Amendment No. 5 to Credit Agreement among Alpharma Inc., Lenders, and Bank of America (August 3, 2004)

CONFORMED COPY

AMENDMENT NO. 5 TO THE

CREDIT AGREEMENT

AMENDMENT NO. 5 TO THE CREDIT AGREEMENT among ALPHARMA INC., a Delaware corporation ("Holdings"), the banks, financial institutions and other lenders party hereto, and BANK OF AMERICA, as administrative agent and collateral agent (the "Administrative Agent"), as parties to the Credit Agreement referred to below.

1. Alpharma Operating Corporation, a Delaware corporation (the "Company"), Alpharma USPD Inc., a Maryland corporation (together with the Company and the Subsidiary Borrowers party thereto, the "Borrowers"), Holdings, the Lender Parties and the Administrative Agent have entered into a Credit Agreement dated as of October 5, 2001, as amended by Amendment No. 1 dated as of December 16, 2002, Amendment No. 2 dated as of April 3, 2003, Amendment No. 3 dated as of December 18, 2003 and Amendment No. 4 dated as of April 19, 2004 (as further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement.
2. Holdings and the Required Lenders have agreed to amend the Credit Agreement as hereinafter set forth.
1. Amendments to Credit Agreement

. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 4, hereby amended as follows:

1. The definition of "Consolidated EBITDA" in Article I is amended by inserting after clause "(o)" therein the following new clause to read as follows:

"plus (p) all cash restructuring charges up to a maximum aggregate amount of $30,000,000 incurred from July 1, 2004 through December 31, 2004 in connection with initiatives designed primarily to reduce selling, general and administrative expenses in worldwide operations".

2. The table in Section 5.04(a) is amended in full to read as follows:

Measurement Period	Ratio
December 31, 2001 to September 30, 2002 December 31, 2002 to September 30, 2003 December 31, 2003 to June 30, 2004 September 30, 2004 to December 31, 2004 March 31, 2005 June 30, 2005 and thereafter	5.25:1.0 4.50:1.0 4.00:1.0 4.25:1.0 4.00:1.0 3.50:1.0

 

3. The table in Section 5.04(d) is amended in full to read as follows:

Measurement Period	Ratio
December 31, 2001 to September 30, 2002 December 31, 2002 to September 30, 2003 December 31, 2003 to June 30, 2004 September 30, 2004 to December 31, 2004 March 31, 2005 June 30, 2005 and thereafter	2.50:1.0 3.00:1.0 3.50:1 3.00:1 3.25:1.0 3.50:1.0

2. Additional Agreement

. The undersigned Lenders hereby acknowledge that the Company redeemed $24,455,000 of the October Convertible Notes on June 11, 2004 using, in part, proceeds of Revolving Credit Borrowings, and by this reference do hereby confirm that such redemption is approved in all respects.

3. Fees

. On the date hereof, Holdings shall pay to the Administrative Agent, for the benefit of each Lender that executes this Amendment by no later than 1:00 PM (New York time) on Tuesday, August 3, 2004, an upfront fee equal to 0.10% of the aggregate Commitments of each such Lender under the Credit Agreement as of the date hereof.

4. Conditions of Effectiveness

. This Amendment shall become effective as of the date first above written (or, in the case of Section 2, as of June 11, 2004) when, and only when, the Administrative Agent shall have received counterparts of this Amendment executed by Holdings and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment; and Sections 1 and 2 of this Amendment shall become effective as of the date hereof (or, in the case of Section 2, as of June 11, 2004) when and only when the Administrative Agent shall have received (a) the fees specified in Section 3 hereof and the payment of all accrued fees and expenses of the Administrative Agent (including the reasonable accrued fees and expenses of counsel to the Administrative Agent invoiced on or prior to the date hereof) and (b) all of the following documents, each such document dated the date of receipt thereof by the Administrative Agent (unless otherwise specified), in form and substa nce satisfactory to the Administrative Agent:

1. Counterparts of the Consent appended hereto (the "Consent"), executed by each of the Loan Parties (other than Holdings);
2. Certified copies of (A) the resolutions of the Board of Directors of (1) Holdings approving this Amendment and the matters contemplated hereby and (2) each other Loan Party evidencing approval of the Consent and (B) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Amendment, the Consent and all other matters contemplated hereby;
3. A certificate signed by a duly authorized officer of Holdings stating that: (A) the representations and warranties contained in Section 5 hereof and in the Loan Documents are true and correct on and as of the date of such certificate as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a date other than the date of such certificate, and (B) no event has occurred and is continuing that constitutes a Default.
5. Representations and Warranties of Holdings

. Holdings hereby represents and warrants as follows:

1. Each Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation.
2. The execution, delivery and performance by each Loan Party of this Amendment and the Consent, as applicable, to which it is a party, are within such Person's corporate or other powers, have been duly authorized by all necessary corporate or other action and do not (i) contravene such Person's Constitutive Documents, (ii) violate any Requirement of Law, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Collateral Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries.
3. No Governmental Authorization, and no other authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for the due execution, delivery or performance by any Loan Party of this Amendment or the Consent.
4. This Amendment and the Consent have been duly executed and delivered by each Loan Party which is a party thereto. This Amendment and the Consent are legal, valid and binding obligations of each Loan Party which is a party thereto, enforceable against each such Loan Party in accordance with their respective terms.
5. There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or, to the knowledge any Loan Party, threatened before any Governmental Authority or arbitrator that purports to affect the legality, validity or enforceability of this Amendment or the Consent, or the consummation of any of the transactions contemplated hereby.
6. The execution, delivery and performance of this Amendment and the Consent do not adversely affect the Liens created under any of the Collateral Documents.
6. Reference to and Effect on the Loan Documents

. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

2. The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, in each case as amended by this Amendment.
3. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
7. Costs, Expenses

. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 8.04 of the Credit Agreement.

8. Execution in Counterparts

. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

9. Governing Law

. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

Agreed as of the date first above written: