2,056,250
Mississauga, ON Business Interruption 500,000
Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 5,556,250
Earth Movement 5,556,250
Demolition - Increase Cost of Constr. 5,556,250
Transit Coverage 500,000
***Must have a complete listing of all properties covered under this
provision at time of binding.
NOTE: REFERENCE LOCATION #2, #3, #4, #5, #8: Values used are 125% of values
listed on latest statement of values.
NOTE: REFERENCE LOCATION #2 (WILLIAMS STREET): Values on latest "statement
of values" were $18,668,000. Kemper obtained revised values from Chattem,
Inc. in the amount of $11,372,188. The value listed on policy for this
location reflects 125% of $11,372,188.
9
<PAGE>
CHATTEM, INC.
DETERMINATION OF VALUES
THE FOLLOWING IS A LISTING OF LOCATIONS WITH VALUES BY LOCATION.
LOCATION #1 - 1715 W. 38TH STREET, INCL.
BLDG #16 AND #31
REAL & PERSONAL PROPERTY $25,314,047.
BUSINESS INTERRUPTION $63,530,000.
LOCATION #2 - WILLIAMS STREET WAREHOUSE
REAL & PERSONAL PROPERTY $14,215,235.
BUSINESS INTERRUPTION $500,000.
LOCATION #3 - 3110 BROAD STREET
REAL & PERSONAL PROPERTY $336,250.
BUSINESS INTERRUPTION $500,000.
LOCATION #4 - RING MAY CENTER, EDISON RD.,
BASINGSTOKE, UK
REAL & PERSONAL PROPERTY $3,681,864.
BUSINESS INTERRUPTION $500,000.
LOCATION #5 - 1651 S. CARLOS AVE.,
ONTARIO, CA
REAL & PERSONAL PROPERTY $1,651,250.
BUSINESS INTERRUPTION $500,000.
LOCATION #6 - 520 W. 31ST STREET
PERSONAL PROPERTY $107,000.
LOCATION #7 - UNNAMED LOCATIONS $1,000,000.
LOCATION #8 - 2220 ARGENTIA ROAD,
MISSISSAUGA, ONTARIO
REAL & PERSONAL PROPERTY $2,056,250.
BUSINESS INTERRUPTION $500,000.
(THIS LOCATION WILL BE
INCLUDED ON SEPARATE
POLICY.)
<PAGE>
INSURANCE AUDIT AND INSPECTION COMPANY
EXECUTIVE SUMMARIES 1995
FOR
CHATTEM, INC.
CHATTANOOGA, TENNESSEE
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-A (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
INCEPTION: June 30, 1995 EXPIRATION: May 31, 1996 POLICY #: 6059041
INSURER: Commerce and Industry PREMIUM: $79,768
AGENT/BROKER: Associated General Agencies TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Policy Limit: $125,994,100
LOC.
NO. DESCRIPTION SUBLIMIT
- --- ----------- --------
1-1 West 38th St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings $93,501,000
Extra Expense 1,000,000
2-1 Church St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 231,000
Extra Expense 100,000
3-1 Office Building #13, Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 3,147,000
Extra Expense 1,000,000
4-1 3801-11 St. Elmo Ave., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 3,705,000
Extra Expense 1,000,000
5-1 3102 Williams St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 19,668,000
Extra Expense 1,000,000
6-1 3110 Broad Street, Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 369,000
Extra Expense 100,000
7-1 Edison Road, Basingstoke, United Kingdom
Real and Personal Property, Gross Earnings 2,000,000
Extra Expense 100,000
8-1 1651 South Carlos Ave., Ontario, California
Real and Personal Property, Gross Earnings 1,421,000
Extra Expense 100,000
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-A (p. 2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
9-1 520 W. 31st St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 207,000
Extra Expense 100,000
OTHER SUBLIMITS:
Demolition & Increased Cost of Construction, Property
Damage & Time Element 1,000,000
Off-Premises Power, Property Damage 1,000,000
Off-Premises Power, Time Element 1,000,000
Newly-Acquired Locations, 120 Days 1,000,000
Valuable Papers and Records 500,000
Earthquake, Annual Aggregate 50,000,000
Flood, Annual Aggregate All Locations Except 8-1 50,000,000
Location 8-1 Nil
Accounts Receivable $500,000
Electronic Data Processing Media 1,000,000
Electronic Data Processing Equipment 10,000,000
Electronic Data Processing Extra Expense 100,000
Personal Property at Miscellaneous Unscheduled Locations 1,000,000
Transit Each Conveyance 500,000
Each Occurrence 1,000,000
Boiler and Machinery 50,000,000
Expediting Expenses 100,000
Hazardous Substance Clean-up 100,000
Water Damage 100,000
Errors and Omissions in Values Lesser of $100,000 or 5% of Value Insured
Pollutant Clean-up and Removal, Annual Aggregate $25,000
DEDUCTIBLES:
Transit $10,000
Boiler and Machinery Time Element 24 hours
Boiler and Machinery Service Interruption 24 hours
All Other 50,000
COVERED PERILS: All Risks Including Flood, Earthquake, and Boiler and Machinery
COINSURANCE:
Property Damage 100%
Time Element 100%
GROSS EARNINGS ORDINARY PAYROLL COVERAGE: Excluded
VALUATION: Actual Cash Value
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-A (p. 3)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
FORMS AND ENDORSEMENTS:
40345 (11/92) Declarations
40346 (4/84) Location Schedule
40351 (4/84) Property Damage Coverage Agreement
40353 (3/90) Gross Earnings Coverage Agreement
40354 (4/84) Extra Expense Coverage Agreement
40348 (9/90) Covered Perils
40357 (4/84) Transportation Coverage Agreement
40358 (4/84) Accounts Receivable Coverage Agreement
B&M Boiler and Machinery Coverage Agreement
40350 (1/89) Conditions
40352 (4/84) Time Element Conditions
CT1 Data Processing Limits, Deductible, and Coinsurance
40010 Data Processing Equipment Coverage Agreement
40012 Data Processing Data and Media Coverage Agreement
40014 Data Processing Extra Expense Coverage Agreement
E&01 Errors and Omissions Coverage Provisions
0124 Land and Water Exclusion, Debris Removal Clause,
Pollutant Clean-up Provisions and Exclusion
40360 Boiler and Machinery Coverage Provisions
1. 40363 (4/84) Gross Earnings Ordinary Payroll Exclusion
2. 40367 (4/84) Delete Replacement Cost Coverage Provisions
3. 40366 (4/84) Coinsurance Provisions
4. 40361 (4/84) Flood Coverage Provisions
5. 40362 (4/84) Earthquake Coverage Provisions
6. 40369 (4/84) Valuable Papers and Records Coverage Provisions
7. 40370 (4/84) Selling Price Valuation for Non-Manufactured Stock
8. 40372 (1/87) Demolition and Increased Cost of Construction
Provisions--Property Damage
9. 40371 (1/87) Demolition and Increased Cost of Construction
Provisions--Time Element
10. 40379 (4/84) Off-Premises Power Provisions--Property Damage
11. 40364 (4/84) Data Processing Media Valuation Includes Cost of
Gathering Information
12. MULL Miscellaneous Unnamed Locations Coverage Provisions
13. 90-Day Notice Requirement in Event of Cancellation
or Non-Renewal
14. 52169 (5/92) Tennessee Cancellation and Non-Renewal Provisions--60-Day
Notice Requirement
15. 52133 (3/94) California Cancellation and Non-Renewal Provisions--30-Day
Cancellation and 60-Day Non-Renewal Notice
Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-A-1 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation - Tennessee
PERILS INSURED: Occupational Injury & Disease
INCEPTION: January 1, 1995 EXPIRATION: When cancelled POLICY #: 0116
INSURER: Tennessee Association of Business PREMIUM: $
Select Self Insured Trust
AGENT/BROKER: TELEPHONE: (615) 256-2219
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Workers' Compensation Tennessee Statutory
FORMS AND ENDORSEMENTS:
Certificate
Indemnity Agreement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-A-2 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation & Employers' Liability - AL, AZ, CA, CO, CT,
FL, GA, IL, IN, LA, MD, MA, MI, MN, MO, NY, NC, OK, PA, TX, VT, WI
PERILS INSURED: Occupational Injury & Disease
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 3BG 053367-00
INSURER: American Motorists PREMIUM: $18,447
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Workers' Compensation Statutory
Employers' Liability Each Accident $1,000,000
Aggregate, Injury by Disease 1,000,000
Other States, except ME, NV, ND, OH, TN, WA, WV, WY Statutory
EXPERIENCE MODIFIER HISTORY:
1986-87 .95 1990-91 .93 1995-96 .87
1987-88 .81 1991-92 .84
1987-88 .81 1992-93 .75
1988-89 .94 1993-94 .81
1989-90 .80 1994-95 .79
FORMS AND ENDORSEMENTS:
WC 00 00 0A Information Page and Classification Schedules
WC 00 00 00 (4/84) Coverage Agreement
WC 00 04 14 (7/90) Notification of Change in Ownership Requirements
WC 00 04 06 (4/84) Premium Discount Provisions--AL, AZ, CA, CO, FL,
GA, FL, IN, LA, MD, MI, MA, TX, MN, MO, NY, PA,
NC, VA, WI
WC 04 03 01 (1/91) California Changes
WC 04 04 02 (1/95) California Mandatory Rate Change Provisions
WC 99 04 47A (1/95) California Notice
WC 04 03 60 (8/86) California Employers' Liability Changes
WC 05 04 02 (11/90) Colorado Classification Provisions
WC 99 06 17 (1/92) Colorado Disclosure Notice
WC 06 03 03A (1/91) Connecticut Coverage Extends to Fund Assessments
WC 06 03 01 (4/84) Connecticut Application of Policy
WC 20 03 02 (5/86) Massachusetts Assessments
WC 20 03 03 (4/90) Massachusetts Notice: Rates/Premiums and
Reserves/Settlements
WC 20 03 01 (4/84) Massachusetts Unlimited Employers' Liability
Coverage
WC 17 03 02 (9/90) Louisiana Punitive Damages Exclusion
WC 17 03 01 (7/84) Louisiana Changes--Other States Coverage
Provisions
WC 21 06 01 (4/84) Michigan Conformity to State Law Provisions
WC 7502a (1/83) Michigan Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-A-2 (p. 2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation & Employers' Liability - AL, AZ, CA, CO, CT,
FL, GA, IL, LA, MD, MA, MI, MN, MO, NY, NC, OK, PA, TX, VT, WI
PERILS INSURED: Occupational Injury & Disease
WC 24 03 01 (4/84) Missouri Unlimited Employers' Liability Coverage
WC 20 03 01 (4/84) New Jersey Unlimited Employers' Liability Coverage
WC 99 04 46B (10/94) New York Rate Revision Provisions
WC 31 03 08 (4/84) New York Unlimited Employers' Liability Coverage
IL 79 81 (9/93) Oklahoma Fraud and Deceit Warning
WC 37 06 01 (4/84) Pennsylvania Inspection of Manuals
WC 37 06 02 (4/84) Pennsylvania Insurance Consultation Services Act
Exemption
WC 42 03 06 (10/92) Texas Maintenance Tax Surcharge Recoupment
Provisions
WC 44 06 01 (4/84) Vermont Conformity to State Law Provisions
WC 488 06 01B (4/94) Wisconsin Conformity to State Law Provisions
WC 02 06 01 (5/86) Arizona Cancellation Provisions--30-Day Notice
Requirement
WC 04 06 01A (12/93) California Cancellation Provisions--30-Day Notice
Requirement
WC 10 06 01 A (4/93) Georgia Cancellation, Change, and Non-Renewal
Provisions--60-Day Cancellation and
Non-Renewal, 45-Day Change Notice Requirements
WC 12 06 01B (6/89) Illinois Changes--60-Day Cancellation and
Non-Renewal Notice Requirements
WC 17 06 01 (11/92) Louisiana Cancellation Provisions--20-Day Notice
Requirement
WC 19 06 01 (10/84) Maryland Cancellation Provisions--30-Day Notice
Requirement
WC 20 06 01 (6/92) Massachusetts Cancellation Provisions--10-Day
Notice Requirement
WC 22 06 01A (10/92) Minnesota Cancellation and Non-Renewal
Provisions--30-Day Cancellation and 60-Day
Non-Renewal Notice Requirement
WC 24 06 01A (4/91) Missouri Cancellation and Non-Renewal
Provisions--30-Day Notice Requirement
WC 32 03 01A (10/93) North Carolina Cancellation Provisions--30-Day
Notice Requirement
WC 35 06 01A (10/90) Oklahoma Cancellation, Non-Renewal, and Change
Provisions--45-Day Non-Renewal and Change
Notice Requirements
WC 37 06 03 (12/87) Pennsylvania Cancellation Provisions--60-Day
Notice Requirement
WC 42 03 01C (1/91) Texas Changes--30-Day Cancellation and Non-Renewal
Notice Requirement
WC 44 06 02A (9/91) Vermont Cancellation and Non-Renewal
Provisions--45-Day Notice Requirement
WC 45 06 02 (7/93) Virginia Cancellation and Non-Renewal
Provisions--30-Day Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-B (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: General Liability--CLAIMS MADE
PERILS INSURED: Bodily Injury, Property Damage, Personal Injury, Advertising
Injury Liability
INCEPTION: June 1, 1995 EXPIRATION: June 1, 1996 POLICY #: 95-CHTT-9
INSURER: HBA Insurance Ltd. PREMIUM:
AGENT/BROKER: TELEPHONE:
NAME INSURED: Chattem, Inc.; Chattem (U.K.) Ltd.; Chattem (Canada) Inc.
COVERAGES AND LIMITS:
Each Occurrence and Aggregate, Including Defense Costs $5,000,000
SUB-LIMITS:
Fire Damage Liability, Each Occurrence 300,000
Medical Expenses, Each Person 10,000
DEDUCTIBLES:
Each Occurrence 500
Aggregate 2,500
RETROACTIVE DATE: June 1, 1986
FORMS AND ENDORSEMENTS:
Declarations and Coverage Agreements
1. Additional Insured--Vendors: All Vendors of Covered Products
2. Fire Damage Coverage Agreement
3. Medical Expense Coverage Agreement
4. Other Insurance--Policy is Excess over Any Other Insurance
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-1 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy, Most States
PERILS INSURED: Liability, "No-Fault," Medical Payments, Uninsured Motorists,
Physical Damage
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 019 769-22
INSURER: American Manufacturers Mutual PREMIUM: $39,865
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
<TABLE>
<CAPTION>
COVERAGES AND LIMITS:
<S> <C> <C>
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection 5 - Owned Autos Subject to No-Fault Statutory
Medical Payments, Each Person 3 - Private Passenger Autos Only 5,000
Uninsured Motorists, Each Accident 2 - Owned Autos 1,000,000
Underinsured Motorists, Each Accident 2 - Owned Autos 1,000,000
Comprehensive 7 - Scheduled Vehicles Only Actual Cash Value
Collision 7 - Scheduled Vehicles Only Actual Cash Value
</TABLE>
DEDUCTIBLES:
FORMS AND ENDORSEMENTS:
IL 79 01 (9/86) Declarations
CA 72 00 (12/93) Automobile Declarations
CA 79 89 (8/87) Extension Schedule - Composite Rating
CA 00 01 (12/93) Business Auto Liability & Physical Damage Coverage
Agreement
IL 7900 (7/87) Conditions, Mutual Policy Provisions, Nuclear Energy
Liability Exclusion
IL 01 46 (11/88) Conditions
CA 79 03 (3/95) Statutory Changes: CA, MN, NJ, NY, PA
CA 79 20 (3/92) Additional Interest: First National Bank of Chicago
CA 20 01 (12/93) Additional Insured--Lessor: Automotive Rentals, Inc.
CA 02 02 (3/93) Arizona Cancellation & Non-Renewal
Provisions--10-Day Non-Renewal Notice
Requirement
IL 70 25 (2/94) California Cancellation & Non-Renewal
Provisions--60-Day Notice Requirement
IL 70 09 (10/89) Colorado Cancellation and Non-Renewal
Provisions--45-Day Notice Requirement
IL 70 13 (12/93) Connecticut Cancellation & Non-Renewal
Provisions--60-Day Notice Requirement
CA 02 67 (10/94) Florida Cancellation & Non-Renewal
Provisions--45-Day Non-Renewal Notice
Requirement
IL 70 30 (9/94) Georgia Cancellation & Non-Renewal
Provisions--45-Day Notice Requirement
CA 02 70 (8/94) Illinois Cancellation & Non-Renewal
Provisions--45-Day Notice Requirement
IL 02 72 (6/89) Indiana Cancellation & Non-Renewal
Provisions--45-Day Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-1 (p. 2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy, Most States
PERILS INSURED: Liability, "No-Fault," Medical Payments, Uninsured Motorists,
Physical Damage
Requirement
CA 02 15 (5/94) Maryland Cancellation & Non-Renewal
Provisions--45-Day Notice Requirement
IL 70 50 (12/90) Michigan Cancellation & Non-Renewal
Provisions--30-Day Notice Requirement
CA 02 17 (3/94) Michigan Cancellation & Non-Renewal
Provisions--30-Day Notice Requirement
CA 02 19 (3/94) Missouri Cancellation & Non-Renewal
Provisions--30-Day Cancellation and 60-Day Non-
Renewal Notice Requirement
IL 70 16 (6/89) Ohio Cancellation and Non-Renewal
Provisions--30-Day Notice Requirement
IL 70 20 (1/95) Pennsylvania Cancellation & Non-Renewal
Provisions--60-Day Notice Requirements
IL 70 23 (2/89) Tennessee Cancellation & Non-Renewal
Provisions--60-Day Non-Renewal Notice
Requirement
IL 70 51 (5/95) Wisconsin Cancellation & Non-Renewal
Provisions--75-Day Non-Renewal Notice
Requirement
CA 01 43 (1/87) California Changes
IL 01 69 (2/93) Colorado Concealment, Fraud, Misrepresentation
Exclusion
CA 01 07 (12/94) Connecticut Changes
CA 01 28 (5/94) Florida Changes--Mediation and Physical Damage
Appraisals
CA 01 20 (8/94) Illinois Changes--Liability Coverage Applies to
Illinois Mandatory Limits First
IL 01 58 (6/89) Notice to Indiana Agent is Notice to Insurer
IL 01 56 (7/89) Indiana Concealment, Fraud, Misrepresentation
Exclusion
CA 01 19 (3/94) Indiana Application of Two Policies
CA 73 21 (7/89) Maryland Waiver of "No-Fault" Option
CA 01 70 (5/94) Maryland Changes--Liability Fellow-Employee
Exclusion Does Not Apply to Minimum Statutory
Limits
CA 73 10 (7/89) Maryland Uninsured Motorists Limits Options
CA 73 20 (7/89) Maryland "No-Fault" Waiver Explanation
CA 01 10 (3/94) Michigan Changes
CA 01 65 (3/94) Missouri Changes
CA 01 88 (3/92) New Jersey Changes--Pollution Exclusion Not
Applicable Up to Minimum Statutory Limits
CA 01 26 (10/94) North Carolina Changes
CA 01 80 (3/95) Pennsylvania Changes--Constitutionality Clause
IL 09 10 (1/81) Pennsylvania Inspection/Survey Notice
CA 01 46 (3/94) Tennessee Changes--Application of Two Policies
CA 01 35 (9/94) Washington Changes
CA 01 17 (3/94) Wisconsin Changes
IL 79 68 (2/93) Wisconsin Complaint Address Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-2 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Massachusetts
PERILS INSURED: Liability, Personal Injury Protection, Uninsured Motorists,
Physical Damage
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1995 POLICY #: X3P082937-00
INSURER: Arbella Mutual PREMIUM: $4,382
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Liability, Each Accident 7 - Schedule Autos $1,000,000
Personal Injury Protection 7 - Schedule Autos 8,000
Medical Payments, Each Person 7 - Scheduled Autos 5,000
Uninsured Motorists, Each Accident 7 - Scheduled Autos 1,000,000
Comprehensive 7 - Scheduled Autos Actual Cash Value
DEDUCTIBLE:
Comprehensive $300
FORMS AND ENDORSEMENTS:
MM 00 97 (9/91) Declarations and Covered Auto Schedule
CA 00 01 (12/90) Business Auto Coverage Agreement
IL 00 17 (11/85) Conditions
16 AR 1077 (3/93) Mutual Policy Provisions
MM 99 13 (7/94) Massachusetts Auto Medical Payments Coverage
Agreement
MM 99 54 (7/94) Massachusetts Underinsured Motorists Coverage
Agreement
MM 99 11 (7/94) Massachusetts Changes, Personal Injury Protection
Coverage Agreement, Uninsured Motorists Coverage
Agreement
MM 99 43 (9/91) Massachusetts Racing Exclusion
MM 99 23 (9/91) Massachusetts Rate Modification Provisions
IL 00 21 (11/85) Nuclear Energy Liability Exclusion
MM 20 26 (9/91) Additional Insured--Lessor: First National Bank
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-3 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Texas
PERILS INSURED: Liability, No-Fault, Medical Payments, Uninsured Motorists
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 019 772-00
INSURER: American Manufacturers Mutual PREMIUM: $1,923
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAME INSURED: Chattem, Inc.; Chattem (Canada), Inc.; Chattem Consumer
Products Division; Chattem Overseas, Inc.; Chattem UK limited;
Chattem Chemicals Division; Chattem Acquisitions, Inc.;
Chattem Drug & Chemical Company, Inc.; Signal Investment &
Management Company; Hamico, Inc.
<TABLE>
<CAPTION>
COVERAGES AND LIMITS:
<S> <C> <C>
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection, Each Person 5 - Autos Subject to "No-Fault" 2,500
Medical Payments, Each Person 3 - Private Passenger Autos 5,000
Uninsured/Underinsured Motorists, Each Accident 2 - Owned Autos 1,000,000
</TABLE>
FORMS AND ENDORSEMENTS:
TE 72 00 (3/92) Declarations and Schedules
TE 00 01 (3/92) Business Auto Coverage Agreements
IL 7900 (7/87) Mutual Policy Provisions, Conditions, Nuclear Energy
Liability Exclusion
TE 04 01C (3/92) Personal Injury Protection Coverage Agreement
TE 99 03A (3/92) Medical Payments Coverage Agreement
TE 04 09D (5/94) Uninsured/Underinsured Motorists Coverage Agreement
TE 99 60A (3/92) Supplementary Death Benefit
TE 00 30C (3/92) Texas Changes
TE 00 31C (3/92) Texas Changes--Application of Liability Limits
TE 00 32A (3/92) Texas Cancellation and Non-Renewal
Provisions--60-Day Non-Renewal Notice
Requirement
TE 00 33A (3/92) Revised Definition of "Insured Contract"
TE 00 39B (12/92) Texas Changes--Claim Handling and Loss Settlements
TE 99 26B (3/92) Combined Single Limit Provisions
TE 00 37A (3/92) Texas Changes--Physical Damage Coverage for Sound
Equipment
IL 79 36 (4/87) Simplified Policy Language Notice
IL 79 63 (9/93) Texas Consumer Notice
T-001 TE 99 04A (3/92) Add TE 20 02A--Additional
Insured--Lessor
TE 20 02A (3/92) Additional Insured--Lessor (Limited Form):
Automotive Rentals, Inc.
TE 99 77A (3/92) Add Veh. #3
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-C-4 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Minnesota
PERILS INSURED: Liability, "No-Fault," Uninsured Motorists
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 0019770-00
INSURER: American Manufacturers Mutual PREMIUM: $388
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection 5 - Autos Subject to "No-Fault" Statutory
Uninsured Motorists, Each Accident 2 - Owned Autos 1,000,000
FORMS AND ENDORSEMENTS:
IL 79 01 (9/86) Declarations
CA 72 00 (12/90) Automobile Declarations
CA 72 01 (1/87) Owned Auto Schedule
CA 00 01 (12/93) Business Auto Coverage Agreements
IL 7900 (7/87) Mutual Policy Provisions, Conditions, Nuclear Energy
Liability Exclusion
CA 22 25 (6/91) Minnesota Personal Injury Protection Coverage Agreement
CA 21 24 (7/92) Minnesota Uninsured/Underinsured Motorists Coverage
Agreement
CA 01 38 (3/93) Minnesota Changes
CA 02 18 (1/92) Minnesota Cancellation and Non-Renewal
Provisions - 30-Day Cancellation and 60-Day Non-
Renewal Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-1 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft
PERILS INSURED: Liability, Medical Expenses, Hull Physical Damage, Voluntary
Settlements
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 360AC-259574
INSURER: USAIG PREMIUM: $12,453
AGENT/BROKER: Insurance, Inc. TELEPHONE: (615) 472-5051
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Bodily Injury and Property Damage Liability, Each Occurrence $50,000,000
Medical Expenses, Each Person 5,000
Voluntary Settlements, Including Crew Each Person 250,000
Each Accident 2,500,000
Personal Injury Liability, Aggregate 25,000,000
Passenger Baggage Property Damage Liability, Each Person 5,000
Hangar Damage Liability, Aggregate 500,000
Emergency Expense Reimbursement, Each Occurrence 5,000
Search and Rescue, Each Occurrence 25,000
Physical Damage to Spare Engines and Parts, Each Occurrence 100,000
Extra Expense, Temporary Aircraft, 60 Days Each Day 3,300
Each Occurrence 100,000
Extra Expense, Temporary Replacement Parts, 10 Days, Each Occurrence 25,000
AIRCRAFT: 1982 Mitsubishi MU-300 Diamond N306P
DEDUCTIBLES:
Physical Damage: Nil
Extra Expense: 7 Days
FORMS AND ENDORSEMENTS:
Declarations
Coverage Agreements
428-AC (1/95) Syndicate Schedule
367-AC Mexican Operations Warning
1. 396-AC Voluntary Settlements Coverage Provisions
2. 372-AC (6/89) Non-Owned Aircraft Liability Coverage Provisions
3. Medical Payments & Liability for Mobile Equipment
Coverage Provisions
4. Pilot Qualifications
5. 396-AC (10/79) Lienholder's/Lessor's Interest Provisions: First
National Bank of Chicago
6. 385A-AC (6/93) Broad Expansion Provisions
Liability for Damage to Airport Premises
Liability for Physical Damage to Non-Owned Aircraft
Liability for Damage to Passenger Personal Effects
and Hangars
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-1 (p. 2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft
PERILS INSURED: Liability, Medical Expenses, Hull Physical Damage, Voluntary
Settlements
<TABLE>
<CAPTION>
<S>> <C>
Contractual Liability
Liability Arising out of Sale of Owned Aircraft
Reimbursement of Emergency Expenses
Transportation Expenses after Emergency Landing
Automatic Coverage for Increased Values
Physical Damage to Spare Engines and Parts
Extra Expense Coverage Provisions, Temporary Aircraft
Extra Expense Coverage Provisions, Temporary Replacement Parts
7. 375-AC Additional Insured and Waiver of Subrogation Rights: Flightsafety
International
8. 533-AC (6/89) Non-Owned Aircraft Liability Passenger Seat Restriction--60 Seats
9. 532-AC (1/93) Personal Injury Coverage Agreement
10. Revised Definitions of "Total Loss" and "Constructive Total Loss"
11. 373-AC (10/92) Wear and Tear Exclusion
12. 448-AC (7/93) Bodily Injury Liability Employment Practices Exclusion
13. 530-AC (1/86) Pollution/Environmental Disturbance Exclusion
14. 449-AC (4/93) Definition of "Mental Anguish"
15. 531-AC (2/86) War and Hijacking Exclusion
16. 386A-AC (9/92) Limited War and Hijacking Coverage
17. Additional Pilot Provisions
</TABLE>
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-2 (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft Liability - Mexico
PERILS INSURED: Bodily Injury and Property Damage Liability
INCEPTION: MAY 31, 1995 EXPIRATION: May 31, 1996 POLICY #: RCG-19604/LAT 01627
INSURER: Seguros Comercial America PREMIUM:
AGENT/BROKER: USAIG
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
A. Property Damage Liability Each Accident $100,000
B. Bodily Injury (excluding passengers and crew) Each Person 100,000
Each Accident 300,000
FORMS AND ENDORSEMENTS:
RP-15 Coverage Certificate
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-E (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Umbrella Liability
PERILS INSURED: Personal Injury, Property Damage, Advertising Injury
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 5109607
INSURER: Lexington PREMIUM: $143,208
AGENT/BROKER: Swett and Crawford/Associated TELEPHONE: (423) 756-4452
General Agency
NAMED INSURED: Chattem, Inc., Chattem Canada, Inc., Chattem Overseas, Inc.,
Chattem, UK Limited, Chattem Acquisitions, Inc.,
Chattem Drug and Chemical Company, Inc., Signal Investment
and Management Company of Delalware, HBA Insurance Ltd.
(Bermuda)
COVERAGES AND LIMITS:
Each Occurrence $20,000,000
Annual Aggregate, Separately to Products and All Other,
Except Auto 20,000,000
SELF-INSURED RETENTION: $50,000
FORMS AND ENDORSEMENTS:
Declarations
LX0295 Form Schedule
LX0327 (6/89) Schedule of Underlying Insurance
LEXOCCUMB2T (7/94) Umbrella Coverage Agreements
001. LEXCME005 (3/86) Accutane Exclusion
002. LEXCME037 (3/86) DES, Contraceptive Device, and Swime Flu Exclusion
003. LEXCME121 (3/86) HTLV Exclusion
004. LEXCME126 (3/86) Non-F.D.A. Approved Product Exclusion
005. LEXOCC207 (4/90) L-Tryptophan Exclusion
006. LEXOCC262 (6/91) Securities and Financial Interest Exclusion
007. LEXOCC271 (3/92) Employment-Related Practices Exclusion
008. LEXOCC181 (4/90) Clinial Testing Exclusion
009. Non-Concurrency Provisions
010. Self-Insured Retention Provisions
011. Amended Insuring Agreement I
012. Pollution Exclusion with Named Perils Exceptions
013. Premises, Operations, Products, Completed
Operations Hazards on CLAIMS-MADE BASIS
014. Additional Insureds: First National Bank of
Chicago, Sterling-Winthrop, Inc.
015. Named Insured
016. 90-Day Cancellation Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 1)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 8133-94-04-B
INSURER: Federal Insurance Company PREMIUM:
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
GENERAL PROVISIONS
FORMS AND ENDORSEMENTS:
14-02-0941 (1/92) Declarations and Conditions Applicable to All
Coverage Sections
14-02-1252 (12/92) Endorsement Schedule
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 2)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
EXECUTIVE LIABILITY AND INDEMNIFICATION COVERAGE SECTION - CLAIMS -
MADE
COVERAGES AND LIMITS:
Each Wrongful Act and Annual Aggregate $25,000,000
DEDUCTIBLE:
Indemnification Coverage Agreement 1,000,000
PENDING OR PRIOR LITIGATION EXCLUSION DATE: October 27, 1986
CONTINUITY DATE: October 27, 1986
COVERED PERSONS: Any past, present, or future director or officer
FORMS AND ENDORSEMENTS:
14-02-0943 (1/92) Executive Liability Declarations and Coverage
Provisions
1. 14-02-1161 (1/92) Punitive Damages Covered if Insurable Under Law
2. 14-02 0961 (1/92) Add Hamico, Inc. & HBA Insurance Limited to Insured
Organization
3. 14-02-0961 (1/92) Extend Coverage to Employees who are Co-Defendants with
Directors
4. 14-02-1047 (4/92) Revised Bodily and Personal Injury Exclusion
5. 14-02-1103 (4/92) Advertising Injury Exclusion
6. 14-02-1166 (6/92) Spousal Coverage Extension
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 3)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
FIDUCIARY LIABILITY COVERAGE SECTION--CLAIMS MADE
COVERAGES AND LIMITS:
Each Wrongful Act and Annual Aggregate $5,000,000
DEDUCTIBLE:
Indemnifiable Loss: 10,000
PENDING OR PRIOR LITIGATION EXCLUSION DATE: October 27, 1986
CONTINUITY DATE: October 27, 1986
COVERED PLANS: Any Benefit Plan Sponsored, Maintained,
or Administered by Chattem, Inc.
FORMS AND ENDORSEMENTS:
14-02-0945 (1/92) Declarations and Coverage Provisions
1. 14-02-1423 (1/94) Revised "Claim" Definition
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 4)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
CRIME COVERAGE SECTION
COVERAGES AND LIMITS:
Employee Theft $2,000,000
Premises 2,000,000
Transit 2,000,000
Depositors' Forgery 2,000,000
Computer Theft/Funds Transfer 2,000,000
Money Orders and Counterfeit Currency 2,000,000
DEDUCTIBLE:
Benefit Plan Losses Nil
All Other Losses 10,000
FORMS AND ENDORSEMENTS:
14-02-0947 (1/92) Declarations and Coverage Provisions
1. 14-02-0998 (4/92) Money Orders and Counterfeit Coverage Provisions
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 5)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
OUTSIDE DIRECTORSHIP COVERAGE SECTION - CLAIMS MADE
COVERAGES AND LIMITS:
Each Wrongful Act and Annual Aggregate $5,000,000
DEDUCTIBLE:
Indemnification Coverage 100,000
PENDING OR PRIOR LITIGATION DATE: May 31, 1990
CONTINUITY DATE: May 31, 1990
FORMS AND ENDORSEMENTS:
14-02-0951 (1/92) Outside Directorship Liability Declarations and
Coverage Provisions
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 6)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
KIDNAP/RANSOM AND EXTORTION COVERAGE SECTION
COVERAGES AND LIMITS:
Kidnap/Ransom and Extortion $10,000,000
Delivery 10,000,000
Expense 10,000,000
Legal Liability 10,000,000
Political Threat 10,000,000
DEDUCTIBLE: Nil
FORMS AND ENDORSEMENTS:
14-02-0949 (1/92) Declarations and Coverage Provisions
<PAGE>
SCHEDULE 8.2
LIENS
DEBTOR SECURED PARTY UCC FIX FED ST JUDGE FILE #
Chattem, Inc. EMC Corp. X 92125089
171 South St. 9/29/92
Hopkintown, MA 01748
Assigned To:
Romax Finance Corp. 92135033
33 Boston Post Road West 10/30/92
Suite 270
Marlboro, MA 01752
Assigned To:
First American National 92135034
Bank Equipment Finance 10/30/92
TN Sec of St. Division
First American Center
Nashville, TN 37237
Chattem, Inc. Lookout Leasing Co., Inc. X 95413203
410 Spring Street 3/27/95
Chattanooga, TN 37405
Assigned To:
AmSouth of Tennessee
TN Sec of St 602 Market Center
Chattanooga, TN 37402
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Codes
3 Maturity date (if any):
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1 Debtor (Last Name First) and address(es) 2 Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number
Filing Office)
Chattem, Inc. EMC Corporation 92 135033 11/02/92A01
1715 West 38th Street 171 South Street 3:40 PM
Chattanooga, TN 37409 Hopkinton, MA 01748
- -----------------------------------------------------------------------------------------------------------------------------------
This statement refers to original Financing Statement No. 92-125089 Dated September 08-TN $93.00
- -----------------------------------------------------------------------------------------------------------------------------------
A. Continuation / / B. Partial Release / / C. Assignment /X/ D. ??????? $10.00
------ ------ ----------
The original financing From the collateral described The Secured Party certifies
statement between the in the financing statement that the Secured Party has
foregoing Debtor and bearing the file number shown assigned to the Assignee whose
Secured Party, bearing the above, the Secured Party name and address is shown below,
file number shown above, releases the following: Secured Party's rights under the
is still effective. financing statement bearing the
file number shown above in the
following property:
(Fee $10.00) (Fee $10.00) (Fee $10.00)
- -----------------------------------------------------------------------------------------------------------------------------------
Assignee: Romax Finance Corporation 135033
33 Boston Post Road, West 10-30-92
Suite 270 9:54 AM
Marlboro, MA 01752
(1) SYMMETRIX, 4816-E Disk Storage Device, 20 GB Disk Storage / 384 MB Cache Memory; Including but not limited to all
replacements, parts, repairs, and attachments, incorporated therein or affixed thereto, now owned or hereafter acquired.
(Debtor) EMC Corporation
- --------------------------------------------------
(Signature of Debtor, if required)
----------------------------------------------------------
Dated: , 19 By: /s/ Timothy B. Cassidy
---------------------------------------- ------- -------------------------------------------------------
Signature(s) of Secured Party(ies)
</TABLE>
(1) FILING OFFICER COPY-- ALPHABETICAL
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Debtor (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number, and
Filing Office
Chattem, Inc. Romax Finance Corporation
1715 West 38th Street 33 Boston Post Road, West
Chattanooga, TN 37409 Suite 270
Marlboro, MA 01752 135034 11/02/92A01
3:40 PM
- ----------------------------------------------------------------------------------------------------------------------------------
This statement refers to original Financing Statement No. 92-125089 Dated September 29 $10.00
- ----------------------------------------------------------------------------------------------------------------------------------
A. Continuation / / B. Partial Release / / C. Assignment / / D. $10.00 / /
------ ------ -----
The original financing statement From the collateral described in The Secured Party certifies that
between the foregoing Debtor and the financing statement bearing the Secured Party has assigned to
Secured Party, bearing the file the file number shown above, the the Assignee whose name and address
number shown above, is still ef- Secured Party releases the follow- is shown below, Secured Party's
fective. ing: rights under the financing statement
bearing the file number shown above
in the following property:
(Fee $5.00) (Fee $5.00) (Fee $5.00)
- ----------------------------------------------------------------------------------------------------------------------------------
Assignee: First American National Bank
First American Center
Equipment Finance Division
Nashville, TN 37237-4507
1 (One) Symmetrix 4816-E Disk Storage Device, 20GB Disk Storage/384 MB Cache Memory; Including but not limited to all
replacements, parts, repairs, and attachments, incorporated therein or affixed thereto, now owned or hereafter acquired.
(Debtor) ROMAX FINANCIAL CORPORATION
- ---------------------------------------------
(Signature of Debtor, if required)
Dated: , 19 By: /s/ Vice President
---------------------------- ---- -----------------------------------------
Signature(s) of Secured Party(ies)
(1) FILING OFFICER COPY - ALPHABETICAL
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Code:
3 Maturity date (if any):
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 (Last Name First) and address(es) 2 Secured Party(ies) and address(es) For filing Officer (Date, Time, Number and
Filing Office)
Lessee: Chattem, Inc. Lessor: Lockout Leasing Co., Inc. 95 413203 03/27/95AO
1715 W. 38th St. 410 Spring St. 2:52 PM
Chattanooga, TN 37409 Chattanooga, TN 37405 FS-TN $10.00
AG-TN $10.00
SEC/ST $20.00
- ------------------------------------------------------------------------------------------------------------------------------------
4 This financing statement covers the following types (or items) of property:
See attached "Schedule of Leased Equipment"
This financing statement covers a true lease of the above equipment as evidenced by an equipment lease dated 02/28/95 by
and between Chattem Inc., Lessee, and Robert A. Morrsion Jr., d/b/a Lookout Leasing Company, Lessor.
ASSIGNEE OF SECURED PARTY 413203
AMSOUTH OF TENNESSEE 3-27-95
601 MARKET CENTER 10:21 AM
CHATTANOOGA, TN 37402
Check /X/ if covered: / / Proceeds of collateral are also covered / / Products of Collateral are also covered No. of additional
sheets presented:
- ------------------------------------------------------------------------------------------------------------------------------------
Filed with:
- ------------------------------------------------------------------------------------------------------------------------------------
Chattem, Inc. Lookout Leasing Co., Inc.
- ------------------------------------------------------ -------------------------------------------------------------------------
By:/s/ Robert E. Bosworth By:/s/ Bill Morrison
--------------------------------------------------- ----------------------------------------------------------------------
Signature(s) of Lessee Signature(s) of Lessor
</TABLE>
(1) FILING OFFICER COPY-ALPHABETICAL
<PAGE>
SCHEDULE 8.8
AFFILIATE TRANSACTIONS
1. A director, Louis H. Barnett, is a consultant to Chattem, Inc. and
received $33,000 for such services in 1995.
2. In connection with the acquisition of Gold Bond from Martin Himmel Inc.
and the financing under the Credit Documents, Chattem, Inc. has issued
$5.5 million of its common stock to certain affiliates and other
investors. Chattem, Inc. received a fairness opinion from an
independent investment banking firm in connection with the transaction.
<PAGE>
SCHEDULE 11.1
NOTICES
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
Attn: Robert E. Bosworth, Executive Vice President
Fax: 423-821-0395
Signal Investment & Management Co.
1105 North Market Street
Suite 1300
Wilmington, DE 19890
Attn: Robert E. Bosworth, President
<PAGE>
Exhibit 2.1
to
Credit Agreement
FORM OF NOTICE OF BORROWING
TO: NATIONSBANK, N.A., as Agent
NATIONSBANK CORPORATE CENTER
CHARLOTTE, NORTH CAROLINA 28255
RE: Credit Agreement dated as of April __, 1996
among Chattem, Inc. (the "Borrower") the
Domestic Subsidiaries of the Borrower,
NationsBank, N.A., as Agent and the Lenders
party thereto (as the same may be amended,
modified, extended or restated from time to
time, the "Credit Agreement")
DATE: , 199
----------------- -
- -------------------------------------------------------------------------------
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting Revolving Loans in the
amount of $__________ to be funded on __________, 199_ at the interest
rate option set forth in paragraph 3 below. Subsequent to the funding of
the requested Revolving Loans, the aggregate amount of outstanding
Revolving Loans will be $__________, which together with the aggregate
amount of Working Capital Revolving Loans outstanding is less than or
equal to the lesser of (x) the sum of the Revolving Committee Amount plus
the Working Capital Committed Amount and (y) the Borrowing Base.
3. The interest rate option applicable to the requested Revolving Loans
shall be:
a. __________ the Adjusted Base Rate
b. __________ the Adjusted Eurodollar Rate for an Interest Period of:
__________ one month
__________ two months
__________ three months
4. The representations and warranties made by the Credit Parties in the
Credit Documents are true and correct in all material respects at and as if
made on the date hereof.
<PAGE>
5. As of the date hereof, no Default or Event of Default has occurred and
is continuing or would be caused by this Notice of Borrowing.
6. No Material Adverse Effect has occurred since the Closing Date.
CHATTEM, INC.
By:
-------------------------
Name:
-----------------------
Title:
-----------------------
<PAGE>
Exhibit 2.4
to
Credit Agreement
FORM OF NOTICE OF CONTINUATION/CONVERSION
TO: NATIONSBANK, N.A., as Agent
NATIONSBANK CORPORATE CENTER
CHARLOTTE, NORTH CAROLINA 28255
RE: Credit Agreement dated as of April ____, 1996
among Chattem, Inc. (the "Borrower") the
Domestic Subsidiaries of the Borrower,
NationsBank, N.A., as Agent, and the Lenders
party thereto (as the same may be amended,
modified, extended or restated from time to
time, the "Credit Agreement")
DATE: , 199
----------------- --
- -------------------------------------------------------------------------------
1. This Notice of Continuation/Conversion is made pursuant to the terms of
the Credit Agreement. All capitalized terms used herein unless otherwise
defined shall have the meanings set forth in the Credit Agreement.
2. Please be advised that:
_______ (a) the Borrower is requesting that a portion of the current
outstanding Revolving Loans in the amount of $____ currently
accruing interest at _______ be extended or converted as of
_______ at the interest rate option set forth in paragraph 3
below.
_______ (b) the Borrower is requesting that a portion of the outstanding
Tranche A Term Loans in the amount of $_____ currently accruing
interest at _______ be extended or converted as of _______
at the interest rate option set forth in paragraph 3 below.
_______ (c) the Borrower is requesting that a portion of the outstanding
Tranche B Term Loans in the amount of $______ currently
accruing interest at _______ be extended or converted as of
_________ at the interest rate option set forth in paragraph 3
below.
3. The interest rate option applicable to the extension or conversion of all
or part of the existing Revolving Loans, the Tranche A Term Loans or the
Tranche B Term Loans (as set forth above) shall be:
<PAGE>
a. _____ the Adjusted Base Rate
b. _____ the Adjusted Eurodollar Rate for an Interest Period of:
_______ one month
_______ two months
_______ three months
4. The representations and warranties made by the Credit Parties in the
Credit Documents are true and correct in all material respects at and as
if made on the date hereof.
5. As of the date hereof, no Default or Event of Default has occurred and is
continuing or would be caused by this Notice of Continuation/Conversion.
6. No Material Adverse Effect has occurred since the Closing Date.
CHATTEM, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE>
Exhibit 2.5 (a)
to
Credit Agreement
FORM OF
REVOLVING NOTE
$ ,1996
-------------- -----------------
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of _____________
(the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth
in that certain Credit Agreement dated as of ____________ , 1996 between the
Borrower, the Domestic Subsidiaries of the Borrower, the Lenders named
therein (including the Lender) and NationsBank, N.A., as Agent (as modified
and supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
the principal sum of $__________ (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Revolving Loans made by the Lender
to the Borrower under the Credit Agreement), in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Revolving Loan, at such office, in
like money and funds, for the period commencing on the date of
such Revolving Loan until such Revolving Loan shall be paid in full, at the
rates per annum and one the dates provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Notes and not otherwise defined
shall have the respective meanings assigned to them in the Credit Agreement
and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Revolving Loans evidenced by this Revolving Notes upon the occurrence of
certain events (and for payment of collection costs in connection therewith)
and for prepayments of Revolving Loans upon the terms and conditions
specified therein. In the event this Revolving Note is not paid when due at
any stated or accelerated maturity, the Borrower agrees to pay, in addition
to the principal and interest, all costs of collection, including reasonable
attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of each Revolving Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded
by the Lender on its books; provided that the failure of the Lender to make
any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under
this Revolving Note in respect of the Revolving Loans to be evidenced by this
Revolving Note, and each such recordation or endorsement shall be conclusive
and binding absent manifest error.
This Note and the Revolving Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the borrower as provided in
Section 11.3 (d) of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CHATTEM, INC.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
-2-
<PAGE>
FORM OF
TRANCHE A TERM NOTE
$ , 1996
-------------- -----------------
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of ___________ (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A.
(the "ADMINISTRATIVE AGENT") as set forth in that certain Credit Agreement
dated as of April ___, 1996 among the Borrower, the Domestic Subsidiaries of
the Borrower, the Lenders named therein (including the Lender) and
NationsBank, N.A., as Agent, (as modified and supplemented and in effect
from time to time, the "CREDIT AGREEMENT"), the principal sum of $ ______
(or such lesser amount as shall equal the aggregate unpaid principal amount
of the Tranche A Term Loan made by the Lender to the Borrower under the
Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Tranche A Term Loan, at such office, in like money
and funds, for the period commencing on the date of such Tranche A Term Loan
until such Tranche A Term Loan shall be paid in full, at the rates per annum
and on the dates provided in the Credit Agreement.
This Note is one of the Tranche A Term Loan Notes referred to in the
Credit Agreement and evidences the Tranche A Term Loan made by the Lender
thereunder. Capitalized terms used in this Tranche A Term Loan Note and not
otherwise defined shall have the respective meanings assigned to them in the
Credit Agreement and the terms and conditions of the Credit Agreement are
expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Tranche A Term Loan evidenced by this Tranche A Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of such Tranche A Term Loan upon
the terms and conditions specified therein. In the event this Tranche A Term
Loan Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs
of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of the Tranche A Term Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender
to make any such recordation or endorsement shall not affect the obligations
of the Borrower to make a payment when due of any amount owing hereunder or
under this Tranche A Term Loan Note in respect of the Tranche A Term Loan to
be evidenced by this Tranche A Term Loan Note, and each such recordation or
endorsement shall be conclusive and binding absent manifest error.
This Note and the Tranche A Term Loan evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as
provided in Section 11.3 (d) of the Credit Agreement.
THIS TRANCHE A TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Loan
Note to be executed as of the date first above written.
CHATTEM, INC.
By:
--------------------------
Name:
---------------------
Title:
---------------------
-2-
<PAGE>
Exhibit 2.5 (c)
to
Credit Agreement
FORM OF
TRANCHE B TERM NOTE
$ , 1996
--------------------- ------------
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of ____________ (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A. (the
"AGENT") as set forth in that certain Credit Agreement dated as of April ___,
1996 between the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent
(as modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $ ________ (or such lesser amount as
shall equal the aggregate unpaid principal amount of the Tranche B Term Loan
made by the Lender to the Borrower under the Credit Agreement), in lawful
money of the United States of America and in immediately available funds, on
the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of such Tranche B Term Loan,
at such office, in like money and funds, for the period commencing on the
date of such Tranche B Term Loan until such Tranche B Term Loan shall be paid
in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the
Credit Agreement and evidences the Tranche B Term Loan made by the Lender
thereunder. Capitalized terms used in this Tranche B Term Loan Note and not
otherwise defined shall have the respective meanings assigned to them in the
Credit Agrement and the terms and conditions of the Credit Agreement are
expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of such Tranche B Term Loan upon
the terms and conditions specified therein. In the event this Tranche B Term
Loan Notes is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs
of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of the Tranche B Term Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books; provided that the failure of the
Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower to make a payment when due of any amount owing
hereunder or under this Tranche B Term Loan Note in respect of the Tranche B
Term Loan to be evidenced by this Tranche B Term Loan Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Tranche B Term Loan evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as
provided in Section 11.3(d) of the Credit Agreement.
THIS TRANCHE BE TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan
Note to be executed as of the date first above written.
CHATTEM, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
2
<PAGE>
Exhibit 7.1 (e)
to
Credit Agreement
FORM OF OFFICER'S CERTIFICATE
For the fiscal quarter ended ____________, 19__.
I, _____________________, chief financial officer of
Chattem, Inc. (the "BORROWER") hereby certify that, with respect
to that certain Credit Agreement dated as of April __, 1996 (as
it may be amended, modified, extended or restated from time to
time, the "CREDIT AGREEMENT"; all of the defined terms in the Credit
Agreement are incorporated herein by reference) among the Borrower, the other
Credit Parties party thereto, the Lenders party thereto and NationsBank,
N.A., as Agent:
a. Attached hereto as SCHEDULE 1 are calculations demonstrating
compliance by the Credit Parties with the financial covenants contained
in Section 7.12 of the Credit Agreement as of the end of the fiscal
period referred to above.
b. No Default or Event of Default has occurred under the Credit
Agreement(1).
c. The Borrower - prepared quarterly financial statements which
accompany this certificate fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, subject to changes resulting from
normal year-end audit adjustments.
d. As of the end of fiscal period referred to above, the Borrower
and its Subsidiaries have made outstanding loans to directors, officers,
employees, agents, customers or suppliers in the ordinary course of
business for reasonable business expenses in an amount of $________ in
the aggregate.
e. Subsequent to the Closing Date, the Borrower and its
Subsidiaries have made Investments in Chattem (Canada) Inc. in an
aggregate amount equal to $_________.
f. Subsequent to the Closing Date, the Borrower and its
Subsidiaries have made Investments in Chattem (U.K.) Limited in an
aggregate amount equal to $________.
- --------------
1 If a Default or Event of Default shall have occurred an explanation of
such Default or Event of Default shall be provided on a separate page
together with an explanation of the action taken or proposed to be taken by
the Credit Parties with respect thereto.
<PAGE>
Exhibit 7.1 (e)
to
Credit Agreement
g. Subsequent to the Closing Date, the Borrower and its Subsidiaries
have made Investments in Permitted Acquisitions, including any contingency
payments associated therewith, in an aggregate amount equal to $________.
h. As of the end of the fiscal period referred to above, purchase
money Indebtedness incurred by the Borrower and its Subsidiaries to finance
the purchase of fixed assets equals an aggregate principal amount of $____.
i. As of the end of the fiscal period referred to above, Indebtedness
owing by Foreign Subsidiaries equals an aggregate amount equal to $_______.
j. The Credit Parties and their Subsidiaries have made Capital
Expenditures in the current fiscal year in an aggregate amount equal to
$________.
k. The aggregate annual payments of the Borrower and its Subsidiaries
under Operating Leases for the current fiscal year equals $________.
This ______ day of ______________, 19___.
CHATTEM, INC.
----------------------------
Chief Financial Officer
-2-
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
Schedule 1
1. Interest Coverage Ratio
(a) EBIT $
--------------
(b) Cash Interest Expenses $
--------------
(c) EBIT to cash
Interest Expense Ratio
[(a) / (b)] 1:0
--------------
2. Fixed Charge Coverage Ratio
(a) EBITDA $
--------------
(b) Capital Expenditures $
--------------
(c) EBITDA minus
Capital Expenditures
[(a) - (b)] $
--------------
(d) Cash Interest Expense $
--------------
(e) Taxes $
--------------
(f) Scheduled Funded Debt Payments $
--------------
(g) [(d) + (e) + (f)] $
--------------
(h) Fixed Charge Coverage
Ratio [(c) / (g)] :1.0
--------------
3. Leverage Ratio
(a) Funded Debt $
--------------
(b) EBITDA $
--------------
(c) Funded Debt to
EBITDA Ratio
[(a) / (b)] :1.0
--------------
4. Senior Leverage Ratio
(a) Funded Debt $
--------------
(b) Subordinated Debt $
--------------
-3-
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
(c) [(a) - (b)] $
--------------
(d) EBITDA $
--------------
(e) Senior Leverage Ratio
[(c) / (d)] :1.0
--------------
5. Net Worth
(a) Actual Net Worth as of the end
of fiscal period referred to above $
--------------
(b) Net Worth on Closing Date $
--------------
(c) .50 x cumulative Net Income
(without deductions for any losses)
subsequent to Closing Date $
--------------
(d) Net Cash Proceeds from
Equity Issuance subsequent to
Closing Date $
--------------
(e) Net worth required by Section
7.12(e) [(b) + (c) + (d)] $
--------------
-4-
<PAGE>
Exhibit 7.1 (g)
to
Credit Agreement
Form of
Borrowing Base Certificate
For the calendar month ended ______________, 19____.
I, the undersigned, the chief financial officer of Chattem, Inc. (the
"BORROWER") hereby certify that as of the date hereof, with respect to that
certain Credit Agreement dated as of April , 1996 (as it may be amended,
modified, extended or restated from time to time, the "CREDIT AGREEMENT";
all capitalized terms used herein shall have the meanings given to such terms
in the Credit Agreement) among the Borrower, the other Credit Parties party
thereto, the Lenders party thereto and NationsBank, N.A., as Agent:
RECEIVABLES
-----------
1. Gross Amount or Receivables $
------------------
2. Less: Receivables subject to any Lien,
other than Liens securing Credit
Party Obligations ($ )
---------
3. Less: Receivables which are more than
60 days past due ($ )
---------
4. Less: Receivables owing from an
account debtor with 20% of balance
owing by such account debtor 60
days past due ($ )
---------
5. Less: Receivables evidenced by notes,
or other instruments not in possession
of Agent ($ )
---------
6. Less: Receivables owing by insolvent
account debtor or account debtor subject
to bankruptcy or insolvency proceedings ($ )
---------
7. Less: Foreign Receivables ($ )
---------
8. Less: Contingent Receivables or
Receivables subject to offset, counter-
claim, etc. ($ )
---------
9. Less: Receivables for which Affiliate
or Subsidiary is account debtor ($ )
---------
<PAGE>
10. Less: Non-Complying Governmental
Receivables ($ )
---------
11. Less: Receivables in excess of 25%
concentration limit ($ )
---------
12. Less: Other Ineligible Receivables ($ )
---------
13. Total of Ineligible Receivables ($ )
---------
14. Eligible Receivables (as defined in
Section 1.1 of the Credit Agreement)
(Line 1 minus Line 13) $
---------
15. Available Eligible Receivables (80%
of Eligible Receivables) $
---------
INVENTORY
16. Gross Amount of Inventory $
---------
17. Less: Inventory subject to any Lien,
other than Liens securing Credit Party
Obligations ($ )
---------
18. Less: Inventory in poor condition or
Inventory which fails to adhere standards
of governmental authorities ($ )
---------
19. Less: Obsolete and not useable or
saleable Inventory ($ )
---------
20. Less: Foreign Inventory ($ )
---------
21. Less: Inventory at locations not
owned or leased by the Borrower ($ )
---------
22. Less: Inventory at leased premises
or in a public warehouse facility w/o
landlord or other necessary third party
consent ($ )
---------
23. Less: Inventory which is leased or
on consignment ($ )
---------
24. Less: Packaging Materials and Supplies ($ )
---------
25. Less: Goods in transit ($ )
---------
26. Less: Inventory in which Agent does not
have first priority security interest ($ )
---------
27. Less: Other Ineligible Inventory ($ )
---------
-2-
<PAGE>
Exhibit 7.1 (g)
to
Credit Agreement
28. Total Ineligible Inventory ($ )
---------
29. Eligible Inventory (as defined in
Section 1.1 of the Credit Agreement)
(Line 16 minus Line 28) $
---------
30. Available Eligible Inventory
(50% of Eligible Inventory) $
---------
CASH COLLATERAL
31. Dollar amount in Cash Collateral Account $
---------
BORROWING BASE
32. Total Borrowing Base availability
(Line 15 plus Line 30 plus Line 31 plus
$3 million until August 31, 1996) $
---------
33. Aggregate Outstanding (i) Revolving
Loans under the Credit Agreement and (ii)
Working Capital Revolving Loans under the
Working Capital Credit Agreement $
---------
34. a. _________ If the Borrower is
requesting a Revolving
Loan or Working Capital Revolving
Loan and if Line #32 is greater than
Line #33, then the difference ($______)
is available for extensions of credit
under the Credit Agreement and Working
Capital Credit Agreement.
b. __________ If the Borrower intends to withdraw
dollars from the Cash Collateral Account
and if Line #32 is greater than Line #33,
then the difference ($_____) is available
to be withdrawn from the Cash Collateral Account.
35. If Line #33 is greater than Line #32, then the Borrower shall (i) prepay
or otherwise reduce so much of the outstanding Revolving Loans and Working
Capital Revolving Loans as shall be necessary to eliminate such excess or
(ii) deposit additional funds in the Cash Collateral Account as shall be
necessary to eliminate such access.
-3-
<PAGE>
With reference to this Borrowing Base Certificate, I hereby certify on behalf
of the Borrower that the above statements are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this ___ day of
__________________, 19___.
CHATTEM, INC.
[CORPORATE SEAL]
By
-----------------------
Chief Financial Officer
-4-
<PAGE>
Exhibit 7.13
to
Credit Agreement
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (this "Agreement"), dated as of __________, 199_,
is entered into between __________, a __________ (the "New Subsidiary") and
NATIONSBANK, N.A., in its capacity as Agent (the "Agent") under that certain
Credit Agreement, dated as of April __, 1996 among Chattem, Inc. (the
"Borrower"), the domestic Subsidiaries of the Borrower, the Lenders party
thereto and the Agent (as the same may be amended, modified, extended or
restated from time to time, the "Credit Agreement"). All capitalized terms
used herein and not otherwise defined shall have the meanings set forth in
the Credit Agreement.
The New Subsidiary and the Agent, for the benefit of the Lenders, hereby
agree as follows:
1. The New Subsidiary hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the New Subsidiary will be deemed to be a
Credit Party under the Credit Agreement and a "Guarantor" for all purposes of
the Credit Agreement and shall have all of the obligations of a Guarantor
thereunder as if it had executed the Credit Agreement. The New Subsidiary
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Credit Agreement, including
without limitation (a) all of the representations and warranties of the
Credit Parties set forth in Section 6 of the Credit Agreement, (b) all of the
affirmative and negative covenants set forth in Sections 7 and 8 of the
Credit Agreement and (c) all of the guaranty obligations set forth in Section
4 of the Credit Agreement. Without limiting the generality of the foregoing
terms of this paragraph 1, the New Subsidiary, subject to the limitations set
forth in Section 4.7 of the Credit Agreement, hereby guarantees, jointly and
severally with the other Guarantors, to the Agent and the Lenders, as
provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Credit Party Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration or otherwise)
strictly in accordance with the terms thereof and agrees that if any of the
Credit Party Obligations are not paid or performed in full when due (whether
at stated maturity, as a mandatory prepayment, by acceleration or otherwise),
the New Subsidiary will, jointly and severally together with the other
Guarantors, promptly pay and perform the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Credit Party Obligations, the same will be promptly
paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
<PAGE>
2. The New Subsidiary is, simultaneously with the execution of this
Agreement, executing and delivering such Collateral Documents (and such other
documents and instruments) as requested by the Agent in accordance with
Section 7.13 of the Credit Agreement.
3. The address of the New Subsidiary for purposes of Section 11.1 of
the Credit Agreement is as follows:
-------------------------
-------------------------
-------------------------
-------------------------
4. The New Subsidiary hereby waives acceptance by the Agent and the
Lenders of the guaranty by the New Subsidiary under the Credit Agreement upon
the execution of this Agreement by the New Subsidiary.
5. This Agreement 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.
6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be
duly executed by its authorized officer, and the Agent, for the benefit of
the Lenders, has caused the same to be accepted by its authorized officer, as
of the day and year first above written.
[NEW SUBSIDIARY]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Acknowledged and accepted:
NATIONSBANK, N.A., as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 2 -
<PAGE>
Exhibit 11.3
to
Credit Agreement
FORM OF
ASSIGNMENT AGREEMENT
Reference is made to that certain Credit Agreement dated as of April __,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "Credit Agreement") among Chattem, Inc. (the "Borrower"), the
Domestic Subsidiaries of the Borrower, the Lenders identified therein and
NationsBank, N.A., as Agent. All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Agreement.
1. The Assignor (as defined below) hereby sells and assigns, without
recourse, to the Assignee (as defined below), and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of
effective date of the assignment as designated below (the "Effective Date"),
the interests set forth below (the "Assigned Interest") in the Assignor's
rights and obligations under the Credit Agreement, including, without
limitation, (a) the interests set forth below in the Commitment Percentages
of the Assignor on the Effective Date and (b) the Loans owing to the Assignor
in connection with the Assigned Interest which are outstanding on the
Effective Date. The purchase of the Assigned Interest shall be at par and
periodic payments made with respect to the Assigned Interest which (i)
accrued prior to the Effective Date shall be remitted to the Assignor and
(ii) accrue from and after the Effective Date shall be remitted to the
Assignee. From and after the Effective Date, the Assignee, if it is not
already a Lender under the Credit Agreement, shall become a "Lender" for all
purposes of the Credit Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Lender shall be relieved of its
obligations under the Credit Agreement.
2. The Assignor represents and warrants to the Assignee that it is the
holder of the Assigned Interest, and the Loans and Participation Interests
related thereto, and it has not previously transferred or encumbered such
Assigned Interest, Loans or Participation Interests.
3. The Assignee represents and warrants to the Assignor that it is an
Eligible Assignee.
4. This Assignment shall be effective only upon (a) the consent of the
Borrower and the Agent to the extent required under Section 11.3(a) of the
Credit Agreement and (b) delivery to the Agent of this Assignment Agreement
together with the transfer fees, if applicable, set forth in Section 11.3(b)
of the Credit Agreement.
<PAGE>
5. This Assignment shall be governed by and construed in accordance
with the laws of the State of North Carolina.
6. Terms of Assignment
(a) Date of Assignment
-------------------
(b) Legal Name of Assignor
-------------------
(c) Legal Name of Assignee
-------------------
(d) Effective Date of Assignment
-------------------
(e) Revolving Loan Commitment
Percentage assigned %
-------------------
(f) Total Revolving Loans
Outstanding as of Effective Date $
-------------------
(g) Principal Amount of Revolving
Loans assigned on Effective
Date (the amount set forth
in (f) multiplied by the
percentage set forth in (e)) $
-------------------
(h) Revolving Committed Amount $
-------------------
(i) Principal Amount of Revolving
Committed Amount Assigned on
the Effective Date (the amount
set forth in (h) multiplied by
the percentage set forth in (e)) $
-------------------
(j) Tranche A Term Loan Commitment
Percentage assigned %
------------------
(k) Total Tranche A Term Loans
outstanding as of Effective Date $
-------------------
(l) Principal Amount of Tranche A Term
Loans assigned on Effective
Date (the amount set forth
in (k) multiplied by the
percentage set forth in (j)) $
-------------------
(m) Total Tranche B Term Loan
Percentage Assigned %
------------------
(n) Total Tranche B Term Loans
outstanding as of Effective Date $
-------------------
(o) Principal Amount of Tranche B Term
Loans assigned on Effective
Date (the amount set forth
in (n) multiplied by the
- 2 -
<PAGE>
percentage set forth in (m)) $
------------------
- 3 -
<PAGE>
CREDIT AGREEMENT
(SECONDARY WORKING CAPITAL FACILITY)
among
CHATTEM, INC.,
as Borrower,
DOMESTIC SUBSIDIARIES OF BORROWER,
as Guarantors,
THE WORKING CAPITAL LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent
DATED AS OF APRIL 29, 1996
<PAGE>
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Computation of Time Periods and Other Definitional
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Working Capital Revolving Loans.. . . . . . . . . . . . . . . 7
2.2 Continuations and Conversions . . . . . . . . . . . . . . . . 9
2.3 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Working Capital Revolving Loan Notes. . . . . . . . . . . . . 10
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS. . . . . . . . . . . . 10
3.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Place and Manner of Payments. . . . . . . . . . . . . . . . . 11
3.3 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 Payment in Full at Maturity . . . . . . . . . . . . . . . . . 14
3.6 Computations of Interest and Fees . . . . . . . . . . . . . . 14
3.7 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . 15
3.8 Allocation of Payments After Event of Default . . . . . . . . 15
3.9 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . 16
3.10 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . 17
3.11 Inability To Determine Interest Rate. . . . . . . . . . . . . 17
3.12 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Requirements of Law . . . . . . . . . . . . . . . . . . . . . 18
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.16 Replacement of Lenders. . . . . . . . . . . . . . . . . . . . 23
SECTION 4 GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Guaranty of Payment . . . . . . . . . . . . . . . . . . . . . 23
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . . . 24
4.3 Modifications . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Waiver of Rights. . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 Limitation of Guaranty. . . . . . . . . . . . . . . . . . . . 26
4.8 Rights of Contribution. . . . . . . . . . . . . . . . . . . . 26
SECTION 5 CONDITIONS TO EXTENSIONS OF CREDIT. . . . . . . . . . . . . . 27
5.1 Conditions to All Extensions of Credit. . . . . . . . . . . . 27
SECTION 6 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 28
6.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . 28
6.2 No Material Change. . . . . . . . . . . . . . . . . . . . . . 28
6.3 Organization and Good Standing. . . . . . . . . . . . . . . . 29
6.4 Due Authorization . . . . . . . . . . . . . . . . . . . . . . 29
6.5 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Enforceable Obligations . . . . . . . . . . . . . . . . . . . 30
- i -
<PAGE>
6.8 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 30
6.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 32
6.16 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . 32
6.17 Government Regulation . . . . . . . . . . . . . . . . . . . . 32
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 33
6.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . 34
6.20 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.21 Investments . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.22 No Financing of Corporate Takeovers . . . . . . . . . . . . . 35
6.23 Location of Collateral. . . . . . . . . . . . . . . . . . . . 35
6.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.25 Licenses, etc.. . . . . . . . . . . . . . . . . . . . . . . . 35
6.26 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . 35
6.27 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 35
6.28 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 35
6.29 Collateral Documents. . . . . . . . . . . . . . . . . . . . . 36
6.30 Related Transactions. . . . . . . . . . . . . . . . . . . . . 36
6.31 Representations and Warranties Incorporated from Purchase
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.32 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 36
7.1 Information Covenants.. . . . . . . . . . . . . . . . . . . . 36
7.2 Preservation of Existence and Franchises. . . . . . . . . . . 41
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . 41
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 41
7.5 Payment of Taxes and Other Indebtedness . . . . . . . . . . . 41
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7 Maintenance of Property . . . . . . . . . . . . . . . . . . . 42
7.8 Performance of Obligations. . . . . . . . . . . . . . . . . . 43
7.9 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 43
7.11 Audits/Inspections. . . . . . . . . . . . . . . . . . . . . . 43
7.12 Financial Covenants . . . . . . . . . . . . . . . . . . . . . 43
7.13 Additional Credit Parties . . . . . . . . . . . . . . . . . . 45
7.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . 45
7.15 Appraisal Reports.. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 46
8.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.3 Nature of Business. . . . . . . . . . . . . . . . . . . . . . 47
8.4 Consolidation and Merger. . . . . . . . . . . . . . . . . . . 47
8.5 Sale or Lease of Assets . . . . . . . . . . . . . . . . . . . 47
8.6 Advances, Investments and Loans . . . . . . . . . . . . . . . 48
8.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.8 Transactions with Affiliates. . . . . . . . . . . . . . . . . 48
8.9 Fiscal Year; Organizational Documents.. . . . . . . . . . . . 48
8.10 Prepayments of Indebtedness . . . . . . . . . . . . . . . . . 48
- ii -
<PAGE>
8.11 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . 48
8.12 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.13 Sale Leasebacks . . . . . . . . . . . . . . . . . . . . . . . 49
8.14 Negative Pledges. . . . . . . . . . . . . . . . . . . . . . . 49
8.15 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . 49
8.16 Operating Leases. . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 50
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . 50
9.2 Acceleration; Remedies. . . . . . . . . . . . . . . . . . . . 53
SECTION 10 AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 54
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . 54
10.3 Exculpatory Provisions. . . . . . . . . . . . . . . . . . . . 54
10.4 Reliance on Communications. . . . . . . . . . . . . . . . . . 55
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . 56
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . 56
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 56
10.8 Agent in Its Individual Capacity. . . . . . . . . . . . . . . 57
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 58
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . 58
11.3 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . . 59
11.4 No Waiver; Remedies Cumulative. . . . . . . . . . . . . . . . 62
11.5 Payment of Expenses; Indemnification. . . . . . . . . . . . . 62
11.6 Amendments, Waivers and Consents. . . . . . . . . . . . . . . 63
11.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.9 Defaulting Lender . . . . . . . . . . . . . . . . . . . . . . 64
11.10 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.11 Governing Law; Venue. . . . . . . . . . . . . . . . . . . . . 65
11.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . 65
11.13 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 66
11.15 Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.16 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . 66
SCHEDULES
- ---------
Schedule 1.1(a) Working Capital Commitment Percentages
Schedule 1.1(b) Existing Permitted Investments
Schedule 6.10 Indebtedness
Schedule 6.11 Litigation
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.23(a) Real Property Locations
Schedule 6.23(b) Personal Property Locations
Schedule 6.23(c) Chief Executive Offices
Schedule 7.6 Insurance
Schedule 8.2 Liens
Schedule 8.8 Affiliate Transactions
Schedule 11.1 Notices
- iii -
<PAGE>
EXHIBITS
- --------
Exhibit 2.1 Form of Notice of Borrowing
Exhibit 2.2 Form of Notice of Continuation/Conversion
Exhibit 2.4 Form of Working Capital Revolving Loan Note
Exhibit 7.1(e) Form of Officer's Certificate
Exhibit 7.1(g) Form of Borrowing Base Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
- iv -
<PAGE>
CREDIT AGREEMENT
(SECONDARY WORKING CAPITAL FACILITY)
THIS CREDIT AGREEMENT (this "CREDIT AGREEMENT"), is entered into as of
April 29, 1996 among CHATTEM, INC., a Tennessee corporation (the "BORROWER"),
each of the Borrower's Domestic Subsidiaries, individually a "GUARANTOR" and
collectively the "GUARANTORS"), the Working Capital Lenders (as defined herein),
and NATIONSBANK, N.A., as agent for the Working Capital Lenders (in such
capacity, the "AGENT").
RECITALS
WHEREAS, the Borrower and the Guarantors are party to a Credit Agreement
(the "NEW CREDIT AGREEMENT") dated as of the date hereof pursuant to which
NationsBank, N.A., as agent, and certain other lenders named therein (including
the Working Capital Lenders) have agreed to provide a $55 million credit
facility to the Borrower to replace and refinance certain credit facilities
provided by The First National Bank of Chicago, as agent and certain other
lenders under credit agreements dated as of June 17, 1994;
WHEREAS, that certain Indenture dated as of August 3, 1994 among the
Borrower, as issuer, Signal Investment & Management Co., as guarantor and
Southtrust Bank of Alabama, National Association, as trustee (as the same may be
modified, supplemented or amended from time to time, the "INDENTURE") permits
the Borrower to incur additional indebtedness that will be considered Senior
Debt (as defined in the Indenture) upon the satisfaction of a financial test set
forth in the Indenture;
WHEREAS, the Borrower and the Guarantors have requested that the Working
Capital Lenders provide a $6.5 million working capital credit facility to the
Borrower (the "SECONDARY WORKING CAPITAL FACILITY") in addition to the credit
facilities provided under the New Credit Agreement and in accordance with the
terms of the Indenture;
WHEREAS, the Borrower shall be permitted to obtain advances under the
Secondary Working Capital Facility only when the Borrower is allowed to incur
additional Senior Debt pursuant to the terms of the Indenture; and
WHEREAS, the Working Capital Lenders have agreed to make the requested
Secondary Working Capital Facility available to the Borrower on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the New Credit
Agreement. In addition, the following terms shall have the following meanings:
"ADDITIONAL CREDIT PARTY" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.13.
"AGENT" means NationsBank, N.A. or any successor administrative agent
appointed pursuant to Section 10.9.
"APPLICABLE PERCENTAGE" means, the appropriate applicable percentages
corresponding to the Leverage Ratio in effect as of the most recent
Calculation Date as shown below:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Applicable Applicable
Percentage For Percentage For
Pricing Leverage Eurodollar Base Rate
LevelI Ratio Loans Loans
------- -------- -------------- --------------
I < = 4.0 to 1.0 2.25% 1.25%
II > = 4.0 to 1.0 but
< = 4.5 to 1.0 2.50% 1.50%
III < = 4.5 to 1.0 but 2.75% 1.75%
> = 5.0 to 1.0
IV > = 5.0 to 1.0 3.00% 2.00%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The Applicable Percentage shall be determined and adjusted quarterly
on the date (each a "CALCULATION DATE") five Business Days after the date
by which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(e); provided, however, that
(i) the initial Applicable Percentage shall be based on Pricing Level III
(as shown above) and shall remain at Pricing Level III until the first
Calculation Date subsequent to the Closing Date and, thereafter, the
Pricing Level shall be determined by the then current Leverage Ratio, and
(ii) if the Borrower fails to provide the officer's certificate required
by Section 7.1(e) on or before the most recent Calculation Date or fails to
deliver a copy of such officer's certificate to the Agency Services
Address, the Applicable Percentage from such Calculation Date shall be
based on Pricing Level IV until such time that an appropriate officer's
certificate is provided whereupon the Pricing Level shall be determined by
the then current Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation
- 2 -
<PAGE>
Date until the next Calculation Date. Any adjustment in the Applicable
Percentage shall be applicable to all existing Working Capital Loans as
well as any new Working Capital Loans made or issued.
"BORROWER" means the Person identified as such in the heading hereof,
together with any successors and permitted assigns.
"BORROWING BASE CERTIFICATE" means a Borrowing Base Certificate
substantially in the form of EXHIBIT 7.1(g).
"CALCULATION DATE" has the meaning set forth in the definition of
Applicable Percentage.
"CLOSING DATE" means the date hereof.
"COMMITMENT FEES" means the fees payable to the Working Capital
Lenders pursuant to Section 3.4(a).
"COMMITMENTS" means the New Credit Agreement Revolving Committed
Amount, the Working Capital Revolving Committed Amount, the Tranche A Term
Loan Committed Amount and the Tranche B Term Loan Committed Amount.
"CREDIT DOCUMENTS" means collectively, the Working Capital Credit
Documents and the New Credit Agreement Documents.
"CREDIT PARTY OBLIGATIONS" means, without duplication, (a) all of the
obligations of the Credit Parties to the Working Capital Lenders and the
Agent, whenever arising, under this Credit Agreement, the Working Capital
Revolving Notes, the Collateral Documents or any of the other Working
Capital Credit Documents to which the Borrower or any other Credit Party is
a party and (b) all liabilities and obligations owing from a Credit Party
to any Working Capital Lender, or any Affiliate of a Working Capital
Lender, arising under interest rate protection agreements, foreign currency
exchange agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements
(collectively, the "HEDGING AGREEMENTS").
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time
(a) has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement or the New Credit Agreement
(b) has failed to pay to the Agent or any Lender an amount owned by such
Lender pursuant to the terms of this Credit Agreement or the New Credit
Agreement or (c) has been deemed insolvent or has
- 3 -
<PAGE>
become subject to a bankruptcy or insolvency proceeding or to a receiver or
similar official.
"EFFECTIVE DATE" means the date on which the initial Working Capital
Revolving Loans shall have been made.
"EVENT OF DEFAULT" has the meaning specified in Section 9.1.
"EXTENSION OF CREDIT" means, as to any Lender, the making of a Loan by
such Lender (or a participation therein by a Lender).
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
"GUARANTOR" means each of the Domestic Subsidiaries of the Borrower
and each Additional Credit Party which has executed a Joinder Agreement,
together with their successors and assigns.
"HEDGING AGREEMENTS" has the meaning set forth in the definition of
Credit Party Obligations.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in the
form of EXHIBIT 7.13.
"LENDER" means collectively, the Working Capital Lender and the New
Credit Agreement Lender.
"LOAN" or "LOANS" means the Working Capital Revolving Loans, the New
Credit Agreement Revolving Loans, the Tranche A Term Loans and/or the
Tranche B Term Loans (or a portion of any Working Capital Revolving Loan,
New Credit Agreement Revolving Loan, the Tranche A Term Loans or the
Tranche B Term Loans), individually or collectively, as appropriate.
"NEW CREDIT AGREEMENT DOCUMENTS" means the New Credit Agreement, the
Notes (other than the Working Capital Revolving Notes), the Collateral
Documents, the Fee Letter and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"NEW CREDIT AGREEMENT LENDER" means any of the Persons identified as a
"Lender" on the signature pages to the New Credit Agreement, and any Person
which may become a New Credit Agreement Lender by way of assignment in
accordance with the terms of the New Credit Agreement, together with their
successors and permitted assigns.
"NEW CREDIT AGREEMENT REVOLVING LOANS" means the revolving loans made
to the Borrower pursuant to Section 2.1 of the New Credit Agreement.
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"NEW CREDIT AGREEMENT REVOLVING LOAN COMMITMENT PERCENTAGE" means, for
each New Credit Agreement Lender, the percentage identified as its New
Credit Agreement Revolving Loan Commitment Percentage on Schedule 1.1(a) of
the New Credit Agreement, as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section 11.3
of the New Credit Agreement.
"NEW CREDIT AGREEMENT REVOLVING COMMITTED AMOUNT" means SEVENTEEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($17,500,000) or such lessor amount
as the New Credit Agreement Revolving Committed Amount may be reduced
pursuant to Section 2.1(d) or Section 3.3 of the New Credit Agreement.
"NON-EXCLUDED TAXES" has the meaning set forth in Section 3.14.
"NOTE" or "NOTES" means the Working Capital Revolving Loan Notes, the
New Credit Agreement Revolving Loan Notes, the Tranche A Term Loan Notes
and/or the Tranche B Term Loan Notes, individually or collectively, as
appropriate.
"NOTICE OF BORROWING" means a request by the Borrower for a Working
Capital Revolving Loan, in the form of EXHIBIT 2.1.
"NOTICE OF CONTINUATION/CONVERSION" means a request by the Borrower to
continue an existing Eurodollar Loan to a new Interest Period or to convert
a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar
Loan, in the form of EXHIBIT 2.2.
"PARTICIPATION INTEREST" means the Extension of Credit by a Lender by
way of the purchase of a participation in any Loans as provided in Section
3.9.
"REQUIRED LENDERS" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 67% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the preceding
sentence, the term "Credit Exposure" as applied to each Lender shall mean
(a) at any time prior to the termination of the Commitments, the sum of (i)
the Working Capital Revolving Loan Commitment Percentage of such Lender
multiplied by the Working Capital Revolving Committed Amount, plus (ii) the
New Credit Agreement Revolving Loan Commitment Percentage of such Lender
multiplied by the New Credit Agreement Revolving Committed Amount, plus
(iii) the Tranche A Term Loan Commitment Percentage of such Lender
multiplied by the aggregate principal amount of Tranche A Term Loans
outstanding at such time, plus (iv) the Tranche B Term Loan Commitment
Percentage of such Lender multiplied by the aggregate principal amount of
Tranche B Term Loans outstanding
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at such time and (b) at any time after the termination of the Commitments,
the sum of the principal balance of the outstanding Loans of such Lender.
"REVOLVING LOANS" means, collectively, the Working Capital Revolving
Loans and the New Credit Agreement Revolving Loans.
"REVOLVING LOAN MATURITY DATE" means the earlier of (i) April 29, 2001
and (ii) the date on which the Tranche A Term Loans are repaid in full.
"UNUSED COMMITMENT" means, for any period, the amount by which (a) the
then applicable aggregate Working Capital Revolving Committed Amount
exceeds (b) the daily average sum for such period of the outstanding
aggregate principal amount of all Working Capital Revolving Loans.
"WORKING CAPITAL CREDIT DOCUMENTS" means this Credit Agreement, the
Working Capital Revolving Notes, any Joinder Agreement, the Collateral
Documents, the Fee Letter and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"WORKING CAPITAL LENDER" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which may become a
Working Capital Lender by way of assignment in accordance with the terms
hereof, together with their successors and permitted assigns.
"WORKING CAPITAL REVOLVING COMMITTED AMOUNT" means SIX MILLION FIVE
HUNDRED THOUSAND DOLLARS ($6,500,000) or such lesser amount as the Working
Capital Revolving Committed Amount may be reduced pursuant to Section
2.1(d) or Section 3.3.
"WORKING CAPITAL REVOLVING LOANS" means the Working Capital Revolving
Loans made to the Borrower pursuant to Section 2.1.
"WORKING CAPITAL REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each
Working Capital Lender, the percentage identified as its Working Capital
Revolving Loan Commitment Percentage on SCHEDULE 1.1(a), as such percentage
may be modified in connection with any assignment made in accordance with
the provisions of Section 11.3.
"WORKING CAPITAL REVOLVING NOTE" or "WORKING CAPITAL REVOLVING NOTES"
means the promissory notes of the Borrower in favor of each of the Working
Capital Lenders evidencing the Working Capital Revolving Loans provided
pursuant to Section 2.1, individually or collectively, as appropriate, as
such promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time and as evidenced in the form of
EXHIBIT 2.6(a).
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1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS. For
purposes of computation of periods of time hereunder, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding." References in this Agreement to "Articles", "Sections", "Schedules"
or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
1.3 ACCOUNTING TERMS. Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Working Capital Lenders hereunder shall be prepared, in accordance with GAAP
applied on a consistent basis. All financial statements delivered to the
Working Capital Lenders hereunder shall be accompanied by a statement from the
Borrower that GAAP has not changed since the most recent financial statements
delivered by the Borrower to the Working Capital Lenders or if GAAP has changed
describing such changes in detail and explaining how such changes affect the
financial statements. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1 (or, prior to the delivery of the first financial statements
pursuant to Section 7.1, consistent with the financial statements described in
Section 5.1(c)); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) either Agent or the Required Lenders shall so object in
writing within 60 days after delivery of such financial statements (or after the
Working Capital Lenders have been informed of the change in GAAP affecting such
financial statements, if later), then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Working Capital Lenders as to which no such objection shall have been
made.
SECTION 2
CREDIT FACILITIES
2.1 WORKING CAPITAL REVOLVING LOANS.
(a) WORKING CAPITAL REVOLVING LOAN COMMITMENT. Subject to the terms
and conditions set forth herein, each Working Capital Lender severally
agrees to make revolving loans (each a "WORKING CAPITAL REVOLVING LOAN" and
collectively the "WORKING CAPITAL REVOLVING LOANS") to the Borrower, in
Dollars, at any time and from time to time, during the period from and
including the Effective Date to but not including the Revolving Loan
Maturity Date (or such earlier date if the Working Capital Revolving
Committed Amount has been terminated
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as provided herein); PROVIDED, HOWEVER, that (i) the sum of the aggregate
amount of Working Capital Revolving Loans outstanding plus the aggregate
amount of New Credit Agreement Revolving Loans outstanding shall not exceed
the lesser of (x) the sum of the New Credit Agreement Revolving Committed
Amount plus the Working Capital Revolving Committed Amount and (y) the
Borrowing Base, and (ii) with respect to each individual Lender, such
Lender's outstanding Working Capital Revolving Loans plus such Lender's
outstanding New Credit Agreement Revolving Loans shall not exceed the sum
of (x) such Lender's New Credit Agreement Revolving Loan Commitment
Percentage of the New Credit Agreement Revolving Committed Amount and
(y) such Lender's Working Capital Revolving Loan Commitment Percentage of
the Working Capital Revolving Committed Amount.
(b) METHOD OF BORROWING FOR REVOLVING LOANS. By no later than 11:00
a.m. (i) one Business Day prior to the date of the requested borrowing of
Working Capital Revolving Loans that will be Base Rate Loans or (ii) three
Business Days prior to the date of the requested borrowing of Working
Capital Revolving Loans that will be Eurodollar Loans, the Borrower shall
submit a written Notice of Borrowing in the form of EXHIBIT 2.1 to the
Agent setting forth (A) the amount requested, (B) whether such Working
Capital Revolving Loans shall accrue interest at the Adjusted Base Rate or
the Adjusted Eurodollar Rate, (C) with respect to Working Capital Revolving
Loans that will be Eurodollar Loans, the Interest Period applicable thereto
and (D) evidence that the Borrower has complied in all respects with
Section 5.1;
(c) FUNDING OF WORKING CAPITAL REVOLVING LOANS. Upon receipt of a
Notice of Borrowing, the Agent shall promptly inform the applicable Working
Capital Lenders as to the terms thereof. Each such Working Capital Lender
shall make its Working Capital Revolving Loan Commitment Percentage of the
requested Working Capital Revolving Loans available to the Agent by 1:00
p.m. on the date specified in the Notice of Borrowing by deposit, in
Dollars, of immediately available funds at the offices of the Agent at its
principal office in Charlotte, North Carolina or at such other address as
the Agent may designate in writing. The amount of the requested Working
Capital Revolving Loans will then be made available to the Borrower by the
Agent by crediting the account of the Borrower on the books of such office
of the Agent, to the extent the amount of such Working Capital Revolving
Loans are made available to the Agent.
No Working Capital Lender shall be responsible for the failure or
delay by any other Working Capital Lender in its obligation to make Working
Capital Revolving Loans hereunder; provided, however, that the failure of
any Working Capital Lender to fulfill its obligations hereunder shall not
relieve any other Working Capital Lender of its obligations hereunder.
Unless the Agent shall have been notified by any Working
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Capital Lender prior to the date of any such Working Capital Revolving Loan
that such Working Capital Lender does not intend to make available to the
Agent its portion of the Working Capital Revolving Loans to be made on such
date, the Agent may assume that such Working Capital Lender has made such
amount available to the Agent on the date of such Working Capital Revolving
Loans, and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Working Capital Lender. If such Working
Capital Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent will promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from the Working Capital Lender
or the Borrower, as the case may be, interest on such corresponding amount
in respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for such Working Capital Revolving Loan
pursuant to the Notice of Borrowing and (ii) from a Working Capital Lender
at the Federal Funds Rate.
(d) REDUCTIONS OF WORKING CAPITAL REVOLVING COMMITTED AMOUNT. Upon
at least three Business Days' notice, the Borrower shall have the right to
permanently terminate or reduce the aggregate unused amount of the Working
Capital Revolving Committed Amount at any time or from time to time;
provided that (i) each partial reduction shall be in an aggregate amount at
least equal to $1,000,000 and in integral multiples of $500,000 above such
amount and (ii) no reduction shall be made which would reduce the Working
Capital Revolving Committed Amount to an amount less than the aggregate
amount of outstanding Working Capital Revolving Loans. In addition, any
repayment of Working Capital Revolving Loans previously extended hereunder
shall result in an automatic reduction of the Working Capital Revolving
Committed Amount as provided in Section 3.3(a) and Section 3.3(d) hereof.
Any reduction in (or termination of) the Working Capital Revolving
Committed Amount shall be permanent and may not be reinstated.
2.2 CONTINUATIONS AND CONVERSIONS. Subject to the terms of Section 5.1,
the Borrower shall have the option, on any Business Day, to continue in
existence Eurodollar Loans for a subsequent Interest Period, to convert Base
Rate Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate
Loans; provided, however, that (a) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of EXHIBIT 2.2, in compliance with the
terms set forth below, (b) except as provided in Section 3.12, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto,
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(c) Eurodollar Loans may not be continued nor may Base Rate Loans be converted
into Eurodollar Loans during the existence and continuation of a Default or
Event of Default and (d) any request to extend a Eurodollar Loan that fails to
comply with the terms hereof or any failure to request an extension of a
Eurodollar Loan at the end of an Interest Period shall constitute a request for
a conversion to a Base Rate Loan on the last day of the applicable Interest
Period. Each continuation or conversion must be requested by the Borrower no
later than 11:00 a.m. (i) one Business Day prior to the date for a requested
conversion of a Eurodollar Loan to a Base Rate Loan or (ii) three Business Days
prior to the date for a requested extension of a Eurodollar Loan or conversion
of a Base Rate Loan to a Eurodollar Loan, in each case pursuant to a written
Notice of Continuation/Conversion submitted to the Agent which shall set forth
(A) whether the Borrower wishes to continue or convert such Working Capital
Revolving Loans and (B) if the request is to continue a Eurodollar Loan or
convert a Base Rate Loan to a Eurodollar Loan, the Interest Period applicable
thereto.
2.3 MINIMUM AMOUNTS. Each request for a borrowing, conversion or
continuation shall be subject to the requirements that (a) each Eurodollar Loan
shall be in a minimum amount of $1,000,000 and in integral multiples of $500,000
in excess thereof, (b) each Base Rate Loan shall be in a minimum amount of the
lesser of $1,000,000 (and integral multiples of $500,000 in excess thereof) or
the remaining amount available under the Working Capital Revolving Committed
Amount and (c) no more than ten Eurodollar Loans shall be outstanding hereunder
at any one time. For the purposes of this Section, all Eurodollar Loans with
the same Interest Periods shall be considered as one Eurodollar Loan, but
Eurodollar Loans with different Interest Periods, even if they begin on the same
date, shall be considered as separate Eurodollar Loans.
2.4 WORKING CAPITAL REVOLVING LOAN NOTES. The Working Capital Revolving
Loans made by each Working Capital Lender shall be evidenced by a duly executed
promissory note of the Borrower to each applicable Working Capital Lender in the
face amount of its Working Capital Revolving Loan Commitment Percentage of the
Working Capital Revolving Committed Amount in substantially the form of EXHIBIT
2.4.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 INTEREST.
(a) INTEREST RATE. All Base Rate Loans shall accrue interest at the
Adjusted Base Rate and all Eurodollar Loans shall accrue interest at the
Adjusted Eurodollar Rate.
(b) DEFAULT RATE OF INTEREST. Upon the occurrence, and during the
continuance, of an Event of Default, the principal
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of and, to the extent permitted by law, interest on the Working Capital
Loans and any other amounts owing hereunder or under the other Working
Capital Credit Documents (including without limitation fees and expenses)
shall bear interest, payable on demand, at a per annum rate equal to 2%
plus the rate which would otherwise be applicable (or if no rate is
applicable, then the rate for Working Capital Revolving Loans that are Base
Rate Loans plus two percent (2%) per annum).
(c) INTEREST PAYMENTS. Interest on Working Capital Revolving Loans
shall be due and payable in arrears on each Interest Payment Date. If an
Interest Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding Business
Day (subject to accrual of interest for the period of such extension),
except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding day.
3.2 PLACE AND MANNER OF PAYMENTS. All payments of principal, interest,
fees, expenses and other amounts to be made by a Credit Party under this Credit
Agreement shall be received not later than 2:00 p.m. on the date when due, in
Dollars and in immediately available funds, by the Agent at its offices at
NationsBank Corporate Center, Charlotte, North Carolina. Payments received
after such time shall be deemed to have been received on the next Business Day.
The Borrower shall, at the time it makes any payment under this Credit
Agreement, specify to the Agent, the Working Capital Revolving Loans, fees or
other amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails to specify, or if such application would
be inconsistent with the terms hereof, the Agent shall, subject to Section 3.7,
distribute such payment to the Working Capital Lenders in such manner as the
Agent may deem appropriate). The Agent will distribute such payments to the
applicable Working Capital Lenders on the date received if any such payment is
received prior to 2:00 p.m.; otherwise the Agent will distribute such payment to
the applicable Working Capital Lenders on the next succeeding Business Day.
Whenever any payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension would
cause the payment to be made in the next following calendar month, then such
payment shall instead be made on the next preceding Business Day.
3.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Working Capital Revolving Loans in whole or in part from time to
time without premium or penalty; provided, however, that (i) Eurodollar
Loans may only be prepaid on three Business Days' prior written notice to
the Agent and any prepayment of Eurodollar Loans will be subject to Section
3.15 and (ii) once repaid Working Capital Revolving Loans may not
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be reborrowed and any repayment of any Working Capital Revolving Loan shall
result in an automatic permanent reduction of the Working Capital Revolving
Committed Amount equal to the amount of such repayment.
(b) MANDATORY PREPAYMENTS.
(i) REVOLVING COMMITTED AMOUNT. If at any time the sum of
the aggregate amount of Working Capital Revolving Loans outstanding
plus New Credit Agreement Revolving Loans outstanding exceeds the
lesser of (x) the sum of the New Credit Agreement Revolving Committed
Amount plus the Working Capital Revolving Committed Amount and (y) the
Borrowing Base, the Borrower shall immediately make a principal
payment to the Agent in the manner and in an amount necessary to be in
compliance with Section 2.1.
(ii) EXCESS CASH FLOW. Within 10 days after the date the
audited financial statements are required to be delivered pursuant to
Section 7.1(a) (commencing with the fiscal year ending November 30,
1996), the Borrower shall make a prepayment of the Loans in an amount
equal to 75% of the Excess Cash Flow earned during such prior fiscal
year (to be applied as set forth in Section 3.3(c) below).
(iii) ASSET DISPOSITIONS. Immediately upon receipt by the
Borrower or any of its Subsidiaries of proceeds from any Asset
Disposition, the Borrower shall forward 100% of the Net Cash Proceeds
of such Asset Disposition to the Lenders as a prepayment of the Loans
(to be applied as set forth in Section 3.3(c) below).
(iv) ISSUANCES OF EQUITY. Immediately upon receipt by the
Borrower or any of its Subsidiaries of proceeds from any Equity
Issuance (other than the issuance of capital stock of the Borrower in
the amount of $6.5 million in connection with the Borrower's purchase
of the Acquired Assets), the Borrower shall forward 50% of the Net
Cash Proceeds of such Equity Issuance to the Lenders as a prepayment
of the Loans (to be applied as set forth in Section 3.3(c) below).
(v) RECOVERY EVENT. Subject to the terms and conditions of
Section 7.6 hereof, immediately upon receipt by the Borrower or any of
its Subsidiaries of proceeds from any Recovery Event, the Borrower
shall forward 100% of the Net Cash Proceeds from such Recovery Event
to the Lenders as a prepayment of the Loans (to be applied as set
forth in Section 3.3(c) below).
(c) APPLICATION OF PREPAYMENTS. All amounts required to be paid
pursuant to Section 3.3(b)(i) shall be applied first to Working Capital
Revolving Loans and second to New Credit
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Agreement Revolving Loans. All amounts required to be paid pursuant to
Section 3.3(b)(ii), (iii), (iv) and (v) above shall be applied, first pro
rata between the outstanding Tranche A Term Loans and the Tranche B Term
Loans (which amounts shall then be applied to the remaining Principal
Amortization Payments due with respect to the Tranche A Term Loans and the
Tranche B Term Loans in inverse order of maturity thereof), second to the
Working Capital Revolving Loans (with a corresponding reduction in the
Working Capital Revolving Committed Amount), third to the New Credit
Agreement Revolving Loans (with corresponding reduction in the New Credit
Agreement Revolving Committed Amount). One or more holders of the Tranche
B Term Loans may decline to accept a mandatory prepayment under Sections
3.3(b)(ii), (iii), (iv) or (v) (to the extent there is sufficient Tranche A
Term Loans outstanding to be paid with such prepayment) in which case such
declined prepayments shall be allocated pro rata among the Tranche A Term
Loans and Tranche B Term Loans held by New Credit Agreement Lenders
accepting such prepayments. Within the parameters of the application set
forth above, prepayments shall be applied first to Base Rate Loans and then
to Eurodollar Loans in direct order of Interest Period maturities. All
prepayments hereunder shall be subject to Section 3.15.
(d) REBORROWING. Once repaid, Working Capital Revolving Loans cannot
be reborrowed, any repayment of Working Capital Revolving Loans shall
result in an automatic reduction of the Working Capital Revolving
Committed Amount and any reduction in (or termination of) the Working
Capital Revolving Committed Amount shall be permanent and may not be
reinstated.
3.4 FEES.
(a) COMMITMENT FEES. In consideration of the Working Capital
Revolving Committed Amount being made available by the Working Capital
Lenders hereunder, the Borrower agrees to pay to the Agent, for the pro
rata benefit of each applicable Working Capital Lender (based on each
Working Capital Lender's Working Capital Revolving Loan Commitment
Percentage of the Working Capital Revolving Committed Amount), a fee equal
to one-half of one percent (.5%) per annum on the Unused Commitment (the
"COMMITMENT FEES"). The accrued Commitment Fees shall commence to accrue
on the Closing Date and shall be due and payable in arrears on the last
Business Day of each fiscal quarter of the Borrower (as well as on the
Revolving Loan Maturity Date and on any date that the Working Capital
Revolving Committed Amount is reduced) for the immediately preceding fiscal
quarter (or portion thereof), beginning with the first of such dates to
occur after the Closing Date.
(b) ADMINISTRATIVE FEES. The Borrower agrees to pay to the Agent,
for its own account, an annual fee as agreed to between the Borrower and
the Agent in the Fee Letter.
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3.5 PAYMENT IN FULL AT MATURITY. On the Revolving Loan Maturity Date, the
entire outstanding principal balance of all Working Capital Revolving Loans,
together with accrued but unpaid interest and all other sums owing with respect
thereto, shall be due and payable in full, unless accelerated sooner pursuant to
Section 9.
3.6 COMPUTATIONS OF INTEREST AND FEES.
(a) Except for Base Rate Loans, in which case interest shall be
computed on the basis of a 365 or 366 day year as the case may be (unless
the Base Rate is determined by reference to the Federal Funds Rate), all
computations of interest and fees hereunder shall be made on the basis of
the actual number of days elapsed over a year of 360 days. Interest shall
accrue from and include the date of borrowing (or continuation or
conversion) but exclude the date of payment.
(b) It is the intent of the Working Capital Lenders and the Credit
Parties to conform to and contract in strict compliance with applicable
usury law from time to time in effect. All agreements between the Working
Capital Lenders and the Borrower are hereby limited by the provisions of
this paragraph which shall override and control all such agreements,
whether now existing or hereafter arising and whether written or oral. In
no way, nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, or received under this
Credit Agreement, under the Working Capital Revolving Notes or otherwise,
exceed the maximum nonusurious amount permissible under applicable law.
If, from any possible construction of any of the Working Capital Credit
Documents or any other document, interest would otherwise be payable in
excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this paragraph and such documents shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document. If any Working Capital Lender shall ever receive anything of
value which is characterized as interest on the Working Capital Revolving
Loans under applicable law and which would, apart from this provision, be
in excess of the maximum lawful amount, an amount equal to the amount which
would have been excessive interest shall, without penalty, be applied to
the reduction of the principal amount owing on the Working Capital
Revolving Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount which
would have been excessive exceeds such unpaid principal amount of the
Working Capital Revolving Loans. The right to demand payment of the
Working Capital Revolving Loans or any other indebtedness evidenced by any
of the Working Capital Credit Documents does not include the right to
receive any interest which has not otherwise accrued on the date of such
demand, and the Working Capital Lenders do
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not intend to charge or receive any unearned interest in the event of such
demand. All interest paid or agreed to be paid to the Working Capital
Lenders with respect to the Working Capital Revolving Loans shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term (including any renewal or extension)
of the Working Capital Revolving Loans so that the amount of interest on
account of such indebtedness does not exceed the maximum nonusurious amount
permitted by applicable law.
3.7 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
each Loan borrowing, each payment or prepayment of principal of any Loan, each
payment of fees and the Administrative Fees retained by the Agent for its own
account), each reduction of the Working Capital Revolving Committed Amount, each
reduction of the New Credit Agreement Revolving Committed Amount, and each
conversion or continuation of any Loan, shall be allocated pro rata among the
relevant Lenders in accordance with the respective Working Capital Revolving
Loan Commitment Percentages, New Credit Agreement Revolving Loan Commitment
Percentages, Tranche A Term Loan Commitment Percentages and Tranche B Term Loan
Commitment Percentages, as applicable, of such Lenders (or, if the Commitments
of such Lenders have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans and Participation
Interests of such Lenders); PROVIDED that, if any Lender shall have failed to
pay its applicable pro rata share of any Loan, then any amount to which such
Lender would otherwise be entitled pursuant to this Section shall instead be
payable to the Agent; PROVIDED FURTHER, that in the event any amount paid to any
Lender pursuant to this Section is rescinded or must otherwise be returned by
the Agent, each Lender shall, upon the request of the Agent, repay to the Agent
the amount so paid to such Lender, with interest for the period commencing on
the date such payment is returned by the Agent until the date the Agent receives
such repayment at a rate per annum equal to, during the period to but excluding
the date two Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate PLUS two percent (2%) per annum; and
3.8 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding any
other provisions of this Credit Agreement or the New Credit Agreement, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of the Collateral
Documents;
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SECOND, to payment of any fees owed to the Agent in its capacity as an
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses, (including, without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to the
Lenders hereunder and under the New Credit Agreement;
FIFTH, to the payment of the outstanding principal amount of the
Loans, and to any principal amounts outstanding under Hedging Agreements,
pro rata, as set forth below;
SIXTH, to all other obligations which shall have become due and
payable under the Credit Documents and not repaid pursuant to clauses
"FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, and
obligations under Hedging Agreements held by such Lender bears to the aggregate
then outstanding Loans, and obligations under Hedging Agreements) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH," and
"SIXTH" above.
3.9 SHARING OF PAYMENTS. The Working Capital Lenders agree among
themselves that, except to the extent otherwise provided herein, in the event
that any Lender shall obtain payment in respect of any Loan or any other
obligation owing to such Lender under this Credit Agreement or the New Credit
Agreement through the exercise of a right of setoff, banker's lien or
counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, in excess of its pro rata
share of such payment as provided for in this Credit Agreement and the New
Credit Agreement, such Lender shall promptly purchase from the other Lenders for
cash an interest in such Loans and other obligations in such amounts, and make
such other adjustments from time to time, as shall be equitable to the end that
all Lenders share such payment in accordance with their respective ratable
shares as provided for in this Credit Agreement and the New Credit Agreement.
The Working Capital Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which
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shall have shared the benefit of such payment shall, by repurchase of the
interest theretofore sold, return its share of that benefit (together with its
share of any accrued interest payable with respect thereto) to each Lender whose
payment shall have been rescinded or otherwise restored. The Borrower agrees
that any Lender so purchasing such an interest may, to the fullest extent
permitted by law, exercise all rights of payment, including setoff, banker's
lien or counterclaim, with respect to such interest as fully as if such Lender
were a holder of such Loan or other obligation in the amount of such interest.
Except as otherwise expressly provided in this Credit Agreement or the New
Credit Agreement, if any Lender or the Agent shall fail to remit to the Agent or
any other Lender an amount payable by such Lender or the Agent to the Agent or
such other Lender pursuant to this Credit Agreement or the New Credit Agreement
on the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Agent or such other Lender at a rate per annum equal
to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section 3.9 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders under this Section 3.9 to share in the benefits of any
recovery on such secured claim.
3.10 CAPITAL ADEQUACY. If, after the date hereof, any Working Capital
Lender has determined that the adoption or the becoming effective of, or any
change in, or any change by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof in
the interpretation or administration of, any applicable law, rule or regulation
regarding capital adequacy, or compliance by such Working Capital Lender 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 reducing the rate of return on such Working Capital
Lender's capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Working Capital Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Working Capital Lender's policies with respect to capital
adequacy), then, upon notice from such Working Capital Lender to the Borrower,
the Borrower shall be obligated to pay to such Working Capital Lender such
additional amount or amounts as will compensate such Working Capital Lender for
such reduction. Each determination by any such Working Capital Lender of
amounts owing under this Section shall, absent manifest error, be conclusive and
binding on the parties hereto.
3.11 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period, the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Agent shall
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promptly give telecopy or telephonic notice thereof to the Borrower and the
Working Capital Lenders. If such notice is given (a) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, (b) any Working Capital Revolving Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Loans shall be converted to or continued as Base Rate Loans and (c) any
outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Base Rate Loans to Eurodollar
Loans.
3.12 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it unlawful for
any Working Capital Lender to make or maintain Eurodollar Loans as contemplated
by this Credit Agreement, (a) such Working Capital Lender shall promptly give
written notice of such circumstances to the Borrower and the Agent (which notice
shall be withdrawn whenever such circumstances no longer exist), (b) the
commitment of such Working Capital Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert a Base Rate Loan to Eurodollar
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Working Capital Lender to make or maintain Eurodollar Loans,
such Working Capital Lender shall then have a commitment only to make a Base
Rate Loan when a Eurodollar Loan is requested and (c) such Working Capital
Lender's Working Capital Revolving Loans then outstanding as Eurodollar Loans,
if any, shall be converted automatically to Base Rate Loans on the respective
last days or the then current Interest Periods with respect to such Working
Capital Revolving Loans or within such earlier period as required by law. If
any such conversion of a Eurodollar Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, the Borrower shall
pay to such Working Capital Lender such amounts, if any, as may be required
pursuant to Section 3.15.
3.13 REQUIREMENTS OF LAW. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Working Capital Lender, or compliance by any Working Capital Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority, in each case made subsequent to the
Closing Date (or, if later, the date on which such Working Capital Lender
becomes a Working Capital Lender):
(a) shall subject such Working Capital Lender to any tax of any kind
whatsoever with respect to any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Working Capital Lender in respect thereof (except for Non-
Excluded Taxes covered by Section 3.14 (including Non-Excluded Taxes
imposed solely by reason of any failure of such Working
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Capital Lender to comply with its obligations under Section 3.14(b)) and
changes in taxes measured by or imposed upon the overall net income, or
franchise tax (imposed in lieu of such net income tax), of such Working
Capital Lender or its applicable lending office, branch, or any affiliate
thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Working Capital Lender which is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(c) shall impose on such Working Capital Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Working
Capital Lender, by an amount which such Working Capital Lender reasonably deems
to be material, of making, converting into, continuing or maintaining Eurodollar
Loans or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, upon notice to the Borrower from such Working Capital Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Working Capital Lender, upon its demand, any additional
amounts necessary to compensate such Working Capital Lender for such increased
cost or reduced amount receivable, PROVIDED that, in any such case, the Borrower
may elect to convert the Eurodollar Loans made by such Working Capital Lender
hereunder to Base Rate Loans by giving the Agent at least one Business Day's
notice of such election, in which case the Borrower shall promptly pay to such
Working Capital Lender, upon demand, without duplication, such amounts, if any,
as may be required pursuant to Section 3.15. If any Working Capital Lender
becomes entitled to claim any additional amounts pursuant to this Section 3.13,
it shall provide prompt notice thereof to the Borrower, through the Agent,
certifying (x) that one of the events described in this Section 3.13 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Working Capital Lender and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 3.13 submitted by such
Working Capital Lender, through the Agent, to the Borrower shall be conclusive
and binding on the parties hereto in the absence of manifest error. This
covenant shall survive the termination of this Credit Agreement and the payment
of the Working Capital Revolving Loans and all other amounts payable hereunder.
3.14 TAXES.
(a) Except as provided below in this Section 3.14, all payments made
by the Borrower under this Credit Agreement and any Working Capital
Revolving Loan Notes shall be made free
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and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by or
imposed upon the overall net income of any Working Capital Lender or its
applicable lending office, or any branch or affiliate thereof, and all
franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Working Capital Lender or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the laws
of which such Working Capital Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal executive
office is located, or any nation within which such jurisdiction is located
or any political subdivision thereof; or (ii) by reason of any connection
between the jurisdiction imposing such tax and such Working Capital Lender,
applicable lending office, branch or affiliate other than a connection
arising solely from such Working Capital Lender having executed, delivered
or performed its obligations, or received payment under or enforced, this
Credit Agreement or any Working Capital Revolving Loan Notes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any
amounts payable to the Agent or any Working Capital Lender hereunder or
under any Working Capital Revolving Loan Notes, (A) the amounts so payable
to the Agent or such Working Capital Lender shall be increased to the
extent necessary to yield to the Agent or such Working Capital Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Credit Agreement and any Working Capital Revolving Loan Notes, PROVIDED,
HOWEVER, that the Borrower shall be entitled to deduct and withhold any
Non-Excluded Taxes and shall not be required to increase any such amounts
payable to any Working Capital Lender that is not organized under the laws
of the United States of America or a state thereof if such Working Capital
Lender fails to comply with the requirements of paragraph (b) of this
Section 3.14 whenever any Non-Excluded Taxes are payable by the Borrower,
and (B) as promptly as possible thereafter the Borrower shall send to the
Agent for its own account or for the account of such Working Capital
Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and
the Working Capital Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Working Capital
Lender as a result of any such failure. The agreements in this subsection
shall
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survive the termination of this Credit Agreement and the payment of the
Working Capital Revolving Loans and all other amounts payable hereunder.
(b) Each Working Capital Lender that is not incorporated under the
laws of the United States of America or a state thereof shall:
(i)(A) on or before the date of any payment by the Borrower
under this Credit Agreement or Working Capital Revolving Notes to such
Working Capital Lender, deliver to the Borrower and the Agent (x) two
duly completed copies of United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments under this Credit
Agreement and any Working Capital Revolving Notes without deduction or
withholding of any United States federal income taxes and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be, certifying that it is entitled to an
exemption from United States backup withholding tax;
(B) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Agent; or
(ii) in the case of any such Working Capital Lender that is not a
"bank" within the meaning of Section 881(c)(3)(a) of the Internal
Revenue Code, (A) represent to the Borrower (for the benefit of the
Borrower and the Agent) that it is not a bank within the meaning of
Section 881(c)(3)(a) of the Internal Revenue Code, (B) agree to
furnish to the Borrower, on or before the date of any payment by the
Borrower, with a copy to the Agent, two accurate and complete original
signed copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Working Capital Lender's legal
entitlement at the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under this Credit
Agreement and any Working Capital Revolving Notes (and to deliver to
the Borrower and the Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of
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time reasonably requested by the Borrower or the Agent for filing and
completing such forms), and (C) agree, to the extent legally entitled
to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the legal
entitlement of such Working Capital Lender to an exemption from
withholding with respect to payments under this Credit Agreement and
any Working Capital Revolving Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Working Capital Lender
hereunder which renders all such forms inapplicable or which would prevent
such Working Capital Lender from duly completing and delivering any such
form with respect to it and such Working Capital Lender so advises the
Borrower and the Agent then such Working Capital Lender shall be exempt
from such requirements. Each Person that shall become a Working Capital
Lender or a participant of a Working Capital Lender pursuant to Section
11.3 shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required pursuant
to this subsection (b); PROVIDED that in the case of a participant of a
Working Capital Lender, the obligations of such participant of a Working
Capital Lender pursuant to this subsection (b) shall be determined as if
the participant of a Working Capital Lender were a Working Capital Lender
except that such participant of a Working Capital Lender shall furnish all
such required forms, certifications and statements to the Working Capital
Lender from which the related participation shall have been purchased.
3.15 INDEMNITY. The Borrower promises to indemnify each Working Capital
Lender and to hold each Working Capital Lender harmless from any loss or expense
which such Working Capital Lender may sustain or incur (other than through such
Working Capital Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto.
Such indemnification may include an amount equal to (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Loans provided for herein
(excluding, however,
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the Applicable Percentage included therein, if any) minus (ii) the amount of
interest (as reasonably determined by such Working Capital Lender) which would
have accrued to such Working Capital Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. The agreements in this Section shall survive the termination
of this Credit Agreement and the payment of the Working Capital Revolving Loans
and all other amounts payable hereunder.
3.16 REPLACEMENT OF LENDERS. If any Working Capital Lender delivers a
notice to the Borrower pursuant to Sections 3.10, 3.13 or 3.14, then the
Borrower shall have the right, if no Default or Event of Default then exists, to
replace such Working Capital Lender (the "REPLACED LENDER") with one or more
additional banks or financial institutions (collectively, the "REPLACEMENT
LENDER"), PROVIDED that (A) at the time of any replacement pursuant to this
Section 3.16, the Replacement Lender shall enter into one or more assignment
agreements substantially in the form of EXHIBIT 11.3 pursuant to, and in
accordance with the terms of, Section 11.3(b) (and with all fees payable
pursuant to said Section 11.3(b) to be paid by the Replacement Lender) pursuant
to which the Replacement Lender shall acquire all of the rights and obligations
of the Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (a) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (b) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 3.4, and (B) all obligations of the Borrower owing to
the Replaced Lender (including all obligations, if any, owing pursuant to
Section 3.10, 3.13 or 3.14, but excluding those obligations specifically
described in clause (A) above in respect of which the assignment purchase price
has been, or is concurrently being paid) shall be paid in full to such Replaced
Lender concurrently with such replacement.
SECTION 4
GUARANTY
4.1 GUARANTY OF PAYMENT. Subject to Section 4.7 below, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Working Capital Lender, each Affiliate of Working Capital Lender that enters
into a Hedging Agreement and the Agent the prompt payment of the Credit Party
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise). The Guarantors additionally, jointly
and severally, unconditionally guarantee to each Working Capital Lender the
timely performance of all other obligations under the Working Capital Credit
Documents and Hedging Agreements. This Guaranty is a guaranty of payment and
not of collection and is a continuing guaranty and shall apply to all Credit
Party Obligations whenever arising.
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4.2 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Working
Capital Credit Documents or the Hedging Agreements, or any other agreement or
instrument referred to therein, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Guarantor agrees that this Guaranty may be enforced by the Working Capital
Lenders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Working Capital Revolving Notes or any other of the Working
Capital Credit Documents or any collateral, if any, hereafter securing the
Credit Party Obligations or otherwise and each Guarantor hereby waives the right
to require the Working Capital Lenders to proceed against the Borrower or any
other Person (including a co-guarantor) or to require the Working Capital
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Guaranty until such time as
the Working Capital Lenders (and any Affiliates of Working Capital Lenders
entering into Hedging Agreements) have been paid in full, Working Capital
Revolving Committed Amount under the Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to request any return
or reimbursement of funds from the Working Capital Lenders in connection with
monies received under the Working Capital Credit Documents. Each Guarantor
further agrees that nothing contained herein shall prevent the Working Capital
Lenders from suing on the Working Capital Revolving Notes or any of the other
Working Capital Credit Documents or any of the Hedging Agreements or foreclosing
its security interest in or Lien on any collateral, if any, securing the Credit
Party Obligations or from exercising any other rights available to it under this
Credit Agreement, the Working Capital Revolving Notes, any other of the Working
Capital Credit Documents, or any other instrument of security, if any, and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any of any Guarantor's
obligations hereunder; it being the purpose and intent of each Guarantor that
its Guarantor's obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither any Guarantor's
obligations under this Guaranty nor any remedy for the enforcement thereof shall
be impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of the
Borrower or by reason of the bankruptcy or insolvency of the Borrower. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Credit Party Obligations and notice of or proof of
reliance by the Agent or any Working Capital Lender upon this Guarantee or
acceptance of this Guarantee. The Credit Party Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or
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incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors, on the
one hand, and the Agent and the Working Capital Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee.
4.3 MODIFICATIONS. Each Guarantor agrees that (a) all or any part of the
security now or hereafter held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Working Capital
Lenders shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if any,
for the Credit Party Obligations or the properties subject thereto; (c) the time
or place of payment of the Credit Party Obligations may be changed or extended,
in whole or in part, to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; (d) the Borrower and any other party liable
for payment under the Working Capital Credit Documents may be granted
indulgences generally; (e) any of the provisions of the Working Capital
Revolving Notes or any of the other Working Capital Credit Documents may be
modified, amended or waived; (f) any party (including any co-guarantor) liable
for the payment thereof may be granted indulgences or be released; and (g) any
deposit balance for the credit of the Borrower or any other party liable for the
payment of the Credit Party Obligations or liable upon any security therefor may
be released, in whole or in part, at, before or after the stated, extended or
accelerated maturity of the Credit Party Obligations, all without notice to or
further assent by the Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
4.4 WAIVER OF RIGHTS. Each Guarantor expressly waives: (a) notice of
acceptance of this Guaranty by the Working Capital Lenders and of all extensions
of credit to the Borrower by the Working Capital Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Working Capital Lenders
obtaining, amending, substituting for, releasing, waiving or modifying any
security interest, lien or encumbrance, if any, hereafter securing the Credit
Party Obligations, or the Working Capital Lenders' subordinating, compromising,
discharging or releasing such security interests, liens or encumbrances, if any;
(e) all other notices to which the Guarantor might otherwise be entitled; and
(f) demand for payment under this Guaranty.
4.5 REINSTATEMENT. The obligations of the Guarantors under this Section 4
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Credit Party Obligations
is rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy
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or reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by an Agent
or such Working Capital Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.6 REMEDIES. The Guarantors agree that, as between the Guarantors, on
the one hand, and the Agent and the Working Capital Lenders, on the other hand,
the Credit Party Obligations may be declared to be forthwith due and payable as
provided in Section 9 (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 9) notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing such
Credit Party Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or such Credit
Party Obligations being deemed to have become automatically due and payable),
such Credit Party Obligations (whether or not due and payable by any other
Person) shall forthwith become due and payable by the Guarantors. The
Guarantors acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Security Agreements and the other Collateral
Documents and that the Working Capital Lenders may exercise their remedies
thereunder in accordance with their terms.
4.7 LIMITATION OF GUARANTY. Notwithstanding any provision to the contrary
contained herein or in any of the Working Capital Credit Documents, to the
extent the obligations of any Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence hereof), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.8 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such
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obligations. For purposes hereof, (i) "EXCESS FUNDING GUARANTOR" shall mean, in
respect of any obligations arising under the other provisions of this Section 4
(hereafter, the "GUARANTEED OBLIGATIONS"), a Guarantor that has paid an amount
in excess of its Pro Rata Share of the Guaranteed Obligations; (ii) "EXCESS
PAYMENT" shall mean, in respect of any Guaranteed Obligations, the amount paid
by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations; and (iii) "PRO RATA SHARE", for the purposes of this
Section 4.8, shall mean, for any Guarantor, the ratio (expressed as a
percentage) of (a) the amount by which the aggregate present fair saleable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (b) the amount by which the aggregate present fair saleable value
of all assets and other properties of the Borrower and all of the Guarantors
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Borrower and the Guarantors hereunder) of the Borrower and
all of the Guarantors, all as of the Closing Date (if any Guarantor becomes a
party hereto subsequent to the Closing Date, then for the purposes of this
Section 4.8 such subsequent Guarantor shall be deemed to have been a Guarantor
as of the Closing Date and the information pertaining to, and only pertaining
to, such Guarantor as of the date such Guarantor became a Guarantor shall be
deemed true as of the Closing Date).
SECTION 5
CONDITIONS TO EXTENSIONS OF CREDIT
5.1 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The Working Capital Lenders
shall not be obligated to make, continue or convert Working Capital Revolving
Loans unless:
(a) NOTICE. The Borrower shall have delivered (i) in the case of any
new Working Capital Revolving Loan, a Notice of Borrowing, duly executed
and completed, by the time specified in Section 2.1 and (ii) in the case of
any continuation or conversion of a Working Capital Revolving Loan, a duly
executed and completed Notice of Continuation/Conversion by the time
specified in Section 2.5;
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Credit Parties in any Working Capital 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;
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(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 Working Capital Revolving Loan (and the application of the proceeds
thereof) the sum of the Working Capital Revolving Loans outstanding plus
the New Credit Agreement Revolving Loans outstanding shall not exceed the
sum of the New Credit Agreement Revolving Commitment Amount plus the
Working Capital Revolving Commitment Amount;
(f) SECTION 4.09 OF INDENTURE. The Borrower (i) is entitled to
obtain such Working Capital Revolving Loan or convert or continue such
Working Capital Revolving Loan, as the case may be, in accordance with
Section 4.09 of the Indenture and (ii) in connection with any new Working
Capital Revolving Loan the Agent is furnished with a calculation
satisfactory to the Agent from a nationally recognized accounting firm
reasonably satisfactory to the Agent computing the Fixed Charge Coverage
Ratio (as defined in the Indenture).
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.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Working Capital
Lender that:
6.1 FINANCIAL CONDITION. The financial statements delivered to the
Lenders pursuant to Section 5.1(c)(ii) of the New Credit Agreement, (a) have
been prepared in accordance with GAAP and (b) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated and
consolidating (as applicable) financial condition, results of operations and
cash flows of the Credit Parties and their Subsidiaries as of such date and for
such periods. Since November 30, 1995, there has been no sale, transfer or
other disposition by the Borrower or any of its Subsidiaries of any material
part of the business or property of the Borrower or any of its Subsidiaries,
except pursuant to the Blis-To-Sol/Soltice Agreement and no purchase or other
acquisition by any of them of any business or property (including any capital
stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its Subsidiaries, in each case, which, is not
reflected in the foregoing financial statements or in the notes thereto.
6.2 NO MATERIAL CHANGE. Since November 30, 1995, (a) there has been no
development or event relating to or affecting Borrower or any of its
Subsidiaries which has had or would be reasonably
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expected to have a Material Adverse Effect and (b) no dividends or other
distributions have been declared, paid or made upon the capital stock or other
equity interest in Borrower or any of its Subsidiaries nor, except as otherwise
permitted under this Credit Agreement, has any of the capital stock or other
equity interest in a Credit Party been redeemed, retired, purchased or otherwise
acquired for value.
6.3 ORGANIZATION AND GOOD STANDING. The Borrower and each of its
Subsidiaries (a) is a corporation duly incorporated, validly existing and in
good standing under the laws of the State (or other jurisdiction) of its
incorporation, (b) is duly qualified and in good standing as a foreign
corporation authorized to do business in every jurisdiction where the failure to
be so qualified would have a Material Adverse Effect and (c) has the requisite
corporate power and authority to own its properties and to carry on its business
as now conducted and as proposed to be conducted.
6.4 DUE AUTHORIZATION. Each Credit Party (a) has the requisite corporate
power and authority to execute, deliver and perform this Credit Agreement and
the other Working Capital Credit Documents to which it is a party and to incur
the obligations herein and therein provided for and (b) is duly authorized to,
and has been authorized by all necessary corporate action, to execute, deliver
and perform this Credit Agreement and the other Working Capital Credit Documents
to which it is a party.
6.5 NO CONFLICTS. Neither the execution and delivery of the Working
Capital Credit Documents, nor the consummation of the transactions contemplated
therein, nor performance of and compliance with the terms and provisions thereof
by such Credit Party will (a) violate or conflict with any provision of its
articles or certificate of incorporation or bylaws, (b) violate, contravene or
materially conflict with any Requirement of Law or any other law, regulation
(including, without limitation, Regulation U or Regulation X), order, writ,
judgment, injunction, decree or permit applicable to it, (c) violate, contravene
or conflict with contractual provisions of, or cause an event of default under,
any indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may be bound, the
violation of which could have or might be reasonably expected to have a Material
Adverse Effect, or (d) result in or require the creation of any Lien (other than
those contemplated in or created in connection with the Working Capital Credit
Documents) upon or with respect to its properties.
6.6 CONSENTS. No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of a Credit Party is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Working
Capital Credit Documents by a Credit Party, or if required, such consent,
approval and authorization has been obtained.
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6.7 ENFORCEABLE OBLIGATIONS. This Credit Agreement and the other Working
Capital Credit Documents have been duly executed and delivered and constitute
legal, valid and binding obligations of each Credit Party enforceable against
such Credit Party in accordance with their respective terms, except as may be
limited by bankruptcy or insolvency laws or similar laws affecting creditors'
rights generally or by general equitable principles.
6.8 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default in any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its properties is bound which default would have or
would be reasonably expected to have a Material Adverse Effect. No Default or
Event of Default has occurred or exists except as previously disclosed to the
Working Capital Lenders.
6.9 OWNERSHIP. The Borrower and each of its Subsidiaries is the owner of
and has good and marketable title to all of its assets and none of such assets
are subject to any Lien other than Permitted Liens.
6.10 INDEBTEDNESS. The Borrower and its Subsidiaries have no Indebtedness
except (a) as disclosed in the financial statements referenced in Section 6.1,
(b) as set forth on SCHEDULE 6.10 and (c) as otherwise permitted by this Credit
Agreement.
6.11 LITIGATION. Except as disclosed in SCHEDULE 6.11, there are no
actions, suits or legal, equitable, arbitration or administrative proceedings,
pending or, to the knowledge of any Credit Party, threatened against the
Borrower or any of its Subsidiaries which, if adversely determined, would have
or would be reasonably expected to have a Material Adverse Effect.
6.12 TAXES. Each of the Borrower and its Subsidiaries has filed, or caused
to be filed, all tax returns (federal, state, local and foreign) required to be
filed and paid (a) all amounts of taxes shown thereon to be due (including
interest and penalties) and (b) all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware of any proposed tax assessments
against it, any of its Subsidiaries or any other Credit Party.
6.13 COMPLIANCE WITH LAW. Each of the Borrower and its Subsidiaries is in
compliance with all Requirements of Law and all other laws, rules, regulations,
orders and decrees (including without limitation Environmental Laws) applicable
to it, or to its properties, unless such failure to comply would not have or
would not be reasonably expected to have a Material Adverse Effect. No
Requirement of Law would be reasonably expected to cause a Material Adverse
Effect.
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6.14 ERISA. Except as would not result in a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination Event
could reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan; (iii) each Plan has been maintained, operated, and
funded in compliance with its own terms and in material compliance with the
provisions of ERISA, the Code, and any other applicable federal or state
laws; and (iv) no lien in favor or the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under
each Single Employer Plan (determined within the meaning of Section
401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
such Plans), whether or not vested, did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, exceed the current value of the assets of such Plan allocable
to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties,
are reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower,
nor any of its Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the
Credit Parties, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Borrower or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the
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benefits provided and the employees participating) of the liability of the
Borrower and its Subsidiaries and each ERISA Affiliate for post-retirement
welfare benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such benefits,
are reflected on the Financial Statements in accordance with FAS 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in compliance in all material respects with
such sections.
6.15 SUBSIDIARIES. Set forth on SCHEDULE 6.15 is a complete and accurate
list of all Subsidiaries of each Credit Party. Information on SCHEDULE 6.15
includes jurisdiction of incorporation, the number of shares of each class of
capital stock or other equity interests outstanding, the number and percentage
of outstanding shares of each class owned (directly or indirectly) by such
Credit Party; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or purchase and all other similar rights
with respect thereto. The outstanding capital stock and other equity interests
of all such Subsidiaries is validly issued, fully paid and non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in connection with the
Working Capital Credit Documents). Other than as set forth in SCHEDULE 6.15,
neither any Credit Party nor any Subsidiary thereof has outstanding any
securities convertible into or exchangeable for its capital stock nor does any
such Person have outstanding any rights to subscribe for or to purchase or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to its capital stock.
6.16 USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Working Capital
Revolving Loans hereunder will be used solely for the purposes specified in
Section 7.10. None of the proceeds of the Working Capital Revolving Loans will
be used for the purpose of purchasing or carrying any "margin stock" as defined
in Regulation U, Regulation X or Regulation G, or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
"margin stock" or any "margin security" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U, Regulation X, Regulation G or Regulation T. None of the Credit Parties owns
any "margin stock".
6.17 GOVERNMENT REGULATION. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 or the Interstate Commerce Act, each as amended.
In addition, no Credit Party is (a) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
or controlled by such a company, or (b) a "holding company," or a
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"Subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "Subsidiary" or a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended. No director, executive
officer or principal shareholder of the Borrower or any of its Subsidiaries is a
director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
6.18 ENVIRONMENTAL MATTERS. (a) Except as set forth on SCHEDULE 6.18.
(i) each of the Real Properties and all operations at the Real
Properties are in compliance with all applicable Environmental Laws,
and there is no violation of any Environmental Law with respect to the
Real Properties or the businesses operated by the Borrower or any of
its Subsidiaries (the "BUSINESSES"), and there are no conditions
relating to the Businesses or Real Properties that could give rise to
liability under any applicable Environmental Laws.
(ii) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real Properties
in amounts or concentrations that, if released, constitute or
constituted a violation of, or could give rise to liability under,
Environmental Laws.
(iii) Neither the Borrower nor any of its Subsidiaries has
received any written or oral notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding Hazardous
Materials or compliance with Environmental Laws with regard to any of
the Real Properties, Leasehold Properties or the Businesses, nor does
the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice is being threatened.
(iv) Hazardous Materials have not been transported or disposed
of from the Real Properties, or generated, treated, stored or disposed
of at, on or under any of the Real Properties or any other location,
in each case by, or on behalf or with the permission of, the Borrower
or any of its Subsidiaries in a manner that would reasonably be
expected to give rise to liability under any applicable Environmental
Law.
(v) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened, under any Environmental Law to which the
Borrower or any
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of its Subsidiaries is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Real Properties or the
Businesses.
(vi) There has been no release or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or related
to the operations (including, without limitation, disposal) of the
Borrower or any of its Subsidiaries in connection with the Real
Properties or otherwise in connection with the Businesses.
(vii) Neither the Borrower nor any of its Subsidiaries has
assumed any liability of any Person (other than another Credit Party)
under any Environmental Law.
(b) The Borrower has adopted procedures that are designed to (i)
ensure that each Credit Party and their Subsidiaries, any of their
operations and each of the properties owned or leased by each Credit Party
and their Subsidiaries remains in compliance with applicable Environmental
Laws and (ii) minimize any liabilities or potential liabilities that each
Credit Party and their Subsidiaries, any of their operations and each of
the properties owned or leased by each Credit Party and their Subsidiaries
may have under applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or has the legal right to use, all trademarks, tradenames, copyrights,
technology, know-how and processes (the "INTELLECTUAL PROPERTY") necessary for
each of them to conduct its business as currently conducted except for those the
failure to own or have such legal right to use would not have or be reasonably
expected to have a Material Adverse Effect. Set forth on SCHEDULE 6.19 is a
list of all Intellectual Property owned by the Borrower and its Subsidiaries or
that the Borrower or one of its Subsidiaries has the right to use (which list
shall identify the Person that owns or has the right to use each such item of
Intellectual Property). Except as provided on SCHEDULE 6.19, no claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and to
the Credit Parties' knowledge the use of such Intellectual Property by the
Borrower or any of its Subsidiaries does not infringe on the rights of any
Person, except for such claims and infringements that in the aggregate, would
not have or be reasonably expected to have a Material Adverse Effect.
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6.20 SOLVENCY. Each Credit Party is and, after consummation of the
transactions contemplated by this Credit Agreement, will be Solvent.
6.21 INVESTMENTS. All Investments of the Borrower and each of its
Subsidiaries are either Permitted Investments or otherwise permitted by the
terms of this Credit Agreement.
6.22 NO FINANCING OF CORPORATE TAKEOVERS. No proceeds of the Working
Capital Revolving Loans hereunder have been or will be used to acquire, directly
or indirectly, any security in any transaction which is subject to Sections 13
or 14 of the Securities Exchange Act of 1934, as amended (including, without
limitation, Sections 13(d) and 14(d) thereof) or to refinance any Indebtedness
used to acquire any such securities.
6.23 LOCATION OF COLLATERAL. Set forth on SCHEDULE 6.23(a) is a list of
all Real Properties and Leasehold Properties with street address, county and
state where located. Set forth on SCHEDULE 6.23(b) is a list of all locations
where any personal property of a Credit Party is located, including county and
state where located. Set forth on SCHEDULE 6.23(c) is the chief executive
office and principal place of business of each Credit Party.
6.24 DISCLOSURE. Neither this Credit Agreement nor any financial
statements delivered to the Working Capital Lenders nor any other document,
certificate or statement furnished to the Working Capital Lenders by or on
behalf of any Credit Party in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
6.25 LICENSES, ETC. The Borrower and each of its Subsidiaries has obtained
and holds in full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals which are necessary for the
operation of their respective businesses as presently conducted.
6.26 NO BURDENSOME RESTRICTIONS. Neither the Borrower nor any Subsidiary
of the Borrower is a party to any agreement or instrument or subject to any
other obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
would have or be reasonably expected to have a Material Adverse Effect.
6.27 BROKERS' FEES. No Credit Party has any obligation to any Person in
respect of any finder's, broker's, investment banking or other similar fee in
connection with any of the transactions contemplated under the Working Capital
Credit Documents.
6.28 LABOR MATTERS. There are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrower or any Subsidiary of
the Borrower and none of such Persons
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has suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the last five years.
6.29 COLLATERAL DOCUMENTS. The Collateral Documents create valid security
interests in, and first Liens on, the Collateral purported to be covered
thereby, which security interests and Liens are and will remain perfected
security interests and Liens, prior to all other Liens other than Permitted
Liens. Each of the representations and warranties made by the Borrower and its
Subsidiaries in the Collateral Documents is true and correct.
6.30 RELATED TRANSACTIONS. The closing of the acquisition of the Acquired
Assets occurred simultaneously with the making of the initial Loans under the
New Credit Agreement, and no party waived, without the consent of the Required
Lenders, any condition precedent to their obligations to close as set forth in
the Purchase Agreement. True and complete copies of the Purchase Agreement have
been delivered to each of the Working Capital Lenders, together with a true and
complete copy of each document to be delivered at the closing of the acquisition
of the Acquired Assets.
6.31 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM PURCHASE AGREEMENT.
As of the Closing Date, each of the representations and warranties made in the
Purchase Agreement by each of the parties thereto is true and correct in all
material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein.
6.32 SENIOR DEBT. The Working Capital Revolving Loans are Senior Debt
under Article 10.02 of the Indenture, meaning the Agent, for the benefit of the
Working Capital Lenders, shall have all of the rights and privileges of a holder
of Senior Debt under the Indenture, including, but not limited to, the rights
set forth in Article 10 of the Indenture.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Working Capital Revolving Loans, together
with interest, fees and other obligations hereunder have been paid in full and
the Working Capital Revolving Committed Amount hereunder shall have terminated:
7.1 INFORMATION COVENANTS. The Borrower will furnish, or cause to be
furnished, to the Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any
event within 90 days after the close of each fiscal year of the Borrower, a
consolidated and consolidating balance sheet and income statement of the
Borrower and its
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Subsidiaries, as of the end of such fiscal year, together with related
consolidated and consolidating statements of operations and retained
earnings and of cash flows for such fiscal year, setting forth in
comparative form consolidated figures for the preceding fiscal year, all
such financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and whose
opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit
or qualified in any manner.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the Borrower
(other than the fourth fiscal quarter, in which case 90 days after the end
thereof) a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal quarter,
together with related consolidated and statements of operations and
retained earnings and of cash flows for such fiscal quarter in each case
setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate of the
chief financial officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.
(c) MONTHLY FINANCIAL STATEMENTS. As soon as available and in any
event within 20 days after the end of each month of the Borrower (other
than the last month of the first three fiscal quarters in which case 45
days after the end thereof), a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries as at the end of such month
together with (i) related consolidated statements of operations and
retained earnings for such month in each case setting forth in comparative
form consolidated figures for the corresponding period of the preceding
fiscal year and (ii) a separate income statement for each Foreign
Subsidiary (and such other financial information as reasonably requested by
the Agent or the Required Lenders), all such financial information
described above to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of the chief
financial officer of the Borrower to the effect that such monthly financial
statements fairly present in all material respects the financial condition
of the Borrower and its Subsidiaries and have been prepared in accordance
with GAAP, subject to changes resulting from audit and normal year-end
audit adjustments.
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(d) [Intentionally deleted]
(e) OFFICER'S CERTIFICATE. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer of the Borrower substantially in the form of
EXHIBIT 7.1(e), (i) demonstrating compliance with the financial covenants
contained in Section 7.12 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take with respect
thereto. The Borrower shall also deliver a copy of such certificate to the
Agency Services Address.
(f) ANNUAL BUSINESS PLAN AND BUDGETS. At least 60 days after the end
of each fiscal year of the Borrower, beginning with the fiscal year ending
November 30, 1996, an annual business plan and budget of the Borrower and
its Subsidiaries containing, among other things, pro forma financial
statements for the next fiscal year.
(g) BORROWING BASE CERTIFICATE. Within 15 days after the end of each
calendar month, a Borrowing Base Certificate as of the end of the
immediately preceding month, substantially in the form of EXHIBIT 7.1(g)
and certified by the chief financial officer of the Borrower to be true and
correct as of such date.
(h) COMPLIANCE WITH CERTAIN PROVISIONS OF THE CREDIT AGREEMENT.
Within 90 days after the end of each fiscal year of the Borrower, the
Borrower shall deliver a certificate, containing information regarding (i)
the calculation of Excess Cash Flow and (ii) the amount of any Asset
Dispositions, Debt Issuances, Equity Issuances and Recovery Events that
were made during the prior fiscal year.
(i) ACCOUNTANT'S CERTIFICATE. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof.
(j) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy of any
"management letter" submitted by independent accountants to the Borrower or
any of its Subsidiaries in connection with any annual, interim or special
audit of the books of the Borrower or any of its Subsidiaries.
(k) REPORTS. Promptly upon transmission or receipt thereof, (a)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or
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any successor agency, and copies of all financial statements, proxy
statements, notices and reports as the Borrower or any of its
Subsidiaries shall send to its shareholders generally or to a holder of
any Indebtedness owed by the Borrower or any of its Subsidiaries in its
capacity as such a holder and (b) upon the written request of the Agent,
all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters.
(l) NOTICES. Upon a Credit Party obtaining knowledge thereof, such
Credit Party will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following with respect to the Borrower or any of its
Subsidiaries (i) the pendency or commencement of any litigation, arbitral
or governmental proceeding against the Borrower or any of its Subsidiaries
which if adversely determined would have or would be reasonably expected to
have a Material Adverse Effect, or (ii) the institution of any proceedings
against the Borrower or any of its Subsidiaries with respect to, or the
receipt of notice by such Person of potential liability or responsibility
for violation, or alleged violation of any federal, state or local law,
rule or regulation, including but not limited to, Environmental Laws, the
violation of which would have or would be reasonably expected to have a
Material Adverse Effect.
(m) ERISA. Upon any of the Credit Parties or any ERISA Affiliate
obtaining knowledge thereof, Borrower will give written notice to the Agent
and each of the Working Capital Lenders promptly (and in any event within
five Business Days) of: (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably
lead to, a Termination Event; (ii) with respect to any Multiemployer Plan,
the receipt of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the Borrower or any of its ERISA Affiliates, or
of a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including extensions)
thereof of all amounts which the Borrower or any of its Subsidiaries or
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that could have a Material Adverse Effect; together,
with a description of any such event or condition or a copy of any such
notice and a statement by
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the principal financial officer of the Borrower briefly setting forth the
details regarding such event, condition, or notice, and the action, if any,
which has been or is being taken or is proposed to be taken by the Credit
Parties with respect thereto. Promptly upon request, the Borrower shall
furnish the Agent and each of the Lenders with such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as well
as all schedules and attachments thereto required to filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA
and the Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(n) ENVIRONMENTAL.
(i) Upon the reasonable written request of the Agent, the
Borrower will furnish or cause to be furnished to the Agent, at the
Borrower's expense, an environmental assessment of reasonable scope,
form and depth, (including, where appropriate, invasive soil or
groundwater sampling) by a consultant reasonably acceptable to the
Agent as to the nature and extent of the presence of any Hazardous
Materials on any property owned, leased or operated by the Borrower or
any of its Subsidiaries and as to the compliance by the Borrower and
each of its Subsidiaries with Environmental Laws. If the Borrower
fails to deliver such an environmental report within seventy-five (75)
days after receipt of such written request then the Agent may arrange
for same, and the Borrower hereby grants to the Agent and their
representatives access to the Real Properties and a license to
undertake such an assessment (including, where appropriate, invasive
soil or groundwater sampling). The reasonable cost of any assessment
arranged for by the Agent pursuant to this provision will be payable
by the Borrower on demand and added to the obligations secured by the
Collateral Documents.
(ii) The Borrower and each of its Subsidiaries will conduct and
complete all investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property owned or
leased by the Borrower or its Subsidiaries to the extent necessary to
be in compliance with all Environmental Laws and all other applicable
federal, state, and local laws, regulations, rules and policies and
with the orders and directives of all Governmental Authorities
exercising jurisdiction over such real property to the extent any
failure would have or be reasonably expected to have a Material
Adverse Effect.
(o) OTHER INFORMATION. With reasonable promptness upon any such
request, such other information regarding the
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business, properties or financial condition of the Borrower and its
Subsidiaries as the Agent or the Required Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES. Each of the Credit Parties
will, and will cause each of its Subsidiaries to, do all things necessary to
preserve and keep in full force and effect its existence, rights, franchises and
authority.
7.3 BOOKS AND RECORDS. Each of the Credit Parties will, and will cause
each of its Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW. Each of the Credit Parties will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property (including, without limitation, Environmental
Laws) if noncompliance with any such law, rule, regulation, order or restriction
would have or reasonably be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Each of the Credit Parties
will, and will cause its Subsidiaries to, pay and discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that a Credit Party or
its Subsidiary shall not be required to pay any such tax, assessment, charge,
levy, claim or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such payment
(i) would give rise to an immediate right to foreclose on a Lien securing such
amounts or (ii) would have a Material Adverse Effect.
7.6 INSURANCE. Each of the Credit Parties will, and will cause each of
its Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice. All liability policies shall
have each Working Capital Lender as an additional insured and all casualty
policies shall have the Agent, on behalf of the Working Capital Lenders, as loss
payee.
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In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such damage or destruction. Subsequent to any loss, damage
to or destruction of the Collateral of any Credit Party or any part thereof,
such Credit Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose, at
such Credit Party's cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed; provided,
however, that such Credit Party shall not be obligated to repair or replace any
Collateral so lost, damaged or destroyed to the extent the failure to make such
repair or replacement (a) is desirable to the proper conduct of the business of
such Credit Party in the ordinary course and otherwise is in the best interest
of such Credit Party and (b) would not materially impair the rights and benefits
of the Agent or the Working Capital Lenders under this Credit Agreement or any
other Working Capital Credit Document. In the event a Credit Party shall
receive any insurance proceeds, as a result of any loss, damage or destruction,
in a net amount in excess of $100,000, such Credit Party will immediately pay
over such proceeds to the Agent as cash collateral for the Credit Party
Obligations. The Agent agrees to release such insurance proceeds to such Credit
Party for replacement or restoration of the portion of the Collateral of such
Credit Party lost, damaged or destroyed if, (A) within 120 days from the date
the Agent receives such insurance proceeds, the Agent has received written
application for such release from such Credit Party together with evidence
reasonably satisfactory to it that the Collateral lost, damaged or destroyed has
been or will be replaced or restored to its condition (or by Collateral having a
value at least equal to the condition of the asset subject to the loss, damage
or destruction) immediately prior to the loss, destruction or other event giving
rise to the payment of such insurance proceeds and (B) on the date of such
release no Default or Event of Default exists. If the conditions in the
preceding sentence are not met, the Agent shall, on the first Business Day
subsequent to the date 120 days after it received such insurance proceeds, apply
such insurance proceeds as a mandatory prepayment of the Credit Party
Obligations for application in accordance with the terms of Section 3.3(b)(v)
and Section 3.3(c). All insurance proceeds shall be subject to the security
interest of the Working Capital Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is outlined
as to carrier, policy number, expiration date, type and amount on SCHEDULE 7.6,
as SCHEDULE 7.6 may be amended from time to time by written notice to the Agent.
7.7 MAINTENANCE OF PROPERTY. Each of the Credit Parties will, and will
cause its Subsidiaries to, maintain and preserve its properties and equipment in
good repair, working order and condition, normal wear and tear excepted, and
will make, or cause to be made, in such properties and equipment from time to
time all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
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7.8 PERFORMANCE OF OBLIGATIONS. Each of the Credit Parties will, and will
cause its Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a party or by which
it is bound.
7.9 COLLATERAL. If, subsequent to the Closing Date, a Credit Party shall
(a) acquire or lease any real property or (b) acquire any intellectual property,
securities instruments, chattel paper or other personal property required to be
delivered to the Agent as Collateral hereunder or under any of the Collateral
Documents, the Borrower shall immediately notify the Agent of same. Each Credit
Party shall take such action (including, but not limited to, the actions set
forth in Sections 5.1(g) and (h) of the New Credit Agreement), as requested by
the Agent and at its own expense, to ensure that the Lenders have a first
priority perfected Lien in all owned real property (and in such leased real
property as requested by the Agent or the Required Lenders) and all personal
property of the Credit Parties (whether now owned or hereafter acquired),
subject only to Permitted Liens. Each Credit Party shall adhere to the
covenants regarding the location of personal property as set forth in the
Security Agreements.
7.10 USE OF PROCEEDS. The Credit Parties will use proceeds of the Working
Capital Revolving Loans solely (a) to provide working capital and (b) for
general corporate purposes.
7.11 AUDITS/INSPECTIONS. Upon reasonable notice and during normal business
hours, each Credit Party will, and will cause its Subsidiaries to, permit
representatives appointed by the Agent or any Lender, including, without
limitation, independent accountants, agents, attorneys and appraisers to visit
and inspect such Credit Party's (or its Subsidiary's) property, including its
books and records, its accounts receivable and inventory, its facilities and its
other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Agent or its representatives to investigate and verify the accuracy
of information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of the Credit Parties and their
Subsidiaries. The Credit Parties agree that the Agent, and its representatives,
may conduct an annual audit of the Collateral, at the expense of the Borrower.
7.12 FINANCIAL COVENANTS.
(a) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as of the
end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including February 27, 1997,
1.30 to 1.0;
(ii) From February 28, 1997 to and including February 27, 1999,
1.5 to 1.0; and
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(iii) From February 28, 1999 and thereafter, 2.0 to 1.0.
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio, as
of the end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including February 27, 1997,
1.1 to 1.0; and
(ii) From February 28, 1997 and thereafter, 1.2 to 1.0.
(c) LEVERAGE RATIO. The Leverage Ratio, as of the end of each fiscal
quarter, shall be less than or equal to:
(i) From the Effective Date to and including August 30, 1996,
7.0 to 1.0;
(ii) From August 31, 1996 to and including November 29, 1996,
6.75 to 1.0;
(iii) From November 30, 1996 to and including May 30, 1997, 6.0 to
1.0;
(iv) From May 31, 1997 to and including February 27, 1998, 4.5 to
1.0;
(v) From February 28, 1998 to and including February 27, 1999,
4.0 to 1.0.
(vi) From February 28, 1999 and thereafter, 3.5 to 1.0.
(d) SENIOR LEVERAGE RATIO. The Senior Leverage Ratio, as of the end
of each fiscal quarter, shall be less than or equal to:
(i) From the Effective Date to and including November 29, 1996,
3.5 to 1.0;
(ii) From November 30, 1996 to and including May 30, 1997, 3.0 to
1.0;
(iii) From May 31, 1997 to and including February 27, 1999, 2.0 to
1.0;
(iv) From February 28, 1999 and thereafter, 1.5 to 1.0.
(e) NET WORTH. At all times Net Worth shall be no less than negative
Eleven Million Five Hundred Thousand ($11,500,000) increased on a
cumulative basis 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
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deductions for any losses) plus (ii) 100% of the Net Cash Proceeds from any
Equity Issuance subsequent to the Closing Date (other than the issuance of
shares of capital stock of the Borrower in the amount of $6.5 million in
connection with the Borrower's purchase of the Acquired Assets).
7.13 ADDITIONAL CREDIT PARTIES. At the time any Person becomes a
Subsidiary of a Credit Party, the Borrower shall so notify the Agent and
promptly thereafter (but in any event within 30 days after the date thereof)
shall cause such Person to (a) if it is a Domestic Subsidiary, execute a Joinder
Agreement in substantially the same form as EXHIBIT 7.13, (b) cause all of the
capital stock of such Person (if such Person is a Domestic Subsidiary) or 65% of
the capital stock of such Person (if such Person is a Foreign Subsidiary) to be
delivered to the Agent (together with undated stock powers signed in blank) and
pledged to the Agent pursuant to an appropriate pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
acceptable to the Agent (c) if such Person is a Domestic Subsidiary, pledge all
of its assets to the Lenders pursuant to a security agreement in substantially
the form of the Security Agreements and otherwise in a form acceptable to the
Agent (d) if such Person has any Subsidiaries, (i) deliver all of the capital
stock of such Domestic Subsidiaries and 65% of the capital stock of such Foreign
Subsidiaries (together with undated stock powers signed in blank) to the Agent
and (ii) execute a pledge agreement in substantially the form of the Pledge
Agreements and otherwise in a form acceptable to the Agent (e) if such Person
owns or leases any real property in the United States of America, execute any
and all necessary mortgages, deeds of trust, deeds to secure debt, leasehold
mortgages, collateral assignments of leaseholds or other appropriate real estate
collateral documentation in a form acceptable to the Agent and (f) deliver such
other documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord waivers, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form, content and
scope reasonably satisfactory to the Agent.
7.14 OWNERSHIP OF SUBSIDIARIES. The Borrower shall at all times own 100%
of the capital stock of its Subsidiaries (other than to the extent necessary for
Chattem (U.K.) Limited and HBA Insurance Limited to qualify for incorporation in
their respective countries of incorporation, any nominal qualifying shares owned
by any necessary governmental authorities) and may not sell, transfer or
otherwise dispose of any shares of capital stock of any of its Subsidiaries.
7.15 APPRAISAL REPORTS. The Borrower and its Subsidiaries shall provide
the Agent, upon the request of the Agent, with asset appraisal reports with
respect to the real and personal property of
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the Borrower and its Subsidiaries including, without limitation, appraisals of
brand values (provided, however, the Agent shall not require more than one
appraisal of brand values per year).
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Working Capital Revolving Loans, together
with interest, fees and other obligations hereunder, have been paid in full and
the Working Capital Revolving Committed Amount hereunder shall have terminated:
8.1 INDEBTEDNESS. No Credit Party will, nor will it permit any of its
Subsidiaries to, contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement, the New Credit
Agreement and the other Credit Documents;
(b) the Subordinated Debt;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 6.10 (and renewals, refinancings or extensions thereof on terms and
conditions no more favorable, in the aggregate, to such Person than such
existing Indebtedness and in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension);
(d) Indebtedness owing by one Credit Party to another Credit Party;
(e) purchase money Indebtedness (including Capital Leases) incurred
by the Borrower or any of its Subsidiaries to finance the purchase of fixed
assets; PROVIDED that (i) the total of all such Indebtedness for all such
Persons taken together shall not exceed an aggregate principal amount of
$1,000,000.00 at any one time outstanding (including any such Indebtedness
referred to in subsection (c) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and (iii) no
such Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such refinancing;
(f) obligations of the Credit Parties evidenced by the interest rate
protection agreements referred to in Section 7.14; and
(g) Indebtedness incurred by Foreign Subsidiaries not to exceed
$500,000.00, in the aggregate, at any one time
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outstanding (including any such Indebtedness referred to in subsection (c)
above).
8.2 LIENS. No Credit Party will, nor will it permit its Subsidiaries to
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS. 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.
8.4 CONSOLIDATION AND MERGER. No Credit Party will, nor will it permit
its Subsidiaries to, enter into any transaction of merger or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that notwithstanding the foregoing provisions of this
Section 8.4, the following actions may be taken if (a) the Agent is given prior
written notice of such action, and the Credit Parties execute and deliver such
documents, instruments and certificates as the Agent may request in order to
maintain the perfection and priority of the Liens on the assets of the Credit
Parties and (b) after giving effect thereto no Default or Event of Default
exists:
(i) any Credit Party may be merged or consolidated with or into the
Borrower or any Credit Party (other than the Borrower) may be merged or
consolidated with or into any other Credit Party; provided that if such
transaction shall be between the Borrower and another Credit Party, the
Borrower shall be the continuing or surviving corporation; and
(ii) any Foreign Subsidiary may merge or consolidate with any other
Foreign Subsidiary.
8.5 SALE OR LEASE OF ASSETS. 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, 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, or (d) sales of product lines (or the right to produce a
consumer product or products) provided that the dispositions permitted under
this subparagraph (d) during the term of this Credit Agreement shall be limited
to product lines (or the right to produce a consumer product or products) having
sales for the twelve-month period ending on the fiscal quarter ending
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immediately preceding the sale in an aggregate amount of $3,000,000 or less.
8.6 ADVANCES, INVESTMENTS AND LOANS. No Credit Party will, nor will it
permit any of its Subsidiaries to, make any Investments except for Permitted
Investments.
8.7 DIVIDENDS. No Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividends
(whether cash or otherwise) or make any other distribution upon any shares of
its capital stock of any class or (b) purchase, redeem or otherwise acquire or
retire or make any provisions for redemption, acquisition or retirement of any
shares of its capital stock of any class or any warrants or options to purchase
any such shares other than a Permitted Investment; provided that Subsidiaries of
the Borrower may pay dividends to the Borrower.
8.8 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 8.8, 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.
8.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS. No Credit Party will, nor will
it permit any of its Subsidiaries to, change its fiscal year or materially
change its articles or certificate of incorporation or its bylaws without the
prior written consent of the Required Lenders.
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 Working
Capital 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.
8.11 SUBORDINATED DEBT. No Credit Party will (a) make or offer to make
any principal payments with respect to the Subordinated Debt, (b) redeem or
offer to redeem any of the
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Subordinated Debt, or (c) deposit any funds intended to discharge or defease any
or all of the Subordinated Debt. The Subordinated Debt may not be amended or
modified in any material manner without the prior written consent of the
Required Lenders, it being specifically understood and agreed that no amendment
to Article 4 or Article 10 of the Indenture shall be made without the prior
written consent of the Required Lenders.
8.12 LIMITATIONS. No Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual encumbrance
or restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's capital stock,
(b) pay any Indebtedness owed to the Borrower or any other Credit Party, (c)
make loans or advances to any other Credit Party or (d) transfer any of its
property to any other Credit Party, except for encumbrances or restrictions
existing under or by reason of (i) customary non-assignment provisions in any
lease governing a leasehold interest, (ii) this Credit Agreement, the New Credit
Agreement and the other Credit Documents and (iii) the Indenture.
8.13 SALE LEASEBACKS. No Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly become or remain liable as lessee or as
guarantor or other surety with respect to any lease, of any property (whether
real or personal or mixed), whether now owned or hereafter acquired, (a) which
such Credit Party or Subsidiary has sold or transferred or is to sell or
transfer to any other Person other than a Credit Party or (b) which such Credit
Party or Subsidiary intends to use for substantially the same purpose as any
other property which has been sold or is to be sold or transferred by such
Credit Party or Subsidiary to any Person in connection with such lease.
8.14 NEGATIVE PLEDGES. Other than as set forth in Section 4.12 of the
Indenture, none of the Credit Parties will, nor will it permit any of its
Subsidiaries to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
8.15 CAPITAL EXPENDITURES. The Credit Parties and their Subsidiaries will
not make Capital Expenditures, in any fiscal year, that would exceed
$3,500,000.00 in the aggregate.
8.16 OPERATING LEASES. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume or permit to exist obligations under Operating
Leases which require aggregate annual payments in excess of $1,500,000.00.
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SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "EVENT OF
DEFAULT"):
(a) PAYMENT. Any Credit Party shall:
(i) default in the payment when due of any principal of any of
the Working Capital Revolving Loans; or
(ii) default, and such default shall continue for three or more
days, in the payment when due of any interest on the Working Capital
Revolving Loans, or of any fees or other amounts owing hereunder,
under any of the other Working Capital Credit Documents or in
connection herewith.
(b) REPRESENTATIONS. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Working Capital Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was made or
deemed to have been made.
(c) COVENANTS. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.4, 7.5, 7.6, 7.9,
7.10, 7.12, 7.13, 7.14, 7.15 or 8.1 through 8.16 inclusive; or
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 7.1 and such default
shall continue unremedied for a period of five Business Days after the
earlier of an officer of a Credit Party becoming aware of such default
or notice thereof given by the Agent; or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) or (ii) of this Section 9.1) contained
in this Credit Agreement and such default shall continue unremedied
for a period of at least 30 days after the earlier of an officer of a
Credit Party becoming aware of such default or notice thereof given by
the Agent.
(d) OTHER CREDIT DOCUMENTS. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in any
of the other Working Capital
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Credit Documents and such default shall continue unremedied for a period of
at least 30 days after the earlier of an officer of a Credit Party becoming
aware of such default or notice thereof given by the Agent, or (ii) any
Working Capital Credit Document shall fail to be in full force and effect
or to give the Agent and/or the Working Capital Lenders the security
interests, liens, rights, powers and privileges purported to be created
thereby.
(e) GUARANTIES. The guaranty given by the Credit Parties hereunder
or by any Additional Credit Party hereafter or any provision thereof shall
cease to be in full force and effect, or any guarantor thereunder or any
Person acting by or on behalf of such guarantor shall deny or disaffirm
such Guarantor's obligations under such guaranty.
(f) BANKRUPTCY, ETC. The occurrence of any of the following with
respect to the Borrower or any of its Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of any of the Borrower or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up or liquidation
of its affairs; or (ii) an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against the Borrower or any of its Subsidiaries and such petition
remains unstayed and in effect for a period of 60 consecutive days; or
(iii) the Borrower or any of its Subsidiaries shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any substantial part of
its property or make any general assignment for the benefit of creditors;
or (iv) the Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts generally as they become due or any action shall
be taken by such Person in furtherance of any of the aforesaid purposes.
(g) DEFAULTS UNDER OTHER AGREEMENTS. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) of the Borrower or any of its Subsidiaries in a principal amount
in excess of $500,000.00, including, without limitation, the Subordinated
Debt and any indebtedness under the New Credit Agreement (i) a Credit Party
shall (A) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or (B)
default (after giving effect to any applicable grace period) in the
observance or performance of
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any term, covenant or agreement relating to such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition exist, the effect of
which default or other event or condition is to cause, or permit, the
holder or holders of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to whether any notice or
lapse of time is required) any such Indebtedness to become due prior to its
stated maturity; or (ii) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof.
(h) JUDGMENTS. One or more judgments, orders, or decrees shall be
entered against any one or more of the Borrower or any of its Subsidiaries
involving a liability of $500,000.00 or more, in the aggregate, (to the
extent not paid or covered by insurance provided by a carrier who has
acknowledged coverage) and such judgments, orders or decrees shall continue
unsatisfied, undischarged and unstayed for a period ending on the first to
occur of (i) the last day on which such judgment, order or decree becomes
final and unappealable or (ii) 30 days.
(i) ERISA. Any of the following events or conditions: (A) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of the Borrower
or any of their Subsidiaries or any ERISA Affiliate in favor of the PBGC or
a Plan; (B) a Termination Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA;
(C) a Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of Title
IV of ERISA, or (ii) the Borrower or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency or (within the meaning of Section 4245 of ERISA) such Plan; or
(D) any prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject the Borrower or any of its Subsidiaries or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower or any of its Subsidiaries or any
ERISA Affiliate has agreed or is required to indemnify any person against
any such liability;
(j) OWNERSHIP. There shall occur a Change of Control;
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(k) SUBORDINATED DEBT. (i) Any holder of the Subordinated Debt
alleges (or any Governmental Authority with applicable jurisdiction
determines) that the Working Capital Lenders are not holders of Senior Debt
(as defined in the Indenture) or (ii) the subordination provisions in the
Indenture shall, in whole or in part, terminate, cease to be effective or
cease to be legally valid, binding and enforceable against any holder of
the Subordinated Debt;
(l) BUSINESS. The Borrower commences to engage in a line of business
or activity other than the business of manufacturing and marketing of brand
name over-the-counter pharmaceuticals and functional toiletries and
cosmetics; or
(m) INDENTURE/CHANGE OF CONTROL. There shall occur a Change of
Control Triggering Event (as defined in the Indenture) under the Indenture.
9.2 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by the Required Lenders (or the Lenders as may be required
hereunder), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Borrower, take any of the following actions:
(a) TERMINATION OF COMMITMENTS. Declare the Working Capital
Revolving Committed Amount terminated whereupon the Working Capital
Revolving Committed Amount shall be immediately terminated.
(b) ACCELERATION OF LOANS. Declare the unpaid principal of and any
accrued interest in respect of all Working Capital Revolving Loans, and any
and all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Working Capital Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Credit Parties.
(c) ENFORCEMENT OF RIGHTS. Enforce any and all rights and interests
created and existing under the Working Capital Credit Documents, including,
without limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Working Capital Revolving Committed Amount shall
automatically terminate and all Working Capital Revolving Loans, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Working Capital Lenders hereunder shall immediately
become due and payable without the giving of any notice or other
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action by the Agent or the Working Capital Lenders, which notice or other action
is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Working Capital Lender has a separate right of payment and shall be
considered a separate "creditor" holding a separate "claim" within the meaning
of Section 101(5) of the Bankruptcy Code or any other insolvency statute.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT. Each Working Capital Lender hereby designates and
appoints NationsBank, N.A. as Agent of such Working Capital Lender to act as
specified herein and the other Working Capital Credit Documents, and each such
Working Capital Lender hereby authorizes the Agent, as the agent for such
Working Capital Lender, to take such action on its behalf under the provisions
of this Credit Agreement and the other Working Capital Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Working Capital Credit Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere herein and in the other Working Capital
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Working Capital Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any of the other Working Capital Credit
Documents, or shall otherwise exist against the Agent. The provisions of this
Section are solely for the benefit of the Agent and the Working Capital Lenders
and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Credit Agreement and the other Working Capital Credit Documents, the
Agent shall act solely as the agent of the Working Capital Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency or trust with or for any Credit Party.
10.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
hereunder or under the other Working Capital Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other Working
Capital
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Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (b) responsible in any manner to any of the Working
Capital Lenders for any recitals, statements, representations or warranties made
by any of the Credit Parties contained herein or in any of the other Working
Capital Credit Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or provided for in, or
received by the Agent under or in connection herewith or in connection with the
other Working Capital Credit Documents, or enforceability or sufficiency
therefor of any of the other Working Capital Credit Documents, or for any
failure of the Borrower to perform its obligations hereunder or thereunder. The
Agent shall not be responsible to any Working Capital Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, or any of the other Working Capital Credit
Documents or for any representations, warranties, recitals or statements made
herein or therein or made by the Borrower or any Credit Party in any written or
oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Working Capital Lenders or by or on behalf
of the Credit Parties to the Agent or any Working Capital Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Working Capital Revolving Loans or of the
existence or possible existence of any Default or Event of Default or to inspect
the properties, books or records of the Credit Parties. The Agent is not a
trustee for the Working Capital Lenders and owe no fiduciary duty to the Working
Capital Lenders.
10.4 RELIANCE ON COMMUNICATIONS. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care). The
Agent may deem and treat the Working Capital Lenders as the owner of its
interests hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent in
accordance with Section 11.3(b). The Agent shall be fully justified in failing
or refusing to take any action under this Credit Agreement or under any of the
other Working Capital Credit Documents unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or under any of the other
Working Capital Credit
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Documents in accordance with a request of the Required Lenders (or to the extent
specifically provided in Section 11.6, all the Lenders) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders (including their successors and assigns).
10.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Working Capital Lender or a Credit Party
referring to the Working Capital Credit Document, describing such Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Working Capital Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the affairs of any
Credit Party, shall be deemed to constitute any representation or warranty by
the Agent to any Working Capital Lender. Each Working Capital Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Working Capital Lender, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own decision
to make its Working Capital Revolving Loans hereunder and enter into this Credit
Agreement. Each Working Capital Lender also represents that it will,
independently and without reliance upon the Agent or any other Working Capital
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Credit Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties. Except for notices, reports and other
documents expressly required to be furnished to the Working Capital Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Working Capital Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Credit Parties which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION. The Working Capital Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of
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the Borrower to do so), ratably according to their respective percentage of the
Working Capital Revolving Loan Committed Amount (or if the Working Capital
Revolving Loan Committed Amount has expired or been terminated, in accordance
with the respective principal amounts of outstanding Working Capital Revolving
Loans and Participation Interest of the Working Capital Lenders), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following payment in full of the Credit Party Obligations) be imposed on,
incurred by or asserted against the Agent in its capacity as such in any way
relating to or arising out of this Credit Agreement or the other Working Capital
Credit Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
PROVIDED that no Working Capital Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of the Agent. If any indemnity furnished to
the Agent for any purpose shall, in the opinion of the Agent, be insufficient
or become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this Section shall survive the payment of the
Credit Party Obligations and all other amounts payable hereunder and under the
other Working Capital Credit Documents.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower or any other Credit Party as though the Agent were not the
Agent hereunder. With respect to the Working Capital Revolving Loans made and
all obligations owing to it, the Agent shall have the same rights and powers
under this Credit Agreement as any Working Capital Lender and may exercise the
same as though it were not the Agent, and the terms "Lender", "Lenders",
"Working Capital Lender" and "Working Capital Lenders" shall include the Agent
in its individual capacity.
10.9 SUCCESSOR AGENT. The Agent may, at any time, resign upon 20 days
written notice to the Working Capital Lenders. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 45 days after the notice of resignation,
then the retiring Agent shall select a successor Agent provided such successor
is a Working Capital Lender hereunder or a commercial bank organized under the
laws of the United States of America or of any State thereof and has a combined
capital and surplus of at least $400,000,000. Upon the acceptance of any
appointment as the Agent hereunder by a successor, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
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privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as an Agent, as appropriate, under
this Credit Agreement and the other Working Capital Credit Documents and the
provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this Credit
Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be effective (a)
when delivered, (b) when transmitted via telecopy (or other facsimile device) to
the number set out below, (c) the Business Day following the day on which the
same has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on SCHEDULE
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 RIGHT OF SET-OFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement of
remedies described in Section 9.2, each Working Capital Lender is authorized at
any time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived), to set-
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Working Capital Lender
(including, without limitation branches, agencies or Affiliates of such Working
Capital Lender wherever located) to or for the credit or the account of any
Credit Party against obligations and liabilities of such Credit Party to the
Working Capital Lenders hereunder, under the Working Capital Revolving Notes,
the other Working Capital Credit Documents or otherwise, irrespective of whether
the Agent or the Working Capital Lenders shall have made any demand hereunder
and although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of such Lender subsequent thereto. The Credit
Parties hereby agree that any Person purchasing a participation in the Working
Capital Revolving Loans and Working Capital Revolving Loan Committed Amount
hereunder pursuant to Section 11.3(c) or 3.9 may exercise all rights of set-off
with respect to its participation interest as fully as if such Person were a
Working Capital Lender hereunder.
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11.3 BENEFIT OF AGREEMENT.
(a) GENERALLY. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; PROVIDED that none of the Credit Parties may
assign and transfer any of its interests without the prior written consent
of the Lenders; and PROVIDED FURTHER that the rights of each Working
Capital Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this Section
11.3. Notwithstanding the above, nothing herein shall restrict, prevent or
prohibit any Working Capital Lender from (i) pledging its Working Capital
Revolving Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Working Capital Lender from such Federal Reserve
Bank, or (ii) granting assignments or participation in such Working Capital
Lender's Working Capital Revolving Loans and/or Working Capital Revolving
Committed Amount hereunder to its parent company and/or to any Affiliate of
such Working Capital Lender or to any existing Lender or Affiliate thereof.
(b) ASSIGNMENTS. Each Working Capital Lender may, with the prior
written consent of the Borrower and the Agent (provided that no consent of
the Borrower shall be required during the existence and continuation of an
Event of Default), which consent shall not be unreasonably withheld or
delayed, assign all or a portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in the form of EXHIBIT
11.3 to one or more Eligible Assignees; PROVIDED that (i) any such
assignment shall be in a minimum aggregate amount of $1,000,000 of the
Working Capital Revolving Committed Amount and in integral multiples of
$50,000 above such amount (or the remaining amount of Working Capital
Revolving Committed Amount held by such Working Capital Lender), (ii) each
such assignment shall be of a constant, not varying, percentage of all of
the assigning Working Capital Lender's rights and obligations under the
Working Capital Revolving Committed Amount being assigned and (iii) such
Working Capital Lender shall simultaneously assign an identical percentage
of the New Credit Agreement Revolving Committed Amount of such Working
Capital Lender to such Eligible Assignee or Assignees. Any assignment
hereunder shall be effective upon satisfaction of the conditions set forth
above and delivery to the Agent of a duly executed assignment agreement
together with a transfer fee of $3,500 payable to the Agent for its own
account. Upon the effectiveness of any such assignment, the assignee shall
become a "Working Capital Lender" for all purposes of this Credit Agreement
and the other Working Capital Credit Documents and, to the extent of such
assignment, the assigning Working Capital Lender shall be relieved of its
obligations hereunder to the extent of the Working Capital Revolving Loans
and Working Capital Revolving Committed Amount components being assigned.
Along such lines the Borrower agrees that
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upon notice of any such assignment and surrender of the appropriate Working
Capital Revolving Note or Working Capital Revolving Notes, it will promptly
provide to the assigning Working Capital Lender and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Working Capital Revolving Note or
Working Capital Revolving Notes (but with notation thereon that it is given
in substitution for and replacement of the original Working Capital
Revolving Note or Working Capital Revolving Notes or any replacement notes
thereof).
By executing and delivering an assignment agreement in accordance with this
Section 11.3(b), the assigning Working Capital Lender thereunder and the
assignee thereunder shall be deemed to confirm to and agree with each other
and the other parties hereto as follows: (i) such assigning Working Capital
Lender warrants that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim; (ii) except as
set forth in clause (i) above, such assigning Working Capital Lender makes
no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement, any of the other Working Capital Credit Documents or
any other instrument or document furnished pursuant hereto or thereto, or
the execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Credit Agreement, any of the other Working Capital Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto or the financial condition of any Credit Party or the performance
or observance by any Credit Party of any of its obligations under this
Credit Agreement, any of the other Working Capital Credit Documents or any
other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee represents and warrants that it is legally authorized to
enter into such assignment agreement; (iv) such assignee confirms that it
has received a copy of this Credit Agreement, the other Working Capital
Credit Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such assigning Working Capital Lender or any other
Working Capital Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Credit Agreement and
the other Working Capital Credit Documents; (vi) such assignee appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Credit Agreement or any other Working Capital Credit
Document as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Credit
- 60 -
<PAGE>
Agreement and the other Working Capital Credit Documents are required to be
performed by it as a Working Capital Lender.
(c) PARTICIPATIONS. Each Working Capital Lender may sell, transfer,
grant or assign participations in all or any part of such Working Capital
Lender's interests and obligations hereunder; PROVIDED that (i) such
selling Working Capital Lender shall remain a "Working Capital Lender" for
all purposes under this Credit Agreement (such selling Working Capital
Lender's obligations under the Credit Documents remaining unchanged) and
the participant shall not constitute a Working Capital Lender hereunder,
(ii) no such participant shall have, or be granted, rights to approve any
amendment or waiver relating to this Credit Agreement, or the other Working
Capital Credit Documents except to the extent any such amendment or waiver
would (A) reduce the principal of or rate of interest on or fees in respect
of any Working Capital Revolving Loans in which the participant is
participating, (B) postpone the date fixed for any payment of principal
(including extension of the Revolving Loan Maturity Date or the date of any
mandatory prepayment), interest or fees in which the participant is
participating, or (C) release all or substantially all of the collateral or
guaranties (except as expressly provided in the Working Capital Credit
Documents) supporting any of the Working Capital Revolving Loans or Working
Capital Revolving Committed Amount in which the participant is
participating, (iii) sub-participations by the participant (except to an
Affiliate, parent company or Affiliate of a parent company of the
participant) shall be prohibited, (iv) any such participations shall be in
a minimum aggregate amount of $1,000,000 of the Working Capital Revolving
Committed Amount and in integral multiples of $50,000 in excess thereof and
(v) such selling Working Capital Lender simultaneously grants or assigns a
participation, in like percentage, of the New Credit Agreement Revolving
Committed Amount of such Working Capital Lender to such participant. In
the case of any such participation, the participant shall not have any
rights under this Credit Agreement or the other Working Capital Credit
Documents (the participant's rights against the selling Working Capital
Lender in respect of such participation to be those set forth in the
participation agreement with such Working Capital Lender creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Working Capital Lender had not sold such
participation; PROVIDED, however, that such participant shall be entitled
to receive additional amounts under Section 3.15 to the same extent that
the Working Capital Lender from which such participant acquired its
participation would be entitled to the benefit of such cost protection
provisions.
(d) REGISTRATION. The Agent, acting for this purpose solely on
behalf of the Borrower, shall maintain a register (the "Register") for the
recordation of the names and addresses of the Working Capital Lenders and
the principal
- 61 -
<PAGE>
amount of the Working Capital Revolving Loans owing to each Working Capital
Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the
Working Capital Lenders shall treat each Person whose name is recorded in
the Register as the owner of a Working Capital Revolving Loan or other
obligation hereunder for all purposes of this Credit Agreement and the
other Working Capital Credit Documents Credit Documents, notwithstanding
notice to the contrary. Any assignment of any Working Capital Revolving
Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register
shall be available for inspection by the Borrower or any Working Capital
Lender at any reasonable time and from time to time upon reasonable prior
notice.
11.4 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Agent or any Working Capital Lender in exercising any right, power or
privilege hereunder or under any other Working Capital Credit Document and no
course of dealing between the Borrower or any Credit Party and the Agent or any
Working Capital Lender shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or under any
other Working Capital Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Agent or any Working Capital
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the Working Capital Lenders to any other or further action in any
circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION. The Credit Parties agree to:
(a) pay all reasonable out-of-pocket costs and expenses of (i) the Agent in
connection with the negotiation, preparation, execution and delivery and
administration of this Credit Agreement and the other Working Capital Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and expenses of Moore & Van Allen,
special counsel to the Agent and the fees and expenses of counsel for the Agent
in connection with collateral or foreign issues), and any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (ii) the Agent and the Working Capital Lenders
in connection with enforcement of the Working Capital Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Agent and each of the Working Capital Lenders) and (b) indemnify
each Working Capital Lender, its officers, directors,
- 62 -
<PAGE>
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not any
Working Capital Lender is a party thereto) related to (i) the entering into
and/or performance of any Working Capital Credit Document or the use of proceeds
of any Working Capital Revolving Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Working Capital Credit Document, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified), (ii) any Environmental Claim and (iii) any claims for Non-Excluded
Taxes.
11.6 AMENDMENTS, WAIVERS AND CONSENTS. Neither this Credit Agreement nor
any other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing and signed by the Required Lenders and
the Credit Parties; PROVIDED that no such amendment, change, waiver, discharge
or termination shall
(a) without the consent of each Lender affected thereby,
(i) extend the final maturity of any Loan, or any portion
thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder,
(iii) reduce or waive the principal amount of any Loan,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of any
Default or Event of Default or mandatory reduction in the Commitments
shall not constitute a change in the terms of any Commitment of any
Lender),
(v) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Agent may, without consent from any other Lender, release any
Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5 or release any cash collateral in the
Cash Collateral Account in accordance with the terms of the Assignment
of Cash Collateral Account),
- 63 -
<PAGE>
(vi) release the Borrower or substantially all of the other
Credit Parties from its obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section or
Section 3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a), 11.2,
11.3 or 11.5,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower
(or another Credit Party) of any of its rights and obligations under
(or in respect of) the Credit Documents except as permitted thereby;
and
(b) without the consent of Lenders holding in the aggregate more than
50% of the outstanding Tranche A Term Loans and more than 50% of the
outstanding Tranche B Term Loans, extend the time for or the amount or the
manner of application of proceeds of any mandatory prepayment required by
Section 3.3(b)(ii), (iii), (iv) or (v) hereof. No provision of Section 10
may be amended without the consent of the Agent.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans and each Lender acknowledges that the provisions of Section 1126(c) of the
Bankruptcy Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
11.7 COUNTERPARTS. This Credit Agreement may be executed in any number of
counterparts, each of which where 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 Credit Agreement to produce or
account for more than one such counterpart.
11.8 HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.9 DEFAULTING LENDER. Each Working Capital Lender understands and agrees
that if such Working Capital Lender is a Defaulting Lender then it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Working Capital
Credit Documents shall apply to such Defaulting Lender.
- 64 -
<PAGE>
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES. All
indemnities set forth herein and all representations and warranties made herein
shall survive the execution and delivery of this Credit Agreement, the making of
the Working Capital Revolving Loans, the repayment of the Working Capital
Revolving Loans, and other obligations and the termination of the Working
Capital Revolving Committed Amount hereunder.
11.11 GOVERNING LAW; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER WORKING CAPITAL CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal
action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State of
North Carolina or of the United States for the Western District of
North Carolina and, by execution and delivery of this Credit
Agreement, each Credit Party hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the
jurisdiction of such courts. Each Credit Party further irrevocably
consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at the
address for notices pursuant to Section 11.1, such service to become
effective 30 days after such mailing. Nothing herein shall affect the
right of a Lender to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed against a
Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Working Capital Credit
Document brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER
WORKING CAPITAL CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME. All references to time herein shall be references to Eastern
Standard Time or Eastern Daylight time, as the case may be, unless specified
otherwise.
- 65 -
<PAGE>
11.14 SEVERABILITY. If any provision of any of the Working Capital Credit
Documents is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.
11.15 ENTIRETY. This Credit Agreement together with the other Working
Capital Credit Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
the Working Capital Credit Documents or the transactions contemplated herein and
therein.
11.16 BINDING EFFECT. This Credit Agreement shall become effective at
such time when all of the conditions set forth in Section 5.1 of the New Credit
Agreement have been satisfied or waived by the Lenders and it shall have been
executed by the Borrower, the Guarantors and the Agent, and the Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken together, bear
the signatures of each Working Capital Lender, and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Guarantors, the Agent and each Working Capital Lender and their respective
successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 66 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
CHATTEM, INC.,
a Tennessee corporation
By: /s/ Robert E. Bosworth
---------------------------------
Name: Robert E. Bosworth
--------------------------------
Title Executive Vice President
--------------------------------
GUARANTORS: SIGNAL INVESTMENT & MANAGEMENT CO.,
a Delaware corporation
By: /s/ Robert E. Bosworth
---------------------------------
Name: Robert E. Bosworth
--------------------------------
Title President
--------------------------------
LENDERS:
NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By: /s/ Nancy B. Chastain
---------------------------------
Name: Nancy B. Chastain
--------------------------------
Title Senior Vice President
--------------------------------
<PAGE>
Signature page to Credit Agreement dated April 29, 1996 among Chattem, Inc., as
Borrower, each of the Borrower's Domestic Subsidiaries, as Guarantors, the
Working Capital Lenders, and NationsBank, N.A., as agent for the Working Capital
Lenders
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Michael P. Civehta
---------------------------------
Name: Michael P. Civehta
--------------------------------
Title: Vice President
--------------------------------
CREDITANSTALT BANKVEREIN
By: /s/ W. Craig Stamm By: /s/ Robert M. Biringer
--------------------- ------------------------------------
Name: W. Craig Stamm Name: Robert M. Biringer
------------------- -----------------------------------
Title: Senior Associate Title: Senior Vice President
------------------- -----------------------------------
FIRST AMERICAN NATIONAL BANK
By: /s/ Mary E. Buckner
------------------------------------
Name: Mary E. Buckner
-----------------------------------
Title: Vice President
-----------------------------------
<PAGE>
SCHEDULE 1.1(a)
LENDERS AND COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Working Capital
Working Capital Revolving Loan
Revolving Commitment
Operations Contact Credit Contact Committed Amount Percentage
- ----------------------- -------------- ---------------- ---------------
<S> <C> <C> <C>
NationsBank, N.A. NationsBank, N.A. $2,215,909 34.090907692%
One Independence Center 633 Chestnut Street
15th Floor Chattanooga, Tennessee 37450
Charlotte, North Carolina Attn: Nancy Chastain
Attn: Dana Weir Tel: (423) 755-0662
Tel: (704) 388-3917 Fax: (423) 755-0689
Fax: (704) 386-9923
The First National Bank of Chicago The First National Bank of Chicago $1,772,727 27.272723077%
One First National Plaza, Suite 0086 One First National Plaza
Chicago, Illinois 60670 Chicago, Illinois 60670
Attn: Ed Sheridan Attn: John Runger
Tel: (312) 732-8918 Tel: (312) 732-6166
Fax: (312) 732-2715 Fax: (312) 732-1117
Creditanstalt Bankverein Creditanstalt Bankverein $1,403,409 21,590907692%
Creditanstalt Corporate Finance, Inc. Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive, Suite 1680 Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Attn: Lisa Herman Attn: Bob Beringer
Tel: (770) 390-1850 Tel: (770) 390-1850
Fax: (770) 390-1851 Fax: (770) 390-1851
First American National Bank First American National Bank $1,107,955 17,045461538%
4th and Union 725 Broad Street
Nashville, Tennessee 37237-0001 Chattanooga, Tennessee 37401
Attn: Frenisa Joy Attn: Mary Buckner
Tel: (615) 736-6747 Tel: (423) 755-6022
Fax: (615) 748-6098 Tel: (423) 755-6014
Total $6,500,000 100%
</TABLE>
<PAGE>
SCHEDULE 1.1(B)
EXISTING INVESTMENTS
1. 40,000 shares of 13.125% Cumulative, Convertible Preferred Stock, par value
$125 per share, of Elcat, Inc.
2. Investments in foreign subsidiaries of Chattem, Inc., as follows (in U.S.
dollars, subject to exchange rate fluctuations):
Chattem (Canada) Inc. $5,880,948
Chattem (U.K.) Limited $6,504,890
HBA Insurance Ltd. $ 120,000
<PAGE>
SCHEDULE 6.10
INDEBTEDNESS
<TABLE>
<CAPTION>
AMOUNT AT NOVEMBER 30, 1995
--------------------------------------------------
(Loans on CSV of life insurance Face CSV Loans Remaining
policies for directors) Amount Outstanding Outstanding CSV
----------------------- ------ ----------- ----------- ---
<S> <C> <C> <C> <C>
1. Northwestern Mutual Life $2,055,943 $ 449,988 $ 435,499 $14,499
2. National Life of Vermont 2,198,978 1,117,152 1,008,611 108,542
---------- ---------- ---------- -------
$4,254,921 $1,567,150 $1,444,110 $123,040
</TABLE>
<PAGE>
SCHEDULE 6.11
LITIGATION
None
<PAGE>
SCHEDULE 6.15
SUBSIDIARIES
CHATTEM (CANADA) INC.
Jurisdiction of Incorporation: Canada
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 1,000 shares of
Common Stock
5,587,600 shares of
Preferred Stock
Options, Warrants, Rights, etc.: None
CHATTEM (U.K.) LTD.
Jurisdiction of Incorporation: United Kingdom
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 20,000 shares of
Common Stock
2,953,094 shares of
Preferred Stock
Options, Warrants, Rights, etc.: None
SIGNAL INVESTMENT & MANAGEMENT CO.
Jurisdiction of Incorporation: State of Delaware (USA)
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding 250
Options, Warrants, Rights, etc.: None
HBA INSURANCE, LTD.
Jurisdiction of Incorporation: Bermuda
Owner of Capital Stock: Chattem, Inc.
Shares of Capital Stock Issued
and Outstanding: 120,000
Options, Warrants, Rights, etc.: None
<PAGE>
SCHEDULE 6.18
ENVIRONMENTAL MATTERS
1. Those matters disclosed in Request for Information from the U.S. EPA to
Chattem concerning the EPA's investigation of Chattanooga Creek (received
by Chattem on July 12, 1990), and Chattem's Response to the Request for
Information dated July 25, 1990.
2. Those matters disclosed in Level I Environmental Assessment by Philip A.
Lutin dated October 2, 1991.
3. Those matters disclosed in June 7, 1993 letter by Philip A. Lutin to
Charles N. Jolly and attachments thereto.
4. Those matters disclosed in Consent Agreement and Order Assessing
Administrative Penalty [Assessment] Docket CWA-IV 93-513 dated January 7,
1994.
5. Those matters disclosed in March 9, 1994 memorandum from Brian E. Humphrey
to Robert E. Bosworth and others with attachments thereto.
6. Those matters disclosed in March 11, 1994 letter by Philip A. Lutin to
Brian E. Humphrey.
7. Those matters disclosed in April 8, 1994 letter by Ray Smith to Rick Tate.
8. Those matters disclosed in April 13, 1994 letter by Guy M. Moose to Ray
Smith and response letter dated April 22, 1994 by Philip A. Lutin to Guy M.
Moose.
9. Those matters disclosed in October 20, 1994 letter from Sims Crownover to
Ray Smith, and response letter dated November 1, 1994 from Ray Smith to
Sims Crownover.
10. Those matters disclosed in March 10, 1995 letter from John K. Mason to Ray
Smith and response letter dated April 25, 1995 by Philip A. Lutin to John
K. Mason with attachments thereto.
11. Those matters disclosed in April 4, 1995 letter with attachments from
Philip L. Stewart to Ray Smith, and response letter with attachments dated
May 9, 1995 from Ray Smith to Phillip L. Stewart.
12. Those matters disclosed in May 22, 1995 letter from Ray Smith to Rick Tate.
<PAGE>
13. Pursuant to that certain Agreement of Purchase and Sale By and Among
Chattem Chemicals, Inc., as Buyer, Elcat, Inc., as Parent, and Chattem,
Inc., as Seller, dated April 11, 1995, Chattem, Inc. represented that it
was in compliance with environmental laws and knew of no conditions or
events that would lead to any claims being made for environmental matters
except for such matters disclosed in the Agreements. Chattem, Inc., agreed
to indemnify, defend and hold harmless the Buyer and Parent and their
respective officers, directors, shareholders, subsidiaries, affiliated
companies, successors and assigns from and against all losses arising out
of or resulting from any breach of warranty or misrepresentation by Chattem,
Inc.
<PAGE>
SCHEDULE 6.19
INTELLECTUAL PROPERTY RIGHTS
PATENTS OWNED BY CHATTEM, INC.
- --------------------------------------------------------------------------------
TITLE COUNTRY REG. NO.
- --------------------------------------------------------------------------------
Cosmetic Facial Powder Containing United States 4,279,890
Walnut Shell Flour
Process and Composition for Reducing United States 4,251,507
Dental Plaque
Rose Plant Patent United States PP4,564
External Analgesic Compositions United States 4,892,890
PATENTS LICENSED BY ELJENN INTERNATIONAL
TO CHATTEM, INC.
- --------------------------------------------------------------------------------
TITLE COUNTRY REG. NO.
- --------------------------------------------------------------------------------
Method of Removal of Chlorine United States 4,295,985
Retained by Human Skin and Hair
TRADEMARKS OWNED BY CHATTEM, INC.
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
Amphibious Formula California 67887 11/12/2002
Amphibious Formula Canada 332,073 09/18/2002
Amphibious Formula Florida 928164 11/05/2002
Amphibious Formula Hawaii 149564 12/09/2002
Amphibious Formula Texas 40988 11/08/2002
Bronz Silk United Kingdom -- --
Bullfrog California 67888 11/12/2002
Bullfrog Canada 332,935 10/09/2002
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
Bullfrog Florida 928165 11/05/2002
Bullfrog Hawaii 149562 12/09/2002
Bullfrog Mexico 422988 12/30/2001
Bullfrog Peru 102006 03/05/2003
Bullfrog Texas 40989 11/08/2002
Bullfrog (design United States 1,763,958 04/13/2003
only)
Cardui (Calendars) United States 1,738,319 12/08/2007
Chattem Uruguay 267255 07/03/2005
Chattem, Inc. Hong Kong 831 of 1979 12/14/1999
CORN SILK Australia A208,545 06/03/2002
CORN SILK Benelux 011,672 03/05/2005
CORN SILK Brunei 19394 12/21/2000
CORN SILK Canada 144,355 03/11/1996
CORN SILK Chile 374.978 09/23/2001
CORN SILK China 753821 07/06/2005
CORN SILK Costa Rica 36,183 R:6856 10/11/2002
CORN SILK El Salvador 241 05/24/2002
CORN SILK Great Britain 1,160,480 08/29/2002
CORN SILK Guatemala 18,987 11/14/1997
CORN SILK Honduras 40,059 06/15/2002
CORN SILK Indonesia -- --
CORN SILK Ireland 99,464 08/24/2002
CORN SILK Italy 433,426 08/23/2004
CORN SILK Japan 1,571,445 03/28/2003
CORN SILK Malaysia 93/08798 11/09/2000
CORN SILK Mexico -- --
CORN SILK New Zealand B78,955 06/30/2001
2
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
CORN SILK Nicaragua 22,811 06/02/2000
CORN SILK Panama 25.020 07/01/2000
CORN SILK Philippines 25,031 10/07/1997
CORN SILK Singapore -- --
CORN SILK South Africa 65/2799 07/14/2005
CORN SILK South Africa 7014734 10/22/2000
CORN SILK Spain 1797781 --
CORN SILK Venezuela 53,774 12/05/1997
CORN SILK & DESIGN Puerto Rico 24,727 05/20/2003
CORN SILK (Words) Puerto Rico 24,726 05/20/2003
EXELLE United States 1,229,147 03/08/2003
FLEXALL Austria 127,693 10/13/1999
FLEXALL ICE Canada 806,665 Pending
FLEX ALL 454 & Switzerland 374890 7/21/2009
Design
FLEX-ALL Benelux 515044 07/17/1999
FLEX-ALL Benelux 464430 07/10/2002
FLEX-ALL Canada 374,278 10/12/2005
FLEX-ALL Denmark 0534/1991 01/25/2001
FLEX-ALL Finland 116,143 01/20/1992
FLEX-ALL France 1,542,430 07/20/1999
FLEX-ALL Greece 1995 610 09/14/1999
FLEX-ALL Ireland 136135 07/21/1996
FLEX-ALL Italy 570,574 7/20/1999
FLEX-ALL Japan -- --
FLEX-ALL Mexico 471468 12/30/2001
FLEX-ALL Norway 146157 07/25/2001
FLEX-ALL Portugal 257,341 12/10/2002
3
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
FLEX-ALL Sweden 225,489 08/02/2001
FLEX-ALL Switzerland -- --
FLEX-ALL United Kingdom -- 00/00/1996
FLEX-ALL 454 Germany 39504534 07/26/2005
FLEX-ALL 454 Spain 1,513,722 12/05/1999
FLEX-ALL 454 Spain 1,535,531 12/05/1999
GO ZONE New Zealand Z17068 03/23/1999
GO-ZONE Australia Pending --
MUDD Argentina -- --
MUDD Australia -- --
MUDD Bahamas 11,119 11/24/1997
MUDD Barbados 81/2822 (new) 11/29/2000
MUDD Benelux 352,798 06/05/1998
MUDD Canada 319,044 --
MUDD Chile 374,979 09/23/2001
MUDD Costa Rica 59,614 10/16/1991
MUDD Denmark 807/1979 03/23/1999
MUDD Dominican Republic 37,144 06/30/2004
MUDD Ecuador 5442-90 12/20/2000
MUDD Finland 77,509 05/05/2001
MUDD France 1457621 03/25/1998
MUDD France 1,052,859 03/25/1998
MUDD Guatemala 41,967 09/30/2001
MUDD Haiti 478/62 01/23/2001
MUDD Honduras 29,800 08/03/2001
MUDD Italy 946171 08/23/2004
MUDD Jamaica 19,636 03/05/2002
MUDD Japan 2,348,136 10/30/2001
4
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
MUDD Mexico 422,990 12/30/2001
MUDD New Zealand B123,667 06/06/1999
MUDD Nicaragua 12.301C.C. 01/29/2001
MUDD Panama 027001 09/01/2001
MUDD SCRUB Peru 4365 12/24/2003
MUDD Puerto Rico 23,176 11/07/2000
MUDD Scandinavia -- --
MUDD South Africa B78/2675 06/06/1998
MUDD Spain 922,501 10/20/2000
MUDD Sweden 168,193 06/21/1999
MUDD Trinidad/Tobago 11,892 03/16/2008
MUDD United Kingdom 1274157 08/09/2007
MUDD Uruguay 267256 07/03/2005
MUDD Venezuela 96,629 01/09/1996
MUDD & Design Great Britain B1,096,797 06/08/1999
MUDD (Katakana Japan 1,597,970 03/30/1993
Characters)
MUDD State of Tennessee -- 04/06/2000
NORDIC LOOK Benelux 480,589 04/05/2000
NORDIC LOOK France 831290
NORDIC LOOK Germany 1,191,126 03/29/2000
NORDIC LOOK Italy 583,576 04/06/2000
NORWICH Canada UCA017,241 08/27/2002
PAMPRIN Argentina 1,206,098 08/05/1996
PAMPRIN Australia A314,192 12/21/1998
PAMPRIN Bahamas 11,118 11/24/1997
PAMPRIN Barbados 8,298 11/29/1991
PAMPRIN Benelux 350,181 12/29/1997
5
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
PAMPRIN Colombia 94033538 --
PAMPRIN Costa Rica 21618 05/17/1998
PAMPRIN Denmark 2186/1978 06/23/1998
PAMPRIN Dominican Republic 27745 07/28/1998
PAMPRIN Ecuador 5441-90 12/20/1995
PAMPRIN El Salvador 100 07/21/2001
PAMPRIN Finland 76987 03/20/2001
PAMPRIN France 1,433,022 10/30/1997
PAMPRIN Great Britain 1,088,745 12/28/1988
PAMPRIN Guatemala 35,443 09/28/1988
PAMPRIN Haiti 476/62 01/23/1991
PAMPRIN Honduras 25,094 09/05/1998
PAMPRIN Ireland 92259 12/22/1998
PAMPRIN Italy 357790 01/18/1998
PAMPRIN Mexico 254,691 --
PAMPRIN Netherland Antilles -- --
PAMPRIN New Zealand 122,127 12/22/1998
PAMPRIN Nicaragua 8968C.C. 09/09/1998
PAMPRIN Norway 102,879 08/28/1999
PAMPRIN Panama 22,932 01/05/1999
PAMPRIN Peru 102005 03/05/2003
PAMPRIN Puerto Rico 21,511 07/21/1998
PAMPRIN Singapore 446/93 06/14/2003
PAMPRIN South Africa 77/5755 12/20/1997
PAMPRIN Sweden 167,905 06/01/1999
PAMPRIN Switzerland 314910 --
PAMPRIN Trinidad 14,470 12/07/1997
PAMPRIN Venezuela 94,884 06/20/1995
6
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
PAMPRIN West Germany 993,141 01/02/1998
PAMPRIN (Block Canada 234,475 07/20/2009
Letters)
PAMPRIN Block Honduras 25,094 09/05/1998
Letters)
PREMESYN PMS France 1,253,522 12/08/2003
(Stress mark over
"E")
PREMESYN PMS Italy 94 6167 08/23/2004
(Stress mark over
"E")
PREMESYN PMS United Kingdom 1,327,285 11/18/2004
(Stress mark over
"E")
SHY (Applicator) Canada N.S.177/45151 11/27/1997
SHY (Liquid Douche) Canada TMA192,381 06/29/2003
SOLTICE Hong Kong -- --
SOLTICE Taiwan -- --
SOMETHING PERSONAL Canada 259,143 05/22/1996
SPRAY BLOND Benelux 431,162 04/29/1997
SPRAY BLOND Denmark 2330/1989 05/12/1999
SPRAY BLOND France 1,385,650 07/29/1996
SPRAY BLOND France IR,548,336
(International
Mark for Madrid
Convention
Registrations)
SPRAY BLOND Italy 94 6170 08/23/2004
SPRAY BLOND Switzerland 374349 --
SUMBRELLA Australia -- --
SUMBRELLA New Zealand -- --
SUMMER HIGHLIGHTS United States 1784718 07/27/2003
SUN IN Australia A235,497 01/06/2005
7
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
SUN IN Bahamas 11,120 11/24/1997
SUN IN Benelux 365,077 03/20/1990
SUN IN Bophuthatswana 69/6154 12/22/1999
SUN IN Canada 171,191 09/11/1985
SUN IN Great Britain B1,123,580 11/06/2000
SUN IN Ireland 102,340 03/14/2001
SUN IN New Zealand B96253 02/24/2006
SUN IN Puerto Rico -- --
SUN IN South Africa 69/6154 12/22/1999
SUN IN State of Tennessee -- 04/06/2002
SUN IN Transkei 69/6154 12/22/1999
SUN-IN Bophuthsatswana 69/6154 12/22/1999
SUN-IN New Zealand B96,253 02/24/2006
SUN-IN Peru 421 06/23/2003
SUN-IN Puerto Rico 32,056 11/16/2002
SUN-IN Venda 69/6154 12/22/1999
THERA CARE Canada TMA239,954 02/15/2010
THERA CARE & Design Canada TMA269,249 05/21/1997
THERACARE (One Great Britain 1,083,159 09/03/1998
Word)
THERACARE (One Great Britain 1,083,160 09/03/1998
Word)
ULTRASWIM Italy M193C002313 --
ULTRASWIM (Swimmer United States 1760924 03/30/2003
Design)
8
<PAGE>
TRADEMARKS LICENSED BY ELJENN TO CHATTEM, INC.
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
ULTRASWIM Argentina 1,126,019 02/04/1995
ULTRASWIM Australia A38,027 09/14/2003
ULTRASWIM Bahamas 11,284 05/09/1998
ULTRASWIM Barbados 81/2968 05/17/2001
ULTRASWIM Benelux 397,277 03/01/2004
ULTRASWIM Bermuda 10,234 05/23/2005
ULTRASWIM Canada 280,281 06/10/1998
ULTRASWIM Denmark 1694-1986 07/25/1996
ULTRASWIM Finland 96011 09/05/1996
ULTRASWIM France 1,212,873 09/14/2002
ULTRASWIM Germany 1,054,979 09/17/2002
ULTRASWIM Italy M193C002313 03/30/2003
ULTRASWIM Japan 137833/87 05/31/2000
ULTRASWIM Malaysia 85/00685 02/12/2006
ULTRASWIM Mexico 12/30/2001
ULTRASWIM Norway 124,666 04/03/1996
ULTRASWIM Panama 037265 09/23/1995
ULTRASWIM Singapore 2664/84 05/17/2001
ULTRASWIM South Africa/Clsk 84/3387 04/13/1994
ULTRASWIM Sweden 200155 03/07/1996
ULTRASWIM Thailand KOR12235 06/04/2004
ULTRASWIM United Kingdom 1,181,836TM 09/16/2003
ULTRASWIM (Block United States 1,197,606 06/15/2006
Ltrs Soap &
Shampoo)
ULTRASWIM United States 1,681,731 04/07/2002
(Conditional & Body
Lotion)
9
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
ULTRASWIM (Shampoo Puerto Rico 26,209 07/03/1995
& Conditioner)
ULTRASWIM (With United States 1,417,131 01/05/2008
Dolphin Design)
10
<PAGE>
OWNED BY SIGNAL MANAGEMENT & INVESTMENT CO.
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
454 United States 75/005550 Pending
AMPHIBIOUS FORMULA United States 1,279,505 05/29/2004
APPLE-HYDROXY United States -- --
BENZODENT Algeria 041014 --
BENZODENT Argentina 1.213.551 11/11/1996
BENZODENT Australia 123157 --
BENZODENT Austria 64286 --
BENZODENT Benelux 073989 11/05/2005
BENZODENT Bophuthatswana 68/5776 --
BENZODENT Canada UCA49940 04/24/1999
BENZODENT Cuba 92753 04/05/2005
BENZODENT Denmark 8454/1995 12/15/2005
BENZODENT Denmark VR01.19391955 11/05/1995
BENZODENT Finland 79829 12/21/2001
BENZODENT France 1,517,062 --
BENZODENT Germany 670,221 04/30/2004
BENZODENT Greece 52099 01/29/2004
BENZODENT Hong Kong A1202/69 --
BENZODENT Iceland 458/1989 --
BENZODENT Ireland 57722 --
BENZODENT Italy 303,156 --
BENZODENT Jordan 10491 --
BENZODENT Lebanon 45293 --
BENZODENT Monaco R-83.956613 --
BENZODENT New Zealand 56682 --
11
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
BENZODENT Norway 106535 --
BENZODENT Portugal 152583 --
BENZODENT South Africa 68/5776-A --
BENZODENT Sweden 174246 11/07/2000
BENZODENT Switzerland 270209 --
BENZODENT Transkei Tr68/5776 --
BENZODENT United Kingdom BR742143 --
BENZODENT United States 595,101 09/14/2004
BENZODENT Venda 68/5776 --
BENZOGEL United States 1767890 04/27/2003
BENZOGEL United States 74/650485 Pending
BULLFROG United States 74/654831 --
BULLFROG United States 1,279,506 05/29/2004
CAPSALOE United States 74/715332 Pending
CORN SILK United States 799,233 11/23/2005
CHILL STICK United States 74/630796 Pending
CHILL STICK Canada -- --
CORN SILK United States 799,233 11/23/2005
CORN SILK & DESIGN United States 1,457,919 09/22/2007
CORN SILK (Block United States 1,193,832 04/20/2002
Letters & Bckgrnd)
DAY ONE United States 1,608,789 08/07/2000
FLEX ALL United States 75/005548 Pending
FLEX-ALL 454 (Block United States 1,569,189 12/05/1999
Letters
FLEX-ALL 454 United States 1,481,352 03/22/2008
(Stylized)
FLEX-ALL OF United States COMMONLAW --
COLORADO
12
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
FLEX-ALL-SOUTHWEST United States COMMONLAW --
FOR THE PERIOD United States 1,674,764 02/11/2002
BEFORE YOUR PERIOD
GOLD BOND Benelux 525,883 01/22/2003
GOLD BOND Bulgaria 23234 03/26/2003
GOLD BOND Canada TMA368196 04/27/2005
GOLD BOND Czech Republic 187,034 03/30/2003
GOLD BOND Indonesia 310,981 02/27/2003
GOLD BOND Israel 86,125 01/21/2000
GOLD BOND Mexico 448,844 02/19/2003
GOLD BOND Morocco 50,654 02/19/2013
GOLD BOND Slovak Republic 172,163 03/25/2003
GOLD BOND United Kingdom 1,422,292 04/18/1997
GOLD BOND United States 1,209,453 09/21/2002
GOLD BOND Ghana -- Pending
GOLD BOND India 590,366 Pending
GOLD BOND Malaysia 93/00761 Pending
GOLD BOND Singapore S/1856/93 Pending
GOLD BOND Spain 1,745,203 Pending
GOLD BOND United Arab 8,458 Pending
Emirates
GOLD BOND Venezuela 1233-95 Pending
HALF-AS-MUCH United States 1,060,586 03/08/1997
HERBALAX United States 74/650559 --
HI-THERM United States 708,677 12/20/2000
ICY HOT Bophuthatswana 77/2159 05/24/1997
ICY HOT Canada TMA409,013 03/05/2008
ICY HOT Mexico 384016 10/03/2004
ICY HOT Panama 69596 09/29/2005
13
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
ICY HOT Singapore -- 06/14/2000
ICY HOT South Africa 77/2159 05/24/1997
ICY HOT Taiwan 161832 10/31/2001
ICY HOT Venda 77/2159 05/24/1997
ICY-HOT Argentina 1376579 03/30/2000
ICY-HOT Australia A310924 09/05/1998
ICY-HOT Barbados 6708 07/31/1999
ICY-HOT Benelux 345750 05/17/1997
ICY-HOT Bolivia 36996-A 09/19/1997
ICY-HOT Brazil 770139868 02/07/2004
ICY-HOT Colombia Pending --
ICY-HOT Costa Rica 55381 04/06/1999
ICY-HOT Costa Rica 87581 07/20/2004
ICY-HOT Denmark VR00.611 1978 02/17/1998
ICY-HOT Dominican Republic 26636 07/26/1997
ICY-HOT Dutch Antilles 10476 11/22/2007
ICY-HOT Ecuador 409-88 1122/1992
ICY-HOT El Salvador 170/84 09/02/2000
ICY-HOT France 1,409,746 06/08/1997
ICY-HOT Greece 60897 04/05/1998
ICY-HOT Guatemala 34605/226/84 05/21/1998
ICY-HOT Haiti 74/80 10/28/1997
ICY-HOT Honduras 24388 01/17/1998
ICY-HOT Indonesia 247,234 03/04/1999
ICY-HOT Italy 344450 05/23/1997
ICY-HOT Jamaica B18633 06/09/1998
ICY-HOT Malaysia M/B75961 (new) 08/11/1998
ICY-HOT Nicaragua 7766-CC 12/19/1997
14
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
ICY-HOT Paraguay 126,430 10/19/1997
ICY-HOT Peru 82345 12/15/2004
ICY-HOT Philippines 36,541 01/21/2007
ICY-HOT Spain 868743 07/17/1998
ICY-HOT Trinidad B10689 05/21/2006
ICY-HOT United States 970,575 10/16/1993
ICY-HOT Uruguay 218786 10/10/2000
ICY-HOT Venezuela 99.844-F 07/06/1997
ICYHOT United Kingdom B1078443 05/13/1996
ICYHOT Ireland B92568 05/17/1998
ICYHOT Malaysia M/B75961 08/11/1998
ICYHOT Sarawak B17,092 08/15/1998
META CINE United States 372,963 11/21/1999
MICRON United States 1,499,169 08/09/2008
MUDD United States 1,011,938 05/27/2005
MUDD FACIAL United States 74/571539 Pending
TREATMENT
MUDD United States 1,290,647 08/21/2004
MUDD SPA TREATMENT United States 74/537103 Pending
N & Design United States 1,765,513 04/20/2003
NORWICH Puerto Rico 6172 08/08/1996
NORWICH United States 1732425 11/17/2002
PAMPRIN Panama 22,932 01/05/1999
PAMPRIN Philippines -- --
PAMPRIN United States 709,866 01/17/2001
PAMPRIN IB United States 1,499,182 08/09/2008
PAMPRIN United States 74/702071 Pending
15
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
PREMSYN PMS (stress United States 1,471,156 01/23/2006
mark over "E")
QUIK GEL United States 1,951,563 01/05/2008
QUIK GEL United States 74/654830 Pending
SILKENOL United States 1,604,279 07/03/2000
SUNCLYME United States 343,858 03/09/1997
SUN IN (without United States 908,769 02/03/2001
hyphen)
SUN-IN (Block United States 1,456,006 09/08/2007
Letters)
SUN-IN (design) United States 1,059,766 02/22/1997
SUN IN STREAKER United Kingdom 1197101 06/03/2004
TADPOLE United States 1,339,919 06/11/2005
THE ONCE A DAY, ALL United States -- --
DAY SUNSCREEN
THE ULTIMATE United States 74/597971 Pending
WATERPROOF SUNBLOCK
THERA CARE United States 1,092,610 06/06/1998
TRAINER'S CHOICE United States 74/609,150 Pending
VERALAX United States 74/650560 Pending
VFW United States 75/026992 Pending
TRADEMARKS LICENSED BY VALMONT TO
SIGNAL MANAGEMENT & INVESTMENT CO.
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
PHISO Canada 157674 07/12/1998
PHISOAC Canada 118977 07/29/2005
16
<PAGE>
RENEWAL
MARK COUNTRY REG. NO. DATE
- --------------------------------------------------------------------------------
PHISOAC (Stylized) United States 699720 06/21/2000
PHISOCARE Canada 196899 01/18/2004
PHISODAN Canada 132672 09/13/2008
PHISODAN Puerto Rico 13379 06/01/1995
PHISODAN (Stylized) United States 764556 02/11/2004
PHISODERM Canada 78/20300 03/15/2003
PHISODERM Puerto Rico 19097 09/18/1994
PHISODERM United States 408558 08/15/2004
PHISOFOAM Canada 157673 07/12/1998
PHISOLAN Canada 240802 03/07/1995
PHISOPUFF (Block) United States 1294345 09/11/2004
17
<PAGE>
SCHEDULE 6.23 (a)
REAL PROPERTY LOCATIONS
1. 1715 38th Street, Chattanooga, Hamilton County, Tennessee, 37409 (owned).
2. Phase I, Phase II-A and Phase II-B, South Broad Street Center,
Chattanooga, Hamilton County, Tennessee, 37408 (leased).
3. 3110 South Broad Street, Chattanooga, Tennessee, 37408 (subleased).
4. Real Property located on Wauchitchie Pike, Chattanooga, Tennessee
consisting of approximately .02 acres (owned).
5. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .13 acres (owned).
6. Real Property located at 1810 W. 37th Street, Chattanooga, Tennessee
(owned). *
7. Real Property located at 1808 W. 37th Street, Chattanooga, Tennessee
(owned). *
8. Real Property located at 1801 W. 38th Street, Chattanooga, Tennessee
(owned). *
9. Real Property located on W. 38th Street, Chattanooga, Tennessee (owned). *
10. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately .16 acres (owned).
11. Real Property located on Church Street, Chattanooga, Tennessee consisting
of approximately 2.4 acres (owned).
* 4, 5, 6 & 7 together consist of approximately 1.89 acres.
<PAGE>
SCHEDULE 6.23 (b)
PERSONAL PROPERTY LOCATIONS
1. 1715 West 38th Street, Chattanooga, Hamilton County, Tennessee, 37409.
2. Signal Investment & Management Co., 1105 North Market Street, Suite 1300,
Wilmington, Delaware 19890.
3. Phase I, Phase II-A and Phase II-B, South Broad Street Center,
Chattanooga, Hamilton County, Tennessee, 37408.
4. 3110 South Broad Street, Chattanooga, Tennessee, 37408.
5. Morgan and Sampson
P.O. Box 2646
6433 Gayhart Street
Los Angeles, Los Angeles County, California
6. Island Sales
P.O. Box 729
497-563 Kam Highway
Kaneohe, Honolulu County, Hawaii
7. Fluid Packaging
800 Airport Road
Lakewood, Ocean County, New Jersey
8. Bradford Soap Works
CS 1007
West Warwick, Kent County, Rhode Island
9. Kolmar
Skyline Division
Port Jervis, Orange County, New York
10. Niemond Industries
2500 Taylorsville Road
Statesville, Iredell County, North Carolina
11. Prent Corporation
2225 Kennedy Road
Janesville, Rock County, Wisconsin
12. Marietta Corporation
P.O. Box 5250
Cortland, Cortland County, New York
13. Vee Pac
5321 Danshu Road
<PAGE>
10333 High Point Road
Olive Branch, De Soto County, Mississippi
27. Ivers Lee
174 Clinton Road
West Caldwell, Essex County, New Jersey
<PAGE>
SCHEDULE 6.23(c)
CHIEF EXECUTIVE OFFICES
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Signal Investment & Management Co.
1105 North Market Street, Suite 1300
Wilmington, Delaware 19890
<PAGE>
SCHEDULE 7.6
INSURANCE
<PAGE>
ACORD. INSURANCE BINDER ISSUE DATE (MM/DD/YY)
04/01/96
- -------------------------------------------------------------------------------
THIS BINDER IS A TEMPORARY INSURANCE CONTRACT, SUBJECT TO THE CONDITIONS
SHOWN ON THE REVERSE SIDE OF THIS FORM.
- -------------------------------------------------------------------------------
COMPANY COMPANY BINDER NO.
ASSOCIATED GENERAL AGENCY, INC. KEMPER NATIONAL 1768
620 Lindsay Street -----------------------------------------
P.O. Box 11248 Effective Expiration
Chattanooga TN 37401 Date Time Date Time
------------------------------------------
04/01/96 12:01 X AM 01/01/96 12:01 X AM
PM noon
THIS BINDER IS ISSUED TO EXTEND COVERAGE
CODE SUBCODE IN THE ABOVE NAMED COMPANY PER EXPIRING
POLICY NO.:
- -------------------------------------------------------------------------------
INSURED DESCRIPTION OF OPERATIONS/VEHICLES/
PROPERTY (Including Location)
#1-1715 WEST 38TH ST., BLDG. #31, BLDG.
#16 CHURCH ST., CHATTANOOGA, TN /
#2-3100 WILLIAMS STREET, CHATTANOOGA, TN
CHATTEM, INC. #3-3110 S. BROAD STREET, CHATTANOOGA, TN
ETAL / #4-RING WAY CENTER, EDISON ROAD,
1715 West 38th Street BASINGSTOKE, UK / #5-1651 S. CARLOS AVE.
Chattanooga, TN 37408-0000 ONTARIO, CA / #6-520 W. 31ST STREET,
CHATTANOOGA, TN / #7-UNNAMED LOCATIONS /
#8-2220 ARGENTIA ROAD, MISSISSAUGA, ON
- -------------------------------------------------------------------------------
COVERAGES RATES
- -------------------------------------------------------------------------------
TYPE OF INSURANCE COVERAGE FORMS AMOUNT DEDUCTIBLE COINSUR.
- -------------------------------------------------------------------------------
PROPERTY CAUSES OF LOSS POLICY AMOUNT - BLANKET 112,335,648/50,000
LIMIT FOR LOC #1 & #8
_ BASIC _ BROAD FOR REAL PROP, PERSONAL
X SPEC. PROPERTY, BUS. INCOME BALANCE
- ---------------- OF LOC'S SUBLIMITED
- -------------------------------------------------------------------------------
GENERAL LIABILITY GENERAL AGGREGATE $
_ COM. SPECIAL GENERAL LIABILITY PRODUCTS-COMP AGL $
_ CLAIMS MADE _ OCCUR PERSONAL & ADM. INJURY $
_ OWNERS & CONTRACTORS PROT. EACH OCCURRENCE $
- ---------------------- RETRO DATE FOR FIRE DAMAGE (Any one fire) $
CLAIMS MADE: MED. EXPENSE (Any one person) $
- -------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $
_ ANY AUTO BODILY INJURY (Per person) $
_ ALL OWNED AUTOS BODILY INJURY (Per accident) $
_ SCHEDULED AUTOS PROPERTY DAMAGE $
_ HIRED AUTOS MEDICAL PAYMENTS $
_ NON OWNED AUTOS PERSONAL INJURY PROT. $
_ LIM. OF LIABILITY UNINSURED MOTORIST $
_ $
- -------------------------------------------------------------------------------
AUTO MEDICAL DAMAGE _ ALL VEHICLES ACTUAL CASH VALUE $
_ DEDUCTIBLE _ SCHEDULED VEHICLES STATED AMOUNT $
_ COL. NON: _______ OTHER $
_ OTHER THAN COL.
- -------------------------------------------------------------------------------
EXCESS LIABILITY EACH OCCURRENCE $
_ UMBRELLA FORM AGGREGATE $
_ OTHER THAN RETRO DATE FOR SELF-INSURED
UMBRELLA FORM CLAIMS MADE: RETENTION $
- -------------------------------------------------------------------------------
WORKERS' STATUTORY LIMITS
COMPENSATION EACH ACCIDENT $
AND EMPLOYERS DECREASE-POLICY LIMIT $
LIABILITY DECREASE-EACH EMPLOYEE $
- -------------------------------------------------------------------------------
SPECIAL CONDITIONS/OTHER COVERAGES
CONDITIONS AND COVERAGE EXTENSIONS AS PRESENTED ON OUR PROPOSAL DATED
APRIL 1, 1996 APPLY, AGREED AMOUNT ENDORSEMENT INCLUDED FOR 60 DAYS.
- -------------------------------------------------------------------------------
NAME & ADDRESS
- -------------------------------------------------------------------------------
_ MORTGAGEE _ ADDITIONAL INSURED
NATIONSBANK - TENNESSEE X LOSS PAYEE
633 CHESTNUT STREET LOAN #
CHATTANOOGA TN 37402 -------------------------------------
AUTHORIZED REPRESENTATIVE
Mark Chesnutt
--------------------
/s/ Mark A. Chesnutt
- -------------------------------------------------------------------------------
ACORD (7/90) ACORD CORPORATION
- -------------------------------------------------------------------------------
SMR
<PAGE>
[LOGO]
CHATTEM, INC.
CHATTANOOGA, TN
HPR PROPERTY PROPOSAL
---------------------
KEMPER (AMERICAN PROTECTION INS. CO.)
(Cont'd)
COVERAGE
- -------------------------------------------------------------------------------
Insures against all risks, except as excluded under Kemper National's
policy form, of direct physical loss or damage to property insured and for
the coverage designated in the schedule of locations attached.
LIMITS OF LIABILITY
- -------------------------------------------------------------------------------
PROPERTY DAMAGE - blanket coverage for Included in
Loc. #1 which includes 1715 W. 38th St., Policy Amount
Bldg. #16 Church St., Bldg. #31 and Loc. #6 of $112,335,646
520 W. 31st St. Separate sublimits for all
other locations per schedule.
BUSINESS INTERRUPTION - included for Loc. #1 Included in
and #6 on blanket basis. Separate sublimits for Policy Amount
all other locations per schedule. of $112,335,646
Ordinary payroll is included.
EXTRA EXPENSE - sublimit per location $1,000,000
Does not apply to Unnamed locations.
MISCELLANEOUS UNNAMED LOCATIONS 1,000,000
CONTINGENT BUSINESS INCOME - need underwriting NOT INCLUDED
information in order to provide quote
EARTHQUAKE - per occurrence/annual aggregate 50,000,000
excluding coverage of California
FLOOD - per occurrence/annual aggregate 50,000,000
ACCOUNTS RECEIVABLE - sublimit of liability 1,000,000
6
<PAGE>
[LOGO]
Valuable Papers - sublimit of liability 1,000,000
Newly Acquired Property for a period of 90 days 1,000,000
Transit Coverage - per occurrence 500,000
Pollution sublimit 25,000
Demolition/increased cost of construction sublimit 10,000,000
Debris Removal 25% or 5,000,000
Off Premises Power - including transmission 1,000,000
facilities (property damage and time element)
Does not include telecommunications or sewer.
Errors & Omissions Coverage 1,000,000
Trade Shows, Exhibitions 100,000
Electronic Data Processing Included in Policy Amount
Boiler & Machinery Coverage:
Limits of Liability: Per limits as shown on the schedule attached
Property Damage: Expediting Expense Limitation 100,000
Ammonia Contamination Limitation 100,000
Water Damage Limitation 100,000
DEDUCTIBLES:
- -------------------------------------------------------------------------------
A $50,000 combined deductible applies except for the following:
Flood $50,000 Straight Deductible
Earth Movement 50,000 Straight Deductible
Transit 10,000 Straight Deductible
Data Processing 5,000 Straight Deductible
Boiler and Machinery (PD/TE) 50,000 Straight Deductible
Trade Shows, Exhibitions 5,000 Straight Deductible
A 24 hour waiting period (in addition to the applicable deductible) applies
to Off Premises Power (time element).
7
<PAGE>
[LOGO]
LOCATION SCHEDULE
- -------------------------------------------------------------------------------
1. Consumer Products Real & Personal Property --
Includes Bldg. #16 Business Interruption --
1715 W. 38th Street Extra Expense 1,000,000
Chattanooga, TN Accounts Receivable 1,000,000
37409-1248 Valuable Papers 1,000,000
Flood 50,000,000
Earth Movement 50,000,000
Off Premises Power-Property Damage 1,000,000
Off Premises Power-Time Element Incl. w/OPP
Demolition-Increased Cost of Constr. 10,000,000
2. Williams St. Warehouse Personal Property 14,215,235
3100 Williams Street Business Interruption 500,000
Chattanooga, TN Extra Expense 1,000,000
37410-1031 Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 17,715,235
Earth Movement 17,715,235
3. 3110 Broad Street Personal Property 336,250
Chattanooga, TN Business Interruption 500,000
37408-3057 Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 3,836,250
Earth Movement 3,836,250
4. Ring Way Center Real & Personal Property 3,681,864
Edison Road Business Interruption 500,000
Basingstoke Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 7,181,864
Earth Movement 7,181,864
Demolition-Increased Cost of Constr. 7,181,864
5. 1651 S. Carlos Avenue Personal Property 1,651,250
Ontario, CA 91761-7649 Business Interruption 500,000
Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 5,151,250
6. 520 W. 31st Street Personal Property --
Chattanooga, TN Business Interruption 500,000
37410-1115 Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 3,607,000
Earth Movement 3,607,000
8
<PAGE>
[LOGO]
7. Unnamed Locations Real Property, Personal Property ***
and Extra Expense
Combined Sublimit of Liability 1,000,000
8. 2220 Argentia Road Real & Personal Property 2,056,250
Mississauga, ON Business Interruption 500,000
Extra Expense 1,000,000
Accounts Receivable 1,000,000
Valuable Papers 1,000,000
Flood 5,556,250
Earth Movement 5,556,250
Demolition - Increase Cost of Constr. 5,556,250
Transit Coverage 500,000
***Must have a complete listing of all properties covered under this
provision at time of binding.
NOTE: REFERENCE LOCATION #2, #3, #4, #5, #8: Values used are 125% of values
listed on latest statement of values.
NOTE: REFERENCE LOCATION #2 (WILLIAMS STREET): Values on latest "statement of
values" were $18,668,000. Kemper obtained revised values from Chattem, Inc.
in the amount of $11,372,188. The value listed on policy for this location
reflects 125% of $11,372,188.
9
<PAGE>
CHATTEM, INC.
DETERMINATION OF VALUES
THE FOLLOWING IS A LISTING OF LOCATIONS WITH VALUES BY LOCATION.
LOCATION #1 - 1715 W. 38TH STREET, INCL.
BLDG #16 AND #31
REAL & PERSONAL PROPERTY $25,314,047.
BUSINESS INTERRUPTION $63,530,000.
LOCATION #2 - WILLIAMS STREET WAREHOUSE
REAL & PERSONAL PROPERTY $14,215,235.
BUSINESS INTERRUPTION $500,000.
LOCATION #3 - 3110 BROAD STREET
REAL & PERSONAL PROPERTY $336,250.
BUSINESS INTERRUPTION $500,000.
LOCATION #4 - RING MAY CENTER, EDISON RD.,
BASINGSTOKE, UK
REAL & PERSONAL PROPERTY $3,681,864.
BUSINESS INTERRUPTION $500,000.
LOCATION #5 - 1651 S. CARLOS AVE.,
ONTARIO, CA
REAL & PERSONAL PROPERTY $1,651,250.
BUSINESS INTERRUPTION $500,000.
LOCATION #6 - 520 W. 31ST STREET
PERSONAL PROPERTY $107,000.
LOCATION #7 - UNNAMED LOCATIONS $1,000,000.
LOCATION #8 - 2220 ARGENTIA ROAD,
MISSISSAUGA, ONTARIO
REAL & PERSONAL PROPERTY $2,056,250.
BUSINESS INTERRUPTION $500,000.
(THIS LOCATION WILL BE
INCLUDED ON SEPARATE
POLICY.)
<PAGE>
INSURANCE AUDIT AND INSPECTION COMPANY
EXECUTIVE SUMMARIES 1995
FOR
CHATTEM, INC.
CHATTANOOGA, TENNESSEE
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-A (p. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
INCEPTION: June 30, 1995 EXPIRATION: May 31, 1996 POLICY #: 6059041
INSURER: Commerce and Industry PREMIUM:$79,768
AGENT/BROKER: Associated General Agencies TELEPHONE: (423) 756-4552
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
- ---------------------------
Policy Limit: $125,994,100
LOC.
NO. DESCRIPTION SUBLIMIT
- ---- ----------- -----------
1-1 West 38th St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings $93,501,000
Extra Expense 1,000,000
2-2 Church St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 231,000
Extra Expense 100,000
3-1 Office Building #13, Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 3,147,000
Extra Expense 1,000,000
4-1 3801-11 St. Elmo Ave., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 3,705,000
Extra Expense 1,000,000
5-1 3102 Williams St., Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 19,668,000
Extra Expense 1,000,000
6-1 3110 Broad Street, Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 369,000
Extra Expense 100,000
7-1 Edison Road, Basingstoke, United Kingdom
Real and Personal Property, Gross Earnings 2,000,000
Extra Expense 100,000
8-1 1651 South Carlos Ave., Ontario, California
Real and Personal Property, Gross Earnings 1,421,000
Extra Expense 100,000
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-A (p.2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
9-1 520 W. 31st St, Chattanooga, Tennessee
Real and Personal Property, Gross Earnings 207,000
Extra Expense 100,000
OTHER SUBLIMITS:
Demolition & Increased Cost of Construction, Property Damage &
Time Element 1,000,000
Off-Premises Power, Property Damage 1,000,000
Off-Premises Power, Time Element 1,000,000
Newly-Acquired Locations, 120 days 1,000,000
Valuable Papers and Records 500,000
Earthquake, Annual Aggregate 50,000,000
Flood, Annual Aggregate All Locations Except 8-1 50,000,000
Location 8-1 Nil
Accounts Receivable $500,000
Electronic Data Processing Media 1,000,000
Electronic Data Processing Equipment 10,000,000
Electronic Data Processing Extra Expense 100,000
Personal Property at Miscellaneous Unscheduled Locations 1,000,000
Transit Each Conveyance 500,000
Each Occurrence 1,000,000
Boiler and Machinery 50,000,000
Expediting Expenses 100,000
Hazardous Substance Clean-up 100,000
Water Damage 100,000
Errors and Omissions in Values Lesser of $100,000 or 5% of Value Insured
Pollutant Clean-up and Removal, Annual Aggregate $25,000
DEDUCTIBLES:
Transit $10,000
Boiler and Machinery Time Element 24 hours
Boiler and Machinery Service Interruption 24 hours
All Other 50,000
COVERED PERILS: All Risks Including Flood, Earthquake, and Boiler and Machinery
COINSURANCE:
Property Damage 100%
Time Element 100%
GROSS EARNINGS ORDINARY PAYROLL COVERAGE: Excluded
VALUATION: Actual Cash Value
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY 1-A (p. 3)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Property and Time Element
PERILS INSURED: All Risks
FORMS AND ENDORSEMENTS:
40345 (11/92) Declarations
40346 (4/84) Location Schedule
40351 (4/84) Property Damage Coverage Agreement
40353 (3/90) Gross Earnings Coverage Agreement
40354 (4/84) Extra Expense Coverage Agreement
40348 (9/90) Covered Perils
40357 (4/84) Transportation Coverage Agreement
40358 (4/84) Accounts Receivable Coverage Agreement
B&M Boiler and Machinery Coverage Agreement
40350 (1/89) Conditions
40352 (4/84) Time Element Conditions
CT1 Data Processing Limits, Deductible, and Coinsurance
40010 Data Processing Equipment Coverage Agreement
40012 Data Processing Data and Media Coverage Agreement
40014 Data Processing Extra Expense Coverage Agreement
E&O1 Errors and Omissions Coverage Provisions
01224 Land and Water Exclusion, Debris Removal Clause,
Pollutant Clean-up Provisions and Exclusions
40360 Boiler and Machinery Coverage Provisions
1. 40363 (4/84) Gross Earnings Ordinary Payroll Exclusion
2. 40367 (4/84) Delete Replacement Cost Coverage Provisions
3. 40366 (4/84) Coinsurance Provisions
4. 40361 (4/84) Flood Coverage Provisions
5. 40362 (4/84) Earthquake Coverage Provisions
6. 40369 (4/84) Valuable Papers and Records Coverage Provisions
7. 40370 (4/84) Selling Price Valuation for Non-Manufactured Stock
8. 40372 (1/87) Demolition and Increased Cost of Construction Provisions-
Property Damage
9. 40371 (1/87) Demolition and Increased Cost of Construction Provisions-
Time Element
10. 40379 (4/84) Off-Premises Power Provisions-Property Damage
11. 40364 (4/84) Data Processing Media Valuation Includes Cost of Gathering
Information
12. MUL Miscellaneous Unnamed Locations Coverage Provisions
13. 90-Day Notice Requirement in Event of Cancellation or
Non-Renewal
14. 52169 (5/92) Tennessee Cancellation and Non-Renewal Provisions-60-Day
Notice Requirement
15. 52133 (3/94) California Cancellation and Non-Renewal Provisions-30-Day
Cancellation and 60-Day Non-Renewal Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-A-1 (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation - Tennessee
PERILS INSURED: Occupational Injury & Disease
INCEPTION: January 1, 1995 EXPIRATION: When cancelled POLICY #: 0116
INSURER: Tennessee Association of Business Select Self PREMIUM: $
Insured Trust
AGENT/BROKER: TELEPHONE: (615) 256-2219
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITS:
Workers' Compensation Tennessee Statutory
FORMS AND ENDORSEMENTS:
Certificate
Indemnity Agreement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-B (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: General Liability--CLAIMS MADE
PERILS INSURED: Bodily Injury, Property Damage, Personal Injury, Advertising
Injury Liability
INCEPTION: June 1, 1995 EXPIRATION: June 1, 1996 POLICY #: 95-CHTT-9
INSURER: HBA Insurance Ltd. PREMIUM:
AGENT/BROKER: TELEPHONE:
NAMED INSURED: Chattem, Inc.; Chattem (U.K.) Ltd.; Chattem (Canada) Inc.
COVERAGES AND LIMITS:
Each Occurrence and Aggregate, Including Defense Costs $5,000,000
SUB-LIMITS:
Fire Damage Liability, Each Occurrence 300,000
Medical Expenses, Each Person 10,000
DEDUCTIBLES:
Each Occurrence 500
Aggregate 2,500
RETROACTIVE DATE: June 1, 1986
FORMS AND ENDORSEMENTS:
Declarations and Coverage Agreements
1. Additional Insured--Vendors: All Vendors of Covered Products
2. Fire Damage Coverage Agreement
3. Medical Expense Coverage Agreement
4. Other Insurance--Policy is Excess over Any Other Insurance
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-A-2 (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation & Employers' Liability--AL, AZ, CA, CO,
CT, FL, GA, IL, IN, LA, MD, MA, MI, MN, MO, NY, NC, OK, PA,
TX, VT, WI
PERILS INSURED: Occupational Injury & Disease
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 3BG 053367-00
INSURER: American Motorists PREMIUM: $18,447
AGENT/BROKER: Associated General Agency TELEPHONE: (423)756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
Workers' Compensation Statutory
Employers' Liability Each Accident $1,000,000
Aggregate, Injury by Disease 1,000,000
Other States, except ME, NV, ND, OH, TN, WA, WV, WY Statutory
EXPERIENCE MODIFIER HISTORY:
1986-87 .95 1990-91 .93 1995-96 .87
1987-88 .81 1991-92 .84
1987-88 .81 1992-93 .75
1988-89 .94 1993-94 .81
1989-90 .80 1994-95 .79
FORMS AND ENDORSEMENTS:
WC 00 00 0A Information Page and Classification Schedules
WC 00 00 00 (4/84) Coverage Agreement
WC 00 04 14 (7/90) Notification of Change in Ownership Requirements
WC 00 04 06 (4/84) Premium Discount Provisions-- AL, AZ, CA, CO, FL, GA,
FL, IN, LA, MD, MI, MA, TX, MN, MO, NY, PA, NC, VA,
WI
WC 04 03 01 (1/91) California Changes
WC 04 04 02 (1/95) California Mandatory Rate Change Provisions
WC 99 04 47A (1/95) California Notice
WC 04 03 60 (8/86) California Employers' Liability Changes
WC 05 04 02 (11/90) Colorado Classification Provisions
WC 99 06 17 (1/92) Colorado Disclosure Notice
WC 06 03 03A (1/91) Connecticut Coverage Extends to Fund Assessments
WC 06 03 01 (4/84) Connecticut Application of Policy
WC 20 03 02 (5/89) Massachusetts Assessments
WC 20 03 03 (4/90) Massachusetts Notice: Rates/Premiums and
Reserves/Settlements
WC 20 03 01 (4/84) Massachusetts Unlimited Employers' Liability Coverage
WC 17 03 02 (9/90) Louisiana Punitive Damages Exclusion
WC 17 03 01 (7/84) Louisiana Changes--Other States Coverage Provisions
WC 21 06 01 (4/84) Michigan Conformity to State Law Provisions
WC 7502a (1/83) Michigan Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY 11-A-2 (p.2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Workers' Compensation & Employers' Liability - AL, AZ, CA,
CO, CT, FL, GA, IL, IN, LA, MD, MA, MI, MN, MO, NY, NC, OK, PA, TX, VT, WI
PERILS INSURED: Occupational Injury & disease
WC 24 03 01 (4/84) Missouri Unlimited Employers' Liability Coverage
WC 20 03 01 (4/84) New Jersey Unlimited Employers' Liability
Coverage
WC 99 04 46B (10/94) New York Rate Revision Provisions
WC 31 03 08 (4/84) New York Unlimited Employers' Liability Coverage
IL 79 81 (9/93) Oklahoma Fraud and Deceit Warning
WC 37 06 01 (4/84) Pennsylvania Inspection of Manuals
WC 37 06 02 (4/84) Pennsylvania Insurance Consultation Services Act
Exemption
WC 42 03 06 (10/92) Texas Maintenance Tax Surcharge Recoupment
Provisions
WC 44 06 01 (4/84) Vermont Conformity to State Law Provisions
WC 488 06 01B (4/94) Wisconsin Conformity to State Law Provisions
WC 02 06 01 (5/86) Arizona Cancellation Provisions--30-Day Notice
Requirement
WC 04 06 01A (12/93) California Cancellation Provisions--30-Day Notice
Requirement
WC 10 06 01 A (4/93) Georgia Cancellation, Change, and Non-Renewal
Provisions--60-Day Cancellation and Non-Renewal,
45-Day Change Notice Requirements
WC 12 06 01B (6/89) Illinois Changes--60-Day Cancellation and
Non-Renewal Notice Requirements
WC 17 06 01 (11/92) Louisiana Cancellation Provisions--20-Day Notice
Requirement
WC 19 06 01 (10/84) Maryland Cancellation Provisions--30-Day Notice
Requirement
WC 20 06 01 (6/92) Massachusetts Cancellation Provisions--10-Day
Notice Requirement
WC 22 06 01A (10/92) Minnesota Cancellation and Non-Renewal
Provisions--30-Day Cancellation and 60-Day
Non-Renewal Notice Requirement
WC 24 06 01A (4/91) Missouri Cancellation and Non-Renewal
Provisions--30-Day Notice Requirement
WC 32 03 01A (10/93) North Carolina Cancellation Provisions--30-Day
Notice Requirement
WC 35 06 01A (10/90) Oklahoma Cancellation, Non-Renewal, and Change
Provisions--45-Day Non-Renewal and Change Notice
Requirements
WC 37 06 03 (12/87) Pennsylvania Cancellation Provisions--60-Day
Notice Requirement
WC 42 03 01C (1/91) Texas Changes--30-Day Cancellation and Non-Renewal
Notice Requirement
WC 44 06 02A (9/91) Vermont Cancellation and Non-Renewal Provisions--
45-Day Notice Requirement
WC 45 06 02 (7/93) Virginia Cancellation and Non-Renewal
Provisions--30-Day Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-B (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: General Liability--CLAIMS MADE
PERILS INSURED: Bodily Injury, Property Damage, Personal Injury, Advertising
Injury Liability
INCEPTION: June 1, 1995 EXPIRATION: June 1, 1996 POLICY #: 95-CHTT-9
INSURER: HBA Insurance Ltd. PREMIUM:
AGENT/BROKER TELEPHONE:
NAMED INSURED: Chattem, Inc.; Chattem (U.K.) Ltd.; Chattem (Canada) Inc.
COVERAGES AND LIMITS:
Each Occurrence and Aggregate, including Defense Costs $5,000,000
Sub-limits:
Fire Damage Liability, Each Occurence 300,000
Medical Expenses, Each Person 10,000
Deductibles:
Each Occurence 500
Aggregate 2,500
Retroactive Date: June 1, 1986
FORMS AND ENDORSEMENTS:
Declarations and Coverage Agreements
1. Additional Insured--Vendors: All Vendors of Covered Products
2. Fire Damage Coverage Agreement
3. Medical Expense Coverage Agreement
4. Other Insurance--Policy is Excess over Any Other Insurance
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-1 (P. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE:
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy, Most States
PERILS INSURED: Liability, "No-Fault," Medical Payments, Uninsured Motorists,
Physical Damage
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 019 769-22
INSURER: American Manufacturers Mutual PREMIUM: $39,865
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
<TABLE>
<S> <C> <C>
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection 5 - Owned Autos Subject to "No-Fault" Statutory
Medical Payments, Each Person 3 - Private Passenger Autos Only 5,000
Uninsured Motorists, Each Accident 2 - Owned Autos 1,000,000
Underinsured Motorists, Each Accident 2 - Owned Autos 1,000,000
Comprehensive 7 - Scheduled Vehicles Only Actual Cash Value
Collision 7 - Scheduled Vehicles Only Actual Cash Value
</TABLE>
DEDUCTIBLES:
FORMS AND ENDORSEMENTS:
IL 79 01 (9/86) Declarations
CA 72 00 (12/93) Automobile Declarations
CA 79 89 (8/87) Extension Schedule - Composite Rating
CA 00 01 (12/93) Business Auto Liability & Physical Damage Coverage
Agreement
IL 7900 (7/87) Conditions, Mutual Policy Provisions, Nuclear
Energy Liability Exclusion
IL 01 46 (11/88) Conditions
CA 79 03 (3/95) Statutory Changes: CA, MN, NJ, NY, PA
CA 79 20 (3/92) Additional Interest: First National Bank of Chicago
CA 20 01 (12/93) Additional Insured-Lessor: Automotive Rentals, Inc.
CA 02 02 (3/93) Arizona Cancellation & Non-Renewal Provisions-10-Day
Non-Renewal Notice Requirement
IL 70 25 (2/94) California Cancellation & Non-Renewal Provisions-
60-Day Notice Requirement
IL 70 09 (10/89) Colorado Cancellation and Non-Renewal Provisions-
45-Day Notice Requirement
IL 70 13 (12/93) Connecticut Cancellation & Non-Renewal Provisions-
60-Day Notice Requirement
CA 02 67 (10/94) Florida Cancellation & Non-Renewal Provisions-
45-Day Non-Renewal Notice Requirement
IL 70 30 (9/94) Georgia Cancellation & Non-Renewal Provisions-
45-Day Notice Requirement
CA 02 70 (8/94) Illinois Cancellation & Non-Renewal Provisions-
60-Day Notice Requirement
IL 02 72 (6/89) Indiana Cancellation & Non-Renewal Provisions-
45-Day Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-1 (P.2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy, Most States
PERILS INSURED: Liability, "No-Fault," Medical Payments, Uninsured
Motorists, Physical Damage Requirement
CA 02 15 (5/94) Maryland Cancellation & Non-Renewal Provisions--45-Day
Notice Requirement
IL 70 50 (12/90 Michigan Cancellation & Non-Renewal Provisions--30-Day
Notice Requirement
CA 02 17 (3/94) Michigan Cancellation & Non-Renewal Provisions--30-Day
Notice Requirement
CA 02 19 (3/94) Missouri Cancellation & Non-Renewal Provisions--30-Day
Cancellation and 60-Day Non-Renewal Notice Requirement
IL 70 16 (6/89) Ohio Cancellation & Non-Renewal Provisions--30-Day
Notice Requirement
IL 70 20 (1/95) Pennsylvania Cancellation & Non-Renewal Provisions--60-Day
Notice Requirements
IL 70 23 (2/89) Tennessee Cancellation & Non-Renewal Provisions--60-Day
Non-Renewal Notice Requirement
IL 70 51 (5/95) Wisconsin Cancellation & Non-Renewal Provisions--75-Day
Non-Renewal Notice Requirement
CA 01 43 (1/87) California Changes
IL 01 69 (2/93) Colorado Concealment, Fraud, Misrepresentation Exclusion
CA 01 07 (12/94) Connecticut Changes
CA 01 28 (5/94) Florida Changes--Mediation and Physical Damage Appraisals
CA 01 20 (8/94) Illinois Changes--Liability Coverage Applies to Illinois
Mandatory Limits First
IL 01 58 (6/89) Notice to Indiana Agent is Notice to Insurer
IL 01 56 (7/89) Indiana Concealment, Fraud, Misrepresentation Exclusion
CA 01 19 (3/94) Indiana Application of Two Policies
CA 73 21 (7/89) Maryland Waiver of "No-Fault" Option
CA 01 70 (5/94) Maryland Changes--Liability Fellow-Employee Exclusion Does
Not Apply to Minimum Statutory Limits
CA 73 10 (7/89) Maryland Uninsured Motorists Limits Options
CA 73 20 (7/89) Maryland "No-Fault" Waiver Explanation
CA 01 10 (3/94) Michigan Changes
CA 01 65 (3/94) Missouri Changes
CA 01 88 (3/92) New Jersey Changes--Pollution Exclusion Not Applicable Up to
Minimum Statutory Limits
CA 01 26 (10/94) North Carolina Changes
CA 01 80 (3/95) Pennsylvania Changes--Constitutionality Clause
IL 09 10 (1/81) Pennsylvania Inspection/Survey Notice
CA 01 46 (3/94) Tennessee Changes--Application of Two Policies
CA 01 35 (9/94) Washington Changes
CA 01 17 (3/94) Wisconsin Changes
IL 79 68 (2/93) Wisconsin Complaint Address Notice
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-2 (P. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Massachusetts
PERILS INSURED: Liability, Personal Injury Protection, Uninsured Motorists,
Physical Damage
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: X3P082937-00
INSURER: Arbella Mutual PREMIUM: $4,382
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
Liability, Each Accident 7 - Scheduled Autos $1,000,000
Personal Injury Protection 7 - Scheduled Autos 8,000
Medical Payments, Each Person 7 - Scheduled Autos 5,000
Uninsured Motorists, Each Accident 7 - Scheduled Autos 1,000,000
Comprehensive 7 - Scheduled Autos Actual Cash Value
DEDUCTIBLE:
Comprehensive $300
FORMS AND ENDORSEMENTS:
MM 00 97 (9/91) Declarations and Covered Auto Schedule
CA 00 01 (12/90) Business Auto Coverage Agreement
IL 00 17 (11/85) Conditions
16 AR 1077 (3/93) Mutual Policy Provisions
MM 99 13 (7/94) Massachusetts Auto Medical Payments Coverage Agreement
MM 99 54 (7/94) Massachusetts Underinsured Motorists Coverage Agreement
MM 99 11 (7/94) Massachusetts Changes, Personal Injury Protection
Coverage Agreement, Uninsured Motorists Coverage
Agreement
MM 99 43 (9/91) Massachusetts Racing Exclusion
MM 99 23 (9/91) Massachusetts Rate Modification Provisions
IL 00 21 (11/85) Nuclear Energy Liability Exclusion
MM 20 26 (9/91) Additional Insured-Lessor: First National Bank
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-C-3 (P. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Texas
PERILS INSURED: Liability, No-Fault, Medical Payments, Uninsured Motorists
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 019 772-00
INSURER: American Manufacturers Mutual PREMIUM: $1,923
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.; Chattem (Canada), Inc.; Chattem Consumer
Products Division; Chattem Overseas, Inc.; Chattem UK
limited; Chattem Chemicals Division; Chattem Aquisitions,
Inc., Chattem Drug & Chemical Company, Inc.; Signal
Investment & Management Company; Hamlco, Inc.
COVERAGES AND LIMITATIONS:
<TABLE>
<S> <C> <C>
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection, Each Person 5 - Autos Subject to "No-Fault" 2,500
Medical Payments, Each Person 3 - Private Passenger Autos 5,000
Uninsured/Underinsured Motorists, Each Accident 2 - Owned Autos 1,000,000
</TABLE>
FORMS AND ENDORSEMENTS:
TE 72 00 (3/92) Declarations and Schedules
TE 00 01 (3/92) Business Auto Coverage Agreements
IL 7900 (7/87) Mutual Policy Provisions, Conditions, Nuclear
Energy Liability Exclusion
TE 04 01C (3/92) Personal Injury Protection Coverage Agreement
TE 99 03A (3/92) Medical Payments Coverage Agreement
TE 04 09D (5/94) Uninsured/Underinsured Motorists Coverage Agreement
TE 99 60A (3/92) Supplementary Death Benefit
TE 00 30C (3/92) Taxes Changes
TE 00 31C (3/92) Texas Changes-Application of Liability Limits
TE 00 32A (3/92) Texas Cancellation and Non-Renewal Provisions-
60-Day Non-Renewal Notice Requirement
TE 00 33A (3/92) Revised Definition of "Insured Contract"
TE 00 39B (12/92) Taxes Changes-Claim Handling and Loss Settlements
TE 99 26B (3/92) Combined Single Limit Provisions
TE 00 37A (3/92) Texas Changes-Physical Damage Coverage for Sound
Equipment
IL 79 36 (4/87) Simplified Policy Language Notice
IL 79 63 (9/93) Texas Consumer Notice
T-001 TE 99 04A (3/92) Add TE 20 02A-Additional insured-Lessor
TE 20 02A (3/92) Additional Insured-Lessor (Limited Form): Automotive
Rentals, Inc.
TE 99 77A (3/92) Add Veh. #3
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY I-C-4 (P. 1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4892
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Business Auto Policy - Minnesota
PERILS INSURED: Liability, "No Fault," Uninsured Motorists
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: F3Y 0019770-00
INSURER: American Manufacturers Mutual PREMIUM: $388
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
<TABLE>
<S> <C> <C>
Liability, Each Accident 1 - Any Auto $1,000,000
Personal Injury Protection 5 - Autos Subject to "No-Fault" Statutory
Uninsured Motorists, Each Accident 2 - Owned Autos 1,000,000
</TABLE>
FORMS AND ENDORSEMENTS:
IL 79 01 (9/86) Declarations
CA 72 00 (12/90) Automobile Declarations
CA 72 01 (1/87) Owned Auto Schedule
IL 7900 (7/87) Mutual Policy Provisions, Conditions, Nuclear
Energy Liability Exclusion
CA 22 25 (6/91) Minnesota Personal Injury Protection Coverage
Agreement
CA 21 24 (7/92) Minnesota Uninsured/Underinsured Motorists Coverage
Agreement
CA 01 38 (3/93) Minnesota Changes
CA 02 18 (1/92) Minnesota Cancellation and Non-Renewal Provisions-
30-Day Cancellation and 60-Day Non-Renewal Notice
Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-1 (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft
PERILS INSURED: Liability, Medical Expenses, Hull Physical Damage, Voluntary
Settlements
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 360AC-259574
INSURER: USAIG PREMIUM: $12,453
AGENT/BROKER: Insurance, Inc. TELEPHONE: (615) 472-5051
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
Bodily Injury and Property Damage Liability, Each Occurance $50,000,000
Medical Expenses, Each Person 5,000
Voluntary Settlements, Including Crew Each Person 250,000
Each Accident 2,500,000
Personal Injury Liability, Aggregate 25,000,000
Passenger Baggage Property Damage Liability, Each Person 5,000
Hangar Damage Liability, Aggregate 500,000
Emergency Expense Reimbursement, Each Occurance 5,000
Search and Rescue, Each Occurance 25,000
Physical Damage to Spare Engines and Parts, Each Occurance 100,000
Extra Expense, Temporary Aircraft, 60 Days Each Day 3,300
Each Occurance 100,000
Extra Expense, Temporary Replacement Parts, 10 days,
Each Occurance 25,000
AIRCRAFT: 1982 Mitsubishi MU-300 Diamond N306P
DEDUCTIBLES:
Physical Damage: Nil
Extra Expense: 7 Days
FORMS AND ENDORSEMENTS:
Declarations
Coverage Agreements
428-AC (1/95) Syndicate Schedule
367-AC Mexican Operations Warning
1. 396-AC Voluntary Settlements Coverage Provisions
2. 372-AC (6/89) Non-Owned Aircraft Liability Coverage Provisions
3. Medical Payments & Liability for Mobile Equipment
Coverage Provisions
4. Pilot Qualifications
5. 396-AC (10/79) Lienholder's/Lessor's Interest Provisions: First
National Bank of Chicago
6. 385A-AC (6/93) Broad Expansion Provisions
Liability for Damage to Airport Premises
Liability for Physical Damage to Non-Owned Aircraft
Liability for Damage to Passenger Personal Effects
and Hangars
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-1 (p.2)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft
PERILS INSURED: Liability, Medical Expenses, Hull Physical Damage, Voluntary
Settlements
Contractual Liability
Liability Arising out of Sale of Owned Aircraft
Reimbursement of Emergency Expenses
Transportation Expenses after Emergency Landing
Automatic Coverage for Increased Values
Physical Damage to Spare Engines and Parts
Extra Expense Coverage Provisions, Temporary Aircraft
Extra Expense Coverage Provisions, Temporary
Replacement Parts
7. 375-AC Additional Insured and Waiver of Subrogation Rights:
Flightsafety International
8. 533-AC (6/89) Non-Owned Aircraft Liability Passenger Seat Restriction--
60 Seats
9. 532-AC (1/93) Personal Injury Coverage Agreement
10. Revised Definitions of "Total Loss" and "Constructive
Total Loss"
11. 373-AC (10/92) Wear and Tear Exclusion
12. 448-AC (7/93) Bodily Injury Liability Employment Practices Exclusion
13. 530-AC (1/86) Pollution/Environmental Disturbance Exclusion
14. 449-AC (4/93) Definition of "Mental Anguish"
15. 531-AC (2/86) War and Hijacking Exclusion
16. 386A-AC (9/92) Limited War and Hijacking Coverage
17. Additional Pilot Provisions
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-D-1 (p.1)
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Aircraft Liability--Mexico
PERILS INSURED: Bodily Injury and Property Damage Liability
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: RCG-19604/LAT 01627
INSURER: Seguros Comercial America PREMIUM:
AGENT/BROKER: USAIG
NAMED INSURED: Chattem, Inc.
COVERAGES AND LIMITATIONS:
A. Property Damage Liability Each Accident $100,000
B. Bodily Injury (excluding passengers and crew) Each Person 100,000
Each Accident 300,000
FORMS AND ENDORSEMENTS:
RP-15 Coverage Certificate
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-E (p.1)
6314 Rucker Road, Suite G
Indianapolis, Indiana 46220-4892
Telephone: (317) 259-1013
Fax: (317) 465-1004
Date: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Umbrella Liability
PERILS INSURED: Personal Injury, Property Damage, Advertising Injury
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 5109607
INSURER: Lexington PREMIUM: $143,208
AGENT/BROKER: Swett and Crawford/Associated TELEPHONE: (423)756-4452
General Agency
NAMES INSURED: Chattem, Inc., Chattem Canada, Inc., Chattem Overseas, Inc.
Chattem, UK Limited, Chattem Acquisitions, Inc., Chattem Drug
and Chemical Company, Inc., Signal Investment and Management
Company of Delaware, HBA Insurance Ltd. (Bermuda)
COVERAGES AND LIMITS:
Each Occurrence $20,000,000
Annual Aggregate, Separately to Products and All Other,
Except Auto 20,000,000
SELF-INSURED RETENTION: $50,000
FORMS AND ENDORSEMENTS:
Declarations
LX0295 Form Schedule
LX0327 (6/89) Schedule of Underlying Insurance
LEXOCCUMB2T (7/94) Umbrella Coverage Agreements
001. LEXCME005 (3/86) Accutane Exclusion
002. LEXCME037 (3/86) DES, Contraceptive Device, and Swine Flu Exclusion
003. LEXCME121 (3/86) HTLV Exclusion
004. LEXCME126 (3/86) Non-F.D.A. Approved Product Exclusion
005. LEXOCC207 (4/90) L-Tryptophan Exclusion
006. LEXOCC262 (6/91) Securities and Financial Interest Exclusion
007. LEXOCC271 (3/92) Employment-Related Practices Exclusion
008. LEXOCC181 (4/90) Clinical Testing Exclusion
009. Non-Concurrency Provisions
010. Self-Insured Retention Provisions
011. Amended Insuring Agreement I
012. Pollution Exclusion with Named Perils Exceptions
013. Premises, Operations, Products, Completed
Operations Hazards on Claims-Made Basis
014. Additional Insureds: First National Bank of
Chicago, Sterling-Winthrop, Inc.
015. Named Insured
016. 90-Day Cancellation Notice Requirement
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p.1)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
INCEPTION: May 31, 1995 EXPIRATION: May 31, 1996 POLICY #: 8133-94-04-B
INSURER: Federal Insurance Company PREMIUM:
AGENT/BROKER: Associated General Agency TELEPHONE: (423) 756-4452
NAMED INSURED: Chattem, Inc.
GENERAL PROVISIONS
FORMS AND ENDORSEMENTS:
14-02-0941 (1/92) Declarations and Conditions Applicable to All
Coverage Sections
14-02-1252 (12/92) Endoresement Schedule
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p. 2)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1995
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
EXECUTIVE LIABILITY AND INDEMNIFICATION COVERAGE SECTION--CLAIMS MADE
COVERAGES AND LIMITATIONS:
Each Wrongful Act and Annual Aggregate $25,000,000
DEDUCTIBLE:
Indemnification Coverage Agreement 1,000,000
PENDING OR PRIOR LITIGATION EXCLUSION DATE: October 27, 1986
CONTINUITY DATE October 27, 1986
COVERED PERSONS: Any past, present, or future director or officer
FORMS AND ENDORSEMENTS:
14-02-0943 (1/92) Executive Liability Declarations and Coverage
Provisions
1. 14-02-1161 (1/92) Punitive Damages Covered If Insurable Under Law
2. 14-02 0961 (1/92) Add Hamico, Inc. & HBA Insurance Limited to Insured
Organization
3. 14-02-0961 (1/92) Extend Coverage to Employees who are Co-Defendants with
Directors
4. 14-02-1047 (4/92) Revised Bodily and Personal Injury Exclusion
5. 14-02-1103 (4/92) Advertising Injury Exclusion
6. 14-02-1166 (6/92) Spousal Coverage Extension
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p.3)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
FIDUCIARY LIABILITY COVERAGE SECTION--CLAIMS MADE
COVERAGES AND LIMITATIONS:
Each Wrongful Act and Annual Aggregate $5,000,000
DEDUCTIBLE:
Indemnifiable Loss: 10,000
PENDING OR PRIOR LITIGATION EXCLUSION DATE: October 27, 1986
CONTINUITY DATE October 27, 1986
COVERED PLANS: Any Benefit Plan Sponsored, Maintained, or Administered by
Chattem, Inc.
FORMS AND ENDORSEMENTS:
14-02-0945 (1/92) Declarations and Coverage Provisions
1. 14-02-1423 (1/94) Revised "Claim" Definition
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p.4)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
CRIME COVERAGE SECTION
COVERAGES AND LIMITS:
Employee Theft $2,000,000
Premises 2,000,000
Transit 2,000,000
Depositors' Forgery 2,000,000
Computer Theft/Funds Transfer 2,000,000
Money Orders and Counterfeit Currency 2,000,000
DEDUCTIBLE:
Benefit Plan Losses Nil
All Other Losses 10,000
FORMS AND ENDORSEMENTS:
14-02-0947 (1/92) Declarations and Coverage Provisions
1. 14-02-0998 (4/92) Money Orders and Counterfeit Currency Coverage
Provisions
<PAGE>
INSURANCE AUDIT & INSPECTION COMPANY II-F (p.6)5
6314 RUCKER ROAD, SUITE G
INDIANAPOLIS, INDIANA 46220-4928
TELEPHONE: (317) 259-1013
FAX: (317) 465-1004
DATE: December 4, 1996
CLIENT NAME: Chattem, Inc., Chattanooga, Tennessee
POLICY TYPE: Executive Protection
PERILS INSURED: Executive Liability & Indemnification, Outside Directorship,
Fiduciary Liability, Crime, Kidnap/Ransom and Extortion
KIDNAP/RANSOM AND EXTORTION COVERAGE SECTION
COVERAGES AND LIMITATIONS:
Kidnap/Ransom and Extortion $10,000,000
Delivery 10,000,000
Expense 10,000,000
Legal Liability 10,000,000
Political Threat 10,000,000
DEDUCTIBLE: Nil
FORMS AND ENDORSEMENTS:
14-02-0949 (1/92) Declarations and Coverage Provisions
<PAGE>
SCHEDULE 8.2
LIENS
DEBTOR SECURED PARTY UCC FIX FED ST JUDGE FILE #
Chattem, Inc. EMC Corp. X 92125089
171 South St. 9/29/92
Hopkintown, MA 01748
Assigned To:
Romax Finance Corp. 92135033
33 Boston Post Road West 10/30/92
Suite 270
Marlboro, MA 01752
Assigned To:
First American National 92135034
Bank Equipment Finance 10/30/92
TN Sec of St. Division
First American Center
Nashville, TN 37237
Chattem, Inc. Lookout Leasing Co., Inc. X 95413203
410 Spring Street 3/27/95
Chattanooga, Tn 37405
Assigned To:
AmSouth of Tennessee
TN Sec of St 601 Market Center
Chattanooga, TN 37402
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Code:
3 Maturity date (if any):
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Debtor (Last Name First) and address(es) 2 Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number,
and Filing Office)
Chattem, Inc. EMC Corporation 92 135033 11/02/92A01
1715 West 38th Street 171 South Street 3:40 PM
Chattanooga, TN 37409 Hopkinton, MA 01748 AG-TN $10.00
SEC/ST $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
This statement refers to original Financing Statement No. 92-125089 Dated September 29, 1992
- -----------------------------------------------------------------------------------------------------------------------------------
A. Continuation______/ / B. Partial Release______/ / C. Assignment__________/X/ D. Define_____/ /
The original financing From the collateral described The Secured Party certifies
statement between the in the financing statement that the Secured Party has
foregoing Debtor and bearing the file number shown assigned to the Assignee whose
Secured Party, bearing the above, the Secured Party name and address is shown below,
file number shown above, releases the following: Secured Party's rights under the
is still effective. financing statement bearing the
file number shown above in the
following property:
(Fee $10.00) (Fee $10.00) (Fee $10.00)
- -----------------------------------------------------------------------------------------------------------------------------------
Assignee: Romax Finance Corporation 135033
33 Boston Post Road, West 10-30-92
Suite 270 9:54 AM
Marlboro, MA 01752
(1) SYMMETRIX, 4816-E Disk Storage Device, 20 GB Disk Storage / 384 MB Cache Memory; Including but not limited to all
replacements, parts, repairs, and attachments, incorporated therein or affixed thereto, now owned or hereafter acquired.
(Debtor) EMC Corporation
- --------------------------------------------------
(Signature of Debtor, if required)
----------------------------------------------------------
Dated: , 19 By: /s/ Timothy B. Cassidy
---------------------------------------- ------- -------------------------------------------------------
Signature(s) of Secured Party(ies)
</TABLE>
(1) FILING OFFICER COPY--ALPHABETICAL
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Code:
3 Maturity date (if any):
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Debtor (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number, and
Filing Office)
Chattem, Inc. Romax Finance Corporation 92 135034 11/02/92A01
1715 West 38th Street 33 Boston Post Road, West 3:40 PM
Chattanooga, TN 37409 Suite 270 FS-TN $10.00
Marlboro, MA 01752 SEC/ST $10.00
- ----------------------------------------------------------------------------------------------------------------------------------
This statement refers to original Financing Statement No. 92-125089 Dated September 29 1992
- ----------------------------------------------------------------------------------------------------------------------------------
A. Continuation_____ / / B. Partial Release_____ / / C. Assignment_____ /X/ D. Define______/ /
The original financing statement From the collateral described in The Secured Party certifies that
between the foregoing Debtor and the financing statement bearing the Secured Party has assigned to
Secured Party, bearing the file the file number shown above, the the Assignee whose name and address
number shown above, is still ef- Secured Party releases the follow- is shown below, Secured Party's
fective. ing: rights under the financing statement
bearing the file number shown above
in the following property:
(Fee $5.00) (Fee $5.00) (Fee $5.00)
- ----------------------------------------------------------------------------------------------------------------------------------
135034
Assignee: First American National Bank 10-30-92
First American Center 9:54 AM
Equipment Finance Division
Nashville, TN 37237-4507
1 (One) Symmetrix 4816-E Disk Storage Device, 20GB Disk Storage/384 MB Cache Memory; Including but not limited to all
replacements, parts, repairs, and attachments, incorporated therein or affixed thereto, now owned or hereafter acquired.
(Debtor) ROMAX FINANCIAL CORPORATION
- ---------------------------------------------
(Signature of Debtor, if required)
Dated: , 19 By: /s/[illegible] Vice President
---------------------------- ---- -----------------------------------------
Signature(s) of Secured Party(ies)
(1) FILING OFFICER COPY - ALPHABETICAL
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Code:
3 Maturity date (if any):
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 (Last Name First) and address(es) 2 ??? and address(es) For filing Officer (Date, Time, Number and
Filing Office)
Lessee: Chattem, Inc. Lessor: Lockout Leasing Co., Inc. 95 413203 03/27/95AO
1715 W. 38th St. 410 Spring St. 2:52 PM
Chattanooga, TN 37409 Chattanooga, TN 37405 FS-TN $10.00
AG-TN $10.00
SEC/ST $20.00
- ------------------------------------------------------------------------------------------------------------------------------------
4 This financing statement covers the following types (or items) of property:
See attached "Schedule of Leased Equipment"
This financing statement covers a true lease of the above equipment as evidenced by an equipment lease dated 02/28/95 by
and between Chattem Inc., Lessee, and Robert A. Morrsion Jr., d/b/a Lookout Leasing Company, Lessor.
ASSIGNEE OF SECURED PARTY 413203
AMSOUTH OF TENNESSEE 3-27-95
601 MARKET CENTER 10:21 AM
CHATTANOOGA, TN 37402
Check /X/ if covered: / / Proceeds of collateral are also covered / / Products of Collateral are also covered No. of additional
sheets presented:
- ------------------------------------------------------------------------------------------------------------------------------------
Filed with:
- ------------------------------------------------------------------------------------------------------------------------------------
Chattem, Inc. Lookout Leasing Co., Inc.
- ------------------------------------------------------ -------------------------------------------------------------------------
By:/s/ Robert Eb Illegible By:/s/ Bill Morrison
--------------------------------------------------- ----------------------------------------------------------------------
Signature(s) of Lessee Signature(s) of Lessor
(1) FILING OFFICER COPY-ALPHABETICAL
</TABLE>
<PAGE>
SCHEDULE 8.8
AFFILIATE TRANSACTIONS
1. A director, Louis H. Barnett, is a consultant to Chattem, Inc. and
received $33,000 for such services in 1995.
2. In connection with the acquisition of Gold Bond from Martin Himmel
Inc. and the financing under the Credit Documents, Chattem, Inc. has
issued $5.5 million of its common stock to certain affiliates and other
investors. Chattem, Inc. received a fairness opinion from an independent
investment banking firm in connection with the transaction.
<PAGE>
SCHEDULE 11.1
NOTICES
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
Attn: Robert E. Bosworth, Executive Vice President
Fax: 423-821-0395
Signal Investment & Management Co.
1105 North Market Street
Suite 1300
Wilmington, DE 19890
Attn: Robert E. Bosworth, President
<PAGE>
Exhibit 2.1
to
Credit Agreement
FORM OF NOTICE OF BORROWING
TO: NATIONSBANK, N.A., as Agent
NATIONSBANK CORPORATE CENTER
CHARLOTTE, NORTH CAROLINA 28255
RE: Credit Agreement dated as of April __, 1996
among Chattem, Inc. (the "Borrower") the
Domestic Subsidiaries of the Borrower,
NationsBank, N.A., as Agent and the Lenders
party thereto (as the same may be amended,
modified, extended or restated from time to
time, the "Credit Agreement")
DATE: , 199
----------------- -
- --------------------------------------------------------------------------------
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting Working Capital Revolving
Loans in the amount of $__________ to be funded on __________, 199_ at the
interest rate option set forth in paragraph 3 below. Subsequent to the
funding of the requested Working Capital Revolving Loans, the aggregate
amount of outstanding Working Capital Revolving Loans will be $__________,
which together with the aggregate amount of New Credit Agreement Revolving
Loans outstanding is less than or equal to the lesser of (x) the sum of
the New Credit Agreement Revolving Committed Amount plus the Working
Capital Revolving Committed Amount and (y) the Borrowing Base.
3. The interest rate option applicable to the requested Revolving Loans
shall be:
a. __________ the Adjusted Base Rate
b. __________ the Adjusted Eurodollar Rate for an Interest Period of:
__________ one month
__________ two months
__________ three months
4. The representations and warranties made by the Credit Parties in the
Credit Documents are true and correct in all material respects at and as if
made on the date hereof.
<PAGE>
5. As of the date hereof, no Default or Event of Default has occurred and
is continuing or would be caused by this Notice of Borrowing.
6. No Material Adverse Effect has occurred since the Closing Date.
CHATTEM, INC.
By:
-------------------------
Name:
-----------------------
Title:
-----------------------
<PAGE>
Exhibit 2.2
to
Credit Agreement
FORM OF NOTICE OF CONTINUATION/CONVERSION
TO: NATIONSBANK, N.A., as Agent
NATIONSBANK CORPORATE CENTER
CHARLOTTE, NORTH CAROLINA 28255
RE: Credit Agreement dated as of April , 1996
among Chattem, Inc. (the "Borrower") the
Domestic Subsidiaries of the Borrower,
NationsBank, N.A., as Agent, and the Lenders
party thereto (as the same may be amended,
modified, extended or restated from time to
time, the "Credit Agreement")
DATE: , 199
---------------------- --
- -------------------------------------------------------------------------------
1. This Notice of Continuation/Conversion is made pursuant to the terms of
the Credit Agreement. All capitalized terms used herein unless otherwise
defined shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting that a portion of the
current outstanding Working Capital Revolving Loans in the amount of $
currently accruing interest at be extended or converted as of
at the interest rate option set forth in paragraph 3
below.
3. The interest rate option applicable to the extension or conversion of all
or part of the existing Working Capital Revolving Loans (as set forth
above) shall be:
a. _____ the Adjusted Base Rate
b. _____ the Adjusted Eurodollar Rate for an Interest Period of:
_______ one month
_______ two months
_______ three months
4. The representations and warranties made by the Credit Parties in the
Working Capital Credit Documents are true and correct in all material
respects at and as if made on the date hereof.
5. As of the date hereof, no Default or Event of Default has occurred and is
continuing or would be caused by this Notice of Continuation/Conversion.
<PAGE>
6. No Material Adverse Effect has occurred since the Closing Date.
CHATTEM, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE>
Exhibit 2.4
to
Credit Agreement
FORM OF WORKING
CAPITAL REVOLVING NOTE
$____________ ____________, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of ____________ (the
"LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in
that certain Credit Agreement dated as of ____________, 1996 between the
Borrower, the Domestic Subsidiaries of the Borrower, the Lenders named
therein (including the Lender) and NationsBank, N.A., as Agent (as modified
and supplemented and in effect from time to time, the "CREDIT AGREEMENT"), the
principal sum of $____________ (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Working Capital Revolving Loans made
by the Lender to the Borrower under the Credit Agreement), in lawful money of
the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Working Capital
Revolving Loan, at such office, in like money and funds, for the period
commencing on the date of such Working Capital Revolving Loan until such
Working Capital Revolving Loan shall be paid in full, at the rates per annum
and on the dates provided in the Credit Agreement.
This Note is one of the Working Capital Revolving Notes referred to in the
Credit Agreement and evidences Working Capital Revolving Loans made by the
Lender thereunder. Capitalized terms used in this Working Capital Revolving
Note and not otherwise defined shall have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Working Capital Revolving Loans evidenced by this Working Capital Revolving
Note upon the occurrence of certain events (and for payment of collection
costs in connection therewith) and for prepayments of Working Capital
Revolving Loans upon the terms and conditions specified therein. In the event
the Working Capital Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable
attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Working Capital Revolving Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender
to make any such recordation or endorsement shall not affect the obligations
of the Borrower to make a payment when due of any amount owing hereunder or
under this Working Capital Revolving Note in respect of the Working Capital
Revolving Loans to be evidenced by this Working Capital Revolving Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Working Capital Revolving Loans evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as
provided in Section 11.3(d) of the Credit Agreement.
THIS WORKING CAPITAL REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Working Capital Revolving
Note to be executed as of the date first above written.
CHATTEM, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
FORM OF OFFICER'S CERTIFICATE
For the fiscal quarter ended ________________________, 19__.
I, ______________________, chief financial officer of Chattem, Inc. (the
"BORROWER") hereby certify that, with respect to that certain Credit
Agreement dated as of April __, 1996 (as it may be amended, modified,
extended or restated from time to time, the "CREDIT AGREEMENT"; all of the
defined terms in the Credit Agreement are incorporated herein by reference)
among the Borrower, the other Credit Parties party thereto, the Lenders party
thereto and NationsBank, N.A., as Agent:
a. Attached hereto as Schedule 1 are calculations demonstrating
compliance by the Credit Parties with the financial covenants contained
in Section 7.12 of the Credit Agreement as of the end of the fiscal
period referred to above.
b. No Default or Event of Default has occurred under the Credit
Agreement (1).
c. The Borrower - prepared quarterly financial statements which
accompany this certificate fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, subject to changes resulting from
normal year-end audit adjustments.
d. As of the end of fiscal period referred above, the Borrower and
its Subsidiaries have made outstanding loans to directors, officers,
employees, agents, customers or suppliers in the ordinary course of
business for reasonable business expenses in an amount of $__________
in the aggregate.
e. Subsequent to the Closing Date, the Borrower and its Subsidiaries
have made Investments in Chattem (Canada) Inc. in an aggregate amount
equal to $________.
f. Subsequent to the Closing Date, the Borrower and its Subsidiaries
have made Investments in Chattem (U.K.) Limited in an aggregate amount
equal to $________.
- --------------------
1 If a Default or Event of Default shall have occurred an explanation of
such Default or Event of Default shall be provided on a separate page
together with an explanation of the action taken or proposed to be taken
by the Credit Parties with respect thereto.
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
g. Subsequent to the Closing Date, the Borrower and its Subsidiaries
have made Investments in Permitted Acquisitions, including any
contingency payments associated therewith, in an aggregate amount equal
to $__________.
h. As of the end of the fiscal period referred to above, purchase
money Indebtedness incurred by the Borrower and its Subsidiaries to
finance the purchase of fixed assets equals an aggregate principal amount
of $_________.
i. As of the end of the fiscal period referred to above,
Indebtedness owing by Foreign Subsidiaries equals an aggregate amount
equal to $__________.
j. The Credit Parties and their Subsidiaries have made Capital
Expenditures in the current fiscal year in an aggregate amount equal to
$_________.
k. The aggregate annual payments of the Borrower and its
Subsidiaries under Operating Leases for the current fiscal year equals
$_________.
This _____ day of __________, 19__.
CHATTEM, INC.
------------------------------
Chief Financial Officer
- 2 -
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
SCHEDULE 1
1. Interest Coverage Ratio
(a) EBIT $
-------------
(b) Cash Interest Expense $
-------------
(c) EBIT to cash
Interest Expense Ratio
[(a) / (b)] 1:0
--------------
2. Fixed Charge Coverage Ratio
(a) EBITDA $
-------------
(b) Capital Expenditures $
-------------
(c) EBITDA minus
Capital Expenditures
[(a) - (b)] $
-------------
(d) Cash Interest Expense $
-------------
(e) Taxes $
-------------
(f) Scheduled Funded Debt Payments $
-------------
(g) [(d) + (e) + (f)] $
-------------
(h) Fixed Charge Coverage
Ratio [(c) / (g)] :1.0
-------------
3. Leverage Ratio
(a) Funded Debt $
-------------
(b) EBITDA $
-------------
(c) Funded Debt to
EBITDA Ratio
[(a) / (b)] :1.0
-------------
4. Senior Leverage Ratio
(a) Funded Debt $
-------------
(b) Subordinated Debt $
-------------
- 3 -
<PAGE>
Exhibit 7.1(e)
to
Credit Agreement
(c) [(a) - (b)] $
-------------
(d) EBITDA $
-------------
(e) Senior Leverage Ratio
[(c) / (d)] :1.0
-------------
5. Net Worth
(a) Actual Net Worth as of the end of fiscal
period referred to above $
-------------
(b) Net Worth on Closing Date $
-------------
(c) .50 x cumulative Net Income
(without deductions for any losses)
subsequent to Closing Date $
-------------
(d) Net Cash Proceeds from Equity Issuance
subsequent to Closing Date $
-------------
(e) Net Worth required by Section 7.12(e)
[(b) + (c) + (d)] $
-------------
- 4 -
<PAGE>
Exhibit 7.1(g)
to
Credit Agreement
Form of
Borrowing Base Certificate
For the calendar month ended ______________________, 19___.
I, the undersigned, the chief financial officer of Chattem, Inc. (the
"Borrower") hereby certify that as of the date hereof, with respect to that
certain Credit Agreement dated as of April __ , 1996 (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
capitalized terms used herein shall have the meanings given to such terms in
the Credit Agreement) among the Borrower, the
other Credit Parties party thereto, the Lenders party thereto and
NationsBank, N.A., as Agent:
RECEIVABLES
<TABLE>
<S> <C>
1. Gross Amount of Receivables $
-----------
2. Less: Receivables subject to any Lien, other than Liens
securing Credit Party Obligations ($ )
-----------
3. Less: Receivables which are more than 60 days past due ($ )
-----------
4. Less: Receivables owing from an account debtor with 20% of
balance owing by such account debtor 60 days past due ($ )
-----------
5. Less: Receivables evidenced by notes, or other instruments
not in possession of Agent ($ )
-----------
6. Less: Receivables owing by insolvent account debtor or
account debtor subject to bankruptcy or insolvency proceedings ($ )
-----------
7. Less: Foreign Receivables ($ )
-----------
8. Less Contingent Receivables or Receivables subject to offset,
counterclaim, etc. ($ )
-----------
9. Less: Receivables for which Affiliate or Subsidiary is
account debtor ($ )
-----------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10. Less: Non-Complying Governmental Receivables ($ )
-----------
11. Less: Receivables in excess of 25% concentration limit ($ )
-----------
12. Less: Other Ineligible Receivables ($ )
-----------
13. Total of Ineligible Receivables ($ )
-----------
14. Eligible Receivables (as defined in Section 1.1 of the
Credit Agreement) (Line 1 minus Line 13) $
-----------
15. Available Eligible Receivables (80% of Eligible
Receivables) $
-----------
INVENTORY
16. Gross Amount of Inventory $
-----------
17. Less: Inventory subject to any Lien, other than Liens
securing Credit Party Obligations ($ )
-----------
18. Less: Inventory in poor condition or Inventory which fails
to adhere standards of governmental authorities ($ )
-----------
19. Less: Obsolete and not useable or saleable Inventory ($ )
-----------
20. Less: Foreign Inventory ($ )
-----------
21. Less: Inventory located at locations not owned or leased
by the Borrower ($ )
-----------
22. Less: Inventory at leased premises or in a public
warehouse facility w/o landlord or other necessary third
party consent ($ )
-----------
23. Less: Inventory which is leased or on consignment ($ )
-----------
24. Less: Packaging Materials and Supplies ($ )
-----------
25. Less: Goods in transit ($ )
-----------
26. Less: Inventory in which the Agent does not have first
priority security interest ($ )
-----------
27. Less: Other Ineligible Inventory ($ )
-----------
</TABLE>
- 2 -
<PAGE>
Exhibit 7.1(g)
to
Credit Agreement
<TABLE>
<S> <C>
28. Total Ineligible Inventory ($ )
-----------
29. Eligible Inventory (as defined in Section 1.1 of the
Credit Agreement) (Line 16 minus Line 28) $
-----------
30. Available Eligible Inventory (50% of Eligible Inventory) $
-----------
CASH COLLATERAL
31. Dollar amount in Cash Collateral Account $
-----------
BORROWING BASE
32. Total Borrowing Base availability (line 15 plus Line 30
plus Line 31 plus $3 million until August 31, 1996) $
-----------
33. Aggregate Outstanding (i) New Credit Agreement Revolving
Loans under the New Credit Agreement and (ii) Working Capital
Revolving Loans under the Credit Agreement $
-----------
34. a. ___________ If the Borrower is requesting a New Credit
Agreement Revolving Loan or a Working Capital
Revolving Loan and if Line # 32 is greater than
Line #33, then the difference ($_________) is
available for extensions of credit under the New
Credit Agreement and Working Capital Credit
Agreement.
b. ___________ If the Borrower intends to withdraw dollars
from the Cash Collateral Account and if
Line #32 is greater than Line #33 then the
difference ($__________) is available to be
drawn from the Cash Collateral Account.
</TABLE>
35. If Line #33 is greater than Line #32, then the Borrower shall (i)
prepay or otherwise reduce so much of the outstanding New Credit
Agreement Revolving Loans and Working Capital Revolving Loans as shall
be necessary to eliminate such excess or (ii) deposit additional funds
in the Cash Collateral Account as shall be necessary to eliminate such
excess.
With reference to this Borrowing Base Certificate, I hereby certify on
behalf of the Borrower that the above statements are true and correct.
- 3 -
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this ____
day of _____________________, 19___.
CHATTEM, INC.
[CORPORATE SEAL]
By
------------------------
Chief Financial Officer
- 4 -
<PAGE>
Exhibit 7.13
to
Credit Agreement
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (this "Agreement"), dated as of __________, 199_,
is entered into between ______________________________, a _________________
(the "New Subsidiary") and NATIONSBANK, N.A., in its capacity as Agent (the
"Agent") under that certain Credit Agreement, dated as of April __, 1996 among
Chattem, Inc. (the "Borrower"), the Domestic Subsidiaries of the Borrower, the
Lenders party thereto and the Agent (as the same may be amended, modified,
extended or restated from time to time, the "Credit Agreement"). All
capitalized terms used herein and not otherwide defined shall have the meanings
set forth in the Credit Agreement.
The New Subsidiary and the Agent, for the benefit of the Lenders, hereby
agree as follows:
1. The New Subsidiary hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the New Subsidiary will be deemed to be a
Credit Party under the Credit Agreement and a "Guarantor" for all purposes of
the Credit Agreement and shall have all of the obligations of a Guarantor
thereunder as if it had executed the Credit Agreement. The New Subsidiary
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Credit Agreement, including
without limitation (a) all of the representations and warranties of the
Credit Parties set forth in Section 6 of the Credit Agreement, (b) all of the
affirmative and negative covenants set forth in Sections 7 and 8 of the
Credit Agreement and (c) all of the guaranty obligations set forth in Section
4 of the Credit Agreement. Without limiting the generality of the foregoing
terms of this paragraph 1, the New Subsidiary, subject to the limitations set
forth in Section 4.7 of the Credit Agreement, hereby guarantees, jointly and
severally with the other Guarantors, to the Agent and the Lenders, as
provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Credit Party Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration or otherwise)
strictly in accordance with the terms thereof and agrees that if any of the
Credit Party Obligations are not paid or performed in full when due (whether
at stated maturity, as a mandatory prepayment, by acceleration or otherwise),
the New Subsidiary will, jointly and severally together with the other
Guarantors, promptly pay and perform the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Credit Party Obligations, the same will be promptly
paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
<PAGE>
2. The New Subsidiary is, simultaneously with the execution of this
Agreement, executing and delivering such Collateral Documents (and such other
documents and instruments) as requested by the Agent in accordance with
Section 7.13 of the Credit Agreement.
3. The address of the New Subsidiary for purposes of Section 11.1 of the
Credit Agreement is as follows:
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
4. The New Subsidiary herby waives acceptance by the Agent and the
Lenders of the guaranty by the New Subsidiary under the Credit Agreement upon
the execution of this Agreement by the New Subsidiary.
5. This Agreement 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.
6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the New Subsidiary has caused this agreement to be
duly executed by its authorized officer, and the Agent, for the benefit of
the Lenders, has caused the same to be accepted by its authorized officer, as
of the day and year first written above.
[NEW SUBSIDIARY]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and accepted:
NATIONSBANK,N.A., as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
- 2 -
<PAGE>
Exhibit 11.3
to
Credit Agreement
FORM OF
ASSIGNMENT AGREEMENT
Reference is made to that certain Credit Agreement dated as of April __,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "Credit Agreement") among Chattem, Inc. (the "Borrower"), the
Domestic subsidiaries of the Borrower, the Lenders identified therein and
NationsBank, N.A., as Agent. All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Agreement.
1. The Assignor (as defined below) hereby sells and assigns, without
recourse, to the Assignee (as defined below), and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of
effective date of the assignment as designated below (the "Effective Date"),
the interests set forth below (the "Assigned Interest") in the Assignor's
rights and obligations under the Credit Agreement, including, without
limitation, (a) the interests set forth below in the Working Capital
Revolving Loan Commitment Percentages of the Assignor on the Effective Date
and (b) the Working Capital Revolving Loans owing to the Assignor in
connection with the Assigned Interest which are outstanding on the Effective
Date. The Purchase of the Assigned Interest shall be at par and periodic
payments made with respect to the Assigned Interest which (i) accrued prior
to the Effective Date shall be remitted to the Assignor and (ii) accrue from
and after the Effective Date shall be remitted to the Assignee. From and after
the Effective Date,the Assignee, if it is not already a Working Capital
Lender under the Credit Agreement, shall become a "Working Capital Lender" for
all purposes of the Credit Agreement and the other Working Capital Credit
Documents and, to the extent of such assignment, the assigning Working
Capital Lender shall be relieved of its obligations under the Credit Agreement.
2. The Assignor represents and warrants to the Assignee that is is the
holder of the Assigned Interest, and the Loans and Participation Interests
related thereto, and it has not previously transferred or encumbered such
Assigned Interest, Working Capital Revolving Loans or Participation Interest.
3. The Assignee represents and warrants to the Assignor that it is an
Eligible Assignee.
4. This Assignment shall be effective only upon (a) the consent of the
Borrower and the Agent to the extent required under Section 11.3(a) of the
Credit Agreement and (b) delivery to the Agent of this Assignment Agreement
together with the transfer fees, if applicable, set forth in Section 11.3(b)
of the Credit Agreement.
<PAGE>
5. This Assignment shall be governed by and construed in accordance with
the laws of the State of North Carolina.
6. Terms of Assignment
(a) Date of Assignment
-----------------------
(b) Legal Name of Assignor
-----------------------
(c) Legal Name of Assignee
-----------------------
(d) Effective Date of Assignment
-----------------------
(e) Working Capital
Revolving Loan Commitment
Percentage assigned %
----------------------
(f) Total Working Capital
Revolving Loans
outstanding as of Effective Date $
--------------------
(g) Principal Amount of Working
Capital Revolving Loans
assigned on Effective
Date (the amount set forth
in (f) multiplied by the
percentage set forth in (e)) $
--------------------
(h) Working Capital
Revolving Committed Amount $
--------------------
(i) Principal Amount of Working
Capital Revolving Committed
Amount Assigned on
the Effective Date (the amount
set forth in (h) multiplied by
the percentage set forth in (e)) $
--------------------
<PAGE>
The terms set forth above
are hereby agreed to:
, as Assignor
- --------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
, as Assignor
- --------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CONSENTED TO (if applicable):
CHATTEM, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
NATIONSBANK, N.A., as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
REVOLVING NOTE
$5,965,909.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of NationsBank, N.A. (the
"LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in that
certain Credit Agreement dated as of April 29, 1996 between the Borrower, the
Domestic Subsidiaries of the Borrower, the Lenders named therein (including the
Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$5,965,909.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit Agreement
and evidences Revolving Loans made by the Lender thereunder. Capitalized terms
used in this Revolving Note and not otherwise defined shall have the respective
meanings assigned to them in the Credit Agreement and the terms and conditions
of the Credit Agreement are expressly incorporated herein and made a part
hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Revolving
Note in respect of the Revolving Loans to be evidenced by this Revolving Note,
and each such recordation or endorsement shall be conclusive and binding absent
manifest error.
<PAGE>
This Note and the Revolving Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
----------------------------------------
Name: Robert E. Bosworth
-----------------------------------
Title: EXECUTIVE VICE PRESIDENT
-----------------------------------
-2-
<PAGE>
REVOLVING NOTE
$4,772,727.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of The First National Bank of
Chicago (the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set
forth in that certain Credit Agreement dated as of April 29, 1996 between the
Borrower, the Domestic Subsidiaries of the Borrower, the Lenders named therein
(including the Lender) and NationsBank, N.A., as Agent (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"), the
principal sum of $4,772,727.00 (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Revolving Loans made by the Lender to
the Borrower under the Credit Agreement), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Revolving Loan, at such office, in like money and
funds, for the period commencing on the date of such Revolving Loan until such
Revolving Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit Agreement
and evidences Revolving Loans made by the Lender thereunder. Capitalized terms
used in this Revolving Note and not otherwise defined shall have the respective
meanings assigned to them in the Credit Agreement and the terms and conditions
of the Credit Agreement are expressly incorporated herein and made a part
hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Revolving
Note in respect of the Revolving Loans to be evidenced by this Revolving Note,
and each such recordation or endorsement shall be conclusive and binding absent
manifest error.
<PAGE>
This Note and the Revolving Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
----------------------------------------
Name: Robert E. Bosworth
-----------------------------------
Title: EXECUTIVE VICE PRESIDENT
-----------------------------------
-2-
<PAGE>
REVOLVING NOTE
$3,778,409.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Creditanstalt Bankverein
(the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in
that certain Credit Agreement dated as of April 29, 1996 between the Borrower,
the Domestic Subsidiaries of the Borrower, the Lenders named therein (including
the Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$3,778,409.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit Agreement
and evidences Revolving Loans made by the Lender thereunder. Capitalized terms
used in this Revolving Note and not otherwise defined shall have the respective
meanings assigned to them in the Credit Agreement and the terms and conditions
of the Credit Agreement are expressly incorporated herein and made a part
hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Revolving
Note in respect of the Revolving Loans to be evidenced by this Revolving Note,
and each such recordation or endorsement shall be conclusive and binding absent
manifest error.
<PAGE>
This Note and the Revolving Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
----------------------------------------
Name: Robert E. Bosworth
-----------------------------------
Title: EXECUTIVE VICE PRESIDENT
-----------------------------------
-2-
<PAGE>
REVOLVING NOTE
$2,982,955.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of First American National Bank
(the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in
that certain Credit Agreement dated as of April 29, 1996 between the Borrower,
the Domestic Subsidiaries of the Borrower, the Lenders named therein (including
the Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$2,982,955.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit Agreement
and evidences Revolving Loans made by the Lender thereunder. Capitalized terms
used in this Revolving Note and not otherwise defined shall have the respective
meanings assigned to them in the Credit Agreement and the terms and conditions
of the Credit Agreement are expressly incorporated herein and made a part
hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Revolving
Note in respect of the Revolving Loans to be evidenced by this Revolving Note,
and each such recordation or endorsement shall be conclusive and binding absent
manifest error.
<PAGE>
This Note and the Revolving Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
----------------------------------------
Name: Robert E. Bosworth
-----------------------------------
Title: EXECUTIVE VICE PRESIDENT
-----------------------------------
-2-
<PAGE>
TRANCHE A TERM NOTE
$6,818,182.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of NationsBank, N.A. (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A. (the
"AGENT") as set forth in that certain Credit Agreement dated as of April 29,
1996 among the Borrower, the Domestic Subsidiaries of the Borrower, the Lenders
named therein (including the Lender) and NationsBank, N.A., as Agent, (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $6,818,182.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche A Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche A Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche A Term
Loan until such Tranche A Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche A Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche A Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche A Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche A Term Loan evidenced by this Tranche A Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche A Term Loan upon the terms and
conditions specified therein. In the event this Tranche A Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche A Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche A
Term Loan Note in respect of the Tranche A Term Loan to be evidenced by this
Tranche A Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche A Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE A TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE A TERM NOTE
$5,454,545.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of The First National Bank of
Chicago (the "LENDER") and its registered assigns, at the office of NationsBank,
N.A. (the "AGENT") as set forth in that certain Credit Agreement dated as of
April 29, 1996 among the Borrower, the Domestic Subsidiaries of the Borrower,
the Lenders named therein (including the Lender) and NationsBank, N.A., as
Agent, (as modified and supplemented and in effect from time to time, the
"CREDIT AGREEMENT"), the principal sum of $5,454,545.00 (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Tranche A Term Loan
made by the Lender to the Borrower under the Credit Agreement), in lawful money
of the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of such Tranche A Term Loan, at such
office, in like money and funds, for the period commencing on the date of such
Tranche A Term Loan until such Tranche A Term Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche A Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche A Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche A Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche A Term Loan evidenced by this Tranche A Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche A Term Loan upon the terms and
conditions specified therein. In the event this Tranche A Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche A Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche A
Term Loan Note in respect of the Tranche A Term Loan to be evidenced by this
Tranche A Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche A Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE A TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE A TERM NOTE
$4,318,182.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Creditanstalt Bankverein
(the "LENDER") and its registered assigns, at the office of NationsBank, N.A.
(the "AGENT") as set forth in that certain Credit Agreement dated as of April
29, 1996 among the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent,
(as modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $4,318,182.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche A Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche A Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche A Term
Loan until such Tranche A Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche A Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche A Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche A Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche A Term Loan evidenced by this Tranche A Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche A Term Loan upon the terms and
conditions specified therein. In the event this Tranche A Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche A Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche A
Term Loan Note in respect of the Tranche A Term Loan to be evidenced by this
Tranche A Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche A Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE A TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE A TERM NOTE
$3,409,091.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of First American National Bank
(the "LENDER") and its registered assigns, at the office of NationsBank, N.A.
(the "AGENT") as set forth in that certain Credit Agreement dated as of April
29, 1996 among the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent,
(as modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $3,409,091.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche A Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche A Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche A Term
Loan until such Tranche A Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche A Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche A Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche A Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche A Term Loan evidenced by this Tranche A Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche A Term Loan upon the terms and
conditions specified therein. In the event this Tranche A Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche A Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche A
Term Loan Note in respect of the Tranche A Term Loan to be evidenced by this
Tranche A Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche A Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE A TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE B TERM NOTE
$5,000,000.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of NationsBank, N.A. (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A. (the
"AGENT") as set forth in that certain Credit Agreement dated as of April 29,
1996 between the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $5,000,000.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche B Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche B Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche B Term
Loan until such Tranche B Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche B Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
<PAGE>
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche B
Term Loan Note in respect of the Tranche B Term Loan to be evidenced by this
Tranche B Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche B Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE B TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE B TERM NOTE
$2,500,000.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Creditanstalt Bankverein
(the "LENDER") and its registered assigns, at the office of NationsBank, N.A.
(the "AGENT") as set forth in that certain Credit Agreement dated as of April
29, 1996 between the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $2,500,000.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche B Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche B Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche B Term
Loan until such Tranche B Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche B Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
<PAGE>
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche B
Term Loan Note in respect of the Tranche B Term Loan to be evidenced by this
Tranche B Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche B Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE B TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE B TERM NOTE
$5,000,000.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Prime Income Trust (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A. (the
"AGENT") as set forth in that certain Credit Agreement dated as of April 29,
1996 between the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $5,000,000.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche B Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche B Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche B Term
Loan until such Tranche B Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche B Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
<PAGE>
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche B
Term Loan Note in respect of the Tranche B Term Loan to be evidenced by this
Tranche B Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche B Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE B TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
-2-
<PAGE>
TRANCHE B TERM NOTE
$5,000,000.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Van Kampen American Capital
Prime Rate Income Trust (the "LENDER") and its registered assigns, at the office
of NationsBank, N.A. (the "AGENT") as set forth in that certain Credit Agreement
dated as of April 29, 1996 between the Borrower, the Domestic Subsidiaries of
the Borrower, the Lenders named therein (including the Lender) and NationsBank,
N.A., as Agent (as modified and supplemented and in effect from time to time,
the "CREDIT AGREEMENT"), the principal sum of $5,000,000.00 (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Tranche B
Term Loan made by the Lender to the Borrower under the Credit Agreement), in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of such Tranche B Term Loan, at
such office, in like money and funds, for the period commencing on the date of
such Tranche B Term Loan until such Tranche B Term Loan shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche B Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its
<PAGE>
books; provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under this Tranche B Term Loan Note in
respect of the Tranche B Term Loan to be evidenced by this Tranche B Term Loan
Note, and each such recordation or endorsement shall be conclusive and binding
absent manifest error.
This Note and the Tranche B Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE B TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
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<PAGE>
WORKING CAPITAL REVOLVING NOTE
$2,215,909.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of NationsBank, N.A. (the
"LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in that
certain Credit Agreement dated as of April 29, 1996 between the Borrower, the
Domestic Subsidiaries of the Borrower, the Lenders named therein (including the
Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$2,215,909.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Working Capital Revolving Loans made by the Lender to
the Borrower under the Credit Agreement), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Working Capital Revolving Loan, at such office, in
like money and funds, for the period commencing on the date of such Working
Capital Revolving Loan until such Working Capital Revolving Loan shall be paid
in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Working Capital Revolving Notes referred to in the
Credit Agreement and evidences Working Capital Revolving Loans made by the
Lender thereunder. Capitalized terms used in this Working Capital Revolving
Note and not otherwise defined shall have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Working Capital Revolving Loans evidenced by this Working Capital Revolving Note
upon the occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of Working Capital Revolving Loans
upon the terms and conditions specified therein. In the event this Working
Capital Revolving Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Working Capital Revolving Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Working Capital Revolving Note in respect of the Working Capital Revolving Loans
to be evidenced by this Working Capital Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Working Capital Revolving Loans evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as provided
in Section 11.3(d) of the Credit Agreement.
THIS WORKING CAPITAL REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Working Capital Revolving
Note to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
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<PAGE>
WORKING CAPITAL REVOLVING NOTE
$1,772,727.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of The First National Bank of
Chicago (the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set
forth in that certain Credit Agreement dated as of April 29, 1996 between the
Borrower, the Domestic Subsidiaries of the Borrower, the Lenders named therein
(including the Lender) and NationsBank, N.A., as Agent (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"), the
principal sum of $1,772,727.00 (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Working Capital Revolving Loans made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Working Capital Revolving Loan, at such
office, in like money and funds, for the period commencing on the date of such
Working Capital Revolving Loan until such Working Capital Revolving Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Working Capital Revolving Notes referred to in the
Credit Agreement and evidences Working Capital Revolving Loans made by the
Lender thereunder. Capitalized terms used in this Working Capital Revolving
Note and not otherwise defined shall have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Working Capital Revolving Loans evidenced by this Working Capital Revolving Note
upon the occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of Working Capital Revolving Loans
upon the terms and conditions specified therein. In the event this Working
Capital Revolving Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Working Capital Revolving Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Working Capital Revolving Note in respect of the Working Capital Revolving Loans
to be evidenced by this Working Capital Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Working Capital Revolving Loans evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as provided
in Section 11.3(d) of the Credit Agreement.
THIS WORKING CAPITAL REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Working Capital Revolving
Note to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
-2-
<PAGE>
WORKING CAPITAL REVOLVING NOTE
$1,403,409.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Creditanstalt Bankverein
(the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in
that certain Credit Agreement dated as of April 29, 1996 between the Borrower,
the Domestic Subsidiaries of the Borrower, the Lenders named therein (including
the Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$1,403,409.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Working Capital Revolving Loans made by the Lender to
the Borrower under the Credit Agreement), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Working Capital Revolving Loan, at such office, in
like money and funds, for the period commencing on the date of such Working
Capital Revolving Loan until such Working Capital Revolving Loan shall be paid
in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Working Capital Revolving Notes referred to in the
Credit Agreement and evidences Working Capital Revolving Loans made by the
Lender thereunder. Capitalized terms used in this Working Capital Revolving
Note and not otherwise defined shall have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Working Capital Revolving Loans evidenced by this Working Capital Revolving Note
upon the occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of Working Capital Revolving Loans
upon the terms and conditions specified therein. In the event this Working
Capital Revolving Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Working Capital Revolving Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Working Capital Revolving Note in respect of the Working Capital Revolving Loans
to be evidenced by this Working Capital Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Working Capital Revolving Loans evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as provided
in Section 11.3(d) of the Credit Agreement.
THIS WORKING CAPITAL REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Working Capital Revolving
Note to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
-2-
<PAGE>
WORKING CAPITAL REVOLVING NOTE
$1,107,955.00 April 29, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of First American National Bank
(the "LENDER"), at the office of NationsBank, N.A. (the "AGENT") as set forth in
that certain Credit Agreement dated as of April 29, 1996 between the Borrower,
the Domestic Subsidiaries of the Borrower, the Lenders named therein (including
the Lender) and NationsBank, N.A., as Agent (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT"), the principal sum of
$1,107,955.00 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Working Capital Revolving Loans made by the Lender to
the Borrower under the Credit Agreement), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Working Capital Revolving Loan, at such office, in
like money and funds, for the period commencing on the date of such Working
Capital Revolving Loan until such Working Capital Revolving Loan shall be paid
in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Working Capital Revolving Notes referred to in the
Credit Agreement and evidences Working Capital Revolving Loans made by the
Lender thereunder. Capitalized terms used in this Working Capital Revolving
Note and not otherwise defined shall have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Working Capital Revolving Loans evidenced by this Working Capital Revolving Note
upon the occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of Working Capital Revolving Loans
upon the terms and conditions specified therein. In the event this Working
Capital Revolving Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorney fees.
<PAGE>
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Working Capital Revolving Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Working Capital Revolving Note in respect of the Working Capital Revolving Loans
to be evidenced by this Working Capital Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Working Capital Revolving Loans evidenced hereby may be
transferred in whole or in part only by registration of such transfer on the
Register maintained for such purpose by or on behalf of the Borrower as provided
in Section 11.3(d) of the Credit Agreement.
THIS WORKING CAPITAL REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Working Capital Revolving
Note to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
-2-
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "SECURITY AGREEMENT") is entered into as of
April 29, 1996 among Chattem, Inc., a Tennessee corporation (the "BORROWER"),
Signal Investment & Management Co., a Delaware corporation ("SIGNAL") (Signal,
together with each of the Borrower's Domestic Subsidiaries, individually a
"GUARANTOR" and collectively the "GUARANTORS"; the Borrower's Domestic
Subsidiaries, together with the Borrower and Signal, individually a "CREDIT
PARTY", and collectively the "CREDIT PARTIES") and NationsBank, N.A., in its
capacity as agent (in such capacity, the "AGENT") for the new credit agreement
lenders (the "New Credit Agreement Lenders") from time to time party to the New
Credit Agreement described below and the working capital lenders (the "Working
Capital Lenders") from time to time party to the Working Capital Credit
Agreement described below (the New Credit Agreement Lenders, the Working Capital
Lenders and any Affiliates of such New Credit Agreement Lenders or Working
Capital Lenders that enter into Hedging Agreements with a Credit Party may be
referred to collectively herein as the "LENDERS").
RECITALS
WHEREAS, pursuant to (i) that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "NEW CREDIT AGREEMENT"), among the Borrower, the Guarantors, the New
Credit Agreement Lenders and the Agent, the New Credit Agreement Lenders under
the New Credit Agreement have agreed to provide the Borrower with a $55,000,000
credit facility and (ii) pursuant to that certain Working Capital Credit
Agreement dated as of the date hereof (as amended, modified, extended, renewed
or replaced from time to time, the "WORKING CAPITAL CREDIT AGREEMENT"), among
the Borrower, the Guarantors, the Working Capital Lenders and the Agent, the
Working Capital Lenders under the Working Capital Credit Agreement have agreed
to provide the Borrower with an additional $6,500,000 credit facility; and
WHEREAS, the Lenders have required, as a condition precedent to making
Extensions of Credit pursuant to the terms of the New Credit Agreement and
Working Capital Credit Agreement, that the Credit Parties secure their
respective obligations under the New Credit Agreement, the Working Capital
Credit Agreement, the other Credit Documents, the other Working Capital Credit
Documents and all other Credit Party Obligations in accordance with the terms of
this Security Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to such terms in the New
<PAGE>
Credit Agreement and Working Capital Credit Agreement. All terms used in this
Security Agreement that are defined in the Uniform Commercial Code in effect in
the State of North Carolina (the "UCC") and which are not otherwise defined
herein shall have the meanings set forth therein.
(b) In addition, the following terms shall have the following meanings:
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to a Credit Party of any right under
any Copyright including, without limitation, any thereof referred to in
SCHEDULE 6.19 to the New Credit Agreement and SCHEDULE 6.19 to the Working
Capital Credit Agreement.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 6.19 to the New Credit Agreement and SCHEDULE 6.19 to the
Working Capital Credit Agreement, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 6.19 to the New
Credit Agreement and SCHEDULE 6.19 to the Working Capital Credit Agreement.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the Blis-To-
Sol/Soltice Sale Agreement (iii) all material manufacturing contracts,
license agreements and similar agreements, now existing or hereinafter
arising, of the Credit Parties, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Credit
Parties in a report or statement required to be filed under the Exchange
Act; provided, however, agreements filed under Item 601(b) (10) of
Regulation S-K that relate to benefit or compensation plans or employment
agreements of or with the Credit Parties shall not be considered Material
Contracts.
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to a Credit
Party of any right to make, use or sell any invention covered by a Patent,
including, without
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<PAGE>
limitation, any thereof referred to in SCHEDULE 6.19 to the New Credit
Agreement and SCHEDULE 6.19 to the Working Capital Credit Agreement.
"PATENTS": (i) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in SCHEDULE
6.19 to the New Credit Agreement and SCHEDULE 6.19 to the Working Capital
Credit Agreement, and (ii) all applications for letters patent of the
United States or any other country, now existing or hereafter arising, and
all provisionals, divisions, continuations and continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 6.19 to the New Credit Agreement and SCHEDULE 6.19 of the
Working Capital Credit Agreement.
"TRADEMARK LICENSE": any agreement, written or oral, now existing or
hereafter arising, providing for the grant by or to a Credit Party of any
right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 6.19 to the New Credit Agreement and SCHEDULE 6.19
to the Working Capital Credit Agreement.
"TRADEMARKS": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 6.19 to
the New Credit Agreement and SCHEDULE 6.19 to the Working Capital Credit
Agreement, and (ii) all renewals thereof including, without limitation, any
thereof referred to in SCHEDULE 6.19 to the New Credit Agreement and
SCHEDULE 6.19 to the Working Capital Credit Agreement.
"WORK": any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
2. GRANT OF SECURITY INTEREST IN THE COLLATERAL. To secure the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations (as defined in Section 3 hereof), each
Credit Party hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against, any and all
right, title and interest of such Credit Party in and
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<PAGE>
to the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the "COLLATERAL"):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by a Credit Party for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by a Credit Party, as such agreements may be amended
or otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of a Credit
Party to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of a Credit Party to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) claims of a Credit Party for damages arising out
of or for breach of or default under the Assigned Agreements, and (iv) the
right of a Credit Party to terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of each
Credit Party, all rights in litigation of each Credit Party presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments of each Credit Party now or hereafter arising
therefrom;
(h) All books, records, files, computer software and other similar
writings or evidence of each Credit Party's business;
(i) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain all
damages and profits arising from past infringements of a Credit Party
concerning any of the foregoing;
- 4 -
<PAGE>
(j) All other personal property of any kind or type whatsoever owned
by a Credit Party;
(k) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(l) All proceeds and products of the foregoing and all insurance
relating to the foregoing Collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
3. SECURITY FOR OBLIGATIONS. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following,
whether now existing or hereafter incurred (the "Secured Obligations"):
(a) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower under the New
Credit Agreement, the Working Capital Credit Agreement, the Notes, this
Security Agreement and the other Credit Documents and Working Capital
Credit Documents to which the Borrower is a party;
(b) Subject to clause (c) of Section 27 hereof, in the case of the
Guarantors, the prompt performance and observance by such Guarantor of all
obligations of such Guarantor under the New Credit Agreement, the Working
Capital Credit Agreement, this Security Agreement and the other Credit
Documents and Working Capital Credit Documents to which such Guarantor is a
party, including, without limitation, its guaranty obligations arising
under SECTION 4 of the New Credit Agreement and SECTION 4 of the Working
Capital Credit Agreement; and
(c) Subject to clause (c) of Section 27 hereof, all other
indebtedness, liabilities, obligations and expenses of any kind or nature
owing from any Credit Party to any Lender or the Agent in connection with
(i) this Security Agreement or any other Credit Document or Working Capital
Credit Document, whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired, together with any and all modifications,
extensions, renewals and/or substitutions of any of the foregoing, (ii)
collecting and enforcing the Credit Party Obligations and (iii) all
liabilities and obligations owing from such Credit Party to any Lender
arising under any Hedging Agreements.
4. CREDIT PARTIES REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Credit Party shall remain liable under the contracts
and agreements of such Credit Party included in the Collateral to the extent set
forth therein and to perform all of the duties and obligations thereunder to the
same extent as if
- 5 -
<PAGE>
this Security Agreement had not been executed, (b) the exercise by the Agent of
any of the rights hereunder shall not release a Credit Party from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any of the Lenders shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Security Agreement, nor shall the Agent or any of
the Lenders be obligated to perform any of the obligations or duties of the
Credit Parties thereunder or to take any action to collect or enforce any claim
for payment assigned thereunder.
5. REPRESENTATIONS AND WARRANTIES. Each Credit Party hereby represents
and warrants to the Agent, for the benefit of the Lenders, that so long as any
of the Secured Obligations remain outstanding or any Credit Document or Working
Capital Credit Document is in effect or any Loan or Working Capital Revolving
Loan shall remain outstanding, and until all of the Commitments shall have been
terminated:
(a) CONTRACTS AND AGREEMENTS. The Material Contracts, true and
complete copies of which have been furnished to the Agent, have been duly
authorized, executed and delivered by all parties thereto, have not been
amended or otherwise modified except as permitted by Section 6(k) hereof,
are in full force and effect and are binding upon and enforceable against
all parties thereto in accordance with their respective terms. Except for
the collateral assignment of the Assigned Agreements indentified on
Schedule 5(f) attached hereto without the necessary third party consents
(which consents shall be obtained as provided in Section 6(K) (iv) hereof),
there exists no defaults under any Assigned Agreement by any party thereto.
(b) LOCATION OF COLLATERAL. The location of all tangible property
included in the Collateral owned by each Credit Party is as shown on
SCHEDULE 6.23(b) to the New Credit Agreement and SCHEDULE 6.23(b) to the
Working Capital Credit Agreement.
(c) CHIEF EXECUTIVE OFFICE; BOOKS & RECORDS. Each Credit Party's
chief executive office and chief place of business is (and for the prior
four months have been) located at the locations set forth on SCHEDULE
6.23(c) to the New Credit Agreement and SCHEDULE 6.23 to Working Capital
Credit Agreement, and each Credit Party keeps its books and records and the
original copies of the Assigned Agreements at such locations.
(d) OWNERSHIP. Each Credit Party is the legal and beneficial owner
of its Collateral and has the right to pledge, sell, assign or transfer the
same. Each Credit Party's legal name is as shown in this Security
Agreement and no Credit Party has in the past five years changed its name,
been party to a merger, consolidation or other change in
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structure or used any tradename except as set forth in SCHEDULE 5(d)
attached hereto.
(e) SECURITY INTEREST/PRIORITY. This Security Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Collateral of each Credit Party and, when properly
perfected by filing or registration, shall constitute a valid perfected
security interest in such Collateral, to the extent such security can be
perfected by filing under the UCC, federal law or other applicable personal
property security legislation, free and clear of all Liens except for
Permitted Liens.
(f) CONTRACTS; AGREEMENTS. Except as set forth on Schedule 5(f)
attached hereto, the Credit Parties have no Material Contracts which are
non-assignable by their terms or which prevent the granting of a security
interest therein.
(g) RECEIVABLES. (i) Each receivable of the Credit Parties and the
papers and documents relating thereto are genuine and in all material
respects what they purport to be, (ii) in the case of each receivable which
is an account receivable, each receivable arises out of (A) a bona fide
sale of goods sold and delivered by such Credit Party (or is in the process
of being delivered) or (B) services theretofore actually rendered by such
Credit Party to, the account debtor named therein, (iii) no receivable of
such Credit Party is evidenced by any instrument or chattel paper, unless
such instrument or chattel paper has been theretofore endorsed over and
delivered to the Agent and (vi) no surety bond was required or given in
connection with any receivables of a Credit Party or the contracts or
purchase orders out of which they arose.
(h) INVENTORY. No inventory is held by a Credit Party pursuant to
consignment, sale or return, sale on approval or similar arrangement.
(i) COPYRIGHTS, PATENTS AND TRADEMARKS.
(i) SCHEDULE 6.19 to the New Credit Agreement and
SCHEDULE 6.19 to the Working Capital Credit Agreement include all
Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks and Trademark Licenses owned by the Credit Parties in
their names as of the date hereof.
(ii) Except as set forth in SCHEDULE 6.19 to the New Credit
Agreement and SCHEDULE 6.19 to the Working Capital Credit Agreement,
each Copyright, Patent and Trademark of such Credit Party is valid,
subsisting, unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in SCHEDULE 6.19 to the New Credit
Agreement and SCHEDULE 6.19 to the Working
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Capital Credit Agreement, none of such Copyrights, Patents and
Trademarks is the subject of any licensing or franchise agreement.
(iv) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel or question the
validity of any Copyright, Patent or Trademark.
(v) No action or proceeding is pending seeking to limit,
cancel or question the validity of any Copyright, Patent or Trademark,
or which, if adversely determined, would have a Material Adverse
Effect on the value of any Copyright, Patent or Trademark.
(vi) All applications pertaining to the Copyrights, Patents
and Trademarks of each Credit Party have been duly and properly filed,
and all registrations or letters pertaining to such Copyrights,
Patents and Trademarks have been duly and properly filed and issued,
and all such Copyrights, Patents and Trademarks are valid and
enforceable.
(vii) Except as permitted under the New Credit Agreement and
Working Capital Credit Agreement, no Credit Party has made any
assignment or agreement in conflict with the security interest in the
Copyrights, Patents or Trademarks of each Credit Party hereunder.
(j) CONDITIONS PRECEDENT. There are no conditions precedent to the
effectiveness of this Security Agreement that have not been satisfied or
waived.
6. COVENANTS. Each Credit Party covenants that, so long as any of the
Secured Obligations remain outstanding or any Credit Document or Working Capital
Credit Document is in effect or any Loan or Working Capital Revolving Loan shall
remain outstanding, and until all of the Commitments shall have been terminated,
such Credit Party shall:
(a) OTHER LIENS. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral or
any interest therein, except as permitted under the New Credit Agreement
and Working Capital Credit Agreement.
(b) PRESERVATION OF COLLATERAL. Keep the Collateral in good order,
condition and repair in all material respects, ordinary wear and tear
excepted, and not use the Collateral in violation of the provisions of this
Security Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable statute, law, bylaw, rule,
regulation or ordinance.
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(c) INSTRUMENTS/CHATTEL PAPER. Deliver to the Agent all instruments
and chattel paper representing or relating to the Collateral.
(d) CHANGE IN LOCATION OR NAME. (i) Keep such Credit Party's chief
executive office and chief place of business (as well as its books and
records) at the locations set forth on SCHEDULE 6.23(c) to the New Credit
Agreement and SCHEDULE 6.23(c) to the Working Capital Credit Agreement,
(ii) keep the Collateral of such Credit Party at the locations set forth
for such Credit Party on SCHEDULE 6.23(b) to the New Credit Agreement and
SCHEDULE 6.23(b) to the Working Capital Credit Agreement, and (iii) not
change its legal name or begin using a new tradename.
(e) INSPECTION. At all times allow the Agent or its representatives
to visit and inspect the Collateral to the extent set forth in SECTION 7.11
of the New Credit Agreement and SECTION 7.11 of the Working Capital Credit
Agreement.
(f) PERFECTION OF SECURITY INTEREST. Execute and deliver to the
Agent such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents, as the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or appropriate (i) to
assure to the Agent the effectiveness and priority of its security
interests hereunder, including, but not limited to, (A) such financing
statements (including renewal statements) or amendments thereof or
supplements thereto or other instruments as the Agent may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC and any other personal
property security legislation in the appropriate state(s) or province(s),
(B) with regard to Copyrights, a Notice of Grant of Security Interest in
Copyrights for filing with the United States Copyright Office in the form
of EXHIBIT 6(f)-1 attached hereto, and (C) with regard to Patents and
Trademarks, a Notice of Grant of Security Interest in Patents and
Trademarks for filing with the United States Patent and Trademark Office in
the form of EXHIBIT 6(f)-2 attached hereto, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure
the Agent of its rights and interests hereunder. To that end, each Credit
Party agrees that the Agent may file one or more financing statements
disclosing the Agent's security interest in any or all of the Collateral of
such Credit Party without, to the extent permitted by law, such Credit
Party's signature thereon, and further each Credit Party also hereby
irrevocably makes, constitutes and appoints the Agent, its nominee or any
other Person whom the Agent may designate, as such Credit Party's attorney
in fact with full power and for the limited purpose to sign in the name of
such Credit Party any such financing statements, or amendments and
supplements to financing statements, renewal financing
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statements, notices or any similar documents which in the Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and remaining
irrevocable so long as the New Credit Agreement or Working Capital Credit
Agreement is in effect or any amounts payable thereunder or under any other
Credit Document or Working Capital Credit Document or any Loan or Working
Capital Revolving Loan shall remain outstanding, and until all of the
Commitments thereunder shall have terminated. Each Credit Party hereby
agrees that a carbon, photographic or other reproduction of this Security
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Agent without notice thereof to such Credit
Party wherever the Agent may in its sole discretion desire to file the
same. In the event for any reason the law of any jurisdiction other than
North Carolina becomes or is applicable to the Collateral of any Credit
Party or any part thereof, or to any of the Secured Obligations, such
Credit Party agrees to execute and deliver all such instruments and to do
all such other things as the Agent in its sole discretion reasonably deems
necessary or appropriate to preserve, protect and enforce the security
interests of the Agent under the law of such other jurisdiction (and, if a
Credit Party shall fail to do so promptly upon the request of the Agent,
then the Agent may execute any and all such requested documents on behalf
of such Credit Party pursuant to the power of attorney granted
hereinabove). If any Collateral is in the possession or control of a
Credit Party's agents and the Agent so requests, such Credit Party agrees
to notify such agents in writing of the Agent's security interest therein
and, upon the Agent's request, instruct them to hold all such Collateral
for the Lenders' account and subject to the Agent's instructions. Each
Credit Party agrees to mark its books and records to reflect the security
interest of the Agent in the Collateral.
(g) TREATMENT OF RECEIVABLES. Not grant or extend the time for
payment of any receivable, or compromise or settle any receivable for less
than the full amount thereof, or release any Person or property, in whole
or in part, from payment thereof, or allow any credit or discount thereon,
other than as normal and customary in the ordinary course of a Credit
Party's business.
(h) COVENANTS RELATING TO COPYRIGHTS. Except as otherwise permitted
by the New Credit Agreement or Working Capital Credit Agreement,
(i) Employ the Copyright for each Work with such
notice of copyright as may be required by law to secure copyright
protection.
(ii) (A) Not do any act or knowingly omit to do any
act whereby any Copyright may become
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invalidated; (B) not do any act, or knowingly omit to do any act,
whereby any Copyright may become injected into the public domain; (C)
notify the Agent promptly if it knows, or has reason to know, that any
material Copyright may become injected into the public domain or of
any adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any
other country), regarding a Credit Party's ownership of any such
Copyright or its validity; (D) take all necessary steps as it shall
deem appropriate under the circumstances to maintain and pursue each
application (and to use its best efforts to obtain the relevant
registration) and to maintain each registration of each Copyright
owned by a Credit Party including, without limitation, filing of
applications for renewal where necessary; and (E) promptly notify the
Agent of any material infringement of any material Copyright of a
Credit Party of which it becomes aware and take such actions as it
shall reasonably deem appropriate under the circumstances to protect
such Copyright, including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover any and
all damages for such infringement.
(iii) Not make any assignment or agreement in conflict
with the security interest in the Copyrights of each Credit Party
hereunder.
(i) COVENANTS RELATING TO PATENTS AND TRADEMARKS.
(i) (A) Continue to use each Trademark in such a
manner as to maintain such Trademark in full force free from any
claim of abandonment for non-use (except in countries where sales
under the Trademark fail to obtain $100,000 on an annual basis),
(B) maintain as in the past the quality of products and services
offered under such Trademark, (C) employ such Trademark with the
appropriate notice of registration or notice of trademark or
service mark, as applicable, sufficient to protect such
Trademark, (D) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the
Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such mark pursuant to this
Security Agreement, and (E) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any
act whereby any Trademark may be lost.
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(ii) Not do any act, or omit to do any act, whereby any
Patent may become abandoned or dedicated.
(iii) Notify the Agent promptly if it knows, or has
reason to know, that any application or registration relating to
any material Patent or material Trademark may become abandoned or
dedicated, or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United
States Patent and Trademark Office or any court or tribunal in
any country), regarding a Credit Party's ownership of any Patent
or Trademark or its right to register the same or to keep and
maintain the same.
(iv) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar office
or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain
the relevant registration) and to maintain each registration of
the Patents and Trademarks, including, without limitation, filing
of applications for renewal, affidavits of use and affidavits of
incontestability (except registrations in any country where sales
under the Trademark fail to obtain $100,000 on an annual basis).
(v) Promptly notify the Agent after it learns that any
material Patent or Trademark is infringed, misappropriated or
diluted in any material manner by a third party, and take such
actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark, including,
where appropriate, the bringing of suit for infringement,
misappropriation or dilution, seeking injunctive relief where
appropriate and seeking to recover any and all damages for such
infringement, misappropriation or dilution.
(vi) Not make any assignment or agreement in conflict
with the security interest in the Patents or Trademarks of each
Credit Party hereunder.
(j) NEW PATENTS, COPYRIGHTS AND TRADEMARKS. Whenever a Credit Party,
either by itself or through an agent, employee, licensee or designee, shall
file an application for the registration of any Copyright, with the United
States
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Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, or any Patent or Trademark with the
United States Patent and Trademark Office or any similar office or agency
in any other country or any political subdivision thereof, a Credit Party
promptly shall report such filing to the Agent and provide a copy of such
application for registration to the Agent within ten (10) Business Days of
such reporting. Upon request of the Agent, a Credit Party shall promptly
provide the Agent with (i) a listing of all such applications (together
with a listing of the issuance of registrations or letters on present
applications), which new applications and issued registrations or letters
shall be subject to the terms and conditions hereunder, and (ii) (A) with
respect to Copyrights, a duly executed amendment or modification to the
Notice of Security Interest in Copyrights, (B) with respect to Patents and
Trademarks, a duly executed amendment or modification to the Notice of
Security Interest in Patents and Trademarks, or (C) such other duly
executed documents as the Agent may request in a form acceptable to counsel
for the Agent and suitable for recording to evidence the first priority
perfected security interest in the Copyright, Patent or Trademark which is
the subject of such new application to the Agent as provided in Section 2
hereof, and subject to all the terms hereof.
(k) COVENANTS RELATING TO THE ASSIGNED AGREEMENTS.
(i) Each Credit Party shall at its expense (i) perform and
observe all the terms and provisions of the Assigned Agreements to be
performed or observed by such Credit Party, maintain the Assigned
Agreements of such Credit Party in full force and effect, enforce the
Assigned Agreements of such Credit Party in accordance with their
respective terms, and take all such action to such end as may be from
time to time reasonably requested by the Agent.
(ii) (A) Furnish to the Agent copies of all notices, requests
and other documents received by such Credit Party under or pursuant to
the Material Contracts, and such other information and reports
regarding the Material Contracts and (B) make to any other party to
any Material Contracts such demands and requests for information and
reports or for action as a Credit Party is entitled to make
thereunder.
(iii) Each Credit Party shall not (A) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral, or create or permit to
exist any lien, security interest, option or other charge or
encumbrance upon or with respect to any of the Collateral, except for
the assignment and security interest under this Security Agreement,
(B) cancel or terminate any Assigned Agreement of such Credit Party or
consent to or accept any
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cancellation or termination thereof; (C) amend or otherwise modify any
Assigned Agreement of such Credit Party or give any consent, waiver or
approval thereunder; (D) waive any default under or breach of any
Assigned Agreement of such Credit Party; or (E) take any other action
in connection with any Assigned Agreement of such Credit Party which
would impair the value of the interest or rights of such Credit Party
thereunder or which would impair the interests or rights of the Agent.
(iv) Obtain the written consent of (A) Valmont Inc. to the
collateral assignment of the Valmont License Agreement relative to
pHisoDerm (as hereinafter defined) by Signal within ninety (90) days
of the date hereof and (B) The Proctor & Gamble Company to the
collateral assignment of the Norwich Contract (as hereinafter defined)
by the Borrower within forty-five (45) days of the date hereof in form
and substance reasonably satisfactory to the Agent.
(l) NEW AGREEMENTS. Whenever a Credit Party shall enter into an
Assigned Assignment, such Credit Party shall, as soon as available and in
any event within 45 days after the close of the next succeeding fiscal
quarter, provide the Agent with a true and complete copy of such Assigned
Agreement and such other related documents as the Agent may request in a
form reasonably acceptable to the Agent. Upon request of the Agent, a
Credit Party will do any act (including, but not limited to, the actions
set forth in SECTION 7.9 of the New Credit Agreement and SECTION 7.9 of the
Working Capital Credit Agreement), or execute any additional documents
required by the Agent (subject to the limitations set forth in SECTION 7.9
of the New Credit Agreement and SECTION 7.9 of the Working Capital Credit
Agreement) to ensure to the Agent the effectiveness and first priority of
its security interest in such Assigned Agreement.
(m) OTHER ADDITIONAL COLLATERAL. If, subsequent to the Closing Date,
a Credit Party shall acquire any securities instruments, chattel paper or
other personal property required to be delivered to the Agent as Collateral
hereunder, the Credit Party shall immediately notify the Agent of same and
take such action (including, but not limited to, the actions set forth in
SECTION 7.9 of the New Credit Agreement and SECTION 7.9 of the Working
Capital Credit Agreement) as requested by the Agent and at its own expense
(subject to the limitations set forth in SECTION 7.9 of the New Credit
Agreement and SECTION 7.9 of the Working Capital Credit Agreement) to
ensure that the Agent has a first priority perfected Lien in all personal
property of the Credit Parties whether now owned or hereafter acquired,
subject only to Permitted Liens.
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7. ADVANCES BY LENDERS. On failure of any Credit Party to perform any of
the covenants and agreements contained herein, the Agent or the Lenders may, at
its sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Agent or the Lenders may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by the Credit
Parties on a joint and several basis (subject to Section 27 hereof) promptly
upon notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate provided in SECTION 3.1(b) of the New Credit Agreement for
Revolving Loans that are Base Rate Loans. No such performance of any covenant
or agreement by the Agent or the Lenders on behalf of any Credit Party, and no
such advance or expenditure therefor, shall relieve the Credit Parties of any
default under the terms of this Security Agreement or the other Credit Documents
or Working Capital Credit Documents. The Agent or the Lenders may make any
payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent the Agent or the Lenders are aware that such payment
is being contested in good faith by a Credit Party in appropriate proceedings
and against which adequate reserves are being maintained in accordance with
GAAP.
8. EVENTS OF DEFAULT.
The occurrence of an event which under the New Credit Agreement or Working
Capital Credit Agreement would constitute an Event of Default shall be an Event
of Default hereunder (an "EVENT OF DEFAULT").
9. REMEDIES.
(a) GENERAL REMEDIES. Upon the occurrence of an Event of Default and
during continuation thereof, the Agent and the Lenders shall have, in
addition to the rights and remedies provided herein, in the Credit
Documents, Working Capital Credit Documents or by law (including, but not
limited to, the rights and remedies set forth in the UCC or equivalent
legislation of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC to the extent
permitted by law (regardless of whether the UCC is the law of the
jurisdiction where the rights and remedies are asserted and regardless of
whether the UCC applies to the affected Collateral), and further, the Agent
may, with or without judicial process or the aid and
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assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by the
Credit Parties, take possession of the Collateral, (ii) dispose of any
Collateral on any such premises, (iii) require the Credit Parties to
assemble and make available to the Agent at the expense of the Credit
Parties any Collateral at any place and time designated by the Agent which
is reasonably convenient to both parties, (iv) remove any Collateral from
any such premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice,
hearing or process of law, all of which each of the Credit Parties hereby
waives to the fullest extent permitted by law, at any place and time or
times, sell and deliver any or all Collateral held by or for it at public
or private sale, by one or more contracts, in one or more parcels, for
cash, upon credit or otherwise, at such prices and upon such terms as the
Agent deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). Each of the Credit Parties acknowledges
that any private sale referenced above may be at prices and on terms less
favorable to the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sale shall be deemed to have been made in a commercially
reasonable manner. In addition to all other sums due the Agent and the
Lenders with respect to the Secured Obligations, the Credit Parties shall
pay the Agent and each of the Lenders all reasonable costs and expenses
incurred by the Agent or any such Lender, including, but not limited to,
reasonable attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by or against the Agent
or the Lenders or the Credit Parties concerning any matter arising out of
or connected with this Security Agreement, any Collateral or the Secured
Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case concerning a Credit Party under the
Bankruptcy Code. To the extent the rights of notice cannot be legally
waived hereunder, each Credit Party agrees that any requirement of
reasonable notice shall be met if such notice is personally served on or
mailed, postage prepaid, to the Borrower in accordance with the notice
provisions of SECTION 11.1 of the New Credit Agreement at least 10 days
before the time of sale or other event giving rise to the requirement of
such notice. The Agent and the Lenders shall not be obligated to make any
sale or other disposition of the Collateral regardless of notice having
been given. To the extent permitted by law, any Lender may be a purchaser
at any such sale. To the extent permitted by applicable law, each of the
Credit Parties hereby waives all of its rights of redemption with respect
to any such sale. Subject to the provisions of applicable law, the Agent
and the Lenders may postpone or cause the postponement of the sale of all
or any portion of the Collateral by announcement at the time and place of
such sale, and such sale
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may, without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Agent and the
Lenders may further postpone such sale by announcement made at such time
and place.
(b) REMEDIES RELATING TO RECEIVABLES. Upon the occurrence of an
Event of Default and during the continuation thereof, whether or not the
Agent has exercised any or all of its rights and remedies hereunder, (i)
each Credit Party will promptly upon request of the Agent instruct all
account debtors to remit all payments in respect of the receivables to a
mailing location selected by the Agent and (ii) the Agent or its designee
(A) may notify any Credit Party's customers and account debtors that the
receivables of such Credit Party have been assigned to the Agent or of the
Agent's security interest therein, and (B) may (either in its own name or
in the name of a Credit Party or both) demand, collect (including without
limitation by way of a lockbox arrangement), receive, take receipt for,
sell, sue for, compound, settle, compromise and give acquittance for any
and all amounts due or to become due on receivables, and, in the Agent's
discretion, file any claim or take any other action or proceeding to
protect and realize upon the security interest of the Agent and the Lenders
in the receivables. Each Credit Party acknowledges and agrees that the
proceeds of its receivables remitted to or on behalf of the Agent in
accordance with the provisions hereof shall be solely for the Agent's own
convenience and that such Credit Party shall not have any right, title or
interest in such accounts or in any such other amounts except as expressly
provided herein. The Agent and the Lenders shall have no liability or
responsibility to any Credit Party for acceptance of a check, draft or
other order for payment of money bearing the legend "payment in full" or
words of similar import or any other restrictive legend or endorsement or
be responsible for determining the correctness of any remittance. Each
Credit Party hereby agrees to indemnify the Agent and the Lenders from and
against all liabilities, damages, losses, actions, claims, judgments,
costs, expenses, charges and reasonable attorneys' fees suffered or
incurred by the Agent or the Lenders because of the maintenance of the
foregoing arrangements except as relating to or arising out of the gross
negligence or willful misconduct of the Agent or a Lender or its officers,
employees or agents. The foregoing indemnity shall survive the repayment
of the Secured Obligations and the termination of the Commitments.
(c) REMEDIES RELATING TO ASSIGNED AGREEMENTS. Upon the occurrence of
an Event of Default and during the continuation thereof, (i) the Agent, in
addition to the rights and remedies provided herein, may exercise any and
all rights and remedies of the Credit Parties under or in connection with
the Assigned Agreements, including, without limitation, any and all rights
of the Credit Parties to demand or otherwise require payment of any amount
under, or performance of any provision of the Assigned Agreements, and (ii)
all payments received by the
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Credit Parties under or in connection with any Assigned Agreement shall be
received in trust for the benefit of the Agent, shall be segregated from
other funds of any Credit Party and shall be forth with paid over to the
Agent in the same form as so received (with any necessary indorsement).
(d) ACCESS. In addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default and during the continuance thereof,
the Agent shall have the right to enter and remain upon the various
premises of the Credit Parties without cost or charge to the Agent, and use
the same, together with materials, supplies, books and records of the
Credit Parties for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition, the
Agent may remove Collateral, or any part thereof, from such premises and/or
any records with respect thereto, in order to effectively collect or
liquidate such Collateral.
(e) NONEXCLUSIVE NATURE OF REMEDIES. Failure by the Agent or the
Lenders to exercise any right, remedy or option under this Security
Agreement or any other Credit Document or Working Capital Credit Document
or as provided by law, or any delay by the Agent or the Lenders in
exercising the same, shall not operate as a waiver of any such right,
remedy or option. No waiver hereunder shall be effective unless it is in
writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated, which in the case
of the Agent or the Lenders shall only be granted as provided herein. To
the extent permitted by law, neither the Agent, the Lenders nor any party
acting as attorney for the Agent or the Lenders shall be liable hereunder
for any acts or omissions or for any error of judgment or mistake of fact
or law other than their gross negligence or willful misconduct hereunder.
The rights and remedies of the Agent and the Lenders under this Security
Agreement shall be cumulative and not exclusive of any other right or
remedy which the Agent or the Lenders may have under this Agreement shall
be cumulative and not exclusive of any other right or remedy which the
Agent or the Lenders may have.
(f) RETENTION OF COLLATERAL. The Agent may, after providing the
notices required by Section 9-505(2) of the UCC and otherwise complying
with the requirements of applicable law of the relevant jurisdiction, to
the extent the Agent is in possession of any of the Collateral, retain the
Collateral in satisfaction of the Secured Obligations. Unless and until
the Agent or the Lenders shall have provided such notices, however, the
Agent or the Lenders shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.
(g) DEFICIENCY. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all
- 18 -
<PAGE>
amounts to which the Agent or the Lenders are legally entitled, (subject to
Section 27 hereof) the Credit Parties shall be jointly and severally liable
for the deficiency, together with interest thereon at the default rate
specified in SECTION 3.1(b) of the New Credit Agreement for Revolving Loans
that are Base Rate Loans, together with the costs of collection and the
reasonable fees of any attorneys employed by the Agent to collect such
deficiency. Any surplus remaining after the full payment and satisfaction
of the Secured Obligations shall be returned to the Credit Parties or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.
10. RIGHTS OF THE AGENT.
(a) POWER OF ATTORNEY. In addition to other powers of attorney
contained herein, each Credit Party hereby designates and appoints the
Agent, on behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Credit Party, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and
give discharges and releases concerning the Collateral of such
Credit Party, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court
for the purposes of collecting any Collateral of such Credit
Party and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought
and, in connection therewith, give such discharge or release as
the Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Collateral of such Credit Party;
(v) to direct any parties liable for any payment under
any of the Collateral to make payment of any and all monies due
and to become due thereunder directly to the Agent or as the
Agent shall direct;
(vi) to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any
time in respect of or arising out of any Collateral of such
Credit Party;
- 19 -
<PAGE>
(vii) to sign and endorse any drafts, assignments,
verifications, notices and other documents relating to the
Collateral of such Credit Party;
(viii) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection therewith, to
give such discharges or releases as the Agent may deem reasonably
appropriate;
(ix) receive, open and dispose of mail addressed to a
Credit Party and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or storage
of the goods giving rise to the Collateral of such Credit Party
on behalf of and in the name of such Credit Party, or securing,
or relating to such Collateral;
(x) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in respect
of, any Collateral or the goods or services which have given rise
thereto, as fully and completely as though the Agent were the
absolute owner thereof for all purposes;
(xi) adjust and settle claims under any insurance
policy relating thereto;
(xii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine necessary
in order to perfect and maintain the security interests and liens
granted in this Security Agreement and in order to fully
consummate all of the transactions contemplated therein;
(xiii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
(xiv) do and perform all such other acts and things as
the Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (A) for so long as any of the Secured Obligations remain
outstanding, any Credit Document or Working
- 20 -
<PAGE>
Capital Credit Document is in effect or any Loan or Working Capital
Revolving Loan shall remain outstanding and (B) until all of the
Commitments shall have been terminated. The Agent shall be under no duty
to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Agent in this
Security Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any act or omission
or for any error of judgment or any mistake of fact or law in its
individual capacity or its capacity as attorney-in-fact except acts or
omissions resulting from its gross negligence or willful misconduct. This
power of attorney is conferred on the Agent solely to protect, preserve and
realize upon its security interest in the Collateral.
(b) PERFORMANCE BY THE AGENT OF OBLIGATIONS. If any Credit Party
fails to perform any agreement or obligation contained herein, the Agent
itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be
payable by the Credit Parties on a joint and several basis pursuant to
Section 13 hereof.
(c) ASSIGNMENT BY THE AGENT. The Agent may from time to time assign
the Collateral and any portion thereof to a successor Agent, and the
assignee shall be entitled to all of the rights and remedies of the Agent
under this Security Agreement in relation thereto.
(d) THE AGENT'S DUTY OF CARE. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the
Agent hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the Credit
Parties shall be responsible for preservation of all rights in the
Collateral, and the Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Credit Parties. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment equal to that which the Agent accords
its own property, it being understood that the Agent shall not have
responsibility for taking any necessary steps to preserve rights against
any parties with respect to any of the Collateral.
11. RIGHTS OF REQUIRED LENDERS. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
12. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent or
any of the Lenders in cash or its equivalent, will be applied in reduction of
the Secured Obligations
- 21 -
<PAGE>
in the order set forth in SECTION 3.8 of the New Credit Agreement, and each
Credit Party irrevocably waives the right to direct the application of such
payments and proceeds and acknowledges and agrees that the Agent shall have the
continuing and exclusive right to apply and reapply any and all such payments
and proceeds in the Agent's sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.
13. COSTS OF COUNSEL. At all times hereafter, the Credit Parties agree to
promptly pay upon demand any and all reasonable costs and expenses of (a) the
Agent or the Lenders, as required under SECTION 11.5 of the New Credit Agreement
and SECTION 11.5 of the Working Capital Credit Agreement and (b) of the Agent as
necessary to protect the Collateral or to exercise any rights or remedies under
this Security Agreement or with respect to any Collateral. All of the foregoing
costs and expenses shall constitute Secured Obligations hereunder.
14. CONTINUING AGREEMENT.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as the New Credit
Agreement or Working Capital Credit Agreement is in effect or any amounts
payable thereunder or under any other Credit Document or Working Capital
Credit Document or any Loan or Working Capital Revolving Loan shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the indemnities and
the representations and warranties set forth in the Credit Documents).
Upon such payment and termination, this Security Agreement shall be
automatically terminated and the Agent for the benefit of the Lenders
shall, upon the request and at the expense of the Credit Parties, forthwith
release all of its liens and security interests hereunder and shall execute
and deliver all UCC termination statements and/or other documents
reasonably requested by the Credit Parties evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Agent or any Lender in defending and
enforcing such reinstatement shall be deemed to be included as a part of
the Secured Obligations.
- 22 -
<PAGE>
15. AMENDMENTS; WAIVERS; MODIFICATIONS. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in SECTION 11.6 of the New Credit Agreement or
SECTION 11.6 of the Working Capital Credit Agreement.
16. SUCCESSORS IN INTEREST. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Credit Party, its successors and assigns and shall inure, together with the
rights and remedies of the Agent and the Lenders hereunder, to the benefit of
the Agent and the Lenders and their successors and assigns; PROVIDED, HOWEVER,
that none of the Credit Parties may assign its rights or delegate its duties
hereunder without the prior written consent of each Lender or the Required
Lenders, as required by the New Credit Agreement or Working Capital Credit
Agreement.
17. NO LIABILITY TO THE AGENT OR LENDERS. To the fullest extent
permitted by law, each Credit Party hereby releases the Agent in its individual
capacity or its capacity as attorney-in-fact, each Lender in its individual
capacity or its capacity as attorney-in-fact, their respective successors and
assigns and any party acting as attorney for the Agent or the Lenders, from any
liability for any act or omission or for any error of judgment or mistake of
fact or law relating to this Security Agreement or the Collateral, except for
any liability arising from the gross negligence or willful misconduct of the
Agent, or such Lender, or its officers, employees or agents.
18. NOTICES. All notices required or permitted to be given under this
Security Agreement shall be in conformance with SECTION 11.1 of the New Credit
Agreement.
19. COUNTERPARTS. This Security Agreement may be executed in any number
of counterparts, each of which where 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 Security Agreement to produce or
account for more than one such counterpart.
20. HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
21. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Security Agreement may be brought in the
courts of the State of North Carolina or of the United States for the
Western District of North Carolina and, by execution and delivery of this
Security Agreement, each Credit Party
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<PAGE>
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Credit Party further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to it at the address for notices pursuant to SECTION 11.1 of the New Credit
Agreement, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Agent to serve process in any
other manner permitted by law or to commence legal proceedings or to
otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Security
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
22. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS SECURITY AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
23. SEVERABILITY. If any provision of any of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
24. ENTIRETY. This Security Agreement and the other Credit Documents and
Working Capital Credit Documents represent the entire agreement of the parties
hereto and thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any commitment letters or correspondence relating
to the Credit Documents and Working Capital Credit Documents or the transactions
contemplated herein and therein.
25. SURVIVAL. All representations and warranties of the Credit Parties
hereunder shall survive the execution and delivery of this Security Agreement
and the other Credit Documents and Working Capital Credit Documents, the
delivery of the Notes and the making of the Loans and Working Capital Revolving
Loans under the New Credit Agreement and Working Capital Credit Agreement.
26. OTHER SECURITY. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Credit Party), or by
a guarantee, endorsement
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<PAGE>
or property of any other Person, then the Agent and the Lenders shall have the
right to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Agent and the Lenders shall have the
right, in their sole discretion, to determine which rights, security, liens,
security interests or remedies the Agent and the Lenders shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Agent's and the
Lenders' rights or the Secured Obligations under this Security Agreement or
under any other of the Credit Documents or Working Capital Credit Documents.
27. JOINT AND SEVERAL OBLIGATIONS OF CREDIT PARTIES.
(a) Subject to clause (c) of this Section 27, each of the Credit
Parties is accepting joint and several liability hereunder in consideration
of the financial accommodation to be provided by the Lenders under the New
Credit Agreement and Working Capital Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Credit Parties and in
consideration of the undertakings of each of the Credit Parties to accept
joint and several liability for the obligations of each of them.
(b) Subject to clause (c) of this Section 27, each of the Credit
Parties jointly and severally hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Credit Parties with respect to the payment and
performance of all of the Secured Obligations arising under this Security
Agreement and the other Credit Documents and Working Capital Credit
Documents, it being the intention of the parties hereto that all the
Secured Obligations shall be the joint and several obligations of each of
the Credit Parties without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents and Working Capital Credit Documents,
to the extent the obligations of a Guarantor shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation,
because of any applicable state, provincial or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation,
the Bankruptcy Code).
[remainder of page intentionally left blank]
- 25 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: Chattem, Inc.,
a Tennessee corporation
By: /s/ Robert E. Bosworth
-----------------------------
Name: Robert E. Bosworth
---------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
GUARANTORS: Signal Investment & Management Co.,
a Delaware corporation
By: /s/ Robert E. Bosworth
-----------------------------
Name: Robert E. Bosworth
---------------------------
Title: PRESIDENT
---------------------------
- 26 -
<PAGE>
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A., as Agent
By /s/ Nancy B. Chastain
------------------------------
Name: Nancy B. Chastain
-----------------------------
Title: Senior Vice President
-----------------------------
- 27 -
<PAGE>
SCHEDULE 5(d)
to
Security Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.,
as Agent
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE
OR USE OF TRADENAMES
CHATTEM CONSUMER PRODUCTS
- 28 -
<PAGE>
SCHEDULE 5(f)
to
Security Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.,
as Agent
NONASSIGNABLE CONTRACTS
1. License Agreement by and between Valmont Inc. and Signal Investment &
Management Co. dated as of June 17, 1994 (the "Valmont License
Agreement); and
2. Manufacturing Agreement by and between The Proctor & Gamble Company
and Chattem, Inc. (the "Norwich Contract").
- 29 -
<PAGE>
EXHIBIT 6(f)-1
to
Security Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.,
as Agent
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of April __,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "SECURITY AGREEMENT") by and among the Credit Parties party thereto
(each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and NationsBank,
N.A., as Agent (the "AGENT") for the lenders referenced therein (the "LENDERS"),
the undersigned Credit Party has granted a continuing security interest in and
continuing lien upon, the copyrights and copyright applications shown below and
all actions for infringement concerning the foregoing to the Agent for the
ratable benefit of the Lenders:
COPYRIGHTS
- -------------------------------------------------------------------------------
Copyright Description of Date of
Registration No. Registered Copyright Registration
- ---------------- -------------------- ------------
Copyright Applications
- -------------------------------------------------------------------------------
Copyright
Application No. Description of Copyright Filing Date
- --------------- ------------------------ -----------
- 30 -
<PAGE>
The security interest in the attached copyrights and copyright applications can
be terminated only in accordance with the terms of the Security Agreement.
Very truly yours,
----------------------------------
[Credit Party]
By
---------------------------------
Name
-------------------------------
Title
------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By
-------------------------------
Name
-----------------------------
Title
----------------------------
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<PAGE>
STATE OF
----------------------
COUNTY OF
---------------------
I, ___________________________________, a Notary Public of the County and
State aforesaid, certify that __________________, personally came before me this
day and acknowledged that (s)he is ____________Secretary of ___________________,
a _______________________ corporation, and that by authority duly given and as
the act of the corporation, the foregoing instrument was signed in its name by
its _________ President.
WITNESS my hand and official stamp or seal, this _____ day of ___________,
199_.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
(Notary Seal)
- 32 -
<PAGE>
STATE OF
----------------------
COUNTY OF
---------------------
I, ___________________________________, a Notary Public of the County and
State aforesaid, certify that __________________, personally came before me this
day and acknowledged that (s)he is _________ of NationsBank, N.A., a national
banking association, and that by authority duly given and as the act of the
association, the foregoing instrument was signed in its name by its _________
Vice President.
WITNESS my hand and official stamp or seal, this _____ day of ___________,
199_.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
(Notary Seal)
- 33 -
<PAGE>
EXHIBIT 6(f)-2
to
Security Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.,
as Agent
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS AND TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of April __,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "SECURITY AGREEMENT") by and among the Credit Parties party thereto
(each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and NationsBank,
N.A., as Agent (the "AGENT") for the lenders referenced therein (the "LENDERS"),
the undersigned Credit Party has granted a continuing security interest in and
continuing lien upon, (i) the letters patent and patent applications (the
"Patents") and trademarks, service marks and related registrations and
applications (the "Trademarks") shown below to the Agent for the ratable benefit
of the Lenders, together with (ii)(A) any and all improvement patents, reissues,
reexaminations, patents of addition, renewals, extensions, continuations,
continuations-in-part, substitutes, provisionals and divisions concerning the
Patents and (B) the goodwill and assets of the business symbolized by such
Trademarks and (iii) all actions for infringement concerning the foregoing
including the right to sue for and to recover and retain all damages and profits
arising from past infringement:
PATENTS
- -------------------------------------------------------------------------------
Date of
Patent No. Description of Patent Patent
- ---------- --------------------- -------
- 34 -
<PAGE>
Patent Applications
- -------------------------------------------------------------------------------
Patent
Application No. Description of Patent Filing Date
- --------------- --------------------- -----------
TRADEMARKS
- -------------------------------------------------------------------------------
Trademark Date of
Registration No. Registered Trademark Registration
- ---------------- -------------------- ------------
Trademark Applications
- -------------------------------------------------------------------------------
Trademark
Application No. Trademark Filing Date
- --------------- --------- -----------
The security interest in the attached patents, patent applications, trademarks
and trademark applications can be terminated only in accordance with the terms
of the Security Agreement.
Very truly yours,
----------------------------------
[Credit Party]
By
---------------------------------
Name
-------------------------------
Title
------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By
-------------------------------
Name
-----------------------------
Title
----------------------------
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<PAGE>
STATE OF
----------------------
COUNTY OF
---------------------
I, ___________________________________, a Notary Public of the County and
State aforesaid, certify that __________________, personally came before me this
day and acknowledged that (s)he is ____________Secretary of
___________________________, a _______________________ corporation, and that by
authority duly given and as the act of the corporation, the foregoing instrument
was signed in its name by its _________ President.
WITNESS my hand and official stamp or seal, this _____ day of ___________,
199_.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
(Notary Seal)
- 36 -
<PAGE>
STATE OF
----------------------
COUNTY OF
---------------------
I, ___________________________________, a Notary Public of the County and
State aforesaid, certify that __________________, personally came before me this
day and acknowledged that (s)he is _________ of NationsBank, N.A., a national
banking association, and that by authority duly given and as the act of the
association, the foregoing instrument was signed in its name by its _________
Vice President.
WITNESS my hand and official stamp or seal, this _____ day of ___________,
199_.
---------------------------------
Notary Public
My Commission Expires:
- ----------------------
(Notary Seal)
- 37 -
<PAGE>
AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
THIS AIRCRAFT MORTGAGE AND SECURITY AGREEMENT (this "Agreement") is entered
into as of April 29, 1996 between Chattem, Inc., a Tennessee corporation (the
"BORROWER") and NationsBank, N.A., in its capacity as agent (in such capacity,
the "AGENT") for the new credit agreement lenders (the "NEW CREDIT AGREEMENT
LENDERS") from time to time party to the New Credit Agreement described below
and the working capital lenders (the "WORKING CAPITAL LENDERS") from time to
time party to the Working Capital Credit Agreement described below (the New
Credit Agreement Lenders, the Working Capital Lenders and any Affiliates of such
New Credit Agreement Lenders or Working Capital Lenders that enter into Hedging
Agreements with a Credit Party may be referred to collectively herein as the
"LENDERS").
RECITALS
WHEREAS, pursuant to (i) that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "NEW CREDIT AGREEMENT"), among the Borrower, the Domestic Subsidiaries
of the Borrower, the New Credit Agreement Lenders and the Agent, the New Credit
Agreement Lenders under the New Credit Agreement have agreed to provide the
Borrower with a $55,000,000 credit facility and (ii) pursuant to that certain
Working Capital Credit Agreement dated as of the date hereof (as amended,
modified, extended, renewed or replaced from time to time, the "WORKING CAPITAL
CREDIT AGREEMENT"), among the Borrower, the Domestic Subsidiaries of the
Borrower, the Working Capital Lenders and the Agent, the Working Capital Lenders
have agreed to provide the Borrower with an additional $6,500,000 credit
facility;
WHEREAS, the Lenders have required, as a condition precedent to making
Extensions of Credit pursuant to the terms of the New Credit Agreement and
Working Capital Credit Agreement, that the Borrower secure its obligations under
the New Credit Agreement, the Working Capital Credit Agreement and the other
Credit Documents and Working Capital Credit Documents in accordance with the
terms of this Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS. For purposes hereof, the following terms shall have
the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed
<PAGE>
to control a corporation if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, First Union Capital Partners,
Inc. shall not be deemed an Affiliate of the Borrower.
"ASSIGNMENT OF CASH COLLATERAL ACCOUNT" means the assignment of cash
collateral account and security agreement by and between the Borrower and
the Agent dated as of the date hereof.
"BASE RATE" means, for any day, the rate per annum (rounded upwards,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Rate in effect on such day PLUS 1/2 of 1%
or (b) the Prime Rate in effect on such day. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
manifest error) that it is unable after due inquiry to ascertain the
Federal Funds Rate for any reason, including the inability or failure of
the Agent to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on
the effective date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
"BASE RATE LOAN" means any Loan bearing interest at a rate determined
by reference to the Base Rate.
"COLLATERAL DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Mortgage Documents, the Assignment of Cash Collateral
Account and such other documents executed and delivered in connection with
the attachment and perfection of the Lenders' security interests in the
assets of the Credit Parties, including, without limitation, UCC financing
statements and patent and trademark filings.
"COMMITMENTS" means the Revolving Committed Amount, the Working
Capital Committed Amount, the Tranche A Term Loan Committed Amount and the
Tranche B Term Loan Committed Amount.
"CREDIT DOCUMENTS" means this Credit Agreement, the Notes, the
Collateral Documents, the Fee Letter and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
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"CREDIT PARTIES" means the Borrower and the Guarantors and "CREDIT
PARTY" means any one of them.
"DEFAULTING LENDER" means, at any time, any Lender that, at such
time (a) has failed to make a Loan or purchase a Participation Interest
required pursuant to the terms of this Credit Agreement or Working Capital
Credit Agreement, (b) has failed to pay to the Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Credit Agreement
or Working Capital Credit Agreement or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar official.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries of the Borrower that
are domiciled, incorporated or organized under the laws of any state of the
United States or the District of Columbia.
"EXTENSION OF CREDIT" means, as to any Lender, the making of a Loan by
such Lender (or a participation therein by a Lender).
"FEDERAL FUNDS RATE" means for any day the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the business
day next succeeding such day; provided that (a) if such day is not a
business day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding business day and (b) if no such
rate is so published on such next preceding business day, the Federal Funds
Rate for such day shall be the average rate quoted to the Agent on such day
on such transactions as determined by the Agent.
"FEE LETTER" means that certain letter agreement, dated as of April
10, 1996, between the Agent and the Borrower, as amended, modified,
supplemented or replaced from time to time.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3 of the
Credit Agreement.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local, provincial
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
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"HEDGING AGREEMENTS" means any interest rate protection agreement,
foreign currency agreement, commodity purchase or option agreement or other
interest or exchange rate or commodity price hedging agreements with a
Credit Party and any Lender, or any Affiliate of a Lender.
"LOAN" or "LOANS" means the Revolving Loans, the Tranche A Term Loans
and/or the Tranche B Term Loans (or a portion of any Revolving Loan, the
Tranche A Term Loans or the Tranche B Term Loans), individually or
collectively, as appropriate.
"MORTGAGE DOCUMENTS" means the mortgages and such other documents and
agreements executed or delivered in connection with each real property
asset owned by a Credit Party.
"NOTE" or "NOTES" means the Revolving Loan Notes, Working Capital
Revolving Loan Notes, the Tranche A Term Loan Notes and/or the Tranche B
Term Loan Notes, individually or collectively, as appropriate.
"PERSON" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any Governmental Authority.
"PARTICIPATION INTEREST" means the Extension of Credit by a Lender by
way of the issuance of or a purchase of a participation in any Loans.
"PLEDGE AGREEMENTS" means the Pledge Agreements, executed and
delivered by each of the applicable Credit Parties in favor of the Agent,
for the benefit of the Lenders, to secure their obligations under the
Credit Documents, as amended, modified, extended, renewed or replaced from
time to time.
"PRIME RATE" means the per annum rate of interest established from
time to time by the Agent as its Prime Rate. Any change in the interest
rate resulting from a change in the Prime Rate shall become effective as of
12:01 a.m. of the business day on which each change in the Prime Rate is
announced by the Agent. The Prime Rate is a reference rate used by the
Agent in determining interest rates on certain loans and is not intended to
be the lowest rate of interest charged on any extension of credit to any
debtor.
"REQUIRED LENDERS" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 67% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For
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purposes of the preceding sentence, the term "Credit Exposure" as applied
to each Lender shall mean (a) at any time prior to the termination of the
Commitments, the sum of (i) the Revolving Loan Commitment Percentage of
such Lender multiplied by the Revolving Committed Amount, plus (ii) the
Working Capital Revolving Loan Commitment Percentage of such Lender
multiplied by the Working Capital Committed Amount plus (iii) the Tranche A
Term Loan Commitment Percentage of such Lender multiplied by the aggregate
principal amount of Tranche A Term Loans outstanding at such time, plus
(iv) the Tranche B Term Loan Commitment Percentage of such Lender
multiplied by the aggregate principal amount of Tranche B Term Loans
outstanding at such time and (b) at any time after the termination of the
Commitments and the Working Capital Committed Amount, the sum of (i) the
principal balance of the outstanding Loans of such Lender plus (ii) the
principal balance of the outstanding Working Capital Revolving Loans of
such Lender.
"REVOLVING COMMITTED AMOUNT" means SEVENTEEN MILLION FIVE HUNDRED
THOUSAND DOLLARS ($17,500,000) or such lesser amount as the Revolving
Committed Amount may be reduced pursuant to Section 2.1(d) or Section 3.3
of the Credit Agreement.
"REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each Lender, the
percentage identified as its Revolving Loan Commitment Percentage on
SCHEDULE 1.1(a) of the Credit Agreement, as such percentage may be modified
in connection with any assignment made in accordance with the provisions of
Section 11.3 of the Credit Agreement.
"REVOLVING LOANS" means the Revolving Loans made to the Borrower
pursuant to Section 2.1 of the Credit Agreement.
"REVOLVING NOTE" or "REVOLVING NOTES" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving Loans
provided pursuant to Section 2.1, individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time and as
evidenced in the form of EXHIBIT 2.5(a) of the Credit Agreement.
"SECURITY AGREEMENTS" means the Security Agreements, including without
limitation, a separate Security Agreement for aircraft, executed and
delivered by each of the Credit Parties in favor of the Agent for the
benefit of the Lenders to secure their obligations under the Credit
Documents, as such may be amended, modified, extended, renewed, restated or
replaced from time to time.
"SUBSIDIARY" means, as to any Person, (a) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to
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elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, and (b) any partnership, association, joint venture
or other entity in which such person directly or indirectly through
Subsidiaries has more than a 50% equity interest at any time.
"TRANCHE A TERM LOANS" means the term loans made to the Borrower
pursuant to Section 2.2(a) of the Credit Agreement.
"TRANCHE A TERM LOAN COMMITMENT PERCENTAGE" means, for each Lender,
the percentage identified as its Tranche A Term Loan Commitment Percentage
on SCHEDULE 1.1(a) of the Credit Agreement, as such percentage may be
modified in connection with any assignment made in accordance with the
provisions of Section 11.3 of the Credit Agreement.
"TRANCHE A TERM LOAN NOTE" or "TRANCHE A TERM LOAN NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders evidencing
the Tranche A Term Loans provided pursuant to Section 2.2(a) of the Credit
Agreement, individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed or replaced
from time to time as evidenced in the form of EXHIBIT 2.5(b) of the Credit
Agreement.
"TRANCHE B TERM LOAN" means the term loans made to the Borrower
pursuant to Section 2.2(b) of the Credit Agreement.
"TRANCHE B TERM LOAN COMMITMENT PERCENTAGE" means, for each Lender,
the percentage identified as its Tranche B Term Loan Commitment Percentage
on SCHEDULE 1.1(a) of the Credit Agreement, as such percentage may be
modified in connection with any assignment made in accordance with the
provisions of Section 11.3 of the Credit Agreement.
"TRANCHE B TERM LOAN NOTE" or "TRANCHE B TERM LOAN NOTES" means the
promissory notes of the Borrower in favor of each of the Lenders evidencing
the Tranche B Term Loans provided pursuant to Section 2.2(b) of the Credit
Agreement, individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed or replaced
from time to time as evidenced in the form of EXHIBIT 2.5(c) of the Credit
Agreement.
"WORKING CAPITAL COMMITTED AMOUNT" means SIX MILLION FIVE HUNDRED
THOUSAND DOLLARS ($6,500,000) or such lesser amount as the Working Capital
Committed Amount may be reduced pursuant to Section 2.1(d) or Section 3.3
of the Working Capital Credit Agreement.
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"WORKING CAPITAL CREDIT AGREEMENT" means that certain Working Capital
Credit Agreement dated as of the date hereof among the Borrower, the
Guarantors, NationsBank, N.A., as agent, and certain other lenders named
therein, providing for a $6.5 million working capital credit facility in
favor of the Borrower.
"WORKING CAPITAL CREDIT DOCUMENTS" means the Working Capital Credit
Agreement, the Working Capital Revolving Notes, the Collateral Documents,
the Fee Letter and all other related agreements and documents issued or
delivered thereunder or pursuant thereto.
"WORKING CAPITAL REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each
Lender, the percentage identified as its Working Capital Revolving Loan
Commitment Percentage on SCHEDULE 1.1(a) of the Working Capital Credit
Agreement, as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3 of the
Working Capital Credit Agreement.
"WORKING CAPITAL REVOLVING LOANS" means the revolving loans made to
the Borrower pursuant to Section 2.1 of the Working Capital Credit
Agreement.
"WORKING CAPITAL REVOLVING NOTE" or "WORKING CAPITAL REVOLVING NOTES"
means the promissory notes of the Borrower in favor of each of the Lenders
evidencing the Working Capital Revolving Loans provided pursuant to Section
2.1 of the Working Capital Credit Agreement, individually, or collectively,
as appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
2. GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Secured Obligations (as defined in Section 3 hereof), the
Borrower hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against, as and by way
of a first mortgage and security interest having priority over all other
security interests, with power of sale to the extent permitted by applicable
law, the following property and interests in property, whether now owned or
hereafter acquired and wherever located:
(a) Airframe: One (1) Mitsubishi Model MU-300 airframe bearing
FAA Registration No. N306P and Manufacturer's
Serial No. A009SA
(b) Engines: Two (2) Pratt & Whitney Model No. JT 15D-4 engines
bearing Manufacturer's Serial Nos. 70602 and
70610, respectively, each such
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engine having 750 or more rated takeoff horsepower
or the equivalent thereof, whether or not such
engines shall be installed in or attached to the
Airframe or any other airframe.
(c) All appliances, interior and exterior furnishings, equipment,
instruments, parts and accessories now installed in or appurtenant to the above-
described Airframe or Engines and any such property that may in the future be
installed in or affixed to said Airframe or Engines and all replacements,
substitutions of and additions, improvements, accessions and accumulations to
the foregoing and including all records, logs and other materials related
thereto; and
(d) All proceeds from the foregoing.
The property described in subparagraphs 1(a) through 1(c) above is hereinafter
collectively referred to as the "Aircraft." The Aircraft and the property
described in subparagraph 1(d) above are hereinafter collectively referred to as
the "Collateral."
3. SECURITY FOR OBLIGATIONS. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following,
whether now existing or hereafter incurred (the "SECURED OBLIGATIONS"):
(a) the prompt performance and observance by the Borrower of all
obligations of the Borrower under the New Credit Agreement, the Working Capital
Credit Agreement, the Notes, this Agreement and the other Credit Documents and
Working Capital Credit Documents to which the Borrower is a party; and
(b) all other indebtedness, liabilities, obligations and expenses of
any kind or nature owing from the Borrower to any Lender or the Agent in
connection with (i) this Agreement or any other Credit Document or Working
Capital Credit Document, whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired, together with any and all modifications, extensions, renewals
and/or substitutions of any of the foregoing, (ii) collecting and enforcing the
obligations contained in this Section 3 and (iii) all liabilities and
obligations owing from the Borrower to any Lender arising under any Hedging
Agreements.
4. PERFECTION AND MAINTENANCE OF SECURITY INTEREST. In connection with
the grant of the security interest hereunder, Borrower shall execute and deliver
to the Agent, for the benefit of the Lenders, concurrently with the execution of
this Agreement and at any time or times hereafter at the request of the Agent,
all instruments, documents, agreements, amendments, assignments, affidavits,
certificates, financing statements and continuation statements as the Agent may
request, in a form reasonably
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satisfactory to the Agent, to record and perfect, and maintain recorded and
perfected, under federal and state law, the security interest in the Collateral
granted by the Borrower to the Agent. The Borrower hereby agrees that a
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. Furthermore, the Borrower hereby agrees
to pay on demand the cost of any and all filing fees and recording costs which
the Agent deems it necessary to incur to protect and maintain its perfected and
senior security interest in the Collateral. After the occurrence of an Event of
Default (as defined below), Borrower agrees to transfer possession of the
Collateral to a location under the control of the Agent and to take any other
steps deemed necessary by the Agent to maintain the Agent's control of the
Collateral. Borrower agrees to execute all further instruments and documents,
and to take all further action as the Agent may reasonably request.
5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
to the Agent, for the benefit of the Lenders, that so long as any of the Secured
Obligations remain outstanding or any Credit Document or Working Capital Credit
Document is in effect or any Loan or Working Capital Revolving Loan shall remain
outstanding, and until all of the Commitments shall have been terminated:
(a) That it is now the absolute owner of and has good and valid title
to the Aircraft, free and clear of any and all security interests, liens or
other encumbrances.
(b) That the execution, delivery and performance of this Agreement by
the Borrower have been duly authorized by all necessary corporate action.
(c) That the Airframe described in paragraph 2(a) above is not
registered under the laws of any foreign country and that the Borrower is a
citizen of the United States as defined in the Federal Aviation Act of 1958, as
the same may be amended from time to time (the "Act").
(d) That it is a corporation duly organized and existing in good
standing under the laws of the State of Tennessee and its chief executive
offices and principal place of business are located in the State of Tennessee.
6. COVENANTS WITH RESPECT TO THE COLLATERAL. The Borrower, covenants
that so long as any of the Secured Obligations remain outstanding or any Credit
Document or Working Capital Credit Document is in effect or any Loan or Working
Capital Revolving Loan shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) The Borrower will, at all times, keep the Aircraft in good
condition and repair and so as shall be necessary to enable the airworthiness
certification for the Aircraft under the
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Act, which shall include, but shall not be limited to, maintenance and repair in
accordance with the requirements of all appropriate governmental authorities and
the manufacturer's recommendations.
(b) The Borrower will, to the extent required from time to time by
the Agent, keep the Aircraft insured, while on the ground and in flight against
loss or damage by fire, crash and other hazards, casualties and contingencies
for such amounts as the Agent may require and in no event less than the full
insurable value of the Aircraft, such insurance to be obtained from companies
satisfactory to the Agent. Such insurance shall include a "breach of warranty"
endorsement, shall name the Agent as loss payee and be otherwise payable as the
Agent may approve, and shall contain an agreement by the insurer to give the
Agent at least thirty (30) days' notice before any such policy shall be
cancelled or altered. Certified copies of the policies evidencing such
insurance shall be delivered to and held by the Agent. All proceeds payable
under any of said policies shall be payable in any event to the Agent, for the
benefit of the Lenders, and applied in accordance with the terms of Section 7.6
of the Working Capital Credit Agreement and Section 7.6 of the New Credit
Agreement. Should any loss occur with respect to the Aircraft, the Agent is
hereby appointed attorney-in-fact for Borrower to make proof of loss, if
Borrower fails to do so promptly, and to receipt for any sums collected under
such policies. Borrower will promptly, by mail, give notice of loss with
respect to or damage to the Aircraft and will not adjust or settle such loss
without the written consent of the Agent. Borrower hereby grants to the Agent a
continuing senior security interest in and to all of said policies and the
proceeds thereof to secure the Secured Obligations. Borrower will also provide
and maintain comprehensive public liability insurance, naming the Agent as an
additional insured and otherwise payable as the Agent may approve, protecting
against claims for bodily injury, death and/or property damage arising out of
the use, ownership, possession, operation or condition of the Aircraft, in form
and amount and with companies satisfactory to the Agent.
(c) Except as permitted in the New Credit Agreement and Working
Capital Credit Agreement, the Borrower will not sell, lease or permit the use of
the Aircraft to or by any other Person without the prior written consent of the
Agent.
(d) The Borrower will pay all taxes, assessments, registration,
license, filing and other fees and charges imposed by any national, state or
municipal government or other public or airport authority of any nature
whatsoever on this Agreement, on the Aircraft or the ownership, possession or
use thereof, whether the same be payable by or assessed to the Agent or Borrower
and whether assessed during or after the expiration of this Agreement, and will
keep the Aircraft free of any security interests, liens or other encumbrances,
other than the security interest created hereby.
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(e) The Borrower will not make any alterations or modifications to
the Aircraft, install any additional equipment therein or thereon or remove any
equipment therefrom (unless replaced with equipment of equivalent value,
utility, quality, and remaining useful life, assuming such replaced equipment
had been in good operating condition prior to such replacement) without the
prior written consent of the Agent.
(f) The Borrower will not use or operate the Aircraft in any unlawful
manner or in any manner inconsistent with the operating instructions of its
manufacturers or with the terms, conditions and limitations set forth in the
applications for or policies of insurance made or issued pursuant to the terms
of this Agreement.
(g) The Borrower will not remove the Aircraft from the continental
United States or Canada without the prior written consent of the Agent.
(h) The Agent and its designees, in the Agent's discretion, shall
have the right, at all reasonable times, to inspect the Aircraft, and the
Borrower will furnish any information with respect to Borrower and the
Collateral that the Agent may reasonably request.
(i) The Borrower will cause the Aircraft to be and to remain at all
times duly registered in the name of the Borrower in accordance with the Act.
(j) The Borrower will cause all Aircraft records, documents, books
and other materials required by the Act with respect to the Aircraft to be
maintained in accordance therewith.
7. ADVANCES BY LENDERS. On failure of the Borrower to perform any of the
covenants and agreements contained herein, the Agent or the Lenders may, at its
sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Agent or the Lenders may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Agent or the Lenders may make for the
protection of the Collateral or which may be compelled to make by operation of
law. All such sums and amounts so expended shall be repayable by the Borrower
promptly upon notice thereof and demand therefor, shall constitute additional
Secured Obligations and shall bear interest from the date said amounts are
expended at the default rate provided in SECTION 3.1(b) of the New Credit
Agreement for Revolving Loans that are Base Rate Loans. No such performance of
any covenant or agreement by the Agent or the Lenders on behalf of the Borrower,
and no such advance or expenditure therefor, shall relieve the Borrower of any
default under the terms of this Agreement or the other Credit Documents and
Working Capital Credit Documents. The Agent or the Lenders may make any payment
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hereby authorized in accordance with any bill, statement or estimate procured
from the appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent the Agent or the Lenders are aware that such payment is
being contested in good faith by the Borrower in appropriate proceedings and
against which adequate reserves are being maintained in accordance with GAAP.
8. EVENTS OF DEFAULT. The occurrence of an event which under the New
Credit Agreement or Working Capital Credit Agreement would constitute an Event
of Default shall be an Event of Default hereunder (an "EVENT OF DEFAULT").
9. REMEDIES. (a) Upon the occurrence of an Event of Default and during
continuation thereof, the Borrower shall, at the request of the Agent and
without cost or expense to the Agent, assemble the Aircraft at such place or
places as the Agent reasonably designates in its request. In addition to all
other rights and remedies provided herein, by law or in any other contract or
agreement between the parties, the Agent shall have the rights and remedies of a
secured party under the Uniform Commercial Code in effect in the State of North
Carolina (whether or not the UCC applies to the affected Collateral), or other
applicable law, all of which rights and remedies shall be cumulative and none
exclusive, to the extent permitted by law, including, without limitation, the
right to enter and remain upon any premises where the Aircraft may be located,
without cost or expense to the Agent, and to sell, lease or otherwise dispose of
the Aircraft or any part thereof for cash, credit or any combination thereof.
The Agent may purchase all or any part of the Aircraft at public sale (or, if
permitted by law, private sale) and in lieu of actual payment of any such
purchase price, may set off the amount of such price against the Secured
Obligations. The Borrower agrees that, to the extent notice of sale shall be
required by law, the Agent shall give to the Borrower at least ten (10) days'
prior written notice of the time and place of any public sale or of the time and
place at which any private sale or other intended disposition of the Aircraft is
to be made, which ten (10) days' notice shall constitute reasonable
notification; PROVIDED, however, that the Agent may give any shorter notice that
is commercially reasonable under the circumstances. Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) Borrower waives all claims, damages and demands against Agent
arising out of the repossession, retention or sale of any of the Collateral or
any part or parts thereof, except any
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such claims, damages and awards arising out of the gross negligence or willful
misconduct of Agent, as determined in a final non-appealed judgment of a court
of competent jurisdiction.
(c) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.
10. EXERCISE OF REMEDIES. In connection with the exercise of its remedies
pursuant to SECTION 9, Agent may, (i) exchange, enforce, waive or release any
portion of the Collateral and any other security for the Secured Obligations;
(ii) apply such Collateral or security and direct the order or manner of sale
thereof as Agent may, from time to time, determine; and (iii) settle,
compromise, collect or otherwise liquidate any such Collateral or security in
any manner following the occurrence of an Event of Default, without affecting or
impairing Agent's right to take any other further action with respect to any
Collateral or security or any part thereof.
11. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of any Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral received by the Agent or any of
the Lenders in cash or its equivalent, of any sale of, collection from, or other
realization upon all or any part of the Collateral (including, without
limitation, attorneys' and paralegals' fees and legal expenses and after payment
of any amounts payable to Agent pursuant to SECTION 13), will be applied in
reduction of the Secured Obligations in the order set forth in SECTION 3.8 of
the New Credit Agreement, and the Borrower irrevocably waives the right to
direct the application of such payments and proceeds and acknowledges and agrees
that the Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
12. AGENT APPOINTED ATTORNEY-IN-FACT. The Borrower hereby designates and
appoints the Agent, on behalf of the Lenders, and each of its designees or
agents as attorney-in-fact of the Borrower, irrevocably and with full power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of Default:
(i) obtain and adjust insurance required to be paid to the Agent
or any Lender pursuant to the New Credit Agreement or Working Capital
Credit Agreement;
(ii) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Collateral of the Borrower, all as
the Agent may reasonably determine;
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(iii) to commence and prosecute any actions at any court for the
purposes of collecting any Collateral of the Borrower and enforcing any
other right in respect thereof;
(iv) to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Agent may deem
reasonably appropriate;
(v) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the Collateral
of the Borrower;
(vi) to direct any parties liable for any payment under any of
the Collateral to make payment of any and all monies due and to become due
thereunder directly to the Agent or as the Agent shall direct;
(vii) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral of the Borrower;
(viii) to sign and endorse any drafts, assignments, verifications,
notices and other documents relating to the Collateral of the Borrower;
(ix) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem reasonably appropriate;
(x) receive, open and dispose of mail addressed to the Borrower
and endorse checks, notes, drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or documents on behalf of
and in the name of the Borrower, or securing, or relating to such
Collateral;
(xi) sell, assign, transfer, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, the Collateral as
fully and completely as though the Agent were the absolute owner thereof
for all purposes;
(xii) adjust and settle claims under any insurance policy relating
thereto;
(xiii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security
agreements, affidavits, notices and other agreements, instruments and
documents that the Agent may determine necessary in order to perfect and
maintain the security interests and liens granted in this Agreement and in
order to fully consummate all of the transactions contemplated therein;
- 14 -
<PAGE>
(xiv) institute any foreclosure proceedings that the Agent may
deem appropriate; and
(xv) do and perform all such other acts and things as the Agent
may reasonably deem to be necessary, proper or convenient in connection
with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (A) for so long as any of the Secured Obligations remain
outstanding, any Credit Document or Working Capital Credit Document is in
effect or any Loan or Working Capital Revolving Loan shall remain
outstanding and (B) until all of the Commitments shall have been
terminated. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Agent shall not be
liable for any act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as attorney-in-
fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Agent
solely to protect, preserve and realize upon its security interest in the
Collateral.
(b) PERFORMANCE BY THE AGENT OF OBLIGATIONS. If the Borrower fails
to perform any agreement or obligation contained herein, the Agent itself
may perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by
the Borrower.
(c) ASSIGNMENT BY THE AGENT. The Agent may from time to time assign
the Collateral and any portion thereof to a successor Agent, and the
assignee shall be entitled to all of the rights and remedies of the Agent
under this Agreement in relation thereto.
(d) THE AGENT'S DUTY OF CARE. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the
Agent hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the Borrower
shall be responsible for preservation of all rights in the Collateral, and
the Agent shall be relieved of all responsibility for the Collateral upon
surrendering it or tendering the surrender of it to the Borrower. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment equal to that which the Agent accords its own property,
it being understood that the Agent shall not have responsibility for taking
any necessary steps to preserve rights against any parties with respect to
any of the Collateral.
- 15 -
<PAGE>
13. RIGHTS OF REQUIRED LENDERS. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
14. COSTS OF COUNSEL. At all times hereafter, the Borrower agrees to
promptly pay upon demand any and all reasonable costs and expenses of (a) the
Agent or the Lenders, as required under SECTION 11.5 of the New Credit Agreement
and SECTION 11.5 of the Working Capital Credit Agreement and (b) of the Agent as
necessary to protect the Collateral or to exercise any rights or remedies under
this Agreement or with respect to any Collateral. All of the foregoing costs
and expenses shall constitute Secured Obligations hereunder.
15. AMENDMENTS; WAIVERS; MODIFICATIONS. This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged, or terminated
except as set forth in SECTION 11.6 of the New Credit Agreement and SECTION 11.6
of the Working Capital Credit Agreement.
16. NOTICES. All notices required or permitted to be given under this
Agreement shall be in conformance with SECTION 11.1 of the New Credit Agreement.
17. CONTINUING AGREEMENT.
(a) This Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect so long as the New Credit
Agreement or Working Capital Credit Agreement is in effect or any amounts
payable thereunder or under any other Credit Document or Working Capital
Credit Document or any Loan or Working Capital Revolving Loan shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated. Upon termination of this Agreement, the Agent and the Lenders
shall, upon the request and at the expense of the Borrower, forthwith
release all of its liens and security interests hereunder. Notwithstanding
the foregoing all releases and indemnities provided hereunder shall survive
termination of this Agreement.
(b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in
part, of any of the Secured Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law,
all as though such payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is rescinded or must
be restored or returned, all reasonable costs and expenses (including
without limitation any reasonable legal fees and disbursements) incurred by
the Agent or any Lender in defending and enforcing such reinstatement shall
be deemed to be included as a part of the Secured Obligations.
- 16 -
<PAGE>
18. SUCCESSORS IN INTEREST. This Agreement shall create a continuing
security interest in the Collateral and shall be binding upon the Borrower, its
successors and assigns and shall inure, together with the rights and remedies of
the Agent and the Lenders hereunder, to the benefit of the Agent and the Lenders
and their successors and assigns; PROVIDED, HOWEVER, that the Borrower may not
assign its rights or delegate its duties hereunder without the prior written
consent of each Lender or the Required Lenders, as required by the Credit
Agreement.
19. NO LIABILITY TO THE AGENT OR LENDERS. To the fullest extent
permitted by law, the Borrower hereby releases the Agent in its individual
capacity or its capacity as attorney-in-fact, each Lender in its individual
capacity or its capacity as attorney-in-fact, their respective successors and
assigns and any party acting as attorney for the Agent or the Lenders, from any
liability for any act or omission or for any error of judgment or mistake of
fact or law relating to this Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct of the Agent,
or such Lender, or its officers, employees or agents.
20. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of
the State of North Carolina or of the United States for the Western
District of North Carolina and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
such courts. The Borrower further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to SECTION
11.1 of the New Credit Agreement, such service to become effective 30 days
after such mailing. Nothing herein shall affect the right of the Agent to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against the Borrower in any other
jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to in subsection (a) hereof and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
- 17 -
<PAGE>
21. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
22. SEVERABILITY. If any provision of this Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
23. ENTIRETY. This Agreement and the other Credit Documents and Working
Capital Credit Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
the Credit Documents and Working Capital Credit Documents or the transactions
contemplated herein and therein.
24. SURVIVAL. All representations and warranties of the Borrower
hereunder shall survive the execution and delivery of this Agreement and the
other Credit Documents, the delivery of the Notes and the making of the Loans
and Working Capital Revolving Loans under the New Credit Agreement and Working
Capital Credit Agreement.
25. OTHER SECURITY. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by the Borrower), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence of any Event of Default, and the Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Secured Obligations under this
Agreement or under any other of the Credit Documents or Working Capital Credit
Documents.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which where 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 Agreement to produce or account
for more than one such counterpart.
- 18 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Agreement to be
duly executed and delivered as of the date first above written.
CHATTEM, INC., a Tennessee
corporation
By: /s/ Robert E. Bosworth
------------------------------
Name: Robert E. Bosworth
-----------------------------
Title: Executive Vice President
----------------------------
Sworn to and subscribed before me
this 29 day of April, 1996.
Jiam M. Beatty
- ----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ----------------------------------
NATIONSBANK, N.A., as Agent
By /s/ Nancy B. Chastain
------------------------------
Name: Nancy B. Chastain
-----------------------------
Title: Senior Vice President
----------------------------
Sworn to and subscribed before me
this 29 day of April, 1996.
Jiam Beatty
- ---------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ---------------------------------
- 19 -
<PAGE>
ASSIGNMENT OF CASH COLLATERAL ACCOUNT
AND SECURITY AGREEMENT
THIS ASSIGNMENT OF CASH COLLATERAL ACCOUNT AND SECURITY AGREEMENT,
dated as of April 29, 1996 (the "ASSIGNMENT"), by CHATTEM, INC., a Tennessee
corporation (the "BORROWER") to NATIONSBANK, N.A., in its capacity as agent (in
such capacity, the "AGENT") for the new credit agreement lenders (the "NEW
CREDIT AGREEMENT LENDERS") from time to time party to the New Credit Agreement
described below and the working capital lenders (the "WORKING CAPITAL LENDERS")
from time to time party to the Work Capital Credit Agreement described below
(the New Credit Agreement Lenders, the Working Capital Lenders and any
Affiliates of such New Credit Agreement Lenders or Working Capital Lenders that
enter into Hedging Agreements with the Borrower may be referred to collectively
herein as the "LENDERS").
W I T N E S S E T H
WHEREAS, pursuant to (i) that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "NEW CREDIT AGREEMENT"), among the Borrower, the Borrower's Domestic
Subsidiaries, the New Credit Agreement Lenders and the Agent, the New Credit
Agreement Lenders under the New Credit Agreement have agreed to provide the
Borrower with a $55,000,000 credit facility and (ii) pursuant to that certain
Working Capital Credit Agreement dated as of the date hereof (as amended,
modified, extended, renewed or replaced from time to time, the "WORKING CAPITAL
CREDIT AGREEMENT"), among the Borrower, the Borrower's Domestic Subsidiaries,
the Working Capital Lenders and the Agent, the Working Capital Lenders under the
Working Capital Credit Agreement have agreed to provide the Borrower with an
additional $6,500,000 credit facility;
WHEREAS, the Lenders have agreed to make certain loans available to the
Borrower pursuant to the terms of the New Credit Agreement and the Working
Capital Credit Agreement (collectively, the "Credit Agreements") provided the
Borrower (i) maintains on deposit in a demand deposit account with the Agent
cash in an amount sufficient to cause the Borrowing Base to support such loans
pursuant to the terms and conditions set forth in the Credit Agreements and (ii)
pledges to the Agent, for the benefit of the Lenders, such demand deposit
account as collateral security for the Borrower's obligations under the New
Credit Agreement and Working Capital Credit Agreement, the Credit Documents and
the Working Capital Credit Documents; and
WHEREAS, because of the direct benefit to the Borrower of the loans
provided under the Credit Agreements, the Borrower has agreed to make the pledge
of cash collateral account to the Agent, for the benefit of the Lenders, as
provided herein.
<PAGE>
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the New Credit
Agreement and Working Capital Credit Agreement.
2. CREATION OF SECURITY INTEREST AND PLEDGE. To secure the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations (as defined in Section 3 hereof), the
Borrower hereby assigns, mortgages, conveys, hypothecates and delivers to the
Agent, for the benefit of the Lenders, and hereby grants to the Agent, for the
benefit of the Lenders, a continuing security interest in, all right, title and
interest of the Borrower in and to the following (hereinafter referred to
collectively as the "COLLATERAL"):
(a) that certain deposit account no. 2006266718 of the Borrower
maintained with the Agent (hereinafter such deposit account together with
any substitutions therefor and replacements thereof, the "CASH COLLATERAL
ACCOUNT"), and all securities or certificates, whether in certificated or
uncertificated form, investments, accounts, funds or interests in funds,
money or other interests and property now or hereafter held in such Cash
Collateral Account, including specifically without limitation any
Acceptable Investments (as defined in Section 4 hereof), time deposits or
certificates of deposit or equivalent, in whatever currency denominated,
and any and all renewals thereof and replacements therefor; and
(b) all proceeds of the Cash Collateral Account of every kind and
nature, and in whatever form (including cash and non-cash) or currency
denominated, received now or in the future.
3. SECURED OBLIGATIONS. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following,
whether now existing or hereafter incurred (the "SECURED OBLIGATIONS"):
(a) the prompt performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the Notes, this
Assignment and the other Credit Documents and Working Capital Credit
Documents to which the Borrower is a party; and
(b) all other indebtedness, liabilities, obligations and expenses of
any kind or nature owing from the Borrower to any Lender or the Agent in
connection with (i) this Assignment or any other Credit Document or Working
Capital Credit Document, whether now existing or hereafter arising, due or
to become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired, together with any and all modifications,
extensions, renewals and/or substitutions of
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<PAGE>
any of the foregoing, (ii) collecting and enforcing the obligations
contained in this Section 3 and (iii) all liabilities and obligations owing
from the Borrower to any Lender arising under any Hedging Agreements.
4. MAINTENANCE OF CASH COLLATERAL ACCOUNT; PERMITTED INVESTMENTS. (a)
The Borrower covenants and agrees that it will maintain at all times funds on
deposit in the Cash Collateral Account in an amount necessary to satisfy the
requirements of the Credit Agreements, including specifically without
limitation, Section 2.1 of the New Credit Agreement and Section 2.1 of the
Working Capital Credit Agreement; such cash deposit necessary to comply with the
terms of the Credit Agreements being hereinafter referred to as the "REQUIRED
MINIMUM AMOUNT"). The Borrower's failure to maintain the Required Minimum
Amount on deposit in the Cash Collateral Account shall constitute an Event of
Default under the New Credit Agreement and Working Capital Credit Agreement.
(b) The Agent agrees to invest funds on deposit in the Cash Collateral
Account from time to time at the direction of the Borrower in Acceptable
Investments. As used herein the term "Acceptable Investments" means (i)
commercial paper and variable or fixed rate notes issued by, or guaranteed by,
any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P
or P-1 (or the equivalent thereof) or better by Moody's and maturing within 30
days of the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of the Agent with a maturity date of not more than 30
days after the creation thereof, and (iii) tax exempt securities either (A)
carrying a rating of MIG 1 or better or (B) backed by an acceptable irrevocable
letter of credit issued by a bank with a short term commercial paper rating of
A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's, in each case maturing within 30 days of the date
of acquisition.
5. METHOD FOR WITHDRAWAL. In the event the Borrower desires to withdraw
Dollars from the Cash Collateral Account, the following conditions must be
satisfied:
(a) NOTICE. The Borrower shall submit written notice to the Agent
setting forth the amount requested to be withdrawn from the Cash Collateral
Account;
(b) CERTIFICATE. The Borrower shall have delivered a Borrowing Base
Certificate acceptable to the Agent demonstrating that after withdrawing
the amount referenced in the written notice provided pursuant to subsection
5(a), the Borrower will continue to maintain the Required Minimum Amount in
the Cash Collateral Account.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Credit Parties in any Credit Document or Working
Capital Credit Document are true and
- 3 -
<PAGE>
correct in all material respects at and as if made as of such date;
(d) NO DEFAULT. No Default or Event of Default under the Credit
Documents or Working Capital Credit Documents shall exist or be continuing
either prior to or after giving effect thereto; and
(e) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
Material Adverse Effect.
6. PRIORITY. The Borrower represents, warrants and covenants that the
pledge and security interest created hereby is, and will at all times hereafter
be and remain, a first priority security interest and lien in favor of the
Agent, for the benefit of the Lenders, and that the Collateral hereunder is not
subject to, nor will it at any time hereafter be subject to, any other security
interests or liens.
7. ADDITIONAL DOCUMENTS. The Borrower will, in connection with this
Assignment or at any time hereafter on the request of the Agent, execute and
deliver any and all assignments, conveyances, assignment statements, financing
statements, renewal financing statements, security agreements, affidavits,
notices and all other agreements, instruments and documents that the Agent may
reasonably request, and will execute all necessary endorsements in order to
perfect and maintain the security interests and liens granted herein by the
Borrower to the Agent and in order to fully consummate all of the transactions
contemplated herein. In furtherance of the foregoing, the Borrower hereby
appoints the Agent as its attorney-in-fact, with power of substitution, for the
purpose of making any of the foregoing endorsements and executing any such
financing statements, documents and agreements. The foregoing power of attorney
shall be a power coupled with an interest and shall be irrevocable until payment
in full of the Secured Obligations.
8. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) The failure by the Borrower to comply with any of the terms and
conditions contained in this Assignment; and
(b) the occurrence of an Event of Default under the Credit Agreement,
Working Capital Credit Agreement, the Credit Documents or the Working
Capital Credit Documents.
9. REMEDIES. Upon the occurrence of an Event of Default and during the
continuance thereof, the Secured Obligations shall become immediately due and
payable without the necessity for demand, presentment, protest or notice to the
Borrower or any other person and the Agent shall have the right, immediately and
without further action by the Agent, to set-off against the Secured Obligations
all amounts owed by the Agent to the Borrower, including, without limitation,
all amounts in the Cash Collateral
- 4 -
<PAGE>
Account. In addition, upon the occurrence of an Event of Default and during
continuation thereof, the Agent shall have, in addition to any other rights and
remedies contained in this Assignment, the Credit Documents, the Working Capital
Credit Documents or permitted by law, all the rights and remedies of a secured
party under the Uniform Commercial Code in effect in the State of North
Carolina, all of which shall be cumulative to the extent permitted by law.
10. COSTS OF COUNSEL. At all times hereafter, the Borrower agrees to
promptly pay upon demand any and all reasonable costs and expenses of (a) the
Agent or the Lenders, as required under SECTION 11.5 of the Credit Agreement and
(b) of the Agent as necessary to protect the Collateral or to exercise any
rights or remedies under this Assignment or with respect to any Collateral. All
of the foregoing costs and expenses shall constitute Secured Obligations
hereunder.
11. AMENDMENTS; WAIVERS; MODIFICATIONS. This Assignment and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in SECTION 11.6 of the Credit Agreement or
SECTION 11.6 of the Working Capital Credit Agreement.
12. OTHER COLLATERAL. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Credit Party), or by
a guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence of any Event of Default, and the Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Secured Obligations under this
Assignment or under any other of the Credit Documents or Working Capital Credit
Documents.
13. SUCCESSORS IN INTEREST. This Assignment shall create a continuing
security interest in the Collateral and shall be binding upon the Borrower, its
successors and assigns and shall inure, together with the rights and remedies of
the Agent and the Lenders hereunder, to the benefit of the Agent and the Lenders
and their successors and assigns; PROVIDED, HOWEVER, that the Borrower may not
assign its rights or delegate its duties hereunder without the prior written
consent of each Lender or the Required Lenders, as required by the Credit
Agreement and Working Capital Credit Agreement.
14. NO LIABILITY TO THE AGENT OR LENDERS. To the fullest extent
permitted by law, the Borrower hereby releases the Agent in its individual
capacity or its capacity as attorney-in-fact, each Lender in its individual
capacity or its capacity as attorney-in-fact, their respective successors and
assigns and any party acting
- 5 -
<PAGE>
as attorney for the Agent or the Lenders, from any liability for any act or
omission or for any error of judgment or mistake of fact or law relating to this
Assignment or the Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Agent, or such Lender, or its officers,
employees or agents.
15. NOTICES. All notices required or permitted to be given under this
Assignment shall be in conformance with SECTION 11.1 of the New Credit Agreement
and SECTION 11.1 of the Working Capital Credit Agreement.
16. COUNTERPARTS. This Assignment may be executed in any number of
counterparts, each of which where 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 Assignment to produce or account
for more than one such counterpart.
17. HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Assignment.
18. SEVERABILITY. If any provision of any of the Assignment is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
19. ENTIRETY. This Assignment and the other Credit Documents and Working
Capital Credit Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
the Credit Documents and Working Capital Credit Documents or the transactions
contemplated herein and therein.
20. GOVERNING LAW. This Assignment shall be governed by and construed in
accordance with the laws of the State of North Carolina.
- 6 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Assignment to
be duly executed and delivered as of the date first above written.
CHATTEM, INC., a Tennessee corporation
By: /s/ Robert E. Bosworth
------------------------------
Name: Robert E. Bosworth
------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
NATIONSBANK, N.A., as Agent
By /s/ Nancy B. Chastain
------------------------------
Name: Nancy B. Chastain
------------------------------
Title: Senior Vice President
------------------------------
- 7 -
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT") is entered into as of April
29, 1996 among Chattem, Inc., a Tennessee corporation (the "BORROWER"), Signal
Investment & Management Co., a Delaware corporation ("Signal") (Signal, together
with each of the Borrower's Domestic Subsidiaries, individually a "GUARANTOR"
and collectively the "GUARANTORS", and the Borrower's Domestic Subsidiaries,
together with Signal and the Borrower, individually as a "PLEDGOR", and
collectively as the "PLEDGORS") and NationsBank, N.A., in its capacity as agent
(in such capacity, the "AGENT") for the new credit agreement lenders (the "NEW
CREDIT AGREEMENT LENDERS") from time to time party to the New Credit Agreement
described below and the working capital lenders (the "WORKING CAPITAL LENDERS")
from time to time party to the Working Capital Credit Agreement described below
(the New Credit Agreement Lenders, the Working Capital Lenders) and any
Affiliates of such New Credit Agreement Lenders or Working Capital Lenders that
enter into Hedging Agreements with a Credit Party may be referred to
collectively herein as the "LENDERS").
RECITALS
WHEREAS, pursuant (i) to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "NEW CREDIT AGREEMENT") among the Borrower, the Guarantors, the New Credit
Agreement Lenders and the Agent, the New Credit Agreement Lenders under the New
Credit Agreement have agreed to provide the Borrower with a $55,000,000 credit
facility and (ii) pursuant to that certain Working Capital Credit Agreement
dated as of the date hereof (as amended, modified, extended, renewed or replaced
from time to time, the "WORKING CAPITAL CREDIT AGREEMENT"), among the Borrower,
the Guarantors, the Working Capital Lenders and the Agent, the Working Capital
Lenders have agreed to provide the Borrower with an additional $6,500,000 credit
facility; and
WHEREAS, the Lenders have required, as a condition precedent to making
Extensions of Credit pursuant to the terms of the New Credit Agreement and
Working Capital Credit Agreement, that the Pledgors secure their respective
obligations under the New Credit Agreement and Working Capital Credit Agreement
and the other Credit Documents and Working Capital Credit Documents and all
other Credit Party Obligations in accordance with the terms of this Pledge
Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the New Credit Agreement and
Working Capital Credit Agreement.
<PAGE>
2. PLEDGE AND GRANT OF SECURITY INTEREST. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Agent, for the benefit of the Lenders, and grants to
the Agent, for the benefit of the Lenders, a continuing security interest in any
and all right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "PLEDGED COLLATERAL"):
(a) PLEDGED SHARES. (i) All of the issued and outstanding shares of
capital stock of the Persons, as set forth on SCHEDULE 2(a) attached
hereto, that are Domestic Subsidiaries, (ii) 66% of the issued and
outstanding shares of capital stock of the Persons, as set forth on
SCHEDULE 2(a) attached hereto, that are Foreign Subsidiaries, and (iii)
40,000 shares of 13.125% Cumulative Convertible Preferred Stock of Elcat,
Inc., a Delaware corporation, and any security into which such stock may be
converted or exchanged, including without limitation (with respect to each
of clause (i), (ii) and (iii) above), whatever class now or hereafter owned
by such Pledgor, in each case together with the certificates (or other
agreements or instruments) representing such shares, and all options and
other rights, contractual or otherwise, with respect thereto (collectively,
together with the shares of capital stock described in Section 2(b) and
2(c) below, the "PLEDGED SHARES"), including, but not limited to, (A) all
shares or securities representing a dividend on any of the Pledged Shares,
or representing a distribution or return of capital upon or in respect of
the Pledged Shares, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any subscriptions,
warrants, rights or options issued to the holder of, or otherwise in
respect of, the Pledged Shares; and (B) without affecting the obligations
of such Pledgor under any provision prohibiting such action hereunder, in
the event of any consolidation or merger in which a Pledgor is not the
surviving corporation, all shares of each class of the capital stock of the
successor corporation formed by or resulting from such consolidation or
merger.
(b) ADDITIONAL SUBSIDIARIES. All of the issued and outstanding
shares of capital stock of additional Domestic Subsidiaries and 66% of the
issued and outstanding shares of capital stock of additional Foreign
Subsidiaries which are hereafter formed or acquired by a Pledgor, including
without limitation, the certificates (or other agreements or instruments)
representing such shares and all options and other rights, contractual or
otherwise, with respect thereto.
(c) ADDITIONAL SHARES. All additional shares of capital stock of any
Person from time to time acquired by a Pledgor, including without
limitation, the certificates (or
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other agreements or instruments) representing such additional shares and
all options and other rights, contractual or otherwise, with respect
thereto; provided, however, that Pledgor shall not have to pledge or
deliver more than 66% of the capital stock of any Foreign Subsidiary.
(d) PROCEEDS. All proceeds and products of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that a Pledgor may from time to time hereafter deliver
additional shares of stock to the Agent as collateral security for the Pledgor
Obligations. Upon delivery to the Agent, such additional shares of stock shall
be deemed to be part of the Pledged Collateral of such Pledgor and shall be
subject to the terms of this Pledge Agreement whether or not SCHEDULE 2(a) is
amended to refer to such additional shares.
3. SECURITY FOR PLEDGOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "PLEDGOR OBLIGATIONS"):
(a) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower under the New
Credit Agreement, Working Capital Credit Agreement, the Notes, this Pledge
Agreement and the other Credit Documents and Working Capital Credit
Documents to which the Borrower is a party;
(b) Subject to clause (c) of Section 26 hereof, in the case of the
Guarantors, the prompt performance and observance by such Guarantor of all
obligations of such Guarantor under the New Credit Agreement, Working
Capital Credit Agreement, this Pledge Agreement and the other Credit
Documents and Working Capital Credit Documents to which such Guarantor is a
party, including, without limitation, its guaranty obligations arising
under Section 4 of the New Credit Agreement and SECTION 4 of the Working
Capital Credit Agreement; and
(c) Subject to clause (c) of Section 26 hereof, all other
indebtedness, liabilities, obligations and expenses of any kind or nature
owing from any Pledgor to any Lender or the Agent in connection with (i)
this Pledge Agreement or any other Credit Document or Working Capital
Credit Document, whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired, together with any and all modifications,
extensions, renewals and/or substitutions of any of the foregoing, (ii)
collecting and enforcing the obligations contained in this Section 3 and
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(iii) all liabilities and obligations owing from such Credit Party to any
Lender arising under any Hedging Agreements.
4. DELIVERY OF THE PLEDGED COLLATERAL. Each Pledgor hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i) simultaneously with
or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral of a Pledgor.
Prior to delivery to the Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by such
Pledgor for the benefit of the Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of transfer or
assignment in blank, substantially in the form provided in EXHIBIT 4(a)
attached hereto.
(b) ADDITIONAL SECURITIES. If such Pledgor shall receive by virtue
of its being or having been the owner of any Pledged Collateral, any (i)
stock certificate, including without limitation, any certificate
representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation,
sale of assets, combination of shares, stock splits, spin-off or split-off,
promissory notes or other instrument; (ii) option or right, whether as an
addition to, substitution for, or an exchange for, any Pledged Collateral
or otherwise; (iii) dividends payable in securities; or (iv) distributions
of securities in connection with a partial or total liquidation,
dissolution or reduction of capital, capital surplus or paid-in surplus,
then such Pledgor shall receive such stock certificate, instrument, option,
right or distribution in trust for the benefit of the Agent, shall
segregate it from such Pledgor's other property and shall deliver it
forthwith to the Agent in the exact form received together with any
necessary endorsement and/or appropriate undated stock power duly executed
in blank, substantially in the form provided in EXHIBIT 4(a), to be held by
the Agent as Pledged Collateral and as further collateral security for the
Pledgor Obligations.
(c) FINANCING STATEMENTS. Each Pledgor shall execute and deliver to
the Agent such UCC or other applicable financing statements as may be
reasonably requested by the Agent in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such Pledgor.
5. REPRESENTATIONS AND WARRANTIES. Each Pledgor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Pledgor Obligations remain outstanding or any Credit Document or Working
Capital Credit
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Document is in effect or any Loan or Working Capital Revolving Loan shall remain
outstanding, and until all of the Commitments shall have been terminated:
(a) AUTHORIZATION OF PLEDGED SHARES. The Pledged Shares are duly
authorized and validly issued, are fully paid and nonassessable and are not
subject to the preemptive rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and validly issued,
fully paid and nonassessable and not subject to the preemptive rights of
any Person.
(b) TITLE. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens. There exists no "adverse claim" within the
meaning of Section 8-302 of the Uniform Commercial Code as in effect in the
State of North Carolina (the "UCC") with respect to the Pledged Shares of
such Pledgor.
(c) EXERCISING OF RIGHTS. The exercise by the Agent of its rights
and remedies hereunder will not violate any law or governmental regulation
or any material contractual restriction binding on or affecting a Pledgor
or any of its property.
(d) PLEDGOR'S AUTHORITY. No authorization, approval or action by,
and no notice or filing with any Governmental Authority or with the issuer
of any Pledged Stock is required either (i) for the pledge made by a
Pledgor or for the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the Agent or the
Lenders of their rights and remedies hereunder (except as may be required
by the Uniform Commercial Code in the applicable jurisdiction or similar
foreign laws ("Perfection Statutes") and laws affecting the offering and
sale of securities).
(e) SECURITY INTEREST/PRIORITY. This Pledge Agreement creates a
valid security interest in favor of the Agent for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Agent of
the certificates representing the Pledged Shares and all other certificates
and instruments constituting Pledged Collateral will perfect and establish
the first priority of the Agent's security interest in the Pledged Shares
and, when properly perfected by filing or registration in accordance with
the Perfection Statutes, in all other Pledged Collateral represented by
such Pledged Shares and instruments securing the Pledgor Obligations.
Except as set forth in this Section 5(e), no action is necessary to perfect
or otherwise protect such security interest.
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(f) NO OTHER SHARES. No Pledgor owns any shares of stock other than
(i) the shares in Elcat, Inc. referenced in Section 2(a)(iii) hereof and
(ii) the shares as set forth on SCHEDULE 2(a) attached hereto.
6. COVENANTS. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document or Working Capital
Credit Document is in effect or any Loan or Working Capital Revolving Loan shall
remain outstanding, and until all of the Commitments shall have been terminated,
such Pledgor shall:
(a) BOOKS AND RECORDS. Mark its books and records (and shall cause
the issuer of the Pledged Shares of such Pledgor to mark its books and
records) to reflect the security interest granted to the Agent, for the
benefit of the Lenders, pursuant to this Pledge Agreement.
(b) DEFENSE OF TITLE. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein, keep
the Pledged Collateral free from all Liens, except for Permitted Liens, and
not sell, exchange, transfer, assign, lease or otherwise dispose of Pledged
Collateral of such Pledgor or any interest therein, except as permitted
under the New Credit Agreement and Working Capital Credit Agreement.
(c) FURTHER ASSURANCES. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be necessary and desirable or that the Agent may reasonably request in
order to (i) perfect and protect the security interest created hereby in
the Pledged Collateral of such Pledgor (including without limitation any
and all action necessary to satisfy the Agent that the Agent has obtained a
first priority perfected security interest in any capital stock); (ii)
enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral of such Pledgor; and (iii) otherwise
effect the purposes of this Pledge Agreement, including, without limitation
and if requested by the Agent, delivering to the Agent irrevocable proxies
in respect of the Pledged Collateral of such Pledgor.
(d) AMENDMENTS. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any restriction
with respect to any of the Pledged Collateral of such Pledgor which would
in any way affect the lien rights of the Agent under this Pledge Agreement.
7. ADVANCES BY LENDERS. On failure of any Pledgor to perform any of the
covenants and agreements contained herein, the
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Agent may, at its sole option and in its sole discretion, perform the same and
in so doing may expend such sums as the Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by the
Pledgors on a joint and several basis (subject to Section 26 hereof) promptly
upon timely notice thereof and demand therefor, shall constitute additional
Pledgor Obligations and shall bear interest from the date said amounts are
expended at the default rate provided in SECTION 3.1(b) of the New Credit
Agreement for Revolving Loans that are Base Rate Loans. No such performance of
any covenant or agreement by the Agent on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgors of any default under
the terms of this Pledge Agreement or the other Credit Documents or Working
Capital Credit Documents. The Agent may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Pledgor in appropriate proceedings
and against which adequate reserves are being maintained in accordance with
GAAP.
8. EVENTS OF DEFAULT. The occurrence of an event which under the New
Credit Agreement or Working Capital Credit Agreement would constitute an Event
of Default shall be an Event of Default hereunder ("EVENT OF DEFAULT").
9. REMEDIES.
(a) GENERAL REMEDIES. Upon the occurrence of an Event of Default and
during the continuation thereof, the Agent and the Lenders shall have, in
respect of the Pledged Collateral of any Pledgor, in addition to the rights
and remedies provided herein, in the Credit Documents, Working Capital
Credit Documents or by law, the rights and remedies of a secured party
under the UCC or any other applicable law.
(b) SALE OF PLEDGED COLLATERAL. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section and without notice, the Agent may, in its sole
discretion, sell or otherwise dispose of or realize upon the Pledged
Collateral, or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker's board or elsewhere, at such price
or prices and on such other terms as the Agent may deem commercially
reasonable, for cash,
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credit or for future delivery or otherwise in accordance with applicable
law. To the extent permitted by law, any Lender may in such event, bid for
the purchase of such securities. Each Pledgor agrees that, to the extent
notice of sale shall be required by law and has not been waived by such
Pledgor, any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any private
sale is to be made, is personally served on or mailed, postage prepaid, to
such Pledgor, in accordance with the notice provisions of SECTION 11.1 of
the New Credit Agreement at least 10 days before the time of such sale.
The Agent shall not be obligated to make any sale of Pledged Collateral of
such Pledgor regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(c) PRIVATE SALE. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the Agent may
deem it impracticable to effect a public sale of all or any part of the
Pledged Shares or any of the securities constituting Pledged Collateral and
that the Agent may, therefore, determine to make one or more private sales
of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution
or resale thereof. Each Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Agent shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such securities to
register or qualify such securities for public sale under the Securities
Act of 1933 or other applicable securities laws of other jurisdictions.
Each Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial
community of Chattanooga, Tennessee and Charlotte, North Carolina (to the
extent that such offer may be advertised without prior registration under
the Securities Act of 1933), or (ii) made privately in the manner described
above shall be deemed to involve a "public sale" under the UCC,
notwithstanding that such sale may not constitute a "public offering" under
the Securities Act of 1933, and the Agent may, in such event, bid for the
purchase of such securities.
(d) RETENTION OF PLEDGED COLLATERAL. In addition to the rights and
remedies hereunder, upon the occurrence of an
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Event of Default, the Agent may, after providing the notices required by
Section 9-505(2) of the UCC and otherwise complying with the requirements
of applicable law of the relevant jurisdiction, retain all or any portion
of the Pledged Collateral in satisfaction of the Pledgor Obligations.
Unless and until the Agent shall have provided such notices, however, the
Agent shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Pledgor Obligations for any reason.
(e) DEFICIENCY. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Pledgors shall be jointly
and severally liable (subject to Section 26 hereof) for the deficiency,
together with interest thereon at the default rate provided in SECTION
3.1(b) of the New Credit Agreement for Revolving Loans that are Base Rate
Loans, together with the costs of collection and the reasonable fees of any
attorneys employed by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Pledgor
Obligations shall be returned to the Pledgors or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.
10. RIGHTS OF THE AGENT.
(a) POWER OF ATTORNEY. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the Agent, on
behalf of the Lenders, and each of its designees or agents as attorney-in-
fact of such Pledgor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon the occurrence
and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Pledged Collateral of such
Pledgor, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
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(v) to direct any parties liable for any payment under any
of the Pledged Collateral to make payment of any and all monies due
and to become due thereunder directly to the Agent or as the Agent
shall direct;
(vi) to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem reasonably appropriate;
(ix) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, pledge
agreements, affidavits, notices and other agreements, instruments and
documents that the Agent may determine necessary in order to perfect
and maintain the security interests and liens granted in this Pledge
Agreement and in order to fully consummate all of the transactions
contemplated therein;
(x) to exchange any of the Pledged Collateral of such
Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any committee, depository, transfer
agent, registrar or other designated agency upon such terms as the
Agent may determine;
(xi) to vote for a shareholder resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the
Pledged Shares of such Pledgor into the name of the Agent or one or
more of the Lenders or into the name of any transferee to whom the
Pledged Shares of such Pledgor or any part thereof may be sold
pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient in
connection with the Pledged Collateral of such Pledgor.
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This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document or Working Capital Credit Document is in
effect or any Loan or Working Capital Revolving Loan shall remain
outstanding and (ii) until all of the Commitments shall have been
terminated. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Pledge Agreement, and shall not be
liable for any failure to do so or any delay in doing so. The Agent shall
not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Agent solely to protect, preserve and realize upon its security
interest in Pledged Collateral.
(b) PERFORMANCE BY THE AGENT OF PLEDGOR'S OBLIGATIONS. If any
Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Pledgors on a joint and several basis pursuant to
Section 13 hereof.
(c) ASSIGNMENT BY THE AGENT. The Agent may from time to time assign
the Pledged Collateral and any portion thereof to a successor Agent, and
the assignee shall be entitled to all of the rights and remedies of the
Agent under this Pledge Agreement in relation thereto.
(d) THE AGENT'S DUTY OF CARE. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held
by the Agent hereunder, the Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that
Pledgors shall be responsible for preservation of all rights in the Pledged
Collateral of such Pledgor, and the Agent shall be relieved of all
responsibility for Pledged Collateral upon surrendering it or tendering the
surrender of it to the Pledgors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, it being understood that the Agent shall not have responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Agent has or is deemed to have knowledge of
such matters; or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.
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(e) VOTING RIGHTS IN RESPECT OF THE PLEDGED COLLATERAL.
(i) So long as no Event of Default shall have occurred and
be continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining to
the Pledged Collateral of such Pledgor or any part thereof for any
purpose not inconsistent with the terms of this Pledge Agreement, the
New Credit Agreement or the Working Capital Credit Agreement; and
(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of a Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of this Section shall cease and all
such rights shall thereupon become vested in the Agent which shall
then have the sole right to exercise such voting and other consensual
rights.
(f) DIVIDEND RIGHTS IN RESPECT OF THE PLEDGED COLLATERAL.
(i) So long as no Event of Default shall have occurred and
be continuing and subject to Section 4(b) hereof, each Pledgor may
receive and retain any and all dividends (other than stock dividends
and other dividends constituting Pledged Collateral which are
addressed hereinabove) or interest paid in respect of the Pledged
Collateral to the extent they are allowed under the New Credit
Agreement and Working Capital Credit Agreement.
(ii) Upon the occurrence and during the continuance of an
Event of Default:
(A) all rights of a Pledgor to receive the dividends
and interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this Section
shall cease and all such rights shall thereupon be vested in the
Agent which shall then have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(B) all dividends and interest payments which are
received by a Pledgor contrary to the provisions of paragraph (A)
of this Section shall be received in trust for the benefit of the
Agent, shall be segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the Agent as Pledged
Collateral in the exact form received, to be held by the Agent as
Pledged
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Collateral and as further collateral security for the Pledgor
Obligations.
(g) RELEASE OF PLEDGED COLLATERAL. The Agent may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying
or diminishing in any way the force, effect, lien, pledge or security
interest of this Pledge Agreement as to any Pledged Collateral not
expressly released or substituted, and this Pledge Agreement shall continue
as a first priority lien on all Pledged Collateral not expressly released
or substituted.
11. RIGHTS OF REQUIRED LENDERS. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
12. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied in
reduction of the Pledgor Obligations in the order set forth in SECTION 3.8 of
the New Credit Agreement, and each Pledgor irrevocably waives the right to
direct the application of such payments and proceeds and acknowledges and agrees
that the Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
13. COSTS OF COUNSEL. At all times hereafter, the Pledgors agree to
promptly pay upon demand any and all reasonable costs and expenses (a) of the
Agent or the Lenders, as required under SECTION 11.5 of the New Credit Agreement
and SECTION 11.5 of the Working Capital Credit Agreement and (b) of the Agent as
necessary to protect the Pledged Collateral or to exercise any rights or
remedies under this Pledge Agreement or with respect to any Pledged Collateral.
All of the foregoing costs and expenses shall constitute Pledgor Obligations
hereunder.
14. CONTINUING AGREEMENT.
(a) This Pledge Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect so long as the New Credit Agreement or
Working Capital Credit Agreement is in effect or any amounts payable thereunder
or under any other Credit Document or Working Capital Credit Document or any
Loan or Working Capital Revolving Loan shall remain outstanding, and until all
of the Commitments thereunder shall have terminated. Upon termination of this
Pledge Agreement, the Agent and the Lenders shall, upon the request and at the
expense of the Pledgors, forthwith release all of its liens and security
interests hereunder. Notwithstanding the foregoing all releases
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and indemnities provided hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the Pledgor Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, all as
though such payment had not been made; provided that in the event payment of all
or any part of the Pledgor Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any Lender in
defending and enforcing such reinstatement shall be deemed to be included as a
part of the Pledgor Obligations.
15. AMENDMENTS; WAIVERS; MODIFICATIONS. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in SECTION 11.6 of the New Credit Agreement or
SECTION 11.6 of the Working Capital Credit Agreement.
16. SUCCESSORS IN INTEREST. This Pledge Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and assigns; PROVIDED, HOWEVER, that none
of the Pledgors may assign its rights or delegate its duties hereunder without
the prior written consent of each Lender or the Required Lenders, as required by
the New Credit Agreement or Working Capital Credit Agreement. To the fullest
extent permitted by law, each Pledgor hereby releases the Agent and each Lender,
and its successors and assigns, from any liability for any act or omission
relating to this Pledge Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of the Agent, or such
Lender, or its officers, employees or agents.
17. NOTICES. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with SECTION 11.1 of the New Credit
Agreement.
18. COUNTERPARTS. This Pledge Agreement may be executed in any number of
counterparts, each of which where 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 Pledge Agreement to produce or
account for more than one such counterpart.
19. HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
- 14 -
<PAGE>
20. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Pledge Agreement may be brought in the
courts of the State of North Carolina or of the United States for the
Western District of North Carolina and, by execution and delivery of this
Pledge Agreement, each Pledgor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
such courts. Each Pledgor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to SECTION
11.1 of the New Credit Agreement, such service to become effective 30 days
after such mailing. Nothing herein shall affect the right of the Agent to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Pledgor in any other
jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Pledge
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
21. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
22. SEVERABILITY. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. ENTIRETY. This Pledge Agreement and the other Credit Documents and
Working Capital Credit Documents represent the entire agreement of the parties
hereto and thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any commitment letters or correspondence relating
to the Credit Documents and Working Capital Credit Documents or the transactions
contemplated herein and therein.
- 15 -
<PAGE>
24. SURVIVAL. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement and
the other Credit Documents and Working Capital Credit Documents, the delivery of
the Notes and the making of the Loans and Working Capital Revolving Loans under
the New Credit Agreement and Working Capital Credit Agreement.
25. OTHER SECURITY. To the extent that any of the Pledgor Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Agent and the Lenders have the right, in their sole discretion, to
determine which rights, security, liens, security interests or remedies the
Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Pledgor Obligations
under this Pledge Agreement or under any other of the Credit Documents or
Working Capital Credit Documents.
26. JOINT AND SEVERAL OBLIGATIONS OF PLEDGORS.
(a) Subject to clause (c) of this Section 26, each of the Pledgors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the Lenders under the New Credit
Agreement and Working Capital Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Pledgors and in consideration of
the undertakings of each of the Pledgors to accept joint and several
liability for the obligations of each of them.
(b) Subject to clause (c) of this Section 26, each of the Pledgors
jointly and severally hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several liability
with the other Pledgors with respect to the payment and performance of all
of the Pledgor Obligations arising under this Pledge Agreement and the
other Credit Documents and Working Capital Credit Documents, it being the
intention of the parties hereto that all the Pledgor Obligations shall be
the joint and several obligations of each of the Pledgors without
preferences or distinction among them.
- 16 -
<PAGE>
(c) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents and Working Capital Credit Documents,
to the extent the obligations of a Guarantor shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of each Guarantor hereunder
shall be limited to the maximum amount that is permissible under applicable
law (whether federal or state and including, without limitation, the
Bankruptcy Code).
[remainder of page intentionally left blank]
- 17 -
<PAGE>
Each of the Pledgors has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.
PLEDGORS: CHATTEM, INC.,
- -------- a Tennessee corporation
By: /s/ Robert E. Bosworth
------------------------------
Name: Robert E. Bosworth
-----------------------------
Title: EXECUTIVE VICE PRESIDENT
----------------------------
SIGNAL INVESTMENT & MANAGEMENT CO.,
a Delaware corporation
By: /s/ Robert E. Bosworth
------------------------------
Name: Robert E. Bosworth
-----------------------------
Title: PRESIDENT
----------------------------
- 18 -
<PAGE>
SCHEDULE 2(a)
to
Pledge Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.
as Agent
PLEDGED STOCK
NAME OF PLEDGOR: Chattem, Inc.
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ------ ----------
DOMESTIC SUBSIDIARIES
Signal Investment 250 common 1 100%
& Management Co.
FOREIGN SUBSIDIARIES
Chattem (Canada) Inc. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
Chattem (U.K.) Limited 13,200 common 12 66%
1,949,042 preferred 14 66%
- 20 -
<PAGE>
EXHIBIT 4(a)
to
Pledge Agreement
dated as of April 29, 1996
in favor of NationsBank, N.A.
as Agent
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
No. of Shares Certificate No.
- ------------- ---------------
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
[PLEDGOR]
- 21 -
<PAGE>
Number [SEAL] Shares
1 250
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SIGNAL INVESTMENT & MANAGEMENT CO.
THE CORPORATION IS AUTHORIZED TO ISSUE 500 SHARES -- NO PAR VALUE
THIS CERTIFIES THAT Chattem, Inc. IS THE OWNER OF Two Hundred Fifty (250)
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ABOVE CORPORATION TRANSFERABLE
ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY
DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND TO BE SEALED WITH THE SEAL OF THE
CORPORATION.
DATED 10/14/86
--------------------
- ----------------------------- -------------------------
SECRETARY PRESIDENT
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
____________________ 250 shares of the Common Stock of Signal Investment &
Management Co., a Delaware corporation, standing in the name of the undersigned
on the books of such corporation and represented by certificate number 1
herewith, and the undersigned irrevocably constitutes and appoints NationsBank,
N.A., as Agent as its attorney to transfer such stock on the books of such
corporation with full power of substitution in the premises.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
---------------------------
Title: EXECUTIVE VICE PRESIDENT
-------------------------
Witness:
/s/ Nancy B. Chastain
- ------------------------------
Dated:
------------------------
<PAGE>
- --------------------------------------------------------------------------------
INCORPORATED UNDER THE CANADA BUSINESS CORPORATIONS ACT
NO. 6 660 SHARES
----------------------------------------------------------
CHATTEM (CANADA) INC.
----------------------------------------------------------
THIS IS TO CERTIFY THAT CHATTEM, INC.
------------------------------
IS THE REGISTERED HOLDER OF Six Hundred Sixty (660)
--------------------------
COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL
STOCK OF CHATTEM (CANADA) INC.
RESTRICTIONS ON TRANSFER. THERE ARE RESTRICTIONS ON THE RIGHT TO
TRANSFER THE SAID SHARES AND THE CORPORATION WILL FURNISH TO A
SHAREHOLDER, ON DEMAND AND WITHOUT FEE, A COPY OF THE FULL TEXT
THEREOF.
IN WITNESS WHEREOF THE CORPORATION HAS CAUSED THIS
CERTIFICATE TO BE SIGNED BY ITS DULY AUTHORIZED
OFFICERS THIS 29th DAY OF April 1996.
[SEAL]
/S/ Janis Apse
----------------------- -----------------------
- --------------------------------------------------------------------------------
NO PAR VALUE
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
_____________________ 660 shares of the Common Stock of Chattem (Canada) Inc., a
Canadian corporation, standing in the name of the undersigned on the books of
such corporation and represented by certificate number 6 herewith, and the
undersigned irrevocably constitutes and appoints NationsBank, N.A., as Agent as
its attorney to transfer such stock on the books of such corporation with full
power of substitution in the premises.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
------------------------------
Title:
---------------------------
Witness:
/s/ Nancy B. Chastain
- ----------------------------
Dated:
----------------------
<PAGE>
- --------------------------------------------------------------------------------
INCORPORATED UNDER THE CANADA BUSINESS CORPORATIONS ACT
NO. 002 3,066,666 SHARES
-----------------------------------------------
CHATTEM (CANADA) INC.
-----------------------------------------------
THIS IS TO CERTIFY THAT CHATTEM INC.
-------------------------------------------
IS THE REGISTERED HOLDER OF Three million sixty-six Thousand
---------------------------------------
six hundred and sixty-six PREFERENCE SHARES OF
-----------------------------------------
THE CLASS OR SERIES OF SHARES REPRESENTED BY THIS CERTIFICATE HAS RIGHTS,
PRIVILEGES, RESTRICTIONS OR CONDITIONS ATTACHED THERETO AND THE CORPORATION
WILL FURNISH TO THE HOLDER, ON DEMAND AND WITHOUT CHARGE, A FULL COPY OF
THE TEXT OF,
(i) THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHED TO THE
SAID SHARES AND TO EACH CLASS AUTHORIZED TO BE ISSUED AND TO EACH
SERIES INSOFAR AS THE SAME HAVE BEEN FIXED BY THE DIRECTORS, AND
(ii) THE AUTHORITY OF THE DIRECTORS TO FIX THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS OF SUBSEQUENT SERIES, IF APPLICABLE.
RESTRICTIONS ON TRANSFER. THERE ARE RESTRICTIONS ON THE RIGHT TO
TRANSFER THE SHARES REPRESENTED BY THIS CERTIFICATE.
IN WITNESS WHEREOF THE CORPORATION HAS CAUSED THIS CERTIFICATE
[SEAL] TO BE SIGNED BY ITS DULY AUTHORIZED OFFICERS THIS 15th DAY OF
August, 1994.
/s/ Janis Apse
---------------------- ---------------------------
JANIS APSE, SECRETARY
- --------------------------------------------------------------------------------
NO PAR VALUE
<PAGE>
- --------------------------------------------------------------------------------
INCORPORATED UNDER THE CANADA BUSINESS CORPORATIONS ACT
NO. 004 651,816 SHARES
-----------------------------------------------
CHATTEM (CANADA) INC.
-----------------------------------------------
THIS IS TO CERTIFY THAT CHATTEM Inc.
-------------------------------------------
IS THE REGISTERED HOLDER OF Six Hundred Fifty-One Thousand
---------------------------------------
Eight Hundred Sixteen (651,816) PREFERENCE SHARES OF
------------------------------------------
CHATTEM (CANADA) INC.
THE CLASS OR SERIES OF SHARES REPRESENTED BY THIS CERTIFICATE HAS RIGHTS,
PRIVILEGES, RESTRICTIONS OR CONDITIONS ATTACHED THERETO AND THE CORPORATION
WILL FURNISH TO THE HOLDER, ON DEMAND AND WITHOUT CHARGE, A FULL COPY OF
THE TEXT OF,
(i) THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHED TO THE
SAID SHARES AND TO EACH CLASS AUTHORIZED TO BE ISSUED AND TO EACH
SERIES INSOFAR AS THE SAME HAVE BEEN FIXED BY THE DIRECTORS, AND
(ii) THE AUTHORITY OF THE DIRECTORS TO FIX THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS OF SUBSEQUENT SERIES, IF APPLICABLE.
RESTRICTIONS ON TRANSFER. THERE ARE RESTRICTIONS ON THE RIGHT TO
TRANSFER THE SHARES REPRESENTED BY THIS CERTIFICATE.
IN WITNESS WHEREOF THE CORPORATION HAS CAUSED THIS CERTIFICATE
[SEAL] TO BE SIGNED BY ITS DULY AUTHORIZED OFFICERS THIS 29th DAY OF
April, 1996.
/s/ Janis Apse
---------------------- ---------------------------
- --------------------------------------------------------------------------------
NO PAR VALUE
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
_____________________ 3,687,816 shares of the Preferred Stock of Chattem
(Canada) Inc., a Canadian corporation, standing in the name of the undersigned
on the books of such corporation and represented by certificate numbers 2 and 4
herewith, and the undersigned irrevocably constitutes and appoints NationsBank,
N.A., as Agent as its attorney to transfer such stock on the books of such
corporation with full power of substitution in the premises.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------------
Title:
-----------------------------
Witness:
/s/ Nancy B. Chastain
- --------------------------
Dated:
--------------------
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATE NO. 12 NUMBER OF SHARES 13200
--------- --------
Chattem (UK) LIMITED
-----------------------------------------
CAPITAL --- L6,100,000 DIVIDED INTO 100,000 ORD, 6,000,000 PREF SHARES OF
L1 EACH THIS IS TO CERTIFY THAT CHATTEM INC. of 1715 West 38th Street,
Chattanooga, Tennessee 37409, USA IS THE REGISTERED HOLDER of Thirteen
Thousand and two hundred ordinary shares of ONE POUND FULLY PAID NUMBERED 2
TO 13,201 INCLUSIVE IN THE ABOVE-NAMED COMPANY, SUBJECT TO THE MEMORANDUM AND
ARTICLES OF ASSOCIATION OF THE SAID COMPANY.
GIVEN UNDER THE COMMON SEAL OF THE SAID COMPANY
THE 15th DAY OF June 1994
[SEAL]
-----------------------
DIRECTORS For and on behalf of
----------------------- MITRE SECRETARIES LIMITED
------------------------------------
TRANSFER OF PART OR WHOLE OF THE SHARES REPRESENTED BY THIS CERTIFICATE CANNOT
BE RECOGNISED UNLESS THE CERTIFICATE IS DEPOSITED AT THE COMPANY'S REGISTERED
OFFICE.
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
_______________________ 13,200 shares of the Common Stock of Chattem (U.K.)
Limited, a _______________ corporation, standing in the name of the undersigned
on the books of such corporation and represented by certificate number 12
herewith, and the undersigned irrevocably constitutes and appoints NationsBank,
N.A., as Agent as its attorney to transfer such stock on the books of such
corporation with full power of substitution in the premises.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
---------------------------
Title:
------------------------
Witness:
/s/ Nancy B. Chastain
- --------------------------
Dated:
--------------------
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATE NO. 14 NUMBER OF SHARES 1,949,042
--------- -----------
CHATTEM (UK) LIMITED
--------------------------------------------
CAPITAL --- L6,100,000 DIVIDED INTO 100,000 ORDINARY 6,000,000 PREFERENCE
SHARES OF L1 EACH THIS IS TO CERTIFY THAT CHATTEM INC. OF 1715 WEST 38TH
STREET, CHATTANOOGA, TENNESSEE 37409, USA IS THE REGISTERED HOLDER OF ONE
MILLION NINE HUNDRED AND FORTY NINE THOUSAND AND FORTY TWO PREFERENCE SHARE
OF ONE POUND FULLY PAID NUMBERED 1 TO 1,949,042 INCLUSIVE IN THE
ABOVE-NAMED COMPANY, SUBJECT TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF
THE SAID COMPANY.
GIVEN UNDER THE COMMON SEAL OF THE SAID COMPANY
THE 8th DAY OF JULY 1994
[SEAL]
-----------------------
Directors For and on behalf of
----------------------- MITRE SECRETARIES LIMITED
------------------------------------
Director
TRANSFER OF PART OR WHOLE OF THE SHARES REPRESENTED BY THIS CERTIFICATE CANNOT
BE RECOGNISED UNLESS THE CERTIFICATE IS DEPOSITED AT THE COMPANY'S REGISTERED
OFFICE.
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
_______________________ 1,949,042 shares of the Preferred Stock of Chattem
(U.K.) Limited, a _______________ corporation, standing in the name of the
undersigned on the books of such corporation and represented by certificate
number 14 herewith, and the undersigned irrevocably constitutes and appoints
NationsBank, N.A., as Agent as its attorney to transfer such stock on the books
of such corporation with full power of substitution in the premises.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
---------------------------
Title:
------------------------
Witness:
/s/ Nancy B. Chastain
- --------------------------
Dated:
--------------------
<PAGE>
- --------------------------------------------------------------------------------
NUMBER SHARES
1 INCORPORATED UNDER THE LAWS OF **40,000**
THE STATE OF
DELAWARE
[LOGO]
ELCAT, INC.
13.125% CUMULATIVE CONVERTIBLE PREFERRED STOCK
$125 par value per share
THIS CERTIFIES THAT Chattem,Inc. IS THE OWNER OF *** forty thousand
(40,000) *** FULLY PAID AND NON-ASSESSABLE SHARES OF THE CAPITAL STOCK OF THE
ABOVE NAMED CORPORATION TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY
THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF
THIS CERTIFICATE PROPERLY ENDORSED.
[SEAL] IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE
TO BE SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE AND TO
BE HEREUNTO AFFIXED THIS 26th DAY OF May A.D. 1995
/s/David Blum /s/John M. Scansaroli
------------------------------- ----------------------------
David Blum SECRETARY/TREASURER John Scansaroli PRESIDENT
<PAGE>
STOCK TRANSFER POWER
For value received, the undersigned sells, assigns and transfers unto
___________________ 40,000 shares of 13.125% Cumulative Convertible Preferred
Stock of Elcat, Inc., a Delaware corporation, standing in the name of the
undersigned on the books of such corporation and represented by certificate
number 1 herewith, and the undersigned irrevocably constitutes and appoints
NationsBank, N.A., as Agent as its attorney to transfer such stock on the books
of such corporation with full power of substitution in the premises.
CHATTEM, INC.
By: /s/Robert E. Bosworth
---------------------------
Title:
------------------------
Witness:
/s/Nancy B. Chastain
- --------------------------
Dated:
--------------------
<PAGE>
CLOSING DOCUMENTS
- ------------------------------------------------------------------------------
$61,500,000.00 CREDIT FACILITIES
BY AND AMONG
CHATTEM, INC.,
AS BORROWER
AND
THE DOMESTIC SUBSIDIARIES OF THE BORROWER,
AS GUARANTORS
AND
NATIONSBANK, N.A.,
AS AGENT
AND
THE LENDERS
APRIL 29, 1996
- ------------------------------------------------------------------------------
VOLUME 2 OF 2 MOORE & VAN ALLEN, PLLC
<PAGE>
Index - Closing Documents
$61,500,000.00 Credit Facilities
dated as of April 29, 1996 by and among
Chattem, Inc., Borrower
and
The Domestic Subsidiaries of the Borrower, Guarantors
and
NationsBank, N.A., Agent
and
the Lenders
- ------------------------------------------------------------------------------
LOAN DOCUMENTS TAB
---
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Working Capital Credit Agreement . . . . . . . . . . . . . . . . . . . . 2
Revolving Loan Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 3
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
Tranche A Term Loan Notes. . . . . . . . . . . . . . . . . . . . . . . . 4
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
Tranche B Term Loan Notes. . . . . . . . . . . . . . . . . . . . . . . . 5
- NationsBank, N.A.
- Creditanstalt Bankverein
- Prime Income Trust/Dean Witter
- Van Kampen American Capital Prime Rate Income Trust
<PAGE>
Revolving Loan Notes - Working Capital Facility. . . . . . . . . . . . . 6
- NationsBank, N.A.
- The First National Bank of Chicago
- Creditanstalt Bankverein
- First American National Bank
COLLATERAL DOCUMENTS - PERSONAL PROPERTY
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Aircraft Mortgage and Security Agreement . . . . . . . . . . . . . . . . 8
Assignment of Cash Collateral and Security Agreement . . . . . . . . . . 9
Pledge Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Certificates and Stock Powers. . . . . . . . . . . . . . . . . . . 11
- Signal Investment & Management Co.
- Chattem (Canada) Inc.
- Chattem (U.K.) Limited
- Elcat, Inc.
UCC-1 Financing Statements . . . . . . . . . . . . . . . . . . . . . . . 12
A. CHATTEM, INC.
- Tennessee Secretary of State
(File copy not available at time of binding)
- California Secretary of State
- New Jersey Secretary of State
- Hawaii Bureau of Conveyances
- Rhode Island Secretary of State
- New York Secretary of State
- Orange County, New York
- Cortland County, New York
- North Carolina Secretary of State
- Iredell County, North Carolina
- Wisconsin Secretary of State
- Illinois Secretary of State
- Walker County, Georgia
- Rockdale County, Georgia
- Fulton County, Georgia
- Ohio Secretary of State
- Montgomery County, Ohio
- Butler County, Ohio
- Michigan Secretary of State
-2-
<PAGE>
- Virginia State Corporate Commission
- Henrico County, Virginia
- Richmond City, Virginia
- Mississippi Secretary of State
(File copy not available at time of binding)
- DeSoto County, Mississippi
B. SIGNAL INVESTMENT & MANAGEMENT CO.
- Delaware Secretary of State
- Tennessee Secretary of State
(File copy not available at time of binding)
Notice of Security Interest in Patents and Trademarks (Domestic). . . . . . 13
- Chattem, Inc.
- Signal Investment & Management Co.
Notice of Security Interest in Trademarks (Canadian). . . . . . . . . . . . 14
- Chattem, Inc.
- Signal Investment & Management Co.
COLLATERAL DOCUMENTS - REAL PROPERTY
Fee Property - Chattanooga, Tennessee . . . . . . . . . . . . . . . . . . . 15
- Deed of Trust and Security Agreement
- Title Insurance Policy
- UCC Fixture Filing
- Zoning Letter
- Survey/Flood Certification
Landlord/Bailee Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- Tennessee (Landlord/Phase I, Phase II-A and Phase II-B,
South Broad Street Center, and 3110 South Broad
Street, Chattanooga)
- Tennessee (Bailee/520 West 38th Street, Chattanooga)
- California (Bailee/1651 South Carlos Avenue, Ontario)
CORPORATE DOCUMENTS
Secretary's Certificate including Incumbency Certificate
of Chattem, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
- Articles of Incorporation
- Bylaws
- Resolutions
- Good Standing Certificate
-3-
<PAGE>
Secretary's Certificate including Incumbency Certificate
of Signal Investment & Management Co. . . . . . . . . . . . . . . . 18
- Articles of Incorporation
- Bylaws
- Resolutions
- Good Standing Certificate
Officer's Certificate of Borrower . . . . . . . . . . . . . . . . . . . . 19
OTHER
First Chicago Termination Letter. . . . . . . . . . . . . . . . . . . . . 20
Miller & Martin Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 21
Lytle, Soule & Curlee Legal Opinion . . . . . . . . . . . . . . . . . . . 22
Hart-Scott-Rodino Letter. . . . . . . . . . . . . . . . . . . . . . . . . 23
Solvency Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Certified Copy of Subordinated Debt Documents . . . . . . . . . . . . . . 25
Third Party Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Consent of Martin Himmel, Inc. and Jeffrey S. Himmel to
collateral assignment of Purchase Agreement
(b) Consent of Pharma Tech Industries, Inc. to collateral
assignment of Manufacturing Agreement
(c) Consent of The Woolfoam Corporation to collateral
assignment of the Asset Sale and Purchase Agreement and of
the Inventory Purchase and Sale and Manufacturing Agreement
POST-CLOSING ASSIGNMENT
Assignment Agreement between NationsBank, N.A. and Ceres Finance Ltd. . . 27
Tranche B Term Loan Note. . . . . . . . . . . . . . . . . . . . . . . . . 28
- Ceres Finance Ltd.
-4-
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//5//1
Transaction Type: Original financing statement, UNREAL
Jurisdiction: TENNESSEE
Filing Office: Secretary of State, Tennessee
PRINCIPAL COUNT PRINCIPAL NAME
- --------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
<TABLE>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant
to the Uniform Commercial Code: 3 Maturity date (if any):
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debtor (Last Name First) and address(es) 2 Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number, and
Filing Office)
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independence Center, 15th Floor,
Chattanooga, TN 37409 Agency Services, NC1-001-15-04,
SS/FEI #: 62-0156300 101 North Tryon Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 This financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
** Recording tax on indebtedness in the amount of $61,500,000 was paid to
Hamilton County Register of Deeds with the recording of a Deed of Trust and
Security Agreement. Receipt No. 839051 is attached hereto.
- -------------------------------
ASSIGNEE OF SECURED PARTY
CSC REFERENCE #//MOORE1//96-000163//5//1
MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE
RECORDING TAX PURPOSES IS $61,500,000**
- -------------------------------
THIS INSTRUMENT PREPARED BY
------------------
<TABLE>
<S> <C> <C>
Check /X/ if covered: /X/ Proceeds of Collateral are also covered /X/ Products of Collateral are also covered
No. of additional Sheets presented: 9
- -------------------------------------------------------------------------------------------------------------------------------
Filed with: SOS, Tennessee
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
..................................... ......................................
Chattem, Inc.
/s/ Robert E. Bosworth, EVP
19................................... 19....................................
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Alphabetical
<PAGE>
CHATTANOOGA, TENNESSEE 37402
- ------------------------------------------------------------------------------
DATE SYMBOL VALUATION TAX AND FEES TOTAL PAID
- ------------------------------------------------------------------------------
04/30/96 MORT 61,500,000.00 B
04/30/96 T/DD 68.00 B
04/30/96 MTAX 70,722.70 B
04/30/96 PFEE 1.00 **70,791.70 B
- ------------------------------------------------------------------------------
RECEIPT IS NOT VALID UNTIL CHECK IS PAID BY BANK
- ------------------------------------------------------------------------------
OFFICIAL RECEIPT
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CONV-CONVEYANCE CC-CERTIFIED COPY MISC-MISCELLANEOUS
MTG-MORTGAGE AR-ACCOUNTS RECEIVABLE STXC-STATE TAX CONVEY
WD-WARRANTY DEED UCC-UNIFORM COMMERCIAL CODE STXM-STATE TAX MORTGAGE
TD-TRUST DEED PLAI-PLATS PFEE-PROBATE FFCS
TAPE-TAPLS
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//4//l
Transaction Type: Original financing statement, UNREAL
Jurisdiction: CALIFORNIA
Filing Office: Secretary of State, California
<TABLE>
<CAPTION>
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- ---------------------------------------------
<S> <C> <C>
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
This FINANCING STATEMENT is presented for filing and will remain effective with certain exceptions for a period of five years
from the date of filing pursuant to section 9403 of the California Uniform Commercial Code.
- -------------------------------------------------------------------------------------|---------------------------------------
1. DEBTOR (LAST NAME FIRST - IF AN INDIVIDUAL) |1A. SOCIAL SECURITY OR FEDERAL TAX NO.
Chattem, Inc. | 62-0156300
- --------------------------------------------------------|----------------------------|-------------------|-------------------
1B. MAILING ADDRESS | 1C. CITY, STATE |1D. ZIP CODE
1715 West 38th Street | Chattanooga, TN |37409
- --------------------------------------------------------|----------------------------|-------------------|-------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST - IF AN INDIVIDUAL) |2A. SOCIAL SECURITY OR FEDERAL TAX NO.
|
- --------------------------------------------------------|----------------------------|-------------------|-------------------
2B. MAILING ADDRESS | 2C. CITY, STATE | 2D. ZIP CODE
| |
- --------------------------------------------------------|----------------------------|-------------------|-------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) |3A. FEDERAL TAX NUMBER
|
=====================================================================================|=======================================
4. SECURED PARTY |4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
| OR BANK TRANSIT AND A.B.A. NO.
NAME NationsBank, N.A., as Agent |
MAILING ADDRESS Independence Ctr., 15th Fl., 101 N. Tryon St. |
CITY Charlotte STATE NC ZIP CODE 28255 |
- -------------------------------------------------------------------------------------|---------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) |5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
| OR BANK TRANSIT AND A.B.A. NO.
NAME |
MAILING ADDRESS |
CITY STATE ZIP CODE |
- -------------------------------------------------------------------------------------|---------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner or record when required by instruction 4).
All "accounts," "inventory," "general intangibles," "chattel paper," "documents," "instruments," "deposit accounts," "equipment,"
and "goods" as such items are defined in the UCC in effect in the State of North Carolina on the date hereof, and all such other
personal property of the Debtor, and all products and proceeds of any or all of the foregoing as more particularly described on
Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//4//l
- ------------------|--------------------------------|-------------------------------------------------------------------------
7. CHECK /X/ |7A. /X/ PRODUCT OF COLLATERAL |7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE | ARE ALSO COVERED | INSTRUCTION 5(a) ITEM:
| | / / (1) / / (2) / / (3) / / (4)
- ------------------|--------------------------------|-------------------------------------------------------------------------
8. CHECK /X/ | / /DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
IF APPLICABLE |
- ------------------|---------------------------------------------------||---|-------------------------------------------------
9. Chattem, Inc. DATE: || C |10. THIS SPACE FOR USE OF FILING OFFICER
|| O | (DATE, TIME, FILE NUMBER
>> /s/ ROBERT E. BOSWORTH, EVP 4-29-96 || D | AND FILING OFFICER)
SIGNATURE(S) OF DEBTORS(S) || E |
- ----------------------------------------------------------------------||---|
|| 1 |
|| |
|| 2 |
TYPE OR PRINT NAME(S) OF DEBTOR(S) || | 9612460418
- ----------------------------------------------------------------------|| 3 |
|| | [BAR CODE]
|| 4 |
>> || | [BAR CODE]
SIGNATURE(S) OF SECURED PARTY(IES) || 5 |
- ----------------------------------------------------------------------|| |
|| 6 |
|| |
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) || 7 |
======================================================================|| |
RETURN COPY TO || 8 | FILED
__ || | SACRAMENTO, CA
NAME CSC NETWORKS | || 9 | MAY 02, 1996 AT 1628
ADDRESS 1455 RESPONSE ROAD, SUITE 250 || |
CITY SACRAMENTO, CA 95815 || 0 | BILL JONES
STATE || | SECRETARY OF STATE
ACCT. #P6-0000-743-9 __| || |
======================================================================|| |
FORM 8CC-1___ || |
Filing officer is requested to note file || |
number, date and hour of filing on this || |
copy and return to the above party. APPROVED BY THE SECRETARY OF STATE|| |
======================================================================||===|=================================================
(2) FILING OFFICER COPY-ACKNOWLEDGEMENT CSC NETWORKS
375 HUDSON STREET, NY, NY 10014
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//l//12
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NEW JERSEY
Filing Office: Secretary of State, New Jersey
<TABLE>
<CAPTION>
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- ---------------------------------------------
<S> <C> <C>
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ----------------------------------------------------------------------------------------|----------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing purusant |
to the Uniform Commercial Code | Maturity date (if any):
- -------------------------------|---|----------------------------------------------------|-------|--------------------------------
FOR OFFICE USE ONLY | |Debtor(s) Name (Last Name, First) Complete Address | Maturity date (if any):
| |Chattem, Inc. | -----------------------
| |1715 West 38th Street |
| |Chattanooga, TN 37409 |--------------------------------
| |SS/FEI #: 62-0156300 | FOR OFFICE USE ONLY
| | |
| | |
| | |
| |------------------------------------------------------------|
| |Secured Party(ies) and Complete Address |
| |NationsBank, N.A., as Agent |
| |Independence Center, 15th Floor, Agency |
| |Services, NC1-001-15-04, 101 North Tryon |
| |Street |
| |Charlotte, NC 28255 |
| | |
| |------------------------------------------------------------|
| |Assignee(s) of Secured Party and Complete Address |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
- -------------------------------|---|------------------------------------------------------------|--------------------------------
This financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper," "documents," "instruments," "deposits accounts,"
"equipment," and all "goods" as such terms are defined in the UCC in effect in the State of North Carolina on the date hereof,
and all such other personal property of the Debtor, and all products and proceeds of any or all of the foregoing as more
particularly described on Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//l//12
- ---------------------------------------------------------------------------------------------------------------------------------
When collateral is crops or fixtures complete this portion of form.
a. Descripton of real estate (Sufficient to identify the property).
b. Name and complete address of record owner.
- -----------------------------------------------------------------------------------------------|---------------------------------
a. (X) Proceeds of Collateral are also covered. b. (X) Products of Collateral are also covered.| No. of additional sheets
| presented. (8)
- ---------------------------------------------------------------------------------------------------------------------------------
( ) Filed with Register of Deeds and Mortgages of County. (X) Secretary of State
( ) Filed with the County Clerk of County.
- ---------------------------------------------------------------------------------------------------------------------------------
TERMINATION STATEMENT
This statement of termination of financing is presented to a Filing Officer for filing pursuant to the Uniform Commercial Code.
The secured Party certifies that the Secured Party no longer claims a security interest under the financing statement bearing the
file number above.
/s/ ROBERT E. BOSWORTH, EVP
------------------------------------------
Dated: 19
--------------------------------- ------- ------------------------------------------
(Signature(s) of Secured or Assignee or
Record-Not valid until signed)
FILING OFFICER COPY - ACKNOWLEDGMENT - Filing Officer is requested to no file number, date and hour of filing on this copy and
return it to the person, as an acknowledgment.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//5
Transaction Type: Original financing statement, UNREAL
Jurisdiction: HAWAII
Filing Office: Bureau of Conveyances, Hawaii
PRINCIPAL COUNT PRINCIPAL NAME
- ----------- ----- -------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
R-550
STATE OF HAWAII
BUREAU OF CONEYANCES
RECORDED
MAY 03, 1996 02:30 PM
Doc No(s) 96-061797
/s/ CARL T. WATANABE
ACTING
REGISTRAR OF CONVEYANCES
Type complete address below.
- ------------------------------------------------------------------------------
Return by Mail ( ) To: Pickup or will pickup ( )
CSC NETWORKS/PHL&FS
------------------------------------------
1455 RESPONSE ROAD, SACRAMENTO, CA 95815
------------------------------------------
- ------------------------------------------------------------------------------
2. Debtor (Last Name First) and Address Assignee and Address
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #:62-0156300
- --------------------------------------------------------
3. Secured Party: Name and Address
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services,
NC1-001-15-04, 101 North Tryon Street
Charlotte, NC 28255
- ------------------------------------------------------------------------------
5. This Financing Statement covers the following types or items of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//1//5
- ------------------------------------------------------------------------------
6. Check (x) if applicable: ( ) (if collateral is crops) The above described
crops are growing or are to be grown on: ( ) (If collateral is goods which
are or are to become fixtures) The above described goods are affixed or to be
affixed to:
Record Owner:
-----------------------------------------------------------------
Record Lessee:
----------------------------------------------------------------
- ------------------------------------------------------------------------------
7. Check (x) if applicable: (x) Proceeds (x) Products of collateral are also
covered
- ------------------------------------------------------------------------------
8. This statement is filed without the debtor's signature to perfect a
security interest in collateral:
( ) which is already subject to a security interest in another
jurisdiction when it was brought to this state, or;
( ) which is proceeds of the original collateral described above in which
a security interest was perfected.
- ------------------------------------ ---------------------------------
Chattem, Inc.
By /s/ Robert E. Bosworth, EVP By
---------------------------------- -------------------------------
Signature(s) of Debtor(s)(only Signature(s) of Secured
on amendment) Party(ies)
FILING OFFICER COPY
STATE OF HAWAII
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//19
Transaction Type: Original financing statement, UNREAL
Jurisdiction: RHODE ISLAND
Filing Office: Secretary of State, Rhode Island
PRINCIPAL COUNT PRINCIPAL NAME
- ----------- ----- -------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to THE SECRETARY OF STATE for filing pursuant to the Uniform Commercial Code.
1.Debtor(s) (Last Name First) and address(es) 2. Secured Party(ies) and address(es)
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independence Center, 15th Floor,
Chattanooga, TN 37409 Agency Services, NC1-001-15-04, 101
SS/FEI #: 62-0156300 North Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------------------------------
3. This financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper," "documents,"
"instruments," "deposit accounts," "equipment," and "goods" as such terms are defined
in the UCC in effect in the State of North Carolina on the date hereof, and all such other
personal property of the Debtor, and all products and proceeds of any or all of the
foregoing as more particularly described on Exhibit A attached hereto and made a part FOR FILING OFFICER USE
hereof. -----------------------
CSC REFERENCE #//MOORE1//96-000163//1//19
Check /X/ if covered: /X/ Proceeds of Collateral are also covered /X/ Products of Collateral are also covered
- ---------------------------------------------------------------------------------------------------------------------------------
Filed with: SOS, Rhode Island
- ---------------------------------------------------------------------------------------------------------------------------------
TERMINATION STATEMENT
This statement of termination of financing is presented to a filing officer for filing pursuant to the Uniform Commercial Code.
The Secured Party certifies that the Secured Party no longer claims a security interest under the financing statement bearing
the file number shown above. (Filing Fee $4.00).
----------------------------------------------------------------
Dated: 19 By:
------------------------------------------- -------- -------------------------------------------------------------
(Signature of Secured Party or Assignee of Record -
Not Valid until signed)
(3) FILING OFFICER COPY - ACKNOWLEDGMENT - FILING OFFICER IS REQUESTED TO NOTE FILE NUMBER, DATE AND HOUR OF
FILING ON THIS COPY AND RETURN IT TO THE PERSON FILING, AS AN ACKNOWLEDGMENT.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//6//3
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NEW YORK
Filing Office: Department of State, New York
PRINCIPAL COUNT PRINCIPAL NAME
- ------------- ----- ---------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
STATE OF NEW YORK
DEPARTMENT OF STATE
ALBANY, NY 12231-0001
ALEXANDER F. TREADWELL FILING ACKNOWLEDGMENT
SECRETARY OF STATE
RETURN TO CUSTOMER SERVICE COUNTER MAY 14, 1996
CSC NETWORKS
500 CENTRAL AVENUE
ALBANY, NY 12206
Attached is the acknowledgment copy of your recently submitted filing. This
document has been filed with the New York State Department of State, Uniform
Commercial Code Division.
The UCC-1 Financing Statement has been assigned Filing Number: 096149, Filing
Date: 05/13/1996 and is currently reflected in our automated database as
follows:
DEBTOR'S NAME & ADDRESS
- -----------------------
CHATTEM, INC.
1715 WEST 38TH STREET
CHATTANOOGA, TN 37409
SECURED PARTY'S NAME AND ADDRESS
- --------------------------------
NATIONSBANK N.A., AS AGENT
INDEPENDENCE CENTER, 15TH FLOOR, AGENCY SERVICES
NC1-001-15-04, 101 NORTH TRYON STREET
CHARLOTTE, NC 28255
This Filing will lapse on 05/13/2001 unless continued or terminated. We
encourage filers to take full advantage of the six-month window of
opportunity in which to file UCC-3 continuations. Submission of your
documents at the onset of the six-month window will allow ample time to
rectify potential filing errors and help to assure timely recording of your
filing.
If you have any concerns regarding the way this document is recorded, please
contact one of our Customer Service Representatives at (518) 432-2733, or
respond in writing to the UCC Data Processing Unit at the address indicated
above.
Sincerely,
Uniform Commercial Code Division REF #: 521329
Data Processing Unit
<PAGE>
- -------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer No. of Additional
for filing pursuant to the Uniform Commercial Code. Sheets Presented: 8
- -------------------------------------------------------------------------------
(1) Debtor(s) (Last Name First) and Address(es):
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- -------------------------------------------------------------------------------
(2) Secured Party(ies) (Names(s) and Address(es):
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North
Tryon Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------
(3) / / The Debtor is a transmitting utility.
- -------------------------------------------------------------------------------
(4) For Filing Officer: Date, Time, No. Filing Office
- -------------------------------------------------------------------------------
(5) This Financing Statement covers the following types (or items) of
property. All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
/X/ Products of the Collateral are also covered.
- -------------------------------------------------------------------------------
(6) Assignee(s) of Secured Party and Address(es)
- -------------------------------------------------------------------------------
(7) / / The described crops are growing or to be grown on:*
/ / The described goods are or are to be affixed to:*
/ / The lumber to be cut or minerals or the like (including oil and gas)
is on:*
*(Describe Real Estate Below)
- -------------------------------------------------------------------------------
(8)Describe Real Estate Here: / / This statement is to indexed in the
Real Estate Records:
No. & Street Town or City County Section Block Lot
- -------------------------------------------------------------------------------
(9) Name of a Record Owner
- -------------------------------------------------------------------------------
(10) This statement is filed without the debtor's signature to perfect a
security interest in collateral (check appropriate box)
/ / under a security agreement signed by debtor authorizing secured party
to file this statement, or
/ / which is proceeds of the original collateral described above in which
a security interest was perfected, or
/ / acquired after a change of name, identity or corporate structure of
the debtor, or / / as to which the filing has lapsed, or already
subject to a security interest in another jurisdiction:
/ / when the collateral was brought into the state, or / / when the
debtor's location was changed to this state.
- ---------------------------------- ----------------------------------------
Chattem, Inc.
By /s/ Robert E. Bosworth, EVP By
-------------------------------- --------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy = Numerical
CSC REFERENCE #//MOORE1//96-000163//6//3
(6/82) STANDARD FORM - FORM UCC-1 -
Approved by the Secretary of State of New York
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//6//5
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NEW YORK
Filing Office: County Clerk, Orange
PRINCIPAL COUNT PRINCIPAL NAME
- ------------- ----- ---------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
- -------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer No. of Additional
for filing pursuant to the Uniform Commercial Code. Sheets Presented: 0
- -------------------------------------------------------------------------------
(1) Debtor(s) (Last Name First) and Address(es):
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- -------------------------------------------------------------------------------
(2) Secured Party(ies) (Names(s) and Address(es):
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North
Tryon Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------
(3) / / The Debtor is a transmitting utility.
- -------------------------------------------------------------------------------
(4) For Filing Officer: Date, Time, No. Filing Office
01885
- -------------------------------------------------------------------------------
(5) This Financing Statement covers the following types (or items) of
property. All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
/X/Products of the Collateral are also covered.
- -------------------------------------------------------------------------------
(6) Assignee(s) of Secured Party and Address(es)
- -------------------------------------------------------------------------------
(7) / / The described crops are growing or to be grown on:*
/ / The described goods are or are to be affixed to:*
/ / The lumber to be cut or minerals or the like (including oil and gas)
is on:*
*(Describe Real Estate Below)
- -------------------------------------------------------------------------------
(8) Describe Real Estate Here: / / This statement is to indexed in the
Real Estate Records:
No. & Street Town or City County Section Block Lot
- -------------------------------------------------------------------------------
(9) Name of a Record Owner
- -------------------------------------------------------------------------------
(10) This statement is filed without the debtor's signature to perfect a
security interest in collateral (check appropriate box)
/ / under a security agreement signed by debtor authorizing secured party
to file this statement, or
/ / which is proceeds of the original collateral described above in which
a security interest was perfected, or
/ / acquired after a change of name, identity or corporate structure of
the debtor, or / / as to which the filing has lapsed, or already
subject to a security interest in another jurisdiction:
/ / when the collateral was brought into the state, or / / when the
debtor's location was changed to this state.
- ---------------------------------- ----------------------------------------
Chattem, Inc.
By /s/ Robert E. Bosworth, EVP By
-------------------------------- --------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(2) FILING OFFICER COPY - ACKNOWLEDGEMENT
CSC REFERENCE #//MOORE1//96-000163//6//5
(5/82) STANDARD FORM - FORM UCC-1 -
Approved by the Secretary of State of New York
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//6//4
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NEW YORK
Filing Office: County Clerk, Cortland
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
- -------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer No. of Additional
for filing pursuant to the Uniform Commercial Code: Sheets Presented: 0
- -------------------------------------------------------------------------------
(1) Debtor(s) (Last Name First) and Address(es)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- -------------------------------------------------------------------------------
(2) Secured Party(ies) (Names(s) and Address(es):
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North
Tryon Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------
(3) / / The Debtor is a transmitting utility.
- -------------------------------------------------------------------------------
(4) For Filing Officer: Date, Time, No. Filing Office
960398
- -------------------------------------------------------------------------------
(5) This Financing Statement covers the following types (or items) of
property All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
/X/Products of the Collateral are also covered.
- -------------------------------------------------------------------------------
(6) Assignee(s) of Secured Party and Address(es)
- -------------------------------------------------------------------------------
(7) / / The described crops are growing or to be grown on:*
/ / The described goods are or are to be affixed to:*
/ / The lumber to be cut or minerals or the like (including oil and gas)
is on:*
*(Describe Real Estate Below)
- -------------------------------------------------------------------------------
(8)Describe Real Estate Here: / / This statement is to indexed in the
Real Estate Records:
No. & Street Town or City County Section Block Lot
- -------------------------------------------------------------------------------
(9) Name of a Record Owner
- -------------------------------------------------------------------------------
(10) This statement is filed without the debtor's signature to perfect a
security interest in collateral (check appropriate box)
/ / under a security agreement signed by debtor authorizing secured party
to file this statement, or
/ / which is proceeds of the original collateral described above in which
a security interest was perfected, or
/ / acquired after a change of name, identity or corporate structure of
the debtor, or / / as to which the filing has lapsed, or already
subject to a security interest in another jurisdiction:
/ / when the collateral was brought into the state, or / / when the
debtor's location was changed to this state.
- ---------------------------------- ----------------------------------------
Chattem, Inc.
By /s/ Robert E. Bosworth, EVP By
-------------------------------- --------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(2) FILING OFFICER COPY - ACKNOWLEDGEMENT
CSC REFERENCE #//MOORE1//96-000163//6//4
(5/82) STANDARD FORM - FORM UCC-1 -
Approved by the Secretary of State of New York
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//6//1
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NORTH CAROLINA
Filing Office: Secretary of State, North Carolina
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
- -------------------------------------------------------------------------------
THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER No. of Additional
FOR FILING PURSUANT TO THE UNIFORM COMMERCIAL CODE: Sheets Presented: 0
- -------------------------------------------------------------------------------
(1) Debtor(s) (Last Name First) and Address(es):
(Please Type)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- -------------------------------------------------------------------------------
(2) Secured Party(ies) (Names(s) And Address(es):
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North Tryon
Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------
(3) (a) / / Collateral is or includes fixtures.
(b) / / Timber, Minerals or Accounts Subject
to G.S. 25-9-103(5) are covered
(c) / / Crops Are Growing Or To Be Grown*
On Real Property Described in Section (5).
If either block 3(a) or block 3(b) applies describe
real estate, including record owner(s) in section (5).
- -------------------------------------------------------------------------------
(4) Assignee(s) of Secured Party, Address(es):
- -------------------------------------------------------------------------------
For
Filing
Officer
- -------------------------------------------------------------------------------
(5) This Financing Statement Covers the Following types (or items) of property.
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
* On Farm Collateral Filing, Name County Debtor Resides in
-----------------
(Cannot be Filed unless County is named.)
/X/Products of the Collateral Are Also Covered.
CSC REFERENCE #//MOORE1//96-000163//6//1
- -------------------------------------------------------------------------------
(6) Signatures: Debtor(s) Secured Party(ies) [or Assignees]
Chattem, Inc.
- --------------------------------- ---------------------------------------
By:
------------------------------------
Signatures of Secured Party Permitted
in Lieu of Debtor's Signature:
By: /s/ Robert E. Bosworth, EVP (1) Collateral is subject to Security
------------------------------ Interest In Another Jurisdiction
Standard Form Approved by N.C. and /X/
Sec. of State / / Collateral is Brought Into This
State
Revised 11-90 / / Debtor's Location Changed To
This State
(2) For Other Situations See:
G.S. 25-9-402 (2)
(2) FILING OFFICER COPY - ALPHABETICAL UCC-1
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//6//2
Transaction Type: Original financing statement, UNREAL
Jurisdiction: NORTH CAROLINA
Filing Office: Register of Deeds, Iredell
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
<TABLE>
<CAPTION>
<S><C>
FILE 2ND
- ------------------------------------------------------------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for No. of Additional
filing pursuant to the Uniform Commercial Code. Sheets Presented: 0
- ----------------------------------------------------------------------------------------------------
(1) Debtor(s) (Last Name First) and Address(es): (2) Secured Party(ies) (Names(s) And Address(es):
(Please Type)
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independence Center, 15th Floor, Agency
Chattanooga, TN 37409 Services, NC1-001-15-04, 101 North Tryon
SS/FEI #: 62-0156300 Street
Charlotte, NC 28255 IREDELL COUNTY NC
- ----------------------------------------------------------------------------------------------------
(3) (a) / / Collateral is or includes fixtures. (4) Assignee(s) of Secured Party,
(b) / / Timber, Minerals or Accounts Subject Address(es): MAY 3 96 9 6 0 7 4 0
to G.S. 25-9-103(5) are covered
(c) / / Crops Are Growing Or To Be Grown*
On Real Property Described in Section (5). For
If either block 3(a) or block 3(b) applies Filing 11:15 AM
describe real estate, including record owner(s) Officer
in section (5).
- ------------------------------------------------------------------------------------------------------------------------------------
(5) This Financing Statement Covers the Following types [or items] of property.
All "accounts," "inventory," "general intangibles," "chattel paper," "documents," "instruments," "deposit
accounts," "equipment," and "goods" as such terms are defined in the UCC in effect in the State of North Carolina
on the date hereof, and all such other personal property of the Debtor, and all products and proceeds of any
or all of the foregoing as more particularly described on Exhibit A attached hereto and made a part hereof.
* On Farm Collateral Filing, Name County Debtor Resides in ___________________________________________
/x/ Products of the Collateral Are Also Covered. (Cannot be Filed unless County is named.) CSC REFERENCE #//MOORE1//96-000163//6//2
- ------------------------------------------------------------------------------------------------------------------------------------
TERMINATION STATEMENT: This Statement of Termination of Financing is presented to a Filing Officer pursuant to the Uniform
Commercial Code. The Secured Party certifies that the Secured Party no longer claims a security interest under the financing
statement bearing the file number shown above (A Termination Statement signed by a person other than the secured party of record
must include or be accompanied by the assignment or a statement by the secured party of record that he has assigned the security
interest to the signer of the Termination Statement.)
Date 19 /s/ Tobert E. Bosworth, EVP
--------------- ----- -----------------------------------------------
By
--------------------------------------------
(Signature of Secured Party or Assignee)
Revised 11-90
(3) Filing Officer Copy - Acknowledgement. Filing Officer
is requested to note file number, date and hour of filing
on this copy and return to person filing, as an
Acknowledgement.
(Scissors) UCC-1
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//4//4
Transaction Type: Original financing statement, UNREAL
Jurisdiction: WISCONSIN
Filing Office: Secretary of State, Wisconsin
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- --------------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
This JCC-1 FINANCING STATEMENT is presented for filing pursuant to the Wisconsin
Uniform Commercial Code.
1. Debtor (Legal Name of Entity Or First Name Middle Initial
Last Name If An Individual)
Chattem, Inc.
- --------------------------------------------------------------------------------
1A. Mailing Address
1715 West 38th Street
- --------------------------------------------------------------------------------
1B. City, State, Zip Code 1C. Social Security or Federal Tax ID No.
Chattanooga, TN 37409 62-0156300
- --------------------------------------------------------------------------------
2. Additional Debtor (If Any) (Legal Name Of First Name Middle Initial
Entity Or Last Name If An Individual)
- --------------------------------------------------------------------------------
2A. Mailing Address
- --------------------------------------------------------------------------------
2B. City, State, Zip Code 2C. Social Security or Federal Tax ID No.
- --------------------------------------------------------------------------------
3. Additional Debtor (If Any) (Legal Name Of First Name Middle Initial
Entity Or Last Name If An Individual)
- --------------------------------------------------------------------------------
3A. Mailing Address
- --------------------------------------------------------------------------------
3B. City, State, Zip Code 3C. Social Security or Federal Tax ID No.
- --------------------------------------------------------------------------------
4. Secured Party
Name NationsBank, N.A., as agent
Mailing Address Independence Ctr., 15th Fl., 101 N. Tryon St.
City, State, Zip Code Charlotte, NC 28255
- --------------------------------------------------------------------------------
5. File With /X/ Secretary of State / / Reg of Deeds ___________________ County
- --------------------------------------------------------------------------------
6. No. of Additional Sheets Presented: 8 Attaching additional pages requires
non-standard fee.
- --------------------------------------------------------------------------------
7. This Financing Statement covers the following types (or items) of Collateral
and (7A) if the collateral is crops, the land on which the crops are growing
or to be grown.
7B. Proceeds of collateral are covered unless checked / /.
7C. Products of collateral are covered unless checked. / /.
7D. If checked here / / the term"Debtor" refers to a "Lessee", the term
"Secured Party" refers to a "Lessor" and this filing is made only for
informational purposes to provide notice of a personal property lease of
the of the following.
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//4//4
- --------------------------------------------------------------------------------
8. Office use only, (Initial Filing - Date, Time, Number, etc.)
1583872
Filed A
96 May 3 AM 9 20
DOUGLAS LA FOLLETTE
SECRETARY OF STATE
- --------------------------------------------------------------------------------
9. 2635
------------------------
SUBMITTER ACCOUNT NUMBER
(For use only with Secretary of State - insert assigned number, if any)
- --------------------------------------------------------------------------------
10. Assignee Of Secured Party (if any)
Name
Mailing Address
City
State, Zip Code
- --------------------------------------------------------------------------------
11. "Continuing Business Relationship" under S.409.404(1)(C)
Wis. Stats. exists if checked / /
- --------------------------------------------------------------------------------
12. Chattem, Inc.
--------------------------------------------------------------
NAME OF DEBTOR (IF ENTITY)
BY: /s/ Robert E. Bosworth, EVP
--------------------------------------------------------------
Chattem, Inc.
- -----------------------------------------------------------------
SIGNATURE OF INDIVIDUAL DEBTOR
- -----------------------------------------------------------------
SIGNATURE OF INDIVIDUAL DEBTOR
- -----------------------------------------------------------------
SIGNATURE OF INDIVIDUAL DEBTOR
13.
--------------------------------------------------------------
SIGNATURE OF SECURED PARTY OR ASSIGNEE OR ITS AGENT - TITLE
(Signature of Secured Party if required)
TERMINATION STATEMENT
This statement of termination of financing is presented to a filing officer
pursuant to the Uniform Commercial Code. The secured Party certifies that the
Secured Party no longer claims a security interest under the financing statement
bearing the file number shown above and requests the filing officer to terminate
its interest of record.
- -----------------------------------------------------------------
TYPE/PRINT NAME OF SECURED PARTY OF RECORD
- -----------------------------------------------------------------
SIGNATURE OF SECURED PARTY OF RECORD OR ITS AGENT
NOT VALID UNTIL SIGNED
14. RETURN COPIES TO:
Name
Address
City, State
And Zip Code
Dated: 19
----------------------- ---
15.
-------------------------------------------
CONTACT PERSON
-------------------------------------------
PHONE NUMBER
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//6
Transaction Type: Original financing statement, UNREAL
Jurisdiction: ILLINOIS
Filing Office: Secretary of State, Illinois
PRINCIPAL COUNT PRINCIPAL NAME
- --------------- ----- ------------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
This STATEMENT is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.
------------------------------------------------------------------------------------- For Filing Officer
Debtor(s) (Last Name First) and address(es) Secured Party(ies) and address(es) (Date, Time, Number, and Filing Office)
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independent Center, 15th Floor, Agency
Chattanooga, TN 37409 Services, NC1-001-15-04, 101 North
SS/FEI #: 62-0156300 Tryon Street
Charlotte, NC 28255
-------------------------------------------------------------------------------------
1. This financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper," "documents," ASSIGNEE OF SECURED PARTY
"instruments," "deposit accounts," "equipment," and "goods" as such terms are
defined in the UCC in effect in the State of North Carolina on the date hereof,
and all such other personal property of the Debtor, and all products and proceeds
of any or all of the foregoing as more particularly described on Exhibit A attached
hereto and made a part hereof.
-----------------------------------------
2. /X/ Products of Collateral are also covered.
CSC REFERENCE #//MOORE1/96-000163//1//6
-------------------------------------------------------------------------------------------------------------------------------
TERMINATION STATEMENT: This Statement of Termination of Financing is presented to a Filing Officer for filing pursuant to the
Uniform Commercial Code. The Secured Party certifies that the Secured Party no longer claims a security interest under the
financing statement bearing the file number shown above.
/s/ Robert E Bosworth
----------------------------------------------------------------------------------
Date 19 By: EVP
-------------------- ------- --------------------------------------------------------------------------------
(Signature of Secured Party or Assignee of Record. Not Valid Until Signed.)
FILING OFFICER - ACKNOWLEDGMENT This form of financing statement is approved by the Secretary of State.
STANDARD FORM - UNIFORM COMMERCIAL CODE - FORM UCC-1 - REV. 1 - 75
[SCISSORS]
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//4
Transaction Type: Original financing statement, UNREAL
Jurisdiction: GEORGIA
Filing Office: Clerk of the Superior Court, Walker
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- ----------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
THIS FINANCIAL STATEMENT IS PRESENTED TO A FILING OFFICER FOR
FILING PURSUANT TO THE UNIFORM COMMERCIAL CODE, STATE OF
GEORGIA.
- --------------------------------------------------------------------------------
1A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/X/ Business (Legal Business Name)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
1B. Enter Social Security/Tax ID # 62-0156300
-----------
1C. / /Check if exempt under Item 6
- --------------------------------------------------------------------------------
2A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
2B. Enter Social Security/Tax ID #
-----------
2C. / /Check if exempt under Item 6
- --------------------------------------------------------------------------------
3A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
3B. Enter Social Security/Tax ID #
-----------
3C. / /Check if exempt under Item 6
- --------------------------------------------------------------------------------
4. Secured Party Name and Mailing / / Individual (Last, First, Middle Name)
Address: /X/ Business (Legal Business Name)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services,
NC1-001-15-04, 101 North Tryon Street
Charlotte, NC 28255
File #146-1996-0652
Date 5/3/96
Time 12:00 p.m.
Bill McDaniel, Clerk
Walker County, Ga.
ABOVE SPACE FOR RECORDING INFORMATION
- --------------------------------------------------------------------------------
5. Assignee Name and Mailing Address / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
- --------------------------------------------------------------------------------
6. Exceptions for Social Security/Tax ID# -- O.C.G.A. 11-9-402(9): Financing
Statement filed to perfect a security interest in collateral already
subject to a security interest in another jurisdiction when it is brought
into this state or when the debtor's location is changed to this state or the
debtor is not required to have such a number.
- --------------------------------------------------------------------------------
7. / / Check Only if BOTH: (i) Collateral is consumer goods as defined in
O.C.G.A. 11-9-109 and (ii) the secured obligation is originally $5,000 or
less, and give maturity date (MONTH/DAY/YEAR) or state "None"
---------------------------------.
- --------------------------------------------------------------------------------
8. Check ONLY if applicable.
A. / / Collateral on Consignment.
B. / / Collateral on Lease.
- --------------------------------------------------------------------------------
9A. This financing statement covers the following types or items of collateral:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in in effect in the State of North Carolina
on the date hereof, and all such other personal property of the Debtor, and
all products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
9B. /X/ Products of collateral are also covered.
CSC REFERENCE #//MOORE1//96-000163//1//4
- --------------------------------------------------------------------------------
9C. Enter collateral code(s) from back of form that best describes collateral
covered by this filing:
--------------- ---------------
--------------- ---------------
--------------- ---------------
--------------- ---------------
--------------- ---------------
--------------- ---------------
- --------------------------------------------------------------------------------
9D. Number of additional sheets presented: 8
---------------
- --------------------------------------------------------------------------------
10. Check if applicable and include reasonable description of the real estate in
Item 9A:
A. / / Crops growing or to be grown.
B. / / Minerals or the like (including oil and gas) or accounts subject to
O.C.G.A. 11-9-103(5).
C. / / Fixture filing pursuant to O.C.G.A. 11-9-313.
- --------------------------------------------------------------------------------
11. Name of the Record Owner(s) or Record Lessee(s) (if debtor does not have an
interest of record in the real estate):
- --------------------------------------------------------------------------------
12. County or counties in which the affected real estate is located (Must be
identified if filing covers crops, mineral or fixtures):
- ------------ ------------ ------------ ------------ ------------
- ------------ ------------ ------------
- --------------------------------------------------------------------------------
13. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check only if applicable):
A. / / alrerady subject to a security interest in another jurisdiction when
it was brought into this state or debtor's location changed to this
state:
B. / / which is proceeds of the original collateral described above in which
a security interest was perfected;
C. / / as to which the filing has lapsed;
D. / / acquired after a change of debtor's name, identify or corporate
structure; or
E. / / described in a security agreement/real estate mortgage attached
hereto in accordance with O.C.G.A. 11-9-402(1).
- --------------------------------------------------------------------------------
14. Signature(s) of Debtor(s)
Chattem, Inc.
/s/ Robert E. Bosworth, EVP
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
15. Signature(s) of Secured Party(ies)
NationsBank, N.A., as Agent
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------
16. Return Copy To: Name and Address
CSC NETWORKS/PHL&FS
1455 RESPONSE ROAD
SACRAMENTO, CA 95815
STATE OF GEORGIA - FINANCING STATEMENT
UCC-1 (REVISED 1/1/1995
SECURED PARTY COPY
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//3
Transaction Type: Original financing statement, UNREAL
Jurisdiction: GEORGIA
Filing Office: Clerk of the Superior Court, Rockdale
PRINCIPAL COUNT PRINCIPAL NAME
- ------------- ----- --------------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER FOR FILING PURSUANT TO
THE UNIFORM COMMERCIAL CODE, STATE OF GEORGIA
- --------------------------------------------------------------------------------
1A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/x/ Business (Legal Business Name)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
1B. Enter Social Security/Tax ID #62-0156300 1C. / / Check if exempt under
Item 6
- --------------------------------------------------------------------------------
2A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
2B. Enter Social Security/Tax ID #__________ 2C. / / Check if exempt under
Item 6
- --------------------------------------------------------------------------------
3A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
3B. Enter Social Security/Tax ID #__________ 3C. / / Check if exempt under
Item 6
- --------------------------------------------------------------------------------
4. Secured Party Name and Mailing / / Individual (Last, First, Middle Name)
Address:
/x/ Business (Legal Business Name)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services,
NC1-001-15-04, 101 North Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------
FILED IN OFFICE
CLERK OF SUPERIOR COURT
ROCKDALE COUNTY GEORGIA
96-004307
1996 MAY - 3 PM 3:02
File No. 122-96-690
ABOVE SPACE FOR RECORDING INFORMATION
- --------------------------------------------------------------------------------
5. Assignee Name and Mailing Address / / Individual (Last, First, Middle Name)
/ / Business (Legal Business Name)
- --------------------------------------------------------------------------------
6. Exceptions for Social Security/Tax ID# -- O.C.G.A. 11-9-402(9): Financing
Statement filed to protect a security interest in collateral already subject
to a security interest in another jurisdiction when it is brought into this
state or when the debtor's location is changed to this state, or the debtor
is not required to have such a number.
- --------------------------------------------------------------------------------
7. / / Check Only if BOTH: (i) Collateral is consumer goods as defined in
O.C.G.A. 11-9-109 and (ii) the secured obligation is originally $5,000
or less, and give maturity date (MONTH/DAY/YEAR) or state "None"
______________________________________________________________________
- --------------------------------------------------------------------------------
8. Check ONLY if applicable.
A. / / Collateral on Consignment.
B. / / Collateral on Lease.
- --------------------------------------------------------------------------------
9A. This financing statement covers the following types or items of collateral:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as such
terms are defined in the UCC in effect in the State of North Carolina on the
date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
9B. /x/ Products of collateral are CSC REFERENCE #//MOORE1//96-000163//1//3
also covered.
- --------------------------------------------------------------------------------
9C. Enter collateral code(s) from back of form that best describes collateral
covered by this filing:
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
- --------------------------------------------------------------------------------
9D. Number of additional sheets presented: 8
- --------------------------------------------------------------------------------
10. Check if applicable and include reasonable description of the real estate in
Item 9A:
A. / / Crops growing or to be grown. B. / /Minerals or the like (including
oil and gas) or accounts
subject to O.C.G.A. 11-9-103(6).
C. / / Fixture filing pursuant to
O.C.G.A. 11-9-313.
- --------------------------------------------------------------------------------
11. Name of the Record Owner(s) or Record Lessee(s) (if debtor does not have an
interest of record in the real estate):
- --------------------------------------------------------------------------------
12. County or Counties in which the affected real estate is located (Must be
identified if filing covers crops, mineral or fixtures):
__________ __________ __________ __________ ___________ _____
- --------------------------------------------------------------------------------
13. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check only if applicable):
A. / / already subject to a security interest in another jurisdiction when
it was brought into this state or debtor's location changed to this
state;
B. / / which is proceeds of the original collateral described above in which
a security interest was perfected;
C. / / as to which the filing has lapsed;
D. / / acquired after a change of debtor's name, identify or corporate
structure; or
E. / / described in a security agreement/real estate mortgage attached
hereto in accordance with O.C.G.A. 11-9-402(1).
- --------------------------------------------------------------------------------
14. Signature(s) of Debtor(s)
Chattem, Inc. /s/ Robert E. Bosworth, EVP
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
- --------------------------------------------------------------------------------
15. Signature(s) of Secured Party(ies)
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
- --------------------------------------------------------------------------------
16. Return Copy To: Name and Address
CSC NETWORKS/PHL&FS STATE OF GEORGIA - FINANCING STATEMENT
1455 RESPONSE ROAD
SACRAMENTO, CA 95815 UCC-1 (REVISED 1/1/1995)
FORM MUST BE TYPED
READ INSTRUCTIONS ON BACK
BEFORE FILLING OUT FORM.
FILING OFFICER ACKNOWLEDGMENT COPY
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//2
Transaction Type: Original financing statement, UNREAL
Jurisdiction: GEORGIA
Filing Office: Clerk of the Superior Court, Fulton
PRINCIPAL COUNT PRINCIPAL NAME
- ----------------- ----- ----------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER FOR FILING PURSUANT TO
THE UNIFORM COMMERCIAL CODE, STATE OF GEORGIA.
- --------------------------------------------------------------------------------
1A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/X/ Business (Legal Business Name)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
1B. Enter Social Security/Tax ID # 62-0156300 1C. / / Check if exempt under
---------- Item 6
- --------------------------------------------------------------------------------
2A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/X/ Business (Legal Business Name)
2B. Enter Social Security/Tax ID # 2C./ / Check if exempt under Item 6
- --------------------------------------------------------------------------------
3A. Debtor Name and Mailing Address: / / Individual (Last, First, Middle Name)
/X/ Business (Legal Business Name)
3B. Enter Social Security/Tax ID # 3C./ / Check if exempt under Item 6
- --------------------------------------------------------------------------------
4. Secured Party Name and Mailing / / Individual (Last, First, Middle Name)
Address: /X/ Business (Legal Business Name)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services,
NC1-001-15-04, 101 North Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------
5. Assignee Name and Mailing / / Individual (Last, First, Middle Name)
Address: /X/ Business (Legal Business Name)
- --------------------------------------------------------------------------------
6. Exceptions for Social Security/Tax ID# __O.C.G.A. 11-9-402(9): Financing
Statement filed to perfect a security interest in collateral already subject
to a security interest in another jurisdiction when it is brought into this
state or when the debtor's location is changed to this state, or the debtor
is not required to have such a number.
- --------------------------------------------------------------------------------
7. / / Check Only if BOTH: (i) Collateral is consumer goods as defined in
O.C.G.A. 11-9-109 and (ii) the secured obligation is originally $5,000 or less,
and give maturity date (MONTH/DAY/YEAR) or state "None" ______________________.
- --------------------------------------------------------------------------------
8. Check ONLY if applicable.
A./ / Collateral on Consignment.
B./ / Collateral on Lease.
- --------------------------------------------------------------------------------
9A. This financing statement covers the following types or items of collateral:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
9B. /X/ Products of collateral are CSC REFERENCE #//MOORE1//96-000163//1//2
also covered.
- --------------------------------------------------------------------------------
9C. Enter collateral code(s) from back of form that best describes collateral
covered by this filing:
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
- --------------------------------------------------------------------------------
9D. Number of additional sheets presented: 8
------------
- --------------------------------------------------------------------------------
10. Check if applicable and include reasonable description of the real estate
in Item 9A:
A. / / Crops growing or to be grown. B. / / Minerals or the like
(including oil and gas) or accounts subject to O.C.G.A. 11-9-103(6).
C. / / Fixture filing pursuant to O.C.G.A. 11-9-313.
- --------------------------------------------------------------------------------
11. Name of the Record Owner(s) or Record Lessee(s) (if debtor does not have an
interest of record in the real estate):
- --------------------------------------------------------------------------------
12. County or Counties in which the affected real estate is located (Must be
identified if filing covers crops, mineral or fixtures):
- --------- --------- --------- --------- --------- --------- --------- ---------
- --------------------------------------------------------------------------------
13. This statement is filed without the debtor's signature to perfect a
security interest in collateral (check if applicable):
A. / / already subject to a security interest in another jurisdiction
when it was brought into this state or debtor's location changed to
this state;
B. / / which is proceeds of the original collateral described above in
which a security interest was perfected;
C. / / as to which the filing has lapsed;
D. / / acquired after a change of debtor's name, identify or corporate
structure; or
E. / / described in a security agreement / real estate mortgage attached
hereto in accordance with O.C.G.A. 11-9-402(1).
- --------------------------------------------------------------------------------
14. Signature(s) of Debtor(s) 15. Signature(S) of Secured Party(ies)
Chattem, Inc. NationsBank, N.A., as Agent
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
- --------------------------------------------------------------------------------
16. Return Copy to: Name and Address STATE OF GEORGIA - FINANCING STATEMENT
CSC NETWORKS/PHL&FS UCC-1 (REVISED 1/1/1995
1455 RESPONSE ROAD
SACRAMENTO, CA 95815 FORM MUST BE TYPED.
READ INSTRUCTION ON BACK
BEFORE FILLING OUT FORM.
STANDARD FORM UCC-1 - APPROVED 1/1/1995 BY GEORGIA SUPERIOR COURT CLERKS'
COOPERATIVE AUTHORITY
DEBTOR COPY
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//16
Transaction Type: Original financing statement, UNREAL
Jurisdiction: OHIO
Filing Office: Secretary of State, Ohio
PRINCIPAL COUNT PRINCIPAL NAME
------------- ----- ----------------------------------------------
SECURED PARTY 1 NationsBank, N.A. as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant
to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
1 Debtor(s) (Last Name First) and Address(es)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #:62-0156300
- --------------------------------------------------------------------------------
2 Secured Party(ies) and Address(es)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North
Tryon Street
Charlotte, NC 28255
x-file (8)
- --------------------------------------------------------------------------------
3 For Filing Officer
(Date, Time, Number, and Filing Office)
OHIO SEC. OF STATE
05/03/96 4:39
026064 05069602302
AM70579
- --------------------------------------------------------------------------------
4 The financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as such
terms are defined in the UCC in effect in the State of North Carolina on the
date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
- --------------------------------------------------------------------------------
5. ASSIGNEE(S) OF SECURED PARTY AND ADDRESS(ES)
- --------------------------------------------------------------------------------
BL,PR CSC REFERENCE #//MOORE1//96-000163//1//16
Check/X/ if covered: /X/ Proceeds of Collateral are also covered
No. of additional sheets presented: 8
- --------------------------------------------------------------------------------
Filed with: SOS, Ohio
- --------------------------------------------------------------------------------
(USE WHICHEVER SIGNATURE LINE IS APPLICABLE)
Chattem, Inc.
....................................... ...................................
By: /s/ Robert E. Bosworth, EVP By:
.................................... .................................
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
FILING OFFICER COPY-NUMERICAL THIS FORM OF FINANCIAL STATEMENT IS
STANDARD FORM - APPROVED BY THE SECRETARY OF STATE
UNIFORM COMMERCIAL CODE -UCC-1 Revised, Eff. 1/1/79
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//18
Transaction Type: Original financing statement, UNREAL
Jurisdiction: OHIO
Filing Office: County Recorder, Montgomery
PRINCIPAL COUNT PRINCIPAL NAME
- --------- ----- --------------
SECURED PARTY 1 NationsBank N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code.
- --------------------------------------------------------------------------------
1 Debtor(s) (Last Name First) and Address(es)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- --------------------------------------------------------------------------------
2 Secured Party(ies) and Address(es)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency
Services, NC1-001-15-04, 101 North
Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------
3 For Filing Officer
(Date, Time, Number, and Filing Office)
96 MAY - 3 PM 2:24
JOY CLARK
RECORDER
- --------------------------------------------------------------------------------
4 The financing statement covers the following types (or items) of property:
F9605661
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina
on the date hereof, and all such other personal property of the Debtor, and
all products and proceeds of any or all of the foregoing as more
particularly described on Exhibit A attached hereto and made a part hereof.
- --------------------------------------------------------------------------------
5 ASSIGNEE(S) OF SECURED PARTY AND ADDRESS(ES)
- --------------------------------------------------------------------------------
LOCAL ADDRESS 333 LINDEN AVE DAYTON OH
CSC REFERENCE #//MOORE1//96-000163//1//18
Check /x/ if covered: /x/ Proceeds of Collateral are also covered
No. of additional sheets presented: 8
- --------------------------------------------------------------------------------
Filed with: County, Montgomery
- --------------------------------------------------------------------------------
(USE WHICHEVER SIGNATURE LINE IS APPLICABLE)
Chattem, Inc.
- -------------------------------------------- ----------------------------------
By: /s/Robert E. Bosworth, EVP By:
- -------------------------------------------- ----------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
FILING OFFICER COPY-ALPHABETICAL THIS FORM OF FINANCING STATEMENT
STANDARD FORM - APPROVED BY THE SECRETARY OF STATE
UNIFORM COMMERCIAL CODE - UCC-1 UCC 96-0153 AO1
.1/1/79
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//17
Transaction Type: Original financing statement, UNREAL
Jurisdiction: OHIO
Filing Office: County Recorder, Butler
PRINCIPAL COUNT PRINCIPAL NAME
- ------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
- -------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code. FILE 2nd
- -------------------------------------------------------------------------------
1 Debtor(s) (Last Name First) and Address(es)
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
96-02330
- -------------------------------------------------------------------------------
2 Secured Party(ies) and Address(es)
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services, NC1-001-15-04, 101 North Tryon
Street
Charlotte, NC 28255
- -------------------------------------------------------------------------------
3 For Filing Officer
(Date, Time, Number, and Filing Office)
- -------------------------------------------------------------------------------
4 The financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
- -------------------------------------------------------------------------------
5. ASSIGNEE(S) OF SECURED PARTY AND ADDRESS(ES)
- -------------------------------------------------------------------------------
CSC REFERENCE #//MOORE1//96-000163//1//17
Check /X/ if covered: /X/ Proceeds of Collateral are also covered
No. of additional sheets presented: 8
- -------------------------------------------------------------------------------
Filed with: County, Butler
- -------------------------------------------------------------------------------
TERMINATION STATEMENT
This statement of termination of financing is presented to a filing officer for
filing pursuant to the Uniform Commercial Code. The Secured Party certifies that
the Secured Party no longer claims a security interest under the financial
statement bearing the file number shown above.
/s/ Robert E. Bosworth, EVP
----------------------------------
Dated: , 19 By:
-------------- ---- ----------------------------------
(Signature of Secured Party or
Assignee of Record - Not Valid
until signed)
FILING OFFICER COPY - ACKNOWLEDGEMENT - Filing officer is requested to note file
number, date and hour of filing on this copy and return in to the person filing,
as an acknowledgement.
REVISED, EFF. 1/1/79
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//7
Transaction Type: Original financing statement, UNREAL
Jurisdiction: MICHIGAN
Filing Office: Secretary of State, Michigan
PRINCIPAL COUNT PRINCIPAL NAME
- ---------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
This FINANCING STATEMENT is presented for filing
pursuant to the Michigan Uniform Commercial Code. *(Please Type All Information)
- --------------------------------------------------------------------------------
1. Debtor(s) (Last name First, if individual) Soc. Security #/Tax ID #
& Address(es)
62-0156300
----------
Chattem, Inc.
- ------------------------------------------------- ----------
Address
1715 West 38th Street
- ------------------------------------------------- ----------
City State Zip Code
Chattanooga TN 37409
- ------------------------------------------------- ----------
Debtor(s) (Last Name First, if individual)
& Address(es) ----------
----------
- ------------------------------------------------- ----------
Address
- ------------------------------------------------- ----------
City State Zip Code
- --------------------------------------------------------------------------------
FOR FILING OFFICER
(Date, Time, Number, and Filing Officer)
- --------------------------------------------------------------------------------
DO NOT WRITE THIS SPACE
- --------------------------------------------------------------------------------
2. If filing without debtor signature, item a, b, c, d must be marked /X/.
a. / / Collateral was already subject to the security interest in another
state when it was brought into Michigan, or when the Debtor's location
changed to Michigan;
b. / / Collateral is proceeds of the original collateral in which a
security interest was perfected.
c. / / A previous filing covering the collateral has lapsed
(Prev. Filing #) );
d. / / The filing covers collateral acquired after a change of name
identity, or corporate structure of Debtor (MCLA 440.9402(2) & (7))
FROM:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prev. Filing# ).
- --------------------------------------------------------------------------------
3. Secured Party(ies) and Address(es) Secured Party #
NationsBank, N.A., as Agent
Independence Center, 15th Floor, Agency Services,
NC1-001-15-04, 101 North Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------
4. MAIL ACKNOWLEDGMENT COPY TO:
CSC NETWORKS/PHL&FS
1455 RESPONSE ROAD
SACRAMENTO, CA 95815
- --------------------------------------------------------------------------------
5. No of Add'l Sheets
8
- --------------------------------------------------------------------------------
6. State Account No.
- --------------------------------------------------------------------------------
7. (Mark /X/ if applicable):
/X/ Products of collateral are also covered.
/ / The debtor is a transmitting utility as defined in MCLA 440.9105 (1)(o).
- --------------------------------------------------------------------------------
8. Assignee(es) (if any) and Address(es) Secured Party #
- --------------------------------------------------------------------------------
9. This financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//1//7
- --------------------------------------------------------------------------------
TERMINATION STATEMENT: This Statement of Termination is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code. The Secured Party
no longer claims a security interest under the financing statement bearing
the file number shown above. (Secured Party will receive an acknowledgement
of termination only if this form is filed in duplicate (photocopy) with the
filing officer.)
/s/ ROBERT E. BOSWORTH, EVP
--------------------------------
Dated ,19 By:
-------------------- -- --------------------------------
Signature(s) of Secured Part(ies)
or Assignee(s) of Record
IF YOU WISH THE ACKNOWLEDGMENT COPY TO BE MAILED TO AN ADDRESS OTHER THAN THE
SECURED PARTY SHOWN IN ITEM 3, PROVIDE COMPLETE MAILING INFORMATION IN ITEM 4.
SECRETARY OF STATE ACKNOWLEDGEMENT COPY
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//21
Transaction Type: Original financing statement, UNREAL
Jurisdiction: VIRGINIA
Filing Office: State Corporation Commission, Virginia
PRINCIPAL COUNT PRINCIPAL NAME
- --------- ----- -----------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
PRINT OR TYPE ALL INFORMATION
THE SECURED PARTY DESIRES THIS FINANCING STATEMENT TO BE INDEXED AGAINST THE
RECORD OWNER OF THE REAL ESTATE NO ( ) YES ( ) NAME OF RECORD
OWNER
----------------------------------------
STATE CORPORATION COMMISSION
(Uniform Commercial Code Division, Box 1197, Richmond, Virginia 23209)
FORM FOR ORIGINAL FINANCING STATEMENT AND SUBSEQUENT STATEMENTS
- --------------------------------------------------------------------------------
The Commission stamps the File Number on the Original Financing Statement.
The secured party must place this same number on all subsequent statements.
- --------------------------------------------------------------------------------
960503 7802
2
- --------------------------------------------------------------------------------
Index numbers of subsequent statements (For office use only)
- --------------------------------------------------------------------------------
Name & mailing address of all Check the box indicating the kind
debtors, trade styles, etc. of statement.
No other name will be indexed. Check only one box.
- ------------------------------ -------------------
Chattem, Inc. (X) ORIGINAL FINANCING STATEMENT
1715 West 38th Street
Chattanooga, TN 37409 ( ) CONTINUATION-ORIGINAL STILL EFFECTIVE
SS/FEI #: 62-0156300
( ) AMENDMENT
( ) ASSIGNMENT
( ) PARTIAL RELEASE OF COLLATERAL
( ) TERMINATION
- --------------------------------------------------------------------------------
Name & address of Secured Party Name & address of Assignee
NationsBank, N.A., as Agent
Independence Center, 15th Floor,
Agency Services, NC1-001-15-04,
101 North Tryon Street
Charlotte, NC 28255
- --------------------------------------------------------------------------------
Date of maturity if less than five Check if proceeds of collateral are
years covered (X)
- --------------------------------------------------------------------------------
CSC REFERENCE #//MOORE1//96-000163//1//21
Description of collateral covered by original financing statement
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
- --------------------------------------------------------------------------------
Space to record an amendment, assignment, release of collateral or a
statement to cover collateral brought into Virginia from another jurisdiction.
- --------------------------------------------------------------------------------
Describe Real Estate if applicable:
- --------------------------------------------------------------------------------
Chattem, Inc.
/s/ Robert E. Bosworth, EVP
- --------------------------------------------------------------------------------
Signature of Debtor if applicable Signature of Secured Party if applicable
(Date) (Date)
FILING OFFICER COPY - ACKNOWLEDGEMENT
Revised 7-1-82
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//22
Transaction Type: Original financing statement, UNREAL
Jurisdiction: VIRGINIA
Filing Office: Clerk of the Circuit Court, Henrico
PRINCIPAL COUNT PRINCIPAL NAME
- --------- ----- ---------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
PRINT OR TYPE ALL INFORMATION
THE SECURED PARTY DESIRES THIS FINANCING STATEMENT TO BE INDEXED AGAINST THE
RECORD OWNER OF THE REAL ESTATE NO ( ) YES ( ) NAME OF RECORD OWNER
------------
STATE CORPORATION COMMISSION
(Uniform Commercial Code Division, Box 1197, Richmond, Virginia 23209)
FORM FOR ORIGINAL FINANCING STATEMENT AND SUBSEQUENT STATEMENTS
- ------------------------------------------------------------------------------
The Commission stamps the File Number on the Original Statement. The secured
party must place this same number on all subsequent statements.
- ------------------------------------------------------------------------------
Index numbers of subsequent statements (For office use only)
- ------------------------------------------------------------------------------
1 Name & mailing address of all debtors, trade styles, etc.
NO OTHER NAME WILL BE INDEXED.
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
SS/FEI #: 62-0156300
- ------------------------------------------------------------------------------
2 Check the box indicating the kind of statement.
CHECK ONLY ONE BOX.
(X) ORIGINAL FINANCING STATEMENT
( ) CONTINUATION-ORIGINAL STILL EFFECTIVE
( ) AMENDMENT
( ) ASSIGNMENT
( ) PARTIAL RELEASE OF COLLATERAL
( ) TERMINATION
- ------------------------------------------------------------------------------
3 Name & address of Secured Party
NationsBank, N.A. as Agent
Independence Center, 15th Floor, Agency Services, NC1-001-15-04,
101 North Tryon Street
Charlotte, NC 28255
- ------------------------------------------------------------------------------
4 Name & address of Assignee
- ------------------------------------------------------------------------------
5 Date of maturity if less than five years
- ------------------------------------------------------------------------------
6 Check if proceeds of collateral are covered (X)
- ------------------------------------------------------------------------------
CSC REFERENCE #//MOORE1//96-000163//1//22
Description of collateral covered by original financing statement
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
- ------------------------------------------------------------------------------
Space to record an amendment, assignment, release of collateral or a
statement to cover collateral brought into Virginia from another jurisdiction.
- ------------------------------------------------------------------------------
Describe Real Estate if applicable:
- ------------------------------------------------------------------------------
Chattem Inc. NationsBank, N.A., as Agent
/s/ Robert E. Bosworth, EVP
- ------------------------------------------------------------------------------
Signature of Debtor if Signature of Secured Party if
applicable (Date) applicable (Date)
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//1//23
Transaction Type: Original financing statement, UNREAL
Jurisdiction: VIRGINIA
Filing Office: Clerk of the Circuit Court, Richmond, City of
PRINCIPAL COUNT PRINCIPAL NAME
- --------- ----- ---------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
PRINT OR TYPE ALL INFORMATION
THE SECURED PARTY DESIRES THIS FINANCING STATEMENT TO BE INDEXED AGAINST
THE RECORD OWNER OF THE REAL ESTATE NO ( ) YES ( ) NAME OF RECORD
OWNER ___________________
- ----------------------------------------------------------------------
STATE CORPORATION COMMISSION
(Uniform Commercial Code Division, Box 1197, Richmond, Virginia 23209)
FORM FOR ORIGINAL FINANCING STATEMENT AND SUBSEQUENT STATEMENTS
- -------------------------------------------------------------------------------
|
The Commission stamps the File Number on the Original |
Financing Statement. The secured party must place this |
same number on all subsequent statements. |
|
- -------------------------------------------------------------------------------
Index numbers of subsequent statements (For office use only)
- -------------------------------------------------------------------------------
Name & mailing address of all | Check the box indicating the kind
debtors, trade styles, etc. | of statement.
NO OTHER NAME WILL BE INDEXED. | CHECK ONLY ONE BOX.
|
Chattem, Inc. | (X) ORIGINAL FINANCING STATEMENT
1715 West 38th Street |
Chattanooga, TN 37409 | ( ) CONTINUATION-ORIGINAL STILL EFFECTIVE
SS/FEI #: 62-0156300 |
| ( ) AMENDMENT
|
| ( ) ASSIGNMENT
|
| ( ) PARTIAL RELEASE OF COLLATERAL
|
| ( ) TERMINATION
- -------------------------------------------------------------------------------
Name & address of Secured Party | Name & address of Assignee
|
NationsBank, N.A., as Agent |
Independence Center, 15th Floor, |
Agency Services, NC1-001-15-04, |
101 North Tryon Street |
Charlotte, NC 28255 |
- -------------------------------------------------------------------------------
|
Date of maturity if less than | Check if proceeds of collateral are
five years | covered (X)
|
- -------------------------------------------------------------------------------
CSC REFERENCE #//MOORE1//96-000163//1//23
Description of collateral covered by original financing statement
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made part hereof.
- -------------------------------------------------------------------------------
Space to record an amendment, assignment, release of collateral or a statement
to cover collateral brought into Virginia from another jurisdiction.
- -------------------------------------------------------------------------------
Describe Real Estate if applicable:
- -------------------------------------------------------------------------------
Chattem, Inc. | NationsBank, N.A., as Agent
|
/s/ Robert E. Bosworth, EVP |
- -------------------------------------------------------------------------------
Signature of Debtor if applicable (Date) | Signature of Secured Party if
| applicable (Date)
- -------------------------------------------------------------------------------
FILING OFFICER COPY - ACKNOWLEDGEMENT Revised 7-1-82
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//4//2
Transaction Type: Original financing statement, UNREAL
Jurisdiction: MISSISSIPPI
Filing Office: Secretary of State, Mississippi
PRINCIPAL COUNT PRINCIPAL NAME
- --------- ----- ---------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
This Financing Statement is presented to the Filing Officer pursuant to the
Uniform Commercial Code. UCC-1
STATE OF MISSISSIPPI
1. DEBTOR(S)
Chattem, Inc. ---------------------------------------
Debtor (Last Name First)/Business Name Debtor (Last Name First)/Business Name
1715 West 38th Street
- --------------------------------------- ---------------------------------------
Mailing Address Mailing Address
Chattanooga TN 37409
- --------------------------------------- ---------------------------------------
City State *Country Code Zip City State *Country Code Zip
52-0156300 *Type of Debtor: /X/
- --------------------------------------- ---------------------------------------
*Tax ID/S.S.# P C *Tax ID/S.S.# P C
2. SECURED PARTY
NationsBank, N.A., as Agent
- ----------------------------------------------
Secured (Last Name First)/Business Name
Independence Ctr., 15th Fl., 101 N. Tryon St.
- ----------------------------------------------
Address
Charlotte NC 28255
- ----------------------------------------------
City State *Country Code Zip
*Type of Secured: /X/
- ----------------------------------------------
*Tax ID/S.S.# P C
3. ASSIGNEE
- ----------------------------------------------
Assignee (Last Name First)/Business Name
- ----------------------------------------------
Address
- ----------------------------------------------
City State *Country Code Zip
*Type of Assignee:
- ----------------------------------------------
*Tax ID/S.S.# P C
4. THIS FINANCING STATEMENT COVERS THE FOLLOWING TYPES (OR ITEMS) OF PROPERTY:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//4//2
CHECK /X/ IF THIS STATEMENT IS FILED WITHOUT THE DEBTOR'S SIGNATURE TO
PERFECT A SECURITY INTEREST IN COLLATERAL:
/ / already subject to a security interest in another jurisdiction when it
was brought into this state or when Debtor's location was changed to
this state.
/ / which is proceeds if the security interest in the original collateral
was perfected.
/ / where the original filing has lapsed.
/ / acquired after a change of name, identity, or corporate structure of
the Debtor.
/ / if lien to secure payment of royalty proceeds (effective 1 year).
5. CHECK /X/ IF COVERED: /X/ PRODUCTS OF COLLATERAL.
6. FINANCING STATEMENT IS FILED WITH: SOS, Mississippi
-----------------
7. NUMBER OF ADDITIONAL SHEETS ATTACHED: 8
--------------
- ------------------------------------------------------
Chattem, Inc.
/s/ Robert E. Bosworth, EVP
- ------------------------------------------------------
Signature(s) of Debtors
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
Signature(s) of Secured Party(ies)
(required only when filed without Debtor signature)
(a) FILING OFFICER - ALPHABETICAL
UCC-1 APPROVED FOR USE BY THE
SECRETARY OF STATE OF MISSISSIPPI 11/01/86
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//4//3
Transaction Type: Original financing statement, UNREAL
Jurisdiction: MISSISSIPPI
Filing Office: Clerk of the Chancery Court, De Soto
PRINCIPAL COUNT PRINCIPAL NAME
- -------------- ----- ----------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Chattem, Inc.
<PAGE>
- -------------------------------------------------------------------------------
This Financing Statement is presented to the Filing Officer pursuant to the
Uniform Commercial Code. UCC-1
STATE OF MISSISSIPPI
1. Debtor(s)
Chattem, Inc.
-------------------------------------
Debtor (Last Name First)/Business Name Debtor (Last Name First)/Business
Name
1715 West 38th Street
- -------------------------------------- -------------------------------------
Mailing Address Mailing Address
Chattanooga /TN/ / / / 37409 / / / / / /
- -------------------------------------- -------------------------------------
City State *Country Code Zip City State *Country Code Zip
62-0156300 *Type of Debtor: / /X/ *Type of Debtor: / / /
- -------------------------------------- -------------------------------------
*Tax ID/S.S.# P C *Tax ID/S.S.# P C
2. Secured Party 3. Assignee
NationsBank, N.A., as Agent
- -------------------------------------- -------------------------------------
Secured (Last Name First) / Business Assignee (Last Name First) / Business
Name Name
Independence Ctr., 15th Fl., 101 N.
Tyron Street
- -------------------------------------- -------------------------------------
Address Address
Charlotte /NC/ / / / 28255 / / / / / /
- -------------------------------------- -------------------------------------
City State *Country Code Zip City State *Country Code Zip
*Type of Secured / /X/ *Type of Assignee: / / /
- -------------------------------------- -------------------------------------
*Tax ID/S.S.# P C *Tax ID/S.S.# P C
4. This Financing Statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper,"
"documents," "instruments," "deposit accounts," "equipment," and "goods" as
such terms are defined in the UCC in effect in the State of North Carolina on
the date hereof, and all such other personal property of the Debtor, and all
products and proceeds of any or all of the foregoing as more particularly
described on Exhibit A attached hereto and made a part hereof.
--------------------------
FOR FILING OFFICE USE ONLY
/
/
/
/Debtor #
/Secasgn #
/
-------------------------
CSC REFERENCE #//MOORE1//96-000163//4//3
5. CHECK /X/ IF THIS STATEMENT IS FILED WITHOUT THE DEBTOR'S SIGNATURE TO
PERFECT A SECURITY INTEREST IN COLLATERAL:
/ / already subject to a security interest in another jurisdiction when
it was brought into this state or when Debtor's location was changed
to this state.
/ / which is proceeds if the security interest in the original collateral
was perfected.
/ / where the original filing has lapsed.
/ / acquired after a change of name, identity or corporate structure of the
Debtor.
/ / if lien to secure payment of royalty proceeds (effective 1 year).
6. CHECK /X/ IF COVERED: /X/ PRODUCTS OF COLLATERAL.
7. NUMBER OF ADDITIONAL SHEETS ATTACHED: 8
8. FINANCING STATEMENT IS FILED WITH: CLERK, DE SOTO
/s/ Robert S. Bosworth, EVP
- --------------------------------- ----------------------------------
Chattem, Inc. NationsBank, N.A., as Agent
- --------------------------------- ----------------------------------
Signature(s) of Debtors Signature(s) of Secured Party(ies)
(required only when filed without
Debtor signature)
(c) FILING OFFICER COPY ACKNOWLEDGEMENT UCC-1 APPROVED FOR USE BY THE
SECRETARY OF STATE OF MISSISSIPPI
11/01/86
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Chattem, Inc. NationsBank, N.A., as
Agent
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all rents
and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by Debtor for sale or lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of Debtor for damages arising out of or for breach of or
default under the Assigned Agreements, and (iv) the right of Debtor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons, as set forth on SCHEDULE 1(a) attached hereto, that are
Domestic Subsidiaries, (ii) 66% of the issued and outstanding shares of
capital stock of Persons, as set forth on SCHEDULE 1(b) attached hereto,
that are Foreign Subsidiaries and (iii) 40,000 shares of 13.125% cumulative
convertible Preferred Stock of Elcat, Inc., a Delaware corporation, and any
security into which such stock may be converted or exchanged, including
without limitation, with respect to each of clause (i), (ii) and (iii)
above, whatever class now or hereafter owned by Debtor, in each case,
together with the certificates (or other agreements or instruments)
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with the shares of
capital stock described in paragraph (i) and (j) below, the "PLEDGED
SHARES"), including, but not limited to, (A) all shares or securities
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the Pledged Shares
and (B) in the event of any consolidation or merger in which Debtor is
not the surviving corporation, all shares of each class of the capital
stock of the successor corporation formed by or resulting from such
consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and outstanding
shares of capital stock of additional Foreign Subsidiaries which are
hereafter formed or acquired by Debtor, including without limitation, the
certificates (or other agreements or instruments) representing such shares
and all options and other rights, contractual or otherwise, with respect
thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and other
rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time acquired
by Debtor that is domiciled outside the United States, including without
limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
-2-
<PAGE>
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the right to sue for and to recover and retain
all damages and profits arising from past infringements of Debtor
concerning any of the foregoing;
(m) That certain deposit account no. 2006266718 of the Debtor
maintained with NationsBank, N.A. (hereinafter such deposit account
together with any substitutions therefor and replacements thereof, the
"CASH COLLATERAL ACCOUNT"), and all securities or certificates, whether
in certificated or uncertificated form, investments, accounts, funds or
interests in funds, money or other interests and property now or hereafter
held in such Cash Collateral Account, including specifically without
limitation any Acceptable Investments, time deposits or certificates of
deposit or equivalent, in whatever currency denominated, and any and all
renewals thereof and replacements therefor and all proceeds of the Cash
Collateral Account of every kind and nature, and in whatever form
(including cash and non-cash) or currency denominated, received now or in
the future;
(n) All other personal property of any kind or type whatsoever owned
by Debtor;
(o) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(p) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"ACCEPTABLE INVESTMENTS" means (i) commercial paper and variable or
fixed rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within 30 days of
the date of acquisition, (ii) dollar denominated time deposits and
certificate of deposits of NationsBank, N.A. with a maturity date of not
more than 30 days after the creation thereof, and (iii) tax exempt
securities either (A) carrying a rating of MIG 1 or better or (B) backed
by an acceptable irrevocable letter of credit issued by a bank with a short
term commercial paper rating of A-1 (or the equivalent thereof) or better
by S&P or P-1 (or the equivalent thereof) or better by Moody's, in each
case maturing within 30 days of the date of acquisition.
-3-
<PAGE>
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement, as
amended and modified from time to time, by and among the Debtor, Signal
Investment and Management Co. and The Woolfoam Corporation, dated as of
April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof, or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in SCHEDULE 2 attached hereto, and (ii) all renewals thereof including,
without limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of the
United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and Signal
Investment & Management Co. dated as of June 17, 1994, (iv) any agreement
required to be filed after the date hereof as a material contact in
accordance with Item 601(b) (10) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by the Debtor
in a report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b) (10) of Regulation
S-K that relate to benefit or compensation plans or employment agreements
of or with the Debtor shall not be considered Material Contracts.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
-4-
<PAGE>
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 2 attached hereto, and (b) all applications for letters patent of
the United States or any other country, now existing or hereafter arising,
and all provisionals, divisions, continuations, continuations-in-part and
substitutes thereof, including, without limitation, any thereof referred to
in SCHEDULE 2 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor, Signal
Investment & Management Co., Martin Himmel Inc. and Jeffrey S. Himmel,
dated as of April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to use any Trademark, including, without limitation, any thereof
referred to in SCHEDULE 2 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names, styles,
logos and identifiers, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in SCHEDULE 2
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in SCHEDULE 2 attached hereto.
"WORK"; any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other country.
-5-
<PAGE>
SCHEDULE 1(a)
DOMESTIC SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
SIGNAL INVESTMENT & MANAGEMENT 250 common 1 100%
CO.
-6-
<PAGE>
SCHEDULE 1(b)
FOREIGN SUBSIDIARIES
Certificate Percentage
Name of Subsidiary Number of Shares Number Ownership
- ------------------ ---------------- ----------- ----------
CHATTEM (CANADA) INC. 660 common 6 66%
3,687,816 preferred 2 and 4 66%
CHATTEM (U.K.) LIMITED 13,200 common 12 66%
1,949,042 preferred 14 66%
-7-
<PAGE>
SCHEDULE 2
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
UNITED STATES TRADEMARKS
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//3//1
Transaction Type: Original financing statement, UNREAL
Jurisdiction: DELAWARE
Filing Office: Secretary of State, Delaware
PRINCIPAL COUNT PRINCIPAL NAME
- ----------- ----- ----------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Signal Investment & Management Co
<PAGE>
State of Delaware
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC - 1
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing If to be filed with Recorder of Deeds indicate Tax Parcel
Officer for filing pursuant to the Uniform Commercial Code. No.(s).
--------------------------------------------
No. of additional sheets presented 7
-----------------
- ----------------------------------------------------------------------------------------------------------------------------------
PARTIES PARTIES
- ----------------------------------------------------------------------------------------------------------------------------------
Debtor (or Assignor) (last name first if individual) and Secured Party(ies) (last name first if individual) and address:
mailing address:
Signal Investment & Management Co NationsBank, N.A., as Agent
1105 North Market Street, Suite 1300 Independence Center, 15th Floor, Agency Services,
Wilmington, DE 19890 NC1-001-15-04, 101 North Tryon Street
SS/FEI#_62-1290284 Charlotte, NC 28255
- ----------------------------------------------------------------------------------------------------------------------------------
Debtor (or Assignor) (last name first if individual) and Assignee (if any) of Secured Party(ies) and address of Assignee:
mailing address:
- ----------------------------------------------------------------------------------------------------------------------------------
This statement is filed without the Debtor's signature to Special Types of Parties (check X in applicable box(es))
perfect a security interest in collateral (check X in / / The terms "Debtor" and "Secured Party" mean "Lessee" and
applicable boxe(s)) "Lessor", respectively.
/ / Already subject to a security interest in another
jurisdiction when it was brought into this State. / / The terms "Debtor" and "Secured Party" mean "Consignee" and
"Consignor", respectively.
/ / Already subject to a security interest in another
jurisdiction when the Debtor's location changed to / / Debtor is a Transmitting Utility.
this State.
/ / Debtor acting in a representative capacity (e.g., trustee).
/ / Which is proceeds of the original collateral described ------------------------------------------------------------------
below in which a security interest is perfected. Filed With: SOS, Delaware
------------------------------------------------------------------
/ / Acquired after a change of name, identity or corporate Prepared By (Name and Address):
structure of Debtor.
Moore & Van Allen, PLLC (TLM)
/ / As to which the filing has lapsed. NationsBank Corporate Center
100 North Tryon Street, Floor 47
NationsBank, N.A., as Agent Charlotte, NC 28202-4003
- ----------------------------------------------------------------------------------------------------------------------------------
By: / / Check to request Continuation Statement notice for additional
------------------------------------------------------------ fee.
Signature of Secured Party(ies) Title
(required only if item is checked)
- ----------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property: Check only if applicable: /X/ Products of collateral
are also covered.
All "accounts," "inventory," "general intangibles," "chattel paper," "documents," "instruments," "deposit accounts," "equipment,"
and "goods" as such terms are defined in the UCC in effect in the State of North Carolina on the date hereof, and all such other
personal property of the Debtor, and all products and proceeds of any or all of the foregoing as more particularly described on
Exhibit A attached hereto and made a part hereof.
CSC REFERENCE #//MOORE1//96-000163//3//1
- ----------------------------------------------------------------------------------------------------------------------------------
If the collateral is crops, the crops are growing or to be grown on the following described real estate:
- ----------------------------------------------------------------------------------------------------------------------------------
If the collateral is (a) goods that are or are to become fixtures; (b) timber to be cut; or (c) minerals or the like (including
oil and gas) or accounts resulting from the sale thereof at the wellhead or mine head, the description of the real estate
concerned is: (check X in applicable box(es))
/ / Fixtures / / Timber / / Minerals or accounts resulting from sale thereof at wellhead or minehead
And this Financing Statement is to be filed in the real estate records where a mortgage on such real estate would be recorded. If
the Debtor does not have an interest of record, the name of a record owner is:
- ----------------------------------------------------------------------------------------------------------------------------------
THIS SPACE FOR USE OF FILING OFFICER
(DATE, TIME, NUMBER, FILING OFFICER)
- -------------------------------------------------------------
Signal Investment & Management Co.
By: /s/ Robert E. Bosworth, President
---------------------------------------------------------
Signature of Debtor (or Assignor) Title '96 12089
- -------------------------------------------------------------
By:
---------------------------------------------------------
Signature of Debtor (or Assignor) Title
CREDITOR COPY
</TABLE>
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Signal Investment & NationsBank, N.A., as Agent
Management Co.
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all
rents and tenant payments, if any;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by Debtor for sale or
lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of Debtor for damages arising out of or for
breach of or default under the Assigned Agreements, and (iv) the right of
Debtor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all
judgements of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons that are Domestic Subsidiaries and (ii) 66% of the issued
and outstanding shares of capital stock of Persons that are Foreign
Subsidiaries, including without limitation, with respect to each of clause
(i) and (ii) above, whatever class now or hereafter owned by Debtor, in
each case, together with the certificates (or other agreements or
instruments) representing such shares, and all options and other rights,
contractual or otherwise, with respect thereto (collectively, together
with the shares of capital stock described in paragraph (i) and (j)
below, the "PLEDGED SHARES"), including, but not limited to, (A) all
shares or securities representing a dividend on any of the Pledged
Shares, or representing a distribution or return of capital upon or in
respect of the Pledged Shares, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any subscriptions,
warrants, rights or options issued to the holder of, or otherwise in
respect of, the Pledged Shares and (B) in the event of any consolidation
or merger in which Debtor is not the surviving corporation, all shares of
each class of the capital stock of the successor corporation formed by or
resulting from such consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and
outstanding shares of capital stock of additional Foreign Subsidiaries
which are hereafter formed or acquired by Debtor, including without
limitation, the certificates (or other agreements or instruments)
representing such shares and all options and other rights, contractual or
otherwise, with respect thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and
other rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time
acquired by Debtor that is domiciled outside the United States, including
without limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the
- 2 -
<PAGE>
right to sue for and to recover and retain all damages and profits
arising from past infringements of Debtor concerning any of the foregoing;
(m) All other personal property of any kind or type whatsoever
owned by the Debtor;
(n) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(o) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement,
as amended and modified from time to time, by and among the Debtor,
Chattem, Inc. and the Woolfoam Corporation, dated as of April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Copyright Office or in any similar office or agency of the United
States, any State thereof, or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in SCHEDULE 1 attached hereto, and (ii) all renewals
thereof including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of
the United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
- 3 -
<PAGE>
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and the
Debtor dated as of June 17, 1994 (iv) any agreement required to be filed
after the date hereof as a material contact in accordance with
Item 601(b)(10) of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act") by the Debtor in a
report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b)(10) of
Regulation S-K that relate to benefit or compensation plans or employment
agreements of or with the Debtor shall not be considered Material
Contracts.
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 1
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto, and (b) all applications for letters patent
of the United States or any other country, now existing or hereafter
arising, and all provisionals, divisions, continuations,
continuations-in-part and substitutes thereof, including, without
limitation, any thereof referred to in SCHEDULE 1 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor,
Chattem, Inc., Martin Himmel Inc. and Jeffrey S. Himmel, dated as of
April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 1 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names,
styles, logos and identifiers, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United
- 4 -
<PAGE>
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in SCHEDULE 1 attached hereto, and
(b) all renewals thereof including, without limitation, any thereof
referred to in SCHEDULE 1 attached hereto.
"WORK": any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the
applicable copyright laws of any other country.
- 5 -
<PAGE>
SCHEDULE 1
SIGNAL INVESTMENT & MANAGEMENT CO.
UNITED STATES TRADEMARKS
<TABLE>
<CAPTION>
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
<S> <C> <C>
AMPHIBIOUS FORMULA 1,279,505 5/29/1984
BENZODENT 595,101 9/14/1954
BENZOGEL 1,767,890 4/27/1993
BULLFROG 1,279,506 5/29/1984
CORN SILK 799,233 11/23/1965
CORN SILK & Design 1,457,919 9/22/1987
CORNSILK 1,193,832 4/20/1982
DAY ONE 1,608,789 8/7/1990
FLEX-ALL 454 1,569,189 12/5/1989
FLEX-ALL 454 (Stylized) 1,481,352 3/22/1988
FOR THE PERIOD BEFORE YOUR PERIOD 1,674,764 2/11/1992
HALF-AS-MUCH 1,060,586 3/8/1977
HI-THERM 708,677 12/20/1960
ICY-HOT 970,575 10/16/1973
META CINE 372,963 11/21/1939
MICRON 1,499,169 8/9/1988
MUDD 1,011,938 5/27/1975
MUDD 1,290,647 8/21/1984
N & Design 1,765,513 4/20/1993
NORWICH 1,732,425 11/17/1992
PAMPRIN 709,866 1/17/1961
PAMPRIN IB 1,499,182 8/9/1988
PAMPRIN 709,866 1/17/1961
PREMESYN PMS 1,471,156 1/5/1988
QUICK GEL 1,951,563 1/23/1996
SILKENOL 1,604,279 7/3/1990
SUNCLYME 343,858 3/9/1937
SUN IN 908,769 2/3/1971
SUN-IN 1,456,006 9/8/1987
SUN-IN (Design) 1,059,766 2/22/1977
TADPOLE 1,339,919 6/11/1985
THERA CARE 1,092,610 6/6/1978
GOLD BOND 1,209,453 9/21/1982
<CAPTION>
U.S. Pending Trademark Trademark Application No. Date of Application
- ---------------------- ------------------------- -------------------
<S> <C> <C>
CHILL STICK 74/630796 2/6/1995
FLEX-ALL 75/005548 10/13/1995
TRAINER'S CHOICE 74/609150 12/9/1994
VERALAX 74/650560 3/23/1995
454 75/005550 10/13/1995
BENZOGEL 74/650485 3/23/1995
BULLFROG 74/654831 3/30/1995
CAPSALOE 74/715332 8/14/1995
HERBALAX 74/650559 3/23/1995
MUDD FACIAL TREATMENT 74/571539 9/9/1994
MUDD SPA TREATMENT 74/537103 6/13/1994
PAMPRIN 74/702071 7/17/1995
QUICK GEL 74/654830 3/30/1995
THE ULTIMATE WATERPROOF SUNBLOCK 74/597971 11/14/1994
VFW 75/026992 12/4/1995
<CAPTION>
State Registered Trademark Trademark Registration No.
- -------------------------- ---------------------------
<S> <C>
NORWICH Puerto Rico Reg. No. 6172
</TABLE>
<PAGE>
COMMON LAW TRADEMARKS
FLEX-ALL OF COLORADO
FLEX-ALL-SOUTHWEST
APPLE-HYDROXY
THE ONCE A DAY ALL DAY SUNSCREEN
PAMPRIN (Stylized "A" in decorative italics)
UNITED STATES TRADEMARK LICENSE
Trademark License Agreement between Valmont, Inc. and Signal Investment &
Management Co. dated June 17, 1994, for the following marks:
Marks in the United States Trademark Registration No.
- -------------------------- --------------------------
PHISOAC (Stylized) 699,720
PHISODAN (Stylized) 764,556
PHISODERM 408,558
PHISOPUFF (Block) 1,294,345
Marks in Puerto Rico Trademark Registration No.
- -------------------- --------------------------
PHISODAN 13,379
PHISODERM 19,097
Marks in Canada Trademark Registration No.
- --------------- --------------------------
PHISO 157,674
PHISOAC 118,977
PHISOCARE 196,899
PHISODAN 132,672
PHISODERM 78/20300
PHISOFOAM 157,673
PHISOLAN 240,802
<PAGE>
CSC REFERENCE #//MOORE1//96-000163//7//1
Transaction Type: Original financing statement, UNREAL
Jurisdiction: TENNESSEE
Filing Office: Secretary of State, Tennessee
PRINCIPAL COUNT PRINCIPAL NAME
- ------------- ----- --------------------------------------------
SECURED PARTY 1 NationsBank, N.A., as Agent
DEBTOR 1 Signal Investment & Management Co
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing
pursuant to the Uniform Commercial Code: 3 Maturity date (if any):
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debtor (Last Name First) and address(es) 2 Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number and
Filing Offices)
Signal Investment & Management Co NationsBank, N.A., as Agent
105 North Market Street, Suite 1300 Independence Center, 15th Floor, Agency
Wilmington, DE 19890 Services, NC1-001-15-04,101 North Tryon
S/FEI #:62-1290284 Street
Charlotte, NC 28255
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The financing statement covers the following types (or items) of property:
All "accounts," "inventory," "general intangibles," "chattel paper," "document,"
"instruments," "deposit accounts," "equipment," and "goods" as such terms are
defined in the UCC in effect in the State of North Carolina on the date hereof,
and all such other personal property of the Debtor, and all products and
proceeds of any or all of the foregoing as more particularly described on
Exhibit A attached hereto and made a part hereof. **Recording tax on related
indebtedness in the amount of $61,500,000 was paid to Hamilton County Register
of Deeds by the Parent Company, Chattem, Inc. with the recording of a Deed of
Trust and Security Agreement. Receipt No. 39051 is attached.
- -------------------------------
ASSIGNEE OF SECURED PARTY
CSC REFERENCE
#//MOORE1//96-000163//7//1
<TABLE>
<S><C>
- ------------------------------- "MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSE IS $61,500,999**
-----------------
THIS INSTRUMENT PREPARED BY
-----------------------------
Check /X/ if covered:
/X/ Proceeds of Collateral are also covered /X/ Products of Collateral are also covered No. of additional Sheets presented: 8
- ------------------------------------------------------------------------------------------------------------------------------------
Filed with: SOS, Tennessee
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------
- ---------------------------------------
Signal Investment & Management Co
/s/ Robert E. Boswertz, President 19
- --------------------------------------- -----------------------------------
Signature of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Alphabetical
- -------------------------------------------------------------------------------
<PAGE>
[LETTERHEAD]
839051
- --------------------------------------------------------------------------------
DATE SYMBOL VALUATION TAX AND FEES TOTAL PAID
- --------------------------------------------------------------------------------
04/30/96 MORT 61,600,000.00 B
04/30/96 T/DD 68.00 B
04/30/96 MTAX 70,722.70
04/30/96 PFEE 1.00 **70,791.70 B
324834
PAMELA HURST
REGISTER
HAMILTON COUNTY
STATE OF TENNESSEE
'96 APR 30 PM 12 48
BY: ____________
DEPUTY
[ILLEGIBLE] 18147
BK-4672-608
- --------------------------------------------------------------------------------
RECEIPT IS NOT VALID UNTIL CHECK IS PAID BY BANK
- --------------------------------------------------------------------------------
OFFICIAL RECEIPT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LETTERHEAD]
<PAGE>
EXHIBIT A
DEBTOR SECURED PARTY
Signal Investment & NationsBank, N.A., as Agent
Management Co.
The collateral consists of any and all right, title and interest of
Debtor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (capitalized terms used below are defined at
the end of this Exhibit A):
(a) All equipment, including, without limitation, all vehicles,
rolling stock, machinery, tools, furniture, furnishings, office equipment
and trade fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all
rents and tenant payments, if any;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by Debtor for sale or
lease;
(d) All of the Material Contracts and all such other agreements,
contracts, leases, tax sharing agreements or hedging arrangements now or
hereafter entered into by Debtor, as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (i) all rights of Debtor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Debtor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of Debtor for damages arising out of or for
breach of or default under the Assigned Agreements, and (iv) the right of
Debtor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All federal, state and local tax refunds and claims of Debtor,
all rights in litigation of Debtor presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all
judgements of Debtor now or hereafter arising therefrom;
<PAGE>
(h) (i) All of the issued and outstanding shares of capital stock
of the Persons that are Domestic Subsidiaries and (ii) 66% of the issued
and outstanding shares of capital stock of Persons that are Foreign
Subsidiaries, including without limitation, with respect to each of clause
(i) and (ii) above, whatever class now or hereafter owned by Debtor, in
each case, together with the certificates (or other agreements or
instruments) representing such shares, and all options and other rights,
contractual or otherwise, with respect thereto (collectively, together
with the shares of capital stock described in paragraph (i) and (j)
below, the "PLEDGED SHARES"), including, but not limited to, (A) all
shares or securities representing a dividend on any of the Pledged
Shares, or representing a distribution or return of capital upon or in
respect of the Pledged Shares, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any subscriptions,
warrants, rights or options issued to the holder of, or otherwise in
respect of, the Pledged Shares and (B) in the event of any consolidation
or merger in which Debtor is not the surviving corporation, all shares of
each class of the capital stock of the successor corporation formed by or
resulting from such consolidation or merger;
(i) All of the issued and outstanding shares of capital stock of
additional Domestic Subsidiaries and (ii) 66% of the issued and
outstanding shares of capital stock of additional Foreign Subsidiaries
which are hereafter formed or acquired by Debtor, including without
limitation, the certificates (or other agreements or instruments)
representing such shares and all options and other rights, contractual or
otherwise, with respect thereto;
(j) All additional shares of capital stock of any Person from time
to time acquired by Debtor that is domiciled in the United States,
including without limitation, the certificates (or other agreements or
instruments) representing such additional shares and all options and
other rights, contractual or otherwise, with respect thereto, and 66% of
additional shares of capital stock of any Person from time to time
acquired by Debtor that is domiciled outside the United States, including
without limitation, the certificates (or other agreements or instruments)
representing such additional shares and all options and other rights,
contractual or otherwise, with respect thereto;
(k) All books, records, files, computer software and other similar
writings or evidence of Debtor's business;
(l) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, proprietary information, designs,
processes, inventions, know-how and trade secrets and all actions of
infringement, including the
- 2 -
<PAGE>
right to sue for and to recover and retain all damages and profits
arising from past infringements of Debtor concerning any of the foregoing;
(m) All other personal property of any kind or type whatsoever
owned by the Debtor;
(n) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(o) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
DEFINITIONS:
"BLIS-TO-SOL/SOLTICE SALE AGREEMENT" means that certain agreement,
as amended and modified from time to time, by and among the Debtor,
Chattem, Inc. and the Woolfoam Corporation, dated as of April 24, 1996.
"COPYRIGHT LICENSES": any agreement, now existing or hereafter
arising, providing for the grant by or to Debtor of any right under any
Copyright including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto.
"COPYRIGHTS": (i) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Copyright Office or in any similar office or agency of the United
States, any State thereof, or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in SCHEDULE 1 attached hereto, and (ii) all renewals
thereof including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto.
"DOMESTIC SUBSIDIARIES": all subsidiaries of Debtor that are
domiciled, incorporated or organized under the laws of any State of
the United States or the District of Columbia.
"FOREIGN SUBSIDIARIES": all subsidiaries of Debtor that are not
Domestic Subsidiaries.
"MATERIAL CONTRACTS": (i) the Purchase Agreement, (ii) the
Blis-To-Sol/Soltice Sale Agreement (iii) all material manufacturing
contracts, license agreements and similar agreements, now existing or
hereinafter arising, of the Debtor, including but not limited to, the
manufacturing agreements with Pharma Tech Industries, Inc. for powdered
- 3 -
<PAGE>
Gold Bond and Procter & Gamble Pharmaceuticals, Inc. for Norwich aspirin
and the license agreement for pHisoDerm between Valmont Inc. and the
Debtor dated as of June 17, 1994 (iv) any agreement required to be filed
after the date hereof as a material contact in accordance with
Item 601(b)(10) of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act") by the Debtor in a
report or statement required to be filed under the Exchange Act;
provided, however, agreements filed under Item 601(b)(10) of
Regulation S-K that relate to benefit or compensation plans or employment
agreements of or with the Debtor shall not be considered Material
Contracts.
"PATENT LICENSE": all agreements, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor of
any right to make, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in SCHEDULE 1
attached hereto.
"PATENTS": (a) all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in
SCHEDULE 1 attached hereto, and (b) all applications for letters patent
of the United States or any other country, now existing or hereafter
arising, and all provisionals, divisions, continuations,
continuations-in-part and substitutes thereof, including, without
limitation, any thereof referred to in SCHEDULE 1 attached hereto.
"PERSON": any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any governmental authority.
"PURCHASE AGREEMENT": means that certain Asset Purchase Agreement,
as amended and modified from time to time, by and among the Debtor,
Chattem, Inc., Martin Himmel Inc. and Jeffrey S. Himmel, dated as of
April 10, 1996.
"TRADEMARK LICENSE": any agreement, whether written or oral, now
existing or hereafter arising, providing for the grant by or to Debtor
of any right to use any Trademark, including, without limitation, any
thereof referred to in SCHEDULE 1 attached hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, together
with the goodwill of the business symbolized by said marks, names,
styles, logos and identifiers, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United
- 4 -
<PAGE>
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in SCHEDULE 1 attached hereto, and
(b) all renewals thereof including, without limitation, any thereof
referred to in SCHEDULE 1 attached hereto.
"WORK": any work of authorship which is subject to copyright
protection pursuant to Title 17 of the United States Code or the
applicable copyright laws of any other country.
- 5 -
<PAGE>
SCHEDULE 1
SIGNAL INVESTMENT & MANAGEMENT CO.
UNITED STATES TRADEMARKS
<TABLE>
<CAPTION>
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
<S> <C> <C>
AMPHIBIOUS FORMULA 1,279,505 5/29/1984
BENZODENT 595,101 9/14/1954
BENZOGEL 1,767,890 4/27/1993
BULLFROG 1,279,506 5/29/1984
CORN SILK 799,233 11/23/1965
CORN SILK & Design 1,457,919 9/22/1987
CORNSILK 1,193,832 4/20/1982
DAY ONE 1,608,789 8/7/1990
FLEX-ALL 454 1,569,189 12/5/1989
FLEX-ALL 454 (Stylized) 1,481,352 3/22/1988
FOR THE PERIOD BEFORE YOUR PERIOD 1,674,764 2/11/1992
HALF-AS-MUCH 1,060,586 3/8/1977
HI-THERM 708,677 12/20/1960
ICY-HOT 970,575 10/16/1973
META CINE 372,963 11/21/1939
MICRON 1,499,169 8/9/1988
MUDD 1,011,938 5/27/1975
MUDD 1,290,647 8/21/1984
N & Design 1,765,513 4/20/1993
NORWICH 1,732,425 11/17/1992
PAMPRIN 709,866 1/17/1961
PAMPRIN IB 1,499,182 8/9/1988
PAMPRIN 709,866 1/17/1961
PREMESYN PMS 1,471,156 1/5/1988
QUICK GEL 1,951,563 1/23/1996
SILKENOL 1,604,279 7/3/1990
SUNCLYME 343,858 3/9/1937
SUN IN 908,769 2/3/1971
SUN-IN 1,456,006 9/8/1987
SUN-IN (Design) 1,059,766 2/22/1977
TADPOLE 1,339,919 6/11/1985
THERA CARE 1,092,610 6/6/1978
GOLD BOND 1,209,453 9/21/1982
U.S. Pending Trademark Trademark Application No. Date of Application
- ---------------------- ------------------------- -------------------
CHILL STICK 74/630796 2/6/1995
FLEX-ALL 75/005548 10/13/1995
TRAINER'S CHOICE 74/609150 12/9/1994
VERALAX 74/650560 3/23/1995
454 75/005550 10/13/1995
BENZOGEL 74/650485 3/23/1995
BULLFROG 74/654831 3/30/1995
CAPSALOE 74/715332 8/14/1995
HERBALAX 74/650559 3/23/1995
MUDD FACIAL TREATMENT 74/571539 9/9/1994
MUDD SPA TREATMENT 74/537103 6/13/1994
PAMPRIN 74/702071 7/17/1995
QUIK GEL 74/654830 3/30/1995
THE ULTIMATE WATERPROOF SUNBLOCK 74/597971 11/14/1994
VFW 75/026992 12/4/1995
</TABLE>
State Registered Trademark Trademark Registered No.
- -------------------------- ------------------------
NORWICH Puerto Rico Reg. No. 6172
<PAGE>
COMMON LAW TRADEMARKS
---------------------
FLEX-ALL OF COLORADO
FLEX-ALL-SOUTHWEST
APPLE-HYDROXY
THE ONCE A DAY ALL DAY SUNSCREEN
PAMPRIN (Stylized "A" in decorative italics)
UNITED STATES TRADEMARK LICENSE
-------------------------------
Trademark License Agreement between Valmont, Inc. and Signal Investment &
Management Co. dated June 17, 1994, for the following marks:
Marks in the United States Trademark Registration No.
- -------------------------- --------------------------
PHISOAC (Stylized) 699,720
PHISODAN (Stylized) 764,556
PHISODERM 408,558
PHISOPUFF (Block) 1,294,345
Marks in Puerto Rico Trademark Registration No.
- -------------------- --------------------------
PHISODAN 13,379
PHISODERM 19,097
Marks in Canada Trademark Registration No.
- --------------- --------------------------
PHISO 157,674
PHISOAC 118,977
PHISOCARE 196,899
PHISODAN 132,672
PHISODERM 78/20300
PHISOFOAM 157,673
PHISOLAN 240,802
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. DEPARTMENT OF COMMERCE
RECORDATION FORM COVER SHEET Patent and Trademark Office
PATENTS ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademark. Please record the attached original documents or copy thereof.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Name of Party(ies) conveying an interest. 2. Name and address of receiving party(ies):
Chattem, Inc. Name: NationsBank, N.A. as Collateral Agent
----------------------------------------------------
Internal Address: Independence Center, 15th Floor
- ------------------------------------------------- ----------------------------------------
3. Nature of Conveyance: NC1-001-15-04
---------------------------------------------------------
/ /Assignment / /Merger
/x/Security Agreement / /Change of Name Street Address: 101 North Tryon Street
/ /Other ------------------------------------------
-----------------------------------
City: Charlotte State: North Carolina ZIP: 28255
Execution Date: April 29, 1996 ------------- ------------------ -----------
Additional name(s) & addresses attached? / / Yes /x/ No
- -----------------------------------------------------------------------------------------------------------------------------------
4. Application number(s) or patent number(s):
If this document is being filed together with a new application, the execution date of the application is:
----------------------
A. Patent Application No.(s): B. Patent No.(s): 4,279,890 PP4,564
4,251,507 4,892,890
Additional numbers attached? / / Yes /x/ No
- -----------------------------------------------------------------------------------------------------------------------------------
5. Name and address of party to whom correspondence 6. Total number of applications and patents involved: 4
concerning document should be mailed: -------
Name: Rita M.K. Purut, Esq. ------------------------------------------------------------------
----------------------------------------------
Internal Address: Moore & Van Allen, PLLC 7. Total fee (37 CFR 3.41): . . . . $ 190.00
---------------------------------- -------------
Street Address: 2200 West Main Street, Suite 800 /x/ Enclosed
----------------------------------- / / Authorized to be charged to deposit account
City: Durham State: NC ZIP: 27705 ------------------------------------------------------------------
--------------- ------- -------------
8. Deposit account number:
------------------------------------------------------------------
(Attach duplicate copy of this form if paying by deposit account)
- -----------------------------------------------------------------------------------------------------------------------------------
DO NOT USE THIS SPACE
- -----------------------------------------------------------------------------------------------------------------------------------
9. Statement and signature.
TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE FOREGOING INFORMATION IS TRUE AND CORRECT AND ANY ATTACHED COPY IS A TRUE COPY OF
THE ORIGINAL DOCUMENT.
Rita M.K. Purut, Esq. /s/ Rita M.K. Purut 5/6/1996
------------------------- ------------------- --------
Name of person signing Signature Date
Total number of pages including cover sheet, attachments and document: 6
----
- -----------------------------------------------------------------------------------------------------------------------------------
Mail documents to be recorded with required cover sheet
information to: I hereby certify that this paper is being deposited with the
United States Postal Service as first class mail in an envelope
addressed to the Commissioner of Patents and Trademarks, Box
COMMISSIONER OF PATENTS AND TRADEMARKS Assignments, Washington, DC 20231.
BOX ASSIGNMENTS
WASHINGTON, D.C. 20231
Thomas E. Sikes III
---------------------------------------------------------
Typed or printed name of person signing certification
/s/ Thomas E. Sikes III 5/6/96
---------------------------- ---------
Signature Date
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS AND TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of April
29, 1996 (as the same may be amended, modified, extended or restated from
time to time, the "SECURITY AGREEMENT") by and among the Credit Parties party
thereto (each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and
NationsBank, N.A., as Agent (the "AGENT") for the lenders referenced therein
(the "LENDERS"), the undersigned Credit Party has granted a continuing
security interest in and continuing lien upon, (i) the letters patent and
patent applications (the "Patents") and trademarks, service marks and related
registrations and applications (the "Trademarks") shown below to the Agent
for the ratable benefit of the Lenders, together with (ii)(A) any and all
improvement patents, reissues, reexaminations, patents of addition, renewals,
extensions, continuations, continuations-in-part, substitutes, provisionals
and divisions concerning the Patents and (B) the goodwill and assets of the
business symbolized by such Trademarks and (iii) all actions for infringement
concerning the foregoing including the right to sue for and to recover and
retain all damages and profits arising from past infringement:
PATENTS
- -------------------------------------------------------------------------------
Date of
Patent No. Description Of Patent Patent
- ---------- --------------------- -------
See Exhibit A attached hereto and made a part hereof.
PATENT APPLICATIONS
- -------------------------------------------------------------------------------
Patent
Application No. Description Of Patent Filing Date
- --------------- --------------------- -----------
See Exhibit A attached hereto and made a part hereof.
<PAGE>
TRADEMARKS
- -------------------------------------------------------------------------------
Trademark Date of
Registration No. Registered Trademark Registration
- ---------------- -------------------- ------------
See Exhibit A attached hereto and made a part hereof.
Trademark Applications
- -------------------------------------------------------------------------------
Trademark
Application No. Trademark Filing Date
- --------------- --------- -----------
See Exhibit A attached hereto and made a part hereof.
- 2 -
<PAGE>
The security interest in the attached patents, patent applications, trademarks
and trademark applications can be terminated only in accordance with the terms
of the Security Agreement.
Very truly yours,
CHATTEM, INC., a Tennessee corporation
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:/s/ Nancy B. Chastain
------------------------------
Name: Nancy B. Chastain
----------------------------
Title: Senior Vice President
---------------------------
- 3 -
<PAGE>
As to Chattem, Inc.:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tina M. Beatty
- ----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ----------------------------------
[SEAL]
As to NationsBank, N.A., as Agent:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tina M. Beatty
- ----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ----------------------------------
[SEAL]
- 4 -
<PAGE>
EXHIBIT A
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
</TABLE>
UNITED STATES PATENT LICENSE
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.)
</TABLE>
UNITED STATES TRADEMARKS
<TABLE>
<CAPTION>
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
<S> <C> <C>
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
</TABLE>
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
<PAGE>
- -------------------------------------------------------------------------------
U.S. DEPARTMENT OF COMMERCE
Patent and Trademark Office
RECORDATION FORM COVER SHEET
TRADEMARKS ONLY
- -------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademarks. Please record the
attached original document or copy thereof.
- --------------------------------------------------------------------------------
1. Name of Party(ies) conveying an interest:
Chattem, Inc.
/ / Individual(s) / / Association
/ / General Partnership / / Limited Partnership
/X/ Corporation-State Tennessee
-----------------------------------------------------
/ / Other
Additional name(s) of conveying party(ies) attached / / Yes /X/ No
- -------------------------------------------------------------------------------
2. Name and Address of Party(ies) receiving an interest:
Name: NationsBank, N.A. as Collateral Agent
---------------------------------------------------------------------------
Internal Address: Independence Center, 15th Fl. NC1-001-15-04
---------------------------------------------------------------
Street Address: 101 N. Tryon Street
--------------------------------------------
City: Charlotte State: NC ZIP: 28255
---------------------------- ------- --------
/ / Individual(s) citizenship
---------------------------------------------
/X/ Association National Association
------------------------------------------------------------
/ / General Partnership
----------------------------------------------------
/ / Limited Partnership
----------------------------------------------------
/ / Corporation-State
------------------------------------------------------
/ / Other
------------------------------------------------------------------
If assignee is not domiciled in the United States, a domestic representative
designation is attached: / / Yes / / No
(Designation must be a separate document from Assignment)
Additional name(s) & address(es) attached? / / Yes /X/ No
- -------------------------------------------------------------------------------
3. Nature of Conveyance:
/ / Assignment / / Merger
/X/ Security Agreement / / Change of Name
/ / Other
-------------------------------
Execution Date: April 29, 1996
- -------------------------------------------------------------------------------
4. Application number(s) or registration number(s)
A. Trademark Application No.(s): See Attached
B. Trademark Registration No.(s):
1,763,958 1,784,718
1,738,319 1,760,924
1,229,147
Additional numbers attached? / / Yes /X/ No
- -------------------------------------------------------------------------------
5. Name and address of party to whom correspondence concerning document should
be mailed:
Name: Rita M.K. Purut, Esq.
---------------------------------------------------------------------------
Internal Address: Moore & Van Allen, PLLC
---------------------------------------------------------------
---------------------------------------------------------------------------
Street Address: 2200 West Main Street, Suite 800
-----------------------------------------------------------------
---------------------------------------------------------------------------
City: Durham State: NC ZIP: 27705
---------------------- --------- --------------------------
- -------------------------------------------------------------------------------
6. Total number of applications and registrations involved: 5
- -------------------------------------------------------------------------------
7. Total fee (37 CFR 3.4): ......$ 170.00
--------------------------------------------
/X/ Enclosed
/ / Authorized to be charged to deposit account
- -------------------------------------------------------------------------------
8. Deposit account number:
---------------------------------------------------------------------------
(Attach duplicate copy of this form if paying by deposit account):
- -------------------------------------------------------------------------------
DO NOT USE THIS SPACE
- -------------------------------------------------------------------------------
9. Statement and signature.
TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE FOREGOING INFORMATION IS TRUE
AND CORRECT AND ANY ATTACHED COPY IS A TRUE COPY OF THE ORIGINAL DOCUMENT.
Rita M.K. Purut /s/ Rita M.K. Purut 5/6/1996
------------------------------- ----------------------- ----------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments and document: 6
-------
- -------------------------------------------------------------------------------
Mail documents to be recorded with required cover sheet information to:
Commissioner of Patent and Trademarks
Box Assignments
Washington, D.C. 20231
Enter the name of the person submitting the document. The submitter mush
sign and date the cover sheet, confirming that to the best of that person's
knowledge and belief, the information contained on the cover sheet is correct
and that any copy of the document is a true copy of the original document.
Enter the total number of pages contained in the cover sheet, including any
attached pages containing information continued from the Items of the cover
sheet.
- -------------------------------------------------------------------------------
I hereby certify that this paper is being deposited with the United States
Postal Service as first class mail in an envelope addressed to the Commissioner
of Patents and Trademarks, Box Assignments, Washington, D.C. 20231.
THOMAS E. SIKES III
- ------------------------------------------------------------
Typed or printed name of person signing certification
/s/ Thomas E. Sikes III 5/6/96
- ---------------------------------- ---------------------
Signature Date
- -------------------------------------------------------------------------------
<PAGE>
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS AND TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of April
29, 1996 (as the same may be amended, modified, extended or restated from
time to time, the "SECURITY AGREEMENT") by and among the Credit Parties party
thereto (each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and
NationsBank, N.A., as Agent (the "AGENT") for the lenders referenced therein
(the "LENDERS"), the undersigned Credit Party has granted a continuing
security interest in and continuing lien upon, (i) the letters patent and
patent applications (the "Patents") and trademarks, service marks and related
registrations and applications (the "Trademarks") shown below to the Agent
for the ratable benefit of the Lenders, together with (ii)(A) any and all
improvement patents, reissues, reexaminations, patents of addition, renewals,
extensions, continuations, continuations-in-part, substitutes, provisionals
and divisions concerning the Patents and (B) the goodwill and assets of the
business symbolized by such Trademarks and (iii) all actions for infringement
concerning the foregoing including the right to sue for and to recover and
retain all damages and profits arising from past infringement:
PATENTS
- -------------------------------------------------------------------------------
Date of
Patent No. Description Of Patent Patent
- ---------- --------------------- -------
See Exhibit A attached hereto and made a part hereof.
PATENT APPLICATIONS
- -------------------------------------------------------------------------------
Patent
Application No. Description Of Patent Filing Date
- --------------- --------------------- -----------
See Exhibit A attached hereto and made a part hereof.
<PAGE>
TRADEMARKS
- -------------------------------------------------------------------------------
Trademark Date of
Registration No. Registered Trademark Registration
- ---------------- -------------------- ------------
See Exhibit A attached hereto and made a part hereof.
Trademark Applications
- -------------------------------------------------------------------------------
Trademark
Application No. Trademark Filing Date
- --------------- --------- -----------
See Exhibit A attached hereto and made a part hereof.
- 2 -
<PAGE>
The security interest in the attached patents, patent applications, trademarks
and trademark applications can be terminated only in accordance with the terms
of the Security Agreement.
Very truly yours,
CHATTEM, INC., a Tennessee corporation
By: /s/ Robert E. Bosworth
--------------------------------
Name: ROBERT E. BOSWORTH
------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:/s/ Nancy B. Chastain
------------------------------
Name: Nancy B. Chastain
----------------------------
Title: Senior Vice President
---------------------------
- 3 -
<PAGE>
As to Chattem, Inc.:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tina M. Beatty
- ----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ----------------------------------
[SEAL]
As to NationsBank, N.A., as Agent:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tina M. Beatty
- ----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- ----------------------------------
[SEAL]
- 4 -
<PAGE>
EXHIBIT A
CHATTEM, INC.
UNITED STATES PATENTS
<TABLE>
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- -------------------
<S> <C> <C>
4,279,890 07/21/1981 Cosmetic facial powder containing walnut shell flour.
4,251,507 02/17/1981 Process and composition for reducing dental plaque.
PP4,564 07/08/1980 Rose Plant.
4,892,890 01/09/1990 External analgesic compositions.
UNITED STATES PATENT LICENSE
<CAPTION>
Patent No. Date of Patent Patent Description
- ---------- -------------- ------------------
<S> <C> <C>
4,295,985 10/20/1981 Method of removal of chlorine retained by human skin and
hair (licensed by Eljenn International to Chattem, Inc.).
</TABLE>
<TABLE>
<CAPTION>
UNITED STATES TRADEMARKS
<S> <C> <C>
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
Bullfrog (Design) 1,763,958 4/13/1993
CARDUI 1,738,319 12/8/1992
EXELLE 1,229,147 3/8/1983
SUMMER HIGHLIGHTS 1,784,718 7/27/1993
Ultraswim (Design) 1,760,924 3/30/1993
State Registered Trademark Trademark Registration No.
- -------------------------- --------------------------
AMPHIBIOUS FORMULA California Reg. No. 67,887
AMPHIBIOUS FORMULA Florida Reg. No. 928,164
AMPHIBIOUS FORMULA Hawaii Reg. No. 149,564
AMPHIBIOUS FORMULA Texas Reg. No. 40,988
BULLFROG California Reg. No. 67,888
BULLFROG Florida Reg. No. 928,165
BULLFROG Hawaii Reg. No. 149,562
BULLFROG Texas Reg. No. 40,989
CORN SILK & Design Puerto Rico Reg. No. 24,727
CORN SILK Puerto Rico Reg. No. 24,726
MUDD Puerto Rico Reg. No. 23,176
MUDD Tennessee
PAMPRIN Puerto Rico Reg. No. 21,511
SUN IN Puerto Rico
SUN IN Tennessee
SUN-IN Puerto Rico Reg. No. 32,056
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
U.S. DEPARTMENT OF COMMERCE
RECORDATION FORM COVER SHEET Patent and Trademark Office
TRADEMARKS ONLY
- --------------------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademarks. Please record the attached original document or copy thereof.
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Name of Party(ies) conveying an interest: 2. Name and Address of Party(ies) receiving an interest:
Signal Investment & Management Co.
Name: NationsBank, N.A. as Collateral Agent
-----------------------------------------------------------
Internal Address: Independence Center, 15th Fl. NC1-001-15-04
------------------------------------------------
/ /Individual(s) / /Association
/ /General Partnership / /Limited Partnership Street Address: 101 N. Tryon Street
--------------------------------------------------
/x/Corporation-State Delaware
------------------------------------ City: Charlotte State: NC ZIP: 28255
/ /Other -------------- ---- --------
------------------------------------------------ / /Individual(s) citizenship ______________________________
Additional name(s) of conveying party(ies) attached? /x/Association National Association
/ / Yes /x/ No --------------------------------------------
- ------------------------------------------------------------
3. Nature of conveyance: / /General Partnership ____________________________________
/ /Assignment / /Merger / /Limited Partnership ____________________________________
/x/Security Agreement / /Change of Name / /Corporation-State ______________________________________
/ /Other ________________________________________________ / /Other __________________________________________________
Execution Date: April 29, 1996 If assignee is not domiciled in the United States, a domestic
representative designation is attached: / / Yes / / No
(Designation must be a separate document from Assignment)
Additional name(s) & address(es) attached? / / Yes /X/ No
- ---------------------------------------------------------------------------------------------------------------------------------
4. Application number(s) or registration number(s) B. Trademark Registration No.(s): See Attached
A. Trademark Application No.(s): See Attached
Additional numbers attached? /X/ Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
5. Name and address of party to whom correspondence 6. Total number of applications and registrations involved: 47
concerning document should be mailed:
Name: Rita M.K. Purut, Esq.
------------------------------------------------------ ----------------------------------------------------------------
Internal Address: Moore & Van Allen, PLLC 7. Total fee (37 CFR 3.4):.... $1,220.00
------------------------------------------ ---------------------------------
/X/ Enclosed
- ------------------------------------------------------------ / /Authorized to be charged to deposit account
Street Address: 2200 West Main Street, Suite 800 ----------------------------------------------------------------
--------------------------------------------
- ------------------------------------------------------------ 8. Deposit account number:
-------------------------------------------------------------
City: Durham State: NC ZIP: 27705 (Attach duplicate copy of this form if paying by deposit account):
--------------- --- -------------------
- ---------------------------------------------------------------------------------------------------------------------------------
DO NOT USE THIS SPACE
- ---------------------------------------------------------------------------------------------------------------------------------
9. Statement and signature.
TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE FOREGOING INFORMATION IS TRUE AND CORRECT AND ANY ATTACHED COPY IS A TRUE COPY OF THE
ORIGINAL DOCUMENT.
Rita M.K. Purut /s/Rita M.K. Purut 5/6/1996
----------------------------------- ----------------------- ------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments and document: 8
------
- ----------------------------------------------------------------------------------------------------------------------------------
Mail documents to be recorded with required cover sheet
information to: I hereby certify that this paper is being deposited with the
Commissioner of Patent and Trademarks United States Postal Service as first class mail in an
Box Assignments envelope addressed to the Commissioner of Patents and
Washington, D.C. 20231 Trademarks, Box Assignments, Washington, DC 20231.
Enter the name of the person submitting the document. The Thomas E. Sikes III
submitter must sign and date the cover sheet, confirming that ------------------------------------------------------
to the best of that person's knowledge and belief, the Typed or printed name of person signing certification
information contained on the cover sheet is correct and that
any copy of the document is a true copy of the original /s/Thomas E. Sikes III 5/6/96
document. Enter the total number of pages contained in the ------------------------------------- --------------
cover sheet, including any attached pages containing Signature Date
information continued from the Items of the cover sheet.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A. Trademark Application Numbers:
74/715,332
74/702,071
74/654,831
74/654,830
74/650,560
74/650,559
74/650,485
74/609,150
74/597,971
74/630,796
74/571,539
74/537,103
75/026,992
75/005,550
75/005,548
B. Trademark Registration Numbers:
1,951,563 1,279,505
1,767,890 1,209,453
1,765,513 1,193,832
1,732,425 1,092,610
1,674,764 1,060,586
1,608,789 1,059,766
1,604,279 1,011,938
1,569,189 970,575
1,499,182 908,769
1,499,169 799,233
1,481,352 709,866
1,471,156 708,677
1,457,919 595,101
1,456,006 372,963
1,339,919 343,858
1,290,647
1,279,506
<PAGE>
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS AND TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of April
29, 1996 (as the same may be amended, modified, extended or restated from
time to time, the "SECURITY AGREEMENT") by and among the Credit Parties party
thereto (each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and
NationsBank, N.A., as Agent (the "AGENT") for the lenders referenced therein
(the "LENDERS"), the undersigned Credit Party has granted a continuing
security interest in and continuing lien upon, (i) the letters patent and
patent applications (the "Patents") and trademarks, service marks and related
registrations and applications (the "Trademarks") shown below to the Agent
for the ratable benefit of the Lenders, together with (ii)(A) any and all
improvement patents, reissues, reexaminations, patents of addition, renewals,
extensions, continuations, continuations-in-part, substitutes, provisionals
and divisions concerning the Patents and (B) the goodwill and assets of the
business symbolized by such Trademarks and (iii) all actions for infringement
concerning the foregoing including the right to sue for and to recover and
retain all damages and profits arising from past infringement:
PATENTS
- ------------------------------------------------------------------------------
DATE OF
PATENT NO. DESCRIPTION OF PATENT PATENT
- ---------- --------------------- ------
See Exhibit A attached hereto and made a part hereof.
PATENT APPLICATIONS
- ------------------------------------------------------------------------------
PATENT
APPLICATION NO. DESCRIPTION OF PATENT FILING DATE
- --------------- --------------------- -----------
See Exhibit A attached hereto and made a part hereof.
<PAGE>
TRADEMARKS
- ------------------------------------------------------------------------------
TRADEMARK DATE OF
REGISTRATION NO. REGISTERED TRADEMARK REGISTRATION
- ---------------- -------------------- ------------
See Exhibit A attached hereto and made a part hereof.
TRADEMARK APPLICATIONS
- ------------------------------------------------------------------------------
TRADEMARK
APPLICATION NO. TRADEMARK FILING DATE
- --------------- --------- -----------
See Exhibit A attached hereto and made a part hereof.
-2-
<PAGE>
The security interest in the attached patents, patent applications,
trademarks and trademark applications can be terminated only in accordance
with the terms of the Security Agreement.
Very truly yours,
CHATTEM, INC., a Tennessee corporation
By:/s/ Robert E. Bosworth
----------------------------------
Name: Robert E. Bosworth
--------------------------------
Title: President
-------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:/s/ Nancy B. Chastain
--------------------------------
Name: Nancy B. Chastain
------------------------------
Title: Senior Vice President
-----------------------------
- 3 -
<PAGE>
As to Chattem, Inc.:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tia M. Beatty
- --------------------------------
Notary Public
My Commission Expires:
12-17-2000
- --------------------------------
As to NationsBank, N.A., as Agent:
Sworn to and subscribed before me
this 29th day of April, 1996.
/s/ Tia M. Beatty
- --------------------------------
Notary Public
My Commission Expires:
12-17-2000
- --------------------------------
- 4 -
<PAGE>
EXHIBIT A
SIGNAL INVESTMENT & MANAGEMENT CO.
UNITED STATES TRADEMARKS
<TABLE>
<CAPTION>
U.S. Registered Trademark Trademark Registration No. Date of Registration
- ------------------------- -------------------------- --------------------
<S> <C> <C>
AMPHIBIOUS FORMULA 1,279,505 5/29/1984
BENZODENT 595,101 9/14/1954
BENZOGEL 1,767,890 4/27/1993
BULLFROG 1,279,506 5/29/1984
CORN SILK 799,233 11/23/1965
CORN SILK & Design 1,457,919 9/22/1987
CORNSILK 1,193,832 4/20/1982
DAY ONE 1,608,789 8/7/1990
FLEX-ALL 454 1,569,189 12/5/1989
FLEX-ALL 454 (Stylized) 1,481,352 3/22/1988
FOR THE PERIOD BEFORE YOUR PERIOD 1,674,764 2/11/1992
HALF-AS-MUCH 1,060,586 3/8/1977
HI-THERM 708,677 12/20/1960
ICY-HOT 970,575 10/16/1973
META CINE 372,963 11/21/1939
MICRON 1,499,169 8/9/1988
MUDD 1,011,938 5/27/1975
MUDD 1,290,647 8/21/1984
N & Design 1,765,513 4/20/1993
NORWICH 1,732,425 11/17/1992
PAMPRIN 709,866 1/17/1961
PAMPRIN IB 1,499,182 8/9/1988
PREMESYN PMS 1,471,156 1/5/1988
QUICK GEL 1,951,563 1/23/1996
SILKENOL 1,604,279 7/3/1990
SUNCLYME 343,858 3/9/1937
SUN IN 908,769 2/3/1971
SUN-IN 1,456,006 9/18/1987
SUN-IN (Design) 1,059,766 2/22/1977
TADPOLE 1,339,919 6/11/1985
THERA CARE 1,092,610 6/6/1978
GOLD BOND 1,209,453 9/21/1982
<CAPTION>
U.S. Pending Trademark Trademark Application No. Date of Application
- ---------------------- ------------------------- -------------------
<S> <C> <C>
CHILL STICK 74/630796 2/6/1995
FLEX-ALL 75/005548 10/13/1995
TRAINER'S CHOICE 74/609150 12/9/1994
VERALAX 74/650560 3/23/1995
454 75/005550 10/13/1995
BENZOGEL 74/650485 3/23/1995
BULLFROG 74/654831 3/30/1995
CAPSALOE 74/715332 8/14/1995
HERBALAX 74/650559 3/23/1995
MUDD FACIAL TREATMENT 74/571539 9/9/1994
MUDD SPA TREATMENT 74/537103 6/13/1994
PAMPRIN 74/702071 7/17/1995
QUICK GEL 74/654830 3/30/1995
THE ULTIMATE WATERPROOF SUNBLOCK 74/597971 11/14/1994
VFW 75/026992 12/4/1995
<CAPTION>
State Registered Trademark Trademark Registration No.
- -------------------------- ---------------------------
<S> <C>
NORWICH Puerto Rico Reg. No. 6172
</TABLE>
<PAGE>
COMMON LAW TRADEMARKS
FLEX-ALL OF COLORADO
FLEX-ALL-SOUTHWEST
APPLE-HYDROXY
THE ONCE A DAY ALL DAY SUNSCREEN
PAMPRIN (Stylized "A" in decorative italics)
UNITED STATES TRADEMARK LICENSE
Trademark License Agreement between Valmont, Inc. and Signal Investment &
Management Co. dated June 17, 1994, for the following marks:
Marks in the United States Trademark Registration No.
- -------------------------- --------------------------
PHISOAC (Stylized) 699,720
PHISODAN (Stylized) 764,556
PHISODERM 408,558
PHISOPUFF (Block) 1,294,345
Marks in Puerto Rico Trademark Registration No.
- -------------------- --------------------------
PHISODAN 13,379
PHISODERM 19,097
Marks in Canada Trademark Registration No.
- --------------- --------------------------
PHISO 157,674
PHISOAC 118,977
PHISOCARE 196,899
PHISODAN 132,672
PHISODERM 78/20300
PHISOFOAM 157,673
PHISOLAN 240,802
<PAGE>
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADE MARKS
The Trade-marks Office
50 Victoria Street
Hull, QUEBEC
K1A 0C9
Dear Sirs:
Please be advised that pursuant to the Security Agreement dated as of April 29,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "SECURITY AGREEMENT") by and among the Credit Parties party thereto
(each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and NationsBank,
N.A., as Agent (the "AGENT") for the lenders referenced therein:
NationsBank, N.A. The First National of Chicago
633 Chestnut Street One First National Plaza
Chattanooga, Tennessee 37450 Chicago, Illinois 60670
Creditanstalt Bankverein First American National Bank
Creditanstalt Corporate Finance, Inc. 725 Broad Street
Two Ravinia Drive, Suite 1680 Chattanooga, Tennessee 37401
Atlanta, Georgia 30346
Van Kampen American Capital Prime Income Trust
One Parkview Plaza Two World Trade Center
Oakbrook Terrace, Illinois 60181 New York, New York 10048
(the "LENDERS"), the undersigned Credit Party has granted a continuing security
interest in and continuing lien upon the trade marks, service marks and related
registrations and applications (the "Trade Marks") shown below to the Agent for
the ratable benefit of the Lenders, together with the goodwill and assets of the
business symbolized by such Trade Marks and all actions for infringement
concerning the foregoing including the right to sue for and to recover and
retain all damages and profits arising from past infringement:
TRADE MARKS
Trade Mark
Trade Mark Registration No.
- ---------- ----------------
See Exhibit A attached hereto and made a part hereof.
<PAGE>
The security interest in the attached trade marks and trade mark applications
can be terminated only in accordance with the terms of the Security Agreement.
Very truly yours,
CHATTEM, INC., a Tennessee corporation
By: /s/ ROBERT E. BOSWORTH
------------------------------------------
Name: Robert Bosworth
----------------------------------------
Title: EVP & CFO
---------------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By: /s/ NANCY CHASTAIN
--------------------------------
Name: Nancy Chastain
------------------------------
Title: Senior Vice President
-----------------------------
- 2 -
<PAGE>
As to Chattem, Inc.:
Sworn to and subscribed before me
this 28th day of May, 1996.
/s/ illigible
- -----------------------------------
Notary Public
My Commission Expires:
MY COMMISSION EXPIRES
MARCH 18, 1998
- -----------------------------------
As to NationsBank, N.A., as Agent:
Sworn to and subscribed before me
this 5th day of June, 1996.
/s/ Tina M. Beatty
- -----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- -----------------------------------
- 3 -
<PAGE>
EXHIBIT A
CANADIAN TRADE MARKS OWNED BY CHATTEM, INC.
MARK REG. NO./APP. NO.
AMPHIBIOUS FORMULA 332,073
BULLFROG 332,935
CORN SILK 144,355
FLEXALL ICE 806,665
MUDD 319,044
NORWICH UCA017,241
PAMPRIN (Block Letters) 234,475
SHY (Applicator) N.S. 177/45151
SHY (Liquid Douche) TMA192,381
SOMETHING PERSONAL 259,143
SUN IN 171,191
THERA CARE TMA239,954
THERA CARE & Design TMA269,249
<PAGE>
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADE MARKS
The Trade-marks Office
50 Victoria Street
Hull, QUEBEC
K1A 0C9
Dear Sirs:
Please be advised that pursuant to the Security Agreement dated as of April 29,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "SECURITY AGREEMENT") by and among the Credit Parties party thereto
(each a "CREDIT PARTY" and collectively, the "CREDIT PARTIES") and NationsBank,
N.A., as Agent (the "AGENT") for the lenders referenced therein:
NationsBank, N.A. The First National of Chicago
633 Chestnut Street One First National Plaza
Chattanooga, Tennessee 37450 Chicago, Illinois 60670
Creditanstalt Bankverein First American National Bank
Creditanstalt Corporate Finance, Inc. 725 Broad Street
Two Ravinia Drive, Suite 1680 Chattanooga, Tennessee 37401
Atlanta, Georgia 30346
Van Kampen American Capital Prime Income Trust
One Parkview Plaza Two World Trade Center
Oakbrook Terrace, Illinois 60181 New York, New York 10048
(the "LENDERS"), the undersigned Credit Party has granted a continuing security
interest in and continuing lien upon the trade marks, service marks and related
registrations and applications (the "Trade Marks") shown below to the Agent for
the ratable benefit of the Lenders, together with the goodwill and assets of the
business symbolized by such Trade Marks and all actions for infringement
concerning the foregoing including the right to sue for and to recover and
retain all damages and profits arising from past infringement:
TRADE MARKS
Trade Mark
Trade Mark Registration No.
- ---------- ----------------
See Exhibit A attached hereto and made a part hereof.
<PAGE>
The security interest in the attached trade marks and trade mark applications
can be terminated only in accordance with the terms of the Security Agreement.
Very truly yours,
SIGNAL INVESTMENT & MANAGEMENT CO., a
Delaware corporation
By: /s/ ROBERT E. BOSWORTH
------------------------------------------
Name: Robert E. Bosworth
----------------------------------------
Title: President
---------------------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By: /s/ NANCY CHASTAIN
--------------------------------
Name: Nancy Chastain
------------------------------
Title: Senior Vice President
-----------------------------
- 2 -
<PAGE>
As to Signal Investment & Management Co.
Sworn to and subscribed before me
this 28th day of MAY, 1996.
- -----------------------------------
Notary Public
My Commission Expires:
MY COMMISSION EXPIRES
MARCH 18, 1998
- -----------------------------------
As to NationsBank, N.A., as Agent:
Sworn to and subscribed before me
this 5th day of June, 1996.
/s/ Tina M. Beatty
- -----------------------------------
Notary Public
My Commission Expires:
12-17-2000
- -----------------------------------
- 3 -
<PAGE>
EXHIBIT A
CANADIAN TRADE MARKS OWNED BY SIGNAL MANAGEMENT & INVESTMENT CO.
MARK REG. NO./APP. NO.
BENZODENT UCA49940
CHILL STICK 780,659
ICY HOT TMA409,013
GOLD BOND TMA368196
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
04/30/96 MORT 61,500,000.00
04/30/96 T/DD 68.00
Drawn By and 04/30/96 MTAX 70,722.70
Moore & Van Allen, PLLC (LSJ) 04/30/96 PFEE 1.00 **70,791.70
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
</TABLE>
DEED OF TRUST
AND
SECURITY AGREEMENT
STATE OF TENNESSEE
COUNTY OF HAMILTON
Name and address of Debtor: Name and address of Secured Party:
Chattem, Inc. NationsBank, N.A.
1715 West 38th Street Independence Center, 15th Floor
Chattanooga, Tennessee 37409 NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
COLLATERAL IS OR INCLUDES FIXTURES AND THIS INSTRUMENT IS ALSO BEING FILED
AS A FIXTURE FILING IN ACCORDANCE WITH TCA SECTION 47-9-402(6). CHATTEM, INC.
IS THE RECORD OWNER OF THE REAL ESTATE.
THIS INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS FOR COMMERCIAL PURPOSES.
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is made
and entered into as of the 29th day of April, 1996, by and among
CHATTEM, INC., a Tennessee corporation (the "Borrower" or "Debtor");
RON SUEDEKUM, an individual and resident of Davidson County, Tennessee (the
"Trustee"); and
NATIONSBANK, N.A., in its capacity as agent (in such capacity, the "Agent"
or "Secured Party") for the lenders from time to time party to the Credit
Agreements described herein (the "Lenders").
THE MAXIMUM PRINCIPAL INDEBTEDNESS SECURED HEREUNDER FOR TENNESSEE
RECORDING TAX PURPOSES IS SIXTY-ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($61,500,000).
<PAGE>
WHEREAS, the Borrower is the owner of the fee simple interest in the real
property described on EXHIBIT A attached hereto and incorporated herein by
reference;
WHEREAS, the Borrower and the Guarantors (as hereinafter defined) have
requested that the Lenders provide credit facilities in the aggregate amount of
$61,500,000 to the Borrower; and
WHEREAS, the Lenders have agreed to make the requested credit facilities
available to the Borrower provided that, among other things, the Borrower
executes and delivers this Deed of Trust.
W I T N E S S E T H:
- - - - - - - - - -
The Borrower, in consideration of the indebtedness herein recited and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, irrevocably grants, mortgages, remises, aliens,
assigns and conveys to the Trustee and the Trustee's successors and assigns,
subject to the further terms of this Deed of Trust, all of the Borrower's
right, title and interest (thereunder or otherwise) in and to the following
described land, real property interests, buildings, improvements, fixtures,
furniture and appliances and other personal property:
(a) All that tract or parcel of land and other real property interests in
Hamilton County, Tennessee more particularly described in EXHIBIT A attached
hereto and made a part hereof (the "Land"); and
(b) All buildings and improvements of every kind and description now or
hereafter erected or placed on the Land (the "Improvements") and all
materials intended for construction, reconstruction, alteration and repair of
such Improvements now or hereafter erected thereon, all of which materials
shall be deemed to be included within the premises hereby conveyed
immediately upon the delivery thereof to the Land, and all fixtures and
articles of personal property now or hereafter owned by the Borrower and
attached to or contained in and used in connection with the Land and
Improvements including, but not limited to, all furniture, furnishings,
apparatus, machinery, equipment, motors, elevators, fittings, radiators,
ranges, refrigerators, awnings, shades, screens, blinds, carpeting, office
equipment and other furnishings and all plumbing, heating, lighting, cooking,
laundry, ventilating, refrigerating, incinerating, air conditioning and
sprinkler equipment and fixtures and appurtenances thereto and all renewals
or replacements thereof or articles in substitution thereof, whether or not
the same are or shall be attached to the Land and Improvements in any manner
(the "Tangible Personalty") and all proceeds of the Tangible Personalty
(hereinafter, the Land, Improvements and Tangible Personalty may be
collectively referred to as the "Premises").
TO HAVE AND HOLD the same, together with all privileges, hereditaments,
easements and appurtenances thereunto belonging, to the Trustee and the
Trustee's successors and assigns to secure the indebtedness herein recited.
- 2 -
<PAGE>
And, as additional security for said indebtedness, the Borrower hereby
conditionally assigns to the Agent all right, title and interest of the Borrower
in and to the security deposits, rents, issues, profits and revenues of the
Premises from time to time accruing (the "Rents and Profits"), reserving only
the right to the Borrower to collect and enjoy the same as long as there shall
exist no Event of Default (as defined in Article IV).
As additional collateral and further security for said indebtedness, the
Borrower does hereby assign to the Agent and grants to the Agent a security
interest in all of the right, title and interest of the Borrower in and to any
and all insurance policies and proceeds thereof and any and all leases
(including equipment leases), rental agreements, sales contracts, management
contracts, franchise agreements, construction contracts, architects' contracts,
technical services agreements, or other contracts, licenses and permits now or
hereafter affecting the Premises (the "Intangible Personalty") or any part
thereof, and the Borrower agrees to execute and deliver to the Agent such
additional instruments, in form and substance reasonably satisfactory to the
Agent, as may hereafter be requested by the Agent to evidence and confirm said
assignment; provided, however, that acceptance of any such assignment shall not
be construed as a consent by the Agent to any lease, rental agreement,
management contract, franchise agreement, construction contract, technical
services agreement or other contract, license or permit, or to impose upon the
Agent any obligation with respect thereto.
All the Tangible Personalty which comprise a part of the Premises shall, as
far as permitted by law, be deemed to be affixed to the aforesaid Land and
conveyed therewith. As to the balance of the Tangible Personalty and the
Intangible Personalty, this Deed of Trust shall be considered to be a security
agreement which creates a security interest in such items for the benefit of the
Agent. In that regard, the Borrower grants to the Agent all of the rights and
remedies of a secured party under the Tennessee Uniform Commercial Code.
The Borrower, Trustee and the Agent covenant, represent and agree as
follows:
ARTICLE I
Secured Obligations
1.1 OBLIGATIONS SECURED. The Agent and the Lenders have agreed to
establish credit facilities in the aggregate amount of $61,500,000 (hereinafter
the loans and extensions of credit thereunder may be called the "Loans") in
favor of the Borrower pursuant to the terms of those certain credit agreements
dated as of the date hereof among the Borrower, each of the Borrower's Domestic
Subsidiaries (the Borrower's Domestic Subsidiaries, individually a "Guarantor"
and collectively the "Guarantors"), the Agent and the Lenders, one in the amount
of $55,000,000 (the "Credit Agreement") and one in the amount of $6,500,000 (the
"Working Capital Credit Agreement") (as amended, modified, supplemented,
extended, renewed or replaced from time to time, collectively the "Credit
Agreements"; terms used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement) and as evidenced by (i) those revolving credit
promissory notes of the Borrower dated as of the date hereof in the aggregate
principal amount of $17,500,000 and having maturity dates of April 29, 2001 (as
referenced and defined in the Credit Agreement, as amended, modified,
- 3 -
<PAGE>
supplemented, extended, renewed or replaced from time to time, the "Revolving
Notes"), (ii) those revolving credit promissory notes of the Borrower dated as
of the date hereof in the aggregate principal amount of $6,500,000 and having
maturity dates of April 29, 2001 (as referenced and defined in the Credit
Agreement, as amended, modified, supplemented, extended, renewed or replaced
from time to time, the "Working Capital Revolving Notes"), (iii) those Tranche A
term loan promissory notes of the Borrower dated as of the date hereof in the
aggregate principal amount of $20,000,000 and having maturity dates of April 29,
2001 (as referenced and defined in the Credit Agreement, as amended, modified,
supplemented, extended, renewed or replaced from time to time, the "Tranche A
Term Loan Notes") and (iv) those Tranche B term loan promissory notes of the
Borrower dated as of the date hereof in the aggregate principal amount of
$17,500,000 and having maturity dates of October 29, 2003 (as referenced and
defined in the Credit Agreement, as amended, modified, supplemented, extended,
renewed or replaced from time to time, the "Tranche B Term Loan Notes")
(hereinafter the Revolving Notes, the Working Capital Revolving Notes, the
Tranche A Term Loan Notes and the Tranche B Term Loan Notes may be referred to
as the "Notes"), and (v) all other documents executed in connection with the
Notes.
ARTICLE II
The Borrower's Covenants, Representations and Agreements
2.1 TITLE TO PROPERTY. The Borrower represents and warrants to the Agent
that (i) it is the owner of the Tangible Personalty (to the extent such Tangible
Personalty does not constitute fixtures), and has the right to convey the same,
(ii) that as of the date hereof title to such property is free and clear of all
encumbrances except for the matters shown on the title insurance policy accepted
by the Agent in connection with this Deed of Trust (the "Permitted
Encumbrances"), and (iii) it will warrant and defend the title to such property
except for the Permitted Encumbrances and the Permitted Liens against the claims
of all Persons. As to the balance of the Premises, the Rents and Profits and
the Intangible Personalty, the Borrower represents and warrants that it has
title to such property that title as of the date hereof to such property is free
and clear of all encumbrances except for the Permitted Encumbrances, that it has
the right to convey such property and that it will warrant and defend such
property except for the Permitted Encumbrances and the Permitted Liens against
the claims of all Persons.
2.2 TAXES AND FEES. The Borrower will pay on or before the date that the
same become delinquent, all taxes, general and special assessments, insurance
premiums, permit fees, inspection fees, license fees, water and sewer charges,
franchise fees and equipment rents and any other charges or fees against it or
the Premises (and the Borrower, upon request of the Agent, will submit to the
Agent receipts evidencing said payments) in accordance with Section 7.5 of the
Credit Agreements.
2.3 REIMBURSEMENT. The Borrower agrees that if it shall fail to pay on or
before the date that the same become delinquent any tax, assessment or charge
levied or assessed against the Premises or any utility charge, whether public or
private, or any insurance premium or if it shall fail to procure the insurance
coverage and the delivery of the insurance
- 4 -
<PAGE>
certificates required hereunder, or if it shall fail to pay any other charge
or fee described in Sections 2.2, 2.3 or 2.6 hereof, then the Agent, at its
option, may pay or procure the same. The Borrower will reimburse the Agent
upon demand for any sums of money paid by the Agent pursuant to this Section,
together with interest on each such payment at the default rate of interest
provided in Section 3.1(b) of the Credit Agreement for Revolving Loans that
are Base Rate Loans, and all such sums and interest thereon shall be secured
hereby.
2.4 ADDITIONAL DOCUMENTS. The Borrower agrees to execute and deliver to
the Agent, concurrently with the execution of this Deed of Trust and upon the
request of the Agent from time to time hereafter, all financing statements and
other documents reasonably required to perfect and maintain the security
interest created hereby. The Borrower hereby irrevocably (as long as any Loans
remain outstanding) makes, constitutes and appoints the Agent as the true and
lawful attorney of the Borrower to sign the name of the Borrower on any
financing statement, continuation of financing statement or similar document
required to perfect or continue such security interests.
2.5 SALE OR ENCUMBRANCE. Except as permitted by the Credit Agreements,
the Borrower will not sell, encumber or otherwise dispose of any of the Tangible
Personalty except to incorporate such into the Improvements or replace such with
goods of quality and value at least equal to that replaced. In the event the
Borrower sells or otherwise disposes of any of the Tangible Personalty in
contravention of the foregoing sentence, the Agent's security interest in the
proceeds of the Tangible Personalty shall continue pursuant to this Deed of
Trust.
2.6 FEES AND EXPENSES. The Borrower will promptly pay upon demand any and
all reasonable costs and expenses of the Agent, (a) as required under Section
11.5 of the Credit Agreements and (b) as necessary to protect the Premises, the
Rents and Profits or the Intangible Personalty or to exercise any rights or
remedies under this Deed of Trust with respect to the Premises, Rents and
Profits or the Intangible Personalty. All of the foregoing costs and expenses
shall be secured hereby.
2.7 LEASES AND OTHER AGREEMENTS. Without first obtaining on each occasion
the written approval of the Agent, which shall not be unreasonably withheld, the
Borrower shall not, except as permitted by the Credit Agreements, enter into,
cancel, surrender or modify or permit the cancellation of any material lease
(including any equipment lease), rental agreement, management contract,
franchise agreement, construction contract, technical services agreement or
other material contract, license or permit now or hereafter affecting the
Premises, or modify any of said instruments, or accept or permit to be made, any
prepayment (more than one month) of any installment of rent or fees thereunder.
Certified copies of each such approved material lease or other material
agreement shall be submitted to the Agent as soon as possible. The Borrower
shall faithfully keep and perform, or cause to be kept and performed, in all
material respects, all of the covenants, conditions, and agreements contained in
each of said agreements, now or hereafter existing, on the part of the Borrower
to be kept and performed (including performance of all covenants to be performed
under any and all leases of the Premises or any part thereof) and shall at all
times use commercially reasonable efforts to enforce, with respect to each other
party to said
- 5 -
<PAGE>
agreements, all obligations, covenants and agreements by such other party to
be performed thereunder.
2.8 MAINTENANCE OF PREMISES. Except as provided otherwise in the Credit
Agreements, the Borrower will abstain from and will not permit the commission of
waste in or about the Premises and will maintain, or cause to be maintained, the
Premises in good condition and repair, reasonable wear and tear excepted.
2.9 INSURANCE.
(a) TYPES REQUIRED. The Borrower shall maintain insurance for the
Premises as set forth in Section 7.6 of the Credit Agreements. In addition to
the requirements set forth in Section 7.6 of the Credit Agreements, if any part
of the Improvements is located in an area having "special flood hazards" as
defined in the Federal Flood Disaster Protection Act of 1973, a flood insurance
policy naming the Agent as mortgagee must be submitted to the Agent. The policy
must be in such amount, covering such risks and liabilities and with such
deductibles or self-insurance retentions as are in accordance with normal
industry practice.
(b) USE OF PROCEEDS: All insurance proceeds received by the Borrower
shall be applied as set forth in Section 7.6 of the Credit Agreements.
2.10 EMINENT DOMAIN. The Borrower assigns to the Agent any proceeds or
awards which may become due by reason of any condemnation or other taking for
public use of the whole or any part of the Premises or any rights appurtenant
thereto to which the Borrower is entitled, and such proceeds or awards shall be
applied in the same manner the insurance proceeds are applied pursuant to
Section 7.6 of the Credit Agreements. The Borrower agrees to execute such
further assignments and agreements as may be reasonably required by the Agent to
assure the effectiveness of this Section. In the event any Governmental
Authority shall require or commence any proceedings for the demolition of any
buildings or structures comprising a part of the Premises, or shall commence any
proceedings to condemn or otherwise take pursuant to the power of eminent domain
a material portion of the Premises, the Borrower shall promptly notify the Agent
of such requirement or commencement of proceeding (for demolition, condemnation
or other taking).
2.11 RELEASES AND WAIVERS. The Borrower agrees that no release by the
Agent of any portion of the Premises, the Rents and Profits or the Intangible
Personalty, no subordination of any Lien, no forbearance on the part of the
Lenders or the Agent to collect on the Loans, or any part thereof, no waiver of
any right granted or remedy available to the Agent and no action taken or not
taken by the Agent shall in any way have the effect of releasing the Borrower
from full responsibility to the Lenders and the Agent for the complete discharge
of each and every of the Borrower's obligations hereunder.
- 6 -
<PAGE>
ARTICLE III
Event of Default
An Event of Default shall exist under the terms of this Deed of Trust upon
the existence of an Event of Default under the terms of the Credit Agreements.
ARTICLE IV
Foreclosure
4.1 ACCELERATION OF LOAN; FORECLOSURE. Upon the occurrence and during the
continuance of an Event of Default and otherwise in compliance with Section 9.2
of the Credit Agreements, the entire balance of the Loans and any other
obligations due under the Credit Documents, including all accrued interest,
shall, at the option of the Agent, become immediately due and payable. Upon
failure to pay the Loans or reimburse any other amounts due under the Credit
Documents in full at any stated or accelerated maturity, the Trustee may
foreclose the lien of this Deed of Trust as set forth herein.
4.2 FORECLOSURE. Upon the occurrence and during the continuance of an
Event of Default and at the request of the Agent, the Trustee, or his
successor or substitute, after publishing notice of the time and place of
sale at least three (3) different times in some newspaper published in a
county in which the Premises is located, the first of which publications
shall be at least twenty (20) days prior to said sale, shall proceed to sell
the Premises, at public auction for cash. Any sale made by the Trustee
hereunder may be as an entirety or in such parcels as the Agent may request.
To the extent permitted by applicable law, any sale may be adjourned by
announcement at the time and place appointed for such sale without further
notice except as may be required by law. The sale by the Trustee of less than
the whole of the Premises shall not exhaust the power of sale herein granted,
and the Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Premises shall be sold; and, if the
proceeds of such sale of less than the whole of the Premises shall be less
than the aggregate of the indebtedness secured hereby and the expense of
executing this trust as provided herein, this Deed of Trust and the lien
hereof shall remain in full force and effect as to the unsold portion of the
Premises just as though no sale had been made; provided, however, that the
Borrower shall never have any right to require the sale of less than the
whole of the Premises but the Agent shall have the right, at its sole
election, to request the Trustee to sell less than the whole of the Premises.
Trustee may, after any request or direction by the Agent, sell not only the
real property but also the Tangible Personalty and other interests which are
a part of the Premises, or any part thereof, as a unit and as a part of a
single sale, or may sell any part of the Premises separately from the
remainder of the Premises. It shall not be necessary for the Trustee to have
taken possession of any part of the Premises or to have present or to exhibit
at any sale any of the Tangible Personalty. If the Premises is located in
two or more counties, it may all be sold in one of the counties if the
Trustee so elects. Otherwise, the sale shall occur in the county in which
the Premises is located. The sale shall be held at such location in the
county as the foreclosure notice may specify. The power of sale granted
- 7 -
<PAGE>
herein shall not be exhausted by any sale held hereunder by the Trustee or
his substitute or successor, and such power of sale may be exercised from
time to time and as many times as the Agent may deem necessary until all of
the Premises has been duly sold and all secured indebtedness has been fully
paid. In the event any sale hereunder is not completed or is defective in
the opinion of the Agent, such sale shall not exhaust the power of sale
hereunder and the Agent shall have the right to cause a subsequent sale or
sales to be made hereunder. Any and all statements of fact or other recitals
made in any deed or deeds or other conveyances given by the Trustee or any
successor or substitute appointed hereunder as to nonpayment of the secured
indebtedness or as to the occurrence of any default, or as to the Agent's
having declared all of said indebtedness to be due and payable, or as to the
request sell, or as to notice of time, place and terms of sale and the
properties to be sold having been duly given, or as to the refusal, failure
or inability to act of the Trustee or any substitute or successor trustee, or
as to the appointment of any substitute or successor trustee, or as to any
other act or thing having been duly done by the Agent or by the Trustee,
substitute or successor, shall be taken as prima facie evidence of the truth
of the facts so stated and recited. The Trustee is hereby released from all
obligations imposed by statute which can be waived, including any requirement
of qualification or bond. It is agreed that the Agent, in the event of any
sale of the Premises, may bid and buy as any third person might, but the
Agent shall not be required to present cash at the sale except to the extent,
if any, by which the Agent's bid exceeds the amount of the secured
indebtedness, including all expenses of collection and sale provided for
herein. The Trustee may delegate, in his sole discretion, any authority
possessed under this Deed of Trust, including the authority to conduct a
foreclosure sale. Without limiting the foregoing, the Trustee may retain a
professional auctioneer to preside over the bidding, and the customary charge
for the auctioneer's services shall be paid from sale proceeds as an expense
of sale. If prior to or at any foreclosure sale a third party represents to
the Trustee in writing that such party holds the next junior lien to this
Deed of Trust (whether by judgment lien, junior deed of trust, or otherwise),
the Trustee may disburse surplus proceeds to such third party in an amount
not to exceed the amount of lien alleged by the third party in its written
statement to the Trustee. A foreclosure sale may be adjourned by the Trustee
and may be reset at a later time and/or date by announcement at the time and
place of the originally advertised sale and without any further publication.
The foreclosure sale of the Premises shall be conducted for cash to be
tendered upon the conclusion of the bidding; provided, however, (i) the
Trustee may accept a check issued or certified by a local bank as
consideration for the sale and (ii) if, in his sole discretion, the Trustee
announces before or after bidding that, upon the failure of the high bidder
to complete the sale for cash within one (1) hour, the Premises may be sold
to the second highest bidder, and if the high bidder should subsequently fail
to complete the purchase within that time, then the Trustee may, at his
option, close the sale of the Premises to the second highest bidder. The
Agent or the Trustee may, after default, advise third parties of the amount
(or estimated amount) of principal, interest and expenses that will be
outstanding as of the date of any foreclosure sale and may share any other
available information regarding the Premises. The Borrower agrees that the
Borrower will not bid at any sale hereunder and will not allow others to bid
on the Borrower's behalf unless, at the time of sale, the Borrower has cash
sufficient to pay at the sale the amount of his bid.
- 8 -
<PAGE>
4.3 PROCEEDS OF SALE. Following a foreclosure sale, the proceeds of such
sale shall, subject to applicable law, be applied in accordance with Section 3.8
of the Credit Agreements.
ARTICLE V
Additional Rights and Remedies of the Agent
5.1 RIGHTS UPON MATURITY OR AN EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, the Agent, immediately and
without additional notice and without liability therefor to the Borrower, except
for its own gross negligence or willful misconduct, may do or cause to be done
any or all of the following: (a) take physical possession of the Premises;
(b) exercise its right to collect the Rents and Profits; (c) enter into
contracts for the completion, repair and maintenance of the Improvements
thereon; (d) expend funds of the Loans and any rents, income and profits derived
from the Premises for payment of any taxes, insurance premiums, assessments and
charges for completion, repair and maintenance of the Improvements, preservation
of the lien of this Deed of Trust and satisfaction and fulfillment of any
liabilities or obligations of the Borrower arising out of or in any way
connected with the construction of Improvements on the Premises whether or not
such liabilities and obligations in any way affect, or may affect, the lien of
this Deed of Trust; (e) enter into leases demising the Premises or any part
thereof; (f) take such steps to protect and enforce the specific performance of
any covenant, condition or agreement in the Notes, this Deed of Trust, the
Credit Agreements, or the other Credit Documents, or to aid the execution of any
power herein granted; and (g) generally, supervise, manage, and contract with
reference to the Premises as if the Agent were equitable owner of the Premises.
The Borrower also agrees that any of the foregoing rights and remedies of the
Agent may be exercised at any time independently of the exercise of any other
such rights and remedies, and the Agent may continue to exercise any or all such
rights and remedies until the Event(s) of Default are cured or waived with the
consent of the Required Lenders or the Lenders (as required by the Credit
Agreements) or until foreclosure and the conveyance of the Premises or until the
Loans and other indebtedness secured hereby are otherwise satisfied or paid in
full.
5.2 APPOINTMENT OF RECEIVER. If upon the maturity of any of the Loans or
any other amounts or obligations under the Credit Documents, the same remain
unpaid, or upon the occurrence and continuance of an Event of Default, the Agent
as a matter of right shall be entitled to the appointment of a receiver or
receivers for all or any part of the Premises, to take possession of and to
operate the Premises, and to collect the rents, issues, profits, and income
thereof, all expenses of which shall be added to the indebtedness secured
hereby, whether such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of the Premises or
the solvency of any Person or Persons liable for the payment of the indebtedness
secured hereby, and the Borrower does hereby irrevocably consent to the
appointment of such receiver, consents to the EX PARTE appointment of a
receiver, or receivers, waives any and all defenses to such appointment, and
agrees not to oppose any application therefor by Agent. Nothing herein is to be
construed to deprive the Agent of any other right, remedy or privilege it may
have under the
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<PAGE>
law to have a receiver appointed. Any money advanced by the Agent in
connection with any such receivership shall be a demand obligation (which
obligation the Borrower hereby promises to pay) owing by the Borrower to the
Agent pursuant to this Deed of Trust.
5.3 WAIVERS. No waiver of any Event of Default shall at any time
thereafter be held to be a waiver of any rights of the Agent stated anywhere in
the Notes, this Deed of Trust, the Credit Agreements or any of the other Credit
Documents, nor shall any waiver of a prior Event of Default operate to waive any
subsequent Event(s) of Default. All remedies provided in this Deed of Trust, in
the Notes, in the Credit Agreements and in the other Credit Documents are
cumulative and may, at the election of the Agent, be exercised alternatively,
successively, or in any manner and are in addition to any other rights provided
by law.
5.4 BORROWER'S WAIVER OF CERTAIN RIGHTS. To the full extent the Borrower
may do so, the Borrower agrees that the Borrower will not at any time insist
upon, plead, claim or take the benefit or advantage of any law now or hereafter
in force providing for any appraisement, valuation, stay, extension or
redemption, and the Borrower, for the Borrower, the Borrower's heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Premises, to the extent permitted by applicable
law, hereby waives and releases all rights of redemption (including the
statutory right of redemption and the equity of redemption), valuation,
appraisement, stay of execution, notice of intention to mature or declare due
the whole of the secured indebtedness, notice of election to mature or declare
due the whole of the secured indebtedness and all rights to a marshaling of
assets of the Borrower, including the Premises, or to a sale in inverse order of
alienation in the event of foreclosure of the liens and/or security interests
hereby created. The Borrower shall not have or assert any right under any
statute or rule of law pertaining to the marshaling of assets, sale in inverse
order of alienation, the exemption of homestead, the administration of estates
of decedents, or other matters whatever to defeat, reduce or affect the right of
the Agent under the terms of this Deed of Trust to a sale of the Premises for
the collection of the secured indebtedness without any prior or different resort
for collection, or the right of the Agent under the terms of this Deed of Trust
to the payment of the secured indebtedness out of the proceeds of sale of the
Premises in preference to every other claimant whatever. If any law referred to
in this Section and now in force, of which the Borrower or the Borrower's heirs,
devisees, representatives, successors or assigns or any other persons claiming
any interest in the Premises might take advantage despite this Section, shall
hereafter be repealed or cease to be in force, such law shall not thereafter be
deemed to preclude the application of this Section.
5.5 DELIVERY OF POSSESSION AFTER FORECLOSURE. In the event there is a
foreclosure sale hereunder and at the time of such sale, the Borrower or the
Borrower's heirs, devises, representatives, successors or assigns are occupying
or using the Premises, or any part thereof, each and all immediately shall
become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day to day, terminable at the will of either landlord or tenant, at
a reasonable rental per day based upon the value of the property occupied, such
rental to be due daily to the purchaser; and to the extent permitted by
applicable law, the purchaser at such sale, notwithstanding any language herein
apparently to the contrary, shall have the sole option to demand possession
immediately following the sale or to permit the
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<PAGE>
occupants to remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain a summary action for possession of the
property (such as an action for forcible detainer) in any court having
jurisdiction.
5.6 SUBSTITUTE TRUSTEE. The Trustee may resign by an instrument in
writing addressed to the Agent, or the Trustee may be removed at any time with
or without cause by an instrument in writing executed by the Agent in case of
the death, resignation, removal or disqualification of the Trustee, or if for
any reason the Agent shall deem it desirable to appoint a substitute or
successor trustee to act instead of the herein named trustee or any substitute
or successor trustee, then the Agent shall have the right and is hereby
authorized and empowered to appoint a successor trustee, or a substitute
trustee, without other formality than appointment and designation in writing
executed by the Agent and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the Premises is
fully and finally sold hereunder. If the Agent is a corporation or association
and such appointment is executed on its behalf by an officer of such corporation
or association such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation or
association. Upon the making of any such appointment and designation, all of
the estate and title of the Trustee in the Premises shall vest in the named
successor or substitute trustee who shall thereupon succeed to, and shall hold,
possess and execute, all the rights, powers, privileges, immunities and duties
herein conferred upon the Trustee. All references herein to "TRUSTEE" shall
deemed to refer to the Trustee (including any successor or substitute appointed
and designated as herein provided) from time to time acting hereunder.
5.7 NO LIABILITY OF TRUSTEE. The Trustee shall not be liable for any
error of judgment or act done by the Trustee in good faith and in accordance
with the terms hereof, or otherwise be responsible or accountable under any
circumstances whatsoever (including Trustee's negligence), except for the
Trustee's gross negligence or willful misconduct. The Trustee shall have the
right to rely on any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by him hereunder, believed by him in
good faith to be genuine. All moneys received by the Trustee until used or
applied as herein provided, shall be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law), and the Trustee shall be under no
liability for interest on any moneys received by him hereunder. The Borrower
hereby ratifies and confirms any and all acts which the herein named Trustee or
his successor or successors, substitute or substitutes, in this trust, shall do
lawfully by virtue hereof and the Borrower will reimburse the Trustee for, and
save him harmless against, any and all liability and expenses which may be
incurred by him in the performance of his duties other than liabilities and
expenses resulting from the Trustee's gross negligence or willful misconduct.
The foregoing indemnity shall not terminate upon discharge of the secured
indebtedness or foreclosure, or release or other termination, of this Deed of
Trust.
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<PAGE>
ARTICLE VI
General Conditions
6.1 TERMS. The singular used herein shall be deemed to include the
plural; the masculine deemed to include the feminine and neuter; and the named
parties deemed to include their heirs, successors and assigns. The term
"Lender" shall include any of the Persons identified as a "Lender" on the
signature pages to the Credit Agreements, and any Person which may become a
Lender by way of assignment in accordance with the terms of the Credit
Agreements, together with their successors and assigns.
6.2 NOTICES. All notices and other communications required to be given
hereunder shall have been duly given and shall be effective (i) when delivered,
(ii) when transmitted via telecopy (or other facsimile device) to the number set
out below, (iii) the Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address or telecopy numbers set forth below, or at such other address as
such party may specify by written notice to the other parties hereto.
to the Borrower/Debtor:
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Attention: Robert E. Bosworth
Fax: (423) 821-0395
to the Agent/Secured Party:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Dana Weir
Fax: (704) 386-9923
to the Trustee:
Ron Suedekum
NationsBank, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Fax: (615) 749-3126
- 12 -
<PAGE>
6.3 SEVERABILITY. If any provision of this Deed of Trust is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
6.4 HEADINGS. The captions and headings herein are inserted only as a
matter of convenience and for reference and in no way define, limit, or describe
the scope of this Deed of Trust nor the intent of any provision hereof.
6.5 CONFLICTING TERMS. In the event the terms and conditions of this Deed
of Trust conflict with the terms and conditions of the Credit Agreements, the
terms and conditions of the Credit Agreements shall control and supersede the
provisions of this Deed of Trust with respect to such conflicts.
6.6 GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE.
IN WITNESS WHEREOF, the Borrower has executed this Deed of Trust under seal
as of the above written date.
CHATTEM, INC., a Tennessee corporation
ATTEST: By: /s/ Robert E. Bosworth
----------------------------------------------
Title Executive Vice President
--------------------------------------------
By: /s/ Hugh F. Sherber
-------------------------
Title: Secretary
-----
(Corporate Seal)
- 13 -
<PAGE>
STATE OF NORTH CAROLINA )
)
COUNTY OF MECKLENBURG )
Before me, the undersigned, a Notary Public in and for the State and County
aforesaid, personally appeared Robert E. Bosworth, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be the Executive Vice President of Chattem,
Inc., a Tennessee corporation, the within named bargainor, being duly authorized
so to do, and that he as such Executive Vice President executed the foregoing
instrument in the capacity and for the purposes therein contained, by signing
the name of the corporation by himself as such Executive Vice President.
WITNESS my hand, at office in Charlotte, Mecklenburg County, this 29th day
of April, 1996.
/s/ Tina M. Beatty
---------------------------
Notary Public
My Commission Expires:
December 17, 2000
- 14 -
<PAGE>
BOOK 4672 PAGE 622
EXHIBIT A
IN THE CITY OF CHATTANOOGA, HAMILTON COUNTY, TENNESSEE:
TRACT ONE (1): Beginning at a spike marking the intersection of the
Southeast line of Church Avenue with the South line of 38th Street; thence
South 66 degrees 48 minutes 00 seconds East, with and along the South line of
38th Street, 94.53 feet to an iron pipe marking the point of its intersection
with the West line of the tract of land conveyed to the City of Chattanooga,
for street purposes, by document of record in Book 784, page 162, in the
Register's Office of Hamilton County, Tennessee; thence South 22 degrees 12
minutes 08 seconds East, with and along the West line of the said tract of
land conveyed to the City of Chattanooga, Tennessee, 209.17 feet to a point;
thence North 66 degrees 49 minutes 40 seconds West 37.60 feet to a concrete
monument; thence South 22 degrees 35 minutes 20 seconds West 99.00 feet to an
iron pipe in the North line of School Street; thence North 66 degrees 49
minutes 40 seconds West, with and along the North line of School Street,
152.22 feet to an iron pipe; thence Westwardly, with and along the North line
of School Street as it curves to the left (said curve having a delta of 45
degrees 38 minutes 29 seconds and a radius of 43.90 feet), an arc distance of
34.97 feet to an iron pipe; thence North 69 degrees 51 minutes 50 seconds
West, with and along the North line of School Street, 121.98 feet to an iron
pipe marking the point of its intersection with the East line of Church
Avenue; thence North 26 degrees 32 minutes 46 seconds East, with and along
the East line of Church Avenue, 109.25 feet to an iron pipe; thence
Northeastwardly, with and along the Southeast line of Church Avenue as it
curves to the right (said curve having a delta of 37 degrees 43 minutes 51
seconds and a radius of 80.01 feet), an arc distance of 52.69 feet to an iron
pipe; thence North 64 degrees 16 minutes 37 seconds East, with and along the
Southeast line of Church Avenue, 111.42 feet to the point of beginning.
TRACT TWO (2): Beginning at an iron pipe marking the intersection of the
South line of 38th Street with the West line of Pennsylvania Avenue; thence
South 22 degrees 31 minutes 51 seconds West, with and along the West line of
Pennsylvania Avenue, 88.50 feet to an iron pipe; thence North 66 degrees 48
minutes 00 seconds West 109.00 feet to an iron pipe; thence South 22 degrees
31 minutes 51 seconds West 81.90 feet to an iron pipe in the North line of a
10-foot wide alley; thence North 66 degrees 39 minutes 00 seconds West, with
and along the North line of said alley, 51.70 feet to an iron pipe; thence
North 21 degrees 04 minutes 00 seconds East 15 feet to an iron pipe; thence
North 62 degrees 20 minutes 00 seconds West 83.66 feet to an iron pipe in the
East line of a tract of land conveyed to the City of Chattanooga, Tennessee,
for street purposes, by document of record in Book 784, page 162, in the
Register's Office of Hamilton County, Tennessee; thence North 22 degrees 12
minutes 08 seconds West, with and along the East line of said tract of land
conveyed to the City of Chattanooga, Tennessee, by document of record in Book
784, page 162, in the Register's Office of Hamilton County, Tennessee, 211.85
feet to a point in the South line of 38th Street; thence South 66 degrees 48
minutes 00 seconds East, with and along the South line of 38th Street, 393.52
feet to the point of beginning.
(continued)
<PAGE>
BOOK 4672 PAGE 623
TRACT THREE (3): Beginning at a spike marking the intersection of the Northwest
line of Church Street with the South line of 38th Street; thence South 62
degrees 19 minutes 49 seconds West, with and along the Northwest line of
Church Street, 101.16 feet to an iron pipe; thence North 66 degrees 46
minutes 19 seconds West 9.80 feet to an iron pipe; thence North 23 degrees 13
minutes 41 seconds East 21.50 feet to a cut X on wall; thence North 66
degrees 46 minutes 19 seconds West 64 feet to an iron pipe; thence North 23
degrees 13 minutes 41 seconds East 57 feet to an iron pipe in the South line
of 38th Street; thence South 66 degrees 46 minutes 19 seconds East, with and
along the South line of 38th Street, 137.60 feet to the point of beginning.
TRACT FOUR (4): Beginning at a concrete monument marking the intersection of
the South line of 37th Street with the West line of Church Street; thence
South 28 degrees 58 minutes 42 seconds West, with and along the West line of
Church Street, 52.11 feet to a spike; thence South 22 degrees 14 minutes 54
seconds West, with and along the West line of Church Street, 158.20 feet to a
spike; thence Southwestwardly, with and along a curve to the right at the
intersection of the West line of Church Street with the North line of 38th
Street (said curve having a delta of 98 degrees 27 minutes 41 seconds and
a radius of 12.38 feet), an arc distance of 21.27 feet to a spike in the North
line of 38th Street; thence North 66 degrees 46 minutes 19 seconds West, with
and along the North line of 38th Street, 149.20 feet to a cut cross; thence
North 23 degrees 37 minutes 17 seconds East 111.97 feet to an iron pipe;
thence North 66 degrees 46 minutes 19 seconds West 400.50 feet to an iron
pipe; thence North 07 degrees 18 minutes 45 seconds East 116.73 feet to an
iron pipe in the South line of 37th Street; thence South 66 degrees 46
minutes 19 seconds East, with and along the South line of 37th Street, 595.70
feet to the point of beginning.
TRACT FIVE (5): Beginning at an iron pipe marking the intersection of the
West line of Church Street with the North line of 37th Street; thence North
66 degrees 46 minutes 19 seconds West, with and along the North line of 37th
Street, 111.94 feet to an iron pipe; thence North 30 degrees 02 minutes 12
seconds East 49.79 feet to an iron pipe; thence South 66 degrees 46 minutes
19 seconds East 111.94 feet to an iron pipe in the West line of Church
Street; thence South 30 degrees 02 minutes 12 seconds West, with and along the
West line of Church Street, 49.79 feet to the point of beginning.
TRACT SIX (6): Beginning at an iron pipe marking the intersection of the
South line of Old Wauhatchie Pike, with the West line of Church Street;
thence South 44 degrees 42 minutes 27 seconds West, with and along the West
line of Church Street, 87.91 feet to an iron pipe; thence North 31 degrees 32
minutes 56 seconds East 81.16 feet to an iron pipe in the South line of Old
Wauhatchie Pike; thence South 70 degrees 58 minutes 23 seconds East, with and
along the South line of Old Wauhatchie Pike, 20.50 feet to the point of
beginning.
TRACT SEVEN (7): Lot One (1), Chattem, Inc. Subdivision, as shown by plat of
record in Plat Book 54, page 15, in the Register's Office of Hamilton County,
Tennessee.
TOGETHER WITH Ingress and Egress Easement recorded in Book 4509, page 127, in
the Register's Office of Hamilton County, Tennessee.
<PAGE>
BOOK 4672 PAGE 624
REFERENCE is made for prior title to Deeds of record in Book 807, page 537,
Book W, Volume 25, page 111, Book 3903, page 143, Book 2173, page 388, Book
3593, page 70, Book 1854, page 135, Book 1395, page 567, Book 2239, page 2,
Book B, Volume 14, page 506, Book H, Volume 25, page 715, Book 1401, page
346, Book 1399, page 110, Book 1401, page 634, Book 2034, page 238, Book
3825, page 856, Book 1462, page 79, Book K, Volume 14, page 171, Book G,
Volume 15, page 405, Book J, Volume 16, page 66, Book M, Volume 15, page 243
and Book 1881, page 504, in the Register's Office of Hamilton County,
Tennessee.
PAMELA HURST
REGISTER
HAMILTON COUNTY
STATE OF TENNESSEE
'96 APR 30 PM 12 48
BY: /s/ S. Taylor
----------------
DEPUTY
<PAGE>
AMERICAN LAND TITLE ASSOCIATION
LOAN POLICY
(10-17-92)
43 0001 107 00003764
CHICAGO TITLE INSURANCE COMPANY
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE
CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, CHICAGO TITLE
INSURANCE COMPANY, a Missouri corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A, against loss or damage, not
exceeding the Amount of Insurance stated in Schedule A, sustained or incurred
by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested
other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land;
5. The invalidity or unenforceability of the lien of the insured mortgage
upon the title;
6. The priority of any lien or encumbrance over the lien of the insured
mortgage;
7. Lack of priority of the lien of the insured mortgage over any
statutory lien for services, labor or material:
(a) arising from an improvement or work related to the land which is
contracted for or commenced prior to Date of Policy; or
(b) arising from an improvement or work related to the land which is
contracted for or commenced subsequent to Date of Policy and which
is financed in whole or in part by proceeds of the indebtedness
secured by the insured mortgage which at Date of Policy the
insured has advanced or is obligated to advance;
8. The invalidity or unenforceability of any assignment of the insured
mortgage, provided the assignment is shown in Schedule A, or the
failure of the assignment shown in Schedule A to vest title to the
insured mortgage in the named insured assignee free and clear of all
liens.
The Company will also pay the costs, attorneys' fees and expenses incurred in
defense of the title or the lien of the insured mortgage, as insured, but
only to the extent provided in the Conditions and Stipulations.
IN WITNESS WHEREOF, CHICAGO TITLE INSURANCE COMPANY has caused this policy to
be signed and sealed as of Date of Policy shown in Schedule A, the policy to
become valid when countersigned by an authorized signatory.
CHICAGO TITLE INSURANCE COMPANY
Issued by: By:
MILLIGAN-REYNOLDS GUARANTY
TITLE AGENCY, INC. President
724 CHERRY STREET
CHATTANOOGA, TENNESSEE 37402
(423) 756-0911 By: /s/ Thomas J. Adams
Secretary
[SEAL]
<PAGE>
EXCLUSIONS FROM COVERAGE
THE FOLLOWING MATTERS ARE EXPRESSLY EXCLUDED FROM THE COVERAGE OF THIS POLICY
AND THE COMPANY WILL NOT PAY LOSS OR DAMAGE, COSTS, ATTORNEYS' FEES OR EXPENSES
WHICH ARISE BY REASON OF:
1. (a) ANY LAW, ORDINANCE OR GOVERNMENTAL REGULATION (INCLUDING BUT NOT
LIMITED TO BUILDING AND ZONING LAWS, ORDINANCES, OR REGULATIONS)
RESTRICTING, REGULATING, PROHIBITING OR RELATING TO (i) THE
OCCUPANCY, USE, OR ENJOYMENT OF THE LAND; (ii) THE CHARACTER,
DIMENSIONS OR LOCATION OF ANY IMPROVEMENT NOW OR HEREAFTER ERECTED ON
THE LAND; (iii) A SEPARATION IN OWNERSHIP OR A CHANGE IN THE
DIMENSIONS OR AREA OF THE LAND OR ANY PARCEL OF WHICH THE LAND IS OR
WAS A PART; OR (iv) ENVIRONMENTAL PROTECTION, OR THE EFFECT OF ANY
VIOLATION OF THESE LAWS, ORDINANCES OR GOVERNMENTAL REGULATIONS,
EXCEPT TO THE EXTENT THAT A NOTICE OF THE ENFORCEMENT THEREOF OR A
NOTICE OF A DEFECT, LIEN OR ENCUMBRANCE RESULTING FROM A VIOLATION OR
ALLEGED VIOLATION AFFECTING THE LAND HAS BEEN RECORDED IN THE PUBLIC
RECORDS AT DATE OF POLICY.
(b) ANY GOVERNMENTAL POLICE POWER NOT EXCLUDED BY (a) ABOVE, EXCEPT TO
THE EXTENT THAT A NOTICE OF THE EXERCISE THEREOF OR A NOTICE OF A
DEFECT, LIEN OR ENCUMBRANCE RESULTING FROM A VIOLATION OR ALLEGED
VIOLATION AFFECTING THE LAND HAS BEEN RECORDED IN THE PUBLIC RECORDS
AT DATE OF POLICY.
2. RIGHTS OF EMINENT DOMAIN UNLESS NOTICE OF THE EXERCISE THEREOF HAS BEEN
RECORDED IN THE PUBLIC RECORDS AT DATE OF POLICY, BUT NOT EXCLUDING FROM
COVERAGE ANY TAKING WHICH HAS OCCURRED PRIOR TO DATE OF POLICY WHICH WOULD
BE BINDING ON THE RIGHTS OF A PURCHASER FOR VALUE WITHOUT KNOWLEDGE.
3. DEFECTS, LIENS, ENCUMBRANCES, ADVERSE CLAIMS OR OTHER MATTERS:
(a) CREATED, SUFFERED, ASSUMED OR AGREED TO BY THE INSURED CLAIMANT;
(b) NOT KNOWN TO THE COMPANY, NOT RECORDED IN THE PUBLIC RECORDS AT DATE
OF POLICY, BUT KNOWN TO THE INSURED CLAIMANT AND NOT DISCLOSED IN
WRITING TO THE COMPANY BY THE INSURED CLAIMANT PRIOR TO THE DATE THE
INSURED CLAIMANT BECAME AN INSURED UNDER THIS POLICY;
(c) RESULTING IN NO LOSS OR DAMAGE TO THE INSURED CLAIMANT;
(d) ATTACHING OR CREATED SUBSEQUENT TO DATE OF POLICY (EXCEPT TO THE
EXTENT THAT THIS POLICY INSURES THE PRIORITY OF THE LIEN OF THE
INSURED MORTGAGE OVER ANY STATUTORY LIEN FOR SERVICES, LABOR OR
MATERIAL); OR
(e) RESULTING IN LOSS OR DAMAGE WHICH WOULD NOT HAVE BEEN SUSTAINED IF
THE INSURED CLAIMANT HAD PAID VALUE FOR THE INSURED MORTGAGE.
4. UNENFORCEABILITY OF THE LIEN OF THE INSURED MORTGAGE BECAUSE OF THE
INABILITY OR FAILURE OF THE INSURED AT DATE OF POLICY, OR THE INABILITY OR
FAILURE OF ANY SUBSEQUENT OWNER OF THE INDEBTEDNESS, TO COMPLY WITH
APPLICABLE DOING BUSINESS LAWS OF THE STATE IN WHICH THE LAND IS SITUATED.
5. INVALIDITY OR UNENFORCEABILITY OF THE LIEN OF THE INSURED MORTGAGE, OR
CLAIM THEREOF, WHICH ARISES OUT OF THE TRANSACTION EVIDENCED BY THE INSURED
MORTGAGE AND IS BASED UPON USURY OR ANY CONSUMER CREDIT PROTECTION OR TRUTH
IN LENDING LAW.
6. ANY STATUTORY LIEN FOR SERVICES, LABOR OR MATERIALS (OR THE CLAIM OF
PRIORITY OF ANY STATUTORY LIEN FOR SERVICES, LABOR OR MATERIALS OVER THE
LIEN OF THE INSURED MORTGAGE) ARISING FROM AN IMPROVEMENT OR WORK RELATED
TO THE LAND WHICH IS CONTRACTED FOR AND COMMENCED SUBSEQUENT TO DATE OF
POLICY AND IS NOT FINANCED IN WHOLE OR IN PART BY PROCEEDS OF THE
INDEBTEDNESS SECURED BY THE INSURED MORTGAGE WHICH AT DATE OF POLICY THE
INSURED HAS ADVANCED OR IS OBLIGATED TO ADVANCE.
7. ANY CLAIM, WHICH ARISES OUT OF THE TRANSACTION CREATING THE INTEREST OF THE
MORTGAGEE INSURED BY THIS POLICY, BY REASON OF THE OPERATION OF FEDERAL
BANKRUPTCY, STATE INSOLVENCY, OR SIMILAR CREDITORS' RIGHTS LAWS, THAT IS
BASED ON:
(i) THE TRANSACTION CREATING THE INTEREST OF THE INSURED MORTGAGEE BEING
DEEMED A FRAUDULENT CONVEYANCE OR FRAUDULENT TRANSFER; OR
(ii) THE SUBORDINATION OF THE INTEREST OF THE INSURED MORTGAGEE AS A
RESULT OF THE APPLICATION OF THE DOCTRINE OF EQUITABLE SUBORDINATION;
OR
(iii) THE TRANSACTION CREATING THE INTEREST OF THE INSURED MORTGAGEE BEING
DEEMED A PREFERENTIAL TRANSFER EXCEPT WHERE THE PREFERENTIAL TRANSFER
RESULTS FROM THE FAILURE:
(a) TO TIMELY RECORD THE INSTRUMENT OF TRANSFER; OR
(b) OF SUCH RECORDATION TO IMPART NOTICE TO A PURCHASER FOR VALUE OR
A JUDGMENT OR LIEN CREDITOR.
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A. The term "insured" also
includes
(i) the owner of the indebtedness secured by the insured mortgage
and each successor in ownership of the indebtedness except a successor who is an
obligor under the provisions of Section 12(c) of these Conditions and
Stipulations (reserving, however, all rights and defenses as to any successor
that the Company would have had against any predecessor insured, unless the
successor acquired the indebtedness as a purchaser for value without knowledge
of the asserted defect, lien, encumbrance, adverse claim or other matter insured
against by this policy as affecting title to the estate or interest in the
land);
(ii) any governmental agency or governmental instrumentality which is
an insurer or guarantor under an insurance contract or guaranty insuring or
guaranteeing the indebtedness secured by the insured mortgage, or any part
thereof, whether named as an insured herein or not;
(iii) the parties designated in Section 2(a) of these Conditions
and Stipulations.
(b) "insured claimant": an insured claiming loss or damage.
(c) "knowledge" or "known": actual knowledge, not constructive knowledge
or notice which may be imputed to an insured by reason of the public records as
defined in this policy or any other records which impart constructive notice of
matters affecting the land.
(d) "land": the land described or referred to in Schedule A, and
improvements affixed thereto which by law constitute real property. The term
"land" does not include any property beyond the lines of the area described or
referred to in Schedule A, nor any right, title, interest, estate or easement in
abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing
herein shall modify or limit the extent to which a right of access to and from
the land is insured by this policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": records established under state statutes at Date of
Policy for the purpose of imparting constructive notice of matters relating to
real property to purchasers for value and without knowledge. With respect to
Section 1(a)(iv) of the Exclusions From Coverage, "public records" shall also
include environmental protection liens filed in the records of the clerk of the
United States district court for the district in which the land is located.
(g) "unmarketability of the title": an alleged or apparent matter
affecting the title to the land, not excluded or excepted from coverage, which
would entitle a purchaser of the estate or interest described in Schedule A or
the insured mortgage to be released from the obligation to purchase by virtue of
a contractual condition requiring the delivery of marketable title.
2. CONTINUATION OF INSURANCE
(a) AFTER ACQUISITION OF TITLE. The coverage of this policy shall
continue in force as of Date of Policy in favor of (i) an insured who acquires
all or any part of the estate or interest in the land by foreclosure, trustee's
sale, conveyance in lieu of foreclosure, or other legal manner which discharges
the lien of the insured mortgage; (ii) a transferee of the estate or interest so
acquired from an insured corporation, provided the transferee is a parent or
wholly-owned subsidiary of the insured corporation, and their corporate
successors by operation of law and not by purchase, subject to any rights or
defenses the Company may have against any predecessor insureds; and (iii) any
governmental agency or governmental instrumentality which acquires all or any
part of the estate or interest pursuant to a contract of insurance or guaranty
insuring or guaranteeing the indebtedness secured by the insured mortgage.
(b) AFTER CONVEYANCE OF TITLE. The coverage of this policy shall
continue in force as of Date of Policy in favor of an insured only so long as
the insured retains an estate or interest in the land, or holds an indebtedness
secured by a purchase money mortgage given by a purchaser from the insured, or
only so long as the insured shall have liability by reason of covenants of
warranty made by the insured in any transfer or conveyance of the estate or
interest. This policy shall not continue in force in favor of any purchaser
from the insured of either (i) an estate or interest in the land, or (ii) an
indebtedness secured by a purchase money mortgage given to the insured.
<PAGE>
- --------------------------------------------------------------------------------
LOAN
- --------------------------------------------------------------------------------
SCHEDULE A
OFFICE FILE NUMBER POLICY NUMBER DATE OF POLICY AMOUNT OF INSURANCE
- --------------------------------------------------------------------------------
1 2 3 4
April 30, 1996
100753 43 0001 107 00003764 at 12:48 P.M. $1,738,700.00
- --------------------------------------------------------------------------------
1. NAME OF INSURED: NationsBank, N.A., as Agent, its successors and/or
assigns.
2. THE ESTATE OR INTEREST IN THE LAND WHICH IS ENCUMBERED BY THE INSURED
MORTGAGE IS:
Fee Simple
3. TITLE TO THE ESTATE OR INTEREST IN THE LAND IS VESTED IN: Chattem, Inc.,
a Tennessee Corporation
4. THE INSURED MORTGAGE AND ASSIGNMENTS THEREOF, IF ANY, ARE DESCRIBED AS
FOLLOWS:
Deed of Trust and Security Agreement by Chattem, Inc., a Tennessee
Corporation to Ron Suedekum, Trustee, dated April 29, 1996, filed for
record April 30, 1996, and recorded in Book 4672, page 608, in the
Register's Office of Hamilton County, Tennessee, securing NationsBank,
N.A., as Agent, its successors and/or assigns.
NOTE: The indebtedness secured by said Deed of Trust and Security
Agreement appears to also be secured by UCC Financing Statement recorded in
Book 4672, page 625, in the Register's Office of Hamilton County,
Tennessee.
5. THE LAND REFERRED TO IN THIS POLICY IS DESCRIBED AS FOLLOWS:
IN THE CITY OF CHATTANOOGA, HAMILTON COUNTY, TENNESSEE:
TRACT ONE (1): Beginning at a spike marking the intersection of the
Southeast line of Church Avenue with the South line of 38th Street; thence
South 66 degrees 48 minutes 00 seconds East, with and along the South line
of 38th Street, 94.53 feet to an iron pipe marking the point of its
intersection with the West line of the tract of land conveyed to the City
of Chattanooga, for street purposes, by document of record in Book 784,
page 162, in the Register's Office of Hamilton County, Tennessee; thence
South 22 degrees 12 minutes 08 seconds East, with and along the West line
of the said tract of land conveyed to the City of Chattanooga, Tennessee,
209.17 feet to a point; thence North 66 degrees 49 minutes 40 seconds West
37.60 feet to a concrete monument; thence South 22 degrees 35 minutes 20
seconds West 99.00 feet to an iron pipe in the North line of School Street;
thence North 66 degrees 49 minutes 40 seconds West, with and along the
North line of School Street, 152.22 feet to an iron pipe; thence
Westwardly, with and along the North line of School Street as it curves to
the left (said curve having a delta of 45 degrees 38 minutes 29 seconds and
a radius of 43.90 feet), an arc distance of
(continued)
<PAGE>
Continuation of Legal Description
Policy Number: 43 0001 107 00003764
34.97 feet to an iron pipe; thence North 69 degrees 51 minutes 50 seconds
West, with and along the North line of School Street, 121.98 feet to an
iron pipe marking the point of its intersection with the East line of
Church Avenue; thence North 26 degrees 32 minutes 46 seconds East, with and
along the East line of Church Avenue, 109.25 feet to an iron pipe; thence
Northeastwardly, with and along the Southeast line of Church Avenue as it
curves to the right (said curve having a delta of 37 degrees 43 minutes 51
seconds and a radius of 80.01 feet), an arc distance of 52.69 feet to an
iron pipe; thence North 64 degrees 16 minutes 37 seconds East, with and
along the Southeast line of Church Avenue, 111.42 feet to the point of
beginning.
TRACT TWO (2): Beginning at an iron pipe marking the intersection of the
South line of 38th Street with the West line of Pennsylvania Avenue; thence
South 22 degrees 31 minutes 51 seconds West, with and along the West line
of Pennsylvania Avenue, 88.50 feet to an iron pipe; thence North 66 degrees
48 minutes 00 seconds West 109.00 feet to an iron pipe; thence South 22
degrees 31 minutes 51 seconds West 81.90 feet to an iron pipe in the North
line of a 10-foot wide alley; thence North 66 degrees 39 minutes 00 seconds
West, with and along the North line of said alley, 51.70 feet to an iron
pipe; thence North 21 degrees 04 minutes 00 seconds East 15 feet to an iron
pipe; thence North 62 degrees 20 minutes 00 seconds West 83.66 feet to an
iron pipe in the East line of a tract of land conveyed to the City of
Chattanooga, Tennessee, for street purposes, by document of record in Book
784, page 162, in the Register's Office of Hamilton County, Tennessee;
thence North 22 degrees 12 minutes 08 seconds West, with and along the East
line of said tract of land conveyed to the City of Chattanooga, Tennessee,
by document of record in Book 784, page 162, in the Register's Office of
Hamilton County, Tennessee, 211.85 feet to a point in the South line of
38th Street; thence South 66 degrees 48 minutes 00 seconds East, with and
along the South line of 38th Street, 393.52 feet to the point of beginning.
TRACT THREE (3): Beginning at a spike marking the intersection of the
Northwest line of Church Street with the South line of 38th Street; thence
South 62 degrees 19 minutes 49 seconds West, with and along the Northwest
line of Church Street, 101.16 feet to an iron pipe; thence North 66 degrees
46 minutes 19 seconds West 9.80 feet to an iron pipe; thence North 23
degrees 13 minutes 41 seconds East 21.50 feet to a cut X on wall; thence
North 66 degrees 46 minutes 19 seconds West 64 feet to an iron pipe; thence
North 23 degrees 13 minutes 41 seconds East 57 feet to an iron pipe in the
South line of 38th Street; thence South 66 degrees 46 minutes 19 seconds
East, with and along the South line of 38th Street, 137.60 feet to the
point of beginning.
TRACT FOUR (4): Beginning at a concrete monument marking the intersection
of the South line of 37th Street with the West line of Church Street;
thence South 28 degrees 58 minutes 42 seconds West, with and along the West
line of Church Street, 52.11 feet to a spike; thence South 22 degrees 14
minutes 54 seconds West, with and along the West line of Church Street,
158.20 feet to a spike; thence Southwestwardly, with and along a curve to
the right at the intersection of the West line of Church Street with the
North line of 38th Street (said curve having a delta of 98 degrees 27
minutes 41 seconds and a radius of 12.38 feet), an arc distance of 21.27
feet to a spike in the North line of 38th Street; thence North 66 degrees
46 minutes 19 seconds West, with
<PAGE>
Continuation of Legal Description
Policy Number: 43 0001 107 00003764
and along the North line of 38th Street, 149.20 feet to a cut cross; thence
North 23 degrees 37 minutes 17 seconds East 111.97 feet to an iron pipe;
thence North 66 degrees 46 minutes 19 seconds West 400.50 feet to an iron
pipe; thence North 07 degrees 18 minutes 45 seconds East 116.73 feet to an
iron pipe in the South line of 37th Street; thence South 66 degrees 46
minutes 19 seconds East, with and along the South line of 37th Street,
595.70 feet to the point of beginning.
TRACT FIVE (5): Beginning at an iron pipe marking the intersection of the
West line of Church Street with the North line of 37th Street; thence North
66 degrees 46 minutes 19 seconds West, with and along the North line of
37th Street, 111.94 feet to an iron pipe; thence North 30 degrees 02
minutes 12 seconds East 49.79 feet to an iron pipe; thence South 66 degrees
46 minutes 19 seconds East 111.94 feet to an iron pipe in the West line of
Church Street; thence South 30 degrees 02 minutes 12 seconds West, with and
along the West line of Church Street, 49.79 feet to the point of beginning.
TRACT SIX (6): Beginning at an iron pipe marking the intersection of the
South line of Old Wauhatchie Pike, with the West line of Church Street;
thence South 44 degrees 42 minutes 27 seconds West, with and along the West
line of Church Street, 87.91 feet to an iron pipe; thence North 31 degrees
32 minutes 56 seconds East 81.16 feet to an iron pipe in the South line of
Old Wauhatchie Pike; thence South 70 degrees 58 minutes 23 seconds East,
with and along the South line of Old Wauhatchie Pike, 20.50 feet to the
point of beginning.
TRACK SEVEN (7): Lot One (1), Chattem, Inc. Subdivision, as shown by plat
of record in Plat Book 54, page 15, in the Register's Office of Hamilton
County, Tennessee.
TOGETHER WITH Ingress and Egress Easement recorded in Book 4509, page 127,
in the Register's Office of Hamilton County, Tennessee.
REFERENCE is made for prior title to Deeds of record in Book 807, page 537,
Book W, Volume 25, page 111, Book 3903, page 143, Book 2173, page 388, Book
3593, page 70, Book 1854, page 135, Book 1395, page 567, Book 2239, page 2,
Book B, Volume 14, page 405, Book H, Volume 25, page 715, Book 1401, page
346, Book 1399, page 110, Book 1401, page 634, Book 2034, page 238, Book
3825, page 856, Book 1462, page 79, Book K, Volume 14, page 171, Book G,
Volume 15, page 405, Book J, Volume 16, page 66, Book M, Volume 15, page
243 and Book 1881, page 504, in the Register's Office of Hamilton County,
Tennessee.
<PAGE>
- --------------------------------------------------------------------------------
LOAN
- --------------------------------------------------------------------------------
SCHEDULE B
POLICY NUMBER: 43 0001 107 00003764
-----------------------
LOAN
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company will not pay
costs, attorneys' fees or expenses) which arise by reason of:
SPECIAL EXCEPTIONS:
1. Taxes for the Year 1996 are a lien, not yet due and payable.
2. Encroachments, overlaps, boundary line disputes, and any matters which
would be disclosed by an accurate survey and inspection of the premises,
arising subsequent to June 9, 1993.
3. Easements, or claims of easements, not shown by the public records, arising
subsequent to June 9, 1993.
4. As to TRACT SIX (6): SUBJECT TO power line as shown on plat of survey
prepared by Betts Engineering Associates, Inc., Drawing No. 3089-6-101,
consisting of three (3) sheets, with Sheet 1 being dated June 10, 1993,
Sheet 2 being dated June 9, 1993, and Sheet 3 being dated June 9, 1993 and
being revised June 11, 1993.
5. As to TRACT SEVEN (7): SUBJECT TO easement of record in Book 862, page
168, in the Register's Office of Hamilton County, Tennessee.
6. As to TRACT FOUR (4): SUBJECT TO the following provision which appears in
Deed of record in Book 2173, page 388, in the Register's Office of Hamilton
County, Tennessee: "SUBJECT TO the rights of the owners lying West of same
to the joint use with owners of this lot to the stairway leading
Northwardly from 38th Street that serves both properties".
7. As to TRACT THREE (3): SUBJECT TO sanitary sewer line as shown on plat of
survey prepared by Betts Engineering Associates, Inc., Drawing No.
3089-6-101, consisting of three (3) sheets, with Sheet 1 being dated June
10, 1993, Sheet 2 being dated June 9, 1993, and Sheet 3 being dated June 9,
1993 and being revised June 11, 1993.
8. As to TRACT THREE (3): SUBJECT TO 30-inch reinforced concrete pipe
drainage structure as shown on plat of survey prepared by Betts Engineering
Associates, Inc., Drawing No. 3089-6-101, consisting of three (3) sheets,
with Sheet 1 being dated June 10, 1993, Sheet 2 being dated June 9, 1993,
and Sheet 3 being dated June 9, 1993 and being revised June 11, 1993.
9. As to TRACT TWO (2): SUBJECT TO anchor as shown on plat of survey prepared
by
Countersigned
- ------------------------
Authorized Signatory
SCHEDULE B (EXTENDED COVERAGE) SCHEDULE B OF THIS POLICY CONSISTS OF PAGES.
<PAGE>
Continuation of Schedule B
Policy Number : 43 0001 107 00003764
Betts Engineering Associates, Inc., Drawing No. 3089-6-101, consisting of
three (3) sheets, with Sheet 1 being dated June 10, 1993, Sheet 2 being
dated June 9, 1993, and Sheet 3 being dated June 9, 1993 and being revised
June 11, 1993.
10. As to TRACT ONE (1): SUBJECT TO power line as shown on plat of survey
prepared by Betts Engineering Associates, Inc., Drawing No. 3089-6-101,
consisting of three (3) sheets, with Sheet 1 being dated June 10, 1993,
Sheet 2 being dated June 9, 1993, and Sheet 3 being dated June 9, 1993 and
being revised June 11, 1993.
11. SUBJECT TO the following matters which appear on plat of survey prepared
by Betts Engineering Associates, Inc., Drawing No. 3089-6-101, consisting
of three (3) sheets, with Sheet 1 being dated June 10, 1993, Sheet 2 being
dated June 9, 1993, and Sheet 3 being dated June 9,1993 and being revised
June 11, 1993:
(a) As to TRACT SIX (6): asphalt encroachment.
(b) As to TRACT SEVEN (7): wall encroachment.
(c) As to TRACT FIVE (5): asphalt encroachment.
(d) As to TRACT FOUR (4): 8-inch concrete block wall encroachment.
(e) As to TRACT FOUR (4): fence encroachment.
(f) As to TRACT FOUR (4): ingress and egress asphalt drive to the extent
that others have rights to the use thereof.
(g) As to TRACT THREE (3): rock wall encroachment.
(h) As to TRACT TWO (2): fence encroachment.
(i) As to TRACT ONE (1): fence encroachment.
(j) As to TRACT SEVEN (7): covered awning for dock encroachment.
12. As to TRACT SEVEN (7): SUBJECT TO 5 feet reserved for road widening, as
shown on said plat.
13. As to the Ingress And Egress Easement recorded in Book 4509, page 127, in
the Register's Office of Hamilton County, Tennessee: SUBJECT TO Deed of
Trust executed by Chattem Chemicals, Inc., a Delaware Corporation, recorded
in Book 4509, page 109, in the Register's Office of Hamilton County,
Tennessee, to secure The Chase Manhattan Bank (National Association), for
itself and as Agent.
<PAGE>
ENDORSEMENT LOAN POLICY
Attached to and forming a part of
Title Insurance Policy No.
43 0001 107 00003764
Issued By
E-1
CHICAGO TITLE INSURANCE COMPANY
COMPREHENSIVE ENDORSEMENT
The Company hereby insures the insured against loss or damages which the insured
shall sustain by reason of:
1. Any inaccuracies in the following assurances:
(a) That there are no covenants, conditions or restrictions under which
the lien of the mortgage referred to in Schedule A can be divested or
subordinated or its validity, priority or enforceability otherwise
impaired;
(b) That, unless otherwise expressly set forth or indicated to the
contrary in Schedule B:
(1) There are no present violations on said land of any enforceable
covenants, conditions or restrictions or plat building lines;
(2) Any instrument referred to in Schedule B as specifically
containing "covenants and restrictions" affecting said land does
not, in addition, establish an easement thereon or provided for
either a lien for liquidated damages, a levy of a private charge
or assessment, an option to purchase, or the prior approval of a
future purchaser or occupant;
(3) There are no encroachments of existing improvements located on
said land onto adjoining land, nor any encroachments onto said
land of existing improvements located on adjoining land;
(4) There are no encroachments of existing improvements located on
said land onto that portion of said land subject to any easement
shown in Schedule B.
2. Any future violations on said land of any covenants, conditions or
restrictions occurring prior to the acquisition of title to said land by
the insured, provided such violations result in loss of the lien of the
mortgage referred to in Schedule A or impair the validity, priority or
enforceability of such lien, or result in loss of the title to said estate
or interest if the insured shall acquire title in satisfaction of the
indebtedness secured by such mortgage.
3. The entry of any court order or judgment which constitutes a final
determination and denies the right to maintain any existing improvements on
said land because of any violation of any covenants, conditions or
restrictions or plat building lines or because of any encroachment thereof
over onto adjoining land.
Wherever in this endorsement any or all the word "covenants, conditions or
restrictions" appear, they shall not be deemed to refer to or to include the
terms, covenants, conditions or limitations contained in any lease, instrument
creating an easement or declaration of condominium referred to in Schedule A.
This endorsement is made a part of the policy and is subject to all the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and prior endorsements, if any, nor does it extend the effective date
of the policy and prior endorsements or increase the face amount thereof.
April 30, 1996 File No. 100753 CHICAGO TITLE INSURANCE COMPANY
Chattem, Inc., a Tennessee Corporation By:
Milligan-Reynolds Guaranty Title Agency, Inc.
[CORPORATE SEAL] ATTEST: President
- ------------------------------
Authorized Countersignature
NOTE: THIS ENDORSEMENT SHALL NOT BE VALID OR /s/ Thomas J. Adams
BINDING UNTIL COUNTERSIGNED BY AN AUTHORIZED Secretary
SIGNATORY.
C.T.I. CO. COMPREHENSIVE ENDORSEMENT 1
COM 1
<PAGE>
OWNERS ___
ENDORSEMENT LOAN __X__
Attached to and forming a part of
Loan Policy No. 43 0001 107 00003764
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY E-2
This policy hereby insures the Insured that the land herein described is the
same as that delineated on the plat of survey prepared by Betts Engineering
Associates, Inc., Drawing No. 3089-6-101.
This endorsement is made a part of the commitment or policy. It is subject to
all the terms of the commitment of policy and prior endorsements. Except as
expressly stated on this endorsement, the terms, dates and amount of the
commitment or policy and prior endorsements are not changed.
Dated: April 30, 1996 File No. 100753 CHICAGO TITLE INSURANCE COMPANY
Chattem, Inc., a Tennessee Corporation BY:
Milligan-Reynolds Guaranty Title Agency, Inc.
- -------------------------------- ATTEST: PRESIDENT
Authorized Countersignature [SEAL]
NOTE: THIS ENDORSEMENT SHALL NOT BE VALID OR /s/ Thomas J. Adams
BINDING UNTIL COUNTERSIGNED BY AN AUTHORIZED
SIGNATORY. SECRETARY
<PAGE>
ENDORSEMENT
Attached to Policy No.
43 0001 107 00003764
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
E-3
The Company insures the owner of the indebtedness secured by the insured
mortgage against loss or damage sustained by reason of:
1. The invalidity or unenforceability of the lien of the insured mortgage
resulting from the provisions therein which provide for changes in the
rate of interest.
2. Loss of priority of the lien of the insured mortgage as security for
the unpaid principal balance of the loan, together with interest as
changed in accordance with the provisions of the insured mortgage,
which loss of priority is caused by the changes in the rate of
interest.
"Changes in the rate of interest", as used in this endorsement, shall mean only
those changes in the rate of interest calculated pursuant to the formula
provided in the insured mortgage at Date of Policy.
This endorsement does not insure against loss or damage based upon (a) usury, or
(b) any consumer credit protection or truth in lending law.
This endorsement is made a part of the policy and is subject to all the terms
and provisions thereof and of any prior endorsements thereto, except that the
insurance afforded by this endorsement is not subject to Section 3(d) of the
Exclusions From Coverage. Except to the extent expressly stated, it neither
modifies any of the terms and provisions of the policy and any prior
endorsements, nor does it extend the effective date of the policy and any prior
endorsements, nor does it increase the fact amount thereof.
April 30, 1996 File No. 100753
Chattem, Inc., a Tennessee Corporation
CHICAGO TITLE INSURANCE COMPANY
Milligan-Reynolds Guaranty Title Agency, Inc. BY:
- -------------------------------- ATTEST: PRESIDENT
Authorized Countersignature [SEAL]
NOTE: THIS ENDORSEMENT SHALL NOT BE VALID OR /s/ Thomas J. Adams
BINDING UNTIL COUNTERSIGNED BY AN AUTHORIZED
SIGNATORY. SECRETARY
<PAGE>
OWNERS ___
ENDORSEMENT LOAN __X__
Attached to and forming a part of
Loan Policy No. 43 0001 107 00003764
ISSUED BY E-4
CHICAGO TITLE INSURANCE COMPANY
The Company hereby insures the Insured that, notwithstanding exclusions
from coverage 3(d) and the conditions and stipulations 8(d) of the Policy, but
subject to all of the other terms and provisions of this Policy:
Provided that the insured Deed of Trust complies with the terms of Sections
47-28-101 through 110, as amended, of the Tennessee Code Annotated, and provided
that all future disbursements are made in compliance with said Sections or other
applicable statutes in effect at the time of any disbursement, obligatory and
optional advances made for commercial purposes subsequent to date of Policy
pursuant to the terms of the insured Deed of Trust and/or the credit agreements,
all of which are secured by the insured Deed of Trust, shall be included within
the coverage of this Policy not to exceed the face amount of said Policy,
provided that the mortgagor is the owner of the estate or interest covered by
said Policy at the date any such advances are made and subject to the
limitations hereinafter set forth.
The Company further assures the Insured that such subsequent advances shall
have the same priority over liens, encumbrances and other matters disclosed by
the public records, as do advances secured by the insured mortgage as of date of
Policy, except for the following matters, if any, disclosed by the public
records subsequent to Policy Date.
a. Federal tax liens.
b. As to optional advances made for commercial purposes: Liens,
encumbrances or other matters, the existence of which are actually
known to the Insured prior to the date of such advances.
c. Bankruptcies affecting the estate of the vestee prior to date of any
such advances.
d. Any lien, or right to a lien, for services, labor or materials
- Continued
This endorsement is made a part of the commitment or policy. It is subject to
all the terms of the commitment of policy and prior endorsements. Except as
expressly stated on this endorsement, the terms, dates and amount of the
commitment or policy and prior endorsements are not changed.
Dated: April 30, 1996 File No. 100753 CHICAGO TITLE INSURANCE COMPANY
Chattem, Inc., a Tennessee Corporation BY:
Milligan-Reynolds Guaranty Title Agency, Inc.
- -------------------------------- ATTEST: PRESIDENT
Authorized Countersignature [SEAL]
NOTE: THIS ENDORSEMENT SHALL NOT BE VALID OR /s/ Thomas J. Adams
BINDING UNTIL COUNTERSIGNED BY AN AUTHORIZED
SIGNATORY. SECRETARY
<PAGE>
Continuation of Endorsement
heretofore or hereafter furnished, imposed by law and not shown by the
public records.
e. Real estate taxes or special assessments.
f. All matters shown in Schedule B of the Policy.
The total liability of the Company under said policy and any endorsements
therein shall not exceed, in the aggregate, the face amount of said policy and
costs which the company is obligated under the conditions and stipulations
thereof to pay.
<PAGE>
(c) AMOUNT OF INSURANCE. The amount of insurance after the acquisition or
after the conveyance shall in neither event exceed the least of:
(i) the Amount of Insurance stated in Schedule A;
(ii) the amount of the principal of the indebtedness secured by the
insured mortgage as of Date of Policy, interest thereon, expenses of
foreclosure, amounts advanced pursuant to the insured mortgage to assure
compliance with laws of to protect the lien of the insured mortgage prior to the
time of acquisition of the estate or interest in the land and secured thereby
and reasonable amounts expended to prevent deterioration of improvements, but
reduced by the amount of all payments made; or
(iii) the amount paid by any governmental agency or governmental
instrumentality, if the agency or instrumentality is the insured claimant, in
the acquisition of the estate of interest in satisfaction of its insurance
contract or guaranty.
3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT
The insured shall notify the Company promptly in writing (i) in case of any
litigation as set forth in Section 4(a) below, (ii) in case knowledge shall
come to an insured hereunder of any claim of title or interest which is
adverse to the title to the estate or interest or the lien of the insured
mortgage, as insured, and which might cause loss or damage for which the
Company may be liable by virtue of this policy, or (iii) if title to the
estate or interest or the lien of the insured mortgage, as insured, is
rejected as unmarketable. If prompt notice shall not be given to the
Company, then as to the insured all liability of the Company shall terminate
with regard to the matter or matters for which prompt notice is required;
provided, however, that failure to notify the Company shall in no case
prejudice the rights of any insured under this policy unless the Company
shall be prejudiced by the failure and then only to the extent of the
prejudice.
4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED CLAIMANT TO COOPERATE
(a) Upon written request by the insured and subject to the options
contained in Section 6 of these Conditions and Stipulations, the Company, at its
own cost and without unreasonable delay, shall provide for the defense of an
insured in litigation in which any third party asserts a claim adverse to the
title or interest as insured, but only as to those stated causes of action
alleging a defect, lien or encumbrance or other matter insured against by this
policy. The Company shall have the right to select counsel of its choice
(subject to the right of the insured to object for reasonable cause) to
represent the insured as to those stated causes of action and shall not be
liable for and will not pay the fees of any other counsel. The Company will not
pay any fees, costs or expenses incurred by the insured in the defense of those
causes of action which allege matters not insured against by this policy.
(b) The Company shall have the right, at its own cost, to institute and
prosecute any action or proceeding or to do any other act which in its opinion
may be necessary or desirable to establish the title to the estate or interest
or the lien of the insured mortgage, as insured, or to prevent or reduce loss or
damage to the insured. The Company may take any appropriate action under the
terms of this policy, whether or not it shall be liable hereunder, and shall not
thereby concede liability or waive any provision of this policy. If the Company
shall exercise its rights under this paragraph, it shall do so diligently.
(c) Whenever the Company shall have brought an action or interposed a
defense as required or permitted by the provisions of this policy, the Company
may pursue any litigation to final determination by a court of competent
jurisdiction and expressly reserves the right, in its sole discretion, to appeal
from any adverse judgment or order.
(d) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action or proceeding, the insured
shall secure to the Company the right to so prosecute or provide defense in the
action or proceeding, and all appeals therein, and permit the Company to use,
at its option, the name of the insured for this purpose. Whenever requested
by the Company, the insured, at the Company's expense, shall give the Company
all reasonable aid (i) in any action or proceeding, securing evidence,
obtaining witnesses, prosecuting or defending the action or proceeding, or
effecting settlement, and (ii) in any other lawful act which in the opinion
of the Company may be necessary or desirable to establish the title to the
estate or interest or the lien of the insured mortgage, as insured. If the
Company is prejudiced by the failure of the insured to furnish the required
cooperation, the Company's obligations to the insured under the policy shall
terminate, including any liability or obligation to defend, prosecute, or
continue any litigation, with regard to the matter or matters requiring such
cooperation.
5. PROOF OF LOSS OR DAMAGE
In addition to and after the notices required under Section 3 of these
Conditions and Stipulations have been provided the Company, a proof of loss or
damage signed and sworn to by the insured claimant shall be furnished to the
Company within 90 days after the insured claimant shall ascertain the facts
giving rise to the loss or damage. The proof of loss or damage shall describe
the defect in, or lien or encumbrance on the title, or other matter insured
against by this policy which constitutes the basis of loss or damage and shall
state, to the extent possible, the basis of calculating the amount of the loss
or damage. If the Company is prejudiced by the failure of the insured claimant
to provide the required proof of loss or damage, the Company's obligations to
the insured under the policy shall terminate, including any liability or
obligation to defend, prosecute, or continue any litigation, with regard to the
matter or matters requiring such proof of loss or damage.
In addition, the insured claimant may reasonably be required to submit to
examination under oath by any authorized representative of the Company and
shall produce for examination, inspection and copying, at such reasonable
times and places as may be designated by any authorized representative of the
Company, all records, books, ledgers, checks, correspondence and memoranda,
whether bearing a date before or after Date of Policy, which reasonably
pertain to the loss or damage. Further, if requested by any authorized
representative of the Company, the insured claimant shall grant its
permission, in writing, for any authorized representative of the Company to
examine, inspect and copy all records, books, ledgers, checks, correspondence
and memoranda in the custody or control of a third party, which reasonably
pertain to the loss or damage. All information designated as confidential by
the insured claimant provided to the Company pursuant to this Section shall
not be disclosed to others unless, in the reasonable judgment of the Company,
it is necessary in the administration of the claim. Failure of the insured
claimant to submit for examination under oath, produce other reasonably
requested information or grant permission to secure reasonably necessary
information from third parties as required in this paragraph, unless
prohibited by law or governmental regulation, shall terminate any liability
of the Company under this policy as to that claim.
6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY
In case of a claim under this policy, the Company shall have the following
additional options:
(a) TO PAY OR TENDER PAYMENT OF THE AMOUNT OF INSURANCE OR TO PURCHASE THE
INDEBTEDNESS.
(i) to pay or tender payment of the amount of insurance under this
policy together with any costs, attorneys' fees and expenses incurred by the
insured claimant, which were authorized by the Company, up to the time of
payment or tender of payment and which the Company is obligated to pay; or
(ii) to purchase the indebtedness secured by the insured mortgage for
the amount owing thereon together with any costs, attorneys' fees and expenses
incurred by the insured claimant which were authorized by the Company up to the
time of purchase and which the Company is obligated to pay.
If the Company offers to purchase the indebtedness as herein provided, the
owner of the indebtedness shall transfer, assign, and convey the indebtedness
and the insured mortgage, together with any collateral security, to the Company
upon payment therefor.
Upon the exercise by the Company of either of the options provided for in
paragraphs a(i) of (ii), all liability and obligations to the insured under this
policy, other than to make the payment required in those paragraphs, shall
terminate, including any liability or obligation to defend, prosecute, or
continue any litigation, and the policy shall be surrendered to the Company for
cancellation.
(b) TO PAY OR OTHERWISE SETTLE WITH PARTIES OTHER THAN THE INSURED OR WITH
THE INSURED CLAIMANT.
(i) to pay or otherwise settle with other parties for or in the name
of an insured claimant any claim insured against under this policy, together
with any costs, attorneys' fees and expenses incurred by the insured claimant
which were authorized by the Company up to the time of payment and which the
Company is obligated to pay; or
(ii) to pay or otherwise settle with the insured claimant the loss or
damage provided for under this policy, together with any costs, attorneys' fees
and expenses incurred by the insured claimant which were authorized by the
Company up to the time of payment and which the Company is obligated to pay.
Upon the exercise by the Company of either of the options provided for in
paragraphs (b)(i) or (ii), the Company's obligations to the insured under this
policy for the claimed loss or damage, other than the payments required to be
made, shall terminate, including any liability or obligation to defend,
prosecute or continue any litigation.
7. DETERMINATION AND EXTENT OF LIABILITY
This policy is a contract of indemnity against actual monetary loss or
damage sustained or incurred by the insured claimant who has suffered loss or
damage by reason of matters insured against by this policy and only to the
extent herein described.
(a) The liability of the Company under this policy shall not exceed the
least of:
(i) the Amount of Insurance stated in Schedule A, or, if applicable,
the amount of insurance as defined in Section 2(c) of these Conditions and
Stipulations;
(ii) the amount of the unpaid principal indebtedness secured by the
insured mortgage as limited or provided under Section 8 of these Conditions
and Stipulations or as reduced under Section 9 of these Conditions and
Stipulations, at the time the loss or damage insured against by this policy
occurs, together with interest thereon; or
<PAGE>
(iii) the difference between the value of the insured estate or
interest as insured and the value of the insured estate or interest subject to
the defect, lien or encumbrance insured against by this policy.
(b) In the event the insured has acquired the estate or interest in the
manner described in Section 2(a) of these Conditions and Stipulations or has
conveyed the title, then the liability of the Company shall continue as set
forth in Section 7(a) of these Conditions and Stipulations.
(c) The Company will pay only those costs, attorneys' fees and expenses
incurred in accordance with Section 4 of these Conditions and Stipulations.
8. LIMITATION OF LIABILITY
(a) If the Company established the title, or removes the alleged defect,
lien or encumbrance, or cures the lack of a right of access to or from the land,
or cures the claim of unmarketability of title, or otherwise establishes the
lien of the insured mortgage, all as insured, in a reasonably diligent manner by
any method, including litigation and the completion of any appeals therefrom, it
shall have fully performed its obligations with respect to that matter and shall
not be liable for any loss or damage caused thereby.
(b) In the event of any litigation, including litigation by the Company or
with the Company's consent, the Company shall have no liability for loss or
damage until there has been a final determination by a court of competent
jurisdiction, and disposition of all appeals therefrom, adverse to the title or
to the lien of the insured mortgage, as insured.
(c) The Company shall not be liable for loss or damage to any insured for
liability voluntarily assumed by the insured in settling any claim or suit
without the prior written consent of the Company.
(d) The Company shall not be liable for: (i) any indebtedness created
subsequent to Date of Policy except for advances made to protect the lien of the
insured mortgage and secured thereby and reasonable amounts expended to prevent
deterioration of improvements; or (ii) construction load advances made
subsequent to Date of Policy, except construction loan advances made subsequent
to Date of Policy for the purpose of financing in whole or in part the
construction of an improvement to the land which at Date of Policy were secured
by the insured mortgage and which the insured was and continued to be obligated
to advance at and after Date of Policy.
9. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY
(a) All payments under this policy, except payments made for costs,
attorneys' fees and expenses, shall reduce the amount of the insurance pro
tanto. However, any payments made prior to the acquisition of title to the
estate or interest as provided in Section 2(a) of these Conditions and
Stipulations shall not reduce pro tanto the amount of the insurance afforded
under this policy except to the extent that the payments reduce the amount of
the indebtedness secured by the insured mortgage.
(b) Payment in part by any person of the principal of the indebtedness, or
any other obligation secured by the insured mortgage, or any voluntary partial
satisfaction or release of the insured mortgage, to the extent of the payment,
satisfaction or release, shall reduce the amount of insurance pro tanto. The
amount of insurance may thereafter be increased by accruing interest and
advances made to protect the lien of the insured mortgage and secured thereby,
with interest thereon, provided in no event shall the amount of insurance be
greater than the Amount of Insurance stated in Schedule A.
(c) Payment in full by any person or the voluntary satisfaction or release
of the insured mortgage shall terminate all liability of the Company except as
provided in Section 2(a) of these Conditions and Stipulations.
10. LIABILITY NONCUMULATIVE
If the insured acquires title to the estate or interest in satisfaction of
the indebtedness secured by the insured mortgage, or any part thereof, it is
expressly understood that the amount of insurance under this policy shall be
reduced by any amount the Company may pay under any policy insuring a mortgage
to which exception is taken in Scehdule B or to which the insured has agreed,
assumed, or taken subject, or which is hereafter executed by an insured and
which is a charge or lien on the estate or interest described or referred to in
Scehdule A, and the amount so paid shall be deemed a payment under this policy.
11. PAYMENT OF LOSS
(a) No payment shall be made without producing this policy for endorsement
of the payment unless the policy has been lost or destroyed, in which case proof
of loss or destruction shall be furnished to the satisfaction of the Company.
(b) When liability and the extent of loss or damage has been definitely
fixed in accordance with these Conditions and Stipulations, the loss or damage
shall be payable within 30 days thereafter.
12. SUBROGATION UPON PAYMENT OR SETTLEMENT
(a) THE COMPANY'S RIGHT OF SUBROGATION.
Whenever the Company shall have settled and paid a claim under this policy,
all right of subrogation shall vest in the Company unaffected by any act of the
insured claimant.
The Company shall be subrogated to and be entitled to all rights and
remedies which the insured claimant would have had against any person or
property in respect to the claim had this policy not been issued. If requested
by the Company, the insured claimant shall transfer to the Company all rights
and remedies against any person or property necessary in order to perfect this
right of subrogation. The insured claimant shall permit the Company to sue,
compromise or settle in the name of the insured claimant and to use the name of
the insured claimant in any transaction or litigation involving these rights or
remedies.
If a payment on account of a claim does not fully cover the loss of the
insured claimant, the Company shall be subrogated to all rights and remedies of
the insured claimant afte the insured claimant shall have recovered its
principal, interest, and costs of collection.
(b) THE INSURED'S RIGHTS AND LIMITATIONS.
Notwithstanding the foregoing, the owner of the indebtedness secured by the
insured mortgage, provided the priority of the lien of the insured mortgage or
its enforceability is not affected, may release or substitute the personal
liability of any debtor or guarantor, or extend or otherwise modify the terms of
payment, or release a portion of the estate or interest from the lien of the
insured mortgage, or release any collateral security for the indebtedness.
When the permitted acts of the insured claimant occur and the insured has
knowledge of any claim of title or interest adverse to the title to the estate
or interest or the priority or enforceability of the lien of the insured
mortgage, as insured, the Company shall be required to pay only that part of any
losses insured against by this policy which shall exceed the amount, if any,
lost to the Company by reason of the impairment by the insured claimant of the
Company's right of subrogation.
(c) THE COMPANY'S RIGHTS AGAINST NON-INSURED OBLIGORS.
The Company's right of subrogation against non-insured obligors shall exist
and shall include, without limitation, the rights of the insured to indemnities,
guaranties, other policies of insurance or bonds, notwithstanding any terms or
conditions contained in those instruments which provide for subrogation rights
by reason of this policy.
The Company's right of subrogation shall not be avoided by acquisition of
the insured mortgage by an obligor (except an obligor described in Section
1(a)(ii) of these Conditions and Stipulations) who acquires the insured mortgage
as a result of an indemnity, guarantee, other policy of insurance, or bond and
the obligor will not be an insured under this policy, notwithstanding Section
1(a)(i) of these Conditions and Stipulations.
13. ARBITRATION
Unless prohibited by applicable law, either the Company or the insured may
demand arbitration pursuant to the Title Insurance Arbitration Rules of the
American Arbitration Association. Arbitrable matters may include, but are not
limited to, any controversy or claim between the Company and the insured arising
out of or relating to this policy, any service of the Company in connection with
its issuance or the breach of a policy provision or other obligation. All
arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be
arbitrated at the option of either the Company or the insured. All arbitrable
matters when the Amount of Insurance is in excess of $1,000,000 shall be
arbitrated only when agreed to by both the Company and the insured.
Arbitration pursuant to this policy and under the Rules in effect on the date
the demand for arbitration is made or, at the option of the insured, the Rules
in effect at Date of Policy shall be binding upon the parties. The award may
include attorneys' fees only if the laws of the state in which the land is
located permit a court to award attorneys' fees to a prevaling party. Judgment
upon the award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof.
The law of the situs of the land shall apply to an arbitration under the
Title Insurance Arbitration Rules.
A copy of the Rules may be obtained from the Company upon request.
14. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT
(a) This policy together with all endorsements, if any, attached hereto by
the Company is the entire policy and contract between the insured and the
Company. In interpreting any provision of this policy, this policy shall be
construed as a whole.
(b) Any claim of loss or damage, whether or not based on negligence, and
which arises out of the status of the lien of the insured mortgage or of the
title to the estate or interest covered hereby or by any action asserting such
claim, shall be restricted to this policy.
(c) No amendment of or endorsement to this policy can be made except by a
writing endorsed hereon or attached hereto signed by either the President, a
Vice President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
15. SEVERABILITY
In the event any provision of this policy is held invalid or unenforceable
under applicable law, the policy shall be deemed not to include that provision
and all other provisions shall remain in full force and effect.
16. NOTICES, WHERE SENT
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall include the number of this policy and
shall be addressed to the Company at the issuing office or to:
CHICAGO TITLE INSURANCE COMPANY
CLAIMS DEPARTMENT
171 NORTH CLARK STREET
<PAGE>
<TABLE>
<CAPTION>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to the Uniform Commercial Code:
3. Maturity date (if any):
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Debtor (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date, Time, Number,
and Filing Office)
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independence Center, 15th Floor, Agency Book 4672 Page 625
Chattanooga, TN 37409 Services, NC1-001-15-04 101 North Tryon
SS/FEI #:62-0156300 Street
Charlotte, NC 28255
- -----------------------------------------------------------------------------------------------------------------------------------
4. This financing statement covers the following types (or items) of property:
See Rider A and Exhibit A attached hereto and made a part hereof. Some of the collateral described in this financing statement is
or is to become fixtures on the real estate herein described and this financing statement is a fixture filing to be recorded in the
real property records. **Recording tax on indebtedness in the amount of $61,500,000 was paid to Hamilton County Register of Deeds
with the recording of a Deed of Trust and Security Agreement. Receipt No. _____ is attached hereto. Taxes pd on Rec. #839051
04/30/96 MORT 61,500,000.00
04/30/96 T/DD 10.00 **10.00
- ----------------------------------
ASSIGNEE OF SECURED PARTY
CSC REFERENCE #//MOORE1//96-000163//2//1
- ---------------------------------- *MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES IS $61,500,000**
-----------------
THIS INSTRUMENT PREPARED BY ---------------------
Check /X/ if covered: /X/Proceeds of Collateral are also covered /X/Products of Collateral are also covered No. of additional
Sheets presented:0
- -----------------------------------------------------------------------------------------------------------------------------------
Filed with: ROD, Hamilton
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------ ------------------------------------------------------------------
Chattem, Inc. NationsBank, N.A., as Agent
19 /s/ Robert E. Bosworth 19 /s/ Nancy B. Chastain
---------------------------------------------------------- ---------------------------------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Alphabetical FILE IN REAL ESTATE RECORDS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
324835
PAMELA HURST
REGISTER
HAMILTON COUNTY
STATE OF TENNESSEE
'96 APR 30 PM 12:49
BY: /s/ S. TAYLOR
-------------------------------
DEPUTY
RECPT # 839052
---------------------------
<PAGE>
RIDER A
Debtor: Secured Party:
Chattem, Inc. NationsBank, N.A., as Agent
1715 West 38th Street Independence Center, 15th Floor
Chattanooga, Tennessee 37409 Agency Services, NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
All right, title and interest of the Debtor in and to the following which are
affixed to, located on or used in connection with all buildings and improvements
of every kind and description (the "Improvements") now or hereafter erected or
placed on the property described in EXHIBIT A attached hereto and made a part
hereof (the "Land") (collectively, the "Collateral"):
(a) Any and all materials intended for construction, reconstruction,
alteration and repair of such Improvements now or hereafter erected thereon, all
of which materials shall be deemed to be included within the Premises (as
hereinafter defined) immediately upon the delivery thereof to the Land, and all
fixtures and articles of personal property now or hereafter owned by the Debtor
and attached to or contained in and used in connection with the Land and
Improvements including, but not limited to, all furniture, furnishings,
apparatus, machinery, equipment, motors, elevators, fittings, radiators, ranges,
refrigerators, awnings, shades, screens, blinds, carpeting, office equipment and
other furnishings and all plumbing, heating, lighting, cooking, laundry,
ventilating, refrigerating, incinerating, air conditioning and sprinkler
equipment, and fixtures and appurtenances thereto and all renewals or
replacements thereof or articles in substitution thereof, whether or not the
same are or shall be attached to the Land and Improvements in any manner (the
Land and Improvements together with the personal property described above are
hereafter referred to as the "Premises"); and
(b) Any and all of the security deposits, rents, issues, profits and
revenues of the Premises from time to time accruing; and
(c) Any and all insurance policies and proceeds thereof and any and all
leases (including equipment leases), rental agreements, sales contracts,
management contracts, franchise agreements, construction contracts, architects'
contracts, technical services agreements, or other contracts, licenses and
permits now or hereafter affecting the Premises (the "Intangible Personalty").
<PAGE>
Together with all proceeds of the foregoing collateral.
A portion of the above described goods are or are to be affixed to the Land and
Improvements.
The record owner of the real property described in EXHIBIT A hereto is the
Debtor.
- 2 -
<PAGE>
EXHIBIT A
IN THE CITY OF CHATTANOOGA, HAMILTON COUNTY, TENNESSEE:
TRACT ONE (1): Beginning at a spike marking the intersection of the Southeast
line of Church Avenue with the South line of 38th Street; thence South 66
degrees 48 minutes 00 seconds East, with and along the South line of 38th
Street, 94.53 feet to an iron pipe marking the point of its intersection with
the West line of the tract of land conveyed to the City of Chattanooga, for
street purposes, by document of record in Book 784, page 162, in the Register's
Office of Hamilton County, Tennessee; thence South 22 degrees 12 minutes 08
seconds East, with and along the West line of the said tract of land conveyed to
the City of Chattanooga, Tennessee, 209.17 feet to a point; thence North 66
degrees 49 minutes 40 seconds West 37.60 feet to a concrete monument; thence
South 22 degrees 35 minutes 20 seconds West 99.00 feet to an iron pipe in the
North line of School Street; thence North 66 degrees 49 minutes 40 seconds
West, with and along the North line of School Street, 152.22 feet to an iron
pipe; thence Westwardly, with and along the North line of School Street as it
curves to the left (said curve having a delta of 45 degrees 38 minutes 29
seconds and a radius of 43.90 feet), an arc distance of 34.97 feet to an iron
pipe; thence North 69 degrees 51 minutes 50 seconds West, with and along the
North line of School Street, 121.98 feet to an iron pipe marking the point of
its intersection with the East line of Church Avenue; thence North 26 degrees 32
minutes 46 seconds East, with and along the East line of Church Avenue, 109.25
feet to an iron pipe; thence Northeastwardly, with and along the Southeast line
of Church Avenue as it curves to the right (said curve having a delta of 37
degrees 43 minutes 51 seconds and a radius of 80.01 feet), an arc distance of
52.69 feet to an iron pipe; thence North 64 degrees 16 minutes 37 seconds East,
with and along the Southeast line of Church Avenue, 111.42 feet to the point of
beginning.
TRACT TWO (2): Beginning at an iron pipe marking the intersection of the South
line of 38th Street with the West line of Pennsylvania Avenue; thence South 22
degrees 31 minutes 51 seconds West, with and along the West line of Pennsylvania
Avenue, 88.50 feet to an iron pipe; thence North 66 degrees 48 minutes 00
seconds West 109.00 feet to an iron pipe; thence South 22 degrees 31 minutes 51
seconds West 81.90 feet to an iron pipe in the North line of a 10-foot wide
alley; thence North 66 degrees 39 minutes 00 seconds West, with and along the
North line of said alley, 51.70 feet to an iron pipe; thence North 21 degrees 04
minutes 00 seconds East 15 feet to an iron pipe; thence North 62 degrees 20
minutes 00 seconds West 83.66 feet to an iron pipe in the East line of a tract
of land conveyed to the City of Chattanooga, Tennessee, for street purposes, by
document of record in Book 784, page 162, in the Register's Office of Hamilton
County, Tennessee; thence North 22 degrees 12 minutes 08 seconds West, with and
along the East line of said tract of land conveyed to the City of Chattanooga,
Tennessee, by document of record in Book 784, page 162, in the Register's Office
of Hamilton County, Tennessee, 211.85 feet to a point in the South line of 38th
Street; thence South 66 degrees 48 minutes 00 seconds East, with and along the
South line of 38th Street, 393.52 feet to the point of beginning.
(continued)
<PAGE>
TRACT THREE (3): Beginning at a spike marking the intersection of the Northwest
line of Church Street with the South line of 38th Street; thence South 62
degrees 19 minutes 49 seconds West, with and along the Northwest line of Church
Street, 101.16 feet to an iron pipe; thence North 66 degrees 46 minutes 19
seconds West 9.80 feet to an iron pipe; thence North 23 degrees 13 minutes 41
seconds East 21.50 feet to a cut X on wall; thence North 66 degrees 46 minutes
19 seconds West 64 feet to an iron pipe; thence North 23 degrees 13 minutes 41
seconds East 57 feet to an iron pipe in The South line of 38th Street; thence
South 66 degrees 46 minutes 19 seconds East, with and along the South line of
38th Street, 137.60 feet to the point of beginning.
TRACT FOUR (4): Beginning at a concrete monument marking the intersection of the
South line of 37th Street with the West line of Church Street; thence South 28
degrees 58 minutes 42 seconds West, with and along the West line of Church
Street, 52.11 feet to a spike; thence South 22 degrees 14 minutes 54 seconds
West, with and along the West line of Church Street, 158.20 feet to a spike;
thence Southwestwardly, with and along a curve to the right at the intersection
of the West line of Church Street with the North line of 38th Street (said curve
having a delta of 98 degrees 27 minutes 41 seconds and a radius of 12.38 feet),
an arc distance of 21.27 feet to a spike in the North line of 38th Street;
thence North 66 degrees 46 minutes 19 seconds West, with and along the North
line of 38th Street, 149.20 feet to a cut cross; thence North 23 degrees 37
minutes 17 seconds East 111.97 feet to an iron pipe; thence North 66 degrees 46
minutes 19 seconds West 400.50 feet to an iron pipe; thence North 07 degrees 18
minutes 45 seconds East 116.73 feet to an iron pipe in the South line of 37th
Street; thence South 66 degrees 46 minutes 19 seconds East, with and along the
South line of 37th Street, 595.70 feet to the point of beginning.
TRACT FIVE (5): Beginning at an iron pipe marking the intersection of the West
line of Church Street with the North line of 37th Street; thence North 66
degrees 46 minutes 19 seconds West, with and along the North line of 37th
Street, 111.94 feet to an iron pipe; thence North 30 degrees 02 minutes 12
seconds East 49.79 feet to an iron pipe; thence South 66 degrees 46 minutes 19
seconds East 111.94 feet to an iron pipe in the West line of Church Street;
thence South 30 degrees 02 minutes 12 seconds West, with and along the West line
of Church Street, 49.79 feet to the point of beginning.
TRACT SIX (6): Beginning at an iron pipe marking the intersection of the South
line of Old Wauhatchie Pike, with the West line of Church Street; thence South
44 degrees 42 minutes 27 seconds West, with and along the West line of Church
Street, 87.91 feet to an iron pipe; thence North 31 degrees 32 minutes 56
seconds East 81.16 feet to an iron pipe in the South line of Old Wauhatchie
Pike; thence South 70 degrees 58 minutes 23 seconds East, with and along the
South line of Old Wauhatchie Pike, 20.50 feet to the point of beginning.
TRACT SEVEN (7): Lot One (1), Chattem, Inc. Subdivision, as shown by plat of
record in Plat Book 54, page 15, in the Register's Office of Hamilton County,
Tennessee.
TOGETHER WITH Ingress And Egress Easement recorded in Book 4509, page 127, in
the Register's Office of Hamilton County, Tennessee.
<PAGE>
REFERENCE is made for prior title to Deeds of record in Book 807, page 537, Book
W, Volume 25, page 111, Book 3903, page 143, Book 2173, page 388, Book 3593,
page 70, Book 1854, Page 135, Book 1395, page 567, Book 2239, page 2, Book B,
Volume 14, page 506, Book H, Volume 25, page 715, Book 1401, page 346, Book
1399, page 110, Book 1401, page 634, Book 2034, page 238, Book 3825, page 856,
Book 1462, page 79, Book K, Volume 14, page 171, Book G, Volume 15, page 405,
Book J, Volume 16, page 66, Book M, Volume 15, page 243 and Book 1881, page 504,
in the Register's Office of Hamilton County, Tennessee.
<PAGE>
[LETTERHEAD]
April 18, 1996
Nations' Bank, N.A., as Agent
RE: Hamilton County Tax Map #155J-D-016.01
Lot 1 Chattem, Inc., Plat Book 54, Page 15
Dear Sirs:
The above referenced property, located at 1715 West 38th Street, is zoned M-1
Manufacturing Zone.
I have enclosed a copy of the M-1 zoning regulations from the City of
Chattanooga Zoning Ordinance.
If I may be of further assistance to you, please call me at 423/209-6677.
Sincerely,
/s/Gloria Haney
Gloria Haney, Assistant Director
Current Planning and Operations
GH:jd
Enclosure
0<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
1000. M-1 MANUFACTURING ZONE
1001. USE REGULATIONS:
(1) The following uses shall be PROHIBITED:
Dwellings, except watchman's house
Cemeteries
(2) The following uses shall be located AT LEAST 1000 FEET from
the nearest boundary of the R-4 Special Zone, or any
Residential Zone:
Blast furnace
Boiler works
Coal screening and sieving plants
Forge plants
Foundries
Junk yards
Ore reduction
Planing mills
Processing of fish, poultry and meat
Rock crushers
Rolling mills
Sawmills
Smelting
Stockyards
Stone mills or quarries
[Ordinance No. 9344 - 3/20/90]
[Ordinance No. 9492 - 11/20/90]
(3) Contractor's plants and storage yards shall be permitted
subject to the screening provisions of the M-2 Zone.
[Ordinance No. 9344 - 3/20/90]
[Ordinance No. 9492 - 11/20/90]
(3.01) Recycling Processing Centers for materials to be recycled and
used in new products provided that:
(a) All processing such as compacting, shredding, or
bailing shall be within an enclosed building;
(b) All outdoor storage shall be concealed from view,
beyond the limits of the property, by fencing or
natural screening; or
(c) Any other storage shall be within an enclosed building;
and
(d) No salvaging of parts or dismantling will be permitted.
[Ordinance No. 10035 - 4/26/94]
(4) Any other lawful use shall be permitted anywhere in the zone,
EXCEPT that liquor stores shall be permitted only subject to
approval of the City Council for each proposed liquor store as
authorized by T.C.A. 57-3-108 and Sections 5-101 through
5-126, Part II, Chattanooga City Code, and
[Ordinance No. 9077 - 11/22/88]
- 88 -
<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
EXCEPT that open air markets shall be permitted only subject
to the approval of a special permit by the Board of Zoning
Appeals under terms of Article VIII and
EXCEPT that day care centers shall be permitted as an on-site,
accessory use to any permitted use, subject to the issuance of
a Special Permit by the Board of Appeals in accordance with
Article VIII, of this Ordinance.
[Ordinance No. 9077 - 11/22/88]
EXCEPT that Commercial Hazardous Waste Management Facilities
or Commercial Medical Waste Management Facilities shall also
be subject to the provisions of Article XV of this ordinance.
[Ordinanc No. 9875 - 5/11/93]
EXCEPT that adult-oriented establishments, as defined and
restricted by Article VIII, shall be subject to the issuance
of a Special Permit by the Board of Zoning Appeals in
accordance with the requirements of article VIII.
[Ordinance No. 9987 - 12/21/93]
EXCEPT that wineries, including vineyards, processing,
bottling and sales facilities shall be permitted only subject
to approval of the City Council by Special Exceptions Permit.
[Ordinance No. 10023 - 3/22/94]
(5) Any use shall comply with all currently adopted codes of the
City of Chattanooga (Federal, State, or local) with regard to
fire and explosive hazards, smoke, dust, fly ash, fumes, or
odor.
[Ordinance No. 9077 - 11/22/88]
1002. HEIGHT AND AREA REGULATIONS:
(1) No building shall exceed 35 feet in height except that a
building may exceed 35 feet in height provided either that for
every foot of additional height over 35 feet the building
shall be set back one (1) additional foot from all property
lines; or that if any point on the exterior surface of the
building is above 35 feet in height, the vertical projection
of such point upon the ground shall not be nearer to any
property line than a horizontal distance equal to the height
of such point above the ground.
(2) There is no minimum building site area.
(3) There shall be a front yard of not less than 25 feet.
(4) There shall be a side yard of not less than 25 feet when side
yard adjoins residential zone.
(5) There shall be a rear yard of not less than 25 feet where the
rear yard adjoins a residential zone.
(6) Other than as provided above, no other front, rear or side
yards are required, but where buildings are separated, the
distance between them shall be at least ten (10) feet.
- 89 -
<PAGE>
MAP 155J GROUP D PARCEL 016.01 DISTRICT: 1
OWNER NAME PROPERTY TYPE: 10
CHATTEM INC
LAND USE CODE: 280.00
ADDRESS LAND VALUE: 160,800
01715 W 38TH ST
BLDG VALUE: 1,480,100
CHATT TN 37409
PROP. ADDR. 01715 W 38TH ST APPRAISAL: 1,654,900
SALES DATA:
DATE CONSIDERATION BOOK PAGE ASSESSMENT: 661,960
03-21-88 3513 0340 ---LOT SIZE---
05-01-75 2239 0434 EXEMPT CODE:
IMPROVEMENT CODE: 0000
LEGAL DESCRIPTION: SUBDIVISION:
*ADJ LAND,BLDGS FOR 1995
LT 1 CHATTEM INC SUB
PB 54 PG 15
PF4 = NAME BROWSE PF5 = ADDRESS BROWSE PF10 = RETURN TO SALES BROWSE
PF7 = BLDG BROWSE PF8 = LAND BROWSE ENTER = KEY NEXT STATE GRID
<PAGE>
[LETTERHEAD]
April 25, 1996
Nations' Bank, N.A., as Agent
The following zoning information is in response to your request:
Tax Map 155J-C-019 located on Wauhatchie Pike - R-1 Residential Zone
Tax Map 155J-C-022 located on Church Street - R-1 Residential Zone
Tax Map 155J-C-026 located on W. 37th Street - R-2 Residential Zone
Tax Map 155J-C-027 located on W. 37th Street - R-2 Residential Zone
Tax Map 155J-C-028 located on W. 38th Street - R-2 Residential Zone
Tax Map 155J-C-029 located on W. 38th Street - R-2 Residential Zone
Tax Map 155J-C-043 located on Church Street - R-2 Residential Zone
Tax Map 155J-D-015 located on W. 38th Street - R-2 Residential Zone
Attached is a copy of the R-1 and R-2 Residential Zone regulations from the City
of Chattanooga Zoning Ordinance.
If you have any questions, please contact our office.
Sincerely,
/s/ Gloria Haney
Gloria Haney, Assistant Director
GH/pd
<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
ARTICLE V. ZONE REGULATIONS
100. R-1 RESIDENTIAL ZONE
101. PERMITTED USES:
(1) Single-family dwellings, excluding factory manufactured homes
constructed as a single self-contained unit and mounted on a
single chassis.
[Ordinance No. 9661 - 01/21/92]
(2) Schools.
[Ordinance No. 6837 - 1/7/75]
(3) Parks, play grounds and community buildings.
(4) Golf courses, except driving ranges, miniature courses and other
similar commercial operations.
(5) Fire halls and other public buildings.
(6) Churches.
(7) Home occupations.
(8) Kindergartens operated by governmental units or religious
organizations.
(9) Day care homes.
(10) Day care centers, except that such uses shall require a special
permit under the terms of Article VIII of this Ordinance.
(11) Kindergartens, except those operated by governmental units or by
religious organizations; except that such uses shall require a
special permit under the terms of Article VIII of this Ordinance.
[Ordinance No. 6098 - 10/14/69]
[Ordinance No. 7639 - 3/18/80]
(12) Accessory uses and buildings customarily incidental and
subordinate to the above.
102. HEIGHT AND AREA REGULATIONS:
(1) No building shall exceed two and one-half stories or 35 feet in
height except that a building may exceed these height regulations
provided that for every one (1) foot of additional height over 35
feet the building shall be set back one (1) additional foot from
all property lines.
(2) The minimum building site area shall be 7,500 square feet and the
minimum frontage 60 feet.
[Ordinance No. 8527 - 9/10/85]
(3) There shall be a front yard of not less than 25 feet.
[R-1]
- 22 -
<PAGE>
(4) There shall be a side yard on each side of the building of not
less than 10 feet. For corner lot side yard requirements, see
Article VI, Section 108.
[Ordinance No. 9739 - 6/23/92]
(5) There shall be a rear yard of not less than 25 feet.
(6) The Health Department may require larger lots when septic tanks
are used due to soil conditions, topography, drainage, presence
of swimming pools, etc.
[Ordinance No. 8527 - 9/10/85]
103. OFF-STREET PARKING REGULATIONS:
Off-Street parking shall be provided on the same lot as or a lot adjacent
to the building in accordance with the following requirements:
(1) There shall be two (2) spaces for every dwelling unit. Units
with four (4) bedrooms or more shall be required to have three
(3) parking spaces.
[Ordinance No. 8527 - 9/10/85]
(2) There shall be (1) space for every three (3) seats in the main
auditorium of churches and other public buildings.
(3) Parking space for golf courses shall be in an amount satisfactory
to the City and approved by the Traffic Engineer.
104. MINIMUM ELEVATION REGULATION:
No residence or structure intended for human habitation shall be erected
near a tributary of the Tennessee River unless its lowest habitable floor
is at an elevation equal to or greater than the High Water Stage at the
point of construction; provided, however, no residence or structure
intended for habitation shall be erected near the Tennessee River unless
its lowest habitable floor is a minimum or two (2) feet above the elevation
of the High Water Stage at the point of construction. The minimum building
site for any structure erected near a tributary of the Tennessee River
shall be at an elevation which is not below the High Water Stage at the
point of construction; provided, however, that the minimum building site
for any structure erected near the Tennessee River shall be at an elevation
which is a minimum of two (2) feet above the High Water Stage at the point
of construction. No public or private driveway shall be below the High
Water Stage.
[Ordinance No. 6434 - 4/18/72]
105. SPECIAL EXCEPTIONS FOR PLANNED UNIT DEVELOPMENT:
Flexibility in the arrangement of residential uses may be permitted by the
City Council as special exceptions in any R-1 Residential Zone, provided
that the minimum size of any tract of land sought to be used for the
planned unit shall be five (5) acres and that a desirable environment
through the use of good design procedures is assured, allowing flexibility
in individual yard requirements to provide for multiple dwelling units,
- 23 -
<PAGE>
(ARTICLE V, Zone Regulations Cont'd)
townhouses, and two-family units, except that such use or uses shall
require a special permit under the terms of Article V of this Ordinance.
[Ordinance No. 6075 - 7/15/69]
106. SPECIAL EXCEPTIONS FOR CEMETERIES:
The City Council may permit the development of cemeteries (excluding
crematoriums, embalming facilities or other such preparatory functions)
within any R-1 Residential Zone, as a special exception under terms
specified in Article VI, of the Ordinance.
[Ordinance No. 6994 - 12/16/75]
107. SPECIAL EXCEPTIONS FOR RESIDENTIAL HOMES FOR HANDICAPPED AND/OR AGED
PERSONS OPERATED ON A COMMERCIAL BASIS:
The City Council may issue a Special Exceptions Permit for a Residential
Home for Handicapped and/or Aged Persons under the terms specified in
Article VI, of this Ordinance, provided that the Home shall not contain
more than (8) handicapped and/or aged persons.
[Ordinance No. 9077 - 11/22/88]
-24-
<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
200. R-2 RESIDENTIAL ZONE
201. PERMITTED USES:
(1) Single-family dwellings, excluding factory manufactured mobile
homes constructed as a single self-contained unit and mounted on
a single chassis.
[Ordinance No. 9661 - 1/21/92]
(2) Two family dwellings.
(3) Schools.
(4) Parks, playgrounds, and community buildings.
(5) Golf courses, except driving ranges, miniature courses and other
similar commercial operations.
(6) Fire halls and other public buildings.
(7) Churches.
(8) Accessory uses and buildings.
(9) Home occupations.
[Ordinance No. 7639 - 3/18/80]
(10) Day care homes.
[Ordinance No. 6837 - 1/7/75]
(11) Kindergartens operated by governmental units or by religious
organizations.
(12) Day care centers, except that such uses shall require a special
permit under the terms of Article VIII of this Ordinance.
(13) Kindergartens, except those operated by governmental units or
religious organizations; except that such uses shall require a
special permit under the terms of Article VIII of this Ordinance.
[Ordinance No. 6098 - 10/14/69]
202. HEIGHT AND AREA REGULATIONS:
(1) No buildings shall exceed two and one-half stories or 35 feet in
height except that a building may exceed these requirements
provided that for every foot of additional height over 35 feet
the building shall be set back one (1) additional foot from all
property lines.
(2) The minimum building site area shall be:
7,500 square feet for a single-family dwelling
unit on sewers, and
9,500 square feet for a two-family dwelling unit
on sewers.
- 34 -
<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
The minimum frontage shall be 60 feet.
[Ordinance No. 8527 - 9/10/85]
(3) There shall be a front yard of not less than 25 feet.
(4) There shall be a side yard on each side of the building of not
less than 10 feet. For corner lot side yard requirements, see
Article VI, Section 108.
[Ordinance No. 8527 - 9/10/85]
[Ordinance No. 9739 - 6/23/92]
(5) There shall be a rear yard of not less than 25 feet.
(6) The Health Department may require larger lots when septic tanks
are used due to soil conditions, topography, drainage, presence
of swimming pools, etc.
[Ordinance 8527 - 9/10/85]
203. OFF-STREET PARKING REGULATIONS:
Off-street parking shall be provided on the same lot as or a lot
adjacent to the building in accordance with the following
requirements:
(1) For single-family dwellings two (2) parking spaces. Units with
four (4) bedrooms or more shall be required to have three (3)
parking spaces.
For two family dwellings 1.5 parking spaces for every dwelling
unit. Units with two (2) or more bedrooms shall be required to
have two (2) parking spaces per dwelling unit.
[Ordinance No. 8527 - 9/10/87]
(2) One (1) space for every three (3) seats in a main auditorium of
churches, schools, and other public buildings.
(3) Parking space for golf courses shall be in the amount
satisfactory to the City and approved by the Traffic Engineer.
204. MINIMUM ELEVATION REGULATIONS:
No residence or structure intended for human habitation shall be
erected near a tributary of the Tennessee River unless its lowest
habitable floor is at an elevation equal to or greater than High Water
Stage at the point of construction; provided, however, no residence or
structure intended for habitation shall be erected near the Tennessee
River unless its lowest habitable floor is a minimum of two (2) feet
above the elevation of the High Water Stage at the point of
construction. The minimum building site for any structure erected
near a tributary of the Tennessee River shall be at an elevation which
is not below the High Water Stage at the point of construction;
provided, however, that the minimum building site for any structure
erected near the Tennessee River shall be at an elevation which is a
minimum of two (2) feet above the High Water Stage at the point of
construction. No public or private driveway shall be below the High
Water Stage.
[Ordinance No. 6434 - 4/18/72]
- 35 -
<PAGE>
(ARTICLE V, Zone Regulations, Cont'd)
205. SPECIAL EXCEPTIONS FOR PLANNED UNIT DEVELOPMENT:
Flexibility in the arrangement of residential uses may be permitted by
the City Council as special exceptions in any R-2 Residential zone,
provided that the minimum size of any tract of land sought to be used
for the planned unit shall be five (5) acres and that a desirable
environment through the use of good design procedures is assured,
allowing flexibility in individual yard requirements to provide for
multiple dwelling units, townhouses, and two family units, except that
such use or uses shall require a special permit under the terms of
Article V of this Ordinance.
[Ordinance No. 6075 - 7/15/69]
[Ordinance No. 6590 - 7/27/73]
206. SPECIAL EXCEPTIONS FOR CEMETERIES:
The City Council may permit the development of cemeteries (excluding
crematoriums, embalming facilities or other such preparatory
functions) within any R-2 Residential Zone as a special exception
under the terms specified in Article VI of this Ordinance.
[Ordinance No. 6994 - 12/16/75]
207. SPECIAL EXCEPTIONS FOR RESIDENTIAL HOMES FOR HANDICAPPED AND/OR AGED
PERSONS OPERATED ON A COMMERCIAL BASIS:
The City Council may issue a Special Exception Permit for a
Residential Home for Handicapped and/or Aged Persons under the terms
specified in Article VI of this Ordinance, provided that the Home
shall not contain more than eight (8) handicapped and/or aged persons.
[Ordinance No. 9077 - 11/22/88]
- 36 -
<PAGE>
SURVEY
PREVIOUSLY FURNISHED
TO THE BANK
<PAGE>
[LETTERHEAD]
Faxed to: 423/785-8480
Original Mailed
29 April 1996
Nations Bank, N.A., as Agent
c/o Lea Johnson, Moore & Van Allen, PLLC
100 North Tryon Street
47th Floor
Charlotte, NC 28202
RE: Chattem, Inc.
This letter is to certify that the following listed properties are in a Zone C
area and are not in a 100-year flood zone per the FIRM (Flood Insurance Rate
Map), Community Panel Number 470072-0020-A, dated 3 September 1980:
TAX MAP NUMBER GROUP NUMBER PARCEL NUMBER
155J D 15
155J D 16.01
155J C 19
155J C 22
155J C 26
155J C 27
155J C 28
155J C 29
155J C 43
E.O. Wasdin
Registered Surveyor No. 852
[SEAL]
cc: R. Grant Dobson
Miller & Martin
<PAGE>
LANDLORD'S CERTIFICATION
THIS CERTIFICATION is made by Tammy Development Company, a limited
partnership (together with its successors and assigns, the "LANDLORD"), for
the benefit of NATIONSBANK, N.A., as Agent (together with all successors and
assigns, the "AGENT") for the Lenders (as defined in the Credit Agreement
described below).
WHEREAS, the Landlord is the lessor under the lease described in EXHIBIT A
attached hereto (the "LEASE") with Chattem, Inc., a Tennessee corporation (the
"TENANT") as lessee; and
WHEREAS, the Lenders have provided or will be providing a $61,500,000.00
credit facility (the "CREDIT FACILITY") evidenced and secured by, among other
things, two credit agreements (together with all modifications, renewals or
replacements, the "CREDIT AGREEMENTS") executed by Tenant, Agent and Lenders,
among others, and a security agreement (together with all modifications,
renewals or replacements, the "PLEDGE") on all machinery, equipment, trade
fixtures, vehicles, inventory, accounts receivable, goods, records and other
personal property now or hereafter delivered to or located or installed at
the Tenant's leasehold estate in the premises described in the Lease (the
"PREMISES") (the "PERSONAL PROPERTY") (the Credit Agreements, the Pledge and
all other documents relating to, evidencing or securing the Credit Facility
being referred to herein collectively as the "CREDIT DOCUMENTS"); and
WHEREAS, the Lenders have requested the Landlord to furnish the Lenders
certain assurances and agreements regarding the Lease, which assurances and
agreements the Landlord is willing to give as set forth herein; and
WHEREAS, the Landlord believes it is in its best interest to provide such
assurances and agreements;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and other good and valuable consideration, the Landlord
hereby certifies to and agrees with the Agent and the Lenders as follows:
1. The Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way, except as set forth in EXHIBIT A
hereto.
2. The Lease, together with all assignments, modifications,
supplementations and amendments set forth in EXHIBIT A, represents the entire
agreement between the parties with respect to the lease of the Premises.
3. To the best knowledge of the Landlord, neither the Tenant nor the
Landlord is in default under the Lease, and no event or circumstance has
occurred or exists which, with the passage of time or the giving of notice or
both, would constitute a default under the Lease.
<PAGE>
4. The Landlord consents to the extensions of credit under the Credit
Facility, and the execution of the Credit Documents and agrees that,
notwithstanding any provision in the Lease to the contrary, neither the
extensions of credit under the Credit Facility, nor the execution of the Credit
Documents, shall create a default under the Lease, the Landlord hereby waiving
any provisions in the Lease which could create a default as such provisions
apply to the same.
5. (i) If the Tenant defaults in respect of any provisions of the
Lease, the Agent shall have the right, but not the obligation, to cure such
default, and the Landlord shall accept performance by or on behalf of the Agent
as though, and with the same effect as if, it had been done or performed by the
Tenant. The Agent shall have a period of time after the service of notice of
such default upon it within which to cure or cause to be cured the default
specified in such notice which period of time is the same period for cure, if
any, as given to the Tenant in respect of the specified default after the giving
of notice of such default to the Tenant, plus an additional period of thirty
(30) days in the case of nonpayment of rent and sixty (60) days in the case of
all other types of default. In the event that the Landlord seeks to terminate
the Lease by reason of a default, which default cannot reasonably be cured
within the aforesaid period, then provided that the Agent has within said period
commenced such cure, the period of time for cure shall be extended for so long
as the Agent is diligently continuing to attempt to cure such default.
(ii) If, in order to cure any default by the Tenant, the Agent
must have possession of or control over the Premises, no default will be deemed
to exist and the Landlord shall have no right, and shall take no action, to
terminate the Lease until the Agent has had a reasonable opportunity to commence
and with reasonable diligence to complete foreclosure or take other appropriate
actions to acquire possession of and control over the Premises, but upon the
condition that the Agent shall during the pendency of any such foreclosure or
other proceedings pay or cause to be paid to the Landlord, when and as it shall
become due, the rent provided for in the Lease. The Agent shall not be required
to commence or continue any foreclosure or other proceedings or to obtain or
continue possession of the Premises, except as specified above as a prerequisite
for exercise or preservation of the Agent's rights.
(iii) Anything in subsection (ii) of this Section 5 to the
contrary notwithstanding, any default of the Tenant which is not reasonably
susceptible of being cured by the Agent even after the Agent has obtained
possession of and control over the Premises shall be deemed to have been waived
by the Landlord. Any default which is reasonably susceptible of being cured
shall thereafter be cured with reasonable diligence.
(iv) The Agent (or its designee or nominee) may become the legal
owner and holder of the interest of the Tenant under the Lease, by foreclosure
or other enforcement proceedings, or by obtaining an assignment of the Lease in
lieu of foreclosure or through settlement of or arising out of any pending or
threatened foreclosure proceeding, without the Landlord's consent and without
any obligation to assume the Lease, but subject to the applicable terms and
provisions of the Lease. In any such event the Landlord shall recognize and
accept the Agent as its tenant under the Lease. In such event, the Agent (or
its designee or nominee) shall have the right thereafter to assign the Lease to
any party.
- 2 -
<PAGE>
Upon the delivery to the Landlord of a duplicate original of any instrument
of assignment containing the assignee's assumption of the Lease (subject to
the provisions of the Lease), such assignee of the Agent shall become the
Tenant, and shall be substituted for the Agent as the owner and holder of the
Lease for all purposes, as of the effective date of such assignment.
Notwithstanding the above, the Agent or such third party shall not be liable
for any act or omission of the Tenant (other than the obligation to pay rent)
prior to the date of any foreclosure, deed in lieu of foreclosure or other
conveyance, provided, however, that the foregoing shall not limit Agent's
obligations in the event Agent elects to cure a default under clause (i)
above.
6. The Landlord agrees that: (a) the Tenant is the owner of the Personal
Property, whether attached to the Premises or not; (b) the Agent's lien upon or
security interest in the Personal Property is prior and superior to any
interest, lien or claim of any nature the Landlord may now have or hereafter
obtain in the Personal Property whether by operation of law, contract or
otherwise; (c) either the Tenant or the Agent may remove the Personal Property
from the Premises at any time without hindrance on the part of the Landlord; and
(d) the Personal Property shall remain personal property and shall not become
fixtures, notwithstanding the manner or mode of the attachment of the Personal
Property to the land. The Landlord hereby waives any rights it may now or
hereafter have in the Personal Property, including without limitation, any lien
rights available under applicable law.
7. The Landlord will not consent to any material modification or
amendment of any of the terms of the Lease, to the termination thereof by the
Tenant nor to the assignment or subletting of all or any part of the Premises
without the prior written consent of Agent.
8. The Landlord shall send to the Agent (in the manner provided herein) a
copy of any notice or statement sent to the Tenant by the Landlord asserting a
default under the Lease. Such copy shall be sent to the Agent at the same time
such notice or statement is sent to the Tenant. Notices shall be sent to the
Agent by prepaid, registered or certified mail, addressed to the Agent at the
following address, or such other address as the Agent shall designate to the
Landlord in writing:
NATIONSBANK, N.A.
------------------------
------------------------
------------------------
------------------------
Attention:
------------
- 3 -
<PAGE>
EXECUTED under seal this 19th day of April, 1996.
LANDLORD:
Tammy Development Company
By
--------------------------------------
Title Partner
-----------------------------------
- 4 -
<PAGE>
Security Interest Agreement
NationsBank, N.A., as Agent
100 North Tryon Street
Charlotte, North Carolina 28225
Ladies and Gentlemen:
Chattem, Inc. ("Borrower") now does or hereafter may store certain of its
merchandise, inventory, or other of its personal property at premises (the
"Premises") owned or leased by Cherokee Warehouses, Inc., including, without
limitation, such Premises described on EXHIBIT A attached hereto.
Borrower has entered into certain financing arrangements with certain
financial institutions (the "Lenders") and NationsBank, N.A., as agent for
itself and the other Lenders (in such capacity, the "Agent") and, as a condition
to the Lenders' loans and other financial accommodations to Borrower, the
Lenders require, among other things, liens on all of Borrower's personal
property located on the Premises ("Collateral").
To induce the Lenders (together with their respective agents and assigns)
to enter into said financing arrangements, and for other good and valuable
consideration, the undersigned hereby agrees that:
(i) it will not assert against any of Borrower's assets any statutory
or possessory liens, including, without limitation, rights of levy or
distraint for rent, all of which it hereby waives;
(ii) the Collateral shall be identifiable as being owned by Borrower
and kept reasonably separate and distinct from other property in our
possession;
(iii) none of the Collateral located on the Premises shall be deemed to
be fixtures;
(iv) if Borrower defaults on its obligations to the Lenders or the
Agent and, as a result, the Agent, on behalf of itself and the Lenders,
undertakes to enforce its security interest in the Collateral, the
undersigned will cooperate with the Agent in its efforts to assemble all of
the Collateral located on the Premises and will permit the
<PAGE>
Agent to either remain on the Premises for sixty (60) days after the Agent
declares the default, or, at the Agent's option, to remove the Collateral
from the Premises within a reasonable time, not to exceed sixty (60) days
after the Agent declares the default, provided that the Agent leaves the
Premises in the same condition as existed immediately prior to such sixty
(60) day period, and the Agent shall indemnify the undersigned for any
damages arising out of its temporary occupancy of the Premises, and will
not hinder the Agent's actions in enforcing its liens on the Collateral.
Any notice(s) required or desired to be given hereunder shall be directed
to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Lenders and the Agent are paid and
satisfied in full and all financing arrangements among the Lenders, the Agent
and Borrower have been terminated.
The undersigned will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this agreement. The agreements contained
herein may not be modified or terminated orally and shall be binding upon the
successors, assigns and personal representatives of the undersigned, upon any
successor owner or transferee of any of Premises, and upon any purchasers,
including any mortgagee, from the undersigned.
Executed and delivered this 18th day of April, 1996
Cherokee Warehouses, Inc.
By
-----------------------------
Title V.P.
-----------------------------
<PAGE>
EXHIBIT A
LOCATION OF PREMISES
Cherokee Warehouses, Inc.
520 West 31st Street
Chattanooga, TN 37401
<PAGE>
Security Interest Agreement
NationsBank, N.A., as Agent
100 North Tryon Street
Charlotte, North Carolina 28225
Ladies and Gentlemen:
Chattem, Inc. ("Borrower") now does or hereafter may store certain of its
merchandise, inventory, or other of its personal property at premises (the
"Premises") owned or leased by Morgan & Sampson, Inc., including, without
limitation, such Premises described on EXHIBIT A attached hereto.
Borrower has entered into certain financing arrangements with certain
financial institutions (the "Lenders") and NationsBank, N.A., as agent for
itself and the other Lenders (in such capacity, the "Agent") and, as a condition
to the Lenders' loans and other financial accommodations to Borrower, the
Lenders require, among other things, liens on all of Borrower's personal
property located on the Premises ("Collateral").
To induce the Lenders (together with their respective agents and assigns)
to enter into said financing arrangements, and for other good and valuable
consideration, the undersigned hereby agrees that:
(i) it will not assert against any of Borrower's assets any statutory
or possessory liens, including, without limitation, rights of levy or
distraint for rent, all of which it hereby waives;
(ii) the Collateral shall be identifiable as being owned by Borrower
and kept reasonably separate and distinct from other property in our
possession;
(iii) none of the Collateral located on the Premises shall be deemed to
be fixtures;
(iv) if Borrower defaults on its obligations to the Lenders or the
Agent and, as a result, the Agent, on behalf of itself and the Lenders,
undertakes to enforce its security interest in the Collateral, the
undersigned will cooperate with the Agent in its efforts to assemble all of
the Collateral located on the Premises and will permit the
<PAGE>
Agent to either remain on the Premises for sixty (60) days after the Agent
declares the default, or, at the Agent's option, to remove the Collateral
from the Premises within a reasonable time, not to exceed sixty (60) days
after the Agent declares the default, provided that the Agent leaves the
Premises in the same condition as existed immediately prior to such sixty
(60) day period, and the Agent shall indemnify the undersigned for any
damages arising out of its temporary occupancy of the Premises, and will
not hinder the Agent's actions in enforcing its liens on the Collateral.
Any notice(s) required or desired to be given hereunder shall be directed
to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Lenders and the Agent are paid and
satisfied in full and all financing arrangements among the Lenders, the Agent
and Borrower have been terminated.
The undersigned will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this agreement. The agreements contained
herein may not be modified or terminated orally and shall be binding upon the
successors, assigns and personal representatives of the undersigned, upon any
successor owner or transferee of any of Premises, and upon any purchasers,
including any mortgagee, from the undersigned.
Executed and delivered this 17th day of April, 1996
Morgan & Sampson, Inc.
By /s/Steve Morgan
----------------------------
Title Operations Manager
-----------------------------
<PAGE>
EXHIBIT A
LOCATION OF PREMISES
Morgan & Sampson, Inc.
1651 South Carlos Avenue
Ontario, California 91761
<PAGE>
CHATTEM, INC.
SECRETARY'S CERTIFICATE
I, Hugh F. Sharber, being the duly elected and acting Secretary of
Chattem, Inc., a Tennessee corporation (the "Company"), do hereby certify that:
(1) Attached hereto as EXHIBIT A is a true, correct and complete
copy of the Charter of the Company as in full force and effect
on the date hereof.
(2) Attached hereto as EXHIBIT B is a true, correct and complete copy
of the By-Laws of the Company, together with all amendments
thereto, which were duly adopted and are in full force and effect
on the date hereof.
(3) Attached hereto as EXHIBIT C is a true, correct and complete
copy of resolutions that were duly adopted at meetings held March
27, 1996 and April 24, 1996 by the Board of Directors of the
Company, and said resolutions have not been amended, modified or
rescinded, and are in full force and effect as of the date hereof.
(4) Each of the following named individuals is, as of the date
hereof, a duly elected and qualified officer of the Company and
holds the office set forth below opposite such individual's name.
The signature written below opposite the name and title of each
such officer is such officer's actual signature:
NAME OFFICE SIGNATURE
Zan Guerry Chairman, President /s/ Zan Guerry
and Chief Executive ------------------------
Officer
Robert E. Bosworth Executive Vice /s/ Robert E. Bosworth
President and Chief ------------------------
Financial Officer
Hugh F. Sharber Secretary /s/ Hugh F. Sharber
------------------------
A. Alexander Taylor, Assistant Secretary /s/ A. Alexander Taylor
II ------------------------
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
the ___ day of April, 1996.
/s/ Hugh F. Sharber
---------------------------
Hugh F. Sharber, Secretary
I, the duly elected President of the Company, do hereby certify on behalf of the
Company that Hugh F. Sharber is the duly elected and qualified Secretary of the
Company and that the signature set forth above his name is his signature.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of April,
1996.
/s/ Zan Guerry
---------------------------
Zan Guerry, President
2
<PAGE>
RESTATED CHARTER OF CHATTEM, INC.
Pursuant to the provisions of TENNESSEE CODE ANNOTATED, Section
48-20-107 Chattem, Inc., a Tennessee corporation hereby adopts the
following Restated Charter:
1. The name of the corporation is Chattem, Inc.
2. The maximum number of shares which the corporation is authorized
to issue is Ten Million (10,000,000), consisting of nine million (9,000,000)
common shares without par value and one million (1,000,000) preferred shares,
which preferred shares shall be issuable in one or more series.
3. The Corporation's registered office is 1715 West 38th Street,
Chattanooga, Hamilton County, Tennessee 37409. The name of its registered agent
at that address is Charles N. Jolly.
4. The address of the principal office of the corporation in the
State of Tennessee shall be 1715 West 38th Street, Chattanooga, Hamilton County,
Tennessee 37409.
5. The preferences, limitations, relative rights, and designations
of its shares are as follows:
(a) Except as otherwise provided by law or by action of the
Board of Directors in granting voting rights to any series of preferred shares,
the entire voting power for the election of directors and for all other purposes
shall be vested exclusively in the common shares. Each common share shall have
one vote upon all matters.
(b) The dividends specified on all outstanding preferred shares
(including any cumulative unpaid dividends, if dividends are cumulative), shall
be declared and paid, or set apart for payment, before any dividends on the
outstanding common shares shall be declared and paid or set apart for payment.
(c) No holder of any class of shares of this corporation shall
be entitled as of right to subscribe for, purchase, or receive any part of any
new or additional issue of shares of any class, whether now or hereafter
authorized, or of any bonds, debentures, or other securities convertible into
shares
<PAGE>
Page 2
of any class, and all such shares, bonds, debentures or other securities
convertible into shares may be issued and disposed of by the corporation to such
person or persons and on such terms and for such consideration as the Board of
Directors, in its absolute discretion, may deem advisable.
(d) The Board of Directors shall have the authority to divide
the preferred shares into series and to fix and determine with respect to such
preferred shares:
(i) the rate of dividend;
(ii) whether shares may be called or redeemed, and, if so,
the call or redemption price and the terms and conditions of call;
(iii) the amount payable upon shares in the event of
voluntary and involuntary liquidation;
(iv) sinking fund provisions, if any, for the call or
redemption of shares;
(v) the terms and conditions, if any, on which shares may
be converted;
(vi) voting rights;
(vii) whether the shares shall be cumulative, non-
cumulative, or partially cumulative as to dividends and the dates from which any
cumulative dividends are to accumulate.
(viii) any other designations pertaining to such shares not
forbidden by law.
6. A series of preferred shares of the corporation is hereby given
the distinctive designation of "Series A Convertible Preferred Stock," said
series to consist of one hundred thirty-nine thousand two hundred eighty-six
(139,286) shares without par value, of which the preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof shall be as follows:
(a) CASH DIVIDENDS. The holders of Series A Convertible
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors of the funds of the
<PAGE>
Page 3
corporation legally available therefor cash dividends at the annual rate of four
hundred percent (400%) of the dividend paid upon common shares for the same
period, before any dividend shall be paid to the holders of any common shares.
Cash dividends shall be paid beginning with the first dividend payment date
following date of issuance of such shares.
(b) REDEMPTION. Series A Convertible Preferred Stock shall not
be redeemable.
(c) VOTING RIGHTS. At every meeting of shareholders of the
corporation, every holder of Series A Convertible Preferred Stock shall be
entitled to one (1) vote for each share standing in his name on the books of the
corporation, with the same and identical voting rights, except as expressly
provided herein, as a holder of a common share.
(d) PRIORITY ON DISSOLUTION. In the event of any liquidation,
dissolution or winding up of the affairs of the corporation, whether voluntary
or otherwise, after payment or provision for payment of the debts and other
liabilities of the corporation, the holders of Series A Convertible Preferred
Stock shall be entitled to receive, out of the remaining net assets of the
corporation, for each share of Series A Convertible Preferred Stock four hundred
percent (400%) of the amount to be paid to the holder of each common share.
Such payment to such preferred shareholders shall not be preferred over payments
to common shareholders.
(e) CONVERSION INTO COMMON SHARES.
(i) Subject to the provisions herein, the holder of
record of any share or shares of Series A Convertible preferred Stock shall have
the right, at his option, to convert each said share of Series A Convertible
Preferred Stock into four (4) fully paid and non-assessable common shares of the
corporation.
(ii) Any holder of shares of Series A Convertible
Preferred Stock desiring to convert such into common shares shall surrender the
certificate or certificates representing the shares of Series A Preferred Stock
so to be
<PAGE>
Page 4
converted, duly endorsed to the corporation or in blank, at the principal office
of the corporation (or such other place as may be designated by the
corporation), and shall give written notice to the corporation at said office
that he elects to convert the same, and setting forth the name or names (with
the address or addresses) in which the common shares are to be issued.
(iii) Conversion shall be subject to the following
provisions:
(A) As soon as practicable after surrender for
conversion of any Series A Convertible Preferred Stock, the corporation shall
deliver or cause to be delivered at the principal office of the corporation (or
such other place as may be designated by the corporation), to the written order
of the holder of such Series A Convertible Preferred Stock, certificates
representing the common shares issuable upon such conversion, issued in such
name or names as such holder may direct. Conversion shall be deemed to have
taken place as of the close of business on the day of the surrender of the
Series A Convertible Preferred Stock, as provided above, and the rights of the
holder shall cease at such time, and the person or persons in whose name the
common shares are to be issued shall be treated for all purposes as having
become the record holder of such common shares at such time; provided, however,
that any such surrender on any date when the stock transfer books of the
corporation shall be closed shall constitute the persons or persons in whose
name or names the certificate for such shares is to be issued as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
(B) The corporation shall not be required to
issue any fractions of common shares upon the conversion of Series A Convertible
Preferred Stock. If any fractional common shares would otherwise be deliverable
upon the conversion of any Series A Convertible Preferred Stock, the corporation
shall make adjustment for such fractional share interest by payment of an amount
in cash equal to the same
<PAGE>
Page 5
fraction of the market value of a full common share of the corporation on the
close of the trading day immediately preceding the date upon which such shares
are surrendered for conversion.
(C) In the event the corporation shall at any
time subdivide or combine in a greater or lesser number of shares of the
outstanding common shares, the number of common shares issuable upon conversion
of Series A Convertible Preferred Stock shall be proportionately increased in a
case of a subdivision or decreased in a case of combination, effective in either
case at the close of business on the date when such subdivision or combination
shall become effective.
(D) In the event the corporation shall at any
time pay to the holders of common shares a dividend in common shares, the number
of common shares issuable upon conversion of the Series A Convertible Preferred
Stock shall be proportionately increased, effective at the close of business on
the record date for determination of the holders of common shares entitled to
such dividend.
(E) No adjustment of the conversion ratio of the
Series A Convertible Preferred Stock shall be made by reason of any event except
those enumerated above in (C) and (D).
(f) LIMITATIONS. So long as any shares of Series A
Convertible Preferred Stock are outstanding the corporation shall not,
without the affirmative vote or written consent as provided by law, of the
holders of at least two-thirds (2/3) of the outstanding shares of Series A
Convertible Preferred Stock, voting as a class, change the preferences,
rights or limitations with respect to Series A Convertible Preferred Stock,
in any material respect prejudicial to the owners thereof, but nothing herein
contained shall require such a class vote or consent (i) in connection with
any increase in the total number of authorized common shares or Series A
Convertible Preferred Stock, or (ii) in connection with authorization,
designation, increase, decrease or issuance of any preferred shares or any
class or series of shares ranking on a parity with a Series A Convertible
Preferred Stock, or (iii) in connection with any redemption or
<PAGE>
Page 6
conversion of any series or class of shares, or (iv) in connection with the
issuance of any presently authorized but unissued preferred shares and provided
that the provisions of this paragraph shall not in any way limit the right and
power of the corporation to issue any bonds, notes, mortgages, debentures and
other obligations, and to incur indebtedness to banks and to other lenders.
(g) PRE-EMPTIVE RIGHTS. Series A Convertible Preferred
Stock shall have no pre-emptive rights.
7. The corporation is for profit.
8. The purpose of purposes for which the corporation is
organized are: to buy, sell, produce, manufacture, distribute and dispose of
all kinds of goods, wares, merchandise, manufactures, commodities, furniture,
machinery, tools, supplies and products, and generally to engage in and conduct
any form of manufacturing, mercantile or commercial enterprise not contrary to
law; to lease, buy, sell, use, mortgage, improve and otherwise handle, deal in,
and dispose of all property, real, personal and mixed, as may be necessary or
convenient in connection with the business of the corporation; and without
limitation upon the foregoing, to manufacture, buy, sell, lease and generally
deal in medicines, drugs, chemicals, chemical specialties, cosmetics, food
products, surgical, pharmaceutical, physician's and hospital supplies and
equipment, scientific apparatus and all other items of every kind and
description, and any and all articles and things connected therewith or part
thereof. The corporation is further authorized and empowered to engage in any
other activity or carry on any other trade or business which a corporation may
legally conduct under the laws of the State of Tennessee.
9. The duration of the corporation is perpetual.
10.A. (1) Subject to the provisions of any series of
preferred shares which may at the time be outstanding and in addition to any
affirmative vote required by law or this Restated Charter, and except as
otherwise expressly provided in subparagraph B of this Paragraph 10:
<PAGE>
Page 7
(a) any merger or consolidation of the corporation or any Subsidiary
(as defined below) with (i) any Interested Shareholder (as defined below) or
(ii) any other corporation (whether or not itself in Interested shareholder)
which is or after such merger or consolidation would be an Affiliate (as
defined below) of any Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Shareholder or any Affiliate of any Interested Shareholder of any
assets of the corporation or of any Subsidiary having an aggregate Fair
Market Value (as defined below) of $5,000,000 or more; or
(c)the issuance or transfer by the corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
corporation or any Subsidiary to any Interested Shareholder or any Affiliate of
any Interested Shareholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value of $5,000,000
or more; or
(d) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of any Interested
shareholder or any Affiliate of any Interested Shareholder; or
(e) any reclassification of securities (including any reverse stock
split) or recapitalization of the corporation or any merger or consolidation
of the corporation with any of its Subsidiaries of any other transaction
(whether or not with or into or otherwise involving an Interested
Shareholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the corporation or any Subsidiary which is directly
or indirectly owned by any Interested Shareholder or any Affiliate of any
Interested Shareholder; shall require the affirmative vote of the holders of
at least 80% of the then outstanding Voting Shares (as defined below) of the
corporation, including the affirmative vote of the holders of at
<PAGE>
Page 8
least 80% of the then outstanding Voting Shares of the corporation other than
those beneficially owned by such Interested Shareholder. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any agreement with
any national securities exchange or otherwise.
(2) The term "Business Combination" as used in this Paragraph 10
shall mean any transaction which is referred to in any one or more of clauses
(a) through (e) of subparagraph (1) of this subparagraph A.
B. The provision of subparagraph A of this Paragraph 10 shall not be
applicable to any particular Business Combination and such Business
Combination shall require only such affirmative vote as is required by law
and any other provision of this Restated Charter, if all the conditions
specified in either of the following subparagraph (1) or (2) are met.
(1) The Business Combination shall have been approved by a majority of
the Continuing Directors (as defined below); provided that such approval
shall only be effective if obtained at a meeting at which a Continuing
Director Quorum (as defined below) is present; or
(2) All of the following conditions shall have been met:
(a) The aggregate amount of (x) cash and (y) Fair Market Value as of
the date of the consummation of the Business Combination of other
consideration to be received per share by holders of common shares in such
Business Combination shall be at least equal to the highest amount determined
under subclauses (i), (ii) and (iii) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any common share of the corporation acquired
by it (A) within the two year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
<PAGE>
Page 9
"Announcement Date") or (B) in the transaction in which it became an Interested
Shareholder, whichever is higher;
(ii) The Fair Market Value per common share on the Announcement
Date or on the date on which the Interested Shareholder became an Interested
Shareholder (such later date is referred to in this Paragraph 10 as the
"Determination Date"), whichever is higher; and
(iii) (if applicable) the price per share equal to the Fair Market
Value per common share determined pursuant to subparagraph (2)(a)(ii) above,
multiplied by the ratio of (A) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any common share of the corporation acquired
by it within the two year period immediately prior to the Announcement Date
to (B) the Fair Market Value per common share of the corporation on the first
day in such two year period on which the Interested Shareholder acquired any
common share.
(b) the aggregate amount of (x) cash and (y) Fair Market Value as of
the date of the consummation of the Business Combination of other
consideration to be received per share by holders of shares of any class of
outstanding preferred shares of the corporation shall be at least equal to
the highest amount determined under subclauses (i), (ii), (iii) and (iv)
below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any shares of such class of preferred shares
acquired by it (A) within the two year period immediately prior to the
Announcement Date or (B) in the transaction in which it became an Interested
Shareholders, whichever is higher;
(ii) the highest preferential amount per share to which the holders
of shares of such class of preferred shares would be entitled in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
<PAGE>
[Letterhead]
92 JUN-3 PM 1:31 May 27, 1992
BRYANT MILLSAPS
SECRETARY OF STATE
APR '6 1996
Secretary of State
State of Tennessee
18th Floor, James K. Polk Building
Nashville, TN 37219
Articles of Amendment to
Restated Charter of Chattem, Inc.
---------------------------------
The following amendment to the corporate Charter of Chattem, Inc. was
duly adopted by its Board of Directors on January 29, 1992, and by its
shareholders at the annual meeting of shareholders on April 8, 1992, as
hereby filed pursuant to The Tennessee Business Corporation Act:
RESOLVED, that Article 2 of the Restated Charter of Chattem, Inc.
is hereby amended to read as follows:
"2. The maximum number of shares which the corporation
is authorized to issues is twenty-one million
(21,000,000) consisting of twenty million (20,000,000)
common shares without par value and one million
(1,000,000) preferred shares, which preferred shares
shall be issuable in one or more series."
5/28/92 /s/ Charles N. Jolly
- -------------------- -------------------------------
DATE CHARLES N. JOLLY
Secretary
Chattem, Inc. 1715 West 38th Street Chattanooga, TN 37409 (615) 821-4571
1-800-366-6833 FAX: 1-615-821-0395 Telex: 55-8463
<PAGE>
AMENDED, 3/1/95
AMENDED AND RESTATED BY-LAWS
ARTICLE I - SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of shareholders shall be
held on such date, at such time and place as may be designated by the board of
directors.
Section 2. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or entitled to vote at any meeting of
shareholders, or shareholders entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
record date shall be fifteen days prior to the date on which the action
requiring such determination of sharehodlers is to be taken. The board of
directors may fix in advance another record date, not more than 70 days nor less
than 10 days prior to the date on which the action is to taken.
Section 3. Proxies. All proxies shall be filed with the secretary of the
corporation before or at the time of the meeting.
ARTICLE II - DIRECTORS
(Effective 3/1/95)
Section 1. Number and Compensation. There shall be from 7 to 12 directors
of the corporation. Compensation of directors shall be determined by the board.
Section 2. Regular Meetings. Regular meetings of the board, without
notice, shall be held immediately after the annual meeting of shareholders and
on the fourth Wednesday of January, April, and July, at the corporation
headquarters in Chattanooga, or at such other date and place as may be
determined by the board.
Section 3. Special Meetings. Special meetings of the board may be called
by the chairman of the board, the president or any three directors.
Section 4. Notice. Notice of any special meeting shall be given at least
one (1) day prior thereto by oral, telegraphic, electronic or written notice
given or delivered personally to each director or at least three (3) days prior
thereto if such notice is given by regular, registered or certified mail. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the director at his home or business address.
<PAGE>
AMENDED, 3/1/95
Section 5. Indemnification. Any person made or threatened to be made a
party to a suit or proceeding by reason of the fact that he or his intestate
was, is, or shall be a director or officer or Audit Committee member of the
corporation or at the request of the corporation a director or officer or Audit
Committee member of another corporation controlled by the corporation, shall be
indemnified by this corporation to the maximum extent and upon the conditions
provided by the laws of the State of Tennessee, including Tennessee Code
Annotated, Sections 48-1-407 through 48-1-411.
Section 6. Action Without Meeting. The board may take any action which it
is required or permitted to take by law without a meeting upon written consent
setting forth the action so taken and signed by all of the directors entitled to
vote thereon.
Section 7. Committees. The majority of the entire board, by resolution,
may designate committees and delegate to them such authority of the board as it
deems desirable within the limits prescribed by Tennessee law.
Section 8. Advisory Directors. The board may appoint advisory directors
who shall act only in the capacity of providing general policy advice to the
board. In any action where a recorded vote of the directors is taken, the vote
of elected directors shall determine the outcome.
ARTICLE III - OFFICERS
Section 1. Election. The board shall elect all officers for terms of one
year. Assistant officers, if any, shall not be considered officers for the
purposes of this section, and shall be appointed and subject to removal by the
president.
Section 2. Vacancies. A vacancy in any office subject to board election
may be filled by the board.
Section 3. Chairman of the Board. The chairman of the board shall be the
chief executive officer. He shall preside at any meetings of the board and of
the shareholders.
Section 4. President. The President shall have management and control of
the affairs of the corporation in accordance with policies promulgated by the
board.
- 2 -
<PAGE>
AMENDED, 3/1/95
Section 5. The Vice Presidents. In the event of the absence, death, or
inability to act of the president, the executive vice president shall perform
the duties and be vested with the powers of the president. The vice presidents
shall perform such duties as from time to time may be assigned to them by the
president or by the board of directors.
Section 6. The Secretary. The secretary shall: (a) see that all notices
are duly given in accordance with the provisions of these by-laws and as
required by law; (b) take minutes of meetings of the directors and shareholders;
(c) perform such other duties as may be assigned to him by the president or by
the board.
Section 7. Assistant Secretaries. The assistance secretaries shall
perform such duties as may be assigned to them by the secretary.
Section 8. Salaries. Salaries of officers shall be determined by the
board and may be changed by the board at any time.
ARTICLE IV - SHARES
Section 1. Signatures. All certificates for shares shall be signed by the
president or executive vice president or such vice president as may be
designated by the board and the secretary or an assistant secretary.
Section 2. Transfer. Transfer of shares shall be made only on the share
transfer books of the corporation.
Section 3. Voting upon Shares of Other Corporations Held by the
Corporation. The president shall have authority to vote in person or by proxy
on behalf of the corporation at any meeting of shareholders of any corporation
in which the corporation may hold shares. The board may confer like powers upon
any other officer.
ARTICLE V - FISCAL YEAR
The fiscal year of the corporation shall begin on December 1 and end on
November 30.
- 3 -
<PAGE>
AMENDED, 3/1/95
ARTICLE VI - SEAL
The corporate seal shall be circular, and the inscription thereof shall
include the corporate name and state of incorporation.
ARTICLE VII - AMENDMENT
The by-laws may be amended by the vote of a majority of the board.
- 4 -
<PAGE>
AMENDED, 1/26/94
AMENDED AND RESTATED BY-LAWS
ARTICLE I - SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of shareholders shall be
held on such date, at such time and place as may be designated by the board
of directors.
Section 2. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or entitled to vote at any meeting of
shareholders, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper
purpose, the record date shall be fifteen days prior to the date on which the
action requiring such determination of shareholders is to be taken. The board
of directors may fix in advance another record date, not more than 70 days nor
less than 10 days prior to the date on which the action is to taken.
Section 3. Proxies. All proxies shall be filed with the secretary of
the corporation before or at the time of the meeting.
ARTICLE II - DIRECTORS
(Effective 1/26/94)
Section 1. Number and Compensation. There shall be 10 directors of
the corporation. Compensation of directors shall be determined by the board.
Section 2. Regular Meetings. Regular meetings of the board, without
notice, shall be held immediately after the annual meeting of shareholders
and on the fourth Wednesday of January, April, and July, at the corporation
headquarters in Chattanooga, or at such other date and place as may be
determined by the board.
Section 3. Special Meetings. Special meetings of the board may be
called by the chairman of the board, the president or any three directors.
Section 4. Notice. Notice of any special meeting shall be given at
least one (1) day prior thereto by oral, telegraphic, electronic or written
notice given or delivered personally to each director or at least three (3)
days prior thereto if such notice is given by regular, registered or
certified mail. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the director at his home or
business address.
<PAGE>
AMENDED, 1/26/94
Section 5. Indemnification. Any person made or threatened to be made a
party to a suit or proceeding by reason of the fact that he or his intestate
was, is, or shall be a director or officer or Audit Committee member of the
corporation or at the request of the corporation a director or officer or
Audit Committee member of another corporation controlled by the corporation,
shall be indemnified by this corporation to the maximum extent and upon the
conditions provided by the laws of the State of Tennessee, including
Tennessee Code Annotated, Sections 48-1-407 through 48-1-411.
Section 6. Action Without Meeting. The board may take any action which
it is required or permitted to take by law without a meeting upon written
consent setting forth the action so taken and signed by all of the directors
entitled to vote thereon.
Section 7. Committees. The majority of the entire board, by
resolution, may designate committees and delegate to them such authority of
the board as it deems desirable within the limits prescribed by Tennessee law.
Section 8. Advisory Directors. The board may appoint advisory
directors who shall act only in the capacity of providing general policy
advice to the board. In any action where a recorded vote of the directors is
taken, the vote of elected directors shall determine the outcome.
ARTICLE III - OFFICERS
Section 1. Election. The board shall elect all officers for terms of
one year. Assistant officers, if any, shall not be considered officers for
the purposes of this section, and shall be appointed and subject to removal
by the president.
Section 2. Vacancies. A vacancy in any office subject to board
election may be filled by the board.
Section 3. Chairman of the Board. The chairman of the board shall be
the chief executive officer. He shall preside at any meetings of the board
and of the shareholders.
Section 4. President. The President shall have management and control
of the affairs of the corporation in accordance with policies promulgated by
the board.
-2-
<PAGE>
AMENDED, 1/26/94
Section 5. The Vice Presidents. In the event of the absence, death, or
inability to act of the president, the executive vice president shall perform
the duties and be vested with the powers of the president. The vice
presidents shall perform such duties as from time to time may be assigned to
them by the president or by the board of directors.
Section 6. The Secretary. The secretary shall: (a) see that all
notices are duly given in accordance with the provisions of these by-laws and
as required by law; (b) take minutes of meetings of the directors and
shareholders; (c) perform such other duties as may be assigned to him by the
president or by the board.
Section 7. Assistant Secretaries. The assistance secretaries shall
perform such duties as may be assigned to them by the secretary.
Section 8. Salaries. Salaries of officers shall be determined by the
board and may be changed by the board at any time.
ARTICLE IV - SHARES
Section 1. Signatures. All certificates for shares shall be signed by
the president or executive vice president or such vice president as may be
designated by the board and the secretary or an assistant secretary.
Section 2. Transfer. Transfer of shares shall be made only on the
share transfer books of the corporation.
Section 3. Voting upon Shares of Other Corporations Held by the
Corporation. The president shall have authority to vote in person or by proxy
on behalf of the corporation at any meeting of shareholders of any
corporation in which the corporation may hold shares. The board may confer
like powers upon any other officer.
ARTICLE V - FISCAL YEAR
The fiscal year of the corporation shall begin on December 1 and end on
November 30.
-3-
<PAGE>
AMENDED, 1/26/94
ARTICLE VI - SEAL
The corporate seal shall be circular, and the inscription thereof shall
include the corporate name and state of incorporation.
ARTICLE VII - AMENDMENT
The by-laws may be amended by the vote of a majority of the board.
-4-
<PAGE>
MARCH 27, 1996
APPROVAL OF FINANCING
RESOLVED, that the credit facility of up to $60 million providing for a
revolving credit loan not to exceed $24 million and term loans in the amount
of $36 million contemplated by the Commitment Letter dated March 13, 1996 by
and between the Company and NationsBank, N.A. ("NATIONSBANK") be, and the
same hereby is, authorized and approved; and further
RESOLVED, that the Company shall be, and hereby is, authorized and approved
to enter into a secured senior Credit Agreement ("CREDIT AGREEMENT") with
Nationsbank and various other lenders, and that each of the terms and
provisions contained therein and in each of the notes, the security
agreements, pledge agreements, the deeds of trusts and any other agreements
entered into in connection with the credit facility (as contemplated in the
Credit Agreement, and collectively with the Credit Agreement referred to as,
the "FINANCING DOCUMENTS") be, and the same hereby are, authorized and
approved in each and every respect, that each and every transaction effected
or to be effected pursuant to the terms and provisions of the Financing
Documents are hereby authorized and approved in each and every respect and
that this Company enter into the Financing Documents and consummate the
transactions contemplated thereby; and further
RESOLVED, that the President, and any Vice President, the Treasurer or the
Secretary or any other officer of this Company each be, and they hereby are
authorized to: (a) execute and deliver, in the name and on behalf of this
Company, the Financing Documents substantially in the form discussed by the
Board of
<PAGE>
Directors, with such changes thereto as may be approved by the officer
executing and delivering the same on behalf of this Company; (b) grant
security interest in, assign, transfer, mortgage, convey, hypothecate and/or
deliver, as security for money borrowed or credit obtained, stocks, bonds,
instruments, accounts, mortgages, merchandise, documents, insurance policies,
certificates and any other held or belonging to, with full authority to
endorse, assign or guarantee any of the same in the name of, this Company and
(c) execute and deliver all security, pledge and other agreements, financing
statements, financing statements and other papers required by NationsBank in
connection with any of the foregoing matters. The execution of any document
or instrument by any of the aforesaid officers of this Company pursuant to
these resolutions shall be conclusive evidence that the same have been
authorized and approved in each and every respect; and further
RESOLVED, that in connection with the loans to be extended by NationsBank and
various other lenders to this Company in an aggregate principal amount up to
but not exceeding $60 million at any one time outstanding, the President, any
Vice President, and Treasurer, the Secretary, the Assistant Secretary or any
other officer of this Company, each be, and he hereby is, authorized from
time to time to borrow such amounts as such officer shall determine to be in
the best interest of the Company; and further
RESOLVED, that the President, and any Vice President, the treasurer, the
Secretary or any other officer of this Company, each be, and he or she hereby
is, authorized to do and perform all such further acts and things and to
execute and deliver all such further documents
<PAGE>
and instruments and to take all such further steps as any one of them may
deem to be necessary, advisable, convenient or proper to carry out the intent
of these resolutions and to perform fully the provisions of the Financing
Documents; and further
RESOLVED, that the Secretary, Assistant Secretary or any other officer of this
Company be, and he or she hereby is, authorized to certify to the names of
the current officers of this Company and other persons authorized to sign for
it (including, without limitation, persons to whom such officers or
authorized persons have delegated their authority) and the officers
respectively held by them, if any, together with specimens of their
signatures, and in case of any change of any holder or holders of any such
office or offices or of any such authorized person or persons, the fact of
such change and the names of any new officer or officers respectively held by
them, if any, together with specimens of their signatures; and NationsBank
shall be, authorized to honor any notices, checks, notes, drafts, bills of
exchange, acceptances, undertakings authorizations, letters, instruments,
orders, instructions, agreements or other documents signed by any officer,
officers, authorized person or new authorized person, in respect of whom it
has received any such certificate or certificates; and further
RESOLVED, that the authority given hereunder shall be deemed retroactive and
any and all acts hereunder performed prior to the passage of these
resolutions are hereby ratified and approved.
<PAGE>
APRIL 24, 1996
BOARD RESOLUTIONS
WHEREAS, the Board of Directors at its special meetings held March 27, 1996
approved the Company entering into a credit facility of up to $60 million
with NationsBank, N.A., as agent and various other lenders ("NATIONSBANK");
and
WHEREAS, since the March 27, 1996 meeting of the Board of Directors the terms
of the proposed financing with NationsBank and various other lenders have
been modified in certain respects and it is the intention of the Board of
Directors that the previously adopted resolutions shall fully authorize the
proposed financing with NationsBank, as modified.
NOW, THEREFORE, BE IT RESOLVED, that the credit facilities in the aggregate
amount of $61.5 million, consisting of a Credit Agreement of up to $55
million and a Working Capital Credit Agreement of up to $6.5 million with
NationsBank, as agent for a group of lenders, be, and the same hereby is,
authorized and approved; and it is
RESOLVED, that all the actions authorized, adopted or approved with regard to
the Credit Agreement and Financing Documents (as defined in the March 27,
1996 resolutions of the Board of Directors) shall continue to be authorized,
adopted and approved and shall include authorization and approval to make any
and all modifications necessary to carry out the financing necessary to carry
out the financing with NationsBank and the other lenders after March 27, 1996.
<PAGE>
ISSUANCE DATE: 04/16/1996
REQUEST NUMBER: 96107018
SECRETARY OF STATE TELEPHONE CONTACT: (615) 741-6488
CORPORATIONS SECTION
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 11/11/1909
NASHVILLE, TENNESSEE 37243-0306 STATUS: ACTIVE
CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0005742
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
MILLER & MARTIN MILLER & MARTIN
424 CHURCH STREET 424 CHURCH STREET
SUITE 1225 SUITE 1225
NASHVILLE, TN 37219 NASHVILLE, TN 37219
CERTIFICATE OF EXISTENCE
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
- --------------------------------------------------------------------------------
"CHATTEM, INC."
- --------------------------------------------------------------------------------
IS A CORPORATION DULY INCORPORATED UNDER THE LAW OF THIS STATE WITH DATE OF
INCORPORATION AND DURATION AS GIVEN ABOVE;
THAT ALL FEES, TAXES, AND PENALTIES OWED TO THIS STATE WHICH AFFECT THE
EXISTENCE OF THE CORPORATION HAVE BEEN PAID;
THAT THE MOST RECENT CORPORATION ANNUAL REPORT REQUIRED HAS BEEN FILED WITH
THIS OFFICE; AND
THAT ARTICLES OF DISSOLUTION HAVE NOT BEEN FILED; AND
THAT ARTICLES OF TERMINATION OF CORPORATE EXISTENCE HAVE NOT BEEN FILED
I FURTHER CERTIFY THAT THE FOLLOWING DOCUMENT(S) IS/ARE ON FILE WITH THIS
OFFICE:
REFERENCE NUMBER DATE-FILED FILING TYPE FIELD CHANGED
BJ10P0089 11/11/09 CHART-PROFIT
BP12P0354 12/29/16 AMEND-CHARTER
BP17P0070 11/01/22 AMEND-CHARTER
M-P-P0195 11/07/36 AMEND-CHARTER
BP26P0178 04/08/44 AMEND-CHARTER STOCK
BP41P0277 11/09/55 AMEND-CHARTER
BP48P3110 07/27/62 MERGER STOCK
BP51P2805 09/28/66 AMEND-CHARTER NAME
BP51P5738 09/29/67 AMEND-CHARTER STOCK
BP52P6799 04/29/69 AMEND-CHARTER STOCK
BP53P4230 08/19/70 AMEND-CHARTER STOCK
038 01128 10/02/78 RESTATED CHART NAME
044 00783 11/28/78 OFFICE CHANGE REGISTERED OFFICE
102 01014 10/03/79 AMEND-CHARTER STOCK
KEY ERROR 08/16/83 AMEND-CHARTER PRINCIPAL ADDRESS
471 02031 04/16/84 AMEND-CHARTER
498 03414 10/18/84 AMEND-CHARTER STOCK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR: REQUEST FOR CERTIFICATE ON DATE: 04/16/96
FEES
RECEIVED: $20.00 $20.00
FROM:
MILLER & MARTIN (VOLUNTEER BLDG/S-1000) TOTAL PAYMENT RECEIVED: $40.00
VOLUNTEER BLDG.
SUITE 1000 RECEIPT NUMBER: 00001953182
CHATTANOOGA, TN 37402-0000 ACCOUNT NUMBER: 00000307
[SEAL] /s/ Riley C. Darnell
-----------------------
RILEY C. DARNELL
SECRETARY OF STATE
<PAGE>
ISSUANCE DATE: 04/16/1996 PAGE 2
REQUEST NUMBER: 96107018
SECRETARY OF STATE TELEPHONE CONTACT: (615) 741-6488
CORPORATIONS SECTION
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 11/11/1909
NASHVILLE, TENNESSEE 37243-0306 STATUS: ACTIVE
CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0005742
JURISDICTION: TENNESSEE
"CHATTEM, INC."
REFERENCE NUMBER DATE-FILED FILING TYPE FIELD CHANGED
682 02099 04/23/87 AN RPT
730 02237 12/15/87 AN RPT
733 02925 12/23/87 AMEND-CHARTER
765-0291 02/22/88 RESTATED CHART STOCK
1056-2764 03/01/89 AN RPT
1581-0009 03/01/90 AN RPT
FYC/REVENUE 06/16/90 MAIL ADDR / FYC FISCAL YR CLOSING MONTH
FYC/REVENUE 10/02/90 MAIL ADDR / FYC FISCAL YR CLOSING MONTH
2016-0317 03/01/91 AN RPT
2325-0176 03/01/92 AN RPT
2474-1398 06/03/92 AMEND-CHARTER STOCK
2590-1265 03/01/93 AN RPT
2789-1858 02/01/94 AGENT/OFFICE REGISTERED OFFICE
2762-1967 03/01/94 AN RPT
2922-0425 03/01/95 AN RPT
3079-1379 03/01/96 AN RPT
[SEAL] /s/ Riley C. Darnell
-----------------------
RILEY C. DARNELL
SECRETARY OF STATE
<PAGE>
ISSUANCE DATE: 04/16/1996
REQUEST NUMBER: 96107017
SECRETARY OF STATE
CORPORATIONS SECTION
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 11/11/1909
NASHVILLE, TENNESSEE 37243-0306 STATUS: ACTIVE
CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0005742
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
MILLER & MARTIN MILLER & MARTIN
424 CHURCH STREET 424 CHURCH STREET
SUITE 1225 SUITE 1225
NASHVILLE, TN 37219 NASHVILLE, TN 37219
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
- --------------------------------------------------------------------------------
"CHATTEM, INC."
- --------------------------------------------------------------------------------
WAS INCORPORATED OR QUALIFIED TO DO BUSINESS IN THE STATE OF TENNESSEE ON
THE ABOVE DATE, AND THAT THE ATTACHED DOCUMENT(S) WAS/WERE FILED IN OFFICE ON
THE DATE(S) AS BELOW INDICATED:
REFERENCE DATE FILED FILING TYPE FILING ACTION
NUMBER NAM DUR STK PRN OFC AGT INC MAL FYC
765-0291 02/22/1988 RESTATED CHART X
2474-1398 06/03/1992 AMEND-CHARTER X
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR: REQUEST FOR COPIES ON DATE: 04/16/96
FEES
RECEIVED: $20.00 $20.00
FROM:
MILLER & MARTIN (VOLUNTEER BLDG/S-1000) TOTAL PAYMENT RECEIVED: $40.00
VOLUNTEER BLDG.
SUITE 1000 RECEIPT NUMBER: 00001953182
CHATTANOOGA, TN 37402-0000 ACCOUNT NUMBER: 00000307
[SEAL] /s/ Riley C. Darnell
-----------------------
RILEY C. DARNELL
SECRETARY OF STATE
<PAGE>
SIGNAL INVESTMENT & MANAGEMENT CO.
SECRETARY'S CERTIFICATE
I, Hugh F. Sharber, being the duly elected and acting Secretary of
Signal Investment & Management Co., a Delaware corporation (the "Company"),
do hereby certify that:
(1) Attached hereto as EXHIBIT A is a true, correct and complete
copy of the Certificate of Incorporation of the Company as in
full force and effect on the date hereof.
(2) Attached hereto as EXHIBIT B is a true, correct and complete
copy of the By-Laws of the Company, together with all
amendments thereto, which were duly adopted and are in full
force and effect on the date hereof.
(3) Attached hereto as EXHIBIT C is a true, correct and complete
copy of resolutions that were duly adopted by unanimous
consent of the Board of Directors of the Company, and said
resolutions have not been amended, modified or rescinded, and
are in full force and effect as of the date hereof.
(4) Each of the following named individuals is, as of the date
hereof, a duly elected and qualified officer of the Company
and holds the office set forth below opposite such
individual's name. The signature written below opposite the
name and title of each such officer is such officer's actual
signature:
NAME OFFICE SIGNATURE
Robert E. Bosworth President /s/ Robert E. Bosworth
-----------------------
Joey B. Hogan Vice President /s/ Joey B. Hogan
-----------------------
Stephen M. Powell Treasurer /s/ Stephen M. Powell
-----------------------
Hugh F. Sharber Secretary /s/ Hugh F. Sharber
-----------------------
A. Alexander Taylor, II Assistant Secretary /s/ A. Alexander Taylor
-----------------------
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate
on the ___ day of April, 1996.
/s/ Hugh F. Sharber
--------------------------
Hugh F. Sharber, Secretary
I, the duly elected President of the Company, do hereby certify on behalf of
the Company that Hugh F. Sharber is the duly elected and qualified Secretary
of the Company and that the signature set forth above his name is his
signature.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
April, 1996.
/s/ Robert E. Bosworth
------------------------------
Robert, E. Bosworth, President
2
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "SIGNAL INVESTMENT & MANAGEMENT CO.", FILED IN THIS OFFICE
ON THE TWENTY-SEVENTH DAY OF JUNE, A.D. 1986, AT 11 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7909299
DATE: 04-16-96
<PAGE>
CERTIFICATE OF INCORPORATION
OF
Signal Investment & Management Co
1. The name of the corporation is:
Signal Investment & Management Co.
2. The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is five hundred (500); all of such shares shall be
without par value.
5. The board of directors is authorized to make, alter or repeal
the by-laws of the corporation. Election of directors need not be by written
ballot.
6. The name and mailing address of the incorporator is:
L. M. Custis
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law
of Delaware, do make this certificate, hereby declaring and certifying that
this is my act and deed and the facts herein stated are true, and accordingly
have hereunto set my hand this 27th day of June, 1986.
/s/ L. M. Custis
-----------------------------
L. M. Custis
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
CHANGE OF REGISTERED AGENT OF "SIGNAL INVESTMENT & MANAGEMENT CO.", FILED IN
THIS OFFICE ON THE TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1991, AT 9 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7909300
DATE: 04-16-96
<PAGE>
CERTIFICATE OF CHANGE OF LOCATION OF
REGISTERED OFFICE AND/OR REGISTERED AGENT
OF
SIGNAL INVESTMENT & MANAGEMENT CO.
The Board of Directors of the SIGNAL INVESTMENT & MANAGEMENT CO., a
Corporation of Delaware, on this 13th day of August, A.D. 1991, do hereby
resolve and order that the location of the Registered Office of this
Corporation within this State be, and the same hereby is 1105 N. Market St.,
Suite 1300 Street, in the City of Wilmington, County of New Castle, Zip Code
19801.
The name of the Registered Agent therein and in charge thereof upon whom
process against this Corporation may be served, is Delaware Corporate
Management, Inc..
The SIGNAL INVESTMENT & MANAGEMENT CO., a Corporation of Delaware, does
hereby certify that the foregoing is a true copy of a resolution adopted by
the Board of Directors at a meeting held as herein stated.
IN WITNESS WHEREOF, said Corporation has caused this certificate to be signed
by its President and Attested by its Secretary, the 13th day of August, A.D.,
1991.
BY: /s/ Robert E. Bosworth
-----------------------------
President
ROBERT E. BOSWORTH
ATTEST: /s/ Charles N. Jolly
----------------------------
Secretary
CHARLES N. JOLLY
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
SIGNAL INVESTMENT & MANAGEMENT CO.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by
the Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the corporation. Any and all
the signatures on any such certificate may be a facsimile. In case any
officer, transfer agent, or registry who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever
the corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance
of any such new certificate or uncertificated shares.
<PAGE>
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes
or series of the stock of the corporation shall be uncertificated shares.
Within a reasonable time after the issuance or transfer of any uncertificated
shares, the corporation shall send to the registered owner thereof the
written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share or an uncertificated fractional
share shall, but scrip or warrants shall not unless otherwise provided
therein, entitle the holder to exercise voting rights, to receive dividends
thereon, and to participate in any of the assets of the corporation in the
event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not
exchanged for certificates representing the full shares or uncertificated
full shares before a specified date, or subject to the conditions that the
shares for which scrip or warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other conditions which the Board of Directors may
impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney duly executed
and filed with the Secretary of the corporation or with a transfer agent or a
registry, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to
<PAGE>
vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or the allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion, or exchange of stock or for the purpose of any other lawful
action, the directors may fix, in advance, a record date, which shall not be
more than sixty days nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. If no record date is
fixed, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which the
meeting is held; the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at any meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate
or vote thereat or to consent or dissent in writing in lieu of a meeting, as
the case may be, the term "share" or "shares" or "share of stock" or "shares
of stock" or "stockholder" or "stockholders" refers to an outstanding share
or shares of stock and to a holder or holders of record of outstanding shares
of stock when the corporation is authorized to issue only one class of shares
of stock, and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more classes or
series of shares of stock or upon which or upon whom the General Corporation
Law confers such rights notwithstanding that the certificate of incorporation
may provide for more than one class or series of shares of stock, one or more
of which are limited or denied such rights thereunder; provided, however,
that no such right shall vest in the event of an increase or a decrease in
the authorized number of shares of stock of any class or series which is
otherwise denied voting rights under the provisions of the certificate of
incorporation, except as any provision of law may otherwise require.
<PAGE>
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization
of the corporation, and each successive annual meeting shall be held on a
date within thirteen months after the date of the preceding annual meeting. A
special meeting shall be held on the date and at the time fixed by the
directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the
State of Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purpose or purposes.
The notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called. The notice of any meeting shall
also include, or be accompanied by, any additional statements, information,
or documents prescribed by the General Corporation Law. Except as otherwise
provided by the General Corporation Law, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten days nor more than
sixty days before the date of the meeting, unless the lapse of the prescribed
period of time shall have been waived, and directed to each stockholder at
his record address or at such other address which he may have furnished by
request in writing to the Secretary of the corporation. Notice by mail shall
be deemed to be given when deposited, with postage thereon prepaid, in the
United States Mail. If a meeting is adjourned to another time, not more than
thirty days hence, and/or to another place, and if an announcement of the
adjourned time and/or place is made at the meeting, it shall not be necessary
to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not
be given to any stockholder who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of a stockholder at a
meeting of stockholders shall
<PAGE>
constitute a waiver of notice of such meeting, except when the stockholder
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every
meeting of stockholder, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city or other municipality
or community where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote
at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting--the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a
meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years
from its date unless such proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and, if, and
only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether
the interest with which it is coupled is an interest in the stock itself or
an interest in the corporation generally.
<PAGE>
- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and accord to the best of his ability.
The inspectors, if any, shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at
the meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots or consents, determine the result, and do
such acts as are proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one
vote. In the election of directors, a plurality of the votes cast shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the General Corporation Law prescribes a different percentage of
votes and/or a different exercise of voting power, and except as may be
otherwise prescribed by the provisions of the certificate of incorporation
and these bylaws. In the election of directors, and for any other action,
voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action
without a meeting by less
<PAGE>
than unanimous written consent shall be given to those stockholders who have
not consented in writing.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
Board of Directors shall consist of at least three persons and no more than
seven persons. Subject to the foregoing limitation, such number may be fixed
from time to time by action of the stockholders or of the directors, or, if
the number is not fixed, the number shall be five. The number of directors
may be increased or decreased by action of the stockholders or of the
directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected
and qualified or until their earlier resignation or removal. Any director may
resign at any time upon written notice to the corporation. Thereafter,
directors who are elected at an annual meeting of stockholders, and directors
who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. In the interim between annual meetings
of stockholders or of special meetings of stockholders called for the
election of directors and/or for the removal of one or more directors and for
the filling of any vacancy in that connection, newly created directorships
and any vacancies in the Board of Directors, including unfilled vacancies
resulting from the removal of directors for cause or without cause, may be
filled by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
<PAGE>
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member
of a committee of directors who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of any such person at
a meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the directors need be
specified in any written waiver of notice.
- QUORUM AND ACTION. Two or more members of the Board shall constitute a
quorum provided that proper notice has been given or other directors file a
waiver of notice. A majority of the directors present, whether or not a
quorum is present, may adjourn a meeting to another time and place. Except as
herein otherwise provided, and except as otherwise provided by the General
Corporation Law, the vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board. The
quorum and voting provisions herein stated shall not be construed as
conflicting with any provisions of the General Corporation Law and these
Bylaws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the Board,
shall preside.
<PAGE>
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by
the General Corporation Law, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of any member of any
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board,
shall have and may exercise the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation
with the exception of any authority the delegation of which is prohibited by
Section 141 of the General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the
Board, an Executive Vice-President, one or more other Vice-Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurer, and such other
officers with such titles as the resolution of the Board of Directors
choosing them shall designate. Except as may otherwise be provided in the
resolution of the Board of Directors choosing him, no officer other than the
Chairman or Vice-Chairman of the Board, if any, need be a director. Any
number of offices may be held by the same person, as the directors may
determine.
Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of
the Board of Directors following the next
<PAGE>
annual meeting of stockholders and until his successor shall have been chosen
and qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as
shall be prescribed in the resolutions of the Board of Directors designating
and choosing such officers and prescribing their authority and duties, and
shall have such additional authority and duties as are incident to their
office except to the extent that such resolutions may be inconsistent
therewith. The Secretary or an Assistant Secretary of the corporation shall
record all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall exercise such
additional authority and perform such additional duties as the Board shall
assign to him. Any officer may be removed, with or without cause, by the
Board of Directors. Any vacancy in any office may be filled by the Board of
Directors.
<PAGE>
ARTICLE IV
OFFICERS AND DIRECTORS
INDEMNIFICATION
The corporation shall indemnify its officers and directors and
provide for the advancement of litigation expenses to them to the fullest
extent permitted by Section 145 of the General Corporation Law, as the same
may from time to time be amended, and any successor statute thereto.
ARTICLE V
The corporation seal shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and
the provisions of the General Corporation Law, the power to amend, alter or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct
copy of the Bylaws of Signal Investment & Management Co., a Delaware
corporation, as in effect on the date hereof.
WITNESS my hand and seal of the corporation.
Dated: March 20, 1991
--------------
/s/ Charles N. Jolly
----------------------------------------
CHARLES N. JOLLY, Secretary
<PAGE>
APPROVAL OF BANK FINANCING
WHEREAS, the parent corporation of the Company, Chattem,
Inc. ("PARENT"), proposes to enter into one or more Credit
Agreements (collectively, "CREDIT AGREEMENT") with
NationsBank, N.A., as agent ("AGENT") for the benefit of
the lenders named therein ("LENDERS"), providing for a
revolving credit facility and term loans in the aggregate
amount of $61.5 million (the "LOANS"); and
WHEREAS, the Lenders have required, as a condition to making the
Loans, that the Company guarantee the payment and performance of
the obligations of the Parent under the Credit Agreement, among
other things;' and
WHEREAS, the directors of the Company believe that the
Loans to Parent will benefit the Company and that it is
in the best interests of the Company to execute and
deliver to the Agent, for the benefit of the Lenders, a
guaranty agreement and such other security documents as
are contemplated by the Credit Agreement.
NOW, THEREFORE, BE IT RESOLVED, that the Company enter
into, execute, deliver and perform fully in accordance
with its terms the Credit Agreement, and such other
security documents reasonably requested by the Lenders
pursuant to the Credit Agreement (together the "CREDIT
DOCUMENTS"); and
RESOLVED, that each of the Credit Documents be and the
same hereby are authorized and approved in each and every
respect, that each and every transaction effected or to
be effected pursuant to the terms and provisions of the
Credit Documents are hereby authorized and approved in
each and every respect and that this Company enter into
and consummate the transactions contemplated thereby; and
RESOLVED, that the President and any Vice President, the
Treasurer, the Secretary or Assistant Secretary or any
other officer each be, and he hereby is authorized to
execute and deliver, in the name of and on behalf of the
Company, the Credit Documents, with the execution of any
such document or instrument
<PAGE>
by any of the aforesaid officers pursuant to these
resolutions to be conclusive evidence that the same have
been authorized and approved in each and every respect;
and
RESOLVED, the the President, and any Vice President, the
Treasurer, the Secretary, the Assistant Secretary or any
other officer of this Company, each be, and he or she
hereby is, authorized to do and perform all such further
acts and things and to execute and deliver all such
further documents and instruments and to take all such
further steps as any one of them may deem to be
necessary, advisable, convenient or proper to carry out
the intent of these resolutions and to perform fully the
provisions of the Credit Documents.
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THAT "SIGNAL INVESTMENT & MANAGEMENT
CO." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE NOT
HAVING BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS
OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF INCORPORATION, FILED THE TWENTY-SEVENTH DAY OF
JUNE, A.D. 1986, AT 11'CLOCK A.M.
CERTIFICATE OF CHANGE OF REGISTERED AGENT, FILED THE
TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1991, AT 9'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES
ARE THE ONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE
BEEN PAID TO DATE.
/s/ EDWARD J FREEL
-----------------------------------
[SEAL] EDWARD J. FREEL, SECRETARY OF STATE
2094857 8310 AUTHENTICATION: 7910042
960110091 DATE: 04-17-96
<PAGE>
CHATTEM, INC.
OFFICER'S CERTIFICATE
Reference is made to (i) that certain Credit Agreement dated as of April
29, 1996 (as it may be amended, modified, extended or restated from time to
time, the "CREDIT AGREEMENT") among Chattem, Inc. (the "Borrower"), the other
Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A.,
as Agent and (ii) that certain Working Capital Credit Agreement dated as of
April 29, 1996 (as it may be amended, modified, extended or restated from time
to time, the "WORKING CAPITAL CREDIT AGREEMENT"); all capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Credit Agreement and Working Capital Credit Agreement.
I, Robert E. Bosworth, chief financial officer of the Borrower hereby
certify, on behalf of the Borrower and not in my individual capacity, to the
Agent as follows:
1. The Borrower and each of the Borrower's Subsidiaries are in compliance
with all existing material financial obligations.
2. All governmental, shareholder and third party consents and approvals,
if any, with respect to the Credit Documents and Working Capital Credit
Documents and the transactions contemplated thereby have been obtained.
3. 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 the Credit Documents and Working Capital Credit
Documents, if such action, suit, investigation or proceeding could have or might
be reasonably expected to have a Material Adverse Effect.
4. The transactions contemplated by the Purchase Agreement have been
consummated in accordance with the terms thereof.
5. The Projections (as defined in Section 5.1(c) of the Credit Agreement)
were prepared in good faith and using reasonable assumptions.
6. The Borrower and each of the Borrower's Subsidiaries is Solvent.
7. No Default or Event of Default exists.
8. All representations and warranties contained in the Credit Agreement,
the other Credit Documents, the Working Capital
<PAGE>
Credit Documents and the the other Working Capital Credit Documents are true and
correct in all material respects.
9. The Credit Parties are in compliance with each of the financial
covenants set forth in Section 7.12 of the Credit Agreement and 7.12 of the
Working Capital Credit Agreement.
Executed as of the 29th day of April, 1996.
CHATTEM, INC.
By: /s/ ROBERT E. BOSWORTH
--------------------------------
Name: Robert E. Bosworth
------------------------------
Title: Chief Financial Officer
- 2 -
<PAGE>
[LETTERHEAD]
April 26, 1996
NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28225
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Re: CHATTEM, INC.
Ladies and Gentlemen:
The undersigned, The First National Bank of Chicago, as agent ("First
Chicago") for the financial institutions (the "Lenders") that are parties to
the (i) Working Capital Credit Agreement dated as of June 17, 1994 (the
"Working Capital Credit Agreement") and (ii) the Acquisition Credit Agreement
dated as of June 17, 1994 (the "Acquisition Credit Agreement") (collectively,
the Working Capital Credit Agreement and Acquisition Credit Agreement may be
referred to as the "Credit Agreements") has been advised by Chattem, Inc.
(the "Borrower") (i) that certain financial institutions and NationsBank,
N.A., in its capacity as agent (the "Agent"), have agreed to enter into
certain financing arrangements with the Borrower and (ii) that a portion of
the loans to be extended pursuant thereto will be used to repay in full the
Borrower's indebtedness and other obligations to First Chicago and the
Lenders under the Credit Agreements.
The total aggregate amount due from the Borrower to First Chicago and
the Lenders under the Credit Agreements and other documents in connection
therewith is equal to $23,309,558.74, if paid by 12:00 noon (Chicago time) on
April 29, 1996, and if paid thereafter, by 12:00 noon (Chicago time) on any
later date, plus additional interest and fees (calculated assuming no
additional legal fees, no change in the outstanding principal balance and no
change in applicable interest rates) in the amount of $5,812.47 per day for
each day from and after 12:00 noon (Chicago time) on April 29, 1996, to and
including the date of such payment (the "Indebtedness"), and that upon
receipt of payment of the Indebtedness, the Borrower's obligations for
repayment of all outstanding loans under the Credit Agreements will have been
satisfied.
Payment of the Indebtedness in full shall be transferred by wire, in
federal funds, by NationsBank, N.A. in accordance with the following
instructions:
The First National Bank of Chicago
Attention Discount Clearing Account No. 75217653
Notify: Ed Sheridan
ABA No. 071000013
Reference: Chattem, Inc. Payoff
Together with this letter, First Chicago has delivered or caused to be
delivered to the Agent's attorneys' in escrow, the UCC-3 termination
statements, release documents with respect to aircraft, intellectual property
and real estate liens and security interests described on
<PAGE>
[LETTERHEAD]
Exhibit A hereto, releasing the collateral granted to First Chicago and the
Lenders in connection with the Credit Agreements, together with certain
intercompany promissory notes and the certificates evidencing the capital
stock of the Borrower's Subsidiaries pledged to First Chicago described on
Exhibit A hereto and executed blank stock powers in connection with such
stock certificates (all such statements, release documents, instruments and
certificates, collectively, the "Release Documents"). The Release Documents
shall be held in escrow by the Agent's attorneys and released from escrow
only upon receipt by First Chicago of payment in full of the Indebtedness
(which receipt will be confirmed by telephone with First Chicago). After such
release, the Agent and its attorneys shall be authorized to record the
above-described termination statements and other Release Documents required
to be recorded. If such payment has not occurred by Monday, May 6, 1996, the
Agent shall, upon First Chicago's request, cause to return, or cause its
attorneys to return, all such release documents, stock certificates and stock
powers to First Chicago.
In consideration of the payment in full of the Indebtedness, First
Chicago hereby acknowledges and agrees that payment in full of the
Indebtedness will constitute payment in full of all of the Borrower's
outstanding indebtedness under the Credit Agreements and will terminate all
of the Borrower's obligations to First Chicago and the Lenders under the
Credit Agreements, except for obligations that, by their terms, survive
termination of the Credit Agreements.
First Chicago agrees to execute and deliver, at the Borrower's expense,
such other termination statements or documents as the Agent or the Borrower
may reasonably request in connection with First Chicago's above-described
release of the security interests and liens granted pursuant to the Credit
Agreements.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------
Title: Vice President
-----------------------
ACKNOWLEDGED AND AGREED:
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------
Title: EVP-CFO
-----------------------
NATIONSBANK, N.A.
By: /s/ Nancy B. Chastain
-------------------------
Title: Senior Vice President
----------------------
<PAGE>
EXHIBIT A
Release Documents:
1. Full Release under Trademark Security Agreement
2. Full Release under Patent Security Agreement
3. Full Release under Subsidiary Trademark Security Agreement
4. Full Release of Lien of Deed of Trust
5. Release of Aircraft Conveyance
6. UCC-3 Termination Statements for the UCC Financing Statements set
forth in the attached UCC and Fixture Filing Log for Chattem, Inc.
Promissory Notes:
1. Note in the amount of $1,625,000 (Cdn.) executed by Chattem (Canada)
Inc.
2. Note in the amount of L915,000 executed by Chattem (U.K.)
Limited
Stock Certificates for:
1. Signal Investment & Management Co.
2. Chattem (U.K.) Limited (2 certificates)
3. Chattem (Canada) Inc. (2 certificates)
4. Elcat, Inc.
<PAGE>
07/26/94
CHATTEM, INC.
UCC AND FIXTURE FILING LOG
--------------------------
<TABLE>
<CAPTION>
Fed. ID No. 65-0156300
- ------------------------------------------------------------------------------------------------------------------
Type Type Local
of UCC Filing Filing of Filing Filing
Loc. State Collateral Location State Number Date Filing Number Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bailee - CA Morgan and Sampson SOS 94124875 6/20/94
Public 6433 Gayhart Street
Whse Los Angeles, CA 90551
Los Angeles County
- ------------------------------------------------------------------------------------------------------------------
DE Signal Investment & SOS 9408178 6/20/94
Management Co.
1105 North Market Street
Wilmington, DE 19890
New Castle County
- ------------------------------------------------------------------------------------------------------------------
Contract FL Fantasy Blanke Baer DOS 940000123381 6/20/94
Mfger 1000 American Superior Blvd
Winter Haven, FL 33880
Polk County
- ------------------------------------------------------------------------------------------------------------------
Contract GA Mikart, Inc. UCC 812870 6/20/94
Mfger 2909 Marietta Blvd., N.W.
Atlanta, GA 30398
Fulton County
- ------------------------------------------------------------------------------------------------------------------
Contract Walker Co. Work Center UCC 94-624 6/20/94
Pkging Euclid Avenue
Chickamauga, GA 30707
Walker County
- ------------------------------------------------------------------------------------------------------------------
Public HI Island Sales RBC 94-103052 6/20/94
Whse 497-563 Kam Highway
Kanoehe, HI 96744
Honolulu County
- ------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------
Type Type Local
of UCC Filing Filing of Filing Filing
Loc. State Collateral Location State Number Date Filing Number Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Contract NY Marietta Corporation DOS 128091 6/22/94 UCC 940570 6/20/94
Mfger P.O. Box 5250
Cortland, NY 13045
Cortland County
- ------------------------------------------------------------------------------------------------------------------
Contract Kolmar Skyline Division DOS 128091 6/22/94 UCC 02709 6/20/94
Mfger K and Lumber Streets
Port Jervis, NY 12771
Orange County
- ------------------------------------------------------------------------------------------------------------------
Pkging NC Niemond Industries SOS 1118940 6/20/94 UCC 941077 6/20/94
Materials 2500 Taylorsville Road
Statesville, NC 28677
Iredell County
- ------------------------------------------------------------------------------------------------------------------
Contract OH Winn Packaging SOS AL09075 6/20/94 UCC 94-3541 6/20/94
Pkging c/o Package Supply
931 LeSaint Drive
Fairchild, OH 45014
Butler County
- ------------------------------------------------------------------------------------------------------------------
Contract RI Bradford Soap Works SOS 623695 6/20/94
Mfger CS1007
West Warwick, RI 02893
Kent County
- ------------------------------------------------------------------------------------------------------------------
TN Chattem, Inc. SOS 94-323350 6/20/94 FF BK4365 6/20/94
1715 West 38th Street PG792
Chattanooga, TN 37409
Hamilton County
- ------------------------------------------------------------------------------------------------------------------
Signal Investment & SOS 94-323351 6/20/94
Management Co.
1105 North Market Street
Wilmington, DE 19890
- ------------------------------------------------------------------------------------------------------------------
Whse Williams Street Warehouse SOS 94-323350 6/20/94
3102 Williams Street
Chattanooga, TN 37409
Hamilton County
- ------------------------------------------------------------------------------------------------------------------
-3-
<PAGE>
- ------------------------------------------------------------------------------------------------------------------
Type Type Local
of UCC Filing Filing of Filing Filing
Loc. State Collateral Location State Number Date Filing Number Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bailee - Cherokee Warehouse SOS 94-323350 6/20/94
Public 520 West 31st Street
Whse Chattanooga, TN 37402
Hamilton County
- ------------------------------------------------------------------------------------------------------------------
Contract VA PCI of Virginia SOS 9406207718 6/20/94 UCC 94-1462 6/20/94
Mfger 5300 Klockner Drive
Richmond, VA 23231
Richmond, Independent City
- ------------------------------------------------------------------------------------------------------------------
Pkging WI Prent Corporation SOS 1437155 6/20/94
Materials 2225 Kennedy Road
Janesville, WI 53547
Rock County
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
[LETTERHEAD]
April 29, 1996
NationsBank, N.A., as Agent
100 North Tryon Street
Charlotte, NC 28255
Ladies and Gentlemen:
We have acted as counsel to Chattem, Inc., a Tennessee corporation (the
"Borrower") and Signal Investment & Management Co., a Delaware corporation
("Signal") in connection with (i) the execution and delivery of that certain
Credit Agreement dated as of April 29, 1996 (the "Credit Agreement"), among
the Borrower, Signal, the several Lenders from time to time party thereto and
NationsBank, N.A., as Agent ("NationsBank"), (ii) the execution and delivery
of that certain Credit Agreement (Secondary Working Capital Credit Facility)
dated as of April 29, 1996 (the "Working Capital Credit Agreement"), among
the Borrower, Signal, the several lenders from time to time party thereto and
NationsBank, as Agent, (iii) the transactions contemplated thereby and (iv)
the Asset Purchase Agreement dated as of April 10, 1996 among Signal, the
Borrower, Martin Himmel Inc. and Jeffrey S. Himmel (the "Purchase Agreement").
This opinion is being delivered at the request of the Credit Parties
pursuant to Section 5.1(d) of the Credit Agreement. Capitalized terms used
herein but not otherwise defined herein shall have the respective meanings
accorded such terms in the Credit Agreement.
<PAGE>
In rendering this opinion, we have reviewed the following documents:
(1) The Credit Agreement;
(2) The Working Capital Credit Agreement;
(3) Each of the Revolving Loan Notes;
(4) Each of the Tranche A Term Loan Notes;
(5) Each of the Tranche B Term Loan Notes;
(6) Each of the Working Capital Revolving Notes;
(7) The Assignment of Cash Collateral Account;
(8) The Security Agreements;
(9) The Pledge Agreements;
(10) The Mortgage Documents;
(11) The UCC Financing Statements naming the Credit Parties as debtors
to be filed in the respective locations described on SCHEDULE B thereto (the
"UCC Financing Statements");
(12) The Notices of Grant of Security Interest in Patents and
Trademarks executed by the Credit Parties to be filed with the United States
Patent and Trademark Office (the "Notices");
(13) All other Collateral Documents; and
(14) The Purchase Agreement and all documents, approvals and
certificates executed in connection with the Purchase Agreement.
The documents referenced in subsections (1) - (13) above may be referred
to collectively as the "Credit Documents" and the documents referenced in
subsection (14) above may be referred to collectively as the "Acquisition
Documents". The Credit Documents and the Acquisition Documents may be
referred to collectively herein as the "Documents".
The documents we have reviewed in rendering the opinions expressed below,
and upon which we have relied, include the Documents and originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, agreements, documents and other instruments, and such
certificates or comparable documents of public officials and of officers and
representatives of the Credit Parties, and have made such inquiries of such
officers and representatives, as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
<PAGE>
In making the examinations described above, we have assumed the
genuineness of all signatures (other than the signatures of the Credit
Parties), the capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, the
authenticity of the originals of such documents and the correctness and
accuracy of all facts set forth in all certificates and reports examined in
rendering this opinion. We have also assumed the corporate power to enter
into and perform all obligations under the Documents and the due
authorization, execution and delivery of the Documents by all parties thereto
(other than the Credit Parties) and the binding effect of such documents on
such parties.
We have also examined originals or copies of the Charter or Certificate
of Incorporation and Bylaws of each Credit Party, resolutions of the Board of
Directors of each Credit Party, and certificates of public officials
concerning the legal existence, qualifications to do business as a foreign
corporation or good standing of each Credit Party.
We have assumed that the following facts are true in rendering this
opinion (and we have no knowledge of any fact contrary to those assumed): (i)
the Company owns the assets to be subject to Lender's security interests
described in the Credit Documents free and clear of any liens, encumbrances,
or claims, except as shown in the reports described above; the Company has
good and sufficient title to these assets; the Company has "rights" in these
assets; and these assets exist; (ii) Lender has no knowledge of any fact
contrary to those assumed in this opinion or of any security interest in the
Collateral in favor of any third person; (iii) the corporate records and
certificates upon which we have expressed reliance continue to remain
accurate, insofar as material to our opinion, from such earlier dates through
the date hereof; (iv) the proceeds of or the other consideration for the
Loan will not be used for agricultural or single family residential purposes;
(v) the Guaranty Documents will be entered into at the same time as the Notes
and Lenders are relying on the Guaranty Documents and would not make the loan
evidenced by the Notes in the absence of the Guaranty Documents; (vi) the due
delivery to the Lenders of the Credit Documents; (vii) the filing of the
Financing Statements with the Tennessee Secretary of State and the proper
indexing of the Financing Statements by that office; and (viii) the truth of the
representations and warranties contained in the Credit Documents.
For purposes of this opinion, we have assumed with your permission, that
the applicable laws of the State of North Carolina referred to herein as the
Documents are in substance identical to the laws of the State of Tennessee. As
you are aware, we are not admitted to practice in the State of North
Carolina and can express no opinion as to its laws.
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<PAGE>
Based upon the foregoing and subject to the qualifications stated
herein, we are of the opinion that:
1. Each of the Credit Parties is a validly existing corporation under
the laws of the State of its incorporation and has the corporate power to own
its properties and to transact the business in which it is currently engaged,
and is qualified to do business in and is in good standing in the State of
its incorporation and each other jurisdiction where it is required to be
qualified and in good standing given the nature of its business.
2. Each of the Credit Parties has the corporate power to execute,
deliver and carry out the terms and provisions of each of the documents to
which it is a party and each Credit Party has duly taken or caused to be
taken all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Documents.
3. Each of the Credit Parties has duly executed and delivered each of
the Documents to which it is a party, and each such Document constitutes a
legal, valid and binding obligation of each Credit Party, enforceable against
each Credit Party thereto in accordance with its terms.
4. The Acquisition Documents have been duly executed and delivered by
the Borrower and Signal, as appropriate, and Borrower and Signal have
acquired all of the Acquired Assets in accordance with the terms of the
Acquisition Documents.
5. The authorized capital stock and the issued and outstanding shares
of stock of each Credit Party, as set forth in SCHEDULE A attached hereto,
constitutes all of the authorized, issued and outstanding shares of stock of
each Credit Party, and all of such issued and outstanding stock of Signal is
owned by the Person indicated as the owner of such stock on SCHEDULE A.
6. All of the Pledged Shares (as defined in the Pledge Agreements) have
been duly authorized, and validly issued and are fully paid and
non-assessable.
7. The Pledge Agreements create a valid security interest in favor of
the Agent, for the benefit of the Lenders, to secure the Pledgor Obligations
(as defined in the Pledge Agreements), in all right, title and interest of
the Credit Parties in and to the Pledged Shares.
8. Assuming continued possession by the Agent, for the benefit of the
Lenders, of the stock certificates representing the Pledged Shares, the
Agent's security interests in all rights, title and interest of the Credit
Parties in the Pledged Shares constitute perfected security interests.
9. The Security Agreements create valid and enforceable security
interests in favor of the Agent, for the
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<PAGE>
benefit of the Lenders, in the Collateral therein described which constitutes
property in which a security interest can be granted under the Uniform
Commercial Code in the applicable jurisdiction (the "Code Collateral").
10. Assuming continued possession by the Agent, for the benefit of the
Lenders, of the stock certificate representing the preferred stock issued by
Elcat, Inc. in the aggregate amount of $5,000,000 (the "Elcat Security"), the
Agent shall maintain a perfected security interest in all right, title and
interest of the Credit Parties in the Elcat Security.
11. The Assignment of Cash Collateral Account creates a valid and
enforceable security interest in favor of the Agent, for the benefit of the
Lenders, in the Collateral therein described and continued possession by the
Agent, for the benefit of the Lenders, of the Cash Collateral Account shall
provide the Agent with a perfected security interest in all right, title and
interest of the Credit Parties in the Cash Collateral Account.
12. The recording of the Mortgage (as defined in the Credit Agreement)
with the Hamilton County Register of Deeds and payment of the appropriate
recording fees and indebtedness tax will provide a perfected security
interest in the real property and fixtures described therein in favor of the
Agent, for the benefit of the Lenders.
13. Assuming that the Financing Statements have been delivered and filed
or recorded and payment of all amounts properly due and owing in connection
therewith, as appropriate, in the filing offices set forth in SCHEDULE B
attached hereto, the Agent's security interest, for the benefit of the
Lenders, in the Code Collateral will be perfected to the extent such security
interests can be perfected by the filing of financing statements.
14. Upon the proper and timely recording of the Notice of Grant of
Security Interest in Patents and Trademarks (in the form attached to the
Security Agreements) with the United States Patent and Trademark Office and
upon payment of the related applicable filing fees and charges, and upon the
filing of the UCC Financing Statements in the filing offices set forth on
SCHEDULE B hereto, the Agent's security interest, for the benefit of the
Lenders, in the patents and trademarks described therein will be perfected to
the extent such security interests can be perfected under the Uniform
Commercial Code in the applicable jurisdiction (the "Code") and under
applicable Federal law.
15. Neither the execution and delivery of the Documents by any Credit
Party thereto, nor the consummation by a Credit Party of the transactions
contemplated therein (including specifically without limitation the
acquisition of the Acquired Assets pursuant to the terms of the Acquisition
Documents), will (a) violate or conflict with any provision of the articles
or certificate of incorporation or bylaws of any Credit Party, (b) violate,
contravene or materially conflict with any law,
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<PAGE>
regulation (including, without limitation, Regulation U or Regulation X),
order, writ, judgment, injunction, decree or permit applicable to any Credit
Party, (c) violate, contravene or materially conflict with contractual
provisions of, or cause on event of default under, any loan agreement,
mortgage, deed of trust, contract or other agreement or instrument to which
any of the Credit Parties is a party or by which any Credit Party may be
bound (including specifically without limitation the Indenture), or (d)
result in or require the creation of any Lien (other than those contemplated
in or created in connection with the Documents) upon or with respect to the
properties of any Credit Party, although we express no opinion as to whether
future borrowings under the Credit Agreement in excess of $50 million or
any future borrowings under the Working Capital Credit Agreement will violate
the provisions of Section 4.09 of the Indenture.
16. No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or
third party in respect of any Credit Party is required in connection with the
execution, delivery or performance of the Documents by a Credit Party, or if
required, such consent, approval and authorization has been obtained.
17. No consent, approval, waiver, license, authorization or application
or other action by or filing with any Governmental Authority is required in
connection with the consummation of the transactions contemplated by the
Acquisition Documents, except for those already obtained or made. All waiting
periods established by any Governmental Authority applicable to the
Acquisition Documents have lapsed without objection.
18. To our knowledge, (a) there are no judicial, administrative or
arbitration orders, awards or proceedings pending or threatened against or
affecting a Credit Party in any court or before any Governmental Authority or
arbitration board or tribunal that could have or reasonably be expected to
have a Material Adverse Effect and (b) without limiting the generality of the
terms of clause (a) above, there does not exist any order, decree, judgment,
ruling or injunction which restrains the consummation of the transactions
contemplated by the Acquisition Documents.
19. The Credit Agreement, by virtue of its replacement and refinancing
of the $55.0 million credit facilities provided by The First National Bank of
Chicago, as agent and certain other lenders, is the New Credit Agreement (as
defined in the Indenture). The Lenders are holders of Senior Debt (as defined
in the Indenture) up to an aggregate outstanding amount of $50 million under
the Credit Agreement (for any Indebtedness (as defined in the Indenture)
exceeding $50 million under the Credit Agreement to constitute Senior Debt
such Indebtedness must be incurred in compliance with Section 4.09 of the
Indenture, as to which we express no opinion). The Lenders, to the extent of
$50
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<PAGE>
million of Indebtedness incurred under the Credit Agreement and to the extent
of any additional Indebtedness incurred under either the Credit Agreement or
the Working Capital Credit Agreement in compliance with Section 4.09 of the
Indenture, shall have all of the rights of a holder of Senior Debt under the
Indenture, including, but not limited to, the rights set forth in Article 10
of the Indenture.
20. In a properly presented case, a Tennessee court or a federal court
applying Tennessee choice of law rules should give effect to the choice of law
provisions in the Credit Documents and should hold that the Credit Documents
are to be governed by the laws of the State of North Carolina rather than the
laws of the State of Tennessee, except with respect to procedural laws which
shall govern the enforcement of lien rights under the Credit Documents. In
rendering the foregoing opinion, we note that by their terms the Credit
Documents expressly select the laws of the State of North Carolina as the laws
governing their interpretation, that the Credit Documents were negotiated,
executed and delivered by the parties thereto in the State of North Carolina,
advances to be made by the Lenders pursuant to the Credit Agreement will be made
by the Lenders through the Agent in the State of North Carolina, and that
payments required to be made under the Credit Agreement are payable in the
State of North Carolina. The choice of law provisions of the Credit Documents
are not voidable under the laws of the State of Tennessee.
The opinions expressed above are further subject to the following
qualifications and limitations:
a. Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating
to or affecting creditors' rights (including, without limitation,
preference and fraudulent conveyance or transfer laws).
b. The binding effect and enforceability of the Documents and the
availability of injunctive relief or other equitable remedies thereunder
are subject to the effect of general principles of equity (regardless of
whether enforcement is considered in proceedings at law or in equity).
c. We express no opinion as to, or the effect or applicability of,
any laws other than the laws of the State of Tennessee, the federal
laws of the United States of America or the General Corporation Law of
the State of Delaware.
Whenever the existence or absence of facts is indicated to be "to our
knowledge", it is intended to signify that, during the course of our
representation of the Company, no information has come to our attention which
would give us actual knowledge
-7-
<PAGE>
contrary to such statement. However, we have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts
should be drawn from our representation of the Company. Moreover, our
knowledge is limited to those of our attorneys who have recently give
substantive attention to the transactions contemplated by the Credit
Documents or who regularly represent the Company.
The foregoing opinions are, with your concurrence, qualified in their
entirety by the following: (i) the ability of the Lenders to decline to make
advances may affect the question of whether the Lender has given value; (ii)
the right to enforce collection of, or collect, any deficiency remaining
after a sale of the Collateral or the conclusion of any action may be limited
if there has not been compliance with the procedural requirements of state
law; (iii) Sections 47-9-501 ET SEQ. of the Tennessee Code Annotated limit
the manner of exercise of remedies by a lender; (iv) the possible application
to the Lenders of requirements to marshal assets; (v) the effect of any
failure to provide a guarantor with written notice of any payment default so
as to provide the guarantor with an opportunity to cure the default; (vi) the
effect of any modification or alteration of the Notes or the Credit Agreement
that materially affects the Company's obligations without the consent of any
guarantor; (vii) limitations on the right to collect or retain unearned
interest; (viii) impossibility, impracticability, mistake of fact, duress and
undue influence; (ix) statutes or public policy limiting a person's right to
waive the benefits of statutory provisions or common law rights, including
waivers of statutes of limitation and the right to trial by jury and consents
to jurisdiction and venue; (x) limitations on the right of the Lender to
exercise rights and remedies under the Credit Documents for defaults by the
Company if it is determined that the defaults are not material; (xi)
limitations on the rights of the Lenders to exercise rights and remedies
under the Credit Documents for defaults by the Company if it is determined
that any late charges or penalties bear no reasonable relation to the damage
suffered by the Lenders as a result of the delinquencies or defaults; (xii)
limitations on the right of the Lenders to exercise rights and remedies under
the Credit Documents for defaults by the Company if it is determined that the
Lender's enforcement of the covenants or provisions under the circumstances
at that time would violate the Lenders' implied covenant of good faith and
fair dealing; (xiii) limitations on the right of Lenders to exercise rights
and remedies under the Credit Documents for defaults by the Company if it is
determined that the enforcement of the restrictions or burdens is not
reasonably necessary for the protection of the Lenders; and (xiv) the
unenforceability under some circumstances of provisions to the effect that
failure to exercise or delay in exercising a right or remedy will not operate
as a waiver of the right or remedy. These limitations do not, in our opinion,
make the Credit Documents inadequate for the ultimate realization of the
liens, security interests and debt obligations intended to be provided by the
Credit Documents, but
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<PAGE>
economic consequences may be caused by a delay in the availability of
remedies under such documents.
We express no opinion herein as to: (i) the priority of any lien or
security interest created pursuant to the Credit Documents; (ii) the creation
of perfection of the security interests as they relate to any interest in or
claim in or under any policy of insurance; (iii) the creation or perfection
of the security interests in fixtures as they relate to any interest in
ordinary building materials incorporated into any improvement on land;
(iv) the creation or perfection of security interests in other property
transactions excluded from the coverage of Sections 47-9-102 and 47-9-104 of
the Tennessee Code Annotated; (v) federal or state antitrust laws;
(vi) compliance with fiduciary duties; (vii) federal or state securities
laws; (viii) federal or state environmental laws; or (ix) any matter not
expressly referred to in this letter.
The opinions rendered herein are as of the date hereof. We assume no
obligation and disclaim any responsibility to update or supplement these
opinions to reflect any facts which hereafter may come to our attention or
any changes in fact or law subsequent to the date hereof.
This opinion has been furnished to you at your request, and we consider
it to be a confidential communication which may not be furnished, reproduced,
distributed or disclosed to anyone without our prior written consent, except
as permitted by the following paragraph.
This opinion is rendered solely for your information and assistance in
connection with the above transaction. It may not be relied upon by any other
person or for any other purpose without our prior written consent; PROVIDED,
HOWEVER, our opinion may be relied upon by each Lender and by an Eligible
Assignee who becomes a Lender under the Credit Agreement in compliance with
Section 11.3(b) of the Credit Agreement.
Finally, as we have previously advised you, A. Alexander Taylor, II is a
director of the Company and Hugh F. Sharber is an officer of the Company.
Very truly yours,
MILLER & MARTIN
By:
-------------------------------
Partner
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<PAGE>
SCHEDULE A
1. Issued and outstanding shares of Chattem, Inc. as of April 29, 1996
(giving effect to shares issued on April 29, 1996): 8,547,991.
2. Signal Investment & Management Co.: 250 shares, all of which are held by
Chattem, Inc.
- 10 -
<PAGE>
SCHEDULE B
Location for UCC-1 Filings
CHATTEM, INC.
Tennessee Secretary of State
California Secretary of State
New Jersey Secretary of State
Hawaii Bureau of Conveyances
Rhode Island Secretary of State
New York Secretary of State
Orange County, New York
Cortland County, New York
North Carolina Secretary of State
Iredell County, North Carolina
Wisconsin Secretary of State
Illinois Secretary of State
Walker County, Georgia
Rockdale County, Georgia
Fulton County, Georgia
Ohio Secretary of State
Montgomery County, Ohio
Butler County, Ohio
Michigan Secretary of State
Virginia State Corporation Commission
Henrico County, Virginia
Richmond City, Virginia
Mississippi Secretary of State
DeSoto County, Mississippi
SIGNAL INVESTMENT & MANAGEMENT CO.
Delaware Secretary of State
Tennessee Secretary of State
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<PAGE>
[LETTERHEAD]
May 7, 1996
Re: Mitsubshi model MU-300 aircraft with manufacturer's serial number A009
S.A. and United States nationality and registration marks N306P (the
"Aircraft")
NationsBank, N.A., as Agent
100 North Tryon Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
This letter confirms that we filed the following described
instruments with the Federal Aviation Administration (the "FAA") today at the
respective times noted below:
(a) Release dated April 29, 1996 (the "Release") by The First National
Bank of Chicago, as Agent releasing the Aircraft and two Pratt &
Whitney model JT15D-4 aircraft engines with manufacturer's serial
numbers 70602 and 70610 (the "Engines") from the terms of Conveyance
No. X124709 was filed at 2:36 P.M., C.D.T.; and
(b) Aircraft Mortgage and Security Agreement dated as of April 29, 1996
(the "Security Agreement") between Chattem, Inc. as Borrower (the
"Borrower") and NationsBank, N.A., as Agent (the "Agent") covering
the Aircraft and the Engines was filed at 2:37 P.M., C.D.T.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion and as
were made available to us by the FAA, it is our opinion that:
<PAGE>
Page 2
(a) the Release and the Security Agreement are in due form for
recordation by and have been duly filed for recordation with the FAA
pursuant to and in accordance with the provisions of Title 49 of the
United States Code (the "Transportation Code");
(b) legal title to the Aircraft is vested in the Borrower, with a
Certificate of Aircraft Registration duly issued to the Borrower
pursuant to and in accordance with the provisions of the
Transportation Code;
(c) the Aircraft and the Engines are free and clear of any liens,
security interests or encumbrances of record with the FAA other than
such as are created by the Security Agreement;
(d) the Security Agreement creates a valid, duly perfected security
interest in favor of the Agent in the Aircraft and the Engines; and
(e) the Security Agreement is not required to be filed or recorded in
any other place within the United States in order to perfect or
maintain the perfection of the security interest created thereby in
the Aircraft and the Engines under the applicable laws within the
United States.
No opinion is herein expressed as to: (i) laws other than the federal
laws of the United States; (ii) the validity or enforceability under local
law of the Security Agreement; (iii) the recognition of the perfection of the
security interest created by the Security Agreement as against third parties
in any legal proceedings outside the United States; or (iv) the record status
of the Aircraft prior to the commencement of its United States registration
on March 18, 1981. Since our examination was limited to records maintained by
the FAA Aircraft Registry, our opinion does not cover liens which are
perfected without the filing of notice thereof with the FAA, such as federal
tax liens, liens arising under Section 1368(a) of Title 29 of the United
States Code and possessory artisans' liens, and was subject to the accuracy
of FAA personnel in the filing, indexing and recording of instruments filed
with the FAA and in the search for encumbrance cross-reference index cards
for the Engines.
This letter is furnished only to the Lenders (as defined in the
Credit Agreement dated as of April 29, 1996 (the "Credit Agreement") among
the Borrower, Signal Investment & Management Co., the several Lenders from
time to time party thereto and the Agent) and is solely for their benefit in
connection with the transactions contemplated by the Security Agreement;
PROVIDED, HOWEVER, our opinion may be relied upon by any Eligible Assignee
(as defined in the Credit Agreement) who becomes a Lender under the Credit
Agreement in
<PAGE>
Page 3
compliance with Section 11.3(b) of the Credit Agreement. This opinion is not
to be used, circulated, quoted or otherwise relied upon by any other person
or entity or, for any other purpose, without our prior written consent.
Very truly yours,
/s/ Patricia J. Hanson
Patricia J. Hanson
PJH:gam
<PAGE>
[LETTERHEAD]
4/22/1996
Martin M. Goldwyn, Esquire
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Boulevard
Great Neck, New York 11021
Re: Premerger Notification Requirements Under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 Transaction Identification
Number 96-1618
Dear Mr. Goldwyn:
Confirming our telephone conversation of 04/22/96, with your secretary of
your office, a request for early termination of the waiting period provided
by Section 7A(b)(1) of the Clayton Act and Section 803.10(b) of the
premerger notification rules with respect to the proposed acquisition by
Chattem, Inc. of certain assets of Martin Himmel Inc. from Jeffrey S. Himmel
has been granted. Termination of the waiting period became effective upon
communication.
Notice of this termination will be published in the Federal Register in
accordance with Section 7a(b)(2) of the Clayton Act and Section 803.11(c) of
the premerger notification rules.
Sincerely,
/s/ Sandra M. Peay
----------------------------
Renee Horton
Sandrea Peay
Contact Representative
Premerger Notification Office
Bureau of Competition
(202) 326-3100
<PAGE>
[LETTERHEAD]
4/22/1996
Edward N. Boehm, Esquire
Miller & Martin
Suite 1000 Volunteer Building
832 Georgia Avenue
Chattanooga, TN 374022289
Re: Premerger Notification Requirements Under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 Transaction Identification
Number 96-1618
Dear Mr. Boehm:
Confirming our telephone conversation of 04/22/96, a request for early
termination of the waiting period provided by Section 7A(b)(1) of the
Clayton Act and Section 803.10(b) of the premerger notification rules with
respect to the proposed acquisition by Chattem, Inc. of certain assets of
Martin Himmel Inc. from Jeffrey S. Himmel has been granted. Termination of
the waiting period became effective upon communication.
Notice of this termination will be published in the Federal Register
in accordance with Section 7a(b)(2) of the Clayton Act and Section 803.11(c)
of the premerger notification rules.
Sincerely,
/s/ Sandra M. Peay
----------------------------
Renee Horton
Sandrea Peay
Contact Representative
Premerger Notification Office
Bureau of Competition
(202) 326-3100
<PAGE>
[LETTERHEAD]
April 29, 1996
To The Board of Directors and Officers
Chattem, Inc.
To the Lender, as defined below
Dear Directors and Lenders:
We understand that Chattem, Inc. (the "Company") has entered into an
agreement to acquire certain assets of Martin Himmel Inc. (the
"Acquisition"). In connection with the Acquisition, the Company will also
refinance a portion of its existing debt outstanding (the "Refinancing"). We
understand the Acquisition and the Refinancing will be funded with a
$61.5 million credit facility ("Credit Facility"). The Credit Facility is
comprised of a $24 million revolver ("Revolver") and a $37.5 million term
loan composed of a $20 million tranche A term loan and a $17.5 million
tranche B term loan ("Tranche A and "Tranche B", respectively). The Revolver
and Tranche A initially bear an interest rate of LIBOR plus 275 basis points
and is due five years from closing. Tranche B bears an interest rate plus 325
basis points and is due seven and one-half years from closing. It is
anticipated at closing of the Acquisition that the Company will draw down
approximately $49.5 million of the Credit Facility, with approximately
$23 million of the proceeds used for the Refinancing. The Acquisition and
related transactions are referred to collectively herein as the
"Transaction." It is our understanding that a significant part of the
financing for the Transaction will be obtained by the Company from one or
more institutional lenders (the "Lenders").
You have requested our written opinion (the "Opinion") as to the matters set
forth below. This Opinion values the Company as a going concern (including
goodwill), on a pro forma basis, immediately after and giving effect to the
Transaction and the associated indebtedness. For purposes of this Opinion,
"fair value" shall be defined as the amount at which the Company would change
hands between a willing buyer and a willing seller, each having reasonable
knowledge of the relevant facts, neither being under any compulsion to act,
with equity to both; and "present fair saleable value" shall be defined as
the amount that may be realized if the Company's aggregate assets (including
goodwill) are sold as an entirety with reasonable promptness in an arm's
length transaction under present conditions for the sale of comparable
business enterprises, as such conditions can be reasonably evaluated by
Houlihan Lokey. We have used the same valuation methodologies in
<PAGE>
To The Board of Directors and Officers
Chattem, Inc.
April 29, 1996 -2-
determining fair value and present fair saleable value for purposes of
rendering this Opinion. The term "identified contingent liabilities" shall
mean the maximum amount of contingent liabilities identified to us and valued
by responsible officers of the Company, upon whom we have relied upon without
independent verification; no other contingent liabilities will be considered.
Being "able to pay its debts as they become absolute and mature" shall mean
that, assuming the Transaction has been consummated as proposed, the
Company's financial forecasts (the "Projections") for the period 1996 to 2002
indicate positive cash flow for such period, including (and after giving
effect to) the payment of installments due under loans made pursuant to the
indebtedness incurred in the Transaction, as such installments are scheduled
at the close of the Transaction. It is Houlihan Lokey's understanding, upon
which it is relying, that the Company's Board of Directors and any other
recipient of the Opinion will consult with and rely solely upon their own
legal counsel with respect to said definitions. No representation is made
herein, or directly or indirectly by the Opinion, as to any legal matter or
as to the sufficiency of said definitions for any purpose other than setting
forth the scope of Houlihan Lokey's Opinion hereunder.
Notwithstanding the use of the defined terms "fair value" and "present fair
saleable value," we have not been engaged to identify prospective purchasers
or to ascertain the actual prices at which and terms on which the Company can
currently be sold, and we know of no such efforts by others. Because the sale
of any business enterprise involves numerous assumptions and uncertainties,
not all of which can be quantified or ascertained prior to engaging in an
actual selling effort, we express no opinion as to whether the Company would
actually be sold for the amount we believe to be its fair value and present
fair saleable value.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the
circumstances. Among other things, we have:
1. reviewed the Company's annual reports to shareholders and on
Form 10-K for the five fiscal years ended November 30, 1995
and quarterly reports on Form 10-Q for the four quarters ended
February 29, 1996, which the Company's management has
identified as the most current information available;
2. reviewed copies of the following agreements:
a. the Asset Purchase Agreement dated April 10, 1996 between
Signal Investment and Management Co. and Martin Himmel Inc.
b. the draft of the Security Agreement between Chattem and
NationsBank;
c. the draft of the Pledge Agreement between Chattem and
NationsBank;
d. the draft of the Assignment of Cash Collateral Account and
Security Agreement between Chattem and NationsBank;
e. the Indenture Agreement dated August 3, 1994 for the 12.75%
Series B Senior Subordinated Notes due 2004;
<PAGE>
To The Board of Directors and Officers
Chattem, Inc.
April 29, 1996 -3-
3. reviewed the Confidential Information Memorandum for the $60,000,000
Senior Credit Facility prepared by NationsBank dated March 1996;
4. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and
projected operations and performance of the Company, and spoke with
representatives of the Company's counsel to discuss certain matters;
5. visited certain facilities and business offices of the Company;
6. reviewed our analysis and opinion letter, dated April 23, 1996,
pertaining to the determination of the fair market value of certain
of the Company's trademarks and their associated intellectual
property;
7. reviewed forecasts and projections prepared by the Company's
management with respect to the Company for the fiscal years ended
November, 1996 through 2002;
8. reviewed the historical market prices and trading volume for the
Company's publicly traded securities;
9. reviewed other publicly available financial data for the Company
and certain companies that we deem comparable to the Company;
10. reviewed drafts of certain documents to be delivered at the closing
of the Transaction, including, but not limited to, the Credit
Agreement dated as of April, 1996; and
11. conducted such other studies, analyses and investigations as we have
deemed appropriate.
We believe that the foregoing analysis and inquiries are sufficient to render
this Opinion. We have relied upon and assumed, without independent
verification, that the financial forecasts and projections provided to us
have been reasonably prepared and reflect the best currently available
estimates of the future financial results and condition of the Company, and
that there has been no material adverse change in the assets, financial
condition, business or prospects of the Company since the date of the most
recent financial statements made available to us.
We have not independently verified the accuracy and completeness of the
Projections supplied to us with respect to the Company and do not assume any
responsibility with respect to them. Subject to the foregoing, we advise the
recipients of this Opinion (other than the Company and its affiliates) that
nothing has come to the attention of our personnel working on this engagement
in the course thereof that has caused us to believe that it was unreasonable
for us to utilize and rely upon the Projections taken as a whole as part of
our analysis relating to this Opinion.
<PAGE>
To The Board of Directors and Officers
Chattem, Inc.
April 29, 1996 -4-
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it; provided, however, in the case of the
Projections contained in the information, such Projections shall have been
prepared in good faith based upon reasonable assumptions and information
reasonably available and will be, to the best of the Company's knowledge,
true, complete and correct in all material respects, but no other
representation is made with respect thereto. We have not made any physical
inspection, other than as outlined in item #5 above, or independent appraisal
of any of the properties or assets of the Company. Our opinion is necessarily
based on business, economic, market and other conditions as they exist and
can be evaluated by us at the date of this letter.
Based upon the foregoing, and in reliance thereon, it is our opinion as of
the date of this letter that, assuming the Transaction had been consummated
as proposed, immediately after and giving effect to the Transaction:
(a) on a pro forma basis, the fair value and present fair saleable
value of the Company's assets would exceed the Company's
stated liabilities and identified contingent liabilities;
(b) the Company should be able to pay its debts as they become
absolute and mature; and
(c) the capital remaining in the Company after the Transaction
would not be unreasonably small for the business in which the
Company is engaged, as management has indicated it is now
conducted and is proposed to be conducted following the
consummation of the Transaction.
This Opinion is furnished solely for your benefit and may not be relied upon
by any other person without our express, prior written consent. Information
copies of this Opinion may, however, be delivered to financial institutions
that purchase participations in loans constituting the financing incurred in
connection with the Transaction, subject to the understanding that this
Opinion speaks only as of the date hereof and that we assume no
responsibility for the effect of any event occurring after the date hereof.
This Opinion is delivered to each recipient subject to the conditions, scope
of engagement, limitations and understandings set forth in this Opinion and
our engagement letter dated March 20, 1996, and subject to the understanding
that the obligations of Houlihan Lokey in the Transaction are solely
corporate obligations, and no officer, director, employee, agent, shareholder
or controlling person of Houlihan Lokey shall be subjected to any personal
liability whatsoever to any person, nor will any such claim be asserted by or
on behalf of you or your affiliates.
HOULIHAN, LOKEY, HOWARD & ZUKIN, INC.
/s/ Houlihan, Lokey, Howard & Zukin, Inc.
<PAGE>
CERTIFICATE
I, Robert E. Bosworth, Executive Vice President of Chattem, Inc. (the
"BORROWER") hereby certify on behalf of the Borrower and not in my individual
capacity that (i) attached hereto as EXHIBIT A are true and correct copies of
(A) that certain Indenture dated as of August 3, 1994 between the Borrower,
as issuer, Signal Investment & Management Co. ("Signal"), as guarantor and
Southtrust Bank of Alabama, National Association, as trustee ("Trustee") (the
"Indenture") and (B) the Amendment to and Supplemental Indenture dated May
23, 1995 by and among Borrower, Signal and the Trustee (collectively, the
"Subordinated Debt Documents") and (ii) that the attached Subordinated Debt
Documents are in full force and effect and have not been rescinded or
modified.
This 29th day of April, 1996.
CHATTEM, INC.
/s/ Robert E. Bosworth
-----------------------------------------
Robert E. Bosworth
Executive Vice President
<PAGE>
- -------------------------------------------------------------------------------
---------------------------------------
CHATTEM, INC.,
as Issuer,
SIGNAL INVESTMENT & MANAGEMENT CO.,
as Guarantor
and
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION
as Trustee
$75,000,000
12.75% SERIES B SENIOR SUBORDINATED NOTES DUE 2004
---------------------------------------
-------------------
INDENTURE
Dated as of August 3, 1994
-------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
310 (a)(1)..............................................................7.10
(a)(2)..............................................................7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b).................................................... 7.08; 7.10; 7.12
(c).................................................................N.A.
311 (a).................................................................7.11
(b).................................................................7.11
(c).................................................................N.A.
312 (a).................................................................2.05
(b)............................................................... 13.03
(c)............................................................... 13.03
313 (a)................................................................ 7.06
(b)(1)............................................................. N.A.
(b)(2)............................................................. 7.06
(c)...........................................................7.06;13.02
(d)................................................................ 7.06
314 (a)......................................................4.03;4.04;13.05
(b)................................................................ N.A.
(c)(1)............................................................ 13.04
(c)(2)............................................................ 13.04
(c)(3)............................................................. N.A.
(d)................................................................ N.A.
(e)............................................................... 13.05
(f)................................................................ N.A.
315 (a)............................................................. 7.01(2)
(b).................................................................7.05
(c)............................................................. 7.01(1)
(d)............................................................. 7.01(3)
(e)................................................................ 6.11
316 (a)(last sentence)................................................. 2.09
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
(c)............................................................2.13;9.04
317 (a)(1)..............................................................6.08
(a)(2)..............................................................6.09
(b).................................................................2.04
318 (a)................................................................13.01
(b)................................................................ N.A.
(c)................................................................13.01
- -------------------------
*This Cross-Reference Table is not part of the Indenture.
N.A. means not applicable.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................. 1
Section 1.01. Definitions.................................................. 1
Section 1.02. Other Definitions............................................ 9
Section 1.03. Incorporation by Reference of Trust Indenture Act............ 9
Section 1.04. Rules of Construction........................................ 10
ARTICLE 2 THE SECURITIES.............................................. 10
Section 2.01. Form and Dating.............................................. 10
Section 2.02. Execution and Authentication................................. 11
Section 2.03. Registrar and Paying Agent................................... 11
Section 2.04. Paying Agent to Hold Money in Trust.......................... 12
Section 2.05. Securityholder Lists......................................... 12
Section 2.06. Transfer and Exchange........................................ 12
Section 2.07. Replacement Securities....................................... 13
Section 2.08. Outstanding Securities....................................... 13
Section 2.09. Treasury Securities.......................................... 14
Section 2.10. Temporary Securities......................................... 14
Section 2.11. Cancellation................................................. 14
Section 2.12. Defaulted Interest........................................... 14
Section 2.13. Record Date.................................................. 14
ARTICLE 3 REDEMPTION.................................................. 15
Section 3.01. Notices to Trustee........................................... 15
Section 3.02. Selection of Securities to Be Redeemed....................... 15
Section 3.03. Notice of Redemption......................................... 15
Section 3.04. Effect of Notice of Redemption............................... 16
Section 3.05. Deposit of Redemption Price.................................. 16
Section 3.06. Securities Redeemed in Part.................................. 16
Section 3.07. Optional Redemption.......................................... 17
Section 3.08. Mandatory Redemption......................................... 17
Section 3.09. Offer to Purchase by Application of Excess Proceeds.......... 17
ARTICLE 4 COVENANTS................................................... 18
Section 4.01. Payment of Securities........................................ 18
Section 4.02. Maintenance of Office or Agency.............................. 19
Section 4.03. Reports...................................................... 19
Section 4.04. Compliance Certificate....................................... 20
Section 4.05. Taxes........................................................ 20
Section 4.06. Stay, Extension and Usury Laws............................... 21
Section 4.07. Limitation on Restricted Payments............................ 21
Section 4.08. Limitation on Dividend Restrictions Affecting Subsidiaries... 22
Section 4.09. Limitation on Additional Indebtedness........................ 22
Section 4.10. Asset Sales.................................................. 23
<PAGE>
PAGE
----
Section 4.11. Transactions With Affiliates . . . . . . . . . . . . . . 24
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.13. Corporate Existence . . . . . . . . . . . . . . . . . . 24
Section 4.14. Change of Control . . . . . . . . . . . . . . . . . . . 25
Section 4.15. Line of Business . . . . . . . . . . . . . . . . . . . . 26
Section 4.16. Limitations on Senior Subordinated Debt . . . . . . . . 26
Section 4.17. Additional Investments and Subsidiary Guarantees . . . . 26
Section 4.18. Limitation on Issuance and Sale of Capital Stock
of Securities . . . . . . . . . . . . . . . . . . . . 27
Section 4.19. Limitation on Issuance of Subsidiary Indebtedness . . . 27
ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.01. Merger, Consolidation or Sale of Assets . . . . . . . . 27
Section 5.02. Successor Corporation Substituted . . . . . . . . . . . 28
ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . 28
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . 28
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . 30
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . 30
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . 30
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . 31
Section 6.07. Rights of Securityholders to Receive Payment . . . . . . 31
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . 31
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . 31
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . 32
ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . 32
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . 33
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . 34
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 34
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . 34
Section 7.06. Reports by Trustee to Securityholders . . . . . . . . . 34
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . 35
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . 35
Section 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . 36
Section 7.10. Eligibility, Disqualification . . . . . . . . . . . . . 36
Section 7.11. Preferential Collection of Claims Against the Company . 36
Section 7.12. Conflicting Interest . . . . . . . . . . . . . . . . . . 37
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . 37
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . . . . 37
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . 37
-ii-
<PAGE>
PAGE
----
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . . . . 38
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions . . . . . . . 39
Section 8.06. Termination Of Company's Obligation . . . . . . . . . . 40
Section 8.07. Repayment to the Company . . . . . . . . . . . . . . . . 40
Section 8.08. Reinstatement . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 9 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.01. Without Consent of Securityholders . . . . . . . . . . . 40
Section 9.02. With Consent of Securityholders . . . . . . . . . . . . 41
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . . . 42
Section 9.04. Revocation and Effect of Consents . . . . . . . . . . . 42
Section 9.05. Notation on or Exchange of Securities . . . . . . . . . 42
Section 9.06. Trustee to Sign Amendments, Etc. . . . . . . . . . . . . 43
Section 9.07. Notice of Certain Amendments . . . . . . . . . . . . . . 43
ARTICLE 10 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . 43
Section 10.01. Agreement to Subordinate . . . . . . . . . . . . . . . . 43
Section 10.02. Certain Definitions . . . . . . . . . . . . . . . . . . 43
Section 10.03. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . 44
Section 10.04. Default on Senior Debt . . . . . . . . . . . . . . . . . 44
Section 10.05. Acceleration of Securities . . . . . . . . . . . . . . . 45
Section 10.06. When Distribution Must be Paid Over . . . . . . . . . . 45
Section 10.07. Notice by the Company . . . . . . . . . . . . . . . . . 46
Section 10.08. Subrogation . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.09. Relative Rights . . . . . . . . . . . . . . . . . . . . 46
Section 10.10. Subordination May Not Be Impaired by the Company . . . . 46
Section 10.11. Distribution or Notice to Representative . . . . . . . . 46
Section 10.12. Rights of Trustee and Paying Agent . . . . . . . . . . . 47
Section 10.13. Authorization to Effect Subordination . . . . . . . . . 47
ARTICLE 11 SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . 47
Section 11.01. Subsidiary Guarantees . . . . . . . . . . . . . . . . . 47
Section 11.02. Execution and Delivery of Subsidiary Guarantee . . . . . 48
Section 11.03. Guarantors may Consolidated, Etc., on Certain Terms . . 49
Section 11.04. Releases Following Sale of Assets or Sale of all
Capital Stock . . . . . . . . . . . . . . . . . . . . 49
Section 11.05. Limitation of Guarantor's Liability . . . . . . . . . . 49
Section 11.06. Trustee to Include Paying Agent . . . . . . . . . . . . 50
Section 11.07. Subordination of Subsidiary Guarantee . . . . . . . . . 50
Section 11.08. Additional Subsidiary Guarantees . . . . . . . . . . . . 51
ARTICLE 12 REGISTRATION RIGHTS LIQUIDATED DAMAGES . . . . . . . . . 51
Section 12.01. Registration Rights . . . . . . . . . . . . . . . . . . 51
Section 12.02. Liquidated Damages . . . . . . . . . . . . . . . . . . . 52
-iii-
<PAGE>
PAGE
----
ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 52
Section 13.01. Trust Indenture Act Controls . . . . . . . . . . . . . . 52
Section 13.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.03. Communication with Securityholders with Other
Securityholders . . . . . . . . . . . . . . . . . . . 54
Section 13.04. Certificate and Opinion as to Conditions Precedent . . . 54
Section 13.05. Statements Required in Certificate or Opinion . . . . . 54
Section 13.06. Rules by Trustee and Agents . . . . . . . . . . . . . . 54
Section 13.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . 55
Section 13.08. No Recourse Against Others . . . . . . . . . . . . . . . 55
Section 13.09. Multiple Originals . . . . . . . . . . . . . . . . . . . 55
Section 13.10. Governing Law . . . . . . . . . . . . . . . . . . . . . 55
Section 13.11. No Adverse Interpretation of Other Agreements . . . . . 55
Section 13.12. Successors . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.13. Severability . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.14. Table of Contents, Headings, Etc. . . . . . . . . . . . 55
Exhibits
Exhibit A Form of Note
Exhibit B Form of Notation on Series B Subordinated Note Relating to
Subsidiary Guarantee
-iv-
<PAGE>
INDENTURE dated as of August 3, 1994 among Chattem, Inc., a
Tennessee corporation (the "Company"), and Signal Investment & Management
Co., a Delaware corporation, the guarantor of the Company's obligations
hereunder (the "Guarantor") and SouthTrust Bank of Alabama, National
Association, as trustee (the "Trustee").
The Company and the Guarantor, jointly and severally, and the
Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the holders of the 12.75% Series B Senior Subordinated
Notes due 2004 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"ACQUIRED INDEBTEDNESS" of any specified Person means Indebtedness
of any other Person existing at the time of such other Person is acquired,
merged, consolidated or amalgamated with or into or becomes a Subsidiary of
such specified Person, including Indebtedness incurred in connection with, or
in contemplation of, such other Person becoming a Subsidiary of such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise; PROVIDED,
HOWEVER, that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"BOARD OF DIRECTORS" means the Board of Directors of the Company,
or any authorized committee of the Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person
for any period, an obligation of such Person to pay rent to other amounts
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP, and the amount of such obligation shall be
capitalized amount thereof determined in accordance with such principles.
"CAPITAL STOCK" of any Person means any and all shares, interests,
right to purchase, warrants, options, participations, or other equivalents of
or interests in (however designated) the common or preferred equity of such
Person, including, without limitation, partnership interests.
"CASH EQUIVALENTS" means (i) cash, (ii) securities issued or
directly and fully guaranteed or insured by the United States Government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $100,000,000, (iv) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) entered into with any
financial institution meeting the qualifications specified in clause
(iii) above, and (v) commercial paper rated
<PAGE>
A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by
Moody's and, in each case, maturing within six months after the date of
acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease or transfer of all or substantially all of the Company's
assets to any Person or "group" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Wholly Owned Subsidiary, (ii) the adoption of
a plan relating to the liquidation or dissolution of the Company, (iii) the
acquisition by any Person or "group" (as such term is used in Section 13(d)(3)
of the Exchange Act) of a direct or indirect majority (more than 50%)
interest in the voting power of the voting stock of the Company by way of
merger, consolidation or otherwise, or (iv) the first day on which a majority
of the members of the Board of Directors of the Company are not Continuing
Directors.
"CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of both a
Change of Control and a Rating Decline.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
fiscal period, the consolidated net earnings or loss of the Company and its
Subsidiaries as it would appear on a consolidated statement of earnings of
the Company for such fiscal period prepared in accordance with GAAP;
PROVIDED, THAT (i) any extraordinary gain or loss and any gain or loss on
sales of assets outside the ordinary course of business or any gain or loss
on issuance or sale of Equity Interests of the Subsidiary, in each case
together with any related provision for taxes on gains, realized during such
period shall be excluded, (ii) the results of operations of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded, (iii) the Net Income of any
Person other than a Subsidiary of the Company of which 80% or more of the
Capital Stock having voting power generally for the election of directors or
other governing body of such Subsidiary is owned by the Company directly or
indirectly through one or more Wholly Owned Subsidiaries of the Company (or
with respect to Wholly Owned Subsidiaries, where the declaration of dividends
or the making of Distributions by such Wholly Owned Subsidiaries, is not at
that time permitted, directly or indirectly by the terms of its charter, or
any agreement, mortgage indenture, instrument, decree or statute law or
regulations applicable to such Wholly Owned Subsidiary or its shareholders)
shall be included only to the extent of the amount of cash, property,
dividends or Distributions actually paid to the Company or a Wholly Owned
Subsidiary of the Company during such period, (iv) the cumulative effect of a
change in accounting principles shall be excluded, (v) any gain or loss
realized upon the termination of any employee benefit plan (on an after-tax
basis) shall be excluded, (vi) the effect of the Recapitalization and related
charges taken by the Company in its fiscal year 1993, adjusted to reflect the
tax effect of such charges shall be excluded, (vii) all nonrecurring charges
taken in its fiscal year 1993 adjusted to reflect the tax effects thereof
shall be excluded, collectively amounting to $5,527,000 on a pretax basis and
$3,496,000 on an after tax basis and (viii) any extraordinary charge
resulting from the issuance of the Securities under the Indenture and the
application of the net proceeds thereof shall be excluded.
"CONSOLIDATED NET WORTH" with respect to any Person means the
consolidated equity of the common shareholders of such Person and its
consolidated Subsidiaries (excluding the accumulated foreign currency
translation adjustment), as determined on a consolidated basis and in
accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
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"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 13.02 or such other address as to which the
Trustee may give notice to the Company.
"DEFAULT" means any event that is or with the passing of time or
the giving of notice, or both, would be an Event of Default.
"DEPOSITORY" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall
have been appointed and become such pursuant to the applicable provision of
this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"DISTRIBUTION" means any dividend, payment or distribution on or
with respect to Capital Stock or other Equity Interest, whether in cash,
Capital Stock, other securities, assets or property of any kind or nature,
PROVIDED that all Distributions other than in cash shall be valued at the
higher of the (i) value thereof on the Company or its Subsidiary's books
calculated in accordance with GAAP or (ii) the fair market value thereof
based upon a good faith determination of the Company's Board of Directors and
certified in an Officers' Certificate delivered to the Trustee.
"DISQUALIFIED STOCK" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable, at the option of the holder thereof, in whole or in part, on
or prior to the earlier of the maturity date of the Securities or the date on
which no Securities remain outstanding.
"EQUITY INTEREST" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than under the New Credit Agreement) in existence on the
date of this Indenture, until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
(i) the sum of, without duplication, (A) Consolidated Net Income for such
period, plus (B) provision for taxes based on income or profits to the extent
that such taxes were provided for in respect of income or profits included in
computing such Consolidated Net Income, plus (C) consolidated interest
expense (including amortization of original issue discount and noncash
interest payments or accruals and the interest component of Capitalized Lease
Obligations) of the Company and its Subsidiaries for such period, plus (D)
other noncash charges (excluding any such noncash charges, to the extent they
require accrual of or reserve for cash charges for any future periods)
deducted from consolidated revenues in determining Consolidated Net Income
for such period, including noncash charges attributable to the issuance of
Capital Stock and all depreciation and amortization (including amortization
of intangibles), plus (E) any prepayment premiums or consent fees deducted
from consolidated revenues in determining Consolidated Net Income for such
period, DIVIDED BY (ii) Fixed Charges for such period. For purposes of
calculating the Fixed Charge Coverage Ratio: (A) consolidated interest
expense attributable to interest on any Indebtedness bearing floating
interest rate(s) shall be computed based upon the weighted average floating
interest rate(s) in effect for such Indebtedness for such period; (B)
consolidated interest expense attributable to interest on any Indebtedness
under a revolving credit facility shall be computed based upon the average
daily balance of such Indebtedness during such period; (C) in making any
calculation of the Fixed Charge Coverage Ratio for any period beginning prior
to the date of closing of the Recapitalization, the Recapitalization shall be
deemed to have taken place on the first day of such period; and (D) in the
event that the Company or any of its Subsidiaries incurs or redeems any
Indebtedness (other than Indebtedness under the New Credit
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Agreement) or issues or redeems any Preferred Stock or Disqualified Stock or
consummates a material acquisition or disposition transaction subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the event for such the calculation of the Fixed
Charge Coverage Ratio is being made, then the Fixed Charge Coverage Ratio
shall be calculated on a PRO FORMA basis giving effect to such incurrence or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock
or Disqualified Stock or such material acquisition or disposition
transaction, as if the same had occurred at the beginning of the applicable
period.
"FIXED CHARGES" means, for any period, the sum of (i) the
consolidated interest expense (including amortization of original issue
discount, noncash interest payments or accruals and the interest component of
Capitalized Lease Obligations, but excluding amortization of deferred
financing costs) and payments on Hedging Obligations of the Company and its
Subsidiaries for such periods, plus (ii) the amount of all dividend payments
on any series of Preferred Stock of the Company or any of its Subsidiaries
(except dividends paid to the Company or a Subsidiary Guarantor of the
Company) for such period.
"GAAP" means, as of any date, generally accepted accounting
principles consistently applied in the United States which are in effect on
the date of this Indenture and not including any interpretations or
regulations that have been proposed but have not been enacted. Except as may
otherwise be specified, accounting terms used in this Indenture will have the
meanings specified under GAAP.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 to the form of Security attached hereto as Exhibit A.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part
of any Indebtedness.
"GUARANTOR" means (i) Signal Investment & Management Co., (ii) each
of the Subsidiaries that subsequently becomes a guarantor of the Securities
in compliance with the provisions of this Indenture and (iii) each of the
Subsidiaries executing a supplemental indenture in which such Subsidiary
agrees to be bound by the terms of this Indenture.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"INDEBTEDNESS" of any Person as of any date means and includes,
without duplication, (i) all indebtedness, obligations and liabilities of
such Person in respect of borrowed money including all interest, fees and
expenses owned with respect thereto (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments, or
representing the deferred and unpaid balance of the purchase price of any
property or interest therein, if and to the extent such indebtedness would
appear as a liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with GAAP, (ii) all Capitalized Lease
Obligations of such Person, (iii) all obligations of such Person in respect
of letters or credit, bankers' acceptances, letter of credit reimbursement or
similar agreement (whether or not such items would appear on the balance
sheet of such Person), (iv) all net Obligations of such Person in respect of
interest rate protection and foreign current hedging arrangements and (v)
all Guarantees by such Person of items that would constitute Indebtedness
under this definition (whether or not such items would appear on such balance
sheet). The amount of Indebtedness of any Person at any date shall be,
without duplication, the principal amount that would be shown on a balance
sheet of such Person prepared as of such date in
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accordance with GAAP and the maximum net liability of any contingent
Obligations referred to in clauses (i) through (v) above at such date.
Interest rate swap, cap, collar or other hedging agreements shall not be
deemed to be Indebtedness for purposes of the Indenture to the extent that
they are entered into for the purpose (which may be definitively established
by delivering an Officers Certificate to such
effect to the Trustee) of reducing interest rate or currency exposure on any
Indebtedness permitted to be outstanding by the terms of this Indenture.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INITIAL PURCHASER" shall mean Kidder, Peabody & Co. Incorporated.
"INVESTMENTS" of any Person means all investments by such Person in
other Persons (including Affiliates) in the form of loans, advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases
(or other acquisitions for consideration) of Indebtedness, Capital Stock or
other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"INVESTMENT GRADE" shall mean BBB or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P's or Moody's successors or
by any other Rating Agency selected as provided in the definition of Rating
Agency.
"ISSUANCE DATE" means the date of original issue of the Securities.
"JUNIOR DEBT" means Indebtedness of the Company that is subordinate or
junior in right of payment to the Securities.
"LIEN" means any lien, security interest, mortgage, deed of trust,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any option or
other agreement to give any security interest).
"MOODY'S" means Moody's Investors Services, Inc. and its successors.
"NET AMOUNT OF RESTRICTED INVESTMENTS" as at any date of computation
means the aggregate amount of Restricted Investments made by the Company and
its Subsidiaries subsequent to the Issuance Date, less (i) amounts received
upon the disposition, replacement, liquidation or repayment thereof, to the
extent not reflected in Consolidated Net Income of the Company and its
Subsidiaries, and (ii) reductions in connection with any write-down thereof
that are reflected in the Consolidated Net Income of the Company.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that
are the subject of such Asset Sale and any reserve for adjustment in respect
of the sale price of such asset or assets.
"NEW CREDIT AGREEMENT" means those certain Credit Agreements, dated as
of June 17, 1994, by and between the Company and The First National Bank of
Chicago, as agent, providing for up to $55 million of term loan commitments,
revolving credit borrowings and letters of credit, together with any other
replacements, refinancing, refunding or otherwise replacing such Credit
Agreements in substantially
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the same terms and in no greater amount than such Credit Agreements or other
credit agreement and any related notes, guarantees, collateral documents,
instruments and agreements executed in connection with any thereof, and in
each case as amended, supplemented, extended, modified, renewed, refunded,
replaced or refinanced from time to time.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICERS" means the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice President of the Company, the Guarantors or any other
Subsidiary, as the case may be.
"OFFICERS' CERTIFICATE" means a certificate that meets the requirements
of Section 13.04 hereof signed by two Officers, one of whom must be the
principal executive officer, principal financial officer or principal
accounting officer of the Company.
"OPINION OF COUNSEL" means an opinion that meets the requirements of
Section 13.05 hereof from legal counsel who is reasonably acceptable to the
Trustee. Such counsel may be a director, officer, employee of or counsel to
the Company, any Guarantor, any Subsidiary or the Trustee.
"PERMITTED INVESTMENTS" means (i) any Investments in the Company or in
a Wholly Owned Subsidiary of the Company that is a Guarantor; (ii) any
Investments in Cash Equivalents; (iii) Investments by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment
(a) such Person becomes a Wholly Owned Subsidiary of the Company and a
Guarantor or (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that
is a Guarantor, and (iv) any investment that would be a Cash Equivalent but
for its maturity being greater than six months, provided such maturity is not
greater than one year.
"PERMITTED LIENS" means (i) Liens securing Senior Debt of the Company
or guaranties given by the Subsidiaries of the Company guaranteeing the
Senior Debt and any Liens granted to secure such guaranties or Indebtedness
of any Subsidiary that is permitted by this Indenture to be incurred; (ii)
Liens in favor of the Company; (iii) Liens on property of a Person existing
at the time such Person is merged with or into or consolidated with the
Company or any Subsidiary of the Company; PROVIDED that such Liens were in
existence prior to the contemplation of such merger or consolidation; (iv)
Liens on property existing at the time of acquisition thereof by the Company
or any Subsidiary of the Company; PROVIDED that such Liens were in existence
prior to the contemplation of such acquisition; (v) Liens to secure
Indebtedness incurred in connection with Capitalized Lease Obligations,
mortgage financings or purchase money obligations, in each case, incurred for
the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in the business of the Company
or such Subsidiary, which cover only the assets acquired or constructed by
the proceeds of such Indebtedness; (vi) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;
(vii) Liens existing on the date of this Indenture; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; PROVIDED that any reserve or other
appropriate provision as shall be required in accordance with GAAP shall have
been made therefor; (ix) Liens on any insurance policies arising out of
borrowings against the cash surrender value of such insurance policies held
by the Company, PROVIDED that such Liens do not exceed the amount of
Indebtedness and are secured only by the cash surrender value of such
insurance policies; and (x) Liens incurred in the ordinary course of business
of the Company or any
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Subsidiary of the Company that are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business.)
"PERSON" means any individual, corporation, partnership, joint venture,
trust, estate, association, organization or any government or any agency or
political subdivision thereof.
"PREFERRED STOCK" means any Equity Interest, whether or not designated
as "preferred stock," with preferential rights of payment of dividends or
upon redemption or retirement, or upon liquidation, winding-up or dissolution
or termination of the issuer thereof.
"PRINCIPAL" means First Union Capital Partners, Inc. or Zan Guerry and
their respective Affiliates and Related Persons.
"RATING AGENCY" means S&P and Moody's, or, if S&P or Moody's or both
shall not make a rating on the Securities publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be,
selected by the Company, and which shall be substituted for S&P or Moody's or
both, as the case may be.
"RATING CATEGORY" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D, (ii) with respect to Moody's, any of the
following categories: Ba, B, Caa, Ca, C and D, and (iii) with respect to any
other Rating Agency, the equivalent of any such category of S&P or Moody's
used by such other Rating Agency.
"RATING DATE" means the date which is 120 days prior to the earlier of
public notice of a Change of Control or of the intention of the Company to
effect a Change of Control.
"RATING DECLINE" means the occurrence of the following on or within 90
days after the date of public notice of the occurrence of a Change of Control
or of the intention of the Company to effect a Change of Control (which
period shall be extended so long as the rating on the Securities is under
publicly announced consideration for possible downgrade by any Rating
Agency), (i) in the event that the Securities are rated by one or both Rating
Agencies on the Rating Date as Investment Grade, the rating of the Securities
by both Rating Agencies shall be below Investment Grade, or (ii) in the event
that the Securities are rated by both Rating Agencies on the Rating Date
below Investment Grade, the rating of the Securities by any Rating Agency
shall be at least one Rating Gradation below the rating of the Securities by
such Rating Agency on the Rating Date.
"RATING GRADATION" means, with respect to any Rating Agency, the
gradation applied within the Rating Categories used by such Rating Agency
(e.g., (i) with respect to S&P), "+" or "-" following the letter designation
of a Rating Category and an intermediate gradation indicated by the absence
of either a "+" or "-" following the letter designation of a Rating
Category; (ii) with respect to Moody's "1", "2" or "3" following the letter
designation of a Rating Category; and (iii) with respect to any other Rating
Agency, the equivalent of any such gradation used by such other Rating
Agency). For example, a decrease of one Rating Gradation (x) in the case of
S&P, shall be from "+" to the intermediate gradation within the same Rating
Category (e.g., from BB+ to BB-) or from "-" of a Rating Category to "+" of
the next lower Rating Category (e.g., from BB- to B+); (y) in the case of
Moody's, shall be from "1" to "2" within the same Rating Category (e.g., from
Ba1 to Ba2) or from "3" of a Rating Category to "1" of the next lower Rating
Category (e.g., from Ba3 to B1); and (z) with respect to any other Rating
Agency, the equivalent of any such decrease.
"RECAPITALIZATION" means the recapitalization of the Company effective
June 11, 1993.
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"REGISTRATION RIGHTS AGREEMENT" means that certain Note Registration
Rights Agreement dated the Issuance Date between the Company and the Initial
Purchaser.
"RELATED PERSON" with respect to any Principal means (i) any
controlling shareholder, 80% or more owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (ii) a
trust, corporation, partnership or other entity, the beneficiaries,
shareholders, partner, owners or Person beneficially holding an 80% or more
controlling interest of which consists of such Principal or such other
Persons referred to in the foregoing clause (i).
"REPRESENTATIVE" means The First National Bank of Chicago, as agent or
representative of various lenders under the New Credit Agreement together
with its successors or assigns, and any agent, representative or sole lender
thereunder.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer within the corporate trust division of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of
his knowledge of and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation and its successors.
"SECURITIES" means the Securities issued under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES CUSTODIAN" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"SECURITYHOLDER" OR "HOLDER" means a registered holder of one or more
Securities.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect
on the date of this Indenture.
"SUBSIDIARY" of any specified Person means a corporation or such other
entity, a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect the board of directors or other governing body is at
the time, directly or indirectly, owned by such Person or by such Person and
a Subsidiary or Subsidiaries of such Person or by a Subsidiary or
Subsidiaries of such Person.
"SUBSIDIARY GUARANTEE" means, individually and collectively, the
Guarantees now or hereafter given by the Guarantors pursuant to Article 11
hereof, including with respect to the Persons that are Guarantors as of the
date hereof a notation on the Securities substantially in the form attached
hereto as Exhibit B.
"SUBSIDIARY GUARANTOR" means (i) Signal Investment & Management Co.),
(ii) each of the Subsidiaries that subsequently becomes a guarantor of the
Securities in compliance with the provisions
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hereof and (iii) each of the Subsidiaries executing a supplemental indenture
in which such Subsidiary agrees to be bound by the terms of this Indenture
and become a guarantor of the Securities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the
United States of America, or any agency or instrumentality thereof for the
payment of which the full faith and credit of the United States of America is
pledged.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding principal amount of such Indebtedness into (b) the sum of
the product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares required by law, rule or
regulation) shall at the time be owned by such Person or by one or more
Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.
For the purposes of this Indenture, the singular shall include the
plural where appropriate, and the terms "include" or "including" shall mean
without limitation by reason of enumeration or otherwise.
SECTION 1.02. OTHER DEFINITIONS.
Term Defined in Section
"Asset Sale" 4.10
"Asset Sale Offer" 3.09
"Bankruptcy Law" 6.01
"Change of Control Offer" 4.14
"Change of Control Payment Date" 4.14
"Covenant Defeasance" 8.03
"Custodian" 6.01
"Designated Senior Debt" 10.02
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Exchange Offer" 12.01
"Exchange Offer Registration Statement" 12.01
"Legal" 8.02
"Legal Holiday" 13.07
"Notice of Default" 6.01
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
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"Purchase Date" 3.09
"Refinancing Indebtedness" 4.09
"Registrar" 2.03
"Registration Default" 12.02
"Representative" 10.02
"Restricted Amount" 4.07
"Restricted Payment" 4.07
"Senior Debt" 10.02
"Senior Debt of the Guarantors" 11.06
"Shelf Registration Statement" 12.01
"Transaction" 4.11
"Transfer Restricted Securities" 12.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Securities and the Subsidiary
Guarantee;
"INDENTURE SECURITY HOLDER" means a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
and
"OBLIGOR" on the Securities means the Company, the Guarantors and
any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) the terms "include" or "including" or any variation thereof
shall mean without limitation by reason of any enumeration thereof.
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ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which
are incorporated in and made a part of this Indenture. The Subsidiary
Guarantee shall be substantially in the form of Exhibit B hereto. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject or usage. Each
Security shall be dated the date of its authentication. The Securities shall
be issued initially in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Security annexed hereto
as Exhibit A and the Subsidiary Guarantee annexed hereto as Exhibit B shall
constitute, and are hereby expressly made, a part of this Indenture. In the
event of a conflict between this Indenture and Exhibit A or B hereto, this
Indenture shall control. To the extent applicable, the Company, the Guarantor
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
The Securities will initially be issued in global form,
substantially in the form of Exhibit A attached hereto. The Global Securities
shall represent such of the outstanding Securities as shall be specified
therein and each shall provide that it shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee or the Securities Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer or Officers of the Company shall sign the Securities on
behalf of the Company by manual or facsimile signature. The Company's seal
shall be reproduced or impressed on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The
form of Trustee's certificate of authentication to be borne by the Securities
shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by
two Officers of the Company, authenticate Securities for original issue up to
an aggregate principal amount stated in paragraph 4 of the Securities. The
aggregate principal amount of Securities outstanding at any time shall not
exceed the amount set forth herein, except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Company or an Affiliate.
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SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Securities
may be presented for registration of transfer or for exchange ("REGISTRAR")
and (ii) an office or agency where Securities may be presented for payment
("PAYING AGENT"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any
Paying Agent, Registrar or co-registrar without prior notice to any
Securityholder. The Company shall notify the Trustee and the Trustee shall
notify the Securityholders of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company, the
Guarantors or any other Subsidiary of the Company may act as Paying Agent,
Registrar or co-registrar. The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall
incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee of the name and address of any such Agent. If the Company
fails to maintain a Registrar or Paying Agent, or fails to give the foregoing
notice, the Trustee shall act as such, and shall be entitled to appropriate
compensation in accordance with Section 7.07 hereof.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee as Securities Custodian,
Registrar, Paying Agent and agent for service of notices and demands in
connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company, the Guarantor or any other obligor on the Securities
shall require each Paying Agent other than the Trustee to agree in writing
that the Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee subject to the provisions of Article 10 all
money held by the Paying Agent for the payment of principal of, premium, if
any, and interest on Securities, and shall notify the Trustee of any Default
by the Company, any Guarantor or any other obligor on the Securities in
making any such payment. While any such Default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The
Company, the Guarantor or any other obligor on the Securities at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company)
shall have no further liability for the money delivered to the Trustee. If
the Company, any Guarantor or any other obligor on the Securities acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Securityholders all money held by it as Paying Agent.
SECTION 2.05. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Securityholders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company, any Guarantor or any obligor on
the Securities shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders, including
the aggregate principal amount of the Securities held by each thereof, and
the Company, any Guarantor or any other obligor on the Securities shall
otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
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Trustee, any Agent or any authenticating agent from any loss which any of
them may suffer if a Security is replaced. The Company and the Trustee may
charge for their respective expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company
and the Guarantor.
SECTION 2.08. OUTSTANDING SECURITIES.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities
owned by the Company, the Guarantor, or any Affiliate of the Company or any
Affiliate of the Guarantor shall be deemed not to be outstanding, except that
for purposes of determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent, only Securities that a Responsible
Officer knows to be so owned shall be deemed to be excluded for purposes of
such determination.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but
may have variations that the Company, the Guarantor and the Trustee consider
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate definitive
Securities in exchange for temporary Securities. Until such exchange,
temporary Securities shall be entitled to the same rights, benefits and
privileges as definitive Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation. Subject to the
record retention requirements of the Exchange Act, all canceled Securities
held by the Trustee shall be destroyed and certification of their destruction
delivered to the Company, unless by a written order, signed by two Officers
of the Company, the Company shall direct that canceled Securities be
returned to it. The Company may not issue new Securities to replace
Securities that it has redeemed or paid or that have been delivered to the
Trustee for cancellation.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Securityholders on a subsequent special record date, which date shall be at
the earliest practicable date but in all events at least five Business Days
prior to the payment date, in each case at the rate provided in the
Securities and in Section 4.01 hereof. The Company shall, with the consent of
the Trustee, fix or cause to be fixed each such special record date and
payment date. At least 15 days before the special record date, the Company
(or the Trustee, in the name of and at the expense of the Company) shall mail
to Securityholders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of
Securityholders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided
for in TIA Section 316(c) and in Section 9.04 hereof. The record date with
respect to each interest payment date is set forth in paragraph 2 of the form
of Security attached hereto as Exhibit A. Pursuant to Section 6.10 hereof,
the Trustee may fix record dates for other payments to Securityholders.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the Section of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Securities to be redeemed and (iv) the redemption
price.
If the Company is required to make an offer to redeem Securities
pursuant to the provisions of Sections 3.09 or 4.14 hereof, it shall furnish
to the Trustee at least 30 days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the Section of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Securities to be redeemed, (iv) the redemption
price and (v) further setting forth a statement to the effect that (a) the
Company or one of its Subsidiaries has effected an Asset Sale and the
conditions set forth in Section 4.10 have been satisfied or (b) a Change of
Control Triggering Event has occurred and the conditions set forth in
Section 4.14 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed among the Securityholders on a PRO RATA
basis, by lot or in accordance with any other method the Trustee considers
fair and appropriate (and in such manner as complies with applicable legal
and stock exchange requirements, if any). In the event of partial redemption
by lot, the particular Securities to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to
the redemption date by the Trustee from the outstanding Securities not
previously called for redemption.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed.
Securities and portions of them selected shall be in amounts of $1,000 or an
integral multiple thereof; except that (i) no Securities of $1,000 or less
shall be redeemed in part, and (ii) if all of the Securities of a Holder are
to be redeemed, the entire outstanding amount of Securities held by such
Holder, even if not a multiple of $1,000, shall be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities
called for redemption.
In the event the Company is required to make an offer to redeem
Securities pursuant to Sections 3.09 and 4.10 hereof and the amount of the
Excess Proceeds from the Asset Sale are not evenly divisible by $1,000, the
Trustee shall promptly refund to the Company any remaining Excess Proceeds.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail a
notice of redemption to each Holder whose Securities are to be redeemed at
its registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion shall be
issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities or portion of the Securities called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed;
and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that
the Company shall have delivered to the Trustee, at least 45 days prior to
the redemption date, an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
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SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money in immediately
available funds sufficient to pay the redemption price of and accrued interest
on all Securities to be redeemed on that date. The Trustee or Paying Agent
shall promptly return to the Company any money deposited with the Trustee or
the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Securities to be redeemed.
On and after the redemption date, interest ceases to accrue on the
Securities or the portions of Securities called for redemption. If a Security
is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Security was registered at the close of
business on such record date. If any Security called for redemption shall not
be so paid upon surrender for redemption because of the failure of the Company
to comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case
at the rate provided in the Securities and in Section 4.01 hereof.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Under surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Securityholder at the
expense of the Company a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Company may redeem all or any portion of the Securities upon the
terms and subject to the conditions set forth in paragraph 5 of the
Securities. The Securities may not be so redeemed before June 15, 2001. On or
after such date, the Securities will be redeemable, at the option of the
Company, in whole or in part, on at least 30 days' but not more than 60 days'
notice to each holder of such Securities to be redeemed, at a redemption
price (expressed as a percentage of the principal amount of the Securities)
set forth below, plus accrued interest to the redemption date if redeemed
during the 12-month period beginning June 15 of the years indicated below.
Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
Year Percentage
---- ----------
2001 101.594%
2002 and thereafter 100.000%
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SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.14, the Company is
not required to make mandatory redemption or sinking fund payments with
respect to the Securities.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall commence an offer to all Securityholders to purchase Securities (an
"ASSET SALE OFFER"), it shall follow the procedures specified below:
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "OFFER PERIOD"). No later
than five Business Days after the termination of the Offer Period (the
"PURCHASE DATE"), the Company shall purchase the principal amount of
Securities required to be purchased pursuant to Section 4.10 hereof (the
"OFFER AMOUNT") or, if less than the Offer Amount has been tendered, all
Securities tendered in response to the Asset Sale Offer.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued interest shall be
paid to the Person in whose name a Security is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Securities pursuant to the Asset Sale Offer.
Upon the commencement of any Asset Sale Offer, the Company shall
send, by first class mail, a notice to each of the Securityholders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Asset
Sale Offer. The notice, which shall govern the terms of the Asset Sale Offer,
shall state:
(1) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 and the length of time the Asset Sale Offer
shall remain open;
(2) the Offer Amount, the purchase price and the Purchase Date;
(3) that any Security not tendered or accepted for payment shall
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest on and after the Purchase Date;
(5) that Securityholders electing to have a Security purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Company, a depository,
if appointed by the Company, or a Paying Agent at the address specified in
the notice at least three days before the Purchase Date;
(6) that Securityholders shall be entitled to withdraw their
election if the Company, such depository or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Securityholder, the principal amount of the Security the Securityholder
delivered for purchase and a statement that such Securityholder is
withdrawing his election to have the Security purchased;
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(7) that, if the aggregate principal amount of Securities
surrendered by Securityholders exceeds the Offer Amount, the Company shall
select the Securities to be purchased on a PRO RATA basis (with such
adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(8) that Securityholders whose Securities were purchased only in
part shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a PRO RATA basis to the extent necessary, the
Offer Amount of Securities or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all
Securities or portions thereof tendered, and deliver to the Trustee an
Officers' Certificate stating that such Securities or portions thereof were
accepted for payment by the Company in accordance with the terms of this
Section 3.09. The Company, the depository or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Securityholder an amount
equal to the purchase price of the Security tendered by such Securityholder
and accepted by the Company for purchase, and the Company shall promptly
issue a new Security, and the Trustee shall authenticate and mail or deliver
such new Security, to such Securityholder equal in principal amount to any
unpurchased portion of the Security surrendered. Any Security not so accepted
shall be promptly mailed or delivered by the Company to the Securityholder
that tendered it into the Asset Sale Offer. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
redemption pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities. Principal, premium, if any, and interest shall be considered paid
on the date due if the Paying Agent (if other than the Company, the Guarantor
or a Subsidiary of the Company or the Guarantor) holds as of 10:00 a.m.
Eastern Time on the due date money deposited by or on behalf of the Company
in immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than three Business Days following the date
of payment, any money (including accrued interest) that exceeds such amount
of principal, premium, if any, and interest paid on the Securities. Holder of
Securities represented by definitive certificates must surrender such
certificates to a Paying Agent to collect principal payments.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to 1% per annum in excess of the then applicable interest rate on the
Securities to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at
the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
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The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
(a) The Company shall file with the Trustee, within 15 days after
filing the same with the SEC, copies of the annual reports and of
the information, documents, and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) that
the Company is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. If the Company is not subject to the requirements of
such Section 13 or 15(d) of the Exchange Act, the Company shall continue to
file with the SEC and the Trustee on the same timely basis such reports,
information and other documents as it would file if it were subject to the
requirements of Section 13 or 15(d) of the Exchange Act and shall furnish all
such reports, information and other documents to prospective investors who
request it in writing. The Company and each Guarantor shall also comply with
the provisions of TIA Section 314(a).
(b) Whether or not required by the rules and regulations of the
Commission, so long as any Securities are outstanding, the Company will
furnish to the holders of the Securities all financial and other information
that would be required to be contained in filings with the Commission,
including, without limitation, those on Commission Forms 10-Q, 10-K and 8-K
as if the Company were required to file such forms, including a "Management's
Discussion of Analysis of Financial Condition and Results of Operations"
quarterly and annually within 120 days after the end of each of the Company's
fiscal year end and within 45 days after the end of the first three quarters
of each such fiscal year. The financial statements as of and for each fiscal
year shall contain a report thereon by the Company's independent auditors.
In the event the Company is not at the time otherwise required to file such
reports with the Commission pursuant to the Exchange Act, the Indenture
requires the Company nevertheless to continue to file such reports with the
Commission and to furnish them to holders of the Securities. All such reports
shall include condensed financial information with respect to the Company to
the extent and in the form proscribed by the Commission's rules and
regulations applicable to companies required to file reports pursuant to
Sections 13, 14 and 15 of the Exchange Act, whether or not such rules and
regulations otherwise are applicable to the Company.
(c) The Company and the Guarantor shall provide the Trustee with a
sufficient number of copies of all reports and other documents and
information that the Trustee may be required to deliver to
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the Securityholders under this Section 4.03. The Trustee shall be a
repository only for such reports and will not be charged with knowledge of
the contents of such reports.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review
of the activities of the Company and its Subsidiaries (including the
Guarantor) during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether each
has kept, observed, performed and fulfilled its Obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge each has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action each is
taking or proposes to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the
Securities is prohibited or if such event has occurred, a description of the
event and what action each is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03 hereof shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation
reasonably satisfactory to the Trustee) that in making the examination
necessary for certification of such financial statements nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly
to any Person for any failure to obtain knowledge of any such violations.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments and governmental
levies except as contained in good faith and by appropriate proceedings.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and the Guarantor covenant (to the extent that they may
lawfully do so) that they shall not at any time insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law whatever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture;
and the Company and the Guarantors (to the extent that they may lawfully do
so) hereby expressly waive all benefit or advantage of any such law, and
covenant that they shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
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SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any
Distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (other than dividends or Distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or dividends or Distributions
payable to the Company or, in the case of a Subsidiary, from such Subsidiary
to any Wholly Owned Subsidiary of the Company that is a Guarantor); (ii)
purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Subsidiary or other Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly
Owned Subsidiary of the Company that is a Guarantor); (iii) purchase, redeem
or otherwise acquire or retire for value any Indebtedness that is PARI PASSU
with or subordinated to the Securities (other than the Securities); (iv)
redeem, repurchase or defease (including, without limitation, in substance or
legal defeasance) or in any other manner acquire or retire for value by the
Company or any Subsidiary of any Junior Debt or debt ranking PARI PASSU with
the Securities prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment; or (v) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above
plus the net amount of Restricted Investment being collectively referred to
as "Restricted Payments"), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period
immediately preceding such Restricted Payment, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (including Restricted Payments
permitted by clause (i) of the next succeeding paragraph), is less than
the sum of (x) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the date of this
Indenture to the end of the Company's most recently ended fiscal
quarter (or, if such Consolidated Net Income for such period is
a deficit, minus, 100% of such deficit), plus (y) 100% of the aggregate
net cash proceeds received by the Company from the issue or sale of
Equity Interests of the Company or any security convertible or
exchangeable for any such Equity Interests that has been so converted
or exchanged (other than Equity Interests or other securities sold to a
Subsidiary of the Company and other than Disqualified Stock).
The foregoing provisions will not prohibit (i) up to an
aggregate of $1.0 million of additional Restricted Payments since the
Issuance Date; (ii) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Indenture; (iii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company that is a
Guarantor) of other Equity Interests of the Company (other than any
Disqualified Stock) or (iv) the Company from redeeming Junior Debt with the
proceeds from the issuance of Junior Debt, so long as such Junior Debt has a
Weighted Average Life to Maturity greater than the remaining Weighted Average
Life to Maturity of the Junior Debt so redeemed; PROVIDED, HOWEVER, that
except in the case of clause (ii), no Default or Event of Default shall have
occurred or be continuing or would occur as a consequence thereof.
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Not later than 10 days prior to making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by the covenant "Limitation on Restricted Payments"
were computed, which calculations may be based upon the Company's latest
available financial statements.
SECTION 4.08. LIMITATION ON DIVIDEND RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any such
Subsidiary to (i) pay dividends or make any other Distributions on its Equity
Interests or with respect to any other interest or participation in, or
measured by, its sales, revenues or profits, or pay any Indebtedness owed to
the Company or a Subsidiary of the Company, (ii) make loans or advances to
the Company or a Subsidiary of the Company or (iii) transfer any of its
properties or assets to the Company or a Subsidiary of the Company, except
for such encumbrances or restrictions existing under or by reason of (A)
applicable law, (B) this Indenture, (C) any instrument governing Indebtedness
existing on the Issuance Date or any exchange, refinancing or refunding
thereof permitted under this Indenture; PROVIDED, HOWEVER, that the terms of
the new Indebtedness to be incurred shall not impose any greater encumbrance
or restriction than those existing pursuant to the terms of the Indebtedness
proposed to be so exchanged, refinanced or refunded, (D) customary
nonassignment provisions of any agreement or obligation, including a lease
governing a leasehold interest, of the Company or a Subsidiary of the
Company, (E) any instruments governing or evidencing the New Credit Agreement
or any other Indebtedness permitted by the Indenture (including any liens and
guaranties created thereunder); PROVIDED, HOWEVER, that such instruments
shall not impose any greater encumbrance or restriction than those contained
in the New Credit Agreement on the Issuance Date or any agreements evidencing
Permitted Liens, or (F) any instrument governing or evidencing Indebtedness
of a Person acquired by the Company or any Subsidiary of the Company at the
time of such acquisition, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired; PROVIDED,
HOWEVER, that such Indebtedness is not incurred in connection with or in
contemplation of such acquisition.
SECTION 4.09. LIMITATION ON ADDITIONAL INDEBTEDNESS
The Company and its Subsidiaries will be prohibited from, directly or
indirectly, creating, incurring, issuing, assuming, guaranteeing or otherwise
becoming liable contingently or otherwise, with respect to or otherwise
becoming responsible for, or incurring any Obligations under, the payment of
(including through any merger, consolidation, amalgamation, acquisition or
business combination to which the Company is a party) any Indebtedness,
including without limitation, Acquired Indebtedness. The foregoing
notwithstanding, the Company may incur Indebtedness, if the Company's Fixed
Charge Coverage Ratio for the four full fiscal quarters next preceding the
date such additional Indebtedness is incurred, is a least 1.75:1 for the
fiscal years 1994 and 1995, and 2.00:1 thereafter, determined on a PRO FORMA
basis (after giving effect to the incurrence of such Indebtedness and the
application of the net proceeds of such Indebtedness), as if the additional
Indebtedness had been incurred and applied at the beginning of such
four-quarter period.
The foregoing limitations will not apply to (a) the incurrence by the
Company of Indebtedness under the New Credit Agreement of up to $50 million
in aggregate principal amount at any time outstanding, (b) Indebtedness
outstanding on the Issuance Date, (c) the incurrence by the Company of
Indebtedness represented by the Securities, (d) the incurrence by the Company
of Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace or refund Indebtedness referred to in
clauses (b) or (c) above (the "Refinancing Indebtedness"); PROVIDED, HOWEVER,
that unless the proceeds of such Refinancing Indebtedness will be used to
retire all outstanding Securities
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(1) the principal amount of such Refinancing Indebtedness shall not exceed
the principal amount of the Indebtedness so extended, refinanced, renewed,
replaced, substituted or refunded (plus the amount of premiums and expenses
incurred in connection therewith); (2) the Refinancing Indebtedness shall
have a Weighted Average Life to Maturity equal to or greater than the
remaining Weighted Average Life to Maturity of (x) the Securities or (y) the
Indebtedness being extended, refinanced, renewed, replaced or refunded,
whichever has the shorter Weighted Average Life to Maturity; and (3) if
applicable, the Refinancing Indebtedness shall be subordinated in right of
payment to the Securities on terms at least as favorable to the Holders of
Securities as those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced or refunded, or (e)
intercompany Indebtedness between or among the Company and any of its Wholly
Owned Subsidiaries that are Guarantors and (f) Hedging Obligations that are
incurred in order to fix or hedge interest rate risk with respect to floating
rate Indebtedness that is permitted by the terms of this Indenture.
SECTION 4.10. ASSET SALES.
The Company will not, and will not permit any of its Subsidiaries to,
(i) sell, lease, convey or otherwise dispose of any assets (other than (x)
inventory in the ordinary course of business, (y) to a Wholly Owned
Subsidiary that is a Guarantor, or (z) sales of accounts receivable, in each
case under clauses (y) and (z) above, whether or not in the ordinary course
of business)(provided that the sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Company shall be governed by
the provisions of Section 5.01 hereof), or (ii) issue or sell Equity
Interests of any of its Subsidiaries (or debt securities convertible into or
exchangeable for capital stock of such Subsidiary), in each case, whether in
a single transaction or a series of related transactions, (a) that have a
fair market value in excess of $0.5 million, or (b) for net proceeds in
excess of $0.5 million (each of the foregoing, an "Asset Sale"), unless (x)
the Company (or the Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the fair market value (as
determined in good faith by, and evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of
the assets sold or otherwise disposed of and (y) at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents unless the net proceeds received from such
Asset Sale are less than $1.5 million, in which case at least 25% of the
consideration thereof received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents. For purposes of this Section 4.10, the
amount of (x) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in the notes thereto) of the Company or any
Subsidiary (other than Junior Debt, and liabilities that are incurred or
assumed by the Company or any Subsidiary in connection with or in
anticipation of any such Asset Sale) that are assumed by the transferee of
any such assets and (y) any notes or other obligations received by the
Company or any such Subsidiary from such transferee that are immediately
converted by the Company or such Subsidiary into cash (to the extent of the
cash received) shall be deemed to be cash for purposes of this provision.
Within 12 months after any Asset Sale, the Company may apply the Net
Proceeds from such Asset Sale (x) to purchase assets similar in nature and
business purpose to the Company's existing businesses at the time of such
Asset Sale, (y) to purchase assets of related businesses or (z) to reduce
permanently the Senior Debt (or Obligations with respect thereto), including
without limitation, any Indebtedness under the New Credit Agreement (or
Obligations with respect thereto). Any net cash proceeds from Asset Sales
that are not applied as provided in the preceding sentence will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds is
$5.0 million or more, subject to the provisions of Article 10, the Company
shall make an offer to all Holders of Securities (an "Asset Sale Offer") to
repurchase the maximum principal amount of Securities that may be purchased
out "Asset Sale Offer") to repurchase the maximum principal amount of
Securities that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the outstanding principal amount
thereof plus accrued and unpaid interest, if any, to the date fixed for the
closing of such offer, in accordance with the procedures set forth in Section
3.09 hereof. To the extent that the aggregate amount of Securities tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may
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use such deficiency for general corporate purposes. If the aggregate
principal amount of Securities surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Securities to be
purchased on a PRO RATA basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be deemed to be reset at zero.
An offer to purchase Securities pursuant to this Section 4.10 shall be
made pursuant to the provisions of Section 3.09 hereof. Simultaneously with
the notification of such an offer of purchase to the Trustee as required by
Sections 3.01, 3.03 and 3.09 hereof, the Company shall provide the Trustee
with an Officers' Certificate setting forth the information required to be
included therein by Section 3.01 hereof and, in addition, setting forth the
calculations used in determining the amount of Excess Proceeds to be applied
to the purchase of Securities.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Subsidiaries to
enter into any transaction (or series of transactions) between the Company or
any Subsidiary of the Company and an Affiliate or Related Person involving
payments by the Company or any Subsidiary of the Company, including, without
limitation, any sale, purchase, lease or loan or any other disposition of
assets, property or services (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or such Subsidiary, as the case may be, than
those that would be available in a comparable arms-length transaction with an
unrelated Person and (b) the Company delivers to the Trustee (i) with respect
to any Affiliate Transaction involving aggregate payments in excess of $0.5
million, an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) above and such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
of the Company and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $2.5 million, a favorable opinion as to the
fairness to the Company or such Subsidiary from a financial point of view
issued by an investment banking, accounting or financial advisory firm of
national standing. The foregoing notwithstanding, the following Affiliate
transactions will not be restricted: (i) any deposit, credit or Hedging
Obligation transaction or other commercial banking or trust and fiduciary
services transaction with First Union National Bank of North Carolina
("First Union") and its banking affiliates so long as (a) such transaction is
arms-length, (b) such transaction is in the ordinary course of business of
the Company and (c) such transaction is on terms no less favorable to the
Company or its Subsidiary, as the case may be, then those that would be
available in a comparable arms-length transaction with an unrelated Person,
and (ii) with respect to compensation for Zan Guerry and Robert E. Bosworth
for their services as directors and officers of the Company and any
Subsidiary, PROVIDED such compensation is in the ordinary course of business
and has been approved, prior to payment, by the Compensation Committee of the
Board of Directors consisting of majority of outside directors.
SECTION 4.12. LIENS.
The Company will not, and will not permit any Subsidiary of the Company
to, create, incur, assume or suffer to exist any Liens securing Indebtedness
other than Permitted Liens.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company and its Subsidiaries each shall
do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, and the corporate, partnership or
other existence of each Subsidiary, in accordance with the respective
organizational documents (as the same may be amended form time to time) of
each Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company or its Subsidiaries, as the case may be; PROVIDED,
HOWEVER, that neither the Company nor its Subsidiaries shall be required to
preserve any such right, license
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or franchise, or the corporate, partnership or other existence of any
Subsidiary (other than the Company), if the Board of Directors of the Company
or its Subsidiaries, as the case may be, shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or its Subsidiaries, as the case may be, and that the loss
thereof is not adverse in any material respect to the Securityholders.
SECTION 4.14. CHANGE OF CONTROL.
Upon the occurrence of a Change of Control Triggering Event, subject
to the provisions of Article 10, each Holder of Securities will have the
right to require the Company to repurchase all or any part (in integral
multiples of $1,000) of such Holder's Securities pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the aggregated principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase (the "Change of Control
Payment"). Within 10 days following any Change of Control Triggering Event,
the Company shall mail a notice to each Holder with a copy to the Trustee,
stating: (1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" in this Indenture and that all
Securities tendered will be accepted for payment; (2) the purchase price and
the purchase date, which shall be no later than 30 Business Days after the
date such notice is mailed (the "Change of Control Payment Date"); (3) that
any Security not tendered will continue to accrue interest; (4) that, unless
the Company defaults in the payment of the Change of Control Payment, all
Securities accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest on and after the Change of Control Payment Date; (5)
that Holders electing to have any Securities purchased pursuant to a Change
of Control Offer will be required to surrender the Securities, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Securities completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day preceding the
Change of Control Payment Date; (6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Securities delivered for
purchase, and a statement that such Holder is withdrawing his election to
have such Securities purchased; (7) that Holders whose Securities are being
purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof; and (8) the circumstances and material facts
regarding such Change of Control including, without limitation, historical
financial and other information regarding the acquiring Person and PRO FORMA
financial information reflecting the pro forma effects of such acquisition
and information regarding such Person acquiring control. The Company will
comply with the requirements of Rules 14d and 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Securities in connection with a Change of Control Triggering Event.
On the Change of Control Payment Date, the Company will, to the
extent lawful, subject to the provisions of Article 10, (1) accept for
payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (2) deposit with the Paying Agent by 10:00 a.m. Eastern Time
an amount in immediately available funds equal to the Change of Control
Payment in respect of all Securities or portions thereof so tendered and (3)
deliver or cause to be delivered to the trustee the Securities so accepted
together with an Officers' Certificate stating the Securities or portion
thereof tendered to the Company. The Paying Agent shall promptly mail to each
Holder of Securities so accepted payment in an amount equal to the purchase
price for such Securities, and the Trustee shall promptly authenticate and
mail to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; PROVIDED, HOWEVER,
that each such new Security shall be in a principal amount of $1,000 or an
integral multiple thereof. Prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control
Triggering Event, the Company shall either repay all outstanding Senior
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Debt or obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of Securities required by
this Section 4.14. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
Except as described above with respect to a Change of Control, this
Indenture does not contain provisions that permit the Holders of the
Securities to require that the Company repurchase or redeem the Securities in
the event of a takeover, recapitalization or similar transaction.
SECTION 4.15. LINE OF BUSINESS.
For so long as any Securities are outstanding, the Company will
engage primarily in the retail sale manufacture and distribution of consumer
products, specialty chemicals and over-the-counter pharmaceuticals, and other
products and services that are related to or complementary to all or any of
the foregoing. The foregoing is intended to limit the Company's lines of
business generally, but is not intended to require the Company to engage in
each of these businesses or any particular allocation of such businesses.
SECTION 4.16. LIMITATIONS ON SENIOR SUBORDINATED DEBT.
The Company will not incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Securities, and no
Subsidiary of the Company will incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any
Indebtedness that is subordinate or junior in right of payment to any
Guarantee of Senior Debt and senior in any respect in right of payment to
the Subsidiary Guarantee of such Subsidiary.
SECTION 4.17 ADDITIONAL INVESTMENTS AND SUBSIDIARY GUARANTEES.
The Company will not, and will not permit any of its Subsidiaries,
including without limitation, the Guarantors, to make any Investment in any
Subsidiary that is not a Wholly Owned Subsidiary, unless (i) such Investment
is permitted as a Restricted Payment pursuant to the provisions of Section
4.07 hereof, (ii) such Subsidiary (a) guarantees payment of the Securities by
executing a Subsidiary Guarantee having the same terms and conditions as
those set forth in Article 11 hereof and (b) executes and delivers to the
Trustee a supplemental indenture and Subsidiary Guarantee in form and
substance reasonably satisfactory to the Trustee which subjects such
Subsidiary to the provisions of this Indenture as a Guarantor and also
delivers to the Trustee an Opinion of Counsel, in form reasonably
satisfactory to the Trustee, that such Subsidiary Guarantee is a valid,
binding and enforceable obligation of such Subsidiary, subject to such
customary exceptions for bankruptcy and equitable principles as may be
acceptable to the Trustee in its discretion, or (iii) such Investment is made
in HBA Insurance Limited in the ordinary course of business consistent with
past practices. In addition, with respect to any Subsidiary that is not a
Guarantor, the Company will not, and will not permit any of its other
Subsidiaries to, make any payments to any Subsidiary that is not a Guarantor
except in amounts that are paid in the ordinary course for goods and services
on terms no less favorable to the Company or the paying Subsidiary, as the
case may be, than those that would be available in a comparable arms-length
transaction with an unrelated Person.
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Section 4.18. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF
SUBSIDIARIES.
The Company will not (i) permit any Subsidiary to issue or sell any
Capital Stock other than to the Company or (ii) permit any Person other than
the Company to own any Capital Stock of a Subsidiary (other than directors'
qualifying shares to the extent required by law), except for a sale of 100%
of the Capital Stock of a Subsidiary effected in accordance with the
provisions of Section 4.10 of this Indenture.
SECTION 4.19. LIMITATION ON ISSUANCE OF SUBSIDIARY INDEBTEDNESS.
Except as provided in Section 4.09 hereof, the Company will not
permit any Subsidiary of the Company to create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable contingently or
otherwise with respect to or otherwise become responsible for (including as a
result of or through any merger, consolidation or other acquisition or
business combination) any Indebtedness, other than (x) Acquired Indebtedness,
(y) the guaranty of the obligations of the Company under the New Credit
Agreement if the Subdisiary shall have also guaranteed the Securities or (z)
any Indebtedness, incurred by any Subsidiary of the Company to exchange,
refinance or refund any Indebtedness of such Subsidiary existing on the
Issuance Date so long as the principal amount of such additional Indebtedness
incurred does not exceed the principal amount of the Indebtedness so
exchanged, refinanced or refunded.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into another
Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or
permit any of its Subsidiaries to sell, assign, transfer, lease, convey, or
otherwise dispose of) all or substantially all of its and its Subsidiaries'
assets (determined on a consolidated basis for the Company and its
Subsidiaries taken as a whole) to another Person unless (i) the Company is
the surviving entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, one of the states thereof or the District of Columbia, (ii) the
resulting, surviving or transferee corporation assumes by supplemental
indenture in a form reasonably satisfactory to the Trustee all of the
obligations under the Securities and this Indenture, (iii) immediately before
and after giving effect to such transaction, no Default or Event of Default
(and no event that with notice or lapse of time, or both, would become an
Events of Default) shall have occurred or be continuing or would occur or
result upon the effective date of such transaction, (iv) immediately after
giving effect to such transaction, the Consolidated Net Worth of the
resulting, surviving or transferee corporation is not less than that of the
Company immediately prior to the transaction, (v) immediately after giving
effect to such transaction (on a PRO FORMA basis as if such transaction had
occurred at the beginning of the four quarter period immediately preceding
such transaction), the resulting, surviving or transferee corporation would
have been permitted to incur $1.00 of additional Indebtedness pursuant to the
terms of the Fixed Charge Coverage Ratio test contained in Section 4.09
hereof and (vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel that all conditions precedent relating
to such transaction have been satisfied. The Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and Opinion of Counsel.
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SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been
named as the Company, herein; PROVIDED, HOWEVER, that the Company shall not
be released or discharged from the obligation to pay the principal of,
premium, if any, and interest on the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the failure by the Company to pay interest or liquidated
damages on the Securities when the same becomes due and payable and the
continuance of any such failure for 30 days, whether or not prohibited by
Article 10 hereof;
(2) the failure to pay principal or premium, if any, on the
Securities when the same becomes due and payable, whether at maturity,
redemption or otherwise whether or not such payment is prohibited by the
provisions of Article 10 hereof;
(3) the failure of the Company to purchase the Securities or
observe or perform any covenant, condition or agreement on the part of the
Company to be observed or performed pursuant to Sections 3.09, 4.10 or 4.14
hereof;
(4) the failure by the Company to comply with any of its
agreements or covenants to be observed or performed pursuant to Sections
4.07, 4.09, 4.18 and 4.19 hereof;
(5) the failure by the Company or any Guarantor to comply
with any of its other agreements or covenants in, or provisions of, the
Securities or this Indenture and continuance of such failure for 60 days
after written notice of such default is given to the Company by the Trustee
or to the Company by the holders of 25% in the aggregate principal amount of
Securities then outstanding;
(6) the occurrence of an event of default under any mortgage,
indenture or other instrument governing any Indebtedness of the Company or
any Subsidiary of the Company, including, without limitation, Indebtedness
under the New Credit Agreement, whether such Indebtedness, guarantee or
obligation now exists or shall hereafter be created, if (A) such event of
default results from the failure to pay whether at final maturity or
otherwise an aggregate of $5.0 million or more in principal of or interest on
such Indebtedness or (B) as a result of such event of default, the maturity
of $5.0 million or more in principal amount of such indebtedness has been
accelerated prior to its expressed maturity;
(7) failure by the Company or any of its Subsidiaries to pay
final judgments entered by a court of competent jurisdiction against the
Company and/or its Subsidiaries (other than any
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judgment as to which an insurance company of recognized standing has
accepted full liability) aggregating $5.0 million or more which remain
undischarged or unstayed for a period of 60 days;
(8) the Company or any of its Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors, or
(e) admits in writing its inability to pay its debts generally as
they become due;
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any Subsidiary in an
involuntary case,
(b) appoints a Custodian of the Company or any Subsidiary or for all
or substantially all of the property of the Company or any
Subsidiary, or
(c) orders the liquidation of the Company or any Subsidiary and the
order or decree remains unstayed and in effect for 60 consecutive
days;
(10) except as permitted by this Indenture, any Subsidiary
Guarantee is held in any judicial proceeding to be unenforceable or
invalid or ceases for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, denies or
disaffirms its obligations under its Subsidiary Guarantee.
The term "Bankruptcy Law" means title 11, United States Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.
The Company shall deliver to the Trustee annually a certificate
regarding compliance with this Indenture, and the Company shall upon becoming
aware of any Default or Event of Default, deliver to the Trustee a
certificate specifying such Default or Event of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Holder of the
Securities Notice of Default within 30 days after it occurs, unless such
Default or Event of Default has been cured. Except in the case of a Default
or Event of Default in the payment of principal of, premium, if any, or
interest on any Security or that results from a failure to comply with
Section 5.01, the Trustee may withhold the notice if and so long as a
committee of its trust officers in good faith determines that withholding the
notice is in the interest of the Holders of the Securities.
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SECTION 6.02. ACCELERATION.
The Trustee or the holders of not less than 25% in aggregate
principal amount of Securities then outstanding will be authorized, upon the
happening of any Event of Default (other than an Event of Default specified
in clauses (8) and (9) of Section 6.01 hereof that relates to the Company or
a Significant Subsidiary or a group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary), to declare (a "Declaration") all
the Securities due and payable immediately (the "Default Amount"). Upon any
such Declaration, the Default Amount shall become immediately due and
payable; provided that if any Indebtedness is outstanding under the New
Credit Agreement at the time of such Declaration, then the Default Amount
shall not become due and payable until the earlier of (x) the date on which
the Indebtedness under the New Credit Agreement is accelerated or (y) the
fifth day following the date of such Declaration. Notwithstanding the
foregoing, if an Event of Default specified in clause (8) or (9) of
Section 6.01 hereof occurs that relates to the Company or a Significant
Subsidiary or a group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary, such an amount shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. Holders of the Securities may not enforce the
Indenture or the Securities except as provided in Section 6.06 hereof.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy (under this Indenture or otherwise) to collect
the payment of principal, premium, if any, or interest on the Securities or
to enforce the performance of any provision of the Securities or this
Indenture. In case an Event of Default shall occur (which shall not be
cured), the Trustee will be required, in the exercise of its power, to use the
degree of care of a prudent man under the circumstances in the conduct of his
own affairs. However, the Trustee will be under no obligation to exercise any
of its rights or powers under this Indenture at the request of any
Securityholder, unless such Securityholder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount of Securities outstanding are authorized to waive any Default and
rescind any Declaration if the Default or Event of Default is cured, except
an uncured Default in the payment of principal of or interest on any
Security, or a Default with respect to a covenant or provision that cannot be
modified or amended without the consent of the Holder of each outstanding
Security affected or the Holders of a supermajority of the outstanding
Securities affected (in which case, such Default or Event of Default may only
be waived by the Holders of such higher percentage of the outstanding
Securities). Subject to the provisions of this Indenture relating to the
duties of the Trustee, the Trustee is under no obligation to exercise any of
its rights or powers under the Indenture at the request, order or direction
of any of the holders of the Securities issued thereunder, unless the holders
of such Securities have offered the Trustee indemnity reasonably
satisfactory to it. Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Subject to all provisions of this Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Securities then
outstanding have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or that may subject the Trustee to personal liability and the Trustee shall
not in any event be required to take any such action unless such
Securityholders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
SECTION 6.06. LIMITATION ON SUITS.
A Securityholder may pursue a remedy with respect to this Indenture
or the Securities only if:
(1) the Securityholder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Securityholder or Securityholders offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. RIGHTS OF SECURITYHOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Securityholder to receive payment of principal, premium, if any, and
interest on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Securityholder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(1) or (2) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Company or any
Guarantor or any other obligor on the Securities for the whole amount of
principal, premium, if any, and interest remaining unpaid on the Securities
and interest on overdue principal, premium, if any, and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
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The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Securityholders allowed in any judicial proceedings relative to the
Company or any Guarantor (or any other obligor on the Securities), their
creditors or their property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Securityholder to make such payments to the Trustee, and
in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Securityholders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Securityholder thereof, or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Securities for principal, premium, if any and interest, respectively;
and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Securityholders to the extent not otherwise expressly set forth in this
Indenture or the form of Security attached hereto as Exhibit A.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as a Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Securityholder pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Securities.
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ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(1) The duties and responsibilities of the Trustee shall be as
provided in the TIA. If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided, however, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (2) of
this Section;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(c) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(5) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1),(2),(3) and (4) of this Section.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(7) The mandatory provisions of the TIA shall govern the Trustee
and this Indenture and the discretionary provisions of the TIA shall govern
the Trustee and this Indenture except as specifically modified herein to the
extent allowable.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(1) The Trustee may conclusively rely upon and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, not or other document believed by it to be genuine and to have
been signed or presented by the proper Person. Subject to Section 7.01(2)(b),
the Trustee need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall
be sufficient if signed by an Officer of the Company or such Guarantor.
(6) In no event shall receipt by Trustee of financial and other
reports form the Company as provided in this Indenture, review of which could
lead to the conclusion that an Event of Default exists hereunder, impose upon
the Trustee the obligation to review and examine the same, it being
understood that all such information shall be received by Trustee as
repository for said information and documents with no obligation on the part of
the Trustee to review the same.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company,
any Guarantor or any affiliate of the Company or the Guarantors with the same
rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee is subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the
Securities or the Guarantee, it shall not be accountable for the Company's
use of the proceeds from the Securities or any money paid to the Company or
upon the Company's direction under any provision of this Indenture, it shall
not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Securities or the
Guarantee or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
The Trustee shall not be required to take a notice or be
deemed to have a notice of any Default, except an Event of Default described
in Section 6.01(1) or (2) hereof to the extent the Trustee is then serving as
Paying Agent, unless a Responsible Officer shall be specifically notified in
writing of such Default. If a Default or Event of Default occurs and is
continuing and if the Trustee is deemed to have notice thereof as provided
above, the Trustee shall mail to Securityholders a notice of the Default of
Event of Default within 30 days after it occurs. Except in the case of a
Default or Event of Default in the payment of the principal, premium, if any,
or interest on any Security, the Trustee may withhold such notice if and so
long as a committee of its Trust Officers in good faith determines that
withholding such notice is in the interest of the Securityholders. The
Trustee shall be a repository only for financial reports received by the
Trustee and will not be charged with knowledge of such reports or required to
review such reports to determine whether an Event of Default exists hereunder.
SECTION 7.06. REPORTS BY TRUSTEE TO SECURITYHOLDERS.
Within 60 days after each September 1 beginning with the
September 1 following the date of this Indenture, the Trustee shall mail to
the Securityholders a brief report dated as of such reporting date that
complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within the 12 months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA Section
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA Section 313(c).
A copy of each report at the time of its mailing to the
Securityholders shall be filed with the SEC and each stock exchange on which
the Securities are listed. The Company shall promptly notify the Trustee when
the Securities are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and each Guarantor, jointly and severally, shall
pay to the Trustee from time to time reasonable compensation. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Company and each Guarantor, jointly and severally,
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to
the compensation for its services, together with interest on such amounts at
a rate equal to the applicable interest rate on the Securities plus 1% per
annum. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company and each Guarantor, jointly and severally, shall
indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, except as set forth below.
The Trustee shall notify the Company and the Guarantors promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the
Company or any Guarantor shall not relieve the Company or the
Guarantors of their obligations hereunder. The Company and each Guarantor,
jointly and severally, shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Company and
each Guarantor, jointly and severally, shall pay the reasonable fees and
expenses of such counsel. Neither the Company nor the Guarantor need pay for
any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company and the Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
Neither the Company nor the Guarantors need reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through its own negligence or bad faith.
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To secure the Company's and the Guarantors' payment
obligations in this Section, the Trustee shall have a Lien prior to the
Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal and interest on particular Securities.
Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(8) or (9) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company. The Securityholders of a
majority in principal amount of the then outstanding Securities may remove
the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee
resigns or is removed, the retiring Trustee, the Company, the Guarantors or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Securityholder
who has been a Securityholder for at least six months fails to comply with
Section 7.10 hereof, such Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall shall have all the rights, powers and duties of
the Trustee under this Indenture. The successor Trustee shall mail a notice
of its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and subject
to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement
of the Trustee pursuant to this Section 7.08, the Company's and the
Guarantors' obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
federal or state authority and shall have a combined capital and surplus of
at least $100 million (or be a member or Subsidiary of a bank holding system
with aggregate combined capital and surplus of at least $100 million) as set
forth in its most recent published annual report of condition. No obligor
upon the Securities or Person directly or indirectly controlling or
controlled by, or under common control with such obligor shall serve as
trustee for the Securities.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company and the
Guarantors as obligors on the Securities.
SECTION 7.12. CONFLICTING INTEREST.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the TIA, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the TIA and this Indenture. To the extent permitted by the
TIA, the Trustee shall not be deemed to have a conflicting interest by virtue
of being a trustee under this Indenture with respect to Securities of more
than one series.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate delivered to the Trustee,
at any time, with respect to the Securities, elect to have either Section
8.02 or 8.03 hereof be applied to all outstanding Securities upon compliance
with the conditions set forth below in this Article 8.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 of its option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "LEGAL
DEFEASANCE"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged all of its obligations with respect to the
outstanding Securities (which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below) and to have satisfied all its
other obligations under this Indenture (and the Trustee, on demand of and at
the expense of the Company, shall upon satisfaction by the Company of the
conditions in Section 8.04 hereof execute proper instruments acknowledging
the same), except for (a) the rights of Holders of outstanding Securities to
receive solely from the trust fund described in Section 8.04 hereof, and as
more fully set forth in such Section, payments in respect of principal of,
premium, if any, and interest on such Securities when such payments are due,
(b) the Company's obligations with respect to such Securities under Sections
2.04, 2.06, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder (including without limitation,
the provisions of Section 7.07 hereof) and the Company's obligations in
connection therewith and (d) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof
with respect to the Securities.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of its option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and Article 5 hereof
with respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Securities shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other
purposes hereunder (it being understood that such Securities may not be
deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Securities, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a Default or an Event of Default under Section 6.01(3)(1)(4)
or (5), but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.03,
Sections 6.01(3) through 6.01(7) shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or Section 8.03 hereof to the outstanding Securities, as the
case may be:
(a) The Company must have irrevocably deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with
the provisions of this Article 8 that are applicable to it) as
trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) cash in
U.S. Dollars in an amount, or (b) noncallable U.S. Government
Obligations which through
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the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one
Business Day before the due date of any payment, cash in U.S. Dollars
in an amount, or (c) a combination of (a) or (b) above, in such
amounts, as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge the principal of, premium,
if any, and interest on the outstanding Securities on the stated
maturity or on the applicable redemption date, as the case may be,
of such principal or installment of principal, premium, if any, or
interest;
(b) In the case of a Legal Defeasance hereunder, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that (i) the Company has received
from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case, to
the effect that, and based thereon such Opinion shall confirm that,
the Holders of the outstanding Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of a Covenant Defeasance hereunder, the
Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax in the same
amount, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as Subsection 6.01(8) or 6.01(9) hereof is
concerned, at any time in the period ending on the 91st day after
the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any
material agreement or instrument to which the Company is a party or
by which the Company is bound (other than this Indenture);
(f) In the case of a Legal Defeasance on a Covenant Defeasance,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable Bankruptcy Law;
(g) Such Legal Defeasance or Covenant Defeasance shall not
result in the trust arising from such deposit constituting an
investment company within the meaning of the Investment Company Act
unless such trust shall be registered under such Act or be exempt
from registration thereunder;
(h) In the case of a Legal Defeasance or a Covenant Defeasance,
the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to
its election under Section 8.02 or 8.03 hereof was not made by the
Company with the intent of preferring the Holders over other creditors
of the Company or with
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the intent of defeating, hindering, delaying or defrauding creditors of
the Company or others; and
(i) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel reasonably acceptable
to the Trustee, each stating that all conditions precedent provided
for relating to either the Legal Defeasance under Section 8.02
hereof or the Covenant Defeasance under Section 8.03 hereof (as the
case may be) have been complied with as contemplated by this
Section 8.04.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and noncallable U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of
the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company or a Guarantor, if any, acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become
due thereon in respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or noncallable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or noncallable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
which would then be required to be deposited to effect a Legal Defeasance or
Covenant Defeasance.
SECTION 8.06. TERMINATION OF COMPANY'S OBLIGATION.
This Indenture shall cease to be of further effect (except that the
Company's and the Guarantors' obligations under Section 7.07 and 8.08 hereof,
and the Company's, the Guarantors', the Trustee's and the Paying Agent's
obligations under Section 8.07 hereof shall survive) when all outstanding
Securities theretofore authenticated and issued have been delivered (other
than destroyed, lost or stolen Securities which have been replaced or paid)
to the Trustee for cancellation and Company has paid all sums payable by the
Company hereunder.
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SECTION 8.07. REPAYMENT TO THE COMPANY
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal, and premium, if any, or interest has become due and payable
shall be paid to the Company on its written request and (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
(or any other Person designated by any applicable abandoned property law)
shall thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect
to such trust money, and all liability of the Company as trustee thereof,
shall thereupon cease; PROVIDED, HOWEVER, that the trustee or such Paying
Agent, before being required to make any such payment, may at the expense of
the Company cause to be published once, in THE NEW YORK TIMES and THE WALL
STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30
days from the date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
SECTION 8.08. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Dollars or
noncallable U.S. Government Obligations in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's and the Guarantors' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03, as the case may be; PROVIDED, HOWEVER, that, if the Company
makes any payment of principal or, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF SECURITYHOLDERS.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Securities and the Subsidiary Guarantees, without the consent of any
Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.02 hereof;
(3) to provide for uncertificated Securities in addition to or in place
of certificated Securities;
(4) to make any change that would provide any additional rights or
benefits to the Securityholders or that does not adversely affect the legal
rights hereunder of any Securityholder; or
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(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company and the Guarantors accompanied by a
resolution of each of their respective Board of Directors authorizing the
execution of any such supplemental indenture or amendment, and upon receipt
by the Trustee of the documents described in Section 9.06 hereof required or
requested by the Trustee, the Trustee shall join with the Company and the
Guarantors in the execution of any supplemental indenture or amendment
authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into any
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF SECURITYHOLDERS.
Except as provided below in this Section 9.02, the Guarantors and the
Trustee may amend or supplement this Indenture or the Securities or any
supplemental indenture with the written consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Securities) and, except as otherwise provided below, any existing Default and
its consequences (including without limitation, an acceleration of the
Securities) and compliance with any provision of this Indenture or the
Securities may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities (including consents
obtained in connection with a tender offer or exchange offer for the
Securities).
Upon the requst of the Company and the Guarantors, accompanied by a
resolution of its Board of Directors authorizing the execution of any such
supplemental indenture or amendment, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Securityholders
aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company and the
Guarantors in the execution of such supplemental indenture or amendment
unless such supplemental indenture or amendment affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture or amendment.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Securityholders affected thereby a
notice briefly describing the amendment, suppliment or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture,
amendment or waiver. Subject to Sections 6.04 and 6.07 and this Section 9.02
hereof, the Holders of a majority in aggregate principal amount of the
Securities then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities; PROVIDED,
HOWEVER, without the consent of each Securityholder affected, an amendment,
supplement or waiver under this Section 9.02 may not (with respect to any
Securities held by a nonconsenting Holder):
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
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(2) reduce the rate of or change the time for payment of interest
on any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security or alter or waive the provisions with respect to the redemption of
Securities;
(4) waive a Default or Event of Default in the payment of
principal of, or premium, if any, or interest on any Security;
(5) make any Security payable in money other than that stated in
the Security;
(6) make any change in Sections 6.04 or 6.07 hereof or in this
sentence of this Section 9.02;
(7) make any change to the subordination provisions contained in
Article 10 of this Indenture that adversely affects Security holders; or
(8) make any change in the foregoing amendment and waiver
provisions.
The Holders of at least 75% in principal amount of the Securities then
outstanding shall be required to amend or waive compliance with, or a default
under, any provision of Section 4.14 hereof.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Securities shall be set forth
in a supplemental indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Securityholder is a continuing consent by the
Securityholder and every subsequent Securityholder or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such
Securityholder or subsequent Securityholder may revoke the consent as to its
Security if the Trustee receives written notice of revocation before the date
the waiver or amendment becomes effective. A supplemental indenture,
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Securityholder.
The Company may fix a record date for determining which Securityholder
must consent to any supplemental indenture, amendment or waiver requested by
the Company. If the Company fixes a record date, the record date shall be
fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Securityholders furnished to
the Trustee prior to such solicitation pursuant to Section 2.05 hereof, or
(ii) such other date as the Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
The Trustee may place an appropriate notation about a supplemental
indenture, amendment or wavier on any Security thereafter authenticated. The
company, in exchange for all Securities, may issue and the Trustee shall
authenticate, new Securities that reflect the supplemental indenture,
amendment or wavier.
Failure to make the appropriate notation or issue a new security shall
not affect the validity and effect of any such supplemental indenture,
amendment or wavier.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it. In signing or refusing to sign
such amendment or supplemental indenture, the Trustee shall be entitled to
receive, if requested, an indemnity reasonably satisfactory to it and to
receive and, subject to Section 7.01 hereof, shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that such amendment or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that
it will be valid and binding upon the Company and the Guarantors in
accordance with its terms. Neither the Company nor any Guarantor may sign an
amendment or supplemental indenture until the Board of Directors of the
Company or such Guarantor, as applicable, approves it.
SECTION 9.07. NOTICE OF CERTAIN AMENDMENTS.
Concurrently with the setting of any record date for giving notice to
Securityholders of any proposed amendment to Section 3.08, 4.01, 4.10 or 4.14
hereof, the Company shall give notice in writing of the proposed amendment to
the proposed amendment to the agent lender under the New Credit Agreement.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Securityholder by accepting a Security
agrees, that the Indebtedness evidenced by the Security is subordinated in
right of payment, to the extent and in the manner provided in this Article,
to the prior payment in full of all Senior Debt (whether outstanding on the
date hereof or hereafter created, incurred or assumed), and PARI PASSU with,
or senior to, in right of payment of principal of, premium, if any, and
accrued and unpaid interest on, all existing and future subordinated
Indebtedness of the Company.
SECTION 10.02. CERTAIN DEFINITIONS.
"Representative" means the agent lender under the New Credit Agreement or
any successor or assignee thereof.
"Senior Debt" means the principal of, premium, if any, and interest
(including interest, accruing subsequent to the filing of a petition in
bankruptcy at the rate provided for in documentation with respect thereto
whether or not allowed or allowable in such proceeding) and any reimbursement
obligations and other obligations of every nature of the Company under the
New Credit Agreement up to an aggregate of $55 million, and in excess of $55
million so long as such Indebtedness is incurred in compliance with the
restrictions contained in Section 4.09 and any Indebtedness of the Company,
whether outstanding on the Issuance Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Securities. Without limiting the generality of the foregoing,
for purposes of this Article 10 only, Senior Debt shall include all monetary
obligations of the Company under or with respect to the New Credit Agreement
and Indebtedness of the Company incurred under interest rate protection
obligations or foreign exchange contracts, currency swaps or similar
arrangements. Notwithstanding the foregoing, Senior Debt shall not include
(i) any Indebtedness, if the instrument creating or evidencing the same or
the assumption
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or guarantee thereof expressly provides that such Indebtedness shall not be
senior in right of payment to the Securities, (ii) any Indebtedness of the
Company to a Subsidiary of the Company; (iii) to the extent it constitutes
Indebtedness, amounts owed to, or guarantees on behalf of, any shareholder,
director, officer, employee or Affiliate or any associate of such Affiliate
of the Company or any Subsidiary (excluding, for purposes hereof, any amounts
owed for compensation), (iv) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services
incurred in the ordinary course of business, or Indebtedness consisting of
trade payables, (v) Indebtedness incurred in violation of the
Indenture provisions set forth under Section 4.09 except that,
notwithstanding any violation of Section 4.09, Indebtedness incurred under
the New Credit Agreement shall constitute "Senior Debt" for the purposes of
this Indenture up to an aggregate outstanding amount of $50 million (for any
Indebtedness exceeding $50 million under the New Credit Agreement to
constitute "Senior Debt" such Indebtedness must be incurred in compliance
with Section 4.09), (vi) Indebtedness incurred in violation of Sections 4.16
and 4.19, (vii) amounts owing under leases, (viii) Indebtedness that by its
term is subordinate or junior in right of payment to any Indebtedness of the
Company, (ix) any liability for federal, state, local or other taxes owed or
owing by the Company, and (x) Indebtedness which incurred and without respect
to any election under Section 1111(b) of the Bankruptcy Code is without
recourse to the Company.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive
payment in full in cash or other forms of payment acceptable to the
holders of the Senior Debt of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt whether or
not allowed or allowable in such proceeding) before Securityholders
shall be entitled to receive any payment with respect to the Securities;
and
(2) until all Obligations with respect to Senior Debt are paid
in full, any distribution to which Securityholders would be entitled but
for this Article shall be made to holders of Senior Debt (except that,
subject to applicable law, Securityholders may receive securities that
are subordinated to at least the same extent as the Securities to (a)
Senior Debt and (b) any securities issued in exchange for Senior Debt,
and have a maturity date not earlier than the latest maturity date of
the Senior Debt plus one year).
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
SECTION 10.04. DEFAULT ON SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or
any Securityholder in respect of Obligations with respect to, or repurchase
of any of, the Securities and may not acquire from the Trustee or any
Securityholder any Securities for cash or property (other than securities
that are subordinated to at least the same extent as the Securities to (a)
Senior Debt and (b) any securities issued in exchange for Senior Debt, and
have a maturity date not earlier than (i) 2004 or (ii) the latest maturity
date of the Senior Debt (including any term loan thereunder) plus one year)
until all principal and other Obligations with respect to the Senior Debt
have been paid in full if:
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(i) a default in the payment of any principal or other
Obligations with respect to Senior Debt occurs and is continuing beyond
any applicable grace period in the agreement, indenture or other
document governing such Senior Debt; or
(ii) any other default, other than a payment default, occurs
and is continuing beyond any applicable period of grace with respect to
Senior Debt that permits holders of the Senior Debt as to which such
default relates to accelerate its maturity, and the Trustee receives a
written notice of the default (a "Payment Blockage Notice") from a
Person who may give it pursuant to Section 10.12 hereof.
No new payment blockage period except pursuant to Section 10.04(i)
shall be commenced within 360 days after the receipt by the Trustee of
any prior Payment Blockage Notice. No default other than a payment
default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent notice unless such default shall have been waived or
cured for a period of not less than 180 days.
The Company may and shall resume payments on and with respect to
the Securities:
(1) in the case of a payment default referred to in Section
10.04(i), the date upon which such default is cured, waived or ceases to
exist, or
(2) in the case of a default referred to in Section 10.04(ii)
hereof, the earlier of the date such nonpayment default is cured or
waived or 179 days pass after such Payment Blocking Notice is received
if the maturity of such Senior Debt has not been accelerated, if this
Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee receives any payment of any Obligations
with respect to the Securities at a time when a Responsible Officer of the
Trustee has actual knowledge that such payment is prohibited by Section 10.04
hereof, such payment shall be held by the Trustee in trust for the benefit
of, and shall be paid forthwith over and delivered, upon written request, to
the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to
Senior Debt remaining unpaid to the extent necessary to pay such Obligations
in full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt.
If a distribution is made to the Trustee or any Securityholder that
because of this Article 10 should not have been made to it, the Trustee or
such Securityholder who receives the distribution shall hold it in trust for
the benefit of, and, upon written request, pay it over to, the holders of
Senior Debt as their interests may appear, or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to
the extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt.
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With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Debt, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of
Securityholders or the Company or any other Person, money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 10,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
SECTION 10.07. NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Securities to violate this Article, but
failure to give such notice shall not affect the subordination of the
Securities to the Senior Debt as provided in this Article.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full in cash or in other forms of
payment acceptable to the holders of the Senior Debt and until the Securities
are paid in full, Securityholders shall be subrogated (equally and ratably
with all other Indebtedness PARI PASSU with the Securities) to the rights of
holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Securityholders have
been applied to the payment of Senior Debt. A distribution made under this
Article to holders of Senior Debt that otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment
by the Company on the Securities.
SECTION 10.09. RELATIVE RIGHTS.
This Article defines the relative rights of Securityholders and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms;
(2) affect the relative rights of Securityholders and
creditors of the Company other than their rights in relation to holders
of Senior Debt;
(3) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Securityholders; or
(4) deprive the Trustee of the rights and benefits contained
in Article Seven.
If the Company fails because of this Article to pay principal of,
premium, if any, or interest on a Security on the due date, the failure is
still a Default or Event of Default.
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SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company
or any Holder to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Securityholders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the
Securityholders for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Securities, unless the Trustee shall have
received at its Corporate Trust Office at least five Business Days prior to
the date of such payment written notice from the Company or the
Representative that the payment of any Obligations with respect to the
Securities would violate this Article. Only the Company or a Representative
may give the notice. Nothing in this Article 10 shall impair the claims of,
or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Security by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee the Holder's attorney-in-fact for any
and all such purposes; PROVIDED, HOWEVER, there shall be no obligation on
the Trustee to take any action hereunder. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of
the time to file such claim, the Representative is hereby authorized to file
an appropriate claim for and on behalf of the Holders of the Securities.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the prior written consent of the holders of all Senior Debt, as
provided in the governing instruments of such Senior Debt.
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ARTICLE II
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES.
The Guarantor and if more than one, the Guarantors hereby jointly
and severally, absolutely, unconditionally and fully guarantees to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, all Obligations of the Company under the
Securities and under this Indenture and, that: (a) the principal of, premium,
if any, and interest on the Securities will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Securities, if any,
and all other obligations of the Company to the Securityholders or the
Trustee under the Securities and under this Indenture will be promptly paid
in full or performed, all in accordance with the terms of the Securities and
this Indenture; and (b) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, all Guarantors will be jointly
and severally obligated to pay the same immediately. The Guarantor and if
more than one, the Guarantors hereby agree that their obligations hereunder
shall be absolute and unconditional and joint and several, irrespective of
the validity, regularity or enforceability of the Securities or this
Indenture, the absence of any action to enforce the same, any waiver,
consent, modification or indulgence granted by any Securityholder with
respect to any provisions hereof or thereof, the recovery of any judgement
against the Company, any action to enforce the same or any other circumstance
that might otherwise constitute a legal or equitable discharge or defense of
a Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever and covenants that
this Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities and this Indenture
and the payment in full of the principal thereof, premium, if any, and all
accrued thereon. If any Securityholder or the Trustee is requried by any
court to return to the Company or any Guarantor, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the Company
or any Guarantor, any amount paid by either to the Trustee or such
Securityholder, this Subsidiary Guarantee, to the extent therefore
discharged, shall be reinstated in full force and effect. Each Guarantor
agrees that it shall not be entitled to any right of subrogation in relation
to the Securityholders in respect of any Obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby, including, without
limitation, the principal of, premium, if any, and interest on all of the
Securities and all amounts payable to the Trustee. Each Guarantor further
agrees that, as between the Guarantors, on the one hand, and the
Securityholders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (y) in the event of any declaration
of acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor fur the purpose of this Subsidiary Guarantee.
- 50 -
<PAGE>
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01
hereof, each Guarantor as of the date this Indenture hereby agrees that a
notation of such Subsidiary Guarantee substantially in the form of Exhibit B
to this Indenture shall be endorsed by two Officers of such Guarantor on each
Security authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of Vice
Presidents.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of each of the
Guarantors. Each Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 11.01 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on a
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Security on which the Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
SECTION 11.03. GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety
or substantially as an entity, to the Company or another Guarantor.
(b) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Guarantor with or into a corporation or corporations other than
the Company (whether or not affiliated with the Guarantor), or successive
consolidations or mergers, in which a Guarantor or its successor or
successors shall be a party or parties, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as
an entirety, to a corporation other than the Company (whether or not
affiliated with the Guarantor) authorized to acquire and operate the same;
PROVIDED, HOWEVER, that each Guarantor hereby covenants and agrees that, upon
any such consolidation, merger, sale or conveyance, the Subsidiary Guarantee
endorsed on the Securities, and the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be
performed by such Guarantor, shall be expressly assumed (in the event that
the Guarantor is not the surviving corporation in the merger), by
supplemental indenture satisfactory in form to the Trustee together with an
Officer's Certificate and an Opinion of Counsel stating that the transaction
and the supplemental indenture comply with this Indenture, executed and
delivered to the Trustee, by the corporation formed by such consolidation, or
into which the Guarantor shall have been merged, or by the corporation which
shall have acquired such property. In case of such consolidation, merger,
sale or conveyance and upon such assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed
upon the Securities and the due and punctual performance of all the covenants
and conditions of this Indenture to be performed by the Guarantor, such
successor corporation shall succeed to be and substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor.
- 51 -
<PAGE>
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS OR SALE OF ALL CAPITAL
STOCK.
In the event of the sale or transfer of assets sold in such sale or
other disposition include all or substantially all of the assets of any
Guarantor or all of the capital stock of any Guarantor in accordance with
Section 4.10 hereof, then such Guarantor (in the event of a sale or other
disposition of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of a Guarantor) shall automatically be
released from and relieved of its obligations under its Subsidiary Guarantee
and Section 11.03 hereof without any action required on the part of the
Trustee or any Securityholder; PROVIDED that in the event of an Asset Sale,
the Net Proceeds from such sale or other disposition are applied in
accordance with the provisions of Section 4.10 hereof. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel
certifying that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without
limitation Section 4.10 hereof and the execution by the Company, the
Guarantors and the Trustee of a supplemental indenture removing such
Guarantor as a party to this Indenture and otherwise in form reasonably
acceptable to the Trustee, the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee. Any Guarantor not released from
its obligations under its Subsidiary Guarantee shall remain liable for the
full amount of principal of and interest on the Securities and for the other
obligations of any Guarantor under the Indenture as provide in this
Article 11.
SECTION 11.05. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor hereby confirms that it is its intention that its
Subsidiary Guarantee is not and shall not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or
state law. To effectuate the foregoing intention, each of the Guarantors
hereby irrevocably agrees that the Obligations under the Subsidiary
Guarantee shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
each of the Guarantors that are relevant under such laws, and after giving
effect to any rights to contribution pursuant to any agreement providing for
an equitable contribution among each of the Guarantors and other Affiliates
of the Company of payments made by guarantees by such parties, result in the
Obligations of each of the Guarantors in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully and for all intents and purposes as
if such Paying Agent were named in this Article 11 in place of the Trustee.
- 52 -
<PAGE>
SECTION 11.07. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article 11 shall be junior and subordinated to the
Guarantees of Senior Debt of such Guarantor on the same basis as the
Securities are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, (a) each Guarantor may make, and the
Trustee and the Securityholders shall have the right to receive and/or
retain, payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Securities pursuant to this
Indenture, including Article 10 hereof and (b) the rights and obligations of
the relevant parties relative to the Subsidiary Guarantees and the Guarantees
of Senior Debt of the Guarantors shall be the same as their respective rights
and obligations relative to the Securities and Senior Debt of the Company
pursuant to Article 10. "Senior Debt of the Guarantors" shall mean any
Guarantee by such Guarantor of any Senior Debt of the Company, including all
Indebtedness and other Obligations under the New Credit Agreement, and any
other Indebtedness of such Guarantor that is permitted to be incurred under
the terms of this Indenture by such Guarantor as Senior Debt of such
Guarantor unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Subsidiary Guarantee of such Guarantor. Notwithstanding
anything to the contrary in the foregoing, Senior Debt of a Guarantor shall
not include (x) any liability for federal, state, local or other taxes owed
or owing by such Guarantor or (y) any Indebtedness of such Guarantor that is
incurred in violation of this Indenture.
SECTION 11.08. ADDITIONAL SUBSIDIARY GUARANTEES.
In the event any Subsidiary is required to become a Guarantor by the
provisions of Section 4.17 of this Indenture or in the event such
Subsidiary's assets, liabilities, earnings or equity become more than
"immaterial" or "inconsequential" to the Company and its Subsidiaries on a
consolidated basis and the Company determines not to make such separate
reporting of such Subsidiary activities as required by Commission
interpretations under the Exchange Act and Regulation S-X, or if any
Subsidiary is hereafter required to guarantee any Senior Debt or debt that
ranks PARI PASSU with the obligations of the Company and the Subsidiary
hereunder, then such Subsidiary shall guarantee payment of the Securities and
the Obligations of the Company hereunder by executing a Subsidiary Guarantee
having the same terms and conditions as those set forth in this Article 11.
Such new Subsidiary Guarantee shall be evidenced by the Subsidiary executing
and delivering to the Trustee a supplemental indenture and Subsidiary
Guarantee in form and substance reasonably satisfactory to the Trustee and
which subjects such Subsidiary to the provisions of this Indenture, joint and
severally, absolutely and unconditionally and fully as a Guarantor, and also
delivers to the Trustee an opinion of counsel in form reasonably satisfactory
to the Trustee that such Subsidiary Guarantee is valid, binding and enforceable
obligation of such Subsidiary, subject to such customary exceptions for
bankruptcy and applicable principles as may be reasonably acceptable to the
Trustee.
- 53 -
<PAGE>
ARTICLE 12
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
SECTION 12.01. REGISTRATION RIGHTS.
The Company, the Guarantors and the Initial Purchaser, on behalf of
itself and subsequent purchasers of the Securities, are parties to the
Registration Rights Agreement dated as of June 17, 1994. Pursuant to the
Registration Rights Agreement, the Company has filed with the Commission a
registration statement on Form S-2 (the "Exchange Offer Registration
Statement"), under the Securities Act with respect to the Registered
Securities. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company will offer to the holders of Transfer Restricted
Securities (as defined below) who are able to make certain representations
the opportunity to exchange their Transfer Restricted Securities for
Registered Securities (the "Exchange Offer"). The Company will keep the
Exchange Offer open for not less than 20 business days (longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to
holders of the Securities. If, among other things, the Exchange Offer is not
permitted by applicable law or Commission policy, or if any holders of
Transfer Restricted Securities (as defined below) are not eligible under
applicable laws or Commission policy from participating in the Exchange Offer
for any reason, the Company will file with the Commission a shelf
registration statement (the "Shelf Registration Statement") or other
available registration statement form to cover resales of Transfer Restricted
Securities by the Holders thereof who satisfy certain conditions relating to
the provision of information in connection with the Shelf Registration
Statement. The Company will use all reasonable efforts to cause the
applicable registration statement to be declared effective by the Commission
as promptly as practicable after the date of filing. For purposes of the
foregoing, "Transfer Restricted Securities" means each Security until the
earliest of (i) the date on which such Security has been exchanged for a
Registered Security in the Exchange Offer and may be resold to the public
without delivery of a prospectus, (ii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or other Registration
Statement or (iii) the date on which Security is sold to the public pursuant
to Rule 144 under the Securities Act or by a broker-dealer pursuant to the
"Plan of Offering" contemplated by the Exchange Offer Registration Statement.
The Company will use its reasonable efforts to maintain the effectiveness of
the appropriate Registration Statement continuously for a period of three
years.
-54-
<PAGE>
SECTION 12.02. LIQUIDATED DAMAGES.
If (i) the applicable Registration Statement is not timely filed with
the Commission, (ii) the applicable Registration Statement has not been
declared effective by the Commission within 90 days after the Closing Date,
(iii) the Registered Exchange Offer (as defined in the Registration Rights
Agreement) has not been held open for at least 30 business days after the
Effectiveness Date (as defined in the Registration Rights Agreement) and any
Series A Notes properly tendered for exchange have been accepted by the
Company in exchange for Series B Notes, (iv) any required Registration
Statement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being
restored to effectiveness by amendment or otherwise within 10 business days
or succeeded by an additional Registration Statement filed and declared
effective within such 10 business days (each such event a "Registration
Default"), the Company will pay liquidated damages to each holder of Transfer
Restricted Securities that has complied with its obligations under such
Registration Rights Agreements, during the first 90-day period immediately
following the occurrence, and during the continuance, of such Registration
Default in an amount equal to $0.05 per week per $1,000.00 principal amount
of Securities constituting Transfer Restricted Securities held by such
holder. The amount of the liquidated damages will increase by an additional
$0.05 per week per $1,000.00 principal amount constituting Transfer
Restricted Securities for each subsequent 90-day period until the applicable
Registration Statement is filed, the applicable Registration Statement is
declared effective and the Exchange Offer is consummated, or the Registration
Statement again becomes effective, as the case may be, up to a maximum amount
of liquidated damages of $0.50 per week per $1,000.00 principal amount of the
Securities constituting Transfer Restricted Securities. All accrued
liquidated damages shall be paid to Record Holders by the Company on each
Interest Payment Date in the same manner in which interest on the Securities
is then payable. Following the cure of all Registration Defaults, the payment
of liquidated damages will cease. For the purposes of this Section 12.02, the
term "week" shall mean the seven day period following the occurrence of a
particular event. In addition, for so long as the Securities are outstanding,
the Company will continue to provide holders of the Securities and to
prospective purchasers of the Securities the information required by Rule
144A(d)(4).
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed
by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight courier guaranteeing next day delivery, to the
others' addresses:
If to the Company or the Guarantor:
-55-
<PAGE>
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Telecopier No.: (615)821-0395
Attention: Robert E. Bosworth
If to any Subsidiary who becomes a Guarantor after the date hereof:
To the address listed in the supplemental indenture
executed by such Subsidiary.
In each case, with a copy to:
Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, Tennessee 37402
Telecopier No.: (615)785-8480
Attention: A. Alexander Taylor, II
If to the Trustee:
SouthTrust Bank of Alabama, National Association
Post Office Box 2554 or 100 Office Park Drive
Birmingham, Alabama 35290 Birmingham, AL 35223
Telecopier No.: (205)254-4180
Attention: Corporate Trust Department
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Securityholders) shall be deemed to have been duly given: at the time
delivered by hand, if Personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight courier
guaranteeing next day delivery.
Any notice or communication to a Securityholder shall be deemed to have
been given when mailed by first class mail, postage prepaid, to its address
shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA Section 313(c), to the
extent required by the TIA. Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with
respect to other Securityholders.
If a notice or communication is given in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company or any Guarantor mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each Agent at the
same time.
-56-
<PAGE>
SECTION 13.03. COMMUNICATION BY SECURITYHOLDERS WITH OTHER SECURITYHOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities, the Company, the Guarantors, the Trustee, the Registrar and
anyone else who shall have the protection of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such
Guarantor, as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
-57-
<PAGE>
SECTION 13.07. LEGAL HOLIDAYS.
A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York, in the city in which the Corporate
Trust Office of the Trustee is located or at a place of payment are
authorized or obligated by law, regulation or executive order to remain
closed or the Federal Reserve System is not operational. If a payment date is
a Legal Holiday at a place of payment, payment may be made at that place on
the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
SECTION 13.08. NO RECOURSE AGAINST OTHERS.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any Obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect
of, or by reason of, such Obligations or their creation. Each Securityholder
by accepting a Security waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Securities.
SECTION 13.09. MULTIPLE ORIGINALS.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture. Each signed copy shall be an
original, but all of them together shall represent the same agreement.
SECTION 13.10. GOVERNING LAW.
The internal laws of the State of Tennessee shall govern and be used to
construe this Indenture, the Guarantees and the Securities.
SECTION 13.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.12. SUCCESSORS.
All agreements of the Company and the Guarantor in this Indenture and
the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.13. SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 13.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
-58-
<PAGE>
SIGNATURES:
Dated as of August 3, 1994 CHATTEM, INC.
ATTEST: By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
Title: EVP-CFO
By: /s/ Hugh F. Sherber
----------------------------------
Secretary
[CORPORATE SEAL]
Dated as of August 3, 1994 SIGNAL INVESTMENT & MANAGEMENT CO.,
a Guarantor
ATTEST: By: /s/ Robert E. Bosworth
-----------------------------------
Name: Robert E. Bosworth
Title: President
By: /s/ Hugh F. Sherber
----------------------------------
Secretary
[CORPORATE SEAL]
Dated as of August 3, 1994 SOUTHTRUST BANK OF ALABAMA, NATIONAL
ASSOCIATION, as Trustee
ATTEST: By: /s/ Virginia H. Williams
-----------------------------------
Name: Virginia H. Williams
Title: Senior Vice President-Corporate
Trust
By: /s/ Patricia Clannor
----------------------------------
Vice President-Corporate Trust
[ASSOCIATION SEAL]
-59-
<PAGE>
EXHIBIT A
(Face of Security)
12.75% Series B Senior Subordinated Notes
due 2004
Certificate No. U.S.$
------- -------
CUSIP No. 162456
------
CHATTEM, INC.
promises to pay to
- --------------------------------------------------------------------------------
or its registered assigns
the principal sum of
-----------------------------------------------------------
in United States Dollars on June 15, 2004.
Interest Payment Dates: June 15 and December 15, commencing December 15, 1994.
Record Dates: May 31 and November 30 (whether or not a Business Day).
Dated: , 1994
-----------
ATTEST: CHATTEM, INC.
By: By:
---------------------------------- ------------------------------------
Secretary Name:
Title:
[CORPORATE SEAL]
Trustee's Certificate of Authentication:
This is one of the Securities
referred to in the within-
mentioned Indenture:
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Authorized Signature
[ASSOCIATION SEAL]
A-1
<PAGE>
(Back of Security)
12.75% SERIES B SENIOR SUBORDINATED NOTE
DUE June 17, 2004
[Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.(1)]
THIS SECURITY MAY NOT BE TRANSFERRED TO AN EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT THAT IS EITHER SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION 4975(e)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED ("CODE"), UNLESS SUCH TRANSFER
SATISFIES THE REQUIREMENTS OF CERTAIN PROHIBITED TRANSACTION EXEMPTIONS. THE
SECURITIES EVIDENCED HEREBY WILL NOT BE ACCEPTED FOR TRANSFER OR REGISTRATION
OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE TRUSTEE
THAT THESE RESTRICTIONS HAVE BEEN COMPLIED WITH.
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. INTEREST. Chatten, Inc., a Tennessee corporation (the
"Company"), promises to pay interest on the principal amount of this 12.75%
Series B Senior Subordinated Note (the "Note") at the rate and in the manner
specified below. The Company shall pay in cash interest on the principal
amount of this Note at the rate per annum of 12.75% from the date of issuance
of the Company's 12.75% Series A Senior Subordinated Notes for which this
Note is exchanged to maturity. The Company will pay interest semiannually on
June 15 and December 15 of each year, commencing December 15, 1994, or if any
such day in not a Business Day on the next succeeding Business Day (each an
"Interest Payment Date"). Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Interest shall accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of the original issuance of the Notes. To the extent lawful,
the Company shall pay interest on overdue principal at the rate of 1% per
annum in excess of the then applicable interest rate on the Notes; it shall
pay interest on the overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful. Upon the
occurrence of a Registration Default (as defined in Section 12.02 of the
Indenture), the Company will pay certain liquidated damages as set forth in
Section 12.02 of the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on each May 31 and
- ---------------
(1) This paragraph should be included only if the Security is issued in
global form.
A-2
<PAGE>
November 30 next preceding the Interest Payment Date (each May 31 and
November 30 being referred to herein as a "Record Date"), even if such Notes
are canceled after such Record Date and on or before such Interest Payment
Date. The Holder hereof must surrender this Note to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal, premium,
if any, and interest by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Securityholder. The
Company, the Guarantors or any Subsidiary of the Company may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture,
dated as of August 3, 1994 (the "Indenture"), among the Company, the
Guarantors and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on
the date of the Indenture. The Notes are subject to all such terms, and
Securityholders are referred to the Indenture and such act for a statement of
such terms. The terms of the Indenture shall govern any inconsistencies
between the Indenture and the Notes. The Notes are unsecured general
obligations of the Company limited to $75,000,000 in aggregate principal
amount.
5. OPTIONAL REDEMPTION. The Company may redeem all or any of the
Securities at any time at the redemption prices (expressed in percentages of
principal amount) set forth below plus accrued interest to the redemption
date, if redeemed during the 12-month period beginning June 15 of the years
indicated below. The Notes may not be so redeemed before June 15, 2001.
Year Percentage
---- ----------
2001......................... 101.594%
2002 and thereafter.......... 100%
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7
hereof, the Notes are not subject to mandatory redemption.
7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of
Control Triggering Event, the Company shall be required, subject to certain
conditions set forth in the Indenture, to offer to purchase on the Change of
Control Payment Date all outstanding Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest to the date of purchase. Registered
holders of these Notes at the time of any Change in Control Triggering Event
will receive a Change of Control Offer from the Company prior to any related
Change of Control Payment Date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
(b) If the Company or a Subsidiary consummates any Asset Sale, and when
the aggregate amount of Excess Proceeds from such an Asset Sale exceeds
$5,000,000, the Company shall be required to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at 100% of
the principal amount thereof, plus accrued and unpaid interest to the date
fixed for the closing of such offer. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Notes to be redeemed shall be selected on a PRO RATA basis. Security
holders that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company
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<PAGE>
prior to any related purchase date and may elect to have such Notes purchased
by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
8. SUBORDINATION. The Notes are subordinated to the Senior Debt,
which is the Company's Indebtedness and other Obligations under the New
Credit Agreement that are permitted to be incurred by the Company under the
terms of the Indenture, any other Indebtedness that is permitted to be
incurred by the Company under the terms of the Indenture as Senior Debt,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to
the Notes, and the Notes shall be PARI PASSU with, or senior to, in right of
payment of principal of, premium, if any, and accrued and unpaid interest on,
all existing and future subordinated Indebtedness of the Company.
Indebtedness of any Person as of any date means and includes, without
duplication, (i) all indebtedness, obligations and liabilities of such Person
in respect of borrowed money including all interest, fees and expenses owned
with respect thereto (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or
evidenced by bonds, notes, debentures or similar instruments, or representing
the deferred and unpaid balance of the purchase price of any property or
interest therein, if an to the extent such indebtedness would appear as a
liability upon a balance sheet of such Person prepared on a consolidated
basis in accordance with GAAP, (ii) all Capitalized Lease Obligations of such
Person, (iii) all obligations of such Person in respect of letters of credit,
bankers' acceptances, letter of credit reimbursement or similar agreement
(whether or note such items would appear on the balance sheet of such
Person), (iv) all net Obligations of such Person in respect of interest rate
protection and foreign current hedging arrangements and (v) all Guarantees by
such Person of items that would constitute Indebtedness under this definition
(whether or not such items would appear on such balance sheet). The amount of
Indebtedness of any Person at any date shall be, without duplication, the
principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum net
liability of any contingent Obligations referred to in clauses (i) through
(v) above at such date. Interest rate swap, cap, collar or other hedging
agreements shall not be deemed to be Indebtedness for purposes of the
Indenture to the extent that they are entered into for the purpose (which may
be definitively established by delivering an Officers Certificate to such
effect to the Trustee) of reducing interest rate or currency exposure on any
Indebtedness permitted to be outstanding by the terms of this Indenture. To
the extent provided in the Indenture, Senior Debt must be paid before the
Notes may be paid. The Company agrees, and each Securityholder by accepting a
Note agrees, to the subordination and authorizes the Trustee to give it
effect.
9. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000 unless all of the
Notes held by a Securityholder are to be redeemed. On and after the
redemption date, interest ceases to accrue on Notes or portions of them
called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Securityholder, among other things, to furnish appropriate
endorsements and transfer documents to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also,
it need not exchange or register the transfer of any Notes for a period of 15
days before a selection of Notes to be redeemed or during the period between
a Record Date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name this Note is registered
as its absolute owner for the purpose of receiving payment of principal
A-4
<PAGE>
of, premium, if any and interest on this Note and for all other purpose
whatsoever, whether or not this Note is overdue, and neither the Trustee, any
Agent nor the Company shall be affected by notice to the contrary. The
registered Securityholder shall be treated as its owner for all purposes.
12. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of a
majority in principal amount of the then outstanding Notes, and any existing
default (except a payment default or a default with respect to a covenant
that cannot be amended without consent of the holder of each outstanding
Note) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes. Without the consent of any
Securityholder, the Indenture or the Notes may be amended to cure any
ambiguity, defect or inconsistency, to provide for assumption of the Company
Obligations to Securityholders or to make any change that does not adversely
affect the rights of any Securityholder. Without the consent of at least 75%
in principal amount of the then outstanding Notes, no waiver or amendment to
the Indenture may make any change in the provisions of Section 4.14 of the
Indenture (which relate to the Change of Control of provisions).
13. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest or liquidated damages on the Notes for 30 days; default
in payment of principal or premium, if any, on the Notes; failure by the
Company to comply with Sections 3.09, 4.07, 4.09, 4.10, 4.14, 4.18 and 4.19
of the Indenture; failure by the Company for 60 days after notice to it by
the Trustee or by Holders of 25% in aggregate principal amount of the Notes
then outstanding to comply with any of its other agreements or covenants in
the Indenture; defaults under and acceleration prior to express maturity of
certain other Indebtedness; certain final judgments which remain
undischarged; and certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of then outstanding Notes may declare all the Notes to be
due and payable immediately; PROVIDED, that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency relating to
the Company or any Significant Subsidiary, all outstanding Notes become due
and payable immediately without further action or notice. Securityholders may
not enforce the Indenture or the Notes except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest) if it determines that withholding notice is in
their interests. The Company must furnish an annual compliance certificate to
the Trustee.
14. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company including acting as
warrant agent, the Guarantors or any Affiliate of the Company or the
Guarantors, and may otherwise deal with the Company, the Guarantor or their
Affiliates, as if it were not Trustee.
15. REGISTRATION RIGHTS. The Company is required by the terms of
the Indenture and the Registration Rights Agreement to file a certain
Exchange Offer Registration Statement pursuant to which this Note may be
exchanged for a registered note or a Shelf Registration Statement or other
Registration Statement, if such Exchange Offer is not permitted by law or the
Commission. In the event the Company fails to file the applicable
Registration Statement, the holder of this Note will be entitled to
liquidated damages as described in the Indenture.
16. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any Obligations of the Company under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such Obligations or
A-5
<PAGE>
their creation. Each Securityholder by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.
17. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
18. GUARANTEE. The Guarantor has irrevocably and unconditionally
guaranteed the payment of principal, premium, if any, and interest (including
interest on overdue principal and overdue interest, if lawful) on the Notes.
A Guarantor shall be released from its Guarantee of the foregoing obligations
upon the terms and subject to the conditions set forth in the Indenture.
19. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Securityholder or an assignee, such as: TEN COM (= Tenants in common),
TEN ENT (= Tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and has directed the Trustee
to use CUSIP numbers in notices of redemption as a convenience to
Securityholders. No representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed
thereon.
The Company and the Trustee will furnish to any Securityholder upon
written request and without charge a copy of the Indenture. Requests may be
made to:
Company: Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Telecopier No.: (615) 821-0395
Attention: Robert E. Bosworth
Trustee: SouthTrust Bank of Alabama, National Association,
as Trustee
100 Office Park Drive
Birmingham, Alabama 35223
Telecopier No. (205) 254-4180
Attention: Corporate Trust Department
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) have caused our
undersigned duly authorized officer to assign and transfer this Note to:
- ------------------------------------------------------------------------------
(Insert Assignee's Tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
agent, with full power of substitution to transfer this Note on the books of
the Company.
Date: ---------------------------
----------------------- Name of Holder
By:
---------------------------------------
Authorized Signature of Holder:
Name:
Title:
(Holder must sign exactly as its name
appears on the face of this Note)
Signature Guarantee.*
- -----------------------------
* Signature(s) must be guaranteed by an eligible guarantor institution which
is a member of a recognized signature guarantee program, I.E., Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Program (SEMP) or New York Stock Exchange Medallion Signature Program
(MSP).
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, check
the appropriate box.
/ / Section 4.10 / / Section 4.14
If you want to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount
you elect to have purchased:
$
--------------------
Date -------------------------------
------------------- Name of Holder
Authorized Signature of Holder: By:
----------------------------
Name:
Title:
(Holder must sign exactly as
its name appears on the face of
this Note)
Signature Guarantee.*
- -------------------------
* Signature(s) must be guaranteed by an eligible guarantor institution which
is a member of a recognized signature guarantee program, I.E., Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Program (SEMP) or New York Stock Exchange Medallion Signature Program (MSP).
A-8
<PAGE>
EXHIBIT B
FORM OF NOTATION ON SERIES B SENIOR SUBORDINATED NOTE
RELATING TO SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE
Signal Investment & Management Co. (hereinafter referred to as the
"Guarantor," which term includes any successor or additional Guarantors under
the Indenture (the "Indenture") referred to in the Note upon which this
notation is endorsed), (i) has unconditionally, and jointly and severally, to
the extent there are additional Guarantors, guaranteed (a) the due and
punctual payment of the principal of, premium, if any, with respect to and
interest on the Notes, whether at maturity or an interest payment date, by
acceleration, call for redemption or otherwise, (b) the due and punctual
payment of interest on the overdue principal of and, if lawful, interest on
the Notes, (c) the due and punctual performance of all other obligations of
the Company to the Securityholders or the Trustee, all in accordance with the
terms set forth in the Indenture, and (d) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise and (ii) has agreed to pay any and all costs and
expenses (including reasonable attorney's fees and charges) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee
(collectively, the "Obligations"); PROVIDED, HOWEVER, that the maximum
liability of a Guarantor pursuant to this Subsidiary Guarantee shall be
limited by the following paragraph. Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated.
Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing intention, the Holders and
such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under the Subsidiary Guarantee shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Subsidiary Guarantee, result in
the obligations of such Guarantor under the Subsidiary Guarantee not
constituting such fraudulent transfer or conveyance.
No officer, director or incorporator, as such, past, present or future,
of the Guarantors shall have any personal liability under this Subsidiary
Guarantee by reason of his or its status as such stockholder, officer,
director or incorporator.
No set-off, counterclaim, reduction, or diminution of any obligation, or
any dissent of any kind or any nature (other than payment and performance of
the Obligations) which the Guarantor may have or assert against the Company,
any other Guarantor or any Subsidiary of the Company. Securityholders and the
Trustee or any other individual or entity of whatever nature (a "Person")
shall be available hereunder to, or shall be asserted by, the Guarantor
against any Person, including without limitation any Person who is a
Securityholder or the Trustee or to who the Company is or may be liable for
any obligations which are secured in whole or in part by the Obligations and
the respective successors, endorsees, transferees and assigns of each such
Person in any action arising out of the transactions contemplated hereby or
out of any of the documents or instruments referred to herein. The Guarantor
hereby irrevocably waives any rights that it may have by agreement or by
operation of law to (i) offset any obligations of the Securityholders and the
Trustee to it arising from any payments by it under this Guaranty against any
obligations owing
B-1
<PAGE>
by it to the Securityholders and the Trustee, or (ii) offset any obligations
of the Company or any Subsidiary of the Company owing to such Guarantor.
This Subsidiary Guarantee shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Securityholders and, in the event of any
transfer or assignment of rights by any Securityholder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof. Any individual or entity who is a Securityholder
shall be an express third party beneficiary of this Subsidiary Guarantee.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
The obligations of the Guarantor to the Securityholders and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly
subordinated to the extent set forth in Article 11 of the Indenture and
reference is hereby made to such Indenture for the precise terms of such
subordination.
No waiver of any provision of this Subsidiary Guarantee and no consent to
any departure by the Guarantor therefrom, shall be effective unless it is in
writing and signed by the Trustee, and then such a waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
Concurrently with a sale or other disposition of all or substantially all
of the assets of the Guarantor or all of the capital stock of the Guarantor
in compliance with the terms and conditions set forth in the Indenture,
including Section 4.10 and 11.04 thereof, then Guarantor (in the event of a
sale or other disposition of all of the capital stock of Guarantor) or the
purchaser of the property (in the event of a sale or other disposition of all
or substantially all of the assets of Guarantor) shall automatically be
released from and relieved of any obligations under the Subsidiary Guarantee
without any action required on the part of the Trustee or any Securityholder.
With respect to any Guarantor that is foreign-domiciled or organized
under the laws of any jurisdiction outside the United States:
Any and all payments made by the Guarantor hereunder shall be made in
United States Dollars free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on net income and all income and franchise taxes of the United States
and any political subdivisions thereof (all such non-excluded items are
hereinafter referred to as "FOREIGN TAXES"). If any law or regulation shall
require that there be deducted any Foreign Taxes from or in respect of any
such sum payable hereunder, then:
(a) such sum shall be increased as may be necessary so that after
making all such required deductions the Company receives an amount equal to
the sum it would have received had no such deductions been made; and
(b) the Guarantor shall make such deductions and pay such deducted
amounts to the relevant tax or other authority.
The Guarantor agrees to pay any present or future stamp, documentary,
excise or property taxes, charges or similar levies which arise from any
payment made hereunder, from the execution, delivery or registration hereof,
or otherwise with respect hereto ("STAMP TAXES").
B-2
<PAGE>
The obligations contained in this Section shall survive the payment in
full of all other obligations under the Notes and this Subsidiary Guarantee.
If for the purpose of obtaining judgment in connection herewith in any
court it is necessary to convert a sum due hereunder in United States Dollars
into a sum due hereunder in another currency, the Guarantor agrees, to the
fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Company could purchase U.S. Dollars with such other currency on the Business
Day preceding that on which final judgment is given.
The obligation of the Guarantor in respect of any sum due from it to the
Company hereunder shall, notwithstanding any judgment in a currency other
than United States Dollars, be discharged only to the extent that, on the
Business Day following receipt by the Company of any sum adjudged to be so
due in such other currency, the Company may in accordance with normal banking
procedures purchase United States Dollars with such other currency; and if
the dollars so purchased are less than the sum originally due to the company
in United States Dollars, then the Guarantor agrees, as a supreme obligation
and notwithstanding any such judgment, to indemnify the Company against such
loss.
The Guarantor hereby irrevocably submits to the jurisdiction of any New
York State or Federal court sitting in New York City and any appellate court
from any such court in any action or proceeding arising out of or relating to
this Subsidiary Guarantee. The Guarantor hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. The Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Section shall affect the right of the
Company to serve legal process in any other manner permitted by law or affect
the right of the Company to bring any action or proceeding against this
Subsidiary Guarantee or its property in the courts of any other jurisdictions.
To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction or any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment, in aid
of execution, execution or otherwise) with respect to itself or its property,
the Guarantor hereby irrevocably waives such immunity in respect of its
obligations under this Subsidiary Guarantee and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
Section shall have the fullest scope permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States and are intended to be
irrevocable for purposes of such Act.
SIGNAL INVESTMENT &
MANAGEMENT CO.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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<PAGE>
AMENDMENT TO AND SUPPLEMENTAL INDENTURE
THIS AMENDMENT is made this 23rd day of May, 1995, by and among Chattem,
Inc., a Tennessee corporation (the "Company"), Signal Investment & Management
Co., a Delaware corporation (the "Guarantor") and SouthTrust Bank of Alabama,
National Association, a national banking association (the "Trustee"), under the
following circumstances:
A. The Company has issued its Series B Senior Subordinated Notes due
2004 in the aggregate principal amount of $75,000,000 (herein the "Notes").
B. The Notes are secured by the Indenture dated August 3, 1994 among
the Company, the Guarantor and the Trustee ("Indenture").
C. The Company and the Guarantor, having received the written
approval of the holders of at least a majority in interest in principal amount
of the Notes pursuant to Section 9.02 of the Indenture, and the Trustee desire
to amend the Indenture in order to amend the definition of Permitted Investment
as provided hereinafter.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, the parties agree:
1. The definition of "Permitted Investment" as set forth in Section
1.01 of the Indenture shall be deleted in its entirety and in lieu thereof shall
be inserted the following:
"Permitted Investments" means (i) any Investments in the Company
or in a Wholly Owned Subsidiary of the Company that is a Guarantor;
(ii) any Investments in Cash Equivalents; (iii) Investments by the
Company or any Subsidiary of the Company in a Person, if as a result
of such Investment (a) such Person becomes a Wholly Owned Subsidiary
of the Company and a Guarantor or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company
or a Wholly Owned Subsidiary or the Company that is a Guarantor; (iv)
any investment that would be a Cash Equivalent but for its maturity
being greater than six months, provided such maturity is not greater
than one year; (v) Investments consisting of consideration received
by the Company or a Wholly Owned Subsidiary of the Company that is
<PAGE>
a Guarantor in an Asset Sale which consideration is not and is not
required to be in the form of cash or Cash Equivalents pursuant to
Section 4.10 hereof; and (vi) shares of capital stock, notes, warrants
or other securities received by the Company or a Wholly Owned
Subsidiary that is a Guarantor in partial or total satisfaction of
obligations created in the ordinary course of business pursuant to
a plan of reorganization, liquidation, restructuring, decree or
order by a court having jurisdiction under the Federal bankruptcy
laws, as now or hereafter constituted, or under any other applicable
Federal or state bankruptcy, insolvency, receivership or other
similar laws or pursuant to an assignment for the benefit of creditors
or voluntary settlement or restructuring.
2. Except as expressly set forth herein, this Amendment to the
Indenture shall not supersede or otherwise modify the terms and conditions of
the Indenture.
IN WITNESS WHEREOF, this Amendment to the Indenture has been executed
by a duly authorized officer of the Company, the Guarantor and the Trustee.
Dated as of May 23, 1995.
ATTEST: CHATTEM, INC.
By:/s/ Hugh F. Sherber By: /s/ Robert E. Bosworth
-------------------------------- --------------------------------
Secretary Robert E. Bosworth,
Executive Vice President
[CORPORATE SEAL]
Dated as of May 23, 1995.
ATTEST: SIGNAL INVESTMENT & MANAGEMENT
CO., a Guarantor
By:/s/ Hugh F. Sherber By: /s/ Robert E. Bosworth
-------------------------------- --------------------------------
Secretary Robert E. Bosworth,
President
[CORPORATE SEAL]
<PAGE>
Dated as of May 23, 1995.
ATTEST: SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
By: /s/ [ILLEGIBLE] By: /s/ Judith B. Miller
-------------------------------- --------------------------------
Vice President Name: Judith B. Miller
Title: Vice President
[CORPORATE SEAL]
<PAGE>
CONSENT
The undersigned hereby acknowledges that pursuant to the Security
Agreement dated as of April 29, 1996 by and among Chattem, Inc. (the
"Borrower"), the Domestic Subsidiaries of the Borrower and NationsBank, N.A.,
in its capacity as agent (together with its successors and assigns, the
"Agent") (the "Security Agreement") the Borrower and Signal Investment &
Management Co. ("Signal") have assigned their right, title and interest under
the Manufacturing Agreement between Martin Himmel Inc. ("MHI") and the
undersigned dated as of February 16, 1996 and to be assigned to the Borrower
by MHI on or before April 30, 1996 (the "Agreement") as security for the
financing provided to the Borrower by the Agent and the Lenders (as
hereinafter defined) pursuant to the terms of two separate Credit Agreements
by and among the Borrower, the Borrower's Domestic Subsidiaries, as
guarantors, the Agent and the other lenders referred to therein (the
"Lenders") (the "Credit Agreements").
Notwithstanding any other provisions contained in the Agreement, the
undersigned consents to the collateral assignment of the Agreement to the Agent,
for the benefit of the Lenders. Unless and until the Agent gives notice to the
undersigned of the Agent's intention to succeed to the rights of the Borrower
and Signal under the Agreement, the Agent shall not be obligated to perform any
of the obligations of the Borrower under the Agreement.
PHARMA TECH INDUSTRIES, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Title: President 4-26-96
------------------------
<PAGE>
CONSENT
The undersigned hereby acknowledges that pursuant to the Security
Agreement dated as of April 29, 1996 by and among Chattem, Inc. (the
"Borrower"), the Domestic Subsidiaries of the Borrower and NationsBank, N.A.,
in its capacity as agent (together with its successors and assigns, the
"Agent") (the "Security Agreement") the Borrower and Signal Investment &
Management Co. ("Signal") have assigned their right, title and interest under
the Asset Sale and Purchase Agreement and the Inventory Purchase and Sale and
Manufacturing Agreement among the Borrower, Signal and the undersigned dated
as of April 24, 1996 (the "Agreement") as security for the financing provided
to the Borrower by the Agent and the Lenders (as hereinafter defined)
pursuant to the terms of two separate Credit Agreements by and among the
Borrower, the Borrower's Domestic Subsidiaries, as guarantors, the Agent and
the other lenders referred to therein (the "Lenders") (the "Credit
Agreements"). The Agent's rights hereunder are subject to the terms and
conditions of the Asset Sale and Purchase Agreement, the Promissory Note and
the Inventory Purchase and Sale and Manufacturing Agreement.
Notwithstanding any other provisions contained in the Agreement, the
undersigned consents to the collateral assignment of these Agreements to the
Agent, for the benefit of the Lenders. Unless and until the Agent gives notice
to each of the undersigned of the Agent's intention to succeed to the rights of
the Borrower and Signal under the Agreements, the Agent shall not be obligated
to perform any of the obligations of the Borrower under the Agreements.
THE WOOLFOAM CORPORATION
By: /s/ [ILLEGIBLE]
--------------------------------
Title: President
-----------------------------
<PAGE>
ASSIGNMENT AGREEMENT
Reference is made to that certain Credit Agreement dated as of April 29,
1996 (as the same may be amended, modified, extended or restated from time to
time, the "Credit Agreement") among Chattem, Inc. (the "Borrower"), the Domestic
Subsidiaries of the Borrower, the Lenders identified therein and NationsBank,
N.A., as Agent. All capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement.
1. The Assignor (as defined below) hereby sells and assigns, without
recourse, to the Assignee (as defined below), and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective as of effective date
of the assignment as designated below (the "Effective Date"), the interests set
forth below (the "Assigned Interest") in the Assignor's rights and obligations
under the Credit Agreement, including, without limitation, (a) the interests set
forth below in the Commitment Percentages of the Assignor on the Effective Date
and (b) the Loans owing to the Assignor in connection with the Assigned Interest
which are outstanding on the Effective Date. The purchase of the Assigned
Interest shall be at par and periodic payments made with respect to the Assigned
Interest which (i) accrued prior to the Effective Date shall be remitted to the
Assignor and (ii) accrue from and after the Effective Date shall be remitted to
the Assignee. From and after the Effective Date, the Assignee, if it is not
already a Lender under the Credit Agreement, shall become a "Lender" for all
purposes of the Credit Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Lender shall be relieved of its
obligations under the Credit Agreement.
2. The Assignor represents and warrants to the Assignee that it is the
holder of the Assigned Interest, and the Loans and Participation Interests
related thereto, and it has not previously transferred or encumbered such
Assigned Interest, Loans or Participation Interests.
3. The Assignee represents and warrants to the Assignor that it is an
Eligible Assignee.
4. This Assignment shall be effective only upon (a) the consent of the
Borrower and the Agent to the extent required under Section 11.3(a) of the
Credit Agreement and (b) delivery to the Agent of this Assignment Agreement
together with the transfer fees, if applicable, set forth in Section 11.3(b) of
the Credit Agreement.
5. This Assignment shall be governed by and construed in accordance with
the laws of the State of North Carolina.
<PAGE>
6. Terms of Assignment
(a) Date of Assignment May 1, 1996
(b) Legal Name of Assignor NationsBank, N.A.
(c) Legal Name of Assignee Ceres Finance Ltd.
(d) Effective Date of Assignment May 1, 1996
(e) Total Tranche B Term Loan
Percentage Assigned 28.571428571%
(f) Total Tranche B Term Loans
outstanding as of Effective Date $17,500,000
(g) Principal Amount of Tranche B Term
Loans assigned on Effective
Date (the amount set forth
in (f) multiplied by the
percentage set forth in (e)) $5,000,000
[remainder of page intentionally left blank]
- 2 -
<PAGE>
The terms set forth above
are hereby agreed to:
NationsBank, N.A., as Assignor
By: /s/ NANCY B. CHASTAIN
------------------------------
Name: Nancy B. Chastain
----------------------------
Title: Senior Vice President
---------------------------
Ceres Finances Ltd., as Assignee
By: /s/ DARREN RILEY
------------------------------
Name: Darren Riley
----------------------------
Title: Director
---------------------------
CONSENTED TO (if applicable):
CHATTEM, INC.
By: /s/ ROBERT E. BOSWORTH
--------------------------
Name: Robert E. Bosworth
------------------------
Title: Executive Vice President
-----------------------
NATIONSBANK, N.A., as Agent
By: /s/ NANCY B. CHASTAIN
---------------------------
Name: Nancy B. Chastain
-------------------------
Title: Senior Vice President
------------------------
- 3 -
<PAGE>
TRANCHE B TERM NOTE
$5,000,000.00 May 1, 1996
FOR VALUE RECEIVED, Chattem, Inc., a Tennessee corporation (the
"BORROWER"), hereby promises to pay to the order of Ceres Finance Ltd. (the
"LENDER") and its registered assigns, at the office of NationsBank, N.A. (the
"AGENT") as set forth in that certain Credit Agreement dated as of April 29,
1996 between the Borrower, the Domestic Subsidiaries of the Borrower, the
Lenders named therein (including the Lender) and NationsBank, N.A., as Agent (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT"), the principal sum of $5,000,000.00 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Tranche B Term Loan made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of such Tranche B Term Loan, at such office, in like
money and funds, for the period commencing on the date of such Tranche B Term
Loan until such Tranche B Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Tranche B Term Loan Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Loan Note and not otherwise
defined shall have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Tranche B Term Loan evidenced by this Tranche B Term Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Tranche B Term Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
<PAGE>
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under this Tranche B
Term Loan Note in respect of the Tranche B Term Loan to be evidenced by this
Tranche B Term Loan Note, and each such recordation or endorsement shall be
conclusive and binding absent manifest error.
This Note and the Tranche B Term Loan evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3(d) of the Credit Agreement.
THIS TRANCHE B TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Loan Note
to be executed as of the date first above written.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
------------------------------------------
Name: Robert E. Bosworth
-------------------------------------
Title: Executive Vice President
-------------------------------------
-2-
<PAGE>
CONSENT
The undersigned hereby acknowledges that pursuant to the Security
Agreement dated as of April 29, 1996 by and among Chattem, Inc. (the
"Borrower"), the Domestic Subsidiaries of the Borrower and NationsBank, N.A., in
its capacity as agent (together with its successors and assigns, the "Agent")
(the "Security Agreement") the Borrower and Signal Investment & Management Co.
("Signal") have assigned their right, title and interest under the Asset
Purchase Agreement among the Borrower, Signal and the undersigned dated as of
April 10, 1996 (the "Agreement") as security for the financing provided to the
Borrower by the Agent and the Lenders (as hereinafter defined) pursuant to the
terms of two separate Credit Agreements by and among the Borrower, the
Borrower's Domestic Subsidiaries, as guarantors, the Agent and the other lenders
referred to therein (the "Lenders") (the "Credit Agreements").
Notwithstanding any other provisions contained in the Agreement, the
undersigned consents to the collateral assignment of the Agreement to the Agent,
for the benefit of the Lenders. Unless and until the Agent gives notice to each
of the undersigned of the Agent's intention to succeed to the rights of the
Borrower and Signal under the Agreement, the Agent shall not be obligated to
perform any of the obligations of the Borrower under the Agreement.
MARTIN HIMMEL INC.
By:/s/ Jeffrey S. Himmel
--------------------------------
Title: Chairman and CEO
-----------------------------
/s/ Jeffrey S. Himmel
-----------------------------------
Jeffrey S. Himmel
<PAGE>
EXHIBIT 10.5
FIRST AMENDMENT TO LEASE
The parties hereto agree to amend the lease by and between TAMMY
DEVELOPMENT COMPANY (Landlord) and CHATTEM, INC. (Tenant), for the following
described space commonly known as approximately 9,6000 square feet located in
Phase I, SOUTH BROAD STREET CENTER, CHATTANOOGA, TN as follows:
1. ARTICLE 1, SECTION 1. -PREMISES The square footage of the premises is
hereby increased to 35,200 square feet.
2. ARTICLE 2, SECTION 1. -MINIMUM RENT The minimum rent during the remaining
term of the Lease is hereby modified as follows:
(i) Commencing DECEMBER 1, 1996 and terminating JANUARY 31, 1998, an
annual rent of ONE HUNDRED THIRTEEN THOUSAND ONE HUNDRED TWENTY
AND 00/100 ($113,120.00) DOLLARS, payable in equal monthly
installments of NINE THOUSAND FOUR HUNDRED TWENTY-SIX AND 67/100
($9,426.67) DOLLARS.
(ii) Commencing on FEBRUARY 1, 1998 and terminating NOVEMBER 30, 1999,
an annual rent of ONE HUNDRED FOURTEEN THOUSAND FIVE HUNDRED SIXTY
AND 00/100 ($114,560.00) DOLLARS, payable in equal monthly
installments of NINE THOUSAND FIVE HUNDRED FORTY-SIX AND 67/100
($9,546.67) DOLLARS.
(iii) Commencing DECEMBER 1, 1999 and terminating JANUARY 31, 2001,
an annual rent of ONE HUNDRED EIGHTEEN THOUSAND FOUR HUNDRED
AND 00/100 ($118,400.00) DOLLARS, payable in equal monthly
installments of NINE THOUSAND EIGHT HUNDRED SIXTY-SIX AND 67/100
($9,866.67) DOLLARS.
3. ARTICLE 3, SECTION 1. -REAL ESTATE TAXES AND INSURANCE PREMIUMS The
Tenant's proportionate share of base year Real Estate Taxes and Insurance
Premiums will be increased to amounts equal to 70.96 percent (%) of the 1995
Taxes & Premiums paid by the Landlord for the whole building.
4. ARTICLE 3, SECTION 2. -PROPORTIONATE SHARE Tenant's proportionate share
of any increases under Section 1 above shall be deemed to be 70.96 percent (%).
All other terms and conditions contained in the current lease shall remain
the same.
Date: 12-2-96 Date: 11/26/96
------------------- -------------------
LANDLORD: TENANT:
TAMMY DEVELOPMENT CO. CHATTEM, INC.
By: Jim Hudson By: Robert E. Bosworth
------------------------- -------------------------
Title: Partner Title: EVP - CFO
---------------------- ----------------------
<PAGE>
EXHIBIT 11
CHATTEM, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------
<S> <C> <C> <C>
NET INCOME (LOSS):
Continuing operations. . . . . . . . . . . . . . . . . . . $ 3,804 $ 2,325 $ 2,110
Discontinued operations. . . . . . . . . . . . . . . . . . -- 10,008 1,500
Extraordinary loss on early extinguishment of debt, net. . (532) (367) (1,556)
------- ------- -------
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 3,272 $11,966 $ 2,054
------- ------- -------
------- ------- -------
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Weighted number of common shares outstanding . . . . . . . 8,052 7,292 7,292
Shares issued upon assumed exercise of outstanding
stock options and warrants. . . . . . . . . . . . . . . 101 -- --
------- ------- -------
Weighted average number of common and common
equivalent shares outstanding. . . . . . . . . . . 8,153 7,292 7,292
------- ------- -------
------- ------- -------
NET INCOME (LOSS) PER COMMON SHARE:
Continuing operations. . . . . . . . . . . . . . . . . . . $ .47 $ .32 $ .29
Discontinued operations. . . . . . . . . . . . . . . . . . -- 1.37 .21
Extraordinary loss on early extinguishment of debt, net. . (.07) (.05) (.21)
------- ------- -------
Net income per common share. . . . . . . . . . . . . $ .40 $ 1.64 $ .29
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
Exhibit 13
1996 A GOLD MEDAL YEAR
Led by the acquisitions of GOLD BOND, our largest acquisition in history, and
HERPECIN-L, Chattem turned in a gold medal performance in 1996. Sales increased
18% to a record $119 million while earnings jumped 47% to $.47 per share. Also
included in the earnings was a planned $.14 per share loss on the national
launch of PHISODERM Antibacterial Hand Cleanser. Excluding this loss, earnings
would have increased 90% to just over $.60 per share.
While these numbers support the decision to go with a gold annual report, there
were actually a number of other factors which made 1996 a gold medal year.
First, we have two gold medal winners as spokespersons for our products.
Swimmer Janet Evans, who carried the torch to Muhammed Ali at the opening
ceremony of the Olympics and is a four time gold medal winner and current world
record holder, represents ULTRASWIM. Recently, we added Dr. Dot Richardson, the
most valuable player of the United States gold medal winning softball team, as a
spokesperson for FLEXALL. In addition to being a world class softball player,
Dot is in residency as an orthopedic surgeon.
Also, while Atlanta was shining with its outstanding performance of the opening
ceremony of the 1996 Olympics, Chattanooga played a role in the Olympics as a
host for a number of teams in a variety of sports for training and as the site
for the kayaking races on the Ocoee River.
Turning back to the business results, GOLD BOND, which was acquired in April,
clearly was the key driver for 1996. GOLD BOND Powder dominates the medicated
powder market while GOLD BOND Cream is the fastest growing anti-itch cream
product in the United States. During 1996 we continued the marketing
initiatives that were in place on GOLD BOND. Also, we increased advertising
expenditures which led to growth in market share.
In addition to GOLD BOND, Chattem had a number of other notable successes in
1996. HERPECIN-L, which was acquired in June, is an important strategic
acquisition which shows great promise to become a leader in the cold sore
prevention and treatment markets. We initiated television advertising in
October and have already seen solid increases in sales in response to that
advertising.
Another major success for Chattem occurred in the important topical analgesic
market. ICY HOT continued its share growth with another year of 10% growth in
consumer sales. FLEXALL, led by the introduction of Ultra Plus, rebounded from
declining consumer sales early in the year to show an increase of almost 15% for
the three months ending January, 1997.
<PAGE>
BULLFROG had its best year ever with a double digit increase in sales. This
sales increase was led by BULLFROG FOR KIDS and our new and unique BULLFROG QUIK
GEL. MUDD had a very strong year with a dramatic increase in consumer sales due
to the relaunch and repackaging of the MUDD line.
Finally, the International division was another area of strength in 1996 with
profits increasing over 20%. This growth was due to a very strong performance
from our United Kingdom operation, as well as improved profitability in Canada
and European distribution markets.
For 1996 there were two primary weaknesses, CORNSILK and PHISODERM. Both had
sales declines due to intense competition. We have major initiatives in place
to address these two brands which will be covered in the section below for the
1997 outlook, as will PHISODERM Antibacterial.
1997 A YEAR OF BRAND DEVELOPMENT
In 1996, we were led by acquisitions. For 1997, we are forecasting even greater
sales and earnings per share growth rates, led by the development of our brands.
At no time in Chattem's history have there been more marketing projects,
including line extensions, new packaging, and new advertising to grow our
existing brand franchises. These projects should not only lead to growth in
1997 but continued increases in sales and earnings for the following years.
These major projects are outlined below by brand.
GOLD BOND has three major brand development projects. First, and most
important is the introduction of Maximum Strength GOLD BOND Medicated Foot
Powder. This product, whose triple action formula relieves itching, fights
odor and controls moisture, should attract consumers currently using either
odor control or athletes foot products.
Another major project for GOLD BOND is the introduction of GOLD BOND CORNSTARCH
PLUS Medicated Baby Powder which has a unique formula in a cornstarch base with
more skin protectants than any other product. Finally, we will be aggressively
advertising GOLD BOND Cream as fast itch relief that is free of the steroid
hydrocortisone.
ICY HOT will have its first major line extension with new Arthritis Therapy Gel.
This odor free long lasting product should gain consumers currently using odor
free products that don't provide any real sensation of working as well as
products that contain a strong odor. We will have a major advertising campaign
to introduce ICY HOT Arthritis Therapy Gel starting in the summer.
<PAGE>
PAMPRIN and PREMSYN PMS will introduce gel caps, the most preferred dosage form
for internal analgesics. Also, the consumer sales for both products have shown
good response to new advertising campaigns begun late in 1996, and these
campaigns will continue in 1997 at increased spending levels for the two brands.
MUDD will introduce a breakthrough product in MUDD 5 Minute Masque, which works
in one third the time of other masks. In consumer tests this product scored
among the highest of any that we have ever tested.
As I mentioned in the review of 1996, we are addressing the weaknesses of
CORNSILK and PHISODERM aggressively this year. For CORNSILK we are shipping
all new packaging starting February 1, which will replace all existing
inventory in the trade. This major program is the most significant face lift
in the CORNSILK history, as the new attractive blue packaging was strongly
received in extensive consumer testing.
Announcing the major packaging change will be the largest print advertising
campaign in several years for CORNSILK. This new advertising will showcase the
product as well as the unique benefit of CORNSILK, long lasting natural beauty
that does not shine or fade.
For PHISODERM we will be moving back more to the heritage of the brand in terms
of packaging and advertising. A new attractive green bottle will begin shipping
in February which returns PHISODERM to its heritage and represents the "fresh
clean" facial cleanser. A major print campaign will tout PHISODERM as the
"Daily Prescription for Healthy Skin".
PHISODERM Antibacterial has been a classic good news / bad news story. In terms
of negatives, our distribution goals were attained less quickly than we
anticipated which made it difficult to coordinate our advertising and promotion
plans. On the positive side we have a number of major account successes
particularly on the East Coast. At this stage it appears to have created a
brand with sales potential of $5-10 million. For 1997 we are planning a number
of targeted account promotions with a goal of developing PHISODERM Antibacterial
to the higher end of our projected sales range.
The international division is also planning a very aggressive year highlighted
by a number of line extensions planned for Canada. These plans include new
products for GOLD BOND, FLEXALL and PHISODERM.
As you can see, 1997 is indeed a very exciting and aggressive year for our
brands. Our management team and employees are extremely enthused about the
numerous brand development projects planned. I am hopeful that in next year's
annual report I can again proclaim another gold medal year for Chattem as we
move toward $200 million in sales.
<PAGE>
PRODUCT AND MARKET SUMMARY
MISSION AND OBJECTIVE
The mission of the Company is the satisfaction of consumer needs in personal and
health care areas through the marketing of brand name products which are of
excellent quality and proven efficacy. These products compete in small to
medium size over-the-counter (OTC) pharmaceuticals or functional toiletries and
cosmetics markets, with an ideal retail market size of $50 million to $200
million, in which its products can be among the market leaders. These products
are advertised through national media and are distributed through the food, drug
and mass merchandiser classes of trade. The objective of the Company is to
create or maintain a leadership position in each of its markets and to thereby
provide superior earnings while also building the value of each brand.
DOMESTIC PRODUCT OVERVIEW
OTC PHARMACEUTICALS - TOPICAL ANALGESICS
The Company competes in the topical external analgesic category, a $220 million
market, with its FLEXALL 454 and ICY HOT brands. BENZODENT competes in the
denture irritation segment, a $38 million segment, within the overall topical
oral analgesic category.
Overall, Chattem is the number two player in the topical external analgesic
category. FLEXALL 454, the number 3 brand, is an aloe-vera based topical
analgesic clinically proven to provide long lasting relief for arthritis and
other muscle and joint pain. The brand's current product line includes Original
Vitamin E Enriched and Maximum Strength FLEXALL 454 which contain menthol as
the active ingredient, as well as Ultra Plus which was launched during the
middle of 1996 and contains three active ingredients: menthol, methyl salicylate
and camphor.
1
<PAGE>
ICY HOT, the fifth largest brand in its category, completed 1996 with its fifth
straight year of sales growth. ICY HOT offers the most complete product form
line-up in the category with a cream, a balm and the unique chill stick.
Consumer research indicates that the brand's distinctive "Icy and Hot Therapy
for Pain" positioning enjoys high awareness and is viewed as the strongest in
the category. In February of 1997, ICY HOT Arthritis Therapy Gel begins
shipping. This new product contains capsaicin, the active ingredient most
recommended by doctors, in an aloe vera based gel. With an aggressive
introductory marketing plan, this line extension provides significant
opportunity for growth.
BENZODENT, a topical oral analgesic, is the only brand positioned to be applied
directly to dentures to relieve pain. The product contains the maximum amount
of benzocaine allowable in the category and is recommended by dentists.
Marketing efforts are focused on providing samples to consumers when they are
initially fitted for dentures, the point of entry for the category.
OTC PHARMACEUTICALS - MEDICATED POWDER AND CREAM.
The Company competes in the medicated powder and cream markets with its GOLD
BOND Medicated Powder and GOLD BOND Medicated Cream. GOLD BOND is the leading
brand in the medicated powder market and has a growing presence in the anti-itch
cream market. Acquired in April, 1996, the brand's current product line
includes GOLD BOND Medicated Powder, GOLD BOND Extra Strength Medicated Powder,
GOLD BOND Medicated Baby Powder and GOLD BOND Medicated Cream. In February,
1997, the Company will launch GOLD BOND Medicated Foot Powder and GOLD BOND
CORNSTARCH PLUS Medicated Baby Powder.
2
<PAGE>
OTC PHARMACEUTICALS - INTERNAL ANALGESICS
The Company competes in the $61 million menstrual pain relief category with its
PAMPRIN and PREMSYN PMS brands. NORWICH aspirin competes in the general
analgesics category.
PAMPRIN, the number two brand in the menstrual analgesics category, is a
combination drug specifically designed for relief of menstrual symptoms. Multi-
symptom PAMPRIN effectively relieves multiple menstrual discomforts with three
active ingredients. Maximum Pain Relief PAMPRIN is formulated to provide
superior cramp relief and is the only cramp relief product with two pain
relievers. Maximum Strength PREMSYN PMS, the third largest brand in the
category, effectively relieves the physical and emotional symptoms of PMS.
3
<PAGE>
In mid 1997, the Company will launch a gelcap version of both Multi-symptom
PAMPRIN and Maximum Strength PREMSYN PMS. Consumer testing shows that gelcaps
are the preferred form due to the fact that they are easier to swallow.
NORWICH, a high-quality, reasonably priced aspirin franchise, complements the
other OTC pharmaceuticals of the division. The brand is principally focused in
sales and marketing support in the northeast, midwest, and west coast. With the
continued expansion of private label aspirin as well as the Company's decision
to divert advertising and promotion support to bigger, more strategic, growth
opportunities, the brand continues to decline roughly 10% a year.
OTC PHARMACEUTICALS - LIP CARE
The Company competes in the lip care category, a $210 million market, with the
HERPECIN-L brand. Acquired in mid 1996, HERPECIN-L is uniquely formulated to
treat cold sores and protect lips. The product contains a skin protectant and
an effective sunscreen to moisturize lips as well as protect them from the
harmful rays of the sun. 1997 marks the first year in the brand's history in
which it will receive a full year of national television advertising, radio
advertising and promotional support. Given this significant support and the
high incidence of cold sores among the U.S. population, the brand's potential
for growth is strong.
4
<PAGE>
COSMETICS
The Company competes in the oil control face makeup segment, a $92 million
market, within the overall cosmetics category with its CORNSILK brand.
CORNSILK, the number three brand in the oil control makeup segment, is the
original makeup specially formulated to be oil free as well as able to absorb
excess facial oil. The CORNSILK product line includes loose and pressed powders
in two finishes, and in four shade variations; liquid makeup in six shades; and
a concealer. To counteract recent sales declines a dramatic package redesign
will be introduced and will begin shipping in February, 1997. Also in 1997 to
complement CORNSILK's face makeup expertise CORNSILK will add an enriched
stick concealer to the product line.
TOILETRIES - SKIN CLEANSERS AND MASQUES
The Company competes in the facial cleanser category, a $388 million market,
with its PHISODERM brand. In the masque sub-segment of the facial cleanser
category, a $20 million market, the Company competes with MUDD Spa Treatment
Masque products. The MUDD brand includes three varieties of clay-based masques:
Original, Sea and Aloe.
5
<PAGE>
PHISODERM, a specialty face cleanser, is a product that through its pH balanced
formula provides the consumer with superior cleansing without the harsh, drying
effects of soap. The brand offers adult products available in different skin
types: normal to dry, normal to oily, as well as a product designed for use on
babies. In 1996 PHISODERM for Sensitive Skin was introduced. This fragrance
free product was designed to appeal to the wide audience of women who experience
problems with sensitive skin. PHISODERM for Sensitive Skin bolsters the
therapeutic image of the brand as well as the brand's tie to dermatologists. In
1997 PHISODERM will introduce bold new bottle labels in a cartonless package
format. Also in 1997, PHISODERM will be featured in an extensive print
advertising campaign and offer its best selling item in a year round 50% bonus
size.
In mid 1996 PHISODERM Antibacterial Hand Cleanser was brought to market. This
product introduced the ultimate name in medical professional cleansing into the
$270 million mass antibacterial hand cleansing category. To launch the two item
product line, a broker sales force was established to provide national retail
coverage for the food class of trade. PHISODERM Antibacterial Hand Cleanser was
promoted through national television advertising and two promotional programs.
The MUDD brand continues to show dramatic retail growth after the 1995 relaunch
of MUDD Original Masque under the Spa Treatment banner and the introduction of
Sea Masque and Aloe Masque. All three sku's are in the top ten best selling
facial masques. MUDD drove consumer awareness in 1996 through national
television advertising and by delivering over 1 million samples and coupons to
target consumers. In 1997 MUDD will introduce a revolutionary new masque
extension, MUDD 5 Minute Masque. The new product which contains natural papaya,
grapefruit, and cucumber, provides all of the cleansing benefits of a clay-based
masque product but in one-third of the time.
6
<PAGE>
TOILETRIES - SEASONALS
The Company competes in the suncare category with products that have a sun
protection factor (SPF) of greater than 15, a $238 million market, with its
BULLFROG Sunblock line. SUN-IN competes in the spray on hair lightener
category, a $9 million market, while ULTRASWIM Shampoo and Conditioner are
essentially the only products in the small chlorine removal market.
For the third straight year BULLFROG Sunblock continues to be one of the fastest
growing brands in the category. All BULLFROG Sunblock products, which are
available in unique gels and lotions, provide all day sun protection in or out
of the water. BULLFROG is the Ultimate Waterproof Sunblock. In 1996 BULLFROG
Sport Lotion SPF30+ was added to the product line. Strong growth was realized
in the BULLFROG Quik Gel and the BULLFROG for Kids part of the business. This
was aided by heavy levels of regional seasonal television advertising featuring
the unique benefits of these two sku's. In 1997 BULLFROG Quik Gel SPF 36 will
be added to the fold.
INTERNATIONAL MARKET OVERVIEW
CANADA
Chattem (Canada) Inc. is a wholly-owned subsidiary based in Mississauga, Ontario
which markets and distributes Chattem's consumer products throughout Canada.
The manufacturing of the brands is principally done in the Company's facilities
in Chattanooga while some packaging takes place in Mississauga. The division
utilizes a national broker for its sales efforts. Brands marketed in Canada
include GOLD BOND, PAMPRIN, FLEXALL, CORNSILK, MUDD, SUN-IN, ULTRASWIM and
PHISODERM. In addition, Chattem owns the marketing and distribution rights for
ACNOMEL, a medicated acne product.
7
<PAGE>
EUROPE
Chattem's European business is conducted through Chattem (U.K.) Limited, a
wholly-owned subsidiary located in Basingstoke, Hampshire, England. This unit
also services distributors in Australia and the Middle East. Manufacturing and
packaging of the products is performed principally in the U.K. with a limited
number of ingredients purchased from Chattem. In the U.K., the division employs
its own sales force while exclusive distributors are used to market and sell its
products in Western European countries. Due to the difficulty and expense
involved in the registration of OTC pharmaceuticals in Europe, the unit markets
exclusively the Company's toiletry products. Chattem's products in Europe
include SUN-IN, a range of MUDD Face and Body products, ULTRASWIM,
and CORNSILK. SUN-IN is marketed on the continent as SPRAY BLOND.
U.S. EXPORT
The U.S. Export division services various distributors primarily located in the
Caribbean, Mexico and Peru. The Company sells ICY HOT, GOLD BOND, PAMPRIN, MUDD
and PHISODERM into these markets with the primary focus being the development of
its OTC pharmaceuticals. The Company continues to look for established
distributors in Central and South America.
8
<PAGE>
Financial Information................................................Contents
Management's Discussion and Analysis........................................9
Selected Financial Data....................................................15
Consolidated Balance Sheets................................................16
Consolidated Statements of Income..........................................18
Consolidated Statements of Shareholder's Deficit...........................19
Consolidated Statements of Cash Flows......................................20
Notes to Consolidated Financial Statements.................................21
Report of Independent Public Accountants...................................33
Quarterly Information......................................................34
Geographical Segment Information...........................................35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The results for fiscal 1996 were highlighted by two brand acquisitions and
related financing transactions. On April 29, 1996, the Company purchased the
worldwide rights for the GOLD BOND line of medicated powders and anti-itch
cream from Martin Himmel Inc. The purchase price for the trademarks and
inventory was $40,000,000. Additionally, the Company assumed certain
liabilities of approximately $500,000. The Company financed the GOLD BOND
acquisition and repaid all existing bank indebtedness by entering into a new
$61,500,000 credit agreement with a syndicate of banks, issuing 1,100,000 new
shares of Company stock to a group of investors, including certain officers,
directors and affiliates, and issuing to the seller 155,792 shares of Company
stock at $6.42 per share.
On June 6, 1996, the Company purchased the rights for the HERPECIN-L line of
medicated lip balm from Campbell Laboratories, Inc. The purchase price for the
trademark, receivables and inventory was $5,607,000 plus a royalty payment equal
to the greater of $214,000 or 5% of net sales. Additionally, the Company
assumed certain liabilities of approximately $500,000. The royalty payment is
payable annually for each of the seven twelve-month periods beginning July 1,
1996 and ending June 30, 2003. The purchase was financed by the Company with a
$5,000,000 addition to its existing bank credit agreement with the remaining
$607,000 being funded by the Company.
<PAGE>
As a result of the refinancing of the Company's long-term bank debt in
connection with the GOLD BOND and HERPECIN-L product acquisitions, a loss (net
of tax) of $532,000 was recognized in 1996 on the early extinguishment of
existing long-term obligations to banks.
Unless otherwise indicated, the following discussion and analysis of financial
condition and results of operations relate only to the continuing operations of
the Company, which are the domestic and international consumer products
businesses. The results of operations and the gain on disposal of the specialty
chemicals division in 1995 have been separately classified as discontinued
operations in the accompanying consolidated statements of income.
The Company experienced an increase in net sales, operating income and income
from continuing operations for the year ended November 30, 1996. Net sales
increased 18.2% to $118,903,000 from $100,598,000 in 1995. Operating income
before nonrecurring and unusual charges increased 13.0% to $16,689,000 from
$14,770,000 in 1995. Income from continuing operations increased 63.6% to
$3,804,000 from $2,325,000 in 1995, while net income, which includes the net
income from discontinued operations, the net gain on disposal of the specialty
chemicals division in 1995 and the extraordinary charges relating to the early
extinguishment of debt in 1995 and 1996, decreased to $3,272,000 from
$11,966,000 in fiscal year 1995. Net income would have increased $1,479,000
over 1995 without the positive impact of the sale of the specialty chemicals
division.
2
<PAGE>
In fiscal year 1996 as compared to fiscal year 1995, earnings per share from
continuing operations increased $.15, or 46.9%, to $.47 while total earnings per
share decreased $1.24 to $.40. Total earnings per share for the year ended
November 30, 1995 included the net income from discontinued operations and the
net gain on disposition of the specialty chemicals division.
The Company will continue to seek increases in sales through a combination of
acquisitions and internal growth while maintaining high operating income. As
previously high growth brands mature, sales increases will become even more
dependent on acquisitions and the development of successful line extensions.
On May 1, 1996, the Company began shipping PHISODERM Antibacterial Hand
Cleanser. Also, on May 1, 1996 in an effort to expand the PHISODERM Facial
Cleanser business, the Company began shipping an unfragranced product for
sensitive skin. On July 1, 1996, FLEXALL Ultra Plus was introduced
nationally while the existing FLEXALL line was relaunched with new packaging
and a completely new advertising message.
3
<PAGE>
Strategically, the Company continually evaluates its products and business as
part of its sales growth strategy and, in instances where the Company's
objectives are not realized, will dispose of the brands or businesses and
redeploy the assets to products or businesses with greater growth potential or
to reduce indebtedness. During April, 1996, the Company sold the trademarks and
inventory of two of its minor consumer products brands, SOLTICE and BLIS-TO-SOL.
The sales price of $1,200,000 consisted of $1,000,000 cash received at closing
and a $200,000 promissory note requiring payments of $100,000 per year for the
next two years contingent upon the brands meeting specific future sales levels.
A gain from the sale of $875,000 was recognized.
4
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for continuing operations certain items from the
Company's consolidated statements of income, for the periods indicated,
expressed as a percentage of net sales:
YEAR ENDED NOVEMBER 30,
----------------------------
1996 1995 1994
-------- -------- --------
Net Sales..................................... 100.0% 100.0% 100.0%
--------- -------- --------
Costs and Expenses:
Cost of sales............................ 29.5 29.6 30.2
Advertising and promotion................ 38.3 37.0 35.3
Selling, general and administrative...... 18.2 19.0 21.2
------ ------ ------
Total costs and expenses............ 86.0 85.6 86.7
------ ------ ------
Income From Operations........................ 14.0 14.4 13.3
Other Expense, Net............................ (9.3) (10.8) (9.8)
------ ------ ------
Income Before Income
Taxes.................................... 4.7 3.6 3.5
Provision For Income Taxes.................... 1.5 1.3 1.3
------ ------ ------
Income From
Continuing Operations.................... 3.2% 2.3% 2.2%
------ ------ ------
------ ------ ------
FISCAL 1996 COMPARED TO FISCAL 1995 FOR CONTINUING OPERATIONS
For the year ended November 30, 1996, net sales increased $18,305,000, or 18.2%,
to $118,903,000 from $100,598,000 for the previous fiscal year. This increase
consisted of a $17,194,000, or 19.7%, increase in domestic consumer products
sales from $87,250,000 in 1995 to $104,444,000 in 1996 and an increase of
$1,111,000, or 8.3%, in international sales to $14,459,000 from $13,348,000.
5
<PAGE>
For domestic consumer products, sales of the GOLD BOND and HERPECIN-L product
lines, both of which were acquired in 1996, and PHISODERM Antibacterial Hand
Cleanser accounted for essentially all of the sales increase in 1996,
although sales increases were also realized for the BULLFROG, ICY HOT and
MUDD product lines. Sales declines were recognized for CORNSILK, NORWICH
Aspirin and PHISODERM facial. The remaining domestic brands were basically
flat or had modest declines over the prior fiscal year. All sales variances
were largely the result of changes in volume.
The increase in sales of BULLFROG and MUDD brands in 1996 was largely the result
of new product introductions and/or new packaging in late 1995 and increased
marketing support. Sales growth for the ICY HOT product line was primarily due
to increased advertising and promotional expenditures.
Sales declines for the remainder of the domestic products are essentially the
result of increased competition in their respective product categories, the
maturation of these brands and in most cases reduced marketing support. In the
case of CORN SILK, the brand will be completely repackaged in 1997 while new
products will be introduced under the GOLD BOND, ICY HOT, MUDD, PAMPRIN and
PREMSYN PMS brand names.
6
<PAGE>
In fiscal 1996, sales for the international consumer product's segment
increased $121,000, or 3.1%, for the Canadian operation and $1,446,000, or
17.9%, for the United Kingdom business. The addition of the GOLD BOND
product line in Canada accounted for more than the total of the net sales
increase in that country, although increases were also realized for the SUN-IN,
ULTRASWIM and MUDD product lines. Declines in sales of the other brands in
Canada largely offset the increases enumerated above. Sales increases for
all of the product lines sold by the United Kingdom operation were realized
with the exception of the CORNSILK brand. U.S. export sales decreased
$456,000, or 33.8%, in 1996 largely resulting from unfavorable general
economic conditions in Peru and Mexico. All sales variances were principally
due to volume changes.
Cost of goods sold as a percentage of net sales in 1996 was essentially
unchanged at 29.5% versus 29.6% for 1995. Cost of goods sold was affected by
the partial year positive impact of GOLD BOND which was offset by increased
inventory obsolesence charges.
Advertising and promotion expenses increased $8,270,000, or 22.2%, to
$45,512,000 in 1996 from $37,242,000 in 1995 and were 38.3% of net sales
compared to 37.0% in 1995. This increase was principally associated with the
GOLD BOND and HERPECIN-L brands, which were acquired in 1996, and with the
introduction of PHISODERM Antibacterial Hand Cleanser in that year. Increases
in 1996 were also recorded for the BULLFROG, FLEXALL 454, ICY HOT, SUN-IN and
MUDD product lines.
7
<PAGE>
Selling, general and administrative expenses increased $2,449,000, or 12.8%, to
$21,582,000 in 1996 from $19,133,000 in 1995, but decreased as a percentage of
net sales to 18.2% for 1996 as compared to 19.0% in 1995. This increase was
largely associated with increases in direct selling costs, freight and field
sales expenses, as a result of increased sales.
Interest expense increased $2,318,000, or 20.9%, to $13,394,000 in 1996 from
$11,076,000 in 1995 largely as a result of increased indebtedness associated
with the acquisition of the GOLD BOND and HERPECIN-L product lines in April and
June, 1996, respectively. Interest expense is expected to increase in 1997
due to the expected level of outstanding debt during that year. Until the
Company's indebtedness is reduced substantially, interest expense will continue
to represent a significant percentage of the Company's net sales.
Investment income increased $893,000 to $1,420,000 in 1996 from
$527,000 in 1995. This increase consisted of $113,000 of interest income,
resulting from the temporary investment of excess funds; $328,000 of dividends
on the cumulative, convertible preferred stock of Elcat, Inc. received as part
of the proceeds from the sale of the specialty chemical division in 1995; and a
gain of $452,000 on the sale of an investment.
8
<PAGE>
In 1996, a gain of $875,000 from the sale of the two minor product lines,
SOLTICE and BLIS-TO-SOL, was realized.
Provisions for income taxes were 32.3% of before tax income in 1996 as compared
to 35.6% in 1995. See Note 8 of Notes to Consolidated Financial Statements.
Income from continuing operations increased $1,479,000, or 63.6%, to $3,804,000
in 1996 from $2,325,000 in 1995. This increase resulted primarily from
increased sales in 1996 which more than offset increased interest expense.
9
<PAGE>
FISCAL 1995 COMPARED TO FISCAL 1994 FOR CONTINUING OPERATIONS
Net sales for the year ended November 30, 1995 increased $6,228,000, or 6.6%, to
$100,598,000 as compared to $94,370,000 for the previous fiscal year. The
increase in net sales was attributable to a $4,607,000, or 5.6%, increase in
domestic consumer products sales to $87,250,000 from $82,643,000 in fiscal 1994
and an increase of $1,621,000, or 13.8%, in international consumer products
sales to $13,348,000 from $11,727,000.
For domestic consumer products, net sales increases in 1995 over 1994 were
realized for the BULLFROG, ICY HOT, SUN-IN and MUDD brands, while decreases
were recorded for the major product lines of FLEXALL 454, PREMSYN PMS,
ULTRASWIM, PAMPRIN and NORWICH Aspirin. Sales of BENZODENT and PHISODERM,
products acquired in May and June 1994, respectively, increased a combined
$7,159,000 over their respective 1994 short periods. All sales variances
were largely the result of changes in volume.
The increase in sales of the BULLFROG and SUN-IN brands was led by new products,
good summer weather, increased advertising and promotion expenditures and, in
the case of BULLFROG, the addition of a previously lost major customer. The
MUDD brand introduced new packaging and two new products in 1995, and both MUDD
and the ICY HOT brand received increased marketing support.
10
<PAGE>
The decline in sales of FLEXALL 454 reflects increased competition in the
topical analgesic product category and decreased advertising and promotion
expenditures. Sales declines for the other products listed above are primarily
the result of the maturation of these brands along with reduced marketing
support in most cases.
International consumer products sales for fiscal year 1995 increased $756,000,
or 24.0%, for the Canadian operation and $631,000, or 8.5%, for the United
Kingdom business. The addition of PHISODERM to the product line in Canada
accounted for practically all of the net increase in sales in that country,
although increases were realized for the PAMPRIN, MUDD and SUN-IN brands.
Decreases in sales of CORNSILK and FLEXALL 454 were recorded also. Sales
increases for the SUN-IN and CORNSILK brands were recognized in 1995 for the
United Kingdom business, while sales declines were registered for the BRONZ
SILK, MUDD and ULTRASWIM product lines. U.S. export sales increased $234,000,
or 21.0%, in fiscal 1995. All sales variances were principally due to volume
changes.
Cost of goods sold as a percentage of net sales decreased to 29.6% in 1995 from
30.2% in the 1994 fiscal year. This improvement in 1995 was essentially the
result of a shift in the mix of sales of domestic consumer products to higher
gross margin brands, a full year of in-house production for PHISODERM and
reduced inventory obsolescence charges.
11
<PAGE>
Advertising and promotion expenses increased by $3,906,000, or 11.7%, in 1995
and were 37.0% of net sales compared to 35.3% in the 1994 fiscal year. This
increase was principally due to full year advertising and promotion support for
the BENZODENT and PHISODERM product lines.
The decrease of $609,000, or 3.1%, in selling, general and administrative
expenses in 1995 was largely associated with increases in direct selling costs,
freight and field sales expenses, as a result of increased sales, with large
decreases in administrative and corporate personnel and bonuses more than
offsetting the increase in selling expenses.
Interest expense increased $1,716,000, or 18.3%, in the 1995 fiscal year as a
result of the refinancing of long-term debt in 1994 at higher interest rates and
increased outstanding indebtedness related to the acquisition of BENZODENT and
PHISODERM in that year. Total long-term notes payable decreased by $17,297,000
in 1995, largely due to the application of the net proceeds from the sale of the
specialty chemicals division to repay indebtedness. This debt reduction
favorably impacted interest expense for approximately half the 1995 fiscal year.
12
<PAGE>
In 1995, a gain of $729,000 on the sale of an interest rate cap was recognized
but deferred. This amount is to be amortized over the remaining life of the
original cap agreement. The portion allocated to fiscal 1995 was $454,000,
which was credited to interest expense.
The increase of $341,000 in investment income in 1995 primarily reflects the
pro-rata accrual of the previously discussed dividend to be received on the
cumulative, convertible preferred stock of Elcat, Inc.
During 1994, the Company realized a loss of $512,000 from the sale of the
distribution rights to ALGEMARIN in Canada.
Other income and expense for 1995 includes a loss of $380,000 related to the
disposition of certain assets. During 1994, the Company realized a gain of
$484,000 on the sale of an interest rate swap.
Income taxes decreased to 35.6% of income from continuing operations before
income taxes from 35.9% in 1994. See Note 8 of Notes to Consolidated Financial
Statements.
Income from continuing operations increased by $215,000, or 10.2%, in the 1995
fiscal year. The increase mainly resulted from increased sales and lower
selling, general and administrative expenses.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations and acquisitions with a
combination of internally generated funds and borrowings. The Company's
principal uses of cash are operating expenses, aquisitions, working capital,
capital expenditures and long-term debt servicing.
Cash provided by operating activities was $2,858,000 and $830,000 for 1996 and
1995, respectively. The increase in cash flows from operations from 1995 to
1996 was primarily the result of changes in accounts receivable, refundable and
deferred income taxes, accounts payable and accrued liabilities. These changes
were due primarily to the acquisitions of GOLD BOND and HERPECIN-L.
Investing activities used cash of $47,708,000 in 1996 and provided cash of
$16,762,000 in 1995. The usage of cash in 1996 reflects the expenditures
required for the purchases of the GOLD BOND and HERPECIN-L product lines in that
year, while the 1995 amount includes the proceeds from the sale of the Company's
specialty chemicals division. In 1996, capital expenditures totaled $1,785,000
compared to $2,836,000 in 1995. Expenditures of this nature are expected to be
approximately $2,000,000 in fiscal 1997.
14
<PAGE>
Financing activities provided cash of $57,125,000 in 1996. The Company
financed the acquisition of GOLD BOND and HERPECIN-L and repaid all
outstanding bank indebtedness with the proceeds of a new $66,500,000 bank
credit agreement and the issuance of 1,100,000 new shares of the Company's
common stock to a group of investors, including certain officers, directors
and affiliates. The Company also borrowed $1,441,000 against the cash
surrender value of certain insurance policies.
The following table presents certain working capital data at November 30, 1996
and 1995 or for the respective years then ended:
ITEM 1996 1995
- ---------------------------------------------- ----------- -----------
Working capital (current assets less
current liabilities)..................... $19,793,000 $10,254,000
Current ratio (current assets divided
by current liabilities).................. 1.75 1.49
Quick ratio (cash and cash equivalents,
short-term investments and receivables
divided by current liabilities).......... 1.12 .96
Average accounts receivable turnover 6.51 5.86
Average inventory turnover.................... 3.70 3.99
Working capital as a percentage of
total assets............................. 13.01% 12.29%
The increase in the current and quick ratios at November 30, 1996 as compared to
November 30, 1995 was primarily due to increases in cash, accounts receivable,
inventories and refundable and deferred income taxes offset in part by increases
in all components of current liabilities.
15
<PAGE>
Total debt outstanding was $131,344,000 at November 30, 1996 compared to
$79,689,000 at November 30, 1995. The net increase of $51,655,000 in 1996 was
primarily the result of increased borrowings required by the GOLD BOND and
HERPECIN-L product acquisitions. The availability of credit is determined based
on the Company's cash, accounts receivable and inventories. The Company had
$13,636,000 invested in highly liquid short-term investments as of November 30,
1996 and has no further availability under its credit facility.
Management of the Company believes that cash flows generated by operations,
along with funds available from its short-term, highly liquid investments, will
be sufficient to fund the Company's current commitments and proposed operations.
16
<PAGE>
FOREIGN OPERATIONS
The Company's primary foreign operations are conducted through its Canadian and
U.K. subsidiaries. The functional currencies of these subsidiaries are Canadian
dollars and British pounds, respectively. Fluctuations in exchange rates can
impact operating results, including total revenues and expenses, when
translations of the subsidiary financial statements are made in accordance with
SFAS No. 52, "Foreign Currency Translation." For the years ended November 30,
1996 and 1995, these subsidiaries accounted for 12.0% and 12.0% of total
revenues, respectively, and 6.0% and 10.0% of total assets, respectively. It
has not been the Company's practice to hedge its assets and liabilities in the
U.K. and Canada or its intercompany transactions due to the inherent risks
associated with foreign currency hedging transactions and the timing of payment
between the Company and its two foreign subsidiaries. Historically, gains or
losses from foreign currency transactions have not had a material impact on the
Company's operating results. A loss of $28,000 and a gain of $129,000 for the
years ended November 30, 1996 and 1995, respectively, resulted from foreign
currency transactions. See "Foreign Currency Translation" in Note 2 of Notes to
the Consolidated Financial Statements.
17
<PAGE>
FORWARD LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, the Chairman's Letter and other sections of this Annual Report
contain forward looking statements that are based upon management's current
beliefs and assumptions about expectations, estimates, strategies and
projections for the Company. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates" and variations of such words and
similar expressions are intended to identify such forward looking statements.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward looking statements. The Company undertakes no obligation to
update publicly any forward looking statements whether as a result of new
information, future events or otherwise.
18
<PAGE>
The risks, uncertainties and assumptions regarding forward looking statements
include, but are not limited to, product demand and market acceptance risks;
product development risks, such as delays or difficulties in developing,
producing and marketing new products or line extensions; the impact of
competitive products, pricing and advertising; constraints resulting from the
financial condition of the Company, including the degree to which the Company is
leveraged, debt service requirements and restrictions under bank loan agreements
and the indenture; and other risks described in the Company's Securities and
Exchange Commission filings.
19
+<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year Ended November 30, -
-----------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
NET SALES....................................... $ 118,903 $ 100,598 $ 94,370 $ 89,861 $ 90,221
OPERATING COSTS AND
EXPENSES..................................... 102,214 86,130 81,830 88,111 82,045
----------- ----------- ----------- ----------- -----------
INCOME FROM OPERATIONS.......................... 16,689 14,468 12,540 1,750 8,176
OTHER EXPENSE, NET.............................. (11,069) (10,858) (9,248) (3,489) (1,328)
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES.......................... 5,620 3,610 3,292 (1,739) 6,848
PROVISION FOR (BENEFIT
FROM) INCOME TAXES........................... 1,816 1,285 1,182 (639) 2,329
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS........................ $ 3,804 $ 2,325 $ 2,110 $ (1,100) $ 4,519
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
PER COMMON SHARE DATA
INCOME (LOSS) FROM
CONTINUING OPERATIONS........................ $ .47 $ .32 $ .29 $ (.17) $ .90
DIVIDENDS......................................... $ -- $ -- $ -- $ 20.20 $ .30
BALANCE SHEET DATA
(At End of Period)
TOTAL ASSETS................................... $ 152,183 $ 83,410 $ 85,442 $ 69,534 $ 97,571
LONG-TERM DEBT, less current
maturities................................... $ 127,438 $ 78,089 $ 94,486 $ 83,000 $ 22,784
</TABLE>
13
<PAGE>
MARKET PRICES
The Company's common shares trade over-the-counter on the National Market System
under the NASDAQ symbol CHTT. A quarterly summary of the high and low market
prices per common share as reported by NASDAQ is shown below:
1996 1995
--------------- --------------
QUARTER ENDED: High Low High Low
---------------- ---------------
February............................... 5 5/8 4 1/4 6 3/16 4 9/16
May.................................... 9 1/4 4 1/8 6 1/4 4 3/4
August................................. 10 1/4 7 3/4 5 3/4 4 3/4
November............................... 11 1/4 8 3/8 5 1/4 4 1/4
Based upon transfer agent records, the Company's common shares were held by
approximately 2,500 shareholders as of February 21, 1997.
14
<PAGE>
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1996 AND 1995
(IN THOUSANDS)
ASSETS 1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents .................. $ 9,254 $ 3,636
Accounts receivable, less allowance for
doubtful accounts of $450 in 1996 and
$286 in 1995 .............................. 20,276 16,248
Refundable and deferred income taxes ....... 5,405 1,400
Inventories ................................ 10,295 8,678
Prepaid expenses and other current assets .. 912 1,112
---------- ----------
Total current assets ..................... 46,142 31,074
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET ........... 9,774 9,330
---------- ----------
OTHER NONCURRENT ASSETS:
Investment in Elcat, Inc ................... 5,984 5,328
Patents, trademarks and other purchased
product rights, net ...................... 76,024 31,007
Debt issuance costs, net ................... 3,819 3,073
Deferred income taxes ...................... - 98
Other ...................................... 10,440 3,500
---------- ----------
Total other noncurrent assets ............ 96,267 43,006
---------- ----------
TOTAL ASSETS ............................ $ 152,183 $ 83,410
---------- ----------
---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
15
<PAGE>
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1996 AND 1995
(IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' DEFICIT 1996 1995
---- ----
CURRENT LIABILITIES:
Current maturities of long-term debt....... $ 3,906 $ 1,600
Accounts payable .......................... 6,602 5,462
Payable to bank ........................... 1,710 1,184
Accrued liabilities ....................... 14,131 12,574
---------- -----------
Total current liabilities ............... 26,349 20,820
---------- -----------
LONG-TERM DEBT, less current maturities ..... 127,438 78,089
---------- -----------
DEFERRED INCOME TAXES........................ 2,917 --
---------- -----------
OTHER NONCURRENT LIABILITIES ................ 2,659 1,922
---------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 5, 9
and 10)
SHAREHOLDERS' DEFICIT:
Preferred shares, without par value,
authorized 1,000, none issued ........... -- -
Common shares, without par value,
authorized 20,000, issued 8,592 in 1996
and 7,292 in 1995 ....................... 1,843 1,519
Paid-in surplus ........................... 58,561 52,099
Accumulated deficit ....................... (66,114) (69,386)
---------- -----------
(5,710) (15,768)
Minimum pension liability adjustment....... (112) -
Foreign currency translation adjustments .. (1,358) (1,653)
---------- -----------
Total shareholders' deficit ............. (7,180) (17,421)
---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT ............................ $ 152,183 $ 83,410
---------- -----------
---------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
16
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
NET SALES .................................................................... $ 118,903 $ 100,598 $ 94,370
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales .............................................................. 35,120 29,755 28,495
Advertising and promotion .................................................. 45,512 37,242 33,336
Selling, general and administrative ........................................ 21,582 19,133 19,999
----------- ----------- -----------
Total costs and expenses ................................................. 102,214 86,130 81,830
----------- ----------- -----------
INCOME FROM OPERATIONS ....................................................... 16,689 14,468 12,540
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense ........................................................... (13,394) (11,076) (9,360)
Investment income .......................................................... 1,420 527 186
Gain (loss) on product divestitures ........................................ 875 - (512)
Other income (expense), net ................................................ 30 (309) (438)
----------- ----------- -----------
Total other income (expense) ............................................. (11,069) (10,858) (9,248)
----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES....................................................... 5,620 3,610 3,292
PROVISION FOR INCOME TAXES.................................................... 1,816 1,285 1,182
----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS............................................. 3,804 2,325 2,110
----------- ----------- -----------
DISCONTINUED OPERATIONS:
Income from operations, less provision for income taxes
of $417 and $840 in 1995 and 1994, respectively.......................... -- 674 1,500
Gain on disposal, less provision for income taxes
of $5,696 ............................................................... -- 9,334 -
----------- ----------- -----------
Income from discontinued operations ....................................... -- 10,008 1,500
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY LOSS ............................................. 3,804 12,333 3,610
EXTRAORDINARY LOSS ON EARLY EXTINGUISH-
MENT OF DEBT, NET OF INCOME TAXES (Note 5)................................. (532) (367) (1,556)
----------- ----------- -----------
NET INCOME ................................................................... $ 3,272 $ 11,966 $ 2,054
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE:
Continuing operations ...................................................... $ .47 $ .32 $ .29
Discontinued operations .................................................... - 1.37 .21
Extraordinary loss ......................................................... (.07) (.05) (.21)
----------- ----------- -----------
Net income per common share .............................................. $ .40 $ 1.64 $ .29
----------- ----------- -----------
----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING ............................................................ 8,153 7,292 7,292
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
17
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
MINIMUM CURRENCY
COMMON PAID-IN ACCUMULATED PENSION TRANSLATION
SHARES SURPLUS DEFICIT LIABILITY ADJUSTMENTS TOTAL
--------- ---------- ------------ ------------ ------------- -------
<S>
<C> <C> <C> <C> <C> <C>
Balance, November 30, 1993 ............. $ 1,519 $ 50,283 $ (83,406) -- $ (1,869)$ (33,473)
Net income ........................... -- -- 2,054 -- -- 2,054
Issuance of warrants ................. -- 955 -- -- -- 955
Stock options granted ................ -- 559 -- -- -- 559
Foreign currency translation
adjustment .......................... -- -- -- -- 354 354
------- ------- ------- ------- ------- -------
Balance, November 30, 1994 ............. 1,519 51,797 (81,352) -- (1,515) (29,551)
Net income ........................... -- -- 11,966 -- -- 11,966
Stock options granted ................ -- 302 -- -- -- 302
Foreign currency translation
adjustment .......................... -- -- -- -- (138) (138)
------- ------- ------- ------- ------- -------
Balance, November 30, 1995 ............. 1,519 52,099 (69,386) -- (1,653) (17,421)
Net income ........................... -- -- 3,272 -- -- 3,272
Stock options exercised .............. 63 223 -- -- -- 286
Issuance of common shares ............ 261 6,239 -- -- -- 6,500
Foreign currency translation
adjustment .......................... -- -- -- -- 295 295
Minimum pension liability
adjustment .......................... -- -- -- (112) -- (112)
------- ------- ------- ------- ------- -------
Balance, November 30, 1996 ............. $ 1,843 $ 58,561 $ (66,114) $ (112) $ (1,358) $ (7,180)
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
18
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................... $3,272 $ 11,966 $ 2,054
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ............................. 4,829 4,072 4,036
Deferred income tax provision ............................. 1,797 645 303
Gain on sale of specialty chemicals division .............. -- (9,334) --
Loss (gain) on product divestitures ....................... (875) -- 512
Gain on sale of investment ................................ (452) -- --
Proceeds from sale of investment .......................... 452 -- --
Gain on termination of interest rate cap .................. (281) (454) --
Extraordinary loss on extinguishment of debt, net ......... 532 367 1,556
Dividend receivable from Elcat, Inc......................... (656) (328) --
Other, net ................................................. -- 1,073 1,548
Changes in operating assets and liabilities:
Accounts receivable ..................................... (3,063) 1,973 (1,704)
Refundable and deferred income taxes .................... (2,519) 106 828
Inventories ............................................. 745 (2,488) 3,832
Prepaid expenses and other current assets ............... (359) (166) 133
Accounts payable and accrued liabilities ................ (564) (6,602) 3,064
--------- --------- ---------
Net cash provided by operating activities ................. 2,858 830 16,162
--------- --------- ---------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment ................... (1,785) (2,836) (2,764)
Proceeds from sale of specialty chemicals division, net ...... -- 19,397 --
Proceeds from product divestitures .......................... 1,000 -- 246
Proceeds from notes and sales of assets ...................... 253 227 303
Purchases of patents, trademarks and other product rights .... (43,048) -- (20,956)
Increase in other assets...................................... (4,128) (26) (582)
--------- --------- ---------
Net cash provided by (used in) investing activities ....... (47,708) 16,762 (23,753)
--------- --------- ---------
FINANCING ACTIVITIES:
Repayment of long-term debt .................................. (15,032) (48,704) (112,831)
Proceeds from long-term debt ................................. 67,944 31,100 48,706
Change in payable to bank .................. ................. 526 (117) 243
Proceeds from sale of interest rate cap ...................... -- 984 --
Proceeds from issuance of senior subordinated notes .......... -- -- 73,012
Proceeds from issuance of common stock, net .................. 5,500 -- --
Proceeds from issuance of stock warrants ..................... -- -- 955
Exercise of stock options .................................... 286 -- --
Debt issuance costs .......................................... (2,099) (253) (4,011)
--------- --------- ---------
Net cash provided by (used in) financing activities ....... 57,125 (16,990) 6,074
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS ........................................ 129 -- 89
--------- --------- ---------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year ............................. 12,404 602 (1,428)
At beginning of year ......................................... 3,636 3,034 4,462
--------- --------- ---------
At end of year ............................................... $ 16,040 $ 3,636 $ 3,034
--------- --------- ---------
--------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE: ALL MONETARY AMOUNTS ARE EXPRESSED IN THOUSANDS OF DOLLARS UNLESS
CONTRARILY EVIDENT.
(1) NATURE OF OPERATIONS
---------------------------------------------------------------------------
Chattem, Inc. and its wholly-owned subsidiaries (the Company)
manufacture and market branded consumer products consisting primarily of
over-the-counter pharmaceuticals, cosmetics-and-toiletries. The consumer
products are sold primarily through independent and chain drug stores, drug
wholesalers, mass merchandisers and food stores in the United States and in
various markets in approximately 50 countries throughout the world.
Geographic data for 1996, 1995 and 1994 is included in the schedule of
geographical information on page 35, which is an integral part of these
financial statements.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------------------------
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of Chattem, Inc. and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all
short-term deposits and investments with original maturities of three months or
less to be cash equivalents, including cash and cash equivalents available
exclusively for the repayment of long-term debt (Note 5).
INVENTORIES
Inventory costs include materials, labor and factory overhead.
Inventories in the United States are valued at the lower of last-in, first-out
(LIFO) cost or market, while international inventories are valued at the lower
of first-in, first-out (FIFO) cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is
provided using both straight-line and accelerated methods over the estimated
useful lives of 10 to 40 years for buildings and improvements and 3 to 12 years
for machinery and equipment. Expenditures for maintenance and repairs are
charged to expense as incurred. Depreciation expense for 1996, 1995 and 1994
was $1,352, $1,319 and $1,199, respectively.
20
<PAGE>
PATENTS, TRADEMARKS AND OTHER PURCHASED PRODUCT RIGHTS
The costs of acquired patents, trademarks and other purchased product
rights are capitalized and amortized over periods ranging from 5 to 40 years.
Total accumulated amortization of these assets at November 30, 1996 and 1995 was
$7,899 and $7,291, respectively. Amortization expense for 1996, 1995 and 1994
was $2,086, $1,467 and $1,309, respectively. Royalty expense related to other
purchased product rights for 1996, 1995 and 1994 was $1,140, $1,030 and $1,703,
respectively. Amortization and royalty expense are included in advertising and
promotion expense in the accompanying consolidated statements of income.
DEBT ISSUANCE COSTS
The Company has incurred debt issuance costs in connection with its
long-term debt. These costs are capitalized and amortized over the term of the
debt. Amortization expense related to debt issuance costs was $498, $471 and
$439 in 1996, 1995 and 1994, respectively. Accumulated amortization of these
costs was $817 and $711 at November 30, 1996 and 1995, respectively.
PAYABLE TO BANK
Payable to bank includes checks outstanding in excess of certain cash
balances.
REVENUE RECOGNITION
Revenue is recognized when the Company's products are shipped to its
customers.
RESEARCH AND DEVELOPMENT
Research and development costs relate primarily to the development of
new products and are expensed as incurred. Such expenses were $1,117, $1,140
and $893 in 1996, 1995 and 1994, respectively.
ADVERTISING EXPENSES
The cost of advertising is expensed when the related advertising
first takes place. Advertising expense for 1996, 1995 and 1994 was $22,789,
$18,015 and $15,199, respectively. At November 30, 1996 and 1995, the Company
reported $1,293 and $709, respectively, of advertising paid for in 1996 which
will run in 1997 as other noncurrent assets in the accompanying consolidated
balance sheets.
21
<PAGE>
NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
common shares outstanding after consideration of common share equivalents having
a dilutive effect.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's Canadian and U.K.
subsidiaries are translated into United States currency in accordance with
Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency
Translation." Assets and liabilities are translated to United States dollars at
year-end exchange rates. Income and expense items are translated at average
rates of exchange prevailing during the year. Translation adjustments are
accumulated as a separate component of shareholders' deficit. Gains and losses
which result from foreign currency transactions are included in the accompanying
consolidated statements of income.
INCOME TAXES
The Company uses the asset and liability approach to accounting for
deferred income taxes based on currently enacted tax rates and estimated
differences in financial reporting and income tax bases of assets and
liabilities.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company has entered into interest rate swap agreements as a means
of managing its interest rate exposure and not for trading purposes. These
agreements have the effect of converting a portion of the Company's variable
rate obligations to fixed rate obligations. Net amounts paid or received are
reflected as adjustments to interest expense.
22
<PAGE>
CONCENTRATIONS OF CREDIT RISK
Financial instruments which subject the Company to concentrations of
credit risk consist primarily of accounts receivable, short-term cash
investments and the investment in Elcat, Inc. (Note 3). The Company's exposure
to credit risk associated with nonpayment of accounts receivable is affected by
conditions or occurrences within the retail industry. As a result, the Company
performs ongoing credit evaluations of its customers' financial position but
generally requires no collateral from its customers. The Company's largest
customer accounted for 16% of sales in 1996. No other customer exceeded 10% of
the Company's sales in 1996, 1995, or 1994. Short-term cash investments are
placed with high credit-quality financial institutions or in low risk, liquid
instruments. No losses have been experienced on such investments.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the
1996 presentation.
(3) INVESTMENT IN ELCAT, INC.
---------------------------------------------------------------------------
Investment in Elcat, Inc. (Elcat) consists of 40,000 shares of 13.125%
cumulative, convertible preferred stock of Elcat (the Elcat Preferred Shares)
which was received as part of the consideration from the sale of the Company's
specialty chemicals division in 1995 (Note 14). The Elcat Preferred Shares are
nonvoting and are convertible, in whole or in part, at any time on or after
April 1, 1998, into a 21% common stock ownership of Elcat. At the option of
Elcat, the Elcat Preferred Shares may be redeemed, in whole or in part, on or
after April 1, 1998, at par value ($125 per share) plus any accrued and unpaid
dividends. If all of the then outstanding Elcat Preferred Shares are not
converted or redeemed on or before April 1, 2005, Elcat is obligated to redeem
all of the then outstanding Elcat Preferred Shares at par value plus any accrued
and unpaid dividends.
The dividends, which amount to $656 annually, on the Elcat Preferred
Shares accumulate quarterly but are non-payable until the shares are called
or redeemed. After three years, however, if the shares are still
outstanding, a cash dividend of $200 will be received by the Company in
fiscal year 1999, increasing ratably to the full $656 in fiscal year 2002.
This investment is classified as held-to-maturity and is accounted for
using the cost method of accounting. As Elcat stock is not publicly traded in
the open market and a market price is not readily available, it is not
practicable to estimate the fair value of the investment in Elcat at November
30, 1996. In the opinion of management, however, the fair value of this
investment is in excess of its carrying value as of November 30, 1996.
(4) PENSION PLANS
---------------------------------------------------------------------------
The Company has a noncontributory defined benefit pension plan (the
Plan) which covers substantially all employees. The Plan provides benefits
based upon years of service and the employee's compensation. The Company's
contributions are based on computations by independent actuaries. Plan assets
at November 30, 1996 and 1995 were invested primarily in United States
government and agency securities, corporate debt securities and equity
securities.
23
<PAGE>
Pension cost for the years ended November 30, 1996, 1995 and 1994
included the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost (benefits earned during the period) .................... $ 610 $ 544 $ 581
Interest cost on projected benefit obligation ....................... 775 745 743
Actual loss (return) on plan assets ................................. (637) (828) 220
Net amortization and deferral ....................................... 107 98 (1,223)
---------- ---------- ----------
Net pension cost .................................................... $ 855 $ 559 $ 321
---------- ---------- ----------
---------- ---------- ----------
In addition to net pension cost, a net lump-sum settlement loss of
$598 was recorded in 1996 related to lump-sum distributions to certain
employees. This expense is included in selling, general and administrative
expenses in the accompanying consolidated statements of income. In 1995, as a
result of the sale of the Company's specialty chemicals division, a charge of
$662 was recognized for pension curtailment and settlement expense and is
included in the gain on the sale of discontinued operations for 1995
(Note 14).
The following table sets forth the funded status of the Plan as of
November 30, 1996 and 1995:
1996 1995
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation .............................................. $ 7,152 $ 6,560
Nonvested benefit obligation ........................................... 129 686
--------- ----------
Accumulated benefit obligation ......................................... $ 7,281 $ 7,246
--------- ----------
Plan assets at fair market value ....................................... $ 5,069 $ 6,166
Projected benefit obligation ........................................... (9,340) (9,885)
--------- ----------
Plan assets less than projected benefit obligation ..................... (4,271) (3,719)
Unrecognized net loss .................................................. 2,898 3,344
Unrecognized prior service cost ........................................ (147) (163)
Unrecognized initial asset ............................................. (511) (781)
Minimum pension liability adjustment ................................... (181) --
--------- ----------
Pension liability recognized in balance sheets at end of year .......... $(2,212) $(1,319)
--------- ----------
--------- ----------
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 7.5% and 5.0% respectively, in 1996, and 7.5% and 6.0%,
respectively, in 1995. The expected long-term rate of return on plan assets was
9.0%.
24
<PAGE>
In accordance with the provisions of SFAS No. 87, "Employers'
Accounting for Pensions," the Company has recorded an additional liability at
November 30, 1996 representing the excess of the accumulated benefit obligation
over the fair value of plan assets and accrued pension liability for its pension
plan. At November 30, 1996, the minimum liability exceeded the unrecognized
prior service cost resulting in a minimum pension liability, net of taxes, of
$112, being recorded as an increase of the Company's shareholders' deficit.
The Company has a defined contribution plan covering substantially all
employees. Eligible participants can contribute up to 10% of their annual
compensation and receive a 25% matching employer contribution up to 6% of their
annual compensation. The defined contribution plan expense was $120 for 1996,
$141 for 1995 and $141 for 1994.
(5) LONG-TERM DEBT
---------------------------------------------------------------------------
Long-term debt consisted of the following at November 30, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Revolving line of credit payable to banks at variable
rates (8.13% weighted average at November 30, 1996) ................. $ 24,000 $ -
Term loans payable to banks at variable rates
(8.40% weighted average at November 30, 1996) ....................... 41,819 -
Revolving line of credit payable to banks at variable
rates, repaid in 1996 ............................................... - 5,500
Term loan payable to banks at variable rates, repaid
in 1996 ............................................................. - 8,850
12.75% Senior Subordinated Notes, due 2004, net of
unamortized discount of $1,475 for 1996 and
$1,661 for 1995 ..................................................... 65,525 65,339
--------- --------
Total long-term debt ................................................. 131,344 79,689
Less: current maturities ............................................ 3,906 1,600
--------- --------
Total long-term debt, net of current maturities ...................... $ 127,438 $ 78,089
--------- --------
--------- --------
</TABLE>
The Company entered into a new credit agreement with a syndicate of
banks (the New Credit Agreement) on April 29, 1996 and as amended on June 6,
1996. The purpose of the New Credit Agreement was to finance the acquisitions
of GOLD BOND and HERPECIN-L (Note 12), and to repay all existing bank debt. The
New Credit Agreement is divided into a $24,000 revolving line of credit for
working capital purposes, a five year $20,000 Term A loan facility, and a seven
and one-half year $22,500 Term B loan facility.
The combined Term A and B loans are payable in remaining quarterly installments
as follows:
February 28, 1997 to May 31, 1997..................... $ 681
August 31, 1997 to May 31, 1998....................... 931
August 31, 1998 to May 31, 1999....................... 1,056
August 31, 1999 to May 31, 2001....................... 1,307
August 31, 2001 to October 29, 2003................... 2,138
25
<PAGE>
The revolving line of credit is available to the Company up to
$24,000 or such lesser amount as is determined to be available under the
terms of the New Credit Agreement, and is due and payable on April 29, 2001.
The availability of credit under the revolvers is determined based on the
Company's cash, accounts receivable and inventories. The amount of cash and
cash equivalents on deposit up to the calculated availability is included in
other noncurrent assets in the accompanying consolidated balance sheet at
November 30, 1996 and is available exclusively for the repayment of long-term
bank debt. The amount of cash and cash equivalents on deposit in excess of
the calculated availability is included as a current asset in the
accompanying consolidated balance sheet at November 30, 1996 and is available
for general operating purposes. All of the above cash and cash equivalents
are invested in highly liquid short-term investments.
The Company may elect either a floating rate or Eurodollar interest
rate option applicable to the term and revolving line loans under the New Credit
Agreement. The floating rate and Eurodollar interest rate options are based on
a base rate plus a floating rate margin that fluctuates on the basis of the
Company's leverage ratio. The maximum floating rate margin for the Term A and
revolving line loans is 2.0% for the floating rate option and 3.0% for the
Eurodollar rate option. The maximum floating rate margin for the Term B loan is
2.25% for the floating rate option and 3.25% for the Eurodollar rate option.
The new credit agreement is secured by substantially all of the
Company's cash, accounts receivable, inventory, real property, brand
trademarks and associated intellectual property held by the Company. The
more restrictive financial covenants require the maintenance of minimum
amounts of consolidated tangible net worth, fixed charges coverage, interest
coverage and leverage ratios. The provisions of the New Credit Agreement
also include restrictions on capital expenditures and the payment of
dividends. The New Credit Agreement is guaranteed by one of the Company's
subsidiaries, Signal Investment & Management Co.
In 1994, the Company issued $75,000 of 12.75% Senior Subordinated
Notes due 2004 (the Notes) with five year warrants to purchase 417,182 shares of
common stock (the Warrants). The Notes consisted of 75,000 units, each
consisting of $1,000 principal amount of the Notes and a warrant to purchase
shares of the Company's common stock (Note 9). The price of the Notes was
$73,967, or 98.6% of the original principal amount of the Notes, resulting in a
discount of $1,033. The value assigned to the Warrants was $955 (Note 9),
resulting in a total original issue discount of $1,988. The proceeds of the
Notes were used to repay a prior credit agreement.
The Notes mature on June 15, 2004, and interest is payable
semi-annually on June 15 and December 15 of each year. The Notes are senior
subordinated obligations of the Company and are subordinated in right of payment
to all existing and future senior debt of the Company. The Notes, which were
registered under the Securities Act of 1933, may not be redeemed until June 15,
2001, after which they may be redeemed at the option of the Company. Upon the
occurrence of certain events constituting a change of control, the holders of
the Notes may require the Company to repurchase the Notes at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest.
The Notes are guaranteed by Signal Investment & Management Co. a wholly-owned
subsidiary of the Company.
26
<PAGE>
The Notes are issued under an indenture with an indenture trustee,
which restricts, among other things, the ability of the Company and its
subsidiaries to (i) incur additional indebtedness, (ii) pay dividends, (iii)
sell or issue capital stock of a subsidiary, (iv) create encumbrances on the
ability of any subsidiary to pay dividends or make other restricted payments,
(v) engage in certain transactions with affiliates, (vi) dispose of certain
assets, (vii) merge or consolidate with or into, or sell or otherwise transfer
all or substantially all their properties and assets as an entirety to another
person, or (viii) create additional liens.
During 1996, 1995 and 1994 the Company prepaid previously outstanding
long-term debt with funds received from refinancing in 1996 and 1994 and the
sale of the specialty chemicals division in 1995. In connection with prepayment
of those borrowings, the Company incurred extraordinary losses, net of income
taxes, in 1996, 1995 and 1994 of $532, $367 and $1,556, respectively, or $.07,
$.05 and $.21 per share, respectively. The losses primarily related to the
write-off of debt issuance and other deferred costs.
Future maturities of long-term debt are as follows:
1997 .............................................. $ 3,906
1998 .............................................. 3,975
1999 .............................................. 4,725
2000 .............................................. 5,225
2001 .............................................. 30,888
Thereafter ........................................ 84,100
-------------
132,819
Less: unamortized discount ....................... (1,475)
-------------
$ 131,344
-------------
-------------
Cash interest payments during 1996, 1995 and 1994 were $12,710, $10,811 and
$7,114, respectively.
27
<PAGE>
(6) DERIVATIVE FINANCIAL INSTRUMENTS
---------------------------------------------------------------------------
At November 30, 1996, the Company had two interest rate swap
agreements outstanding with financial institutions, each in a notional amount of
$15,000. Under each agreement, the Company will receive interest payments on
the notional amount at a rate equal to the London Interbank Offered Rate (LIBOR)
(5.58% at November 30, 1996) and will pay interest on the same notional amount
at a fixed interest rate (6.27% under one agreement and 6.395% under the second
agreement).
The Company is exposed to credit losses in the event of nonperformance
by the counterparties to its interest rate swap agreements but has no
off-balance sheet credit risk of accounting loss. The Company anticipates,
however, that counterparties will be able to fully satisfy their obligations
under the agreements.
During June 1993, the Company entered into separate interest rate swap
and cap agreements in notional principal amounts of $30,000 each. In connection
with refinancing in 1994 and the issuance of the Notes, the swap was terminated
in June 1994, resulting in a gain of approximately $484 which is included in
other income in the accompanying consolidated statements of income. On January
12, 1995, the interest rate cap was terminated resulting in a gain of
approximately $729 to the Company. The gain was deferred and is being amortized
over the remaining life of the original cap agreement as a reduction of interest
expense. In 1996, the remaining deferred gain of $281 was recognized.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------------------------------------
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
and SFAS No. 119, "Disclosure about Derivative Financial Instruments and Fair
Value of Financial Instruments" require the disclosure of the fair value of all
financial instruments. Unless otherwise indicated elsewhere in the notes to the
consolidated financial statements, the carrying value of the Company's financial
instruments approximates fair value.
At November 30, 1996, the estimated fair values of the revolving line
of credit and the term loans payable to banks approximate the carrying amounts
of such debt because the interest rates change with market interest rates.
The estimated fair value of the Notes at November 30, 1996 exceeded
their carrying value by a range of $4,915 to $5,570. The fair values were
estimated based on quoted market prices for the same or similar issues.
The fair values of the interest rate swap agreements are the estimated
amounts that the Company would receive or pay to terminate the agreements at the
reporting date, taking into account current interest rates and the current
credit worthiness of the counterparties. At November 30, 1996, the Company
estimates it would have paid $482 to terminate the agreements.
28
<PAGE>
(8) INCOME TAXES
---------------------------------------------------------------------------
The provision for income taxes from continuing operations includes
the following components:
1996 1995 1994
--------- --------- ---------
Current:
Federal ......................... $ (203) $ 470 $ 697
State ........................... 222 170 182
Deferred ......................... 1,797 645 303
--------- --------- ---------
$ 1,816 $ 1,285 $ 1,182
--------- --------- ---------
--------- --------- ---------
Deferred income tax assets and liabilities for 1996 and 1995 reflect
the impact of temporary differences between the amounts of assets and
liabilities for financial reporting and income tax reporting purposes.
Temporary differences and carryforwards which give rise to deferred tax assets
and liabilities at November 30, 1996 and 1995 are as follows:
1996 1995
------- -------
Deferred tax assets:
Reserves and accruals ......................... $ 1,115 $ 1,156
Accrued promotional expenses .................. 770 545
Accrued postretirement health care benefits.... 535 511
Repriced stock option expense ................. 690 690
Accruals for discontinued operations........... 237 472
Operating loss carryforwards .................. 675 675
Other ......................................... 260 381
---------- ----------
Gross deferred tax assets ................... 4,282 4,430
---------- ----------
Deferred tax liabilities:
Excess tax depreciation and amortization ...... 3,317 2,359
Prepaid advertising ........................... 309 183
Inventory ..................................... 190 190
Other ......................................... 772 207
---------- ----------
Gross deferred tax liabilities............... 4,588 2,939
---------- ----------
Net deferred tax asset (liability)........... $ (306) $ 1,491
---------- ----------
---------- ----------
The Company did not record a valuation allowance against the net
deferred income tax asset at November 30, 1995 because it is more likely than
not, in management's opinion, that the income tax asset will be realized in
future years.
29
<PAGE>
The difference between the provision for income taxes and the amount
computed by multiplying income from continuing operations before income taxes by
the U.S. statutory rate is summarized as follows:
1996 1995 1994
-------- -------- --------
Expected tax provision..................... $ 1,911 $ 1,227 $ 1,119
Dividend exclusion benefit ................ (140) (78) -
State income taxes, net of federal income
tax benefit .............................. 147 112 225
Other, net ................................ (102) 24 (162)
-------- -------- ---------
$ 1,816 $ 1,285 $ 1,182
-------- -------- ---------
-------- -------- ---------
Included in "refundable and deferred income taxes" in current assets
in the accompanying consolidated balance sheets are income tax refunds
receivable of $2,794 and $7 at November 30, 1996 and 1995, respectively.
Income taxes paid in 1996, 1995 and 1994 were $2,459, $5,026 and $727,
respectively. The Company received income tax refunds of $215 and $163 during
1996 and 1995, respectively.
(9) SHAREHOLDERS' DEFICIT
---------------------------------------------------------------------------
STOCK ISSUANCE
In April 1996, the Company issued 1,100,000 shares of common stock
to a group of investors, including certain officers, directors and
affiliates, in order to partially fund the acquisition of GOLD BOND (Note
12). In addition, the Company issued to the seller of GOLD BOND, 155,792
shares of the Company's common stock at $6.42 per share.
STOCK OPTIONS
The Company's 1993 Non-Statutory Stock Option Plan (1993 Plan)
provides for issuance of up to 350,000 shares of common stock to key employees.
In addition, the Company's 1994 Non-Statutory Stock Option Plan and the 1994
Non-Statutory Stock Option Plan for Non-Employee Directors (1994 Plans) provide
for the issuance of up to 350,000 and 80,000 shares, respectively, of common
stock. Options are exercisable for a period of up to ten years from the date of
grant.
30
<PAGE>
A summary of stock option activity for the 1993 Plan and the 1994
Plans is as follows:
SHARES PRICE RANGE
------ -----------
Outstanding at November 30, 1993 349,000 7.50 - 8.125
Granted ............................ 325,750 6.25 - 10.375
-----------
Outstanding at November 30, 1994 ..... 674,750 6.25 - 10.375
Cancelled .......................... (47,500) 6.25 - 8.125
Granted ............................ 18,250 4.75 - 5.250
-----------
Outstanding at November 30, 1995 ..... 645,500 4.75 - 10.375
Exercised .......................... (43,650) 4.75 - 8.125
Granted ............................ 318,000 4.625 - 9.500
Cancelled .......................... (307,000) 7.50 - 10.375
-----------
Outstanding at November 30, 1996 612,850 4.625 - 9.500
-----------
-----------
In January 1996, the Company cancelled 207,000 previously awarded
options from the 1993 Plan and the 1994 Plans. These options had original
exercise prices ranging from $7.50 to $8.125 and were reissued at an exercise
price equal to the market price on the date of reissue ($4.875).
PREFERRED SHARES
The Company is authorized to issue up to 1,000,000 preferred shares in
series and with rights established by the board of directors. At November 30,
1996 and 1995, no shares of any series of preferred stock were issued and
outstanding.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective June 1, 1989, the Company established an Employee Stock
Ownership Plan providing for the issuance of up to 360,000 shares of the
Company's common stock. At November 30, 1996, no contributions had been made to
the plan.
31
<PAGE>
COMMON STOCK WARRANTS
As described in Note 5, the Company issued the Warrants at an assigned
value of $955. The Warrants are exercisable for five years. In the aggregate,
there are 75,000 warrants which, when exercised, would entitle the holders
thereof to acquire an aggregate of 417,182 shares of the Company's common stock.
The number of shares of common stock and the price per share at which a warrant
is exercisable are subject to adjustment upon the occurrence of certain events.
A warrant does not entitle the holder to receive any cash dividends paid on
common stock or to exercise any other rights as a shareholder of the Company.
During 1996, as a result of the issuance of 1,100,000 shares of common
stock (Note 9), the number of shares of common stock and the price per share at
which a warrant is exercisable were adjusted from 5.56242 and $7.15,
respectively, to 5.85733 and $6.79, respectively.
(10) CONTINGENCIES
--------------------------------------------------------------------------
Claims, suits and complaints arise in the ordinary course of the
Company's business involving such matters as patents and trademarks, product
liability and other alleged injuries or damage. The outcome of such litigation
cannot be predicted, but, in the opinion of management, based in part upon the
opinion of counsel, all such pending matters are without merit or are of such
kind or involve such amounts as would not have a material adverse effect on the
consolidated operating results or financial position of the Company if disposed
of unfavorably.
32
<PAGE>
(11) SUPPLEMENTAL FINANCIAL INFORMATION
--------------------------------------------------------------------------
A - Inventories consisted of the following at November 30, 1996 and 1995:
1996 1995
--------- ---------
Raw materials .............................. $ 5,365 $ 5,396
Finished goods and work in process ......... 7,484 5,694
Excess of current cost over LIFO value ..... (2,554) (2,412)
--------- ---------
Total inventories .......................... $10,295 $ 8,678
--------- ---------
--------- ---------
International inventories included above, valued on a lower of FIFO
cost or market basis at November 30, 1996 and 1995, were $2,039 and $1,720,
respectively.
B - Property, plant and equipment consisted of the following at November
30, 1996 and 1995:
1996 1995
--------- ---------
Land ................................. $ 208 $ 150
Buildings and improvements ........... 3,014 2,936
Machinery and equipment .............. 21,973 19,835
Construction in progress.............. 1,046 1,540
Less -- accumulated depreciation ..... (16,467) (15,131)
--------- ---------
Property, plant and equipment, net ... $ 9,774 $ 9,330
--------- ---------
--------- ---------
C - Accrued liabilities consisted of the following at November 30, 1996 and
1995:
1996 1995
-------- --------
Accrued interest expense ................. $ 3,996 $ 3,942
Salaries, wages and commissions .......... 1,287 1,317
Promotion expense ........................ 2,827 1,560
Accrued estimated specialty chemicals
divestiture costs ....................... - 1,231
Accrued pension benefits 2,076 742
Other .................................... 3,945 3,782
--------- ---------
Total accrued liabilities................. $14,131 $12,574
--------- ---------
--------- ---------
33
<PAGE>
(12) ACQUISITION AND SALE OF BRANDS
--------------------------------------------------------------------------
On June 17, 1994, the Company acquired a license to the PHISODERM
trademark in the United States, Canada and Puerto Rico (the Territory), together
with certain other assets from Sterling Winthrop Inc. (Sterling). The
purchase price for the license of PHISODERM in the Territory and certain
other assets approximated $17,276. The assets acquired consisted primarily of
the trademark ($16,826) and inventories. If net sales of PHISODERM products in
the United States exceed $11,000 for either of the 12-month periods beginning
July 1, 1995 and July 1, 1996 and ending June 30, 1996 and June 30, 1997, then
the Company will pay Sterling an additional $1,000 per year. Net sales of
PHISODERM products exceeded $11,000 for the 12-month period ended June 30, 1996.
As a result, an additional $1,000 was recorded to patents, trademarks and other
purchased product rights as of November 30, 1996.
On April 29, 1996, the Company purchased the worldwide rights for the
GOLD BOND line of medicated powders and anti-itch cream for approximately
$40,000. The assets acquired consisted of the trademarks ($38,000) and
inventory. Additionally, the Company assumed certain liabilities of
approximately $500. The Company financed the GOLD BOND acquisition with bank
borrowings (Note 5) and issuance of common stock (Note 9).
On June 6, 1996, the Company purchased the rights for the HERPECIN-L
line of medicated lip balm for approximately $5,607 plus a royalty payment equal
to the greater of $214 or 5% of net sales. The royalty payment is payable
annually for each of the seven twelve-month periods beginning July 1, 1996 and
ending June 30, 2003. The assets acquired consisted primarily of the trademark
($5,159), receivables and inventory. Additionally, the Company assumed certain
liabilities of approximately $500. The purchase was financed by the Company
with additional bank borrowings of $5,000 with the remaining $607 being
funded by the Company (Note 5).
During April 1996, the Company sold the trademarks and inventory of
two of its minor consumer products brands, SOLTICE and BLIS-TO-SOL for $1,200
consisting of $1,000 cash received at closing and a $200 promissory note
requiring payments of $100 per year for the next two years contingent upon the
brands meeting specific future sales levels.
(13) ACCRUED POSTRETIREMENT HEALTH CARE BENEFITS
--------------------------------------------------------------------------
The Company maintains certain postretirement health care benefits for
eligible employees. Employees become eligible for these benefits if they meet
certain age and service requirements. The Company pays a portion of the cost of
medical benefits for certain retired employees over the age of 65. Effective
January 1, 1993, the Company's contribution is a service-based percentage of the
full premium. The Company pays these benefits as claims are incurred.
34
<PAGE>
Net periodic postretirement health care benefits cost for the years
ended November 30, 1996, 1995 and 1994, included the following components:
1996 1995 1994
------ ------ ------
Service cost (benefits earned during the
period) ..................................... $ 36 $ 30 $ 35
Interest cost on accumulated postretirement
benefits obligation ......................... 101 102 94
----- ------ ------
Net periodic postretirement benefits cost .... $ 137 $ 132 $ 129
----- ------ ------
----- ------ ------
The following table sets forth the funded status of the plan,
reconciled to the accrued postretirement health care benefits recognized in the
Company's balance sheets at November 30, 1996 and 1995:
1996 1995
------- -------
Accumulated postretirement benefits obligation:
Retirees .......................................... $ 912 $ 883
Fully eligible active plan participants ........... 275 292
Other active participants ......................... 260 170
------- --------
Accrued postretirement health care benefits ....... $1,447 $1,345
------- --------
------- --------
For measurement purposes, a 6.0% annual rate of increase in the per
capita cost of covered health care benefits was assumed in 1996 and 1995. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 7.5% at November 30, 1996 and
1995. The effect of a 1% increase in the assumed health care cost trend rate
would increase the accumulated postretirement benefit obligation as of November
30, 1996 by approximately 4.2%, and the aggregate of the service and interest
cost components of the net annual postretirement benefit cost by approximately
3.1% for the year ended November 30, 1996.
(14) DISCONTINUED OPERATIONS
--------------------------------------------------------------------------
On May 26, 1995, the Company completed the sale of its specialty
chemicals division to privately-held Elcat. The Company received $25,000 from
the sale of the specialty chemicals division consisting of $20,000 in cash and
$5,000 of 13.125% cumulative, convertible preferred stock of Elcat. The net cash
proceeds were used to repay long-term debt of approximately $12,000. The
Company recognized a gain of $9,334, (after tax) from the sale and extraordinary
charge (after tax) of $367 relating to the early extinguishment of the debt.
The results of operations and the gain on disposal of the specialty
chemicals division have been separately classified as discontinued operations in
the accompanying consolidated statements of income. Net sales of the specialty
chemicals division were $6,739 through May 26, 1995 and $13,586 for 1994.
Interest expense of $351 and $752 for 1995 and 1994, respectively, was
allocated to discontinued operations based upon the ratio of net assets
discontinued to the total net assets of the consolidated entity.
35
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
CHATTEM, INC.:
We have audited the accompanying consolidated balance sheets of Chattem, Inc. (a
Tennessee corporation) and subsidiaries as of November 30, 1996 and 1995 and the
related consolidated statements of income, shareholders' deficit and cash flows
for each of the three years in the period ended November 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chattem, Inc. and subsidiaries
as of November 30, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended November 30, 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
January 17, 1997
36
<PAGE>
QUARTERLY INFORMATION
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------
TOTAL FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30
----- ----------- ------ --------- -----------
<S> <C> <C> <C> <C> <C>
FISCAL 1996:
Continuing operations:
Net sales ................................... $ 118,903 18,697 30,430 38,841 30,935
Gross profit ................................ $ 83,783 12,948 21,101 27,453 22,281
Income (loss) (1) ........................... $ 3,804 (38) 2,010 2,131 (299)
Income (loss) per share (1) ................. $ .47 (.01) .26 .24 (.02)
Total
Net income (loss) ........................... $ 3,272 (38) 1,478 2,131 (299)
Net income (loss) per share (2) ............. $ .40 (.01) .19 .24 (.02)
FISCAL 1995:
Continuing operations:
Net sales ................................... $ 100,598 19,372 27,114 28,990 25,122
Gross profit ................................ $ 70,843 13,144 18,557 20,628 18,514
Income (loss) (1) ........................... $ 2,325 (611) 670 1,673 593
Income (loss) per share (1) ................. $ .32 (.08) .09 .23 .08
Total
Net income (loss) ........................... $ 11,966 (250)(3) 10,480 (3) 1,673 63 (3)
Net income (loss) per share (2) ............. $ 1.64 (.03)(3) 1.44 (3) .23 .01 (3)
</TABLE>
(1) BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT.
(2) THE SUM OF THE QUARTERLY EARNINGS PER SHARE AMOUNTS MAY DIFFER
FROM ANNUAL EARNINGS PER SHARE BECAUSE OF THE DIFFERENCES IN THE
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON SHARE
EQUIVALENTS USED (WHERE DILUTIVE) IN THE QUARTERLY AND ANNUAL
COMPUTATIONS.
(3) INCLUDES INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX,
OF $361 OR $.05 PER SHARE, $10,177 OR $1.40 PER SHARE AND $(530)
OR $(.07) PER SHARE FOR THE QUARTERS ENDED FEBRUARY 28, MAY 31
AND NOVEMBER 30, RESPECTIVELY.
37
<PAGE>
GEOGRAPHICAL SEGMENT INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
NET SALES:
Domestic ............................................................ $ 104,444 $ 87,250 $ 82,643
International ....................................................... 14,459 13,348 11,727
----------- ----------- -----------
Consolidated ........................................................ $ 118,903 $ 100,598 $ 94,370
----------- ----------- -----------
----------- ----------- -----------
OPERATING INCOME:
Domestic ............................................................ $ 18,929 $ 16,719 $ 16,981
International ....................................................... 1,613 1,292 120
----------- ----------- -----------
Total ............................................................ 20,542 18,011 17,101
Other unallocated expenses, net (1) .................................. (14,922) (14,401) (13,809)
----------- ----------- -----------
Income from continuing operations before income taxes ..... $ 5,620 $ 3,610 $ 3,292
----------- ----------- -----------
----------- ----------- -----------
IDENTIFIABLE ASSETS:
Domestic ............................................................ $ 135,238 $ 69,732 $ 72,038
International ....................................................... 10,961 8,350 8,389
----------- ----------- -----------
Total ............................................................ 146,199 78,082 80,427
Investment in Elcat, Inc. ........................................... 5,984 5,328 -
Discontinued operations ............................................. - - 5,015
----------- ----------- -----------
Consolidated ..................................................... $ 152,183 $ 83,410 $ 85,442
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(1) PRINCIPALLY INTEREST EXPENSE, CORPORATE OVERHEAD NOT ALLOCATED AND
NONRECURRING AND UNUSUAL CHARGES.
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS CHATTEM, INC.
1715 West 38th Street
ZAN GUERRY ZAN GUERRY Chattanooga, TN 37409
Chairman and President Chairman and President Corporate Office
Chattem, Inc.
Chattanooga, TN ROBERT E. BOSWORTH SUBSIDIARIES AND AFFILIATED COMPANIES
Executive Vice President
SAMUEL E. ALLEN and Chief Financial Officer CHATTEM (U.K.) LIMITED
Chairman Guerry House
GLOBALT, Inc. HUGH F. SHARBER Ringway Centre
Atlanta, GA Secretary Edison Road
Basingstoke, Hampshire RG21 2YH
LOUIS H. BARNETT ADDITIONAL England
Business Consultant FINANCIAL
Fort Worth, TX INFORMATION CHATTEM (CANADA) INC.
Copies of quarterly press 2220 Argentia Road
ROBERT E. BOSWORTH releases and/or quarterly Mississauga, Ontario L5N 2K7
Executive Vice President reports on Form 10-Q and
and Chief Financial Officer annual report on Form 10-K, HBA INSURANCE LTD.
Chattem, Inc. both forms filed with the P.O. Box HM 2062
Chattanooga, TN Securities and Exchange Hamilton 5, Bermuda
Commission, may be obtained
RICHARD E. CHENEY without charge by writing to SIGNAL INVESTMENT &
Former Chairman Emeritus the Executive Vice President MANAGEMENT CO.
Hill and Knowlton, Inc. and Chief Financial Officer, 1100 North Market Street
New York, NY Chattem, Inc., or by calling Suite 1300, Wilmington Trust Center
1-800-366-6077, Ext. 769. Wilmington, DE 19890
SCOTT L. PROBASCO, JR.
Chairman of the Executive COMMON STOCK LISTING
Committee Over-the-Counter
SunTrust Bank, Tennessee, N.A. NASDAQ Symbol: CHTT
Chattanooga, TN
TRANSFER AGENT AND
A. ALEXANDER TAYLOR II REGISTRAR
Partner SunTrust Bank, Atlanta, N.A.
Miller & Martin P.O. Box 4625
Chattanooga, TN Atlanta, GA 30302
</TABLE>
<PAGE>
EXHIBIT 22
CHATTEM INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY
NAME OF SUBSIDIARY STATE OR COUNTRY OF INCORPORATION
- ------------------------ ---------------------------------
Chattem (Canada) Inc. Canada
Chattem (U.K.) Limited England
HBA Insurance Ltd. Bermuda
Signal Investment & Management Co. Delaware
<PAGE>
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report incorporated by reference in this Form 10-K into the Company's
previously filed Registration Statements on Form S-8 (Nos. 33-30742,
33-35386, 33-55640, 33-78524 and 33-78522).
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
February 26, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Chattem, Inc.'s audited financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<CASH> 2,404
<SECURITIES> 6,850
<RECEIVABLES> 20,726
<ALLOWANCES> 450
<INVENTORY> 10,295
<CURRENT-ASSETS> 46,124
<PP&E> 26,241
<DEPRECIATION> 16,467
<TOTAL-ASSETS> 152,183
<CURRENT-LIABILITIES> 26,349
<BONDS> 131,344
0
0
<COMMON> 1,843
<OTHER-SE> (9,023)
<TOTAL-LIABILITY-AND-EQUITY> 152,183
<SALES> 118,903
<TOTAL-REVENUES> 118,903
<CGS> 35,120
<TOTAL-COSTS> 102,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,394
<INCOME-PRETAX> 5,620
<INCOME-TAX> 1,816
<INCOME-CONTINUING> 3,804
<DISCONTINUED> 0
<EXTRAORDINARY> (532)
<CHANGES> 0
<NET-INCOME> 3,272
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
