TERM LOAN AGREEMENT
dated as of May 1, 1998
among
IVC INDUSTRIES, INC.,
the Banks party hereto
and
THE CHASE MANHATTAN BANK,
as Agent
TABLE OF CONTENTS
PAGE(S)
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ARTICLE 1. DEFINITIONS: ACCOUNTING TERMS ................................ -1-
Section 1.01. Definitions ....................................... -1-
Section 1.02. Accounting Terms .................................. -l2-
ARTICLE 2. THE LOANS .................................................... -12-
Section 2.01. The Loans ......................................... -12-
Section 2.02. Purpose ........................................... -13-
Section 2.03. Borrowing Procedures .............................. -13-
Section 2.04. Optional Prepayments and Conversions .............. -13-
Section 2.05. Interest Periods: Renewals ........................ -14-
Section 2.06. Certain Notices ................................... -14-
Section 2.07. Minimum Amounts ................................... -14-
Section 2.08. Interest .......................................... -15-
Section 2.09. Mandatory Prepayments ............................. -15-
Section 2.10. Other Mandatory Prepayment ........................ -16-
Section 2.11. Payments Generally ................................ -16-
Section 2.12. Single Loan ....................................... -17-
ARTICLE 3. [RESERVED] ................................................... -17-
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC. ........................... -17-
Section 4.01. Additional Costs .................................. -17-
Section 4.02. Limitation on Types of Loans ...................... -19-
Section 4.03. Illegality ........................................ -19-
Section 4.04. Certain Conversions pursuant to Sections
4.01 and 4.03 ..................................... -19-
Section 4.05. Certain Compensation .............................. -20-
ARTICLE 5. CONDITIONS PRECEDENT ......................................... -21-
Section 5.01. Documentary Conditions Precedent .................. -21-
ARTICLE 6. REPRESENTATIONS AND WARRANTIES ............................... -23-
Section 6.01. Incorporation, Good Standing and Due
Qualification ..................................... -23-
Section 6.02. Corporate Power and Authority: No Conflicts ....... -24-
Section 6.03. Legally Enforceable Agreements .................... -24-
Section 6.04. Litigation ........................................ -24-
Section 6.05. Financial Statements .............................. -24-
Section 6.06. Ownership and Liens ............................... -25-
Section 6.07. Taxes ............................................. -25-
Section 6.08. ERISA ............................................. -25-
Section 6.09. Subsidiaries and Ownership of Stock ............... -25-
Section 6.10. Credit Arrangements ............................... -26-
Section 6.11. Operation of Business ............................. -26-
Section 6.12. Hazardous Materials ............................... -26-
Section 6.13. No Default on Outstanding Judgments or Orders ..... -28-
Section 6.14. No Defaults on Other Agreements ................... -28-
Section 6.15. Labor Disputes and Acts of God .................... -28-
Section 6.16. Governmental Regulation ........................... -28-
Section 6.17. Partnerships ...................................... -28-
Section 6.18. No Forfeiture Proceeding .......................... -28-
Section 6.19. Solvency .......................................... -29-
Section 6.20. As to Collateral .................................. -29-
ARTICLE 7. AFFIRMATIVE COVENANTS ........................................ -30-
Section 7.01. Maintenance of Existence .......................... -30-
Section 7.02. Conduct of Business ............................... -30-
Section 7.03. Maintenance of Properties ......................... -30-
Section 7.04. Maintenance of Records ............................ -30-
Section 7.05. Maintenance of Insurance .......................... -30-
Section 7.06. Compliance with Laws .............................. -31-
Section 7.07. Right of Inspection ............................... -31-
Section 7.08. Reporting Requirements ............................ -31-
Section 7.09. Registered Trademarks ............................. -34-
Section 7.10. Store Leases ...................................... -34-
Section 7.11. Subordination and Nondisturbance Agreement ........ -35-
ARTICLE 8. NEGATIVE COVENANTS ........................................... -35-
Section 8.01. Debt .............................................. -35-
Section 8.02. Guaranties, Etc ................................... -35-
Section 8.03. Liens ............................................. -36-
Section 8.04. Leases ............................................ -37-
Section 8.05. Investments ....................................... -38-
Section 8.06. Dividends ......................................... -38-
Section 8.07. Sale of Assets .................................... -38-
Section 8.08. Stock of Subsidiaries, Etc ........................ -39-
Section 8.09. Transactions with Affiliates ...................... -39-
Section 8.10. Mergers, Acquisitions, Etc ........................ -39-
Section 8.11. As to Collateral .................................. -40-
Section 8.12. As to Vitamin Specialties Business in Particular .. -40-
Section 8.13. Employment Agreements ............................. -40-
ARTICLE 9. FINANCIAL COVENANTS .......................................... -40-
Section 9.01. EBITDA ............................................ -41-
Section 9.02. Cash Flow Leverage Ratio .......................... -41-
Section 9.03. Tangible Net Worth ................................ -41-
Section 9.04. Current Ratio ..................................... -41-
Section 9.05. Interest Coverage ................................. -41-
Section 9.06. Capital Expenditures .............................. -42-
Section 9.07. No Quarterly Loss ................................. -42-
Section 9.08. EBITDA of VSC ..................................... -42-
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ARTICLE 10. EVENTS OF DEFAULT ........................................... -42-
Section 10.01. Events of Default ................................. -42-
Section 10.02. Remedies .......................................... -46-
Section 10.03. Rescission ........................................ -46-
ARTICLE 11. THE AGENT: RELATIONS AMONG BANKS AND BORROWER ............... -46-
Section 11.01. Appointment, Powers and Immunities of Agent ....... -46-
Section 11.02. Reliance by Agent ................................. -47-
Section 11.03. Defaults .......................................... -47-
Section 11.04. Rights of Agent as a Bank ......................... -47-
Section 11.05. Indemnification of Agent .......................... -48-
Section 11.06. Documents ......................................... -48-
Section 11.07. Non-Reliance on Agent and Other Banks ............. -48-
Section 11.08. Failure of Agent to Act ........................... -48-
Section 11.09. Resignation or Removal of Agent ................... -49-
Section 11.10. Amendments Concerning Agency Function ............. -49-
Section 11.11. Liability of Agent ................................ -49-
Section 11.12. Transfer of Agency Function ....................... -49-
Section 11.13. Non-Receipt of Funds by the Agent ................. -49-
Section 11.14. Withholding Taxes ................................. -50-
Section 11.15. Several Obligations and Rights of Banks ........... -50-
Section 11.16. Pro Rata Treatment of Loans, Etc .................. -50-
Section 11.17. Sharing of Payments Among Banks ................... -50-
Section 11.18. Successor Agent ................................... -51-
Section 11.19. Term lntercreditor Agreement ...................... -51-
ARTICLE 12. MISCELLANEOUS ............................................... -51-
Section 12.01. Amendments and Waivers ............................. -51-
Section 12.02. Usury .............................................. -52-
Section 12.03. Expenses ........................................... -52-
Section 12.04. Survival ........................................... -52-
Section 12.05. Assignment: Participations ......................... -52-
Section 12.06. Notices ............................................ -53-
Section 12.07. Setoff ............................................. -53-
SECTION 12.08. JURISDICTION; IMMUNITIES ........................... -53-
Section 12.09. Table of Contents: Headings ........................ -54-
Section 12.10. Severability ....................................... -54-
Section 12.11. Counterparts ....................................... -54-
Section 12.12. Integration ........................................ -54-
SECTION 12.13. GOVERNING LAW ...................................... -54-
Section 12.14. Confidentiality .................................... -54-
Section 12.15. Treatment of Certain Information ................... -55-
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EXHIBITS
Exhibit A Promissory Note
Exhibit B Authorization Letter
Exhibit C-1 VSC Term Guaranty
Exhibit C-2 IVOSC/Hall (Canada) Term Guaranty
Exhibit D-1 VSC Term Security Agreement
Exhibit D-2 Borrower/IVOSC/Hall (Canada) Term Security Agreement
Exhibit E Opinion of Counsel for Borrower and Subsidiaries
Exhibit F Collateral Assignment of Store Leases
Exhibit G Confidentiality Agreement
Exhibit H Stock Pledge Agreement
Exhibit I Mortgage
Exhibit J Assignment of Leases and Rents
Exhibit K Xxxxx Term Subordination Agreement
Exhibit L Term Trademark Assignment
Exhibit M Subordination. Nondisturbance and Attornment Agreement
SCHEDULES
Schedule 6.04 Litigation
Schedule 6.09 Subsidiaries of Borrower
Schedule 6.10 Credit Arrangements
Schedule 6.12 Hazardous Materials
Schedule 6.20(b) Locations as to Borrower and Subsidiaries
Schedule 6.20(e) Landlords
Schedule 8.05 Loans and Advances to Employees
-iv-
TERM LOAN AGREEMENT
TERM LOAN AGREEMENT dated as of May ____, 1998 among IVC INDUSTRIES INC.,
a corporation organized under the laws of Delaware (the "Borrower"), each of the
banks which is a party hereto (individually a "Bank" and collectively the
"Banks") and THE CHASE MANHATTAN BANK, a New York banking corporation, as agent
for the Banks (in such capacity, together with its successors in such capacity,
the "Agent").
RECITALS:
The Borrower desires that the Banks (subject to Section 2.11 hereof)
extend one or more term loans in the aggregate principal amount of $3,500,000 as
provided herein and the Banks are prepared to do so. Accordingly, the Borrower,
the Banks and the Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Account" has the meaning given to such term in Article 9 of the New York
Uniform Commercial Code as in effect on the date hereof.
"Additional Costs" is defined in Section 4.01.
"Affiliate" means any Person: (a) which directly or indirectly controls,
or is controlled by, or is under common control with, the Borrower or any of its
Subsidiaries; (b) which directly or indirectly beneficially owns or holds 5% or
more of any class of voting stock of the Borrower or any such Subsidiary; (c) 5%
or more of the voting stock of which is directly or indirectly beneficially
owned or held by the Borrower or such Subsidiary; or (d) which is a partnership
in which the Borrower or any of its Subsidiaries is a general partner. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Loan Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the like
refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Amortization Date" means the 15th day of each March, June, September and
December of each year, commencing June 15, 1998; provided however that if any
such day is not a Banking Day, the Amortization Date shall be the next
succeeding Banking Day.
"Assignment of Leases and Rents" means the Assignment of Leases and Rents
from the Borrower to the Agent in respect of the New Freehold/Xxxxxx Real Estate
in the form of Exhibit J attached hereto.
"Authority" means the New Jersey Economic Development Authority.
"Authorization Letter" means the letter agreement executed by the Borrower
in the form of Exhibit B.
"Bank Percentage" of a Bank means the ratio (expressed as a percentage) of
(a) the outstanding principal balance of the Loan of such Bank, to (b) the
aggregate outstanding principal balance of the Loans of all the Banks.
"Banking Day" means any day on which commercial banks are not authorized
or required to close in New York City and whenever such day relates to a Fixed
Rate Loan or notice with respect to any Fixed Rate Loan, a day on which dealings
in Dollar deposits are also carried out in the London interbank market.
"Borrower/IVOSC/Hall (Canada) Term Security Agreement" means the
Borrower/IVOSC/Hall (Canada) Term Security Agreement in the form of Exhibit D-2
to be delivered by the Borrower, IVOSC and Hall (Canada) under the terms of this
Agreement.
"Capital Expenditures" of a Person means, for any period, the Dollar
amount of gross expenditures (including obligations under Capital Leases) made
by such Person for fixed assets, real property, plant and equipment, and all
renewals, improvements and replacements thereof incurred during such period.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed and
delivered by the Borrower, the Bank(s) initially party hereto and the Agent.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral Assignment of Store Leases" means the Collateral Assignment of
Store Leases in the form of Exhibit F hereto to be delivered by the Borrower and
VSC to the Agent under the terms of this Agreement.
"Commitment" of a Bank means (subject to Section 2.11) the obligation of
such Bank to make a Loan under Section 2.01(a) of this Agreement on the Closing
Date in the principal amount set forth below opposite the name of such Bank. The
"Funding Percentage" of a Bank means (subject to Section 2.11) the percentage
set forth opposite the name of such Bank, which represents the ratio (expressed
as a percentage) of such Bank's Commitment to the Commitments of all the Banks:
Bank Commitment Funding Percentage:
---- ---------- -------------------
The Chase Manhattan Bank $3,500,000 100%
---------- ---
Total of all Banks $3,500,000 100%
"Consolidated Capital Expenditures" means for any period the capital
expenditures of the Borrower and its Consolidated Subsidiaries for such period,
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" means Current Assets of the Borrower and its
Consolidated Subsidiaries, as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Current Liabilities" means Current Liabilities of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Consolidated EBITDA" with respect to any period means the EBITDA of the
Borrower and its Consolidated Subsidiaries for such period, as determined on a
consolidated basis in accordance with GAAP, excluding however (a) any
nonrecurring extraordinary charge related to the termination of the Borrower's
contract with Revlon or to the integration of the Portland manufacturing
facility with the Freehold manufacturing facility, (b) any nonrecurring
extraordinary non-cash charge, and (c) any non-cash charge (which may be
recurring) for stock of the Borrower or options in respect thereof granted to
employees of the Borrower as compensation, which (in the case of all of (a), (b)
and (c)) would otherwise be included in computing the consolidated earnings of
the Borrower.
"Consolidated Funded Debt" means, as of any day of determination, Funded
Debt of the Borrower and its Consolidated Subsidiaries as of such day, as
determined on a consolidated basis in accordance with GAAP, less (for so long
any Term Note is held by The Chase Manhattan Bank) the amount of cash of the
Borrower held on such day in the ordinary demand deposit account(s) of the
Borrower with The Chase Manhattan Bank (excluding any payroll account, trust
account or other special purpose account).
"Consolidated Net Income" with respect to any period means the Net Income
of the Borrower and its Consolidated Subsidiaries for such period, as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary of the Borrower whose
accounts are or are required to be consolidated with the accounts of the
Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means the Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Current Assets" of a Person means all assets of such Person treated as
current assets in accordance with GAAP.
"Current Liabilities" of a Person means all liabilities of such Person
treated as current liabilities in accordance with GAAP, including without
limitation and without duplication (a) all obligations payable on demand or
within one year after the date in which the determination is made and (b)
installment and sinking fund payments required to be made within one year after
the date on which determination is made, but excluding all such liabilities or
obligations which are renewable or extendible at the option of such Person to a
date more than one year from the date of determination; but excluding all
amounts outstanding under Facility A and Facility B prior to one year before the
Facility A Expiration Date and the Facility B Expiration Date (as such terms are
defined in the Revolving Credit Agreement) and excluding the portion of the
principal of the Loans that is due and payable on the Maturity Date.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness of such Person for the deferred purchase
price of property or services (except trade payables in the ordinary course of
business); (c) Unfunded Benefit Liabilities of such Person (if such Person is
not the Borrower, determined in a manner analogous to that of determining
Unfunded Benefit Liabilities of the Borrower); (d) the face amount of any
outstanding letters of credit issued for the account of such Person; (e)
obligations of such Person arising under acceptance facilities; (f) guaranties,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations of such Person to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; (g) obligations secured by any Lien on property of such
Person; and (h) obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount payable by the Borrower under this
Agreement or any Term Note that is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period from
and including the due date, to, but excluding the date on which such amount is
paid in full, equal to 2% above the Variable Rate as in effect from time to time
plus the Margin (if any) (provided that, if the amount so in default is
principal of a Fixed Rate Loan and the due date thereof is a day other than the
last day of the Interest Period therefor, the "Default Rate" for such principal
shall be, for the period from and including the due date and to but excluding
the last day of the Interest Period therefor, 2% above the interest rate for
such Loan as provided in Section 2.08 hereof and, thereafter, the rate provided
for above in this definition).
"Designated Party" means the Person identified as the Designated Party in
the Designated Party Identification Agreement dated the date hereof among such
Person, the Agent and the Borrower.
"Designated Party Term Guaranty" means the Guaranty of the Loans from the
Designated Party in favor of the Agent and the Banks dated the date hereof (as
the same may hereafter be amended or supplemented from time to time).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" of a Person with respect to any period means such Person's
earnings before interest, taxes, depreciation and amortization for such period,
as determined in accordance with GAAP.
"Xxxxx Term Subordination Agreement" means the subordination agreement
from Xxxxxx Xxxxx and the Borrower in favor of the Agent and the Banks in the
form of Exhibit K.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Eurodollar Loan" means a Loan when and to the extent the interest rate
therefor is determined on the basis of clause (a) of the definition of "Fixed
Base Rate".
"Event of Default" has the meaning given such term in Section 10.01.
"Excluded VSC Assets" means (i) any and all cash (including, without
limitation, deposit accounts and investments that are cash equivalents) of VSC
existing on the day on which the Agent assigns to the Designated Party the Lien
of the Agent in the Vitamin Specialties Assets, other than cash "in the till" at
the Stores on the day on which the Agent assigns such Lien to the Designated
Party; provided, however, that all cash that is received by VSC after such day
shall not constitute Excluded VSC Assets; and (ii) any and all inventory of VSC
that is not located at a Store, except for any such inventory that shall have
already been paid for by VSC. The Excluded VSC Assets are intended to be
excluded from any assignment by the Agent to the Designated Party of the Lien of
the Agent in the Vitamin Specialties Assets; but the Excluded VSC Assets will
remain subject to a Lien securing all obligations under Revolving Credit
Agreement.
"Facility A Commitments" and "Facility A Loans" have the meanings given
such terms in the Revolving Credit Agreement.
"Facility B Commitments" and "Facility B Loans" have the meanings given
such terms in the Revolving Credit Agreement.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions as
published by the Federal Reserve Bank of New York for such day (or for any day
that is not a Banking Day, for the immediately preceding Banking Day).
"Fixed Base Rate" means with respect to an Interest Period for a Fixed
Rate Loan:
(a) for a Eurodollar Loan. the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) quoted at approximately
11:00 a.m. London time by the principal London branch of the Reference
Bank two Banking Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank market of Dollar
deposits in immediately available funds, for a period, and in an amount,
comparable to the Interest Period and principal amount of the Eurodollar
Loan which shall be made by the Reference Bank and outstanding during such
Interest Period; and
(b) for a Money Market Rate Loan, the rate per annum offered
(if any) by the Reference Bank to the Borrower on the first day of the
Interest Period with respect thereto.
"Fixed Rate" means, with respect to an Interest Period for a Fixed Rate
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined by the Agent to be equal to the quotient of (i) the Fixed Base
Rate for such Loan for such Interest Period, divided by (ii) one minus the
Reserve Requirement for such Loan for such Interest Period.
"Fixed Rate Loan" means a Eurodollar Loan or Money Market Rate Loan.
"Forfeiture Proceeding" means any action, proceeding or investigation
pending against the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"Funded Debt" means, with respect to any Person, all Debt of such Person
(irrespective of whether the maturity thereof is more than one year or less than
one year), other than Debt of the character described in clause (c) in the
definition of the term "Debt".
"Funding Percentage" has the meaning ascribed to it in the paragraph that
defines the term "Commitment" in this Section 1.01.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the date hereof, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
6.05 (except for changes concurred in by the Borrower's independent public
accountants).
"Hall (Canada)" means Hall Laboratories, Ltd. a corporation organized
under the laws of British Columbia.
"Hazardous Material" is defined in Section 6.12.
"HealthRite Purchase Agreement" means the Asset Purchase Agreement dated
as of May 29, 1997 between the Borrower and HealthRite, Inc.
"Interest Period" means, with respect to any Fixed Rate Loan, the period
commencing on the date such Loan is made, converted from another type of Loan or
renewed, as the case may be, and ending, as the Borrower may select pursuant to
Section 2.06: (a) in the case of a Eurodollar Loan, on the numerically
corresponding day in the first, second, third, or sixth or (as available) ninth
or twelfth calendar month thereafter, provided that each such Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate calendar
month; and (b) in the case of a Money Market Rate Loan, on a day not later than
thirty days thereafter.
"IVOSC" means International Vitamin Overseas Sales Corp., a New Jersey
corporation.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as such
for such type of Loan on its signature page hereof or such other office of such
Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Borrower as the office by which its Loans of such
type are to be made and maintained.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loans" shall have the meaning given in Section 2.01 (subject to Section
2.11).
"Margin" means initially (i) in the case of a Fixed Rate Loan, 50 basis
points; and (ii) in the case of a Variable Rate Loan, zero; provided, however,
that the Margin shall be subject to change as hereinafter provided. Where the
quotient of (i) Consolidated Funded Debt on the last day of any fiscal quarter,
divided by (ii) Consolidated EBITDA for such fiscal quarter and the three
preceding fiscal quarters (on a combined basis for such four quarters) is within
one of the ranges set forth
below, the applicable Margin shall be the amount of basis points set forth
opposite such range:
For a For a
Fixed Variable
Range Rate Loan Rate Loan
----- --------- ---------
(A) Equal to or
greater than 2.0 50 0
(B) Less than 2.0: 37.5 0
provided, however, that if an Event of Default exists, the Margin shall be the
amount set forth in line (A) above. Notwithstanding the immediately preceding
sentence, with respect to the determination of such quotient as of the fiscal
quarter ending April 30, 1998 only, the divisor of such quotient (clause (ii)
above) shall not be Consolidated EBITDA for such fiscal quarter and the three
preceding fiscal quarters; instead such divisor shall be the product of
Consolidated EBITDA for such fiscal quarter and the two preceding fiscal
quarters (on a combined basis for such three quarters), multiplied by 1.333.
Each change in the Margin following the end of a fiscal quarter shall become
effective on the earlier to occur of (x) the first day of the calendar month
following the delivery by the Borrower to the Agent of the financial statements
for such fiscal quarter required by Section 7.08(a) or (b) of this Agreement, or
(y) the day on which the Borrower delivers to the Agent a certificate executed
by the chief financial officer or chief operating officer of the Borrower
stating the amount of such quotient (and the elements thereof) as of the last
day of such fiscal quarter. No change in the Margin shall be retroactive, except
that if such certificate of such officer proves (upon such delivery of such
financial statements with respect to such quarter) to have been inaccurate and
such inaccuracy shall have resulted in an understatement of the Margin, then
such understatement or overstatement shall be corrected retroactively to such
date on which such certificate of the chief financial officer was delivered.
"Maturity Date" means March 31, 1999; provided, however, that the Borrower
may extend the Maturity Date to August 31, 1999 provided that (a) the Borrower
gives written notice to the Agent and the Banks of its election to extend the
same not later than February 15, 1999, and (b) no unwaived Default or Event of
Default exists on the day such notice is given or on March 31, 1999; and
provided, further, that if March 31, 1999 or August 31, 1999 (as applicable) is
not a Banking Day, then the Maturity Date shall be the immediately preceding
Banking Day.
"Money Market Rate Loan" means a Loan when and to the extent the interest
rate therefor is determined on the basis of clause (b) of the definition of
"Fixed Base Rate".
"Mortgage" means the Mortgage by Borrower in favor of the Agent, in the
form attached hereto as Exhibit I, covering the New Freehold/Xxxxxx Real Estate.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Net Income" of a Person means, with respect to any period, the net income
of such Person for such period computed in accordance with GAAP.
"Net Refinancing Proceeds" is defined in Section 2.09.
"New Freehold/Xxxxxx Real Estate" means the land, together with the
improvements thereon, consisting of approximately 48.15 acres located in
Freehold Township and Xxxxxx Township, N.J., known as Xxxx 0.00, 0 xxx 0X xx
Xxxxx 79 in Freehold Township, and Lot 18.01 in Block 164 in Xxxxxx Township.
"Option Rights" means options, warrants and other securities and rights
entitling the holder to purchase from the Borrower shares of capital stock of
the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by the Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by
the Reference Bank at its principal office as its prime commercial lending rate.
"Principal" means each of (i), (ii), (iii) and (iv) below:
(i) E. Xxxxxx Xxxxx;
(ii) Xxxxxx X. Xxxxx;
(iii) I. Xxxx Xxxxxxxxxx;
(iv) Xxxxxx X. Xxxxxxxxx.
"Principal Office" means the principal office of the Agent, presently
located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Reference Bank" means The Chase Manhattan Bank, including any corporate
successor thereto.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including such Bank of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Release" is defined in Section 6.12.
"Required Banks" means Banks whose aggregate Bank Percentages are at least
50%.
"Required Payment" is defined in Section 11.13.
"Reserve Requirement" means, for any Fixed Rate Loan for any Interest
Period, the average maximum rate at which reserves (including any marginal.
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the Fixed Base Rate is to be determined as provided in the
definition of "Fixed Base Rate" in this Section 1.01 or (ii) any category of
extensions of credit or other assets which include Fixed Rate Loans.
"Revolving Credit Agreement" means the Credit Agreement among the
Borrower, the banks party thereto, and The Chase Manhattan Bank (National
Association) as agent dated as of April 30, 1996 (as the same has been or may
hereafter be amended or supplemented from time to time).
"Stock Pledge Agreement" means the Stock Pledge Agreement as to the
outstanding capital stock of VSC, in the form of Exhibit H, to be delivered by
the Borrower concurrently herewith under the terms of this Agreement.
"Stores" means the 16 retail stores at the locations identified on
Schedule 6.20(b) at which the Vitamin Specialties Business is conducted, and any
other bona fide retail stores hereafter opened by VSC primarily to conduct the
Vitamin Specialties Business.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or
indirectly by such Person. Unless otherwise specified, references herein to a
Subsidiary means a Subsidiary of the Borrower.
"Tangible Net Worth" of a Person means, at any date of determination
thereof, the excess of total assets of such Person over total liabilities of
such Person, excluding however from the determination of total assets: (i) all
assets which would be classified as intangible assets under GAAP, including
without limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, and deferred charges (including, without limitation,
unamortized debt discount and expense organization cost, and research and
development costs); and (ii) any write-up in the book value of any asset since
July 31, 1997; provided, however, that notwithstanding their classification as
intangible assets, deferred promotional allowances of the Borrower and its
Consolidated Subsidiaries shall be included in (and not excluded from) the
determination of total assets of the Borrower and its Consolidated Subsidiaries,
but not to any extent greater than $2,500,000 in the aggregate as to the
Borrower and its Consolidated Subsidiaries.
"Term Intercreditor Agreement" means the Term Intercreditor Agreement
among the Designated Party, the Agent, the Banks, the Borrower, IVOSC, Hall
(Canada) and VSC dated the date hereof (as the same may hereafter be amended or
supplemented from time to time).
"Term Loan Documents" means this Agreement, the Term Notes, the Designated
Party Term Guaranty, the Mortgage, the Assignment of Leases and Rents, the Stock
Pledge Agreement, the VSC Term Guaranty, the VSC Term Security Agreement, the
Collateral Assignment of Store Leases, the IVOSC/Hall (Canada) Term Guaranty,
the Borrower/IVOSC/Hall (Canada) Term Security Agreement, the Term Intercreditor
Agreement, the Xxxxx Term Subordination Agreement, the Term Trademark
Assignment, the Authorization Letter, and the Designated Party Identification
Agreement.
"Term Note" means (subject to Section 2.11) a promissory note of the
Borrower to a Bank in the form of Exhibit A hereto evidencing the Loan made by
such Bank hereunder.
"Term Trademark Assignment" means the Trademark Assignment from the
Borrower and VSC to the Agent in the form of Exhibit L to this Agreement.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001 (a)( 16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day; provided,
however, that from and after any assignment by the Banks to the Designated Party
of the
Loans, the term "Variable Rate" shall mean, for any day, only the Prime Rate for
such day.
"Variable Rate Loan" means any Loan when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate.
"Vitamin Specialties Assets" means all personal property and fixtures of
VSC, whether now or hereafter existing or now owned or hereafter acquired and
wherever located, of every kind and description, tangible or intangible,
including, but not limited to, all money, goods (including equipment, farm
products and inventory), instruments, securities, documents, chattel paper,
accounts, contract rights, general intangibles, credits, claims, demands,
precious metals and any other property, rights and interests of VSC, and shall
include the proceeds, products and accessions of and to any thereof. The Vitamin
Specialties Assets include (without limitation) the following assets of VSC:
(a) all inventories;
(b) all tangible personal property, computer equipment, brochures,
store signage, store fixtures and leasehold improvements, including
tangible personal property referred to on Schedule 1.03 of the HealthRite
Purchase Agreement;
(c) all cash actually present "in the till" at any of the Stores;
(d) all accounts receivable;
(e) all rights in leases of the Stores;
(f) all rights in purchase orders, sales orders, order books,
mailing lists, customer accounts and customer lists and records;
(g) all rights in intellectual property, including the names
"Vitamin Specialties" and "Herbal Specialties", proprietary information,
computer software, customer lists, mailing lists, trade secrets, patents,
patent applications, copyrights, copyright applications, trademarks,
service marks, trademark or service xxxx registration applications, art
work, boards, plates, films and related art work (such as in catalogs),
tradenames, licenses of any such property or rights, goodwill and permits;
(h) all necessary permits and certificates issued or granted;
(i) all books and records, including, without limitation, quality
control records and computer software and data bases; and
(j) all goodwill.
The term "Vitamin Specialties Assets" also means and includes any rights of the
Borrower in leases of the Stores and trademarks of the Vitamin Specialties
Business that were assigned (or intended to be assigned) by HealthRite Inc. to
the Borrower
pursuant to the HealthRite Purchase Agreement, and further assigned to VSC,
subject to (in the case of such leases) landlord's consent or (in the case of
such trademarks) registration of such assignment.
"Vitamin Specialties Business" means the line of business acquired by the
Borrower from HealthRite, Inc. pursuant to the HealthRite Purchase Agreement.
"VSC" means Vitamin Specialties Corp., a Pennsylvania corporation.
"VSC Term Guaranty" means the VSC Term Guaranty in the form of Exhibit
C-1, to be delivered by VSC under the terms of this Agreement.
"VSC Term Security Agreement" means the VSC Term Security Agreement in the
form of Exhibit D-1, to be delivered by VSC under the terms of this Agreement.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE LOANS.
Section 2.01. The Loans. (a) Subject to the terms and conditions of this
Agreement (including, without limitation, Section 2.11), each of the Banks
severally agrees to make a term loan to the Borrower (collectively, the "Loans")
on the Closing Date in a principal amount equal to the product of $3,500,000
multiplied by the Funding Percentage of such Bank.
(b) The Loans may be outstanding as Variable Rate Loans or
Eurodollar Loans or Money Market Rate Loans (each a "type" of Loans). Each type
of Loans of each Bank shall be made and maintained at such Bank's Lending Office
for such type of Loans. If at any time all the Loans are assigned by the Banks
to the Designated Party, all Loans will convert to Variable Rate Loans and
remain as such.
(c) The Loans shall be due and payable in installments of principal
of $500,000 each in the aggregate of all the Loans, payable on each Amortization
Date, subject to earlier payment as provided in this Agreement. The outstanding
principal balance of the Loans, and all accrued and unpaid interest thereon,
shall be due and payable in full on the Maturity Date.
(d) The Loans of each Bank shall be evidenced by a Term Note dated
the date of this Agreement in favor of such Bank, duly completed and executed by
the Borrower.
Section 2.02. Purpose. The Borrower shall use the proceeds of the Loans,
first, to pay and satisfy trade credit extended by the Designated Party to the
Borrower and presently due and owing on the Closing Date; then (if any balance
remains) for working capital. Such proceeds shall not be used for the purpose,
whether immediate, incidental or ultimate, of buying or carrying "margin stock"
within the meaning of Regulation U.
Section 2.03. Borrowing Procedures. Not later than 2:00 p.m. New York City
time on the Closing Date, each Bank shall, through its Lending Office and
subject to the conditions of this Agreement, make the amount of its Loan
available to the Agent at the Principal Office and in immediately available
funds for the account of the Borrower. The amount so received by the Agent
shall, subject to the conditions of this Agreement, be made available to the
Borrower, in immediately available funds, by the Agent crediting an account of
the Borrower designated by the Borrower and maintained with the Agent at the
Principal Office. The Loans shall be outstanding initially as Variable Rate
Loans, until (if ever) the Loans are converted to a different type of Loans as
hereinafter provided.
Section 2.04. Optional Prepayments and Conversions. (a) The Borrower shall
have the right to make prepayments of principal, or, subject to Section 2.01(b),
to convert one type of Loans into another type of Loans, at any time or from
time to time; provided that: (i) the Borrower shall give the Agent notice of
each such prepayment or conversion as provided in Section 2.06; and (ii) Fixed
Rate Loans may be prepaid or converted only on the last day of an Interest
Period for such Loans; provided, however, that if the Borrower pays the amount
required to be paid under Section 4.05 with respect thereto, the Borrower may
prepay or convert Fixed Rate Loans prior to the last day of an Interest Period
for such Loans. All such prepayments of the Loans shall be applied to the Loans
in the inverse order of amortization. Any amount prepaid may not be reborrowed.
(b) The Borrower shall not make any prepayment of the Facility A
Loans that accompanies a request by the Borrower for a reduction in the Facility
A Commitments, and the Borrower shall not make any prepayment of the Facility B
Loans that accompanies a request by the Borrower for a reduction in the Facility
B Commitments, unless and until the Loans under this Agreement and all interest
thereon have been paid in full; provided, however, that this subsection (b)
shall not apply in the case of prepayments of the Facility A Loans or the
Facility B Loans that are not made in connection with a reduction in the
Facility A Commitments or the Facility B Commitments (respectively); and
provided, further, that this subsection (b) shall not in any way whatsoever
apply to a reduction consisting of a termination of such Commitments by reason
of the expiration thereof or by reason of the occurrence of an event of default
under the Revolving Credit Agreement.
Section 2.05. Interest Periods; Renewals. (a) In the case of each Fixed
Rate Loan, the Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in Section 1.01, subject to
the following limitations: (i) no Interest Period may extend beyond the Maturity
Date; (ii) notwithstanding clause (i) above, no Interest Period for a Eurodollar
Loan shall have a duration of less than one month, and if any such proposed
Interest Period would otherwise be for a shorter period, such Interest Period
shall not be available; (iii) no Interest Period may extend beyond an
Amortization Date unless the aggregate principal amount of Loans having Interest
Periods which end after such Amortization Date are equal to or less than the
aggregate amount of Loans (after giving effect to the payment required to be
made on such Amortization Date) to be outstanding after such Amortization Date;
(iv) if an Interest Period would end on a day which is not a Banking Day, such
Interest Period shall be extended to the next Banking Day,
unless (in the case of a Eurodollar Loan) such Banking Day would fall in the
next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day; and (v) no more than three Interest Periods
of each Bank may be outstanding at any one time.
(b) Upon notice to the Agent as provided in Section 2.06, the
Borrower may renew any Fixed Rate Loan on the last day of the Interest Period
therefor as the same type of Loans with an Interest Period of the same or
different duration in accordance with the limitations provided above. If the
Borrower shall fail to give notice to the Agent of such a renewal, such Fixed
Rate Loan shall automatically become a Variable Rate Loan on the last day of the
current Interest Period.
Section 2.06. Certain Notices. Notices by the Borrower to the Agent of
each prepayment or conversion pursuant to Section 2.04 and each renewal pursuant
to Section 2.05(b), shall be irrevocable and shall be effective only if received
by the Agent not later than 1:00 p.m., New York City time, in the case of
prepayments of, conversions into and renewals of (i) Variable Rate Loans and
Money Market Rate Loans, on the day thereof, and (ii) Fixed Rate Loans, four
Banking Days prior thereto. Each such notice shall specify the Loans to be
prepaid, converted or renewed and the amount (subject to Section 2.07) and type
of the Loans to be converted, or prepaid or renewed (and, in the case of a
conversion, the type of Loans to result from such conversion and, in the case of
a Fixed Rate Loan, the Interest Period therefor) and the date of the prepayment,
or conversion or renewal. The Agent shall promptly notify the Banks of the
contents of each such notice.
Section 2.07. Minimum Amounts. Except for (a) prepayments or conversions
which result in the prepayment or conversion of all Loans of a particular type,
or (b) prepayments pursuant to Section 2.09, or (c) conversions made pursuant to
Section 4.04, each prepayment, conversion and renewal of principal of Loans
shall be in an amount not less than $200,000, and in increments of $25,000, in
the aggregate for all Banks (prepayments, conversions or renewals of or into
Loans of different types or, in the case of Fixed Rate Loans, having different
Interest Periods at the same time hereunder to be deemed separate prepayments,
conversions and renewals for the purposes of the foregoing, one for each type or
Interest Period).
Section 2.08. Interest. (a) Interest shall accrue on the outstanding and
unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan is due at the following rates
per annum: (i) for a Variable Rate Loan, at a variable rate per annum equal to
the Variable Rate plus the applicable Margin and (ii) for a Fixed Rate Loan, at
a fixed rate equal to the Fixed Rate plus the applicable Margin. If the
principal amount of any Loan and any other amount payable by the Borrower
hereunder or under a Term Note shall not be paid when due (on an Amortization
Date, at stated maturity, by acceleration or otherwise), interest shall accrue
on such amount to the fullest extent permitted by law from and including such
due date to but excluding the date such amount is paid in full at the Default
Rate.
(b) The interest rate on each Variable Rate Loan shall change when
the Variable Rate changes and interest on each such Loan shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Interest
on each Fixed Rate Loan shall be calculated on the basis of a year of 360 days
for the actual number of days elapsed. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall notify
the Borrower and the Banks.
(c) Accrued interest shall be due and payable in arrears upon any
payment of principal or conversion and (i) for each Variable Rate Loan, on the
last day of each calendar month, commencing the first such date after such Loan;
and (ii) for each Fixed Rate Loan, on the last day of the Interest Period with
respect thereto and, in the case of an Interest Period greater than three
months, at three-month intervals after the first day of such Interest Period;
provided that interest accruing at the Default Rate shall be due and payable
from time to time on demand of the Agent.
Section 2.09. Mandatory Prepayments. (a) The Borrower shall use reasonable
efforts to obtain (without unreasonable delay after the Closing Date) a mortgage
refinancing or sale/leaseback arrangement in respect of the New Freehold/Xxxxxx
Real Estate in an amount sufficient to yield net refinancing or sale proceeds
(after the payment of the existing mortgage held by Corestates-New Jersey
National Bank and all appraisal, attorney, title insurance and other fees
required by the refinancing lender or purchaser/lessor to be paid by the
Borrower) ("Net Refinancing Proceeds") in an amount not less than $1,500,000 (in
the case of a sale/leaseback) or $1,000,000 (in the case of a mortgage
refinancing). The Borrower shall apply the Net Refinancing Proceeds as follows:
(i) $750,000 (in the case of a sale/leaseback) or $500,000 (in
the case of a mortgage refinancing) to the prepayment of the
principal of the Loans; then
(ii) $750,000 (in the case of a sale/leaseback) or $500,000
(in the case of a mortgage refinancing) to the prepayment of the
principal of the Facility A Loans; then
(iii) any remaining balance of the Net Refinancing Proceeds
shall be applied to the prepayment of the principal of the Facility
A Loans.
The Agent shall have no obligation to discharge the lien of the Mortgage unless
(aa) no Default or Event of Default exists; and (bb) the Borrower provides to
the Agent a written certification of the calculation of the amount of the Net
Refinancing Proceeds, together with such supporting information as the Agent may
reasonably request; and (cc) the amount of the Net Refinancing Proceeds is not
less than $1,500,000 (in the case of a sale/leaseback) or $1,000,000 (in the
case of a mortgage refinancing); and (dd) in the case of a sale/leaseback
arrangement, the sale price is not less than $3,500,000 (net of ordinary closing
costs), and the rental payment (net of real estate taxes and operating expenses)
is not greater than $4 per square foot per year (as may be increased each year
after the first year commensurate with percentage increases in the Consumer
Price Index), and no other payment in any material amount is required to be paid
by the Borrower to the purchaser/lessor in connection therewith, and the
Borrower shall have provided the
Agent with satisfactory evidence of such economic terms; and (ee) in the case of
a sale/leaseback arrangement, not less than 48 hours shall have elapsed after
the Borrower shall have advised the Agent that the Borrower has notified the
Designated Party of the sale price and economic terms of the lease back; and
(ff) simultaneously with such discharge, the Net Refinancing Proceeds are
applied as provided above in this subsection.
(b) All such prepayments of the Loans shall be applied to the Loans
in the inverse order of maturity. Such prepayments shall be subject to Section
4.05 but shall otherwise be without premium or penalty.
Section 2.10. Other Mandatory Prepayment. If the Designated Party notifies
the Agent in writing prior to December 15, 1998 (which notice states that the
Designated Party has given such notice simultaneously to the Borrower) that the
aggregate amount of the purchases by the Borrower, IVOSC, Hall (Canada) and VSC
from the Designated Party of goods and products of every kind whatsoever for the
12-month period ending November 30, 1998 was less than $27,000,000, the Borrower
shall make a mandatory prepayment of the Loans in the aggregate amount of
$500,000 on December 15,1998 (which prepayment shall be in addition to the
regularly scheduled installment of $500,000 due on December 15, 1998 pursuant to
Section 2.01(c)). The Agent shall not have any duty to inquire into or verify
the accuracy of any such notice it receives from the Designated Party,
notwithstanding any dispute thereof by the Borrower. Such prepayment shall be
applied to the Loans in the inverse order of maturity. Such prepayment shall be
subject to Section 4.05 but shall otherwise be without premium or penalty.
Section 2.11. Payments Generally. All payments under this Agreement or the
Term Notes or any other Term Loan Document shall be made to the Agent, for (as
the case may be) its own account or the account of the Banks, in Dollars in
immediately available funds not later than 1:00 p.m. New York City time on the
relevant dates specified above (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Banking Day). The
Agent, or any Bank for whose account any such payment is to be made, may (but
shall not be obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower with the Agent
or such Bank, as the case may be, and any Bank so doing shall promptly notify
the Agent. The Borrower shall, at the time of making each payment under this
Agreement or the Term Notes or any other Term Loan Document, specify to the
Agent the principal or other amount payable by the Borrower under this Agreement
or the Term Notes or any other Term Loan Document to which such payment is to be
applied (and in the event that it fails to so specify, or if a Default or Event
of Default has occurred and is continuing, the Agent may apply such payment as
it may elect in its sole discretion (subject to Section 11.16)). If the due date
of any payment under this Agreement or the Term Notes or any other Term Loan
Document would otherwise fall on a day which is not a Banking Day, such date
shall be extended to the next succeeding Banking Day and interest shall be
payable for any principal so extended for the period of such extension. Each
payment received by the Agent hereunder or under any Term Note or any other Term
Loan Document for the account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for the account of such Bank's Lending Office.
Section 2.12. Single Loan. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Term Loan Documents, unless and
until the same shall be assigned to the Designated Party pursuant to the terms
of the Designated Party Term Guaranty, The Chase Manhattan Bank shall be the
sole Bank hereunder, its Funding Percentage shall at all times be 100% of the
Commitment, the entire Commitment shall be advanced as a single term loan on the
date of the initial borrowing hereunder and shall be repaid, prepaid and/or
converted as provided for hereunder only as a single term loan; provided,
however, that nothing in this Section shall preclude or restrict The Chase
Manhattan Bank from assigning its Loan in whole or in part (or granting
participation interests therein) to (a) any affiliate of, or any corporate
successor to, The Chase Manhattan Bank, or (b) following an Event of Default and
a default by the Designated Party under the Designated Party Term Guaranty, any
other Person.
ARTICLE 3. [RESERVED].
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC.
Section 4.01. Additional Costs. (a) The Borrower shall pay directly to
each Bank and the Agent from time to time within ten days after demand therefor
such amounts as such Bank or the Agent may determine to be necessary to
compensate it for any costs which such Bank or the Agent determines are
attributable to its making or maintaining any Fixed Rate Loans under this
Agreement or its Note, or any reduction in any amount receivable by such Bank
hereunder in respect of any such Loans (such increases in costs and reductions
in amounts receivable being herein called "Additional Costs"), resulting from
any Regulatory Change which: (i) changes the basis of taxation of any amounts
payable to such Bank or the Agent under this Agreement or its Term Note in
respect of any of such Loans (other than taxes imposed on the overall net income
of such Bank or the Agent or of its Lending Office for any of such Loans by the
jurisdiction in which such Bank has its principal office or such Lending
Office); or (ii) imposes or modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Bank or the Agent (including any of such Loans or any
deposits referred to in the definition of "Fixed Base Rate" in Section 1.01); or
(iii) imposes any other condition affecting this Agreement or its Term Note (or
any of such extensions of credit or liabilities). Each Bank or the Agent will
notify the Borrower of any event occurring after the date of this Agreement
which will entitle such Bank or the Agent (as the case may be) to compensation
pursuant to this Section 4.01(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation. If any Bank
requests compensation from the Borrower under this Section 4.01(a), or under
Section 4.01(c), the Borrower may, by notice to such Bank (with a copy to the
Agent), require that such Bank's Loans of the type with respect to which such
compensation is requested be converted in accordance with Section 4.04.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Fixed Rate Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Fixed Rate
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Bank
to renew, and to convert Loans of any other type into, Loans of such type
hereunder shall be suspended until the date such Regulatory Change ceases to be
in effect (and all Loans of such type held by such Bank then outstanding shall
be converted in accordance with Section 4.04).
(c) Without limiting the effect of the foregoing provisions of this
Section 4.01 (but without duplication), the Borrower shall pay directly to each
Bank from time to time within ten days after request therefor such amounts as
such Bank may determine to be necessary to compensate such Bank for any costs
which it determines are attributable to the maintenance by it or any of its
affiliates pursuant to any law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the force of law and
whether in effect on the date of this Agreement or thereafter) of any court or
governmental or monetary authority of capital in respect of its Loans hereunder
(such compensation to include, without limitation, an amount equal to any
reduction in return on assets or equity of such Bank to a level below that which
it could have achieved but for such law, regulation, interpretation, directive
or request). Each Bank will notify the Borrower if it is entitled to
compensation pursuant to this Section 4.01(c) as promptly as practicable after
it makes a determination to request such compensation.
(d) Determinations and allocations by a Bank for purposes of this
Section 4.01 of the effect of any Regulatory Change pursuant to subsections (a)
or (b), or of the effect of capital maintained pursuant to subsection (c), on
its costs of making or maintaining Loans, or on amounts receivable by, or the
rate of return to, it in respect of Loans, and of the additional amounts
required to compensate such Bank under this Section 4.01, shall be conclusive,
provided that such determinations and allocations are made on a reasonable basis
and are set forth in reasonable detail and provided to the Borrower together
with the request for payment thereof.
(e) Any Bank claiming any additional amount under this Section 4.01
agrees to use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different Lending Office if the making of such
designation would avoid the need for, or reduce the amount of, any such
additional amounts.
(f) In the event that any Bank requests compensation pursuant to
this Section 4.01, the Borrower shall be entitled to require such Bank (on at
least 30 days' prior written notice to such Bank and the Agent) to assign its
rights and obligations under this Agreement (including the Loans owing to it) to
a new lender obtained by the Borrower (provided that such lender is reasonably
acceptable to the
Agent), which assignment shall be effected in accordance with and subject to all
the terms and conditions of Section 12.05.
Section 4.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) the Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "Fixed Base Rate" in Section 1.01 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for Fixed Rate Loans as provided in this Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Fixed Base Rate" in Section 1.01 upon the basis of which
the rate of interest for Fixed Rate Loans is to be determined do not adequately
cover the cost to the Banks of making or maintaining such Loans;
then the Agent shall give the Borrower and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks shall be under no
obligation to make or renew Loans of such type or to convert Loans of any other
type into Loans of such type and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Loans of the affected type,
either prepay such Loans or convert such Loans into another type of Loans in
accordance with Section 2.05.
Section 4.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to (a) honor its obligation to renew Fixed Rate Loans hereunder or
convert Loans of any type into Loans of such type, or (b) maintain Fixed Rate
Loans hereunder, then such Bank shall promptly notify the Borrower thereof (with
a copy to the Agent) and such Bank's obligation to make or renew Fixed Rate
Loans and to convert other types of Loans into Loans of such type hereunder
shall be suspended until such time as such Bank may again make, renew, or
convert and maintain such affected Loans and such Bank's outstanding Fixed Rate
Loans, as the case may be, shall be converted in accordance with Section 4.04.
Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03. If
the Loans of any Bank of a particular type (Loans of such type being herein
called "Affected Loans" and such type being herein called the "Affected Type")
are to be converted pursuant to Section 4.01 or 4.03, such Bank's Affected Loans
shall be automatically converted into Variable Rate Loans on the last day(s) of
the then current Interest Period(s) for the Affected Loans (or, in the case of a
conversion required by Section 4.01(b) or 4.03, on such earlier date as such
Bank may specify to the Borrower with a copy to the Agent) and, unless and until
such Bank gives notice as provided below that the circumstances specified in
Section 4.01 or 4.03 which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Variable
Rate Loans; and
(b) all Loans which would otherwise be made or renewed by such Bank
as Loans of the Affected Type shall be made instead as Variable Rate Loans and
all Loans of such Bank which would otherwise be converted into Loans of the
Affected Type shall be converted instead into (or shall remain as) Variable Rate
Loans; and
(c) if Loans of other Banks of the Affected Type are subsequently
converted into Loans of another type (other than Variable Rate Loans), such
Bank's Variable Rate Loans shall be automatically converted on the conversion
date into Loans of such other type to the extent necessary so that, after giving
effect thereto, all Loans held by such Bank and the Banks whose Loans are so
converted are held pro rata (as to principal amounts, types and Interest
Periods) in accordance with their respective Bank Percentages.
If such Bank gives notice to the Borrower (with a copy to the Agent) that
the circumstances specified in Section 4.01 or 4.03 which gave rise to the
conversion of such Bank's Affected Loans pursuant to this Section 4.04 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type are outstanding, such Bank's
Variable Rate Loans shall be automatically converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Loans of the Affected
Type to the extent necessary so that, after giving effect thereto, all Loans
held by the Banks holding Loans of the Affected Type under each Facility and by
such Bank are held pro rata (as to principal amounts, types and Interest
Periods) in accordance with their respective Bank Percentages.
Section 4.05. Certain Compensation. The Borrower shall pay to the Agent
for the account of each Bank, within ten days after the request of such Bank
through the Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
which such Bank determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a Fixed Rate
Loan made by such Bank on a date other than the last day of an Interest Period
for such Loan (whether by reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or renew a
Fixed Rate Loan to be made, converted into or renewed by such Bank on the date
specified therefor in the relevant notice under Section 2.04, 2.05 or 2.06, as
the case may be.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of: (i) the amount of interest which otherwise
would have accrued on the principal amount so paid, prepaid, converted or
renewed or not borrowed, converted or renewed for the period from and including
the date of such payment, prepayment or conversion or failure to borrow, convert
or renew to but excluding the last day of the then current Interest Period for
such Loan (or, in the
case of a failure to borrow, convert or renew, to but excluding the last day of
the Interest Period for such Loan which would have commenced on the date
specified therefor in the relevant notice) at the applicable rate of interest
for such Loan provided for herein; over (ii) the amount of interest (as
reasonably determined by such Bank) such Bank would have bid in the London
interbank market for Dollar deposits for amounts comparable to such principal
amount and maturities comparable to such period. A determination of any Bank as
to the amounts payable pursuant to this Section 4.05 shall be conclusive absent
manifest error and shall be set forth in reasonable detail and provided to the
Borrower together with the request for payment thereof.
ARTICLE 5. CONDITIONS PRECEDENT.
Section 5.01. Documentary Conditions Precedent. The obligations of the
Banks to make the Loans are subject to the condition precedent that the Agent
shall have received on or before the date of such Loans each of the following,
in form and substance satisfactory to the Agent and its counsel:
(a) the Term Note for each Bank duly executed by the Borrower;
(b) the other Term Loan Documents to which the Borrower is a party,
duly executed by the Borrower;
(c) the Designated Party Term Guaranty, the Term Intercreditor
Agreement, and the Designated Party Identification Agreement, all duly executed
by the Designated Party;
(d) the Term Loan Documents to which any Subsidiary of the Borrower
is a party, duly executed by such Subsidiary;
(e) (x) financing statements (UCC-1) duly executed by the Borrower
and the Subsidiaries (respectively) in form suitable for filing under the
Uniform Commercial Code of all jurisdictions necessary or, in the opinion of the
Agent or any Bank, desirable to perfect the security interest created by the VSC
Term Security Agreement and the Borrower/IVOSC/Hall (Canada) Term Security
Agreement; and (y) certified copies of requests for information identifying all
of the financing statements on file with respect to the Borrower, each
Subsidiary and the entity that sold to the Borrower the Vitamin Specialties
Business, in all jurisdictions referred to under (x), indicating that no party
claims an interest in any of the Security (as defined in any such Security
Agreement);
(f) amendments to the Revolving Credit Agreement and documents
executed and delivered in connection therewith to (among other things) adjust
the subordination with respect to the Vitamin Specialties Assets, and provide
for a guaranty by VSC of the obligations of the Borrower under the Revolving
Credit Agreement and a junior lien on the assets of VSC to secure such guaranty,
duly executed by (as appropriate) the Borrower, the Subsidiary and the
Designated Party;
(g) a certificate of the Secretary or Assistant Secretary of the
Borrower dated the Closing Date (x) attesting to all corporate action taken by
the Borrower, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Term Loan Documents to which it is a
party and each other document to be delivered pursuant to this Agreement; and
(y) certifying the names and true signatures of the officers of the Borrower
authorized to sign the Term Loan Documents to which it is a party and the other
documents to be delivered by the Borrower under this Agreement;
(h) a certificate of a duly authorized officer of the Borrower,
dated the Closing Date, stating that the representations and warranties in
Article 6 are true and correct in all material respects on such date as though
made on and as of such date and that no event has occurred and is continuing
which constitutes a Default or Event of Default;
(i) a certificate of the Secretary or Assistant Secretary of each of
the Subsidiaries dated the Closing Date (x) attesting to all corporate action
taken by such Subsidiary, including resolutions of its Board of Directors,
authorizing the execution, delivery and performance of the Term Loan Documents
to which it is a party; and (y) certifying the names and true signatures of the
officers of each such Subsidiary authorized to sign the Term Loan Documents to
which it is a party;
(j) a favorable opinion of counsel for the Borrower and the
Subsidiaries, dated the Closing Date, in substantially the form of Exhibit E and
as to such other matters as the Agent or any Bank may reasonably request;
(k) a certificate of the Secretary or Assistant Secretary of the
Designated Party dated the Closing Date (x) attesting to all corporate action
taken by the Designated Party, including resolutions of its Board of Directors,
authorizing the execution, delivery and performance of the Designated Party Term
Guaranty and (y) certifying the names and true signatures of the officers of the
Designated Party authorized to sign the Term Loan Documents to which the
Designated Party is a party;
(l) a favorable opinion of counsel for the Designated Party dated
the Closing Date as to such matters as the Agent or any Bank may reasonably
request;
(m) the written consent of Corestates - New Jersey National Bank
with respect to the borrowing of the Loans and granting by the Borrower to the
Agent of the Mortgage on the New Freehold/Xxxxxx Real Estate;
(n) a policy of title insurance (or a commitment therefor marked up
by the title insurance company) in the amount of $2,500,000 insuring the
Mortgage as a second-priority Lien on the New Freehold/Xxxxxx Real Estate
(subject only to a mortgage in favor of Corestates - New Jersey National Bank,
which shall have an outstanding balance not in excess of $1,450,000; and subject
to no other Liens or encumbrances that are objectionable to the Agent);
(o) an as-built survey of the New Freehold/Xxxxxx Real Estate dated
not more than 24 months prior to the Closing Date, together with a survey
affidavit of no change executed by the Borrower;
(p) a certificate stating whether or not the New Freehold/Xxxxxx
Real Estate is in a federally-designated flood hazard area, and (if so) evidence
that flood insurance is in effect as required by law;
(q) a certificate of insurance (on form ACCORD 27) evidencing the
effectiveness of "all-risk" property insurance with respect to the improvements
comprising the New Freehold/Xxxxxx Real Estate and with respect to the inventory
and equipment of the Borrower, which names the Agent under a standard mortgagee
and lender-loss payable endorsement;
(r) a letter of nonapplicability under the New Jersey Industrial
Site Recovery Act issued by the New Jersey Department of Environmental
Protection as to the acquisition by the Borrower of the New Freehold/Xxxxxx Real
Estate;
(s) consent letters from the Authority and from the Banque Nationale
de Paris consenting to the borrowing of the Loans and to the grant by the
Borrower of the collateral therefor (including the Mortgage and the
Borrower/IVOSC/Hall (Canada) Term Security Agreement);
(t) the consolidated financial statements of the Borrower and its
Consolidated Subsidiaries as of and for the fiscal quarter ending January 31,
1998 that are referred to in Section 6.05;
(u) advice from the Designated Party that the Borrower has an open
credit line of not less than $3,950,000 (subject to revision in accordance with
normal commercial practices) with the Designated Party, and that such amount
will increase by $750,000 (subject to revision in accordance with normal
commercial practices) when the Borrower prepays the Loans as provided in Section
2.09;
(v) the Xxxxx Term Subordination Agreement, duly executed by Xxxxxx
Xxxxx;
(w) employment agreements with the Principals (respectively), duly
executed by the Borrower and the Principals;
(x) current financial statements of VSC; and
(y) such other approvals, consents, opinions and documents as the
Agent may reasonably request.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 6.01. Incorporation, Good Standing and Due Qualification. Each of
the Borrower and its Subsidiaries is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other jurisdiction in
which such qualification is required, except where the failure to so qualify
would not have a material adverse effect on the financial condition, operations,
properties or business of the Borrower or any of its Subsidiaries.
Section 6.02. Corporate Power and Authority: No Conflicts. The execution,
delivery and performance by the Borrower and by each Subsidiary of the Borrower
of the Term Loan Documents to which it is a party have been duly authorized by
all necessary corporate action and do not and will not: (a) require any consent
or approval of its stockholders; (b) contravene its charter or by-laws; (c)
violate any provision of, or require any filing (other than the filing of the
financing statements contemplated by the VSC Term Security Agreement and the
Borrower/IVOSC/Hall (Canada) Term Security Agreement), registration, consent or
approval under, any law, rule, regulation (including, without limitation,
Regulation U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Borrower or any of its
Subsidiaries; (d) result in a breach of or constitute a default or require any
consent under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien (other than as created under the Term Loan Documents),
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Subsidiary of the Borrower; or (f) cause the Borrower or any
Subsidiary of the Borrower to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, agreement, lease or instrument.
Section 6.03. Legally Enforceable Agreements. Each Term Loan Document to
which the Borrower or any Subsidiary of the Borrower is a party is a legal,
valid and binding obligation of the Borrower or such Subsidiary (as the case may
be) enforceable against the Borrower or such Subsidiary (as the case may be) in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance, moratorium
and other similar laws affecting creditors' rights generally.
Section 6.04. Litigation. Except as set forth in Schedule 6.04, there are
no actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened, against or affecting the Borrower or any Subsidiary of the Borrower
before any court, governmental agency or arbitrator, which may, in any one case
or in the aggregate, materially adversely affect the financial condition,
operations, properties or business of the Borrower or any such Subsidiary or of
the ability of the Borrower or such Subsidiary to perform its obligations under
the Term Loan Documents to which it is a party.
Section 6.05. Financial Statements. (a) The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at July 31, 1997, and the
related consolidated income statement and statements of cash flows and changes
in stockholders' equity of the Borrower and its Consolidated Subsidiaries for
the fiscal year then ended, and the accompanying footnotes, together with the
opinion thereon of Amper, Politziner & Xxxxxx, independent certified public
accountants, and
the interim consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of January 31, 1998, and the related consolidated income
statement and statement of cash flows for the six-month period then ended,
copies of which have been furnished to each of the Banks, fairly present the
financial condition of the Borrower and its Consolidated Subsidiaries as at such
dates and the results of the operations of the Borrower and its Consolidated
Subsidiaries for the periods covered by such statements, all in accordance with
GAAP consistently applied (subject to year-end adjustments and the absence of
footnotes, in the case of such interim financial statements). Since July 31,
1997, there has been no material adverse change in the condition (financial or
otherwise), business or operations of the Borrower or any of its Subsidiaries,
except as may be reflected in the Forms 10-Q filed by the borrower with the
Securities and Exchange Commission between July 31, 1997 and the Closing Date.
(b) There are no liabilities of the Borrower or any of its
Consolidated Subsidiaries, fixed or contingent, which are material but are not
reflected in such financial statements or in the notes thereto, other than
liabilities arising in the ordinary course of business since July 31, 1997.
(c) No information, exhibit or report furnished by the Borrower in
writing to the Agent or any of the Banks in connection with the negotiation of
this Agreement contained to the Borrower's knowledge any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.
Section 6.06. Ownership and Liens. Each of the Borrower and the
Consolidated Subsidiaries of the Borrower has title to, or valid leasehold
interests in, all of its properties and assets, real and personal, including the
properties and assets, and leasehold interests reflected in the financial
statements referred to in Section 6.05 (other than any properties or assets
disposed of in the ordinary course of business), and none of the properties and
assets owned by the Borrower or any Subsidiary of the Borrower and none of its
leasehold interests is subject to any Lien, except as disclosed in such
financial statements or as may be permitted hereunder (including without
limitation those identified on Schedule 6.10) and except for the Liens created
by the Term Loan Documents and the Liens in favor of the agent under the
Revolving Credit Agreement and the Liens in favor of the Designated Party that
were granted in connection with the Revolving Credit Agreement.
Section 6.07. Taxes. Each of the Borrower and its Subsidiaries has filed
or caused to be filed all tax returns (federal, state and local) required to be
filed and has paid or caused to be paid all taxes, assessments and governmental
charges and levies shown thereon to be due, including interest and penalties.
Section 6.08. ERISA. Each Plan, and, to the best knowledge of the
Borrower, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable Federal or
state law, and no event or condition is occurring or exists concerning which the
Borrower would be under an obligation to furnish a report to the Bank in
accordance with Section 7.08(h) hereof. As of the most recent valuation date for
each Plan, each Plan was
"fully funded" (which for purposes of this Section 6.08 shall mean that the fair
market value of the assets of the Plan is not less than the present value of the
accrued benefits of all participants in the Plan, computed on a Plan termination
basis) or the present value of accrued benefits (determined on such basis) does
not exceed the fair market value of the Plan's assets by an amount which is
material.
Section 6.09. Subsidiaries and Ownership of Stock. Schedule 6.09 contains
a complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of the Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been validly issued, is fully paid and
nonassessable and is owned by the Borrower free and clear of all Liens.
Section 6.10. Credit Arrangements. Schedule 6.10 contains a complete and
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments, agreements and arrangements
presently in effect providing for or directly relating to extensions of credit
(including agreements and arrangements for the issuance of letters of credit or
for acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Section 6.11. Operation of Business. Each of the Borrower and its
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto to conduct its business
substantially as now conducted and as presently proposed to be conducted, except
where the failure to possess any such right would not materially adversely
affect the financial condition, operations, properties or business of the
Borrower or any Subsidiary of the Borrower; and to the knowledge of the
Borrower, neither the Borrower nor any of its Subsidiaries is in violation of
any valid rights of others with respect to any of the foregoing.
Section 6.12. Hazardous Materials. The Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a material adverse
effect on the consolidated financial condition, operations or business of the
Borrower and its Consolidated Subsidiaries. The Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would not have a material adverse effect
on the consolidated financial condition, operations or business of the Borrower
and its Consolidated Subsidiaries.
In addition, except as set forth in Schedule 6.12 hereto, or except as
would not have a material adverse effect on the consolidated financial
condition, operations, or business of the Borrower and its Consolidated
Subsidiaries:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Borrower or any of its Subsidiaries to have any permit, license
or authorization required in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. ss.9601(22) ("Release"), of any substance
regulated under Environmental Laws ("Hazardous Materials") generated by the
Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has handled any
Hazardous Material, other than as a generator, on any property now or previously
owned or leased by the Borrower or any of its Subsidiaries; and
(i) no polychlorinated biphenyl is or has been present at any
property now or previously owned or leased by the Borrower or any of
its Subsidiaries;
(ii) no asbestos is or has been present at any property now or
previously owned or leased by the Borrower or any of its
Subsidiaries;
(iii) there are no underground storage tanks for Hazardous
Materials. active or abandoned, at any property now or previously
owned or leased by the Borrower or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by
statute, ordinance, rule. regulation or order, at, on or under any
property now or previously owned by the Borrower or any of its
Subsidiaries; and
(c) Neither the Borrower nor any of its Subsidiaries has transported
or arranged for the transportation of any Hazardous Material to any location
which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental Response and
Liability Information System as provided by 40 C.F.R. ss.300.5 ("CERCLIS") or on
any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against the
Borrower or any of its Subsidiaries for clean-up costs, remedial work, damages
to natural resources or for personal injury claims, including, but not limited
to, claims under CERCLA.
(d) No Hazardous Material generated by the Borrower or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released by the
Borrower or any of its Subsidiaries at any location other than those listed in
Schedule 6.12 hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS or on any similar
state list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any
Environmental laws on any of the real property or properties owned or leased by
the Borrower or any of its Subsidiaries, and no government actions have been
taken or are in process which could subject any of such properties to such Liens
and neither the Borrower nor any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(g) There have been no environmental investigations, studies,
audits, test, reviews or other analyses conducted by or which are in the
possession of the Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or any of
its Subsidiaries which have not been made available to the Banks.
Section 6.13. No Default on Outstanding Judgments or Orders. Each of the
Borrower and its Subsidiaries has satisfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
title, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
Section 6.14. No Defaults on Other Agreements. Neither the Borrower nor
any Subsidiary of the Borrower is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which could reasonably be expected to have a
material adverse effect on the business, properties, assets, operations or
conditions, financial or otherwise, of the Borrower or any such Subsidiary or
its ability to carry out its obligations under the Term Loan Documents to which
it is a party. Neither the Borrower nor any Subsidiary of the Borrower is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, except where such default would not result in
a material adverse effect on the business, properties, assets or financial
condition of the Borrower or any Subsidiary of the Borrower.
Section 6.15. Labor Disputes and Acts of God. Neither the business nor the
properties of the Borrower or of any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether
or not covered by insurance), materially and adversely affecting such business
or properties or the operation of the Borrower or such Subsidiary.
Section 6.16. Governmental Regulation. Neither the Borrower nor any
Subsidiary of the Borrower is subject to regulation under the Public Utility
Holding Company Act of 1935, the Investment Company Act of 1940, the Interstate
Commerce Act, the Federal Power Act or any statute or regulation limiting its
ability to incur indebtedness for money borrowed.
Section 6.17. Partnerships. Neither the Borrower nor any of its
Subsidiaries is a partner in any partnership other than Hidel Partners (of which
the Borrower owns 100% of the Partnership Interests).
Section 6.18. No Forfeiture Proceeding. No Forfeiture Proceeding is
pending or, to the knowledge of the Borrower, threatened.
Section 6.19. Solvency.
(a) The present fair saleable value of the assets of the Borrower
after giving effect to all the transactions contemplated by the Term Loan
Documents and the funding of all Commitments hereunder exceeds the amount of the
existing debts and other liabilities (including contingent liabilities) of the
Borrower.
(b) The property of the Borrower does not constitute unreasonably
small capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted including the capital needs of the Borrower.
(c) The Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower, and
of amounts to be payable on or in respect of debt of the Borrower). The cash
available to the Borrower after taking into account all other anticipated uses
of the cash of the Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of the Borrower when such amounts are required
to be paid.
(d) The Borrower does not believe that final judgments against it in
actions for money damages will be rendered at a time when, or in an amount such
that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section 6.19), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
Section 6.20. As to Collateral. (a) The assets comprising the Vitamin
Specialties Business have been transferred by the Borrower to VSC (except for
the tenant's interest under the leases of certain of the Stores; and subject to
the matters referred to in subsection (d) of this Section with respect to
trademarks), and the
Vitamin Specialties Business is now conducted entirely by VSC and not by the
Borrower or any other Subsidiary.
(b) Schedule 6.20(b) hereto accurately sets forth as to each of the
Borrower and each Subsidiary of the Borrower, the address of (i) its chief
executive office and (ii) each place in which it keeps any inventory, equipment
or fixtures (including, without limitation, each place that is a Store).
(c) During the five years preceding the Closing Date, neither the
Borrower nor any Subsidiary of the Borrower has been known by any name other
than its current name, except for the following names:
(i) Hall Laboratories, Inc.
(ii) International Vitamin Corporation
(iii) International Vitamin Supplements, Inc.
(iv) Vitamin Factory Outlets, Inc.
(v) American Vitamin Products, Inc.
(vi) Hidel Partners
(vii) Ilan Packaging, Inc.
(viii) Vitamin Specialties Division of HealthRite Inc.
(d) None of the trademarks comprising the Vitamin Specialties Assets
is registered with the U.S. Patent and Trademark Office, except that "Vitamin
Specialties" (both with and without a logo) is so registered (and such
registration is of record subject to an outstanding interest in favor of
National Westminster Bank).
(e) The names and addresses of the landlords of the present Stores
are as identified on Schedule 6.20(e).
ARTICLE 7. AFFIRMATIVE COVENANTS.
So long as any of the Term Notes shall remain unpaid, the Borrower shall:
Section 7.01. Maintenance of Existence. Preserve and maintain, and (except
to the extent of any merger of a Subsidiary into the Borrower as permitted
hereby) cause each Subsidiary of the Borrower to preserve and maintain, its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified, and cause each such Subsidiary to qualify and
remain qualified, as a foreign corporation in each jurisdiction in which such
qualification is required.
Section 7.02. Conduct of Business. Continue, and cause each Subsidiary of
the Borrower to continue, to engage in the same general manner in a business of
the same general type as conducted by the Borrower and its Subsidiaries
immediately prior to the execution and delivery of this Agreement.
Section 7.03. Maintenance of Properties. Maintain, keep and preserve, and
cause each Subsidiary of the Borrower to maintain, keep and preserve, all of its
properties, (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
Section 7.04. Maintenance of Records. Keep, and cause each Subsidiary of
the Borrower to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrower and such Subsidiaries.
Section 7.05. Maintenance of Insurance. Maintain, and cause each
Subsidiary of the Borrower to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof. The policy of property insurance covering
the inventory, equipment and fixtures of the Borrower or any Subsidiary
Guarantor shall name the Agent under a lender loss payable endorsement in form
acceptable to the Agent.
Section 7.06. Compliance with Laws. Comply, and cause each Subsidiary of
the Borrower to comply, in all respects with all applicable laws, rules,
regulations and orders (except where any failure to comply would not have a
material effect on the financial condition, operations, properties or business
of the Borrower or any of its Subsidiaries), such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property (except to the extent
that the same is being contested in good faith by appropriate proceedings and
adequate reserves are set aside therefor).
Section 7.07. Right of Inspection. At any reasonable time and from time to
time, upon prior written notice, permit the Agent or any Bank or any agent or
representative thereof, (i) to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries, all at the cost of the Borrower, except that the
Borrower shall not be obligated to bear the cost of more than two such
inspections in any 12-month period at each of its Oregon and British Columbia
facilities; and (ii) to discuss the affairs, finances and accounts of the
Borrower and any such Subsidiary with any of their respective officers and
directors and the Borrower's independent accountants, provided however that in
the case of any such meeting with the Borrower's accountants, such meeting is
scheduled through the Borrower and the Borrower is permitted to be present.
Section 7.08. Reporting Requirements. Furnish directly to the Agent and to
each of the Banks:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
a consolidated income statement and statements of cash flows and changes in
stockholders' equity of the Borrower and its Consolidated Subsidiaries for such
fiscal year, all in the form required to be set forth in Form 10-K required to
be submitted to the Securities and Exchange Commission and all prepared in
accordance with GAAP and accompanied by an opinion thereon acceptable to the
Agent by Amper, Politziner & Xxxxxx or other independent accountants of
recognized standing selected by the Borrower;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and a consolidated income statement and statements of
cash flows and changes in stockholders' equity of the Borrower and its
Consolidated Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, all in the form required to
be set forth in Form 10-Q required to be submitted to the Securities and
Exchange Commission and all prepared in accordance with GAAP and certified by
the chief financial officer of the Borrower (subject to year-end adjustments);
(c) promptly upon receipt thereof, copies of any reports submitted
to the Borrower or any of its Subsidiaries by independent certified public
accountants in connection with examination of the financial statements of the
Borrower or any such Subsidiary made by such accountants;
(d) simultaneously with the delivery of the financial statements
referred to above, a certificate of the chief financial officer of the Borrower
(i) certifying that to the best of his knowledge no Default or Event of Default
has occurred and is continuing or, if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article 9;
(e) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(f) promptly after becoming aware thereof, notice of all actions,
suits, and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Borrower or any of its Subsidiaries which, if determined adversely to the
Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower or such
Subsidiary;
(g) as soon as possible and in any event within 10 days after
becoming aware of the occurrence of each Default or Event of Default a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days after the
Borrower knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of the Borrower setting
forth details respecting such event or condition and the action, if any, which
the Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by the
Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA including, without
limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code) and any
request for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by the Borrower
or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt of the Borrower or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it
intends to terminate or has terminated under Section 4041 A of
ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days;
(vi) the adoption of an amendment to any Plan that pursuant to
Section 401 (a)(29) of the Code or Section 307 of ERISA would result
in the loss of tax-exempt status of the trust of which such Plan is
a part if the Borrower or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said
Sections;
(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Borrower or any ERISA
Affiliate to incur liability under Title IV of ERISA or under
Sections 412(c)(11) or 412(n) of the Code with respect to any Plan;
and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement in an amount which is
material in relation to the financial condition of the Borrower;
(i) promptly after the request of any Bank, copies of each annual
report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to the Borrower or an ERISA
Affiliate;
(j) promptly after the furnishing thereof, copies of any material
statement or report furnished to any other party pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Banks pursuant to any other clause of this Section 7.08;
(k) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Borrower or any of
its Subsidiaries sends to its stockholders, and copies of all regular, periodic
and special reports, and all registration statements which the Borrower or any
such Subsidiary files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange;
(l) promptly after the commencement thereof or promptly after the
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding;
(m) simultaneously with the delivery of the financial statements
referred to in Section 7.08(a), a separate consolidating balance sheet, income
statement and statement of cash flows as to VSC;
(n) prior to the opening of any Store after the Closing Date, (i)
written notice to the Agent of such opening, and (ii) a copy of the lease or
other occupancy agreement as to such Store; and
(o) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Agent
or any Bank may from time to time reasonably request (including, without
limiting the generality of the foregoing, financial statements described in
paragraph (a) and (b) of this Section that are consolidating as to the Borrower
and its Consolidated Subsidiaries).
Section 7.09. Registered Trademarks. (a) Cause VSC to assign to the Agent
any trademark comprising a Vitamin Specialties Asset that is hereafter
registered with the U.S. Patent and Trademark Office, promptly after such
registration is effected (which assignment shall be in form satisfactory to the
Agent); and
(b) Use its best efforts to cause National Westminster Bank to
discharge (in recordable form) its interest in the trademarks referred to in
Section 6.20(d), within 45 days after the Closing Date (or as soon thereafter as
possible).
Section 7.10. Store Leases. (a) Use its best efforts to cause, within 60
days after the Closing Date (or as soon as possible thereafter), the landlords
of the Stores (to the extent they have not already done so) to consent in
writing to the assignment of the tenant's interest under the leases of such
Stores by HealthRite, Inc. to the Borrower and then to VSC and then (as
collateral) to the Agent and its assignee; and provide copies of such written
consents to the Agent; and
(b) Use its best efforts to cause the landlord under each lease of a
Store that is entered into after the Closing Date to consent to the assignment
of such lease (as collateral) to the Agent and its assignee.
Section 7.11. Subordination and Nondisturbance Agreement. Use its best
efforts to cause, within 90 days after the Closing Date (or as soon thereafter
as possible), the existing tenant at the New Freehold/Xxxxxx Real Estate to
execute and deliver to the Agent a subordination, nondisturbance and attornment
agreement in the form of Exhibit M; and, if the Agent considers it necessary or
appropriate elects to engage counsel in connection therewith, the Borrower shall
pay the reasonable fees and disbursements of counsel for the Agent in connection
therewith.
ARTICLE 8. NEGATIVE COVENANTS.
So long as any of the Term Notes shall remain unpaid, the Borrower shall
not:
Section 8.01. Debt. Create, incur, assume or suffer to exist, or permit
any Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Debt, except:
(a) Debt of the Borrower and its Subsidiaries under this Agreement,
the other Term Loan Documents, the Revolving Credit Agreement and the other
Facility Documents (as such term is defined in the Revolving Credit Agreement);
(b) Debt described in Schedule 6.10, including renewals, extensions
or refinancings thereof, provided that (except as otherwise specified in Section
2.09(b) with respect to a refinancing of the mortgage Debt owing to Corestates -
New Jersey National Bank) the then-outstanding principal amount thereof does not
increase;
(c) Debt of the Borrower subordinated on terms satisfactory to the
Agent to the Borrower's obligations under this Agreement and the Notes;
(d) Debt of the Borrower or any such Subsidiary permitted under
Section 8.02 and Section 8.03;
(e) Debt in respect of letters of credit issued for the account of
the Borrower or any such Subsidiary in an aggregate face amount outstanding at
any time of up to $500,000 (in addition to the letter of credit issued under the
Revolving Credit Agreement);
(f) Debt of the Borrower under the interest rate protection
agreement described in Section 7.10 of the Revolving Credit Agreement;
(g) Debt of Hall (Canada) to the Borrower not to exceed $500,000
outstanding at any time;
(h) Debt of the Borrower to Hall (Canada) that is incurred as a
currency hedge, not to exceed $500,000 outstanding at any time; and
(i) Debt of Hall (Canada) to a Canadian institutional lender in an
amount not to exceed $500,000 outstanding at any time.
Section 8.02. Guaranties, Etc. Assume, guarantee, endorse or otherwise be
or become directly or contingently responsible or liable, or permit any
Subsidiary of the Borrower to assume, guarantee, endorse or otherwise be or
become directly or indirectly responsible or liable (including, but not limited
to, an agreement to purchase any obligation, stock, assets, goods or services or
to supply or advance any funds, asset, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except (a) the VSC Term Guaranty and the IVOSC/Hall
(Canada) Term Guaranty, (b) guaranties by Subsidiaries of the obligations of the
Borrower under the Revolving Credit Agreement, and (c) guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business.
Section 8.03. Liens. Create, incur, assume or suffer to exist, or permit
any Subsidiary of the Borrower to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens in favor of the Agent and the Banks securing the Loans and
other obligations of the Borrower hereunder and under the other Term Loan
Documents (as the same may be assigned to the Designated Party); and Liens in
favor of the agent and the banks under the Revolving Credit Agreement securing
the obligations of the Borrower under the Revolving Credit Agreement and the
other Facility Documents;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established:
(d) Liens under workmen's compensation, unemployment insurance,
social security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens arising in connection with
court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(h) Liens securing obligations of such a Subsidiary to the Borrower;
(i) the Lien on the real estate of the Borrower located in Freehold,
New Jersey (not the New Freehold/Xxxxxx Real Estate) securing an obligation to
the Authority and Banque Nationale de Paris, Houston Agency, in the original
principal amount of $5,600,000, and any renewal, extension or refinancing
thereof provided that the same does not increase the then-outstanding principal
amount of such obligation; but not the extension of such Lien to other property;
(j) purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is acquired
by the Borrower or any such Subsidiary in the ordinary course of its
business and the Lien on any such property is created substantially
contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 90% (or, in the case of a Capital Lease,
100%) of the lesser of cost or fair market value as of the time of
acquisition of the property covered thereby to the Borrower or such
Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the property so
acquired and fixed improvements thereon; and
(iv) the Debt secured by all such Liens in favor of any Person
other than the Reference Bank shall not exceed $500,000 at any time
outstanding in the aggregate;
(k) one or more Liens in favor of the Designated Party on the same
assets and properties of the Borrower and its Subsidiaries as are encumbered by
Liens in favor of the agent under the Revolving Credit Agreement that are
subject and subordinate to such Liens in favor of the agent under the Revolving
Credit Agreement;
(l) the Lien encumbering the New Freehold/Xxxxxx Real Estate in
favor of Corestates - New Jersey National Bank securing an amount not in excess
of $1,450,000; and any refinancing of such Lien, subject to and in accordance
with Section 2.09; and
(m) Liens listed on Schedule 6.10, including renewals, extensions or
refinancings thereof, provided that the then-outstanding principal amount of no
such Lien is increased.
Section 8.04. Leases. Create, incur, assume or suffer to exist, or permit
any Subsidiary of the Borrower to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (a) leases existing on the date of this Agreement and any extensions or
renewals thereof; (b) a lease of the New Freehold/Xxxxxx Real Estate pursuant to
a sale/leaseback arrangement, provided that there is compliance with Section
2.09; (c) leases (other than Capital Leases) which do not in the aggregate
require the Borrower and its Subsidiaries on a consolidated basis to make
payments (including taxes, insurance, maintenance and similar expense which the
Borrower or any Subsidiary is required to pay under the terms of any lease) in
any fiscal year of the Borrower in excess of $250,000; and (d) Capital Leases
permitted by Section 8.03.
Section 8.05. Investments. Make any loan or advance to any Person, or
purchase or otherwise acquire any capital stock, obligations or other securities
of any Person, or make any capital contribution to any Person, or otherwise
invest in or acquire any interest in any Person, or permit any Subsidiary of the
Borrower to do so, except: (a) direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition; (b)
commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Xxxxx'x Investors Service, Inc.; (c) certificates of
deposit with maturities of one year or less from the date of acquisition issued
by any commercial bank operating within the United States of America having
capital and surplus in excess of $200,000,000; (d) for stock, obligations or
securities received in settlement of debts (created in the ordinary course of
business) owing to the Borrower or any such Subsidiary; (e) currently
outstanding loans and advances to employees listed on Schedule 8.05 hereof, and
further loans and advances to employees hired after the Closing Date that are
made during fiscal year 1998 and that do not exceed in the aggregate $100,000;
(f) in addition to the loans and advances to Hall (Canada) that are permitted by
Section 8.01(g), other investments in Hall (Canada) that do not in the aggregate
exceed $250,000 at any time outstanding; (g) acquisitions of any Person (whether
by way of the acquisition of the capital stock of such Person or of the assets
of such Person) provided that (i) the aggregate amount of all such acquisitions
pursuant to this clause (g) does not exceed $100,000, (ii) the Agent is advised
in reasonable detail of the nature and extent of the direct and contingent
liabilities of such Person that are being assumed, and the Agent approves the
same, and (iii) (if assets are being acquired) such assets are free of all Liens
other than Liens permitted hereby and upon such acquisition the Bank has a
perfected security interest therein, and (iv) (if capital stock is being
acquired) such Person guarantees all existing and future obligations and
liabilities of the Borrower under the Revolving Credit Agreement and under this
Term Loan Agreement and creates in favor of the agent under the Revolving Credit
Agreement and of the Agent a first-priority Lien in all its existing and future
assets and properties, which guarantee and Lien shall be pursuant to
documentation in form and substance satisfactory to such agent and the Agent.
Section 8.06. Dividends. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Borrower or another
such Subsidiary, except that the Borrower may declare and deliver dividends and
make distributions payable solely in common stock of the Borrower.
Section 8.07. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of, or permit any Subsidiary of the Borrower to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests), except: (a) for inventory
disposed of in the ordinary course of business; (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
(c) that any such Subsidiary may sell, lease, assign, or otherwise transfer its
assets to the Borrower; (d) the sale of the New Freehold/Xxxxxx Real Estate
pursuant to a sale/leaseback arrangement, provided that there is compliance with
Section 2.09; (e) the sale of equipment that is being replaced by other
equipment of equal or greater value; (f) the sale of other
equipment, provided that (i) no single item sold pursuant to this clause (f) has
a value in excess of $250,000, (ii) the aggregate value of all items sold
pursuant to this clause (f) from the Closing Date through the Maturity Date does
not exceed $750,000; provided, however, that in the case of clauses (b), (d),
(e) and (f), such sales and dispositions shall be for not less than fair market
value.
Section 8.08. Stock of Subsidiaries, Etc. Sell or otherwise dispose of any
shares of capital stock of any of its Subsidiaries or permit any such Subsidiary
to issue any additional shares of its capital stock, except directors qualifying
shares.
Section 8.09. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any Subsidiary of the
Borrower to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate.
Section 8.10. Mergers, Acquisitions, Etc. Merge or consolidate with, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire all or substantially all
of the assets or of a line of business of any Person (or enter into any
agreement to do any of the foregoing), or permit any Subsidiary of the Borrower
to do so, except (a) that any such Subsidiary (other than VSC) may merge into or
transfer assets to the Borrower; (b) an acquisition described in Section 8.05(g)
may be made; and (c) a Person may merge into the Borrower or any wholly-owned
Subsidiary of the Borrower, provided that (i) the Borrower or such wholly-owned
Subsidiary is the survivor in such merger; (ii) there shall be, in the judgment
of the Agent (after consultation with the Designated Party; but the final
determination shall be that of the Agent alone), as a result of such merger no
material adverse effect on (x) the business, operations, property, condition
(financial or otherwise), prospects, or ownership of the Borrower and its
Subsidiaries, or (y) the validity or enforceability of any of the Term Loan
Documents or the rights or remedies of the Agent or any of the Banks hereunder
or thereunder; (iii) the Agent shall have been provided with sufficient
information and documents, and sufficiently in advance of the effective date of
such merger, to enable the Agent to evaluate the merger; (iv) the assets of such
Person are free of Liens; (v) no Default or Event of Default exists or would,
after giving effect to such merger, exist; and (vi) prior to the effective date
of such merger the Borrower and/or such wholly-owned Subsidiary executes and
delivers to the Agent such instruments and documents (including without
limitation UCC-1 financing statements) as the Agent reasonably requests to
confirm the continuing validity, perfection and priority of its Lien on the
assets of the Borrower or such wholly-owned Subsidiary after giving effect to
such merger.
Section 8.11. As to Collateral. (a) Relocate, or permit any Subsidiary to
relocate, its chief executive office to a place other than the place identified
in Schedule 6.20(b), unless prior thereto the Borrower or such Subsidiary
Guarantor
shall have given written notice thereof to the Agent and shall have executed and
delivered to the Agent for filing by the Agent (at the cost of the Borrower) any
and all UCC- 1 financing statements and other similar instruments as may be
necessary or appropriate to continue the perfection of the security interests
granted by it to the Agent pursuant to the Term Loan Documents.
(b) Permit any of the inventory, equipment or fixtures of the
Borrower or any Subsidiary to be located in any jurisdiction other than those
identified in Section 6.20(b), unless prior thereto the Borrower or the
applicable Subsidiary shall have notified the Agent in writing and shall have
executed and delivered to the Agent for filing by the Agent (at the cost of the
Borrower) any and all UCC-1 financing statements and other similar instruments
as may be necessary or appropriate to continue the perfection of the security
interests granted by it to the Agent pursuant to the Term Loan Documents.
Section 8.12. As to Vitamin Specialties Business in Particular. (a) Permit
the Vitamin Specialties Business to be conducted by any Person other than VSC.
Without limiting the generality of the foregoing, the Borrower shall not permit
VSC to transfer any of the Vitamin Specialties Assets to the Borrower or any
other Subsidiary, except that VSC may commingle revenues received by it with
funds of the Borrower and its other Subsidiaries in the ordinary course of
business of the Borrower and its Subsidiaries; provided, however, that VSC may
not so commingle its funds (or any other assets of VSC) after any assignment of
this Agreement and the Notes to the Designated Party, but VSC will instead
(after such assignment) retain its own funds and other assets (excluding the
Excluded Assets).
(b) Conduct, or permit any Subsidiary (other than VSC, and other
than a wholly-owned Subsidiary of VSC that shall have granted to the Agent a
Lien in all its assets in form and substance satisfactory to the Agent and all
of whose outstanding capital stock shall have been pledged to the Agent in form
and substance satisfactory to the Agent) to conduct, a retail vitamin and
nutrition business, either directly or by way of franchises to franchisees.
(c) After the occurrence of an Event of Default, ship any inventory
to a Store or otherwise transfer any material value to VSC or confer any
material benefit on VSC (or permit any Subsidiary to do so), unless payment in
full is made to the Borrower therefor or arrangements for payment in full to the
Borrower therefor are made by VSC that are satisfactory to the Agent.
Section 8.13. Employment Agreements. Make any change with respect to any
of the employment agreements with any of the Principals, copies of which are
being delivered to the Agent on the Closing Date.
ARTICLE 9. FINANCIAL COVENANTS.
So long as any of the Term Notes shall remain unpaid:
Section 9.01. EBITDA. The Borrower shall not permit Consolidated EBITDA
for the 12-month period ending July 31, 1998 to be less than $8,000,000.
Section 9.02. Cash Flow Leverage Ratio. The Borrower shall not permit the
ratio, as of the last day of any fiscal quarter of the Borrower, of (x) Funded
Debt as of such day to (y) Consolidated EBITDA for the period of four
consecutive fiscal quarters ending such day, to be greater than the amount set
forth below opposite such day:
(i) April 30, 1998 4.5:1
(ii) July 31, 1998 4.0:1
(iii) October 31, 1998 3.5:1
(iv) January 31, 1999 3.0:1
(v) April 30, 1999 2.5:1
(vi) July 31, 1999 2.5:1
Notwithstanding the immediately preceding sentence, with respect to the
determination of such ratio as of the fiscal quarter ending April 30, 1998 only,
the divisor of such ratio (clause (y) above) shall not be Consolidated EBITDA
for the period of four consecutive fiscal quarters ending such day; instead such
divisor shall be the product of Consolidated EBITDA for the period of three
consecutive fiscal quarters ending such day, multiplied by 1.333.
Section 9.03. Tangible Net Worth. The Borrower shall maintain at all times
a Consolidated Tangible Net Worth of not less than the following amounts:
(A) until July 30, 1998: $14,500,000
(B) July 31, 1998 until July 30, The amount identified in (A)
1999: above, plus 50% of Consolidated
Net Income for the fiscal year
ended July 31, 1998;
(C) on and after July 31, 1999: The amount identified in (B)
above, plus 50% of Consolidated
Net Income for the fiscal year
ending July 31, 1999.
Section 9.04. Current Ratio. The Borrower shall at all times maintain a
ratio of Consolidated Current Assets to Consolidated Current Liabilities of not
less than 1.6:1.0.
Section 9.05. Interest Coverage. The Borrower shall not permit the ratio,
as of the last day of any fiscal quarter of the Borrower, of (x) Consolidated
EBITDA for the period of four consecutive fiscal quarters ending such day to (y)
cash interest expense in respect of all Consolidated Funded Debt for such period
of four consecutive fiscal quarters, to be less than the amount set forth below
opposite such day:
(i) April 30, 1998 3.0:1.0
(ii) each of July 31, 1998, October
31, 1998, January 31, 1999 and
April 30, 1999 3.5:1.0
(iii) each fiscal-quarter ending
date thereafter 4.5:1.0.
Notwithstanding the immediately preceding sentence, with respect to the
determination of such ratio as of the fiscal quarter ending April 30, 1998 only,
the dividend of such ratio (clause (x) above) shall not be Consolidated EBITDA
for the period of four consecutive fiscal quarters ending such day; but instead
such dividend shall be the product of Consolidated EBITDA for the period of
three consecutive fiscal quarters ending such day, multiplied by 1.333.
Section 9.06. Capital Expenditures. The Borrower shall not permit its
Consolidated Capital Expenditures to be greater than:
(i) for the 12 month period ending April $2,000,000
30, 1998
(ii) for the 12 month period ending April $3,000,000
30, 1999
(iii) for the four-month period ending $ 500,000.
August 31, 1999
Section 9.07. No Quarterly Loss. The Borrower shall not incur a net loss
after taxes and extraordinary items (on a consolidated basis with its
Consolidated Subsidiaries) in more than one fiscal quarter in any period of four
consecutive fiscal quarters.
Section 9.08. EBITDA of VSC. The Borrower shall not permit the EBITDA of
VSC for any period consisting of four consecutive fiscal quarters to be less
than (a) negative $250,000, as to any such four-quarter period ending on or
before April 30, 1999, or (b) zero, as to any such four-quarter period ending
after April 30, 1999.
ARTICLE 10. EVENTS OF DEFAULT.
Section 10.01. Events of Default. Any of the following events shall be an
"Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any Term
Note at maturity or when required pursuant to Section 2.09; or (ii) fail to pay
any installment of principal of the Term Note on an Amortization Date and such
failure shall continue for three days; or (iii) fail to pay interest on any Term
Note or any fee or other amount due hereunder as and when due and payable and
such failure shall continue for three days;
(b) any representation or warranty made or deemed made by the
Borrower or any Subsidiary of the Borrower in this Agreement or in any other
Term Loan Document or which is contained in any certificate, document, opinion,
financial or other written statement furnished at any time under or in
connection with this Agreement or any other Term Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made;
(c) the Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.02 or Articles 8 or 9; or (ii) fail
to pay, perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this Section 10.01) in any Term Loan Document and such failure
shall continue for 30 consecutive days;
(d) the Designated Party Term Guaranty or the Term Intercreditor
Agreement shall at any time after its execution and delivery and for any reason
cease to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the Designated Party,
or the Designated Party shall deny it has any further liability or obligation
thereunder or shall fail to perform its obligations thereunder;
(e) the Borrower or any Subsidiary of the Borrower shall: (i) fail
to pay any Debt, including but not limited to indebtedness for borrowed money
(other than the Term Notes), of the Borrower or such Subsidiary, as the case may
be, or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or (ii) fail to perform
or observe any term, covenant or condition on its part to be performed or
observed under any agreement or instrument relating to any such Debt, when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration of, after the giving
of notice or passage of time, or both, the maturity of such Debt, whether or not
such failure to perform or observe shall be waived by the holder of such
indebtedness (except that such a failure under the Borrower's New Jersey
Economic Development Authority financing relating to its Irvington premises
shall not constitute an Event of Default if such failure is waived by the lender
thereunder); provided that (in the case of both (i) and (ii)) the aggregate
principal amount of such Debt as to which such failure to pay has occurred (and
not merely the installment or other portion thereof not paid), or as to which
the maturity is or is permitted to be accelerated by reason of such failure to
perform or observe, shall be $500,000 or more; or any such indebtedness whose
principal amount is $500,000 or more shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or if there shall occur under
the Revolving Credit Agreement an "Event of Default" (as such quoted term is
defined in the Revolving Credit Agreement);
(f) for so long as any of the Term Notes or the Facility B Loans are
outstanding, the Borrower shall fail to maintain current payments under its
trade credit obligations to the Designated Party, including but not limited to
the open trade credit account extended to the Borrower by the Designated Party;
and for such purpose, the Agent and Banks shall be entitled conclusively to rely
upon a certificate of the Treasurer of the Designated Party as to whether or not
such a failure has
occurred or continues to exist, notwithstanding any dispute by the Borrower as
to whether or not such a failure has occurred or continues to exist. For the
purposes hereof, the current status will be determined on (i) the third business
day after the last day of each month for open account balances, and (ii) on the
due date for all other obligations;
(g) the Borrower, or any Subsidiary of the Borrower, or the
Designated Party: (i) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (ii) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian. receiver or trustee for it or a
substantial part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it, in which an adjudication
or appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed for a period of 60 days or more;
or (v) (other than in the case of the Designated Party) shall be the subject of
any proceeding under which its assets may be subject to seizure, forfeiture or
divestiture; or (vi) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (vii) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 60 days or more;
(h) one or more judgments, decrees or orders for the payment of
money in excess of $500,000 in the aggregate shall be rendered against the
Borrower or any Subsidiary of the Borrower and such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of 30 consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending appeal;
(i) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which the Borrower is under an obligation
to furnish a report to the Banks in accordance with Section 7.08(h) hereof and
as a result of such event or condition, together with all other such events or
conditions, the Borrower or any ERISA Affiliate has incurred or in the opinion
of the Required Banks is reasonably likely to incur a liability to a Plan, a
Multiemployer Plan, the PBGC, or a Section 4042 Trustee (or any combination of
the foregoing) which is material in relation to the financial position of the
Borrower;
(j) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material;
(k) if, during the lifetime of a Principal, the number of shares of
capital stock of the Borrower owned by such Principal and members of his
immediate family sharing the same household on the Closing Date (the "Closing
Date Shares") is reduced to less than 95% (or, following one year from the
Closing Date, 90%) of the Closing Date Shares by sales or other transfers (other
than sales or transfers to their issue, which will be deemed to continue to be
owned by such Principal) by such Principal or members of his immediate family
sharing the same
household after the Closing Date (and for purposes hereof, 50% of the shares
acquired by a Principal after the Closing Date pursuant to Option Rights owned
by such Principal on the Closing Date shall be deemed to be included in the
Closing Date Shares of such Principal) or if any shares so required to be
retained are pledged or become subject to a security interest in favor of any
other Person; or at any time the Principals collectively own, beneficially and
of record and free of all Liens, less than 72% of the outstanding capital stock
of the Borrower, except that each Principal may dispose of up to 5% of his
Closing Date Shares from the Closing Date until December 31, 1998 and up to an
additional 5% of his Closing Date Shares from January 1, 1999 until the Maturity
Date (it being agreed that if any Principal disposes of less than such 5% from
the Closing Date until December 31, 1998, the remaining portion of such 5%
allowance may be carried over by such Principal to the period of January 1, 1999
until the Maturity Date);
(l) during any period of 12 consecutive months, commencing on the
date of this Agreement, individuals who at the beginning of such 12-month period
were directors of the Borrower cease for any reason to constitute a majority of
the board of directors of the Borrower;
(m) I. Xxxx Xxxxxxxxxx ceases to serve as the full-time chief
operating officer (or other position acceptable to the Agent) of the Borrower,
unless either (i) Xx. Xxxxxxxxxx is replaced within six months thereafter by a
Person selected by the Borrower whom the Agent reasonably approves in writing as
such replacement or (ii) all of E. Xxxxxx Xxxxx, Xxxxxx X. Xxxxx and Xxxxxx X.
Xxxxxxxxx continue to serve full time as (respectively) the chairman/chief
executive officer, president and vice chairman (or other positions acceptable to
the Agent) of the Borrower:
(n) there is a seizure by or forfeiture in favor of any governmental
authority of any property of the Borrower or any of its Subsidiaries having a
value in excess of $1,000,000, other than by eminent domain proceedings where
the Borrower or such Subsidiary receives reasonable compensation therefor;
(o) the VSC Term Guaranty or the IVOSC/Hall (Canada) Term Guaranty
shall at any time after its execution and delivery and for any reason cease to
be in full force and effect as to the applicable Subsidiary or shall be declared
null and void as to such Subsidiary, or the validity or enforceability thereof
shall be contested in writing by such Subsidiary or such Subsidiary shall deny
in writing it has any further liability or obligation thereunder or shall fail
to perform its obligations thereunder;
(p) the VSC Term Security Agreement or the Borrower/IVOSC/Hall
(Canada) Term Security Agreement shall at any time after its execution and
delivery and for any reason cease: (A) to create a valid and perfected security
interest in and to the property purported to be subject to such Agreement,
having (in the case of the security interest created pursuant to the VSC Term
Security Agreement) first priority; or (B) to be in full force and effect; or
shall be declared null and void; or the validity or enforceability thereof shall
be contested in writing by the grantor thereunder, or the grantor thereunder
shall deny in writing it has any further liability or obligation thereunder, or
the grantor thereunder shall fail to perform any of its obligations thereunder;
or
(q) the Stock Pledge Agreement shall at any time after its execution
and delivery and for any reason cease: (A) to create a valid and perfected first
priority security interest in and to the property purported to be subject to
such Agreement; or (B) to be in full force and effect, or shall be declared null
and void, or the validity or enforceability thereof shall be contested in
writing by the Borrower or VSC, or the Borrower shall deny in writing it has any
further liability or obligation thereunder, or the Borrower shall fail to
perform any of its obligations thereunder.
Section 10.02. Remedies. If any Event of Default shall occur and be
continuing, the Agent may or, upon request of the Required Banks, shall by
notice to the Borrower, declare the outstanding principal of the Notes, all
interest thereon and all other amounts payable under this Agreement or the Term
Notes to be forthwith due and payable, whereupon the Term Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower (provided that, in the case of an
Event of Default referred to Section 10.01(f) above with respect to the
Borrower, the Term Notes, all interest thereon and all such other amounts
payable shall be immediately due and payable without any notice and without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower). Upon the occurrence of an Event of
Default, the Agent may also exercise any and all other remedies that may be
available to it under the Term Loan Documents and such other remedies as may be
legally available to it.
Section 10.03. Rescission. If an Event of Default described in clause (ii)
or (iii) of Section 10.01(a) or in clause (ii) of Section 10.01(c) occurs that
the Designated Party is entitled to cure or cause to be cured under Section 2(a)
of the Designated Party Term Guaranty, and if such Event of Default is cured
within the time allowed under the Designated Party Term Guaranty, then any
declaration that is described in Section 10.02 and that is based solely on such
cured Event of Default shall be rescinded by the Agent; provided, however, that
in no event shall such rescission be required if any other Event of Default has
occurred and is continuing.
ARTICLE 11. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 11.01. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably (but subject to removal by the Required Banks pursuant to
Section 11.09) appoints and authorizes the Agent to act as its agent hereunder
and under any other Term Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Term Loan
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Term Loan Document, and shall not by
reason of this Agreement be a trustee for any Bank. The Agent shall not be
responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrower or any officer or official of the Borrower or
any other Person contained in this Agreement or any other Term Loan Document, or
in any certificate or other document or instrument referred to or provided for
in, or received by any of them
under, this Agreement or any other Term Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Term Loan Document or any other document or
instrument referred to or provided for herein or therein, for the perfection or
priority of any collateral security for the Loans or for any failure by the
Borrower to perform any of its obligations hereunder or thereunder. The Agent
may employ agents and attorneys-in-fact and shall not be responsible, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Term Loan
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed to
by the Borrower and the Agent with respect to the Agent's services hereunder.
Section 11.02. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent may deem and treat each Bank as
the holder of the Loan made by it for all purposes hereof unless and until a
notice by a Bank of assignment pursuant to Section 12.05 shall have been given
to the Agent, shall have been furnished to the Agent, but the Agent shall not be
required to deal with any Person who has acquired a participation in any Loan
from a Bank. As to any matters not expressly provided for by this Agreement or
any other Term Loan Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Banks, and such instructions of the Required Banks and
any action taken or failure to act pursuant thereto shall be binding on all of
the Banks and any other holder of all or any portion of any Loan or any such
participation.
Section 11.03. Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default (other than the non-payment
of principal of or interest on the Loans to the extent the same is required to
be paid to the Agent for the account of the Banks) unless the Agent has received
notice from a Bank or the Borrower specifying 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 of the occurrence of a Default or Event of Default,
the Agent shall give prompt notice thereof to the Banks (and shall give each
Bank prompt notice of each such non-payment). The Agent shall (subject to
Section 11.08) take such action with respect to such Default or Event of Default
which is continuing as shall be directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that the Agent shall not be required to take any
such action which it determines to be contrary to law.
Section 11.04. Rights of Agent as a Bank. With respect to the Loan made by
it, the Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its capacity as a Bank. The
Agent and its affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to (on a secured or unsecured basis), and
generally engage in any kind of banking, trust or other business with, the
Borrower (and any of its affiliates) as if it were not acting as the Agent, and
the Agent may accept fees and other consideration from the Borrower for services
in connection with this Agreement or otherwise without having to account for the
same to the Banks. Although the Agent and its affiliates may in the course of
such relationships and relationships with other Persons acquire information
about the Borrower, its Affiliates and such other Persons, the Agent shall have
no duty to disclose such information to the Banks.
Section 11.05. Indemnification of Agent. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 12.03 or under the applicable
provisions of any other Term Loan Document, but without limiting the obligations
of the Borrower under Section 12.03 or such provisions), ratably in accordance
with their respective Bank Percentages (without giving effect to any
participations in all or any portion of its Loan sold by a Bank to any other
Person), for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, any other Term
Loan Document or any other documents contemplated by or referred to herein or
the transactions contemplated hereby or thereby (including, without limitation,
the costs and expenses which the Borrower is obligated to pay under Section
12.03 or under the applicable provisions of any other Term Loan Document but
excluding, unless a Default or Event of Default has occurred, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents or instruments; provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
Section 11.06. Documents. The Agent will forward to each Bank, promptly
after the Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Term Loan Document to be
delivered to the Agent for such Bank.
Section 11.07. Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other Term
Loan Document. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any other Term
Loan Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary
of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
Subsidiary of the Borrower (or any of their Affiliates) which may come into the
possession of the Agent or any of its affiliates. The Agent shall not be
required to file this Agreement, any other Term Loan Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Term Loan Document or any document or instrument referred
to herein or therein, to anyone.
Section 11.08. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 11.05 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 11.09. Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving written notice thereof to the Banks and the Borrower, and the
Agent may be removed at any time with or without cause by the Required Banks;
provided that the Borrower and the other Banks shall be promptly notified
thereof. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent, which (if other than the Bank having the
next largest Bank Percentage) shall be reasonably acceptable to the Borrower. If
no successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 days after the retiring Agent's giving
of notice of resignation or the Required Banks' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a bank which has an office in New York, New York. The Required
Banks or the retiring Agent, as the case may be, shall upon the appointment of a
successor Agent promptly so notify the Borrower and the other Banks.
Notwithstanding the foregoing provisions of this Section, if all the Loans are
assigned by the Banks to the Designated Party, the Agent shall resign
contemporaneously therewith, and the Designated Party shall be deemed
automatically to have been appointed (and to have accepted the appointment) as
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, 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
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 11.10. Amendments Concerning Agency Function. The Agent shall not
be bound by any waiver, amendment, supplement or modification of this Agreement
or any other Term Loan Document which affects its duties hereunder or thereunder
unless it shall have given its prior consent thereto.
Section 11.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Term Loan Document.
Section 11.12. Transfer of Agency Function. Without the consent of the
Borrower or any Bank, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrower and the Banks
thereof, and provided further that unless such transfer is required by law, such
transfer does not require the Borrower to incur additional cost or expense that
is material in amount.
Section 11.13. Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (either one as appropriate being
the "Payor") prior to the date on which such Bank is to make payment hereunder
to the Agent of the proceeds of a Loan or the Borrower is to make payment to the
Agent, as the case may be (either such payment being a "Required Payment"),
which notice shall be effective upon receipt, that the Payor does not intend to
make the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment (and, if such recipient is the Borrower and
the Payor Bank fails to pay the amount thereof to the Agent forthwith upon
demand, the Borrower) shall, on demand, repay to the Agent the amount made
available to it together with interest thereon for the period from the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to the average daily Federal Funds Rate for
such period.
Section 11.14. Withholding Taxes. Each Bank represents that it is entitled
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, in the event that the payment of interest by the Borrower is treated
for U.S. income tax purposes as derived in whole or in part from sources from
within the U.S., such Bank will furnish to the Agent Form 4224 or Form 1001 of
the Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
exemption from the withholding of U.S. tax with respect thereto. The Agent shall
not be obligated to make any payments hereunder to such Bank in respect of any
Loan of such Bank until such Bank shall have furnished to the Agent the
requested form, certification, statement or document.
Section 11.15. Several Obligations and Rights of Banks. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but no
Bank
shall be responsible for the failure of any other Bank to make a Loan to be made
by such other Bank. The amounts payable at any time hereunder to each Bank shall
be a separate and independent debt, and each Bank shall be entitled to protect
and enforce its rights arising out of this Agreement, and it shall not be
necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
Section 11.16. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided: (a) each borrowing under Section 2.04 shall be made from the
Banks, pro rata according to the amounts of their respective Bank Percentages;
(b) each conversion under Section 2.05 of Loans of a particular type (but not
conversions provided for by Section 4.04), shall be made pro rata among the
Banks holding Loans of such type according to the respective principal amounts
of such Loans by such Banks; (c) each prepayment and payment of principal of or
interest on Loans of a particular type and a particular Interest Period shall be
made to the Agent for the account of the Banks holding Loans of such type and
Interest Period pro rata in accordance with the respective unpaid principal
amounts of such Loans of such Interest Period held by such Banks.
Section 11.17. Sharing of Payments Among Banks. If a Bank shall obtain
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means, it shall promptly purchase from the other Banks participations in (or, if
and to the extent specified by such Bank, direct interests in) the Loans made by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such benefit) pro rata in accordance with their
respective Bank Percentages (as in effect immediately before such payment). To
such end the Banks shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other Banks may exercise
all rights of setoff, banker's lien, counterclaim or similar rights with respect
to such participation (or direct interest). Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness of the Borrower.
Section 11.18. Successor Agent. Any bank, corporation or association into
which the Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its business and assets as a
whole or substantially as a whole, or any bank, corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor Agent hereunder
and vested with all the powers, discretions, immunities, privileges and all
other matters as was its predecessor, without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 11.19. Term Intercreditor Agreement. Each Bank hereby authorizes
and ratifies the execution and delivery by the Agent, on behalf of such Bank, of
the
Term Intercreditor Agreement, together with all amendments to and waivers of the
provisions of such Agreement that the Agent (in its reasonable judgment)
considers necessary or appropriate, and such Bank hereby agrees to be bound by
the terms and conditions thereof.
ARTICLE 12. MISCELLANEOUS.
Section 12.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent and
the Required Banks, or by the Borrower and the Agent acting with the consent of
the Required Banks, and any provision of this Agreement may be waived by the
Required Banks or by the Agent acting with the consent of the Required Banks;
provided that no amendment, modification or waiver shall, unless by an
instrument signed by all of the Banks or by the Agent acting with the consent of
all of the Banks: (a) extend the date fixed for the payment of principal of or
interest on any Loan, (b) reduce the amount of any payment of principal thereof
or the rate at which interest is payable thereon or any fee payable hereunder,
(c) alter the terms of this Section 12.01, or (d) amend the definition of the
term "Required Banks", and provided, further, that any amendment of Article 11
hereof or any amendment which increases the obligations of the Agent hereunder
shall require the consent of the Agent. Amendments, modifications and waivers of
this Agreement are also restricted by Section 5 of the Designated Party Term
Guaranty. No failure on the part of the Agent or any Bank to exercise and no
delay in exercising, any right hereunder or under any other Term Loan Document
shall operate as a waiver thereof or preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided under this
Agreement or under any other Term Loan Document are cumulative and not exclusive
of any remedies otherwise legally available.
Section 12.02. Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrower under this Agreement and the Term Notes shall be
subject to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable to
a Bank limiting rates of interest which may be charged or collected by such
Bank.
Section 12.03. Expenses. The Borrower shall reimburse the Agent on demand
for all reasonable costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel for the Agent) incurred by
the Agent in connection with the preparation of this Agreement, the Term Notes
and the other Term Loan Documents; and the Borrower shall reimburse the Agent
and the Banks on demand for all reasonable costs, expenses and charges
(including, without limitation, reasonable fees and charges of external legal
counsel for the Agent and each Bank and costs allocated by their respective
internal legal departments) incurred by the Agent or any Bank in connection with
the modification of, or enforcement of their rights under, this Agreement, the
Term Notes or any of the other Term Loan Documents. The Borrower agrees to
indemnify the Agent and each Bank and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them arising
out of or by reason of any investigation
or litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to any actual or proposed use by the
Borrower or any Subsidiary of the Borrower of the proceeds of the Loans,
including without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation or litigation or other
proceedings (but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified).
Section 12.04. Survival. The obligations of the Borrower under Sections
4.01, 4.05 and 12.03 shall survive the repayment of the Loans.
Section 12.05. Assignment: Participations. (a) This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the Agent, the
Banks and their respective successors and assigns, except that the Borrower may
not assign or transfer its rights or obligations hereunder; and provided that
the right of The Chase Manhattan Bank to assign its Loan, in whole or in part,
without the prior written consent of the Designated Party is subject to the
restrictions contained in Section 15 of the Designated Party Term Guaranty.
(b) Subject to the restrictions contained in Section 15 of the
Designated Party Term Guaranty, each Bank may assign, or sell participations in,
all or any part of its Loan to another bank, financial institution or other
Person, in which event (i) in the case of an assignment, upon notice thereof by
such Bank to the Borrower and the Agent, the assignee shall have, to the extent
of such assignment (unless otherwise provided in the instrument of assignment)
the same rights, benefits and obligations as a Bank hereunder and such assignee
shall be a Bank hereunder; and (ii) in the case of a participation, the
participant shall have no rights under the Term Loan Documents and all amounts
payable under Article 3 shall be determined as if such Bank had not sold such
participation.
(c) In addition to the assignments and participations permitted
under the foregoing provisions of this Section, any Bank may assign and pledge
all or any portion of its Loan to (i) any affiliate of such Bank or (ii) any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Bank from its obligations hereunder.
Section 12.06. Notices. Unless otherwise specifically provided herein, any
notice, consent or other communication herein required or permitted to be given
shall be in writing and may be personally served, telecopied or sent by courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy or three
days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed); provided that the burden of providing
receipt of a telecopy shall not be met by a transmission report generated by the
sender's telecopy machine. For the purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is delivered as provided in this
Section) shall be as set forth below each party's name on the signature pages
hereof, or, as to each party, at such
other address as may be designated by such party in a written notice to all of
the other parties.
Section 12.07. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of such Bank's offices, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or under such Bank's Term Note which is not paid when due
(regardless of whether such balances are then due to the Borrower), in which
case it shall promptly notify the Borrower and the Agent thereof; provided that
such Bank's failure to give such notice shall not affect the validity thereof.
Payments by the Borrower hereunder shall be made without setoff or counterclaim.
SECTION 12.08. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT OR UNITED
STATES FEDERAL COURT SITTING IN NEW YORK COUNTY AND ANY NEW JERSEY STATE COURT
OR ANY UNITED STATES FEDERAL COURT SITTING IN NEW JERSEY OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TERM NOTES OR ANY
OTHER TERM LOAN DOCUMENT. AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK OR NEW JERSEY STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS
SPECIFIED IN SECTION 12.06. THE BORROWER 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.
THE BORROWER FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY
OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON
CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT
AGAINST THE AGENT SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES
FEDERAL COURT SITTING IN NEW YORK COUNTY. THE BORROWER WAIVES ANY RIGHT IT MAY
HAVE TO JURY TRIAL.
(b) Nothing in this Section 12.08 shall affect the right of the
Agent or any Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Bank to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Notes.
Section 12.09. Table of Contents; Headings. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 12.10. Severability. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 12.12. Integration. The Term Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 12.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 12.14. Confidentiality. Each Bank and the Agent agrees (on behalf
of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower or any Subsidiary of the Borrower pursuant to
this Agreement or otherwise which is identified in writing by the Borrower as
being confidential at the time the same is delivered to the Banks or the Agent
(or their affiliates, directors, officers, employees or representatives),
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks or the Agent, (iii) to bank examiners,
auditors or accountants, (iv) in connection with any litigation to which any one
or more of the Banks is a party or (v) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to the
respective Bank a Confidentiality Agreement in substantially the form of Exhibit
G hereto.
Section 12.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by each Bank or by one or more of their respective
subsidiaries or affiliates and (b) acknowledges that information delivered to
each Bank by the Borrower may be provided to each such subsidiary and affiliate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
IVC INDUSTRIES, INC.
By: /s/ I. Xxxx Xxxxxxxxxx
-------------------------------
Name:
Title:
Address for Notices:
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Mr. I. Xxxx Xxxxxxxxxx
Telecopier No.: 000-000-0000
with a simultaneous copy to:
IVC Industries, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Mr. E. Xxxxxx Xxxxx
Telecopier No: 000-000-0000
AGENT:
THE CHASE MANHATTAN BANK:
By: /s/ Xxx X. Xxxxxxx
-------------------------------
Xxx X. Xxxxxxx
Vice President
Address for Notices:
The Chase Manhattan Bank
New York Agency
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
with a simultaneous copy to:
The Chase Manhattan Bank
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxxx
Telecopier No.: 000-000-0000
BANKS:
THE CHASE MANHATTAN BANK
By: /s/ Xxx X. Xxxxxxx
-------------------------------
Xxx X. Xxxxxxx
Vice President
Lending Office:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address for Notices:
The Chase Manhattan Bank
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxxx
Telecopier No.: 000-000-0000
