EXHIBIT 10.2
------------
JPMORGAN
Rate Cap Transaction
March 8, 2004
Chattem, Inc.
Attn.: Xxxx Xxxx
Fax No: (000) 000-0000
Re: JPMorgan Reference No. 2000005040404
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and
conditions of the rate cap transaction entered into between JPMorgan Chase Bank
("JPMorgan") and Chattem, Inc. (the "Counterparty") on March 4, 2004 (the "Rate
Cap Transaction").
In consideration of the payment of the sum of USD 1,375,000 (the
"Premium") by the Counterparty to JPMorgan at JPMorgan's Account on March 9,
2004 and in consideration of the promise by JPMorgan to make payments to the
Counterparty in accordance with Section 2 hereof, the parties hereto agree as
follows:
1. Definitions. The following terms shall have the following meanings:
"BUSINESS DAY" means any day which is both a New York Business Day and
a London Business Day.
"CALCULATION PERIOD" means each period from and including one Payment
Date (or, in the case of the initial Calculation Period, the Effective Date) to
but excluding the next succeeding Payment Date (or, in the case of the final
Calculation Period, the Termination Date).
"CAP RATE" means, in relation to a Calculation Period, the percentage
rate per annum specified for that Calculation Period in the attached
amortization schedule.
"COUNTERPARTY'S ACCOUNT" means the account of the Counterparty at Bank
of America, N.A., Chattanooga, TN, Account No.: 002006442400 Favor of: Chattem.,
Inc. Attn: FRN Cap.
"DESIGNATED MATURITY" means 3 month(s).
"EFFECTIVE DATE" means June 1, 2004.
"FLOATING RATE" means, with respect to a Reset Date within each
Calculation Period, the rate determined by JPMorgan to be (i) the per annum rate
for deposits in u.s. dollars for a period of the Designated Maturity which
appears on the Telerate Page 3750 Screen as of 11:00 a.m., London time, on the
day that is two London Business Days prior to that Reset Date (rounded upwards,
if necessary, to the nearest 1/100,000 of 1%); (ii) if such rate does not appear
on the Telerate Page 3750 Screen, the Floating Rate with respect to that Reset
Date shall be the arithmetic mean (rounded as aforesaid) of the offered
quotations obtained by JPMorgan from the Reference Banks for deposits in U.S.
dollars to leading banks in the London interbank market as of approximately
11:00 a.m., London time, on the day that is two London Business Days prior to
that Reset Date; or (iii) if fewer than two Reference Banks provide JPMorgan
with such quotations, the Floating Rate shall be the rate per annum which
JPMorgan determines to be the arithmetic mean (rounded as aforesaid) of the
offered quotations which leading banks in New York City selected by JPMorgan are
quoting in the New York interbank market on that Reset Date for deposits in U.S.
dollars to the Reference Banks or, if fewer than two such quotations are
available, to leading European and Canadian Banks.
"JPMORGAN'S ACCOUNT" means the account of JPMorgan at JPMorgan Chase
Bank Account No. 9999-7979, Attention: Derivative Products.
"LONDON BUSINESS DAY" means any day on which banks are open for
business in London and on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
"NEW YORK BUSINESS DAY" means any day on which banks are not required
or authorized by law to close in New York City.
"NOTIONAL PRINCIPAL AMOUNT" means, in relation to a Calculation Period,
the USD amount specified for that Calculation Period in the attached
amortization schedule.
"PAYMENT DATE" means the 1st day in March, June, September and December
commencing on June 1, 2004 and ending on the Termination Date, provided that if
any such day is not a Business Day, such Payment Date shall be the next
succeeding Business Day, except that if such Payment Date would then fall in the
next calendar month, such Payment Date shall be the next preceding Business Day.
"REFERENCE BANKS" means four major banks in the London interbank market
selected by JPMorgan.
"RESET DATE" means the first day of each Calculation Period.
"TELERATE PAGE 3750 SCREEN" means the display designated as "Page 3750"
on the Dow Xxxxx Telerate Service (or such other page as may replace Page 3750
on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for U.S. Dollar
deposits).
2
"Termination Date" means March 1, 2010.
2. Payments. JPMorgan agrees, subject to the payment by the
Counterparty to JPMorgan of the Premium, to pay to the Counterparty on each
Payment Date occurring on or prior to the Termination Date, an amount equal to
the product of (i) the amount by which the Floating Rate exceeds the Cap Rate
with respect to the Calculation Period ending on or nearest such Payment Date,
in each case as determined by JPMorgan, (ii) the Notional Principal Amount and
(iii) the actual number of days in that Calcu1ation Period divided by 360. All
payments to the Counterparty shall be made by deposit to the Counterparty's
Account. All payments to JPMorgan shall be made by deposit to JPMorgan's
Account.
3. Notices. Any notices hereunder (i) shall be in writing and
hand-delivered or sent by first-class mail, postage prepaid, return receipt
requested, and shall be addressed to the intended recipient at its address set
forth on the signature page hereof or at such other address as such party shall
have last specified by notice to the other party and (ii) shall be effective (a)
if delivered by hand or sent by overnight courier, on the day it is delivered,
unless delivery is made after the close of business or on a day that is not a
Business Day, in which case such notice will be effective on the next Business
Day, or (b) if sent by certified or registered mail or the equivalent (return
receipt requested), three Business Days after dispatch.
4. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York.
5. Assignments. Neither party shall have the right to assign its rights
or obligations under this letter agreement without the prior written consent of
the other party.
6. Set-off; Counterclaim. All payments under this letter agreement will
be made without set-off or counterclaim, except that each party will have the
right to set-off, counterclaim or withhold payment in respect of any default by
the other party under this letter agreement or under any other agreement between
the parties.
7. Each Party's Reliance on its Own Judgment. Each party has entered
into this Rate Cap Transaction solely in reliance on its own judgment. Neither
party has any fiduciary obligation to the other party relating to this Rate Cap
Transaction. In addition, neither party has held itself out as advising, or has
held out any of its employees or agents as having the authority to advise, the
other party as to whether or not the other party should enter into this Rate Cap
Transaction, any subsequent actions relating to this Rate Cap Transaction or any
other matters relating to this Rate Cap Transaction. Neither party shall have
any responsibility or liability whatsoever in respect of any advice of this
nature given, or views expressed, by it or any of such persons to the other
party relating to this Rate Cap Transaction, whether or not such advice is given
or such views are expressed at the request of the other party.
8. Waiver of Right to Trial by Jury. Each party hereby irrevocably
waives any and all rights to trial by jury with respect to any legal proceeding
arising out of or relating to this letter agreement or the Rate Cap Transaction.
3
Please confirm that the foregoing correctly sets forth the terns and
conditions of our agreement by responding within ten (10) Business Days by
returning via facsimile an executed copy of this letter agreement to the
attention of Xxxxxxx Xxxxxx (fax. no. 000-000-0000, telephone no. 000-000-0000).
Duplicate hard copies of this letter agreement will be sent to you
shortly. Upon receipt, please execute both copies and return one to JPMorgan to
the address indicated below.
JPMorgan is pleased to have concluded this transaction with yon.
Very truly yours,
JPMORGAN CHASE BANK
--------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
4
Address for Notices:
0 XxxxxXxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: 000-000-0000
ACCEPTED AND AGREED:
CHATTEM, INC.
By: ______________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President and Chief Financial
Officer
Address for Notices:
Attn: Xxxx Xxxxxx, 0000 X. 00xx Xxxxxx,
Xxxxxxxxxxx.
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
5
AMORTIZATION SCHEDULE
Rate Cap Transaction Ref. No. 2000005040404
Calculation Period Calculation Period Notional Principal
from and Including to and Excluding Amount in USD Cap Rate
------------------ ---------------- ------------- --------
June 1, 2004 September 1, 2004 $75,000,000 4.00%
September 1, 2004 December 1, 2004 $75,000,000 4.00%
December 1, 2004 March 1, 2005 $75,000,000 4.00%
March 1, 2005 June 1, 2005 $75,000,000 4.00%
June 1, 2005 September 1, 2005 $75,000,000 4.00%
September 1, 2005 December 1, 2005 $75,000,000 4.00%
December 1, 2005 March 1, 2006 $75,000,000 4.00%
March 1, 2006 June 1, 2006 $60,000,000 4.00%
June 1, 2006 September 1, 2006 $60,000,000 4.00%
September 1, 2006 December 1, 2006 $60,000,000 4.00%
December 1, 2006 March 1, 2007 $60,000,000 4.00%
March 1, 2007 June 1, 2007 $45,000,000 4.50%
June 1, 2007 September 4, 2007 $45,000,000 4.50%
September 4, 2007 December 3, 2007 $45,000,000 4.50%
December 3, 2007 March 3, 2008 $45,000,000 4.50%
March 3, 2008 June 2, 2008 $30,000,000 5.00%
June 2, 2008 September 2, 2008 $30,000,000 5.00%
September 2, 2008 December 1, 2008 $30,000,000 5.00%
December 1, 2008 March 2, 2009 $30,000,000 5.00%
March 2, 2009 June 1, 2009 $15,000,000 5.00%
6
June 1, 2009 September 1, 2009 $15,000,000 5.00%
September 1, 2009 December 1, 2009 $15,000,000 5.00%
December 1, 2009 March 1, 2010 $15,000,000 5.00%
7
