Second Amendment to Amended and Restated Credit Agreement among CONMED Corporation, Lenders, and JPMorgan Chase Bank (September 23, 2004)

Summary

This amendment updates the existing credit agreement between CONMED Corporation, its lenders, and JPMorgan Chase Bank. It allows CONMED to acquire the endoscopic technology product line from C.R. Bard, Inc. for up to $90 million and to issue up to $150 million in convertible subordinated notes. The amendment also revises financial covenants, limits on indebtedness, asset sales, dividends, and investments. These changes are subject to certain conditions, including compliance with financial ratios and other requirements set by the lenders and the administrative agent.

EX-10.1 4 ex10-1.htm

Exhibit 10.1

SECOND AMENDMENT

SECOND AMENDMENT, dated as of September 23, 2004 (this “Second Amendment”), to the Amended and Restated Credit Agreement, dated as of June 30, 2003 (as the same may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among CONMED Corporation, a New York corporation, the several banks and other financial institutions or entities from time to time party thereto (the “Lenders”), and JPMorgan Chase Bank, as administrative agent (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to the Credit Agreement;

WHEREAS, The Borrower has requested that the Credit Agreement be amended, among other things, (i) to provide for the Bard Endoscopic Acquisition (as defined herein) and (ii) to effect certain other related amendments to the Credit Agreement;

WHEREAS, the Lenders and the Administrative Agent are willing to agree to such amendment to the Credit Agreement, subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the Borrower, the Lenders and the Administrative Agent hereby agree as follows:

SECTION 1. Defined Terms. Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement are used herein as therein defined.

SECTION 2. Amendments to Section 1.1 (Definitions). (a) Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions, to appear in alphabetical order:

“Bard Endoscopic Acquistion”: the acquisition of the endoscopic technology product line of C.R. Bard, Inc., a New Jersey corporation, and related assets for aggregate consideration not to exceed $90,000,000.

“Cash Settlement”: cash payments in an aggregate amount not to exceed $150,000,000 due and payable to the holders of the Convertible Subordinated Notes upon occurrence of Conversions in accordance with the terms of the Convertible Notes Indenture.

“Consolidated Total Tangible Assets” means as of any date of determination thereof, the aggregate consolidated net book value of the assets of the Borrower and its Subsidiaries (other than patents, patent rights, trademarks, trade names, franchises, copyrights, licenses, permits, goodwill and other similar intangible assets properly classified as such in accordance with GAAP) after all appropriate adjustments in accordance with GAAP (including, without limitation, reserves for doubtful receivables, obsolescence, depreciation and amortization).

“Conversion”: any conversion of the Convertible Subordinated Notes, in accordance with the terms of the Convertible Notes Indenture, into cash and, if applicable, shares of common stock of the Borrower.

“Convertible Notes Indenture”: the indenture governing the Convertible Subordinated Notes.

“Convertible Subordinated Notes”: a single issuance of unsecured Indebtedness of the Borrower in an aggregate principal amount not to exceed $150,000,000 which (i) under certain circumstances are convertible at the option of any holder into an amount of cash not to exceed $150,000,000 in the aggregate and, if applicable, shares of common stock of the Borrower, (ii) other than as set forth in the foregoing clause (i), qualifies as Permitted Subordinated Indebtedness and (iii) is on terms and conditions reasonably satisfactory to the Administrative Agent.

(i) The definition of “Available Excess Cash Flow” in Section 1.1 of the Credit Agreement is hereby amended by:

(ii) inserting the number “(i)” in front of the term “Permitted Subordinated Indebtedness” in subclause (z) thereof and

(iii) inserting the phrase “and (ii) the Convertible Subordinated Notes (for the avoidance of doubt, excluding the Cash Settlement)” at the end thereof.

(iv) The definition of “Excess Cash Flow” in Section 1.1 of the Credit Agreement is hereby amended by:

(v) adding the following new subclause (ix):

“and (ix) the aggregate amount paid by the Borrower in respect of the Cash Settlement (other than with the proceeds of Permitted Subordinated Debt or Revolving Credit Loans).”;

(vi) by deleting the word “and” at the end of subclause (vii) thereof and inserting, in lieu thereof, a comma; and

(vii) by deleting the period at the end of subclause (viii) thereof.

(c) The definition of “Permitted Business Acquisition” in Section 1.1 of the Credit Agreement is hereby amended by deleting the word “domestic” therefrom.

SECTION 3. Amendments to Section 7.1(a) (Financial Condition Covenants—Consolidated Leverage Ratio). Section 7.1(a) of the Credit Agreement is hereby amended by deleting from the chart set forth therein the references to each fiscal quarter ending on or after September 30, 2004 and the corresponding Consolidated Leverage Ratio for such fiscal quarters and inserting, in lieu thereof, the following:

			“Fiscal Quarter			Consolidated Leverage Ratio

			September 30, 2004 to
			September 30, 2005			3.50 to 1.00
			December 31, 2005 and
			thereafter			3.25 to 1.00”

SECTION 4. Amendment to Section 7.2 (Limitation on Indebtedness). Section 7.2 of the Credit Agreement is hereby amended as follows:

(a) by adding the following new subsection (p):

“and (p) the Convertible Subordinated Notes, provided that on the date of issuance the Borrower and its Subsidiaries are in compliance with the financial covenant contained in Section 7.1(a), computed on a pro forma basis as at the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available.”

(b) by deleting the period from the end of subsection (o) and inserting in lieu thereof a semicolon; and

SECTION 5. Amendment to Section 7.5(e) (Limitation on Sales of Assets). Section 7.5(e) of the Credit Agreement is hereby amended by deleting subclause (y) thereof and inserting, in lieu thereof, the following new subclause (y):

“(y) the aggregate fair market value of such Property since the Closing Date does not exceed 10.0% of the Consolidated Total Tangible Assets”.

SECTION 6. Amendments to Section 7.6 (Limitation on Dividends). Section 7.6 of the Credit Agreement is hereby amended as follows:

(a) by adding the following new subclause (e):

“(e) additional redemptions of Capital Stock using proceeds of the issuance of the Convertible Subordinated Notes in an aggregate amount not to exceed $25,000,000; and”;

(b) by adding the following new subclause (f):

“(f) the Cash Settlement.”;

(c) by deleting the number “$5,000,000” in existing subsection (d) and inserting in lieu thereof the number “$25,000,000”;

(d) by deleting the period from the end of subsection (d) and inserting in lieu thereof a semicolon; and

(e) by deleting the word “and” from the end of existing subsection (c).

SECTION 7. Amendments to Section 7.8 (Limitation on Investments, Loans and Advances). Section 7.8 of the Credit Agreement is hereby amended as follows:

(a) by deleting subclause (y) of subsection (i) and inserting, in lieu thereof, the following new subclause (y):

“(y) the aggregate amount of all investments in such Foreign Subsidiaries (other than investments in accordance with Section 7.8(l)) shall not exceed $50,000,000 since the Closing Date (plus any Available Excess Cash Flow) minus the aggregate principal amount of any Indebtedness of any Foreign Subsidiary at any such time outstanding in accordance with Section 7.2(k), provided that any such investment that constitutes Indebtedness shall be represented by a note or similar instrument and pledged pursuant to Section 6.9 and the Guarantee and Collateral Agreement;”;

(i) by inserting the phrase “, loans or advances” after each occurrence of the word “investments” in Section 7.8(j);

(b) by inserting the following new subsection (l):

“(l) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower and any Subsidiary may make investments in, or create, any Wholly-Owned Foreign Subsidiary (by way of capital contribution or otherwise) for the purpose of making acquisitions in accordance with Section 7.8(k), provided that (i) a binding Contractual Obligation with a counterparty other than an Affiliate of the Borrower to make such acquisition is in effect at the time of such investment and (ii) such acquisition is consummated in accordance with Section 7.8(k) within five Business Days of such investment or, if such acquisition is not so consummated, then within eight Business Days of such investment such contribution is reversed; and”;

“(m) so long as it qualifies as a Permitted Business Acquisition, the Bard Endoscopic Acquisition.”;

(d) by deleting the word “and” from the end of subsection (j); and

(i) by deleting the period from the end of subsection (k) and inserting in lieu thereof a semicolon.

SECTION 8. Amendments to Section 7.9 (Limitation on Optional Payments and Modifications of Debt Instruments). Section 7.9 of the Credit Agreement is hereby amended as follows:

(a) inserting the following new subsection (d):

“(d) make or offer to make any payment, prepayment, repurchase or redemption of or otherwise defease or segregate funds with respect to the Convertible Subordinated Notes (other than scheduled interest payments required to be made in cash), other than (i) with Net Cash Proceeds of the sale or issuance of Capital Stock or Permitted Subordinated Indebtedness by the Borrower or any of its Subsidiaries which remain available after application of the required percentage of such Net Cash Proceeds to the prepayment of the Term Loans in accordance with Section 2.12(a)(i), if required thereunder or (ii) if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the payment of the Cash Settlement in connection with any Conversion; or”;

(b) inserting the following new subsection (e):

“(e) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to the Convertible Subordinated Notes (i) which amends or modifies the subordination provisions contained therein; (ii) which shortens the fixed maturity, or increases the rate or shortens the time of payment of interest on, or increases the amount or shortens the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of such Convertible Subordinated Notes, or increases the amount of, or accelerates the time of payment of, any fees payable in connection therewith; (iii) which increases the amount or shortens the time of payment of the Cash Settlement; (iv) which relates to the affirmative or negative covenants, events of default or remedies under the documents or instruments evidencing such Indebtedness and the effect of which is to subject the Borrower or any of its Subsidiaries, to any more onerous or more restrictive provisions; or (v) which otherwise adversely affects the interests of the Lenders as senior creditors or the interests of the Lenders under this Agreement or any other Loan Document in any respect.”

(d) by deleting the period from the end of subsection (c) and inserting, in lieu thereof, a semicolon.

SECTION 9. Representations and Warranties. (a) The Borrower hereby confirms, reaffirms and restates the representations and warranties set forth in Section 5 of the Credit Agreement. The Borrower represents and warrants that, after giving effect to this Second Amendment, no Default or Event of Default has occurred and is continuing.

(b) The Borrower hereby represents and warrants that the unaudited consolidated balance sheet of the Borrower as at June 30, 2004, and the related unaudited consolidated statements of income and cash flows for the six-month period ended on such date, present fairly the consolidated financial position of the Borrower as at such date, and the consolidated results of its operations and its consolidated cash flows for the six-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and any notes thereto (except as contemplated by GAAP or in the case of any notes to the financial statements dated as of June 30, 2004), have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein).

SECTION 10. Effectiveness. This Second Amendment shall become effective as of the date set forth above (the “Second Amendment Effective Date”) upon the satisfaction of the following conditions precedent:

(a) Second Amendment. The Administrative Agent shall have received this Second Amendment executed and delivered by the Administrative Agent, the Borrower and Lenders party to the Credit Agreement constituting the “Required Lenders” thereunder.

(b) Fees. The Lenders and the Administrative Agent shall have received all fees required to be paid on or before the Second Amendment Effective Date (including, for the avoidance of doubt, all amendment fees payable to consenting Lenders), and all expenses required to be paid on or before the Second Amendment Effective Date for which invoices have been timely presented, including, without limitation, the reasonable fees and expenses of legal counsel, on or before the Second Amendment Effective Date.

(c) Security Documents. The Administrative Agent shall have received the Acknowledgment and Confirmation, substantially in the form of Exhibit A hereto, executed and delivered by an authorized officer of the Borrower and each other Loan Party.

(d) Closing Certificate. The Administrative Agent shall have received a certificate of each Loan Party, dated the Second Amendment Effective Date, substantially in the form of Exhibit C to the Credit Agreement, with appropriate insertions and attachments.

SECTION 11. Continuing Effect of the Credit Agreement. This Second Amendment shall not constitute an amendment of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Borrower that would require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended hereby, the provisions of the Credit Agreement are and shall remain in full force and effect.

SECTION 12. Counterparts. This Second Amendment may be executed by the parties hereto in any number of separate counterparts (including facsimiled counterparts), each of which shall be deemed to be an original, and all of which taken together shall be deemed to constitute one and the same instrument.

SECTION 13. GOVERNING LAW. THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 14. Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Second Amendment, including, without limitation, the fees and disbursements of counsel to the Administrative Agent.

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

	CONMED CORPORATION

	By:	/s/ Robert D. Shallish, Jr. ———————————————— Name: Robert D. Shallish, Jr. Title: Vice President

	JPMORGAN CHASE BANK, as Administrative Agent and as a Lender

	By:	/s/ Frederick K. Miller ———————————————— Name: Frederick K. Miller Title: Vice President