AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 6, 1998 (this
"Amended and Restated Credit Agreement"),amending and
restating the CREDIT AGREEMENT dated as of September
1, 1995, among SCHEIN PHARMACEUTICAL, INC., a Delaware
corporation (the "Borrower"); the LENDERS (as defined
in Article I of the Credit Agreement); and THE CHASE
MANHATTAN BANK, a New York banking corporation, as
issuing bank (in such capacity, the "Issuing Bank"),
as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders and as
collateral agent (in such capacity, the "Collateral
Agent") for the Lenders, as amended by the First
Amendment dated as of February 26, 1996, the Second
Amendment dated as of September 27, 1996, the Third
Amendment dated as of December 20, 1996 and the Fourth
Amendment dated as of November 25, 1997 (as amended,
supplemented or otherwise modified, the "Credit
Agreement").
The Borrower has requested that the Credit Agreement be
amended and restated in the manner provided for by this Amended and Restated
Credit Agreement and that Chase Securities Inc. ("CSI") act as sole and
exclusive advisor, arranger and book manager in connection with such amendment
and restatement. CSI has agreed to act as the sole and exclusive advisor,
arranger and book manager in connection with the amendment and restatement of
the Credit Agreement, and the Lenders are willing to amend and restate the
Credit Agreement upon the terms and subject to the conditions set forth below.
Accordingly, the Borrower and the Lenders hereby agree to amend and restate the
Credit Agreement in the form of the Credit Agreement, with the amendments and
modifications provided herein, as follows:
ARTICLE I
Defined Terms
-------------
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement. As used herein, the
following terms shall have the meanings assigned to them below (and the
following definitions are hereby added in their proper alphabetical order to
Section 1.01 of the Credit Agreement):
"Amendment and Restatement Date" shall mean the date this
Amended and Restated Credit Agreement shall become effective in
accordance with Article V hereof.
"Consent Decree" shall mean the Consent Decree of Condemnation
and Permanent Injunction in United States v. All Drugs...Located at
Steris Laboratories, Inc., et al., Xx. 00 Xxx. 0000 (X. Az., entered
October 21, 1998).
"FDA" shall mean the Food and Drug Administration.
"Steris" shall mean Steris Laboratories, Inc.
"Steris Charges" shall mean any and all fees, charges and
expenses incurred or sustained as a result of or arising from the
changes of the operations of the Borrower and the Subsidiaries,
including but not limited to the FDA seizure, compliance with the
Consent Decree, compensation, severance, other related payments in
connection with the reduction in force, the writedown of fixed assets,
goodwill and inventory, expenses incurred in connection with
discontinued and recalled products, and other related operating
expenses.
ARTICLE II
Amendments to the Credit Agreement
----------------------------------
The Credit Agreement is amended, effective upon the
satisfaction of the conditions set forth in Article IV, as set forth below:
SECTION 2.01. Amendment of Section 1.01. Section 1.01 of the
Credit Agreement is hereby amended by:
(a) (i) deleting the table contained in the definition of
"Applicable Percentage" in its entirety and inserting in lieu thereof
the following:
" Eurodollar ABR Fee
Spread Spread Percentage
------ ------ ----------
Category 1
----------
Leverage Ratio less than 3.0 to 1.0; and
Interest Expense Coverage Ratio greater
than 5.0 to 1.0 1.5000 0.5000 0.2500
Category 2
----------
Leverage Ratio greater than or equal to 3.0
to 1.0 but less than 3.5 to 1.0; Interest
Expense Coverage Ratio less than or equal to
5.0 to 1.0 but greater than
4.5 to 1.0 1.7500 0.7500 0.3125
Category 3
----------
Leverage Ratio greater than or equal to 3.5
to 1.0 but less than 4.0 to 1.0; Interest
Expense Coverage Ratio less than or equal to
4.5 to 1.0 but greater than
4.0 to 1.0 2.0000 1.0000 0.3750
Category 4
----------
Leverage Ratio greater than or equal to 4.0
to 1.0 but less than 4.5 to 1.0; Interest
Expense Coverage Ratio less than or equal to
4.0 to 1.0 but greater than
3.0 to 1.0 2.2500 1.2500 0.3750
Category 5
----------
Leverage Ratio greater than or equal to 4.5
to 1.0 but less than 5.0 to 1.0; Interest
Expense Coverage Ratio less than or equal to
3.0 to 1.0 but greater than
2.5 to 1.0 2.5000 1.5000 0.5000
Category 6
----------
Leverage Ratio greater than or equal to 5.0
to 1.0 but less than 5.5 to 1.0; Interest
Expense Coverage Ratio less than or equal to
2.5 to 1.0 but greater than
2.0 to 1.0 2.7500 1.7500 0.5000
Category 7
----------
Leverage Ratio greater than or equal to 5.5
to 1.0; or Interest Expense Coverage Ratio
less than or equal to 2.0 to 1.0
3.0000 2.0000 0.5000"
and (ii) deleting the last sentence of the definition of "Applicable
Percentage" in its entirety and inserting in lieu thereof the
following:
"Notwithstanding the foregoing, the Applicable
Percentage shall be determined by reference to (a) Category 7
(i) for any period after the last day of the second complete
fiscal quarter to commence after the Merger Date during which
the Borrower has failed to deliver the financial statements
and certificates required by Section 5.04(a) or 5.04(b) and
Section 5.04(c) if such failure has continued unremedied for
three Business Days following notice thereof from the
Administrative Agent or any Lender and (ii) at any time after
the last day of the second complete fiscal quarter to commence
after the Merger Date during the continuance of an Event of
Default and (b) subject to clause (a) above, Category 4 on and
after the Amendment and Restatement Date and prior to the
delivery of the financial statements and certificates required
by Section 5.04(b) and Section 5.04(c) for the first fiscal
quarter of 1999.";
(b) deleting the definition of "Capital Expenditures" in its
entirety and inserting in lieu thereof the following:
"Capital Expenditures" for any period shall mean (a)
the sum of (i) net property, plant and equipment of the
Borrower and the Subsidiaries as of the last day of such
period, in each case determined on a consolidated basis in
accordance with GAAP, (ii) depreciation and amortization of
property, plant and equipment of the Borrower and the
Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP, and (iii) and property rights
and deferred license costs of the Borrower and the
Subsidiaries for the period that have been expended on a cash
basis minus (b) the sum of (i) the book value as of the last
day prior to such period, for the Borrower and the
Subsidiaries determined on a consolidated basis in accordance
with GAAP, of those items of property, plant and equipment
held by the Borrower or a Subsidiary throughout such period,
(ii) any additions to "net property, plant and equipment"
during such period, for the Borrower and the Subsidiaries,
determined on a consolidated basis in accordance with GAAP,
resulting from expenditures of proceeds of insurance
settlements in respect of lost, destroyed or damaged assets,
equipment or other property to the extent such expenditures
are made to replace or repair all or any part of such lost,
destroyed or damaged assets, equipment or other property
within 12 months of the receipt of such proceeds and (iii) any
additions, net of minority interests, if any, to "net
property, plant and equipment" arising from the Acquisition.";
(c) inserting immediately after the phrase "Capital
Expenditures" in the fifth line of the definition of "Fixed Charge
Coverage Ratio" the phrase "(excluding net property rights and deferred
license costs of the Borrower and the Subsidiaries for the reporting
periods in 1998, 1999 and 2000 only)";
(d) deleting the phrase "and (d) (to the extent not included
in clauses (a) through (c) above)" in the seventeenth line of the
definition of "Net Income" and inserting in lieu thereof the following:
", (d) any Steris Charges taken by the Borrower and
the Subsidiaries in the third and fourth fiscal quarters of
1998, provided such charges on a pre-tax basis do not exceed
$156,700,000 and $5,000,000 for the third and fourth fiscal
quarters, respectively, and (e) (to the extent not included in
clauses (a) through (d) above)"; and
(e) deleting the period at the end of the definition of "Net
Worth" and adding at the end thereof the following:
"plus the lesser of (i) amount of any non-cash Steris
Charges taken by the Borrower and the Subsidiaries and (ii)
$117,000,000."
SECTION 2.02. Amendment of Section 5.04. Section 5.04 of the
Credit Agreement is hereby amended by:
(a) deleting the word "and" at the end of paragraph (e)
thereof and inserting in lieu thereof the following:
"(f) within 30 days after the end of each of the
first two fiscal months of each fiscal quarter ending after
the Amendment and Restatement Date and on or prior to the end
of fiscal 1999, the internally generated profit and loss
estimates of the Borrower and its consolidated Subsidiaries
for such month, prepared by the Borrower in good faith based
upon reasonable assumptions;
(g) promptly after the same become available to the
Borrower, with respect to each manufacturing facility of the
Borrower and the Subsidiaries, all warning letters or other
FDA correspondence (other than Form FD 483s) alleging
violations of FDA regulatory requirements at such
manufacturing facility;
(h) promptly after the same become available to the
Borrower, during the period beginning on the Amendment and
Restatement Date and ending on the last day of fiscal 1999,
(i) with respect to Steris, (A) all inspectional observations
made by the FDA as a consequence of inspections of Steris,
which observations are recorded on a Form FD 483 and issued by
the FDA at the conclusion of an inspection, (B) all written
responses by or on behalf of Steris to the FDA concerning such
inspectional observations, (C) all written responses by or on
behalf of Steris to the FDA concerning alleged violations of
FDA regulatory requirements contained in warning letters or
other FDA correspondence, and (D) all other correspondence
from the FDA concerning alleged material violations of current
good manufacturing practices by Steris, and (ii) with respect
to each manufacturing facility of the Borrower and the
Subsidiaries other than manufacturing facilities of Steris,
(A) all inspectional observations recorded on a Form FD 483
issued at the conclusion of inspections, other than
pre-approval inspections and post-approval validation
inspections, (B) all written responses by or on behalf of the
Borrower or the Subsidiaries concerning alleged violations of
FDA regulatory requirements contained in warning letters or
other FDA correspondence, and (C) all other correspondence
from the FDA concerning alleged material violations of current
good manufacturing practices by such manufacturing facility;
(i) promptly, from time to time after the end of
fiscal 1999, with respect to each manufacturing facility of
the Borrower and the Subsidiaries, any of the items in
paragraph (h) above that the Administrative Agent or any
Lender may request; and"; and
(b) redesignating paragraph (f) thereof as paragraph (j).
SECTION 2.03. Amendment of Article VI. Article VI of the
Credit Agreement is hereby amended by:
(a) deleting the phrase "other Indebtedness of the Borrower
not in excess of $10,000,000 aggregate principal amount at any time
outstanding" in paragraph (m) of Section 6.01 and inserting in lieu
thereof the phrase "other Indebtedness (including Indebtedness incurred
in connection with the acquisition of assets and product rights of Xxxx
Xxxxx & Brother Ltd., a subsidiary of American Home Products) not in
excess of $20,000,000 aggregate principal amount at any time
outstanding";
(b) inserting at the end of paragraph (f) of Section 6.04 the
following:
", and of Indebtedness permitted under Section 6.01(m)";
(c) deleting the word "and" from the end of paragraph (k) of
Section 6.04 and all of paragraph (l) of Section 6.04 and inserting in
lieu thereof the following:
"(l) investments consisting of the capital stock of
Duramed Pharmaceuticals, Inc. received as a result of the
Borrower's settlement negotiations with Duramed
Pharmaceuticals, Inc.; provided no cash consideration is paid
by the Borrower or any of the Subsidiaries after the Amendment
and Restatement Date for such capital stock; and
(m) other or additional investments, loans and
advances in a net aggregate amount not to exceed
$20,000,000.";
(d) deleting Sections 6.13, 6.14 and 6.15 in their entirety
and inserting in lieu thereof the following:
"SECTION 6.13. Capital Expenditures. Permit the
aggregate amount of Capital Expenditures made (a) in fiscal
year 1998 to exceed $39,000,000 (or, in the event that FDA
product approval is received with respect to Ferrlecit prior
to the end of 1998, $44,000,000), (b) in fiscal year 1999 to
exceed $35,000,000 (or, in the event that FDA product approval
is received with respect to Ferrlecit prior to the end of
1998, $30,000,000) or (c) in any fiscal year, commencing with
fiscal year 2000, to exceed $25,000,000 plus, commencing with
fiscal year 2001, 50% of the excess, if any, of (i)
$25,000,000 over (ii) actual Capital Expenditures for the
preceding fiscal year.
SECTION 6.14. Leverage Ratio. Permit the Leverage
Ratio as of any date during any period specified below to be
in excess of the ratio set forth below next to such period:
Period Ratio
------ -----
From and including the last day of fiscal 1996 to
but excluding the last day of the second fiscal
quarter of 1997 6.50 to 1.00
From and including the last day of the second fiscal
quarter of 1997 to but excluding the last day of the
third fiscal quarter of 1997 6.00 to 1.00
From and including the last day of the third fiscal
quarter of 1997 to but excluding the last day of
fiscal 1997 5.75 to 1.00
From and including the last day of fiscal 1997 to
but excluding the last day of the second fiscal
quarter of 1998 5.25 to 1.00
From and including the last day of the second fiscal
quarter of 1998 to but excluding the last day of the
third fiscal quarter of 1998 5.00 to 1.00
From and including the last day of the third fiscal
quarter of 1998 to and including the last day of
fiscal 1998 4.50 to 1.00
From and including the first day of fiscal 1999 to
but excluding the last day of the third fiscal
quarter of 1999 5.00 to 1.00
From and including the last day of the third fiscal
quarter of 1999 to but excluding the last day of
fiscal 1999 4.25 to 1.00
From and including the last day of fiscal 1999 to
and including the last day of the first fiscal
quarter of 2000 4.00 to 1.00
Thereafter 3.50 to 1.00";
(d) redesignating Sections 6.16 and 6.17 as Sections 6.15 and
6.16, respectively; and
(e) deleting Section 6.18 in its entirety and inserting in
lieu thereof the following:
"SECTION 6.17. Fixed Charge Coverage Ratio. Permit
the Fixed Charge Coverage Ratio as of any date during any
period specified below to be less than the ratio set forth
below next to such period:
Period Ratio
------ -----
From and including the last day of fiscal 1996 to
but excluding the last day of fiscal 1997 1.00 to 1.00
From and including the last day of fiscal 1997 to
and including the last day of fiscal 1998 1.10 to 1.00
From and including the first day of fiscal 1999 to
but excluding the last day of the second fiscal
quarter of 1999 0.75 to 1.00
From and including the last day of the second fiscal
quarter of 1999 to but excluding the last day of the
third fiscal quarter of 1999 0.80 to 1.00
From and including the last day of the third fiscal
quarter of 1999 to but excluding the last day of
fiscal 1999 0.90 to 1.00
From and including the last day of fiscal 1999 to
but excluding the last day of the second fiscal
quarter of 2000 1.05 to 1.00
From and including the last day of the second fiscal
quarter of 2000 to but excluding the last day of
fiscal 2000 1.25 to 1.00
Thereafter 1.50 to 1.00
SECTION 6.18. Interest Expense Coverage Ratio. Permit
the Interest Expense Coverage Ratio as of any date during any
period specified below to be less than the ratio set forth
below next to such period:
Period Ratio
------ -----
From and including the last day of the third fiscal
quarter of 1998 to and including the last day of
fiscal 1998 2.50 to 1.00
From and including the first day of fiscal 1999 to
and including the last day of the second fiscal
quarter of 1999 2.25 to 1.00
From and including the first day of the third fiscal
quarter of 1999 to and including the last day of the
third fiscal quarter of 1999 2.50 to 1.00
Thereafter 2.75 to 1.00
SECTION 2.04. Amendment of Article VII. Article VII of the
Credit Agreement is hereby amended by (i) deleting the word "or" at the end of
clause (m) thereof and (ii) inserting at the end of clause (n) thereof the
following:
"or
(o) the FDA shall assert that the Borrower or any of the
Subsidiaries is in material violation of the Consent Decree, or shall
commence any action or proceeding asserting any material violation of
current good manufacturing practices by the Borrower or any of the
Subsidiaries, or shall seize, impound or otherwise impose restrictions
on the use of material properties or assets of the Borrower or any of
the Subsidiaries, or there shall be a drawing on Bond #1376333 posted
with the United States District Court for the District of Arizona, and
in any such case, Lenders having Loans, L/C Exposures and unused
Revolving Credit Commitments and Term Loan Commitments at such time
representing two-thirds of the sum of all Loans outstanding, L/C
Exposures and unused Revolving Credit and Term Loan Commitments at such
time shall determine that such action is reasonably likely to result in
a Material Adverse Effect;".
ARTICLE III
Understanding With Respect to Steris
------------------------------------
Upon the effectiveness of this Amended and Restated Credit
Agreement, it is understood and agreed that, retroactive to the date of the
Credit Agreement, no Default or Event of Default under the Credit Agreement or
the Security Documents shall be deemed to have occurred as a result of the
events and circumstances that led to the enforcement actions of the FDA with
respect to Steris, the enforcement actions themselves or the resulting changes
to the operations of the Borrower and the Subsidiaries, including, without
limitation, the Steris Charges. Nothing herein shall be deemed to be a waiver of
any Default or Event of Default after the date hereof.
ARTICLE IV
Representations and Warranties
------------------------------
The Borrower hereby represents and warrants to each Lender that:
(a) After giving effect to Article II and Article III hereof,
the representations and warranties set forth in Article III of this
Amended and Restated Credit Agreement are true and correct in all
material respects as of the date hereof with the same effect as made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(b) After giving effect to Article II and Article III hereof,
no Default or Event of Default has occurred and is continuing.
ARTICLE V
Effectiveness
-------------
This Amended and Restated Credit Agreement shall become
effective on and as of any date on or prior to November 6, 1998, on which each
of the following conditions precedent shall have been satisfied:
(a) The Administrative Agent shall have received duly executed
counterparts hereof which, when taken together, bear the authorized
signatures of the Borrower and Required Lenders.
(b) The Administrative Agent shall have received a certificate
of a Financial Officer of the Borrower, dated the date hereof,
confirming that after giving effect to Article II and Article III
hereof (i) the representations and warranties set forth in Article III
of this Amended and Restated Credit Agreement are true and correct in
all material respects on and as of the date hereof, with the same
effect as though made on and as of such date, except to the extent that
such representations and warranties expressly relate to an earlier date
and (ii) no Event of Default or Default has occurred and is continuing.
(c) The Consent Decree shall have been approved by the United
States District Court for the District of Arizona and shall be in full
force and effect.
(d) Each of the Lenders executing this Amended and Restated
Credit Agreement shall have received from the Borrower, through the
Administrative Agent, on or before the date hereof, in immediately
available funds, a fee equal to 0.25% of the sum of (x) its Post-Merger
Revolving Credit Commitment as in effect on the date hereof plus (y)
its portion of Term Facility Loans outstanding as of the date hereof.
The Borrower shall be deemed to have satisfied the foregoing condition
precedent by remitting to the Administrative Agent, on or before
November 6, 1998, an amount equal to the sum of the fees due to each of
the Lenders executing this Amended and Restated Credit Agreement.
ARTICLE VI
Miscellaneous
-------------
SECTION 6.01. Governing Law. THIS AMENDED AND RESTATED
CREDIT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
SECTION 6.02. Counterparts. This Amended and Restated Credit
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which, when taken together, shall constitute but one
instrument. Delivery of an executed counterpart of a signature page of this
Amended and Restated Credit Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Amended and
Restated Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Credit Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
SCHEIN PHARMACEUTICAL, INC.,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, individually and as Issuing Bank, Administrative Agent
and Collateral Agent,
by
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
---------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
By
---------------------------------
Name:
Title:
THE BANK OF TOKYO--MITSUBISHI TRUST COMPANY,
by
---------------------------------
Name:
Title:
BAYERISCHE HYPO-UND VEREINSBANK AG, NEW YORK BRANCH,
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
COMERICA BANK,
by
---------------------------------
Name:
Title:
COMMERCIAL LOAN FUNDING TRUST I, by XXXXXX COMMERCIAL PAPER INC., not in its
individual capacity but solely as Administrative Agent,
by
---------------------------------
Name:
Title:
COMMERZBANK AG, NEW YORK BRANCH,
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEIFEN-BOERENLEENBANK, B.A., "RABOBANK NEDERLAND",
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH,
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, AG,
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
by
---------------------------------
Name:
Title:
FLEET BANK, N.A.,
by
---------------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
by
---------------------------------
Name:
Title:
MELLON BANK, N.A.,
by
---------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
---------------------------------
Name:
Title:
SOCIETE GENERALE,
by
---------------------------------
Name:
Title:
SUMMIT BANK,
by
---------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
by
---------------------------------
Name:
Title:
by
---------------------------------
Name:
Title:
