<PAGE>
WYNNCHURCH CAPITAL PARTNERS, L.P.
WYNNCHURCH CAPITAL PARTNERS CANADA, L.P.
SENIOR SUBORDINATED LOAN AGREEMENT
$10,000,000 SENIOR SUBORDINATED TERM NOTES
DUE JUNE 30, 2006
WEIDER NUTRITION GROUP, INC.
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TABLE OF CONTENTS
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ARTICLE 1
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DEFINITIONS......................................................................................... 1
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1.1 Certain Definitions........................................................................ 1
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1.2 Accounting Principles...................................................................... 10
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ARTICLE 2
CREDIT TERMS........................................................................................ 11
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2.1 Purchase and Sale of the Senior Subordinated Note.......................................... 11
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2.2 Repayment of Principal..................................................................... 11
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2.3 Interest................................................................................... 11
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2.4 Prepayments................................................................................ 12
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2.5 Payments................................................................................... 12
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2.6 Pro Rata Payment........................................................................... 13
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2.7 Investment Fee............................................................................. 13
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ARTICLE 3
CLOSING DELIVERIES.................................................................................. 13
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES...................................................................... 14
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4.1 Organization and Qualification............................................................. 15
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4.2 Authorization, Validity and Enforceability................................................. 15
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4.3 Capitalization............................................................................. 15
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4.4 No Event of Default; Compliance with Instruments........................................... 16
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4.5 Compliance with Laws; Certain Operations................................................... 16
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4.6 Solvency................................................................................... 16
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4.7 Litigation................................................................................. 16
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4.8 Regulations U and X........................................................................ 17
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4.9 ERISA...................................................................................... 17
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4.10 Subsidiaries............................................................................... 17
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4.11 Financials................................................................................. 17
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4.12 Absence of Undisclosed Liabilities......................................................... 18
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4.13 Assets..................................................................................... 18
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4.14 Tax Matters................................................................................ 18
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4.15 Contracts.................................................................................. 19
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4.16 Absence of Changes......................................................................... 19
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4.17 Intellectual Property...................................................................... 19
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4.18 Insurance.................................................................................. 20
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4.19 Environmental and Safety Matters........................................................... 20
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4.20 Investment Company......................................................................... 20
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4.21 Affiliate Transactions.................................................................... 21
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4.22 Employee Matters.......................................................................... 21
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4.23 Tangible Property......................................................................... 21
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4.24 Disclosure................................................................................ 21
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4.25 Public Utility Company.................................................................... 22
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4.26 Fiscal Year............................................................................... 22
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4.27 Fictitious Business Names................................................................. 22
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4.28 Licenses and Permits...................................................................... 22
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4.29 Notice from Self-Regulated Organization................................................... 22
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ARTICLE 5
AFFIRMATIVE COVENANTS.............................................................................. 22
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5.1 Payment of Obligations.................................................................... 22
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5.2 Preservation of Corporate Existence....................................................... 23
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5.3 Payment of Taxes and Claims............................................................... 23
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5.4 Reporting Requirements.................................................................... 23
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5.5 Notices to Lenders........................................................................ 24
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5.6 Maintenance of Insurance.................................................................. 25
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5.7 Maintenance of Properties................................................................. 26
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5.8 Keeping of Records and Books of Account................................................... 26
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5.9 Visitation Rights......................................................................... 26
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5.10 Compliance with Laws...................................................................... 26
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5.11 [Intentionally Omitted.].................................................................. 26
5.12 Use of Proceeds........................................................................... 26
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5.13 Further Assurances........................................................................ 27
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ARTICLE 6
NEGATIVE COVENANTS................................................................................. 27
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6.1 Indebtedness.............................................................................. 27
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6.2 Liens..................................................................................... 27
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6.3 Merger or Sale............................................................................ 28
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6.4 Payments of Subordinated Indebtedness..................................................... 28
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6.5 Investments............................................................................... 28
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6.6 Distributions............................................................................. 29
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6.7 Amendments or Changes in Agreements....................................................... 30
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6.8 Transactions with Affiliates.............................................................. 30
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6.9 Fiscal Year............................................................................... 30
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6.10 Investment Banking, Broker's and Finder's Fees............................................ 30
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6.11 Capital Expenditures...................................................................... 30
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6.12 Allocation of Consideration............................................................... 30
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6.13 Financial Covenants....................................................................... 30
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6.14 Limitation on Creation of Subsidiaries.................................................... 33
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6.15 Parent Limitations........................................................................ 34
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6.16 Unconditional Purchase Obligations........................................................ 34
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6.17 Limitation on Derivative Transactions..................................................... 34
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6.18 No Guaranties............................................................................. 34
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6.19 Limitation on Transactions Under ERISA................................................ 34
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6.20 Additional Restrictive Covenants...................................................... 34
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6.21 Certain Structural Changes............................................................ 34
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ARTICLE 7
DEFAULT........................................................................................ 35
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7.1 Events of Default..................................................................... 35
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7.2 Consequences of Event of Default...................................................... 36
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7.3 Other Rights.......................................................................... 36
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ARTICLE 8
MISCELLANEOUS.................................................................................. 37
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8.1 Successors and Assigns in General..................................................... 37
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8.2 Modifications, Amendments or Waivers.................................................. 38
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8.3 No Implied Waivers; Cumulative Remedies; Writing Required............................. 38
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8.4 Reimbursement of Expenses; Taxes...................................................... 38
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8.5 Notices............................................................................... 38
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8.6 Survival.............................................................................. 39
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8.7 Governing Law; Consent to Jurisdiction and Service of Process; Waiver of Jury Trial... 39
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8.8 Severability.......................................................................... 40
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8.9 Headings.............................................................................. 40
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8.10 Counterparts.......................................................................... 40
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8.11 Indemnification....................................................................... 40
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8.12 Payment Set Aside..................................................................... 42
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8.13 Interpretation........................................................................ 42
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8.14 Approval of Lenders................................................................... 42
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<PAGE>
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Senior Subordinated Note
Exhibit C Form of Warrant
Schedule 2.1 Purchase and Sale of the Senior Subordinated Note
Schedule 2.5 Payments
Schedule 4.3 Capitalization
Schedule 4.5 Compliance with Laws; Certain Operations
Schedule 4.7 Litigation
Schedule 4.9 ERISA
Schedule 4.10 Subsidiaries
Schedule 4.14 Tax Matters
Schedule 4.15 Contracts
Schedule 4.16 Absence of Changes
Schedule 4.17 Intellectual Property
Schedule 4.19 Environmental and Safety Matters
Schedule 4.21 Affiliate Transactions
Schedule 4.22 Employee Matters
Schedule 6.1 Indebtedness
Schedule 6.2 Liens
Schedule 6.5 Investments
Schedule 6.10 Investment Banking, Broker's and Finder's Fees
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SENIOR SUBORDINATED LOAN AGREEMENT
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This SENIOR SUBORDINATED LOAN AGREEMENT is made and entered into as of June
___, 2000 between WEIDER NUTRITION GROUP, INC., a Utah corporation (the
"Borrower"), as the borrower; and WYNNCHURCH CAPITAL PARTNERS, L.P., a Delaware
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limited partnership ("Wynnchurch"), and WYNNCHURCH CAPITAL PARTNERS CANADA,
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L.P., an Alberta limited partnership ("Wynnchurch Canada"), as the lenders.
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In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Certain Definitions. In addition to other terms defined elsewhere
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in this Agreement, the following terms shall have the meanings set forth below:
"Affiliate" of any Person shall mean any other Person which, directly or
---------
indirectly, controls, or is controlled by or is under common control with such
Person including, in the case of any Person who is an individual, his or her
spouse or any of his or her descendants (lineal or adopted) or ancestors or any
of their spouses. For purposes hereof, "control" shall mean the possession,
-------
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person whether through ownership of securities, by
contract or otherwise; provided, however, that any Person which owns directly or
-------- -------
indirectly 5% or more of the securities of any other Person having ordinary
voting power for the election of directors shall be deemed to control such other
Person. Under no circumstances shall either Lender be deemed to be an Affiliate
of Parent, Borrower or Borrower's Subsidiaries.
"Agent" shall mean Bankers Trust Company, a New York banking corporation,
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in its individual capacity and in its capacity as agent under the Senior Loan
Agreement, or any Person acting as agent for the holders of the Senior
Indebtedness.
"Agreement" shall mean this Senior Subordinated Loan Agreement, as it may
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be amended, modified or supplemented from time to time.
"Bankruptcy Code" shall mean the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.), as amended and in effect from time to time and the
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regulations issued from time to time thereunder.
"Borrower Consolidated Entity" shall mean Borrower and each of its Domestic
----------------------------
Subsidiaries which are such by virtue of clause (a) of the definition of the
term "Subsidiary" hereunder.
"Business" shall mean the business engaged in by the Borrower involving the
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development, manufacture, marketing, distribution and sale of branded and
private label vitamins, nutritional supplements, sports nutrition and similar
products.
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"Business Day" shall mean any day other than a Saturday, Sunday or public
------------
holiday under the laws of the State of Illinois or other day on which banking
institutions are authorized or obligated to close in the State of Illinois.
"Capital Expenditures" shall mean, of any Person for any period, all
--------------------
expenditures capitalized by such Person for financial statement purposes in
accordance with GAAP. For purposes of Section 6.11 only, insurance proceeds and
any other payments received on account of any Casualty Loss applied to the
repair or replacements of the property affected by such Casualty Loss shall not
constitute Capital Expenditures.
"Capital Lease" shall mean a lease under which the obligations of the
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lessee would, in accordance with GAAP, be included in determining total
liabilities as shown on the liability side of a balance sheet of the lessee.
"Capital Lease Obligations" shall mean the amount of the liability
-------------------------
reflecting the aggregate discounted amount of future payments under all Capital
Leases calculated in accordance with GAAP and Statement of Financial Accounting
Standards No. 13.
"Capital Security" shall mean, with respect to any Person, (a) any share of
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capital stock of or other unit of ownership interest in such Person and (b) any
security convertible into, or any option, warrant or other right to acquire, any
share of capital stock of or other unit of ownership interest in such Person.
"Cash" shall mean money, currency or a credit balance in a general deposit
----
account with a financial institution.
"Cash Equivalents" shall mean (a) securities issued or directly and fully
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guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (b) marketable direct obligations
issued by any State of the United States of America or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by Standard & Poor's Ratings Group ("S&P") or the
---
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having
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maturities of not more than one year from the date of acquisition, (c) U.S.
dollar denominated time deposits, certificates of deposit and bankers'
acceptances of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000, (d) any bank whose short-term
commercial paper rating (at the time of acquisition of such security) by S&P is
at least A-1 or the equivalent thereof or by Moody's is at least P-1 or the
equivalent thereof (any such bank, an "Approved Bank"), in each case with
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maturities of not more than six months from the date of acquisition, (e)
commercial paper and variable or fixed rate notes issued by Approved Bank or by
the parent company of any Approved Bank and commercial paper and variable rate
notes issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating (at the time of acquisition of such security)
of at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or guaranteed by any industrial company with a
long-term unsecured debt rating (at the time of acquisition of such security) of
at least AA or the equivalent thereof by S&P or the equivalent thereof by
Moody's and in each case maturing within one year after the date of acquisition
and (f) repurchase agreements with any Approved Bank maturing within one year
from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalents.
2
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"Change of Control" shall mean one or more of the following events:
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(a) less than a majority of the members of Parent's Board of
Directors shall be persons who either (i) were serving as directors on the
date hereof or (ii) were nominated as directors and approved by the vote of
the majority of the directors who are directors referred to in clause (i)
above or this clause (ii); or
(b) the stockholders or Parent shall approve any plan or proposal for
the liquidation or dissolution of Parent; or
(c) a Person or group of Persons acting in concert (other than the
direct or indirect beneficial owners of the Capital Securities of Parent as
of the Closing Date) shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, have become
the direct or indirect beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended from time to time) of
Capital Securities of Parent representing more than thirty-five percent
(35%) of the combined voting power of the outstanding voting Capital
Securities or other ownership interest for the election of directors or
shall have the right to elect a majority of the Board of Directors of
Parent; or
(d) Parent shall cease for any reason to own beneficially and of
record one hundred percent of the issued and outstanding Capital Securities
of Borrower; or
(e) Borrower shall cease for any reason to own beneficially and of
record one hundred percent of the issued and outstanding Capital Securities
of Subsidiary Guarantor.
"Class A Common Stock" shall mean the Class A common stock, par value $0.01
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per share, of Parent.
"Class B Common Stock" shall mean the Class B common stock, par value $0.01
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per share, of Parent.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time, and any successor statute, together with the rules and regulations
thereunder, in each case as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock and the Class B Common
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Stock.
"Consolidated" or "Consolidating" shall mean, when used with reference to
------------ -------------
any financial term in this Agreement, the aggregate for two or more Persons of
the amounts signified by such term for all such Persons determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean for any period the consolidated net
-----------------------
income of the Borrower Consolidated Entity for such period.
"Derivative Transaction" shall mean (a) an interest-rate transaction,
----------------------
including an interest-rate swap, basis swap, forward rate agreement, interest
rate option (including a cap, collar, and floor), and any other instrument
linked to interest rates that gives rise to similar credit risks (including
when-issued securities and forward deposits accepted), (b) an exchange-rate
transaction, including a cross-currency
3
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interest-rate swap, a forward foreign-exchange contract, a currency option, and
any other instrument linked to exchange rates that gives rise to similar credit
risks, (c) an equity derivative transaction, including an equity-linked swap, an
equity-linked option, a forward equity-linked contract, and any other instrument
linked to equities that gives rise to similar credit risk and (d) a commodity
(including precious metal) derivative transaction, including a commodity-linked
swap, a commodity-linked option, a forward commodity-linked contract, and any
other instrument linked to commodities that gives rise to similar credit risks.
"Domestic Subsidiary" shall mean each Subsidiary of Borrower which is
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incorporated under the laws of the states constituting the United State of
America.
"EBITDA" shall mean, for any fiscal period, (a) Consolidated Net Income
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(other than extraordinary items) of the Consolidated Entity for such period,
plus (b) the amount of all Interest Expense, income tax expense, depreciation
----
and amortization, including amortization of any goodwill or other intangibles,
for such period, to the extent deducted in calculating Consolidated Net Income
for such period, and plus or minus (as the case may be) (c)(i) any other non-
---- -----
cash charges and (ii) any gains and losses attributable to any fixed asset sales
and (iii) certain specific "add-backs" with respect to Consolidated Net Income
for the fiscal year of Borrower ending as of May 31, 2000 not exceeding the
respective amounts thereof disclosed in writing to Lenders prior to the date
hereof which have been, in the case of either clause (i) or (ii), subtracted or
added, as the case may be, in calculating Consolidated Net Income for such
period, all determined in accordance with GAAP.
"Environmental and Safety Requirements" shall mean all present and future
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federal, state, local and foreign laws, statutes, rules, regulations, ordinances
and other requirements, including, without limitation, permits issued
thereunder, judicial and administrative orders and determinations, contractual
obligations and common law concerning public health and safety, nuisance, worker
health and safety, protection of the environment, pollution or contamination of
any type whatsoever, including, without limitation, all standards of conduct and
bases of obligations relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, sale, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup
of any hazardous, toxic or otherwise dangerous chemical, material, substance or
waste, or mixture, pesticide, petroleum product or byproduct, asbestos,
polychlorinated biphenyls, noise or radiation.
"Equipment" shall mean, with respect to any Person, all of such Person's
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equipment, including machinery, equipment, office equipment and supplies,
computers and related equipment, furniture, furnishings, tools, tooling, jigs,
dies, fixtures, manufacturing implements, fork lifts, trucks, trailers, motor
vehicles, and other equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute, together with the rules
and regulations thereunder, in each case as in effect from time to time.
"ERISA Affiliate", as applied to any Person, shall mean any trade or
---------------
business, (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control or otherwise
affiliated within the meaning of Section 414 of the Code or Section 4001 of
ERISA and the regulations promulgated and rulings issued thereunder.
Notwithstanding the foregoing, neither the Lenders nor any of their Affiliates
shall be deemed an ERISA Affiliate.
4
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"Event of Default" shall mean any of the Events of Default described in
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Section 7.1 hereof.
"Fixed Charge Coverage Ratio" shall mean, as determined as of any date for
---------------------------
any period ending on such date, the ratio of (a) EBITDA for such period to (b)
the sum of the following, in each case of the Borrower Consolidated Entity as
determined in accordance with GAAP for such period, (i) cash income tax expense,
(ii) cash Interest Expense, (iii) Capital Expenditures of the Borrower
Consolidated Entity (except for such Capital Expenditures financed with the
proceeds of Indebtedness other than the Senior Indebtedness), (iv) distributions
to Parent in respect of dividend payments on or mandatory redemptions of Capital
Securities of Parent, (v) Required Earn-Out Payments and (vi) regularly
scheduled principal payments on the Senior Indebtedness and the Loans.
"Foreign Subsidiary" shall mean a subsidiary of Borrower that is not a
------------------
Domestic Subsidiary.
"GAAP" shall mean United States generally accepted accounting principles,
----
as in effect from time to time, consistently applied.
"Guaranty" of any Person shall mean any Liability, contingent or otherwise,
--------
of such Person (other than an endorsement for collection or deposit in the
ordinary course of business) (a) to pay any Liability of any other Person or to
otherwise protect, or having the practical effect of protecting, the holder of
any such Liability against loss (whether such obligation arises by virtue of
such Person being a partner of a partnership or participant in a joint venture
or by agreement to pay, to keep well, to maintain solvency, assets, level of
income or other financial condition, to purchase assets, goods, securities or
services or to take or pay, or otherwise) or (b) incurred in connection with the
issuance by a third Person of a Guaranty of any Liability of any other Person
(whether such obligation arises by agreement to reimburse or indemnify such
third Person or otherwise). The word "Guarantee" when used as a verb has the
---------
correlative meaning.
"Indebtedness" of any Person shall mean, without duplication: (a) all
------------
indebtedness for borrowed money, including, without limitation, indebtedness
constituting all or any part of the deferred purchase price of property or
services excluding trade accounts payable incurred in the ordinary course of
business and payable on customary trade terms; (b) Capital Lease Obligations;
(c) notes payable and drafts accepted representing extensions of credit whether
or not representing obligations for borrowed money; (d) obligations under
interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements designed to
protect against fluctuations in interest rates; and (e) all indebtedness secured
by any Lien on any property or asset owned or held by such Person regardless of
whether the indebtedness secured thereby shall have been assumed by such Person
or is nonrecourse to the credit of such Person, provided, that if such Person
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has not assumed or otherwise become liable in respect of such Indebtedness, such
Indebtedness shall be deemed to be in an amount equal to the lesser of (A) the
amount of such Indebtedness or (B) the fair market value of the assets subject
to such Lien, as determined in good faith by such Person.
"Interest Coverage Ratio" shall mean, as determined as of any date for any
-----------------------
period ending on such date, the ratio of (a) EBITDA to (b) cash Interest
Expense, in each case for such period.
"Interest Expense" shall mean with respect to any period, the aggregate
----------------
consolidated interest expense of the Borrower Consolidated Entity in respect of
Indebtedness determined on a consolidated basis in accordance with GAAP,
including amortization of original issue discount on any Indebtedness and of all
fees payable in connection with the incurrence of such Indebtedness (to the
extent included in
5
<PAGE>
interest expense), the interest portion of any deferred payment obligation and
the interest component of any Capital Lease obligations.
"Investment" shall mean, with respect to any Person, (a) any direct or
----------
indirect purchase or other acquisition by such Person of any beneficial interest
in, including stock, partnership interest, notes or other securities of, any
other Person and (b) any direct or indirect loan, advance or capital
contribution by such Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of business.
"Latest Balance Sheet" shall mean the audited balance sheet of the Parent
--------------------
dated as of May 31, 1999.
"Lenders" shall mean Wynnchurch, Wynnchurch Canada and their Affiliates,
-------
participants, transferees, successors and assigns.
"Liability" of any Person shall mean (in each case, whether with full or
---------
limited recourse) any indebtedness, liability, obligation, covenant or duty of
or binding upon, or any term or condition to be observed by or binding upon,
such Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under contract, requirement of law,
or otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
"Lien(s)" shall mean any lien, mortgage, pledge, security interest, charge
-------
or encumbrance of any kind, whether voluntary or involuntary, including any
conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest.
"Loans" shall have the meaning set forth in Section 2.1 hereof.
-----
"Management Notes" shall mean those certain promissory notes set forth in
----------------
Schedule 6.5, in the respective original principal amounts and payable to
------------
Borrower by the respective payors, in each case indicated therein.
"Mandatorily Redeemable Obligation" shall mean a Liability of Borrower or
---------------------------------
any Subsidiary of Borrower, or a Liability of another Person guaranteed by
Borrower or any Subsidiary of Borrower, to the extent that, in either case, it
is redeemable, payable or required to be purchased or otherwise retired or
extinguished (a) at a fixed or determinable date, whether by operation of
sinking fund or otherwise, (b) at the option of any Person other than Borrower
or such Subsidiary or (c) upon the occurrence of a condition not solely within
the control of Borrower or such Subsidiary, such as a redemption required to be
made out of future earnings.
"Material Adverse Effect" shall mean a material adverse change in, or a
-----------------------
material adverse effect upon, the (a) business, operations, properties,
condition (financial or otherwise) or operating results of Parent, Borrower or
Borrower's Subsidiaries taken as a whole, as a result of the occurrence or
existence of any single event or condition or series of events or conditions in
the aggregate, or (b) the ability of Parent, Borrower or any of Borrower's
Subsidiaries to perform their respective obligations under any of the Senior
Loan Documents or any of the Senior Subordinated Loan Documents to which they
are a party, or (c) the validity or enforceability of any of the Senior
Subordinated Loan Documents or the rights, powers and remedies of Lenders to
enforce or collect the Obligations. In determining whether any
6
<PAGE>
individual event could result in a Material Adverse Effect, notwithstanding that
such event does not of itself have such effect, a Material Adverse Effect shall
be deemed to have occurred if the cumulative effect of such event and all other
then existing events results or is reasonably likely to result in a Material
Adverse Effect.
"Material Contract" shall mean any contract or other arrangement (other
-----------------
than the Related Transaction Documents), whether written or oral, to which
Parent, Borrower or any subsidiary of Borrower is a party with respect to which
breaches, nonperformances, cancellations or failures to renew by any party
thereto singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
"Multiple Employer Plan" shall mean a single employer plan as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower
or any of its ERISA Affiliates and at least one Person other than Borrower or
its ERISA Affiliates, or (b) was so maintained and with respect to which
Borrower or any of its ERISA Affiliates could have liability under Section 4064
or 4069 of ERISA in the event such plan has been or were to be terminated.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan" as
------------------
defined in Section 3(37) of ERISA.
"Obligations" shall mean all obligations of every nature of Borrower from
-----------
time to time owed to Lenders under any of the Senior Subordinated Loan Documents
(including, without limitation, interest accrued and other amounts payable
thereunder).
"Owned Premises" shall mean all real property owned by the Parent,
--------------
Borrower, or any of Borrower's Subsidiaries.
"Parent" shall mean Weider Nutrition International, Inc., a Delaware
------
corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Pension Plan" shall mean any employee pension benefit plan as defined in
------------
Section 3(2) of ERISA, which is subject to Title IV of ERISA or Section 412 of
the Code or a money purchase pension plan.
"Permitted Liens" shall have the meaning set forth in Section 6.2.
---------------
"Permitted Restrictive Covenant" shall mean (a) any covenant or restriction
------------------------------
contained in any Senior Subordinated Loan Document or Senior Loan Document, (b)
any covenant or restriction binding upon any Person at the time such Person
becomes a Subsidiary of Borrower if the same is not created in contemplation
thereof, (c) any covenant or restriction of the type contained in Section 6.2
that is contained in any contract evidencing or providing for the creation of or
concerning Indebtedness secured by any Purchase Money Lien so long as such
covenant or restriction is limited to the property purchased therewith, the
contracts related thereto and the proceeds thereof, or (d) any covenant or
restriction that (i) is not more burdensome than an existing Permitted
Restrictive Covenant that is such by virtue of clause (b) or (c); (ii) is
contained in a contract constituting a renewal, extension or replacement of the
contract
7
<PAGE>
in which such existing Permitted Restrictive Covenant is contained; and (iii) is
binding only on the Person or Persons bound by such existing Permitted
Restrictive Covenant.
"Person" shall mean any individual, corporation, partnership, company,
------
joint venture, association, bank, trust company or trust, whether or not legal
entities, or any governmental entity or agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan as defined in Section 3(3) of
----
ERISA, whether or not terminated, to which Borrower or any of its ERISA
Affiliates maintains, contributes or has any actual or potential liability and
any other employee benefit or compensatory plan, program, policy or arrangement
with respect to which Borrower or any of its ERISA Affiliates has an actual or
potential liability.
"Potential Event of Default" shall mean any occurrence, condition, act or
--------------------------
omission which, with the passage of time or the giving of notice or both, is
reasonably likely to result in an Event of Default hereunder.
"Principal" shall mean the unpaid principal amount of the Loans.
---------
"Property " shall mean any interest in any kind of property or asset,
--------
whether real, personal or mixed, and whether tangible or intangible.
"Purchase Money Liens" shall mean Liens on any item of Equipment acquired
--------------------
by Borrower securing the purchase price thereof, provided that each such Lien
shall attach only to the Equipment so acquired and to proceeds thereof.
"Quarterly Payment Date" shall mean the last day of March, June, September
----------------------
and December of each year.
"Refinanced Indebtedness" shall mean all Indebtedness of Borrower and the
-----------------------
other Credit Parties under that certain Third Amended and Restated Credit
Agreement dated as of May 6, 1997, as amended, among Borrower, Parent,
Subsidiary Guarantor and certain of their Affiliates, General Electric Capital
Corporation, as Agent, and the financial institutions parties thereto as
lenders.
"Registration Rights Agreement" shall mean that certain Registration Rights
-----------------------------
Agreement, dated as of even date herewith, among Parent and Lenders, in the form
of Exhibit A attached hereto, as the same may be amended or otherwise modified
---------
from time to time in accordance with the terms hereof.
"Related Transaction Documents" shall mean the Senior Subordinated Loan
-----------------------------
Documents and the Senior Loan Documents.
"Related Transactions" shall mean the execution and delivery of the Related
--------------------
Transaction Documents, the funding of the Loans, the refinancing of the
Refinanced Indebtedness, the issuance of the Warrants by Parent to Lenders and
the payment of all fees, costs and expenses associated with all of the
foregoing.
"Required Earn-Out Payment" shall mean payments by Borrower required
-------------------------
pursuant to Section 2 of that certain Stock Purchase Agreement dated July 9,
1998, among Borrower and Wolfgang Brandt and Eberhardt Schlurter, each an
individual, without giving effect to any amendments or supplements to such
8
<PAGE>
Stock Purchase Agreement, or restatements or other modifications thereof, except
for any of the foregoing previously consented to in writing by Agent.
"Restricted Payment" shall mean, with respect to any Person, (a) any
------------------
payment with respect to or on account of any of the Capital Securities of such
Person, including any dividend or other distribution on, any payment of interest
on or principal of, and any payment on account of any purchase, redemption,
retirement, exchange, defeasance or conversion of, or on account of any claim
relating to or arising out of the offer, sale or purchase of, any such Capital
Securities and (b) any optional payment or prepayment on or redemption
retirement, (including by making payments to a sinking or analogous fund),
repurchase, defeasance or other acquisition of, any Indebtedness (other than
Indebtedness pursuant to this Agreement and the Senior Loan Agreement). For the
purpose of this definition, a "payment" shall include the transfer of any asset
or the incurrence of any Indebtedness or other Liability (the amount of any such
payment to be the fair market value of such asset or the amount of such
obligation, respectively) but shall not include the issuance by such Person to
the holders of a class or series of a class of its Capital Securities of the
same class, and if applicable, series, other than, in the case of Borrower or
any Subsidiary of Borrower, Mandatorily Redeemable Obligations.
"Reynolds Agreement" shall mean that certain Separation Agreement dated
------------------
July 15, 1999 among Parent and Robert Reynolds, an individual, without giving
effect to any amendments or supplements thereto or restatements or other
modifications thereof, except for any of the foregoing previously consent to in
writing by Lenders.
"Sale" shall mean the sale, transfer or disposition of all or substantially
----
all of the assets of Parent or Borrower and Borrower's Subsidiaries.
"SEC" shall mean the United States Securities and Exchange Commission.
---
"Senior Indebtedness" shall mean any and all amounts constituting Senior
-------------------
Indebtedness (as defined in the Subordination Agreement (as in effect on the
date hereof)).
"Senior Lenders" shall mean the financial institutions that are or may
--------------
from time to time become parties to the Senior Loan Agreement and Bankers Trust
Company and their participants, assignees and other transferees or successors in
interest.
"Senior Leverage Ratio" shall mean, as of any date of determination
---------------------
thereof, the ratio of (a) all Indebtedness of the Borrower Consolidated Entity
(other than the Loans and any other unsecured Indebtedness) as of such date, to
(b) EBITDA as determined as of such date for the twelve-month period ending on
such date.
"Senior Loan Agreement" shall mean that certain Credit Agreement of even
---------------------
date herewith between Borrower and Senior Lenders, as the same may be
supplemented, amended, modified or replaced from time to time in compliance
herewith.
"Senior Loan Documents" shall mean the Senior Loan Agreement and all other
---------------------
documents, agreements, certificates and instruments attached thereto, referred
to therein or delivered in connection therewith, as any or all of the foregoing
may be supplemented, amended, modified or replaced from time to time in
compliance with the Subordination Agreement.
9
<PAGE>
"Senior Subordinated Loan Documents" shall mean this Agreement, the Senior
----------------------------------
Subordinated Notes, the Subordination Agreement, the Warrants, the Registration
Rights Agreement, and any and all other documents, agreements, certificates and
instruments executed or delivered in connection herewith or therewith
(including, without limitation, those referred to in Article 3 hereof), as any
or all of the foregoing may be supplemented, amended or modified from time to
time.
"Senior Subordinated Notes" shall have the meaning set forth in Section 2.1
-------------------------
hereof.
"Solvent" shall mean, as to any Person at any time, that (a) the fair value
-------
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities), (b)
the present fair saleable value of the Property of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person is able to
realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business, (d) such Person does not intend to incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subordination Agreement" shall mean that certain Subordination Agreement
-----------------------
of even date herewith by and between Lenders and Agent (in its individual
capacity and as agent for itself and Senior Lender as the same may be
supplemented, amended, modified or replaced from time to time in compliance
therewith.
"Subsidiary" shall mean, with respect to any Person at any time (a) any
----------
other Person the accounts of which would be consolidated with those of such
first Person in its consolidated financial statements as of such time, and (b)
any other Persons (i) that is, at such time, controlled by, or (ii) securities
of which having ordinary voting power to elect a majority of the board of
directors (or other persons having similar functions), or other ownership
interests of which ordinarily constituting a majority voting interest, are at
such time, directly or indirectly, owned or controlled by such first Person, or
by one or more of its Subsidiaries, or by such first Person and one or more of
its Subsidiaries; provided, that, for purposes of determining compliance with
---------
Article VI, the defined term "Subsidiary" shall mean and include only Domestic
Subsidiaries.
"Subsidiary Guarantor" shall mean WNG Holdings (International) Ltd., a
--------------------
Nevada corporation.
"Total Leverage Ratio" shall mean, as of any date of determination thereof,
--------------------
the ratio of (a) all Indebtedness of the Borrower Consolidated Entity as of such
date, to (b) EBITDA as determined as of such date for the twelve-month period
ending on such date.
"Warrants" shall mean the warrants exercisable into 1,174,955 shares of
--------
Class A Common Stock issued to Lenders by Parent in form and substance
substantially identical to Exhibit C attached hereto.
---------
Other terms are defined elsewhere in this Agreement.
1.2 Accounting Principles. Any accounting term used in this Agreement
---------------------
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
10
<PAGE>
accordance with GAAP as consistently applied as to Borrower. If any changes in
GAAP are hereafter required or permitted and are adopted by Borrower with the
agreement of their certified public accountants and such changes result in a
change in the method of calculation of any of the financial covenants,
restrictions or standards herein or in the related definitions or terms used
therein, the parties hereto agree to enter into negotiations to amend such
provisions so as to reflect equitably such changes with the desired result that
the criteria for evaluating the financial condition of Borrower shall be the
same after such changes as if such changes had not been made; provided, however,
-------- -------
that no change in GAAP that would affect the method of calculation of any of the
financial covenants, restrictions or standards or definitions of terms used
therein shall be given effect in such calculations until such provisions are
amended in a manner reasonably satisfactory to Lenders.
ARTICLE 2
CREDIT TERMS
------------
2.1 Purchase and Sale of the Senior Subordinated Note. Subject to the
-------------------------------------------------
terms hereof, on the date hereof, Lenders shall purchase from Borrower and
Borrower shall issue and sell to each Lender a senior subordinated note (each a
"Senior Subordinated Note" and collectively, the "Senior Subordinated Notes")
------------------------ -------------------------
evidencing a term Loan in the principal amount set forth opposite such Lender's
name on Schedule 2.1 attached hereto, and for the purchase price set forth
------------
opposite such Lender's name on Schedule 2.1 attached hereto (each a "Loan" and
------------ ----
collectively, the "Loans"). Each of the Senior Subordinated Notes shall be
-----
dated as of the date hereof, subject to the terms and conditions of this
Agreement and in the form attached hereto as Exhibit B.
---------
2.2 Repayment of Principal. Unless otherwise required or permitted to
----------------------
be sooner paid pursuant to the provisions hereof and of the Senior Subordinated
Notes, Borrower shall repay the Principal in full on June 30, 2006.
2.3 Interest.
--------
(a) Interest. So long as no Event of Default has occurred and is
--------
continuing, the Principal shall bear interest from the date hereof until
paid, computed on the basis of a 360-day year for the actual number of days
elapsed, at a fixed annual rate of 13.00%.
(b) Periodic Interest Payments. Accrued interest shall be due and
--------------------------
payable quarterly in arrears on each Quarterly Payment Date commencing on
September 30, 2000. In addition, all accrued and unpaid interest shall be
paid upon the payment in full of the Principal and, if payment in full is
not paid when due, thereafter on demand.
(c) Default Interest Rate. After the occurrence and during the
---------------------
continuance of any Event of Default, the Borrower's Obligations shall bear
interest, payable on demand, at the rate of 16.00% per annum.
(d) Savings Clause. In no contingency or event shall the interest
--------------
rate charged pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that
such a court determines that Lenders have received interest hereunder in
excess of the
11
<PAGE>
highest applicable rate, the amount of such excess interest shall be
applied against the Principal then outstanding, and any excess interest
remaining after such application shall be refunded to Borrower.
2.4 Prepayments.
-----------
(a) Optional Prepayments. Borrower may, at its option, prepay
--------------------
Principal, together with accrued interest thereon:
(i) prior to the first anniversary hereof, if and only if
Borrower repays the Principal in full and pays to Lenders a prepayment
premium of Two Hundred Thousand Dollars ($200,000) (the "Prepayment
----------
Premium"); and
-------
(ii) at any time on or after the first anniversary hereof,
without any Prepayment Premium, provided that such prepayment of Principal
shall be in increments of $500,000.
(b) Prepayment Notice. Borrower shall give notice (a "Prepayment
----------------- ----------
Notice") to Lenders of any optional prepayment under this Section 2.4 not
------
later than 12:00 p.m., Chicago, Illinois time, on the twentieth (20th)
Business Day preceding the date of prepayment, specifying the prepayment
date and the Principal to be prepaid ("Prepayment Principal Amount"). Once
---------------------------
a Prepayment Notice has been given, the Prepayment Principal Amount
specified therein, together with all accrued interest to the date of
payment, shall become due and payable on the date specified in the
Prepayment Notice.
(c) Mandatory Prepayment on Sale or Change of Control. Borrower shall
-------------------------------------------------
give written notice (a "Change Notice") to Lenders upon the earlier of (i)
-------------
thirty (30) days prior to the consummation of, and (ii) two (2) Business
Days after the date of execution of a definitive agreement providing for a
Change of Control or a Sale (it being understood that, in connection with a
Change of Control not involving a transaction to which Borrower is a party,
Borrower shall deliver the relevant Change Notice to Lenders promptly after
it obtains knowledge thereof). Upon receipt of a Change Notice, Lenders
shall have the right, exercisable at any time within thirty (30) days after
receipt of a Change Notice, to require that the Principal be repaid in
full, together with all accrued interest thereon and the Prepayment
Premium, as applicable, and, if Lenders so elect, Borrower shall prepay the
outstanding balance of the Principal owed to Lenders in full, together with
all accrued interest thereon and the Prepayment Premium, as applicable, on
the date of consummation of the Change of Control or Sale.
2.5 Payments. All payments hereunder and under the Senior Subordinated
--------
Notes shall be made to Lenders prior to 12:00 p.m., Chicago, Illinois time, on
the date due, to Lenders in the accounts set forth on Schedule 2.5 attached
------------
hereto, in lawful money of the United States of America, by wire transfer in
funds immediately available at such payment office. All payments hereunder and
under the Senior Subordinated Notes shall, except as required by applicable law,
be made without setoff, deduction or counterclaim, free and clear of all taxes
(other than taxes imposed on the net income of Lenders or franchise taxes),
levies, imports, duties, fees and charges, and without any withholding,
restriction or conditions imposed by any governmental authority. If Borrower is
required by law to deduct any such amounts from or in respect of any sum payable
hereunder to Lenders, then the sum payable hereunder shall be increased as may
be necessary so that, after making all required deductions, Lenders receive an
12
<PAGE>
amount equal to the sum they would have received had no such deductions been
made. Whenever any payment to be made hereunder or under the Senior Subordinated
Notes shall be stated to be due on a date other than a Business Day, such
payment shall be made on the immediately preceding Business Day.
2.6 Pro Rata Payment. All payments hereunder and under the Senior
----------------
Subordinated Notes shall, at all times during which there is more than a single
Lender and/or holders of the Senior Subordinated Notes (or notes issued in
replacement thereof), be made pro rata among such Lenders and/or holders based
upon the aggregate unpaid principal amount of the Senior Subordinated Note
respectively held by each such Lender and/or holder, as reflected in the
register maintained by Borrower pursuant to Section 8.1 hereof.
2.7 Investment Fee. An aggregate fee of Three Hundred Thousand Dollars
--------------
($300,000) (the "Investment Fee") shall be payable to Lenders or their designees
--------------
on the first Business Day after the date hereof.
ARTICLE 3
CLOSING DELIVERIES
------------------
The obligation of Lenders to purchase the Senior Subordinated Notes on the
date hereof is subject to, among other things, Borrower delivering or causing to
be delivered to Lenders on or prior to the date hereof each of the following
(the form and substance of which is satisfactory to Lenders and their counsel):
(a) this Agreement, duly executed by Borrower;
(b) the Senior Subordinated Notes, duly executed by Borrower;
(c) the Warrants, duly executed by Parent;
(d) the Registration Rights Agreement, duly executed by Borrower;
(e) the Subordination Agreement, duly executed by Borrower and Senior
Lenders;
(f) Guarantee duly executed by Subsidiary Guarantor;
(g) the written opinion of Latham & Watkins, counsel to Borrower,
dated as of the date hereof, in the form and substance reasonably
acceptable to Lenders;
(h) certified copies of all documents evidencing corporate action
taken by Borrower, Parent and each of Borrower's Subsidiaries with respect
to the Senior Subordinated Loan Documents including but not limited to
resolutions of the Board of Directors of each of Borrower, Parent and
Borrower's Subsidiaries authorizing the execution, delivery and performance
by such entity of this Agreement, the Senior Subordinated Notes and other
Senior Subordinated Loan Documents to which it is a party;
13
<PAGE>
(i) a certificate of Borrower, signed by its chief executive officer
or chief financial officer, to the effect that: (i) all of the
representations and warranties of Borrower contained in this Agreement are
true and correct as of the date hereof; (ii) Borrower has complied with and
performed all of the terms, covenants and agreements contained in the
Senior Subordinated Loan Documents which are to be complied with or
performed by Borrower on or before the date hereof (unless waived by
Lenders in writing); and (iii) no Event of Default or Potential Event of
Default has occurred and is continuing;
(j) an incumbency certificate of Borrower signed by its secretary or
assistant secretary, certifying the names of the officers of Parent,
Borrower and the Subsidiary Guarantor authorized to sign the Senior
Subordinated Loan Documents to be signed by such party, together with
specimens of the true signatures of the officers executing the Senior
Subordinated Loan Documents;
(k) a financial condition certificate of Borrower, signed by its
chief executive officer or chief financial officer, acknowledging that,
after giving effect to the Related Transactions, (i) each of Parent,
Borrower and Borrower's Domestic Subsidiaries is Solvent and (ii) at least
$10,000,000 is available for borrowing under Borrower's revolving credit
facility with the Senior Lenders;
(l) a copy of the articles or certificate of incorporation of each of
Borrower, Parent and each Domestic Subsidiary, as amended, certified by the
Secretary of State of the applicable jurisdiction, and a copy of each such
party's By-Laws, certified by such party's secretary to be true and correct
and in full force and effect;
(m) a good standing certificate with respect to each of Borrower,
Parent and each Domestic Subsidiary from the Secretary of State of its
state of incorporation, and from the Secretary of State of each other
jurisdiction where such party is qualified to do business;
(n) a copy of all of the Related Transaction Documents (other than
the Senior Subordinated Loan Documents) certified by the Borrower's
secretary to be true and correct and in full force and effect as of the
date hereof;
(o) an unaudited Consolidated balance sheet of Borrower reflecting
the pro forma financial position of Borrower and its Domestic Subsidiaries
as of the date hereof and after giving effect to the consummation of the
Related Transactions (the "Pro Forma Balance Sheet"); and
-----------------------
(p) such other documents, agreements, certificates, instruments and
conditions as Lenders may reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Lenders that the following statements
are true, correct and complete as of the date hereof (after giving effect to the
consummation of the Related Transactions
14
<PAGE>
taking place on or prior to the date hereof) and such representations and
warranties shall survive the execution and delivery of this Agreement and the
issuance of the Senior Subordinated Notes, notwithstanding any investigation
made by Lenders.
4.1 Organization and Qualification. Parent, Borrower and each Domestic
------------------------------
Subsidiary of Borrower is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation. Parent, Borrower and each
Domestic Subsidiary of Borrower is duly qualified to do business as a foreign
corporation in each jurisdiction where, because of the nature of its activities
or properties such qualification is required, except where the failure to so
qualify would not have a Material Adverse Effect. Each of Parent, Borrower and
the Domestic Subsidiaries has delivered to Lenders a true, complete and correct
copy of its Certificate or Articles of Incorporation and By-laws. Each of
Parent, Borrower and the Domestic Subsidiaries has all requisite corporate power
and authority to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted.
4.2 Authorization, Validity and Enforceability. Each of Parent,
------------------------------------------
Borrower and Borrower's Domestic Subsidiaries is duly authorized to execute,
deliver and perform each of the Senior Subordinated Loan Documents and other
Related Transaction Documents to which it is a party and to incur the borrowings
or other obligations contemplated by the provisions thereof. Each of Parent,
Borrower and Borrower's Domestic Subsidiaries has taken all necessary corporate
action (including, without limitation, obtaining approval of its shareholders)
to authorize the execution, delivery and performance of each of the Senior
Subordinated Loan Documents and other Related Transaction Documents to which it
is a party. No consent, approval or authorization of, or declaration or filing
with, any governmental authority, and no consent of any other Person (which has
not been obtained), is required in connection with the execution, delivery and
performance by each of Parent, Borrower and Borrower's Domestic Subsidiaries of
the Senior Subordinated Loan Documents to which it is a party. No consent or
authorization of, filing with or other act by or in respect of any governmental
authority or any other Person is required in connection with the continuing
operations of Borrower or any of Borrower's Domestic Subsidiaries, except for
any of the foregoing which failures to obtain and maintain in full force and
effect singly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Each Related Transaction Document to which each of
Parent, Borrower and Borrower's Domestic Subsidiaries is a party has been duly
executed and delivered by such party and constitutes the legal, valid and
binding obligation of such party, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies. Each of Parent, Borrower and Borrower's Domestic
Subsidiaries execution, delivery and performance of each Senior Subordinated
Loan Document and Related Transaction Document to which it is a party does not
and will not conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or imposition of any Lien,
other than Permitted Liens, upon its property by reason of the terms of (a) any
contract, mortgage, lease, agreement, indenture or instrument to which it is a
party or which is binding upon it, (b) any judgment, law, statute, rule or
governmental regulation applicable to it or (c) its Articles or Certificate of
Incorporation or By-laws.
4.3 Capitalization.
--------------
(a) The authorized and outstanding capital stock of each of Parent,
Borrower and Borrower's Subsidiaries, after giving effect to the Senior
Subordinated Loan Transactions, is as set forth on Schedule 4.3 attached
------------
hereto. All of the outstanding shares of capital stock of each of Borrower
and Borrower's Domestic Subsidiaries is validly issued, fully paid and
15
<PAGE>
nonassessable and all of the outstanding capital stock of Borrower and
Borrower's Domestic Subsidiaries is free and clear of any and all Liens,
other than Liens created under the Senior Loan Documents.
(b) Except as set forth on Schedule 4.3 or as contemplated by the
------------
Warrants, there are not outstanding any shares of stock, securities, rights
or options convertible or exchangeable into or exercisable for any shares
of capital stock, stock appreciation rights or phantom stock of Parent,
Borrower or Borrower's Domestic Subsidiaries. Except as set forth on
Schedule 4.3, none of Parent, Borrower or any of Borrower's Domestic
------------
Subsidiaries is under any obligation, contingent or otherwise, to redeem or
otherwise acquire any shares of its capital stock or any securities, rights
or options to acquire such capital stock, stock appreciation rights or
phantom stock. To Borrower's knowledge, there are no agreements between
any of Parent's directors or their respective Affiliates with respect to
the voting or transfer of the Common Stock owned by such parties or with
respect to any other aspect of their affairs concerning the Business.
(c) There are no statutory or contractual shareholders' preemptive
rights with respect to the Common Stock or any other shares of capital
stock of Parent, Borrower and Borrower's Domestic Subsidiaries. To the best
of Borrower's knowledge, none of Parent, Borrower or Borrower's Domestic
Subsidiaries has violated any applicable federal or state securities laws
in connection with the offer, sale or issuance of any of its capital stock.
There are no agreements granting registration rights to any person with
respect to any shares of stock of Parent, Borrower or Borrower's Domestic
Subsidiaries except for the Registration Rights Agreement.
4.4 No Event of Default; Compliance with Instruments. No event has
------------------------------------------------
occurred and no condition exists which would constitute an Event of Default or
Potential Event of Default. None of Parent, Borrower or Borrower's Domestic
Subsidiaries is in violation of any term of (i) its Certificate of Incorporation
or By-laws, or (ii) Material Contract to which it is a party or by which it may
be bound.
4.5 Compliance with Laws; Certain Operations. Each of Parent, Borrower
----------------------------------------
and Domestic Borrower's Subsidiaries has complied in all material respects with
all applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof and all requirements of any applicable
self-regulatory organization except as set forth on Schedule 4.5 hereto. With
------------
the exception of the items listed on Schedule 4.5 attached hereto, no material
------------
claims are pending against Parent, Borrower or Borrower's Domestic Subsidiaries
alleging a violation of, or liability or responsibility under, any such law,
regulation or requirement which have not been heretofore settled.
4.6 Solvency. Each of Parent, Borrower and Borrower's Domestic
--------
Subsidiaries is Solvent prior to, and after giving effect to, the transactions
contemplated hereby. No transfer of property is being made and no obligation is
being incurred in connection with such transactions with actual intent to
hinder, delay or defraud either present or future creditors.
4.7 Litigation. Except (a) for those matters set forth on Schedule 4.7
---------- ------------
(which matters, singly or in the aggregate could not reasonably be expected to
have a Material Adverse Effect) or (b) with respect to any other matters not set
forth on Schedule 4.7 that singly or in the aggregate could not be reasonably
------------
expected to have a Material Adverse Effect, there are no actions, suits or
proceedings pending or, to Borrower's knowledge, threatened against or affecting
Parent, Borrower or Borrower's Domestic Subsidiaries or their business or
assets, before any court or governmental department, agency or instrumentality,
domestic or foreign. No injunction, writ, temporary restraining order or any
order of any
16
<PAGE>
nature has been issued by any court or governmental department, agency or
instrumentality, domestic or foreign purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Related
Transaction Document, or directing that any of the Related Transactions not be
consummated as provided herein or therein.
4.8 Regulations U and X. Borrower is not engaged in the business of
-------------------
extending credit for the purpose of purchasing or carrying "margin stock", as
defined in Regulation U of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), and no part of the proceeds of the Obligations
---------------------
shall be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in violation
of Regulations U and X of the Federal Reserve Board.
4.9 ERISA.
-----
(a) Except as set forth on Schedule 4.9 attached hereto, none of
------------
Parent, Borrower or any of their ERISA Affiliates maintains, contributes
to, or has any obligation to contribute to or has maintained or contributed
to at any time prior to the date hereof any Multiemployer Plan, Multiple
Employer Plan or Pension Plan.
(b) Each Plan complies in all material respects with ERISA, the Code,
and all applicable statutes and governmental rules and regulations and no
condition exists or event or transaction has occurred in connection with
any Plan which could result in, individually or in the aggregate, the
incurrence by Borrower or any of its ERISA Affiliates of any material
liability, fine or penalty.
(c) None of Parent, Borrower or any of their ERISA Affiliates has any
material contingent liability with respect to any post-retirement benefit
under any Plan, other than liability for continuation coverage described in
Part 6 of Subtitle B of Title I of ERISA.
(d) Parent, Borrower and each of their ERISA Affiliates have made all
contributions and payments to or under each Plan as required by law, the
terms of the Plan, or any contract or agreement except for those which
alone or in the aggregate do not represent a material liability to
Borrower.
(e) No material liability has been asserted or, to Borrower's
knowledge, threatened against Parent, Borrower or any of their ERISA
Affiliates for any violation of ERISA or the Code in connection with any
Plan, including, without limitation, the administration thereof.
4.10 Subsidiaries. Schedule 4.10 attached hereto sets forth the name
------------ -------------
and jurisdiction of formation of each Subsidiary of Borrower. Borrower or a
wholly-owned Subsidiary of Borrower is the record and beneficial owner of all of
the listed and outstanding capital stock (or securities convertible into or
exchangeable for such capital stock) of each of the Domestic Subsidiaries listed
on Schedule 4.10 attached hereto.
-------------
4.11 Financials. Borrower has delivered to Lenders the following
----------
financial statements with respect to the Parent and its consolidated
Subsidiaries: (i) a balance sheet and related statements of operations and cash
flows for the fiscal years ended May 31, 1999, audited by independent certified
public accountants and accompanied by an unqualified opinion thereof, and (ii)
an unaudited balance
17
<PAGE>
sheet and related statements of operations and shareholders' equity and cash
flows for the period ending May 31, 2000. Borrower has delivered to Lenders with
respect to the Borrower Consolidated Entity the following financial statements:
(i) an unaudited balance sheet as of, and unaudited statements of operations,
shareholders' equity and cash flows for the fiscal year ended May 31, 1999 and
(ii) an unaudited balance sheet as of, and unaudited statements of operations,
shareholders' equity and cash flows for the period ending May 31, 2000. The
foregoing financial statements were prepared in accordance with GAAP (subject,
in the case of such unaudited statements, to the absence of footnotes and to
normal year-end adjustments) and present fairly in all material respects the
financial position of the applicable entity as at the dates thereof and the
results of their operations for the periods then ended. Borrower has also
delivered to Lenders the projections of the Borrower Consolidated Entity's
Consolidated profit and loss statement for the annual periods ending on May 31,
2000 through May 31, 2006 (the "Projections"). The Projections represent the
-----------
Borrower Consolidated Entity's projected future financial performance for the
period set forth therein, subject to assumptions, which Borrower believes are
fair and reasonable in light of the current and reasonably foreseeable future
conditions.
4.12 Absence of Undisclosed Liabilities. None of Parent, Borrower or
----------------------------------
Borrower's Domestic Subsidiaries has any material Liability arising out of
transactions entered into, on or prior to the date hereof, or any action or
inaction on or prior to the date hereof, or any state of facts existing on or
prior to the date hereof which are, under GAAP, ordinarily required to be set
forth on a balance sheet or the footnotes thereto, other than liabilities set
forth on the Pro Forma Balance Sheet or as set forth on the Schedules.
4.13 Assets. Each of Parent, Borrower and Borrower's Domestic Subsidiaries
------
have good and indefeasible title to, or a valid leasehold interest in, or a
valid license to use, all material properties and assets used in the conduct of
its business as presently conducted and as presently proposed to be conducted by
it, located on its premises, shown on the Pro Forma Balance Sheet or shown on
the Latest Balance Sheet or acquired thereafter, except for properties and
assets disposed of in the ordinary course of business since the date of the
Latest Balance Sheet, free and clear of all Liens, except for Liens permitted
under Section 6.2 hereof. Borrower's and Borrower's Domestic Subsidiaries'
buildings, equipment and other tangible assets, taken as a whole, are in good
operating condition, ordinary wear and tear excepted.
4.14 Tax Matters. Each of Parent, Borrower and Borrower's Domestic
-----------
Subsidiaries has timely filed, or obtained valid extensions of time for filing
(which extensions have not expired), all federal, state, local and other tax
returns and reports required to be filed by it. All such tax returns, if any,
are true and correct in all material respects. No claim has been made by any
taxing authority in any jurisdiction where each of Parent, Borrower and
Borrower's Domestic Subsidiaries did not file tax returns that it is or may be
subject to taxation by that jurisdiction. Except as disclosed in Schedule 4.14
-------------
attached hereto:
(a) each of Parent, Borrower and Borrower's Domestic Subsidiaries has
paid all taxes (including all deficiency assessments, additions to taxes,
penalties and interest, of which notice has been received) to the extent
that such amounts have become due or are claimed to be due from any
federal, state, local or foreign taxing authorities or a reserve therefor
has been established;
18
<PAGE>
(b) adequate provisions have been made in the Latest Balance Sheet
for the payment of all accrued and unpaid federal, state, local and other
taxes, whether or not now due and payable and whether or not disputed;
(c) there are no tax liens (other than liens for taxes which are not
yet due and payable) on any property of each of Parent, Borrower and
Borrower's Domestic Subsidiaries;
(d) there are no pending or threatened tax return examinations
against either Parent, Borrower or Borrower's Domestic Subsidiaries;
(e) there are no tax deficiencies asserted by any jurisdiction
against Parent, Borrower or any of the Domestic Subsidiaries;
(f) none of Parent, Borrower or any of Borrower's Domestic
Subsidiaries has granted any extensions of limitation periods applicable to
tax claims; and
(g) none of Parent, Borrower or any of Borrower's Domestic
Subsidiaries has any obligation under any written tax sharing agreement or
agreement regarding payments in lieu of Borrower's taxes.
4.15 Contracts. (a) Each of Parent, Borrower and Borrower's Domestic
---------
Subsidiaries have performed all the obligations required to be performed by it
to the date of this Agreement, and is not in receipt of any written claim of
default, under any Material Contract to which it is a party; (b) to the best of
Borrower's knowledge, no event has occurred which, with the passage of time or
the giving of notice or both, would result in a breach or default under any
Material Contract to which Parent, Borrower or Borrower's Domestic Subsidiaries
is a party or are bound; (c) no Material Contract to which Parent, Borrower or
any of Borrower's Domestic Subsidiaries is a party has been breached in any
material respect or canceled by the other party since the date of the Latest
Balance Sheet; and (d) none of Parent, Borrower or any of Borrower's Domestic
Subsidiaries is a party to any lease, contract, commitment or other agreement
which is reasonably likely to have a Material Adverse Effect. Schedule 4.15
-------------
attached hereto contains a true, correct and complete list of all Material
Contracts currently in effect on the date hereof. None of the Material
Contracts contains any burdensome restrictions on Parent, Borrower or any of
Borrower's Domestic Subsidiaries or any of their respective properties which
would have a Material Adverse Effect.
4.16 Absence of Changes. Except as disclosed in Schedule 4.16, since
------------------ -------------
May 31, 1999, the Business has been operated in the ordinary course thereof in
all material respects consistent with past practices, and there has been no
occurrence of any event having or reasonably likely to have a Material Adverse
Effect.
4.17 Intellectual Property. Each of Parent, Borrower and Borrower's
---------------------
Domestic Subsidiaries own and possess all right, title and interest in and to,
or has a valid and enforceable license to use, all patents, trade names,
trademarks, copyrights, inventions, processes, designs, custom or proprietary
computer software, works of authorship, franchises, formulas, trade secrets,
know-how and other intangible property and proprietary rights which are
material, either individually or in the aggregate, to or for use in the conduct
of its business (collectively, "Intellectual Property"). To the best of their
---------------------
knowledge, each of Parent, Borrower and its Domestic Subsidiaries may use all of
its material Intellectual Property in the conduct of its business with no
conflict with or infringement of the rights of
19
<PAGE>
others. Except as set forth in Schedule 4.17 attached hereto, Borrower has no
-------------
knowledge of any infringement by any third party on any of its material
Intellectual Property owned or used by it and has not taken or omitted to take
any action which would have the effect of waiving any of its rights thereunder.
4.18 Insurance. Each of Parent, Borrower and Borrower's Domestic
---------
Subsidiaries maintains insurance in such amounts and covering such risks as is
customarily carried by companies of similar size engaged in similar lines of
business. All such policies are in full force and effect, and none of Parent,
Borrower or Borrower's Domestic Subsidiaries is in default in any material
respect in its obligations under any such policy.
4.19 Environmental and Safety Matters.
--------------------------------
(a) Except as disclosed in Schedule 4.19, the on-going operations of
-------------
Parent, Borrower and each of Borrower's Domestic Subsidiaries comply in all
material respects with all Environmental and Safety Requirements.
(b) Except as disclosed in Scheduled 4.19, Parent, Borrower and each
--------------
of Borrower's Domestic Subsidiaries have obtained all licenses, permits,
authorizations and registrations required under any Environmental and
Safety Requirements ("Environmental Permits") and necessary for their
---------------------
respective ordinary course operations, all such Environmental Permits are
in good standing, and each of Parent, Borrower and Borrower's Domestic
Subsidiaries are in compliance with all material terms and conditions of
such Environmental Permits, except where the failure to obtain or comply
with Environmental Permits would not have a Material Adverse Effect.
(c) Except as disclosed in Scheduled 4.19, none of Parent, Borrower
--------------
or any of Borrower's Domestic Subsidiaries is, or has Property or
operations which are subject to any outstanding written order from or
agreement with any governmental authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental and Safety
Requirements.
(d) To the knowledge of Borrower, no Liens exist under any
Environmental and Safety Laws on any property or facility now or previously
owned, operated or otherwise used by Parent, Borrower or Borrower's
Domestic Subsidiaries and, to the best of the knowledge of Borrower, no
government or other third party actions have been taken, threatened or are
reasonably likely to subject any such property or facility to such Liens,
and none of Parent, Borrower, Borrower's Domestic Subsidiaries or any
Environmental Affiliate have been or are required pursuant to any
Environmental and Safety Requirements to place any notice or restriction in
any deed to such property or facility.
4.20 Investment Company. None of Parent, Borrower or Borrower's
------------------
Subsidiaries is (a) an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or (b) subject to any other law which purports to regulate or
restrict its ability to borrow money or to consummate the Related Transactions
or to perform its obligations hereunder or thereunder.
20
<PAGE>
4.21 Affiliate Transactions. Except as disclosed on Schedule 4.21 and
---------------------- -------------
except (1) in the ordinary course of and pursuant to the reasonable requirements
of Parent's, Borrower's or the relevant Subsidiary's business and (2) upon fair
and reasonable terms no less favorable to Parent, Borrower and such Subsidiary
than it could obtain in a comparable arm's-length transaction with an
unaffiliated Person: (a) no Affiliate nor any officer, employee, director or
stockholder of Parent, Borrower or Borrower's Subsidiaries or is a party to any
agreement, contract, commitment or transaction with Parent, Borrower or
Borrower's Domestic Subsidiaries (employment related, consulting or otherwise).
4.22 Employee Matters. Except as set forth on Schedule 4.22 attached
---------------- -------------
hereto and except for any of the following which singly or in the aggregate
could not reasonably be expected to have a Material Adverse Effect:
(a) no employees of Parent, Borrower or Borrower's Domestic
Subsidiaries are currently represented by any labor union, none of Parent,
Borrower or Borrower's Subsidiaries is a party to any collective bargaining
agreement, and to the best of Borrower's knowledge, there is no
organizational effort presently being made or threatened by or on behalf of
any labor unions with respect to employees of Parent, Borrower or
Borrower's Domestic Subsidiaries;
(b) there is no unfair labor practice complaint against Parent,
Borrower or Borrower's Domestic Subsidiaries pending before the National
Labor Relations Board;
(c) there is no labor strike, dispute, slowdown, representation
campaign or work stoppage actually pending or, to the best of Borrower's
knowledge, threatened against Parent, Borrower or Borrower's Domestic
Subsidiaries; and
(d) to the best of Borrower's knowledge, no officer or employee of
Parent, Borrower or Borrower's Subsidiaries have entered into any agreement
which is now in effect with any person, corporation, partnership or
business organization other than Parent, Borrower or Borrower's
Subsidiaries requiring such person to assign any interest in any invention
or trade secrets or to keep confidential any trade secrets or other
proprietary information or containing any prohibition or restriction on
competition or solicitation of customers.
4.23 Tangible Property. The tangible property owned or leased by Parent,
-----------------
Borrower or Borrower's Domestic Subsidiaries, taken as a whole, is sufficient to
conduct the operations of Parent, Borrower or Borrower's Domestic Subsidiaries
as presently conducted and as contemplated. No modifications or additions to
such property which are material, either individually or in the aggregate, are
needed or planned, except as described in the Projections. Each of Parent,
Borrower and Borrower's Domestic Subsidiaries has not received notice of, nor
have there occurred, any pending or to the best of Borrower's knowledge,
threatened condemnation proceedings or any other matter materially and adversely
affecting the value of any owned or leased real property of Parent, Borrower or
Borrower's Domestic Subsidiaries.
4.24 Disclosure. All statements contained in any exhibit, certificate or
----------
other instrument attached hereto or required to be delivered to Lenders pursuant
to this Agreement shall constitute representations and warranties by Borrower
hereunder. The Agreement and the schedules, attachments, written statements,
documents, certificates or other items required hereby or filed with the SEC,
taken as a whole, do not contain any untrue statement of a material fact or omit
a material fact necessary to make each such statement contained herein or
therein not misleading. To the best of Borrower's knowledge,
21
<PAGE>
there is no material fact pertaining to the Business which Borrower has not
disclosed to Lenders in writing and which, as of the date hereof, has had or
could reasonably be expected to have a Material Adverse Effect. All originals or
copies of documents provided by Borrower to Lenders in connection with this
Agreement and the Related Transactions are true, correct and complete in all
material respects.
4.25 Public Utility Company. Borrower is not a "holding company," or a
----------------------
"Subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "Subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.26 Fiscal Year. The Borrower's fiscal year ends May 31.
-----------
4.27 Fictitious Business Names. Except as set forth in Schedule 6.9 of
-------------------------
the Senior Loan Agreement as in effect on the date hereof, neither Borrower or
any of Borrower's Domestic Subsidiaries has used any corporate or fictitious
name (including d/b/a's or the like) during the five (5) years preceding the
date hereof, other than the corporate name under which it has executed this
Agreement.
4.28 Licenses and Permits. Parent, Borrower and each of Borrower's
--------------------
Domestic Subsidiaries has obtained and holds in full force and effect, all
franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary for the operation of its respective businesses as presently
conducted and as proposed to be conducted except where the failure to obtain the
same would not have a Material Adverse Effect. None of Parent, Borrower or any
of Borrower's Domestic Subsidiaries is in violation of the terms of any such
franchise, license, lease, permit, certificate, authorization, qualification,
easement, right of way, right or approval, which violation would have a Material
Adverse Effect.
4.29 Notice from Self-Regulated Organization. Neither Parent nor Borrower
---------------------------------------
has received a notice from the New York Stock Exchange, the SEC or other self-
regulatory organization indicating that Parent has or will be delisted or that
trading of Parent's Common Stock has or will be halted.
4.30 Parent's Business. As of the date hereof, Parent is not engaged in
-----------------
any business or activity and is not incurring any liabilities other than with
respect to the ownership all of the capital stock of Borrower, activities,
expenses, liabilities incident to its organization and to the carrying out of
the transactions contemplated hereby or by the Related Transaction Documents and
other activities related to the Business that, as a whole, are not material.
ARTICLE 5
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that, except with the prior written consent of Lenders,
so long as any of the Obligations remain outstanding and, in the case of
Sections 5.4(f), and 5.8, so long as Lenders collectively own, in the aggregate,
at least a fifty percent (50%) interest in the Warrants or the shares of Common
Stock into which the Warrants are exercisable:
5.1 Payment of Obligations. Borrower shall pay all of the Obligations,
----------------------
as the same become due and payable.
22
<PAGE>
5.2 Preservation of Corporate Existence. Each of Parent, Borrower and
-----------------------------------
Borrower's Domestic Subsidiaries shall(a) maintain its corporate existence
(except that Subsidiaries of Borrower may merge with Borrower or wholly-owned
Subsidiaries of Borrower upon providing Lenders with ten (10) days prior written
notice) and maintain in full force and effect all licenses, bonds, franchises,
leases, trademarks and qualifications to do business, patents, contracts and
other rights material to the profitable conduct of their businesses, and (b)
continue in, and limit their operations to, the same general lines of business
as presently conducted by it.
5.3 Payment of Taxes and Claims. Each of Parent, Borrower and
---------------------------
Borrower's Domestic Subsidiaries shall pay and discharge all federal and
material state and local taxes, assessments and other governmental charges
imposed upon it or upon its income or properties, prior to the date on which
penalties attach thereto, and shall pay all claims which, if unpaid, would
become a Lien upon any of its properties, except for any such tax, assessment,
charge, levy or claim which is being contested by or on behalf of such entity in
good faith and by proper proceedings and for which such reserves or other
provisions as may be required by GAAP shall have been made and recorded.
5.4 Reporting Requirements. Borrower shall promptly furnish to Lenders
----------------------
all such financial information respecting it as Lenders shall reasonably request
and shall notify its auditors and accountants that Lenders are authorized to
obtain such information directly from them if the Borrower fails to furnish such
information to Lenders. Without limiting the foregoing, Borrower shall furnish
to Lenders, in such reasonable detail as Lenders shall request, the following:
(a) Monthly Financial Statements. As soon as available and in any
----------------------------
event within thirty (30) days after the end of each month, excluding months
ending on the last day of a fiscal quarter or Fiscal Year, an unaudited
balance sheet, statement of income and expense and statement of cash flow
for the Borrower Consolidated Entity on a consolidated basis for such
monthly period and for the then current fiscal year to date, all in
reasonable detail, and setting forth in comparative form, figures for the
corresponding period of (i) the previous fiscal year and (ii) the budget.
Such statements shall be certified by the Chief Executive Officer or Chief
Financial Officer of Borrower as fairly presenting in all material respects
the consolidated financial position of the Borrower Consolidated Entity as
of the dates indicated and the results of operations and cash flow for the
calendar month indicated in accordance with GAAP (subject to year-end audit
adjustments and the absence of footnotes).
(b) Quarterly Financial Statements. As soon as available and in any
------------------------------
event within forty-five (45) days after the end of each fiscal quarter of
Borrower (except the last fiscal quarter of any year), an unaudited
quarterly report of the Borrower Consolidated Entity containing a
Consolidated (i) balance sheet, (ii) statement of income and expense, (iii)
statement of shareholders' equity and (iv) statement of cash flow for such
year, and setting forth in each case, in comparative form, figures for the
previous fiscal year and the budget, all in reasonable detail, fairly
presenting in all material respects the financial position and the results
of operations of the Borrower Consolidated Entity. Such statements shall be
certified by the Chief Executive Officer or Chief Financial Officer of
Borrower as fairly presenting in all material respects the consolidated
financial position of the Borrower Consolidated Entity as of the dates
indicated and the results of operations and cash flow for the quarter
indicated in accordance with GAAP (subject to year-end audit adjustments
and the absence of footnotes).
23
<PAGE>
(c) Annual Financial Statements. As soon as available and in any
---------------------------
event within ninety (90) days after the end of each fiscal year of
Borrower, an audited annual report of the Parent (and if requested by
Lenders, Borrower) containing a Consolidated (i) balance sheet, (ii)
statement of income and expense, (iii) statement of shareholders' equity
and (iv) statement of cash flow for such year, and setting forth in each
case, in comparative form, figures for the previous fiscal year, all in
reasonable detail, fairly presenting in all material respects the financial
position and the results of operations of the Parent (and Borrower, if
requested by Lenders) as of the close of such previous year and for the
year then ended, prepared in accordance with GAAP, and, (1) in the case of
audited Financial Statements of Parent, accompanied by an unqualified
opinion of an independent certified public accountant satisfactory to
Lenders and a report of the independent certified public accountant with
respect to the consolidating financial statements of Parent for such fiscal
year in scope and substance reasonably acceptable to Lenders and (2) in the
case of audited financial statements of Borrower, a report of the
independent certified public account with respect thereto in form and
substance satisfactory to Lenders.
(d) Certificates. With each of the audited annual reports delivered
------------
pursuant to Section 5.4(c) above, and with each quarterly unaudited
financial statement delivered pursuant to Section 5.4(b) above, a
certificate of the Borrower's Chief Executive Officer or Chief Financial
Officer stating that, except as explained in reasonable detail in such
certificate, (A) the Parent, Borrower and Borrower's Domestic Subsidiaries
are, at the date of such certificate, in compliance with all of the
covenants and agreements in this Agreement, and (B) no Event of Default or
Potential Event of Default then exists. If such certificate discloses that
a covenant has not been complied with or that an Event of Default or
Potential Event of Default exists, such certificate shall set forth what
action the Borrower has taken or proposes to take with respect thereto.
(e) Accountants' Reports. Promptly upon receipt thereof, copies of
--------------------
all significant reports submitted to Borrower by independent public
accountants in connection with each annual, interim or special audit of its
financial statements made by such accountants, including the management
letter submitted by such accountants to management in connection with its
annual audit.
(f) Reports to the SEC and to Shareholders. Promptly upon the filing
--------------------------------------
or sending thereof, copies of all other regular, periodic or special
reports of Borrower filed with the SEC (including, without limitation,
copies of the Form 10-K annual report, Form 10-Q quarterly reports, Form 8-
K current report or comparable successor reports); copies of all
registration statements of the Borrower filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made
to security holders generally.
(g) Reports to Senior Lenders. Together with any compliance
-------------------------
certificate, financial statement, or other report furnished to Senior
Lenders pursuant to the Senior Loan Documents, a copy of the same setting
forth in reasonable detail all calculations for all amounts contained
therein (including, without limitation, the financial covenant
calculations) and, together with all other notices or certificates
furnished to Senior Lenders pursuant to the Senior Loan Documents, Borrower
shall also deliver to Lenders a copy of the same.
5.5 Notices to Lenders. Borrower shall notify Lenders in writing of the
------------------
following matters at the following times:
24
<PAGE>
(a) Promptly (and in any event within five (5) days) after becoming
aware thereof, any Event of Default or Potential Event of Default.
(b) Promptly (and in any event within five (5) days) after becoming
aware thereof, the assertion by the holder of any material Indebtedness,
including Senior Lenders, that a default exists with respect thereto or
that Borrower or any Domestic Subsidiary is not in compliance with the
terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance.
(c) Promptly (and in any event within five (5) days) after becoming
aware thereof, any notice or indication that any Significant Customer (as
defined below) intends to terminate, significantly reduce or otherwise
alter in a materially adverse manner its relationship with the Business.
For purposes of this Agreement "Significant Customer" shall mean any of the
--------------------
five (5) largest customers of the Business, measured in terms of sales
volume in dollars for the most recent fiscal year then ended.
(d) Promptly (and in any event within five (5) days) after becoming
aware thereof, any event, occurrence or condition that has or is reasonably
likely to have a Material Adverse Effect including, without limitation, any
pending or threatened material action, suit, proceeding or counterclaim by
any Person, or any pending or threatened investigation by or notice from
any governmental authorities, of any violation in any material respect of
any law, statute, regulation or ordinance of any governmental authority.
(e) (A) Promptly and in any event within thirty (30) days after
receipt thereof by Borrower or any of its ERISA Affiliates, copies of each
notice from the IRS relating to the disqualification of any Plan that is
intended to be qualified under Section 401(a) of the Code; (B) promptly and
in any event within thirty (30) Business Days of the occurrence of the
event, written notice of any event with respect to any Plan which could
result in the incurrence by Borrower or any of its ERISA Affiliates of any
material liabilities, fine or penalty; (C) together with each copy of such
notice received by Borrower or any of its ERISA Affiliates, a written
statement of Borrower's senior financial officer setting forth details as
to all events referred to therein and the action taken with respect
thereto, or proposed to be taken, by Borrower or its ERISA Affiliates, as
applicable, and a copy of any notice, filing or correspondence to or
required by the IRS, the Department of Labor, or any government agency or
adverse party as may be applicable.
(f) Promptly, the entry of any order, judgment or decree in excess of
$1,000,000 against Borrower or its Subsidiaries or any of their respective
properties or assets.
(g) Promptly (and in any event within five (5) Business Days) after
becoming aware thereof, any notice or indication from the New York Stock
Exchange, the SEC or other self-regulatory organization that the trading of
Parent is going to be or has been halted or that Parent is going to be or
has been delisted.
5.6 Maintenance of Insurance. Each of Parent, Borrower and Borrower's
------------------------
Domestic Subsidiaries shall maintain insurance on its properties and businesses
with reputable insurance companies in such amounts, of such types and covering
such casualties, risks and contingencies as is
25
<PAGE>
ordinarily carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which they operate.
5.7 Maintenance of Properties. Each of Parent, Borrower and Borrower's
-------------------------
Domestic Subsidiaries shall maintain and preserve all of its properties which
are reasonably necessary for the proper conduct of its businesses in good
working order and condition, ordinary wear and tear excepted.
5.8 Keeping of Records and Books of Account. Each of Parent, Borrower
---------------------------------------
and Borrower's Domestic Subsidiaries shall keep complete and accurate records
and books of account, in which full and correct entries in accordance with GAAP
shall be made of all of its financial transactions.
5.9 Visitation Rights. Each of Parent, Borrower and Borrower's
-----------------
Subsidiaries shall, at any time and from time to time during normal business
hours, permit Lenders or any agents or representatives of Lenders to examine and
make copies of and abstracts from the records and books of account of, and to
visit their properties and to discuss their affairs, finances and accounts with
any officer or director their independent accountants, provided that such
--------
examinations and visits will be conducted in a manner that minimizes disruption
of the parties' business.
5.10 Compliance with Laws.
--------------------
(a) Each of Parent, Borrower and Borrower's Domestic Subsidiaries
shall to comply with the applicable requirements of all laws, rules,
regulations and orders of any governmental authority, except for any
failures to so comply which singly or in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
(b) Within fifteen (15) days after Borrower learns of the enactment or
promulgation of any requirement of law which could reasonably be expected
to have a Material Adverse Effect, Borrower shall provide Lenders with
notice thereof.
(c) At the reasonable request of Lenders, if a material environmental
claim has been asserted by a governmental authority, and at the sole cost
and expense of Borrower, Borrower shall retain an environmental consulting
firm, satisfactory to Lenders in their commercially reasonable judgment, to
conduct an environmental review, audit or investigation of the specific
items as requested by Lenders relating to the properties of Borrower and
its Domestic Subsidiaries and provide to Lenders a copy of any reports
delivered in connection therewith, provided if any of the holders of the
--------
Senior Indebtedness have initiated such an audit, Lenders will accept
copies of reports accepted by the holders of the Senior Indebtedness. At
the reasonable request of Lenders, Borrower shall provide Lenders with any
additional information relating to environmental matters and any potential
related liability resulting therefrom as Lenders may reasonably request.
5.11 [Intentionally Omitted.]
5.12 Use of Proceeds. Borrower shall use the initial proceeds hereunder
---------------
solely to repay the Refinanced Indebtedness and to pay the fees and expenses
arising in connection with the Related Transactions or the Related Transactions.
26
<PAGE>
5.13 Further Assurances. Parent, Borrower and each of Borrower's
------------------
Subsidiaries shall take all such further actions and execute all such further
documents and instruments as Lenders may at any time reasonably determine to be
necessary or desirable to further carry out and consummate the transactions
contemplated by the Senior Subordinated Loan Documents and to cause the
execution, delivery and performance of the Senior Subordinated Loan Documents to
be duly authorized.
ARTICLE 6
NEGATIVE COVENANTS
------------------
Borrower covenants that, except with the prior written consent of Lenders,
so long as any of the Obligations remain outstanding and in the case of Sections
6.7, 6.8, 6.12 and 6.21, so long as Lenders collectively own in the aggregate at
least a fifty percent (50%) interest in the Warrants or the shares of Common
Stock into which the Warrants are exercisable:
6.1 Indebtedness. None of Parent, Borrower or Borrower's Domestic
------------
Subsidiaries shall create, incur, assume, guarantee or be or remain liable for,
contingently or otherwise, or suffer to exist, any Indebtedness, except:
(a) the Obligations;
(b) the Senior Indebtedness;
(c) Indebtedness secured by Purchase Money Liens not to exceed, in
the aggregate for Borrower and its Domestic Subsidiaries combined,
$1,000,000 outstanding at any one time;
(d) Indebtedness described on Schedule 6.1 and any extension, renewal
------------
or refinancing thereof so long as the principal amount thereof is not
increased and such refinancing is on terms and conditions that are no more
restrictive than the terms and conditions of the Indebtedness being
refinanced;
(e) Indebtedness consisting of regularly scheduled rental payments
under Capital Leases not to exceed, in the aggregate for Borrower and its
Domestic Subsidiaries combined, $250,000 in any fiscal year of the
Borrower, provided, that the aggregate face amount of all Indebtedness of
--------
the Borrower and its Domestic Subsidiaries combined in respect of Capital
Leases shall not exceed $2,000,000 at any time;
(f) Indebtedness under Derivative Contracts permitted pursuant to
Section 6.17; and
(g) unsecured Indebtedness (in addition to the Indebtedness permitted
pursuant to the foregoing clauses (a) through (f)) in an aggregate
outstanding principal amount not to exceed at any time, in the aggregate
for Borrower and its Domestic Subsidiaries combined, $1,000,000.
6.2 Liens. None of Parent, Borrower or Borrower's Domestic Subsidiaries
-----
shall create, assume, incur or suffer to be created, assumed, incurred or to
exist, any Lien on any of its now owned or hereafter acquired property except
for the following ("Permitted Liens") (a) Liens for taxes not yet due or for
---------------
taxes being contested in good faith by appropriate proceedings, (b) Liens of
landlords, carriers,
27
<PAGE>
warehousemen, mechanics and material men incurred in the ordinary course of
business for sums not yet due or which are being contested in good faith and by
appropriate proceedings, (c) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security or to secure the performance of
bids, tenders, sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds, (d) zoning restrictions,
easements, licenses, reservations, covenants, rights of way, utility easements,
building restrictions and other similar charges or encumbrances on the use of
real property which do not interfere with the ordinary conduct of the business
of Parent, Borrower or Borrower's Subsidiaries, (e) rights of lessors with
respect to leases of machinery, equipment or real property of Parent, Borrower
or Borrower's Subsidiaries; (f) any judgment lien the existence or continuance
of which does not constitute an Event of Default under Section 7.1; (g) Purchase
Money Liens; (h) Liens upon any Equipment of Borrower or any Domestic Subsidiary
of Borrower subject to a Capital Lease, to the extent such Capital Lease is
permitted by Section 6.1(e), provided, that such Liens (A) secure only the
--------
payment of Indebtedness arising under such Capital Lease and (B) extend only to
such Equipment and proceeds thereof; (i) Liens securing Senior Indebtedness; (j)
the existing Liens described on Schedule 6.2 attached hereto; (k) Liens
------------
consisting of interests of Equipment lessors under operating leases; and (l)
extensions and renewals of the foregoing Permitted Liens; provided that the
--------
aggregate amount of such extended or renewed Liens is not increased and such
extended or renewed Liens are on terms and conditions no more restrictive than
the terms and conditions of the Liens being extended or renewed;
6.3 Merger or Sale. Parent, Borrower and Borrower's Domestic Subsidiaries
--------------
shall not (a) be a party to any merger, liquidation or consolidation (except for
a merger or consolidation of a Subsidiary of Borrower with and into Parent,
Borrower or another Subsidiary of Borrower), (b) sell, transfer, convey, lease
or otherwise dispose of any part of its assets, except for (A) the sale of
inventory in the ordinary course of business, (B) the sale of the owned real
property of Borrower located at #6 Sawgrass Court, Rogers, Arkansas, (C) the
owned real property and related assets of Borrower located at 1960 South 4250
West, Salt Lake City, Utah (D) obsolete or worn out properly disposed of in the
ordinary course of business, (E) Capital Securities of any subsidiary of
Subsidiary Guarantor incorporated or otherwise organized outside of United
States or any state or territory thereof or (E) other dispositions of assets,
provided that (1) such other dispositions of assets are for fair value, (2) the
--------
total consideration received in connection with such disposition is in cash and
(3) the total consideration for such dispositions does not exceed $1,000,000 in
any fiscal year of Borrower or (c) sell with recourse, or discount or otherwise
sell for less than the face thereof, any of its accounts or notes receivable.
6.4 Payments of Subordinated Indebtedness. None of Parent, Borrower or
-------------------------------------
Borrower's Subsidiaries shall make any voluntary or optional prepayment of any
Indebtedness in excess of $100,000 other than the Obligations and Senior
Indebtedness.
6.5 Investments. None of Parent, Borrower or Borrower's Domestic
-----------
Subsidiaries shall make or permit to exist any Investment in any Person, except
for: (a) advances to employees of Parent, Borrower or Borrower's Subsidiaries
for travel or other ordinary business expenses in the ordinary course of, and
pursuant to the reasonable requirements of the such entity's business; (b)
extensions of credit by Parent, Borrower or Borrower's Subsidiaries in the
nature of accounts or notes receivable arising from the sale of goods and
services in the ordinary course of business; (c) shares of stock, obligations or
other securities received by the Parent, Borrower or Borrower's Subsidiaries in
settlement of claims arising in the ordinary course of business; (d) investments
in Cash Equivalents; (e) Guaranties permitted under Section 6.18; (f)
Indebtedness permitted under Section 6.1; (g) Investments listed on Schedule 6.5
------------
attached hereto; (h) so long as before and after giving effect thereto no
Default or Event of Default shall
28
<PAGE>
have occurred or be continuing, Investments in any wholly-owned subsidiary of
Subsidiary Guarantor incorporated or otherwise organized outside of the United
States or any state or territory thereof, in an aggregate amount not exceeding
$1,000,000; (i) Investments in Subsidiary Guarantor to permit Subsidiary
Guarantor (contemporaneously with, and in the same amount of, such
distributions) to pay state and local franchise and similar tax obligations
actually due and payable in cash by Subsidiary Guarantor; and (j) such other
Investments as Lenders approve in writing.
6.6 Distributions. None of Parent, Borrower, or Borrower's Domestic
-------------
Subsidiaries shall directly or indirectly make any Restricted Payment; provided,
that any of Borrower's Domestic Subsidiaries may declare and pay dividends to
Borrower and Borrower may make:
(a) interest payments under the Senior Note;
(b) distributions to Parent to permit Parent and its Subsidiaries
(contemporaneously with, and in the same amount of, such distributions) to
pay Federal, state and local income tax obligations actually due and
payable in cash by Parent, to the extent such obligations are the direct
result of the net income or loss of Borrower and its Subsidiaries being
attributed to Parent for tax purposes;
(c) distributions to Parent to permit Parent (contemporaneously with,
and in the same amount of, such distributions) to pay fees and expenses
necessary to maintain Parent's corporate existence and good standing;
(d) so long as immediately before and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, a
distribution to Parent to permit Parent (contemporaneously with, and in the
same amount of, such payments) to pay quarterly cash dividends in an amount
not exceeding 15 cents per share per fiscal year in respect of its common
stock, provided that (A) only one such distribution may be made during any
fiscal quarter of the Borrower, (B) each such distribution made during any
fiscal quarter of the Borrower shall be made during the fifteenth (15th)
through the twentieth (20th) consecutive day immediately following the end
of the immediately preceding such fiscal quarter and (C) at least five (5)
days prior to such distribution, Lenders shall have received preliminary
versions of the financial statements to be delivered to Lenders pursuant to
Section 5.4(b) for the immediately preceding such fiscal quarter, together
with an attached certificate of the Chief Financial Officer of Parent (on
behalf of itself and Borrower) to the effect that (1) the final financial
statements to be delivered to Lenders for such immediately preceding fiscal
quarter will not differ in any material respect from such preliminary
financial statements and (2) no Default or Event of Default had occurred or
been continuing as of the end of the period covered by such financial
statements, has occurred or is continuing as of the date of such
certificate or would result from the making of such distribution;
(e) Borrower may forgive Indebtedness evidenced by the Management
Notes at the respective times and in the respective amounts required
pursuant to the terms thereof; and
(f) Borrower may make distributions to Parent to permit Parent
(contemporaneously wiht, and in the same amount of, such distributions, to
repurchase shares of its common stock in the amount and at the time and
price per share, respectively, in each case required pursuant to the
Reynolds Agreement.
29
<PAGE>
6.7 Amendments or Changes in Agreements. None of Parent, Borrower or
-----------------------------------
Borrower's Domestic Subsidiaries shall modify, alter, supplement, extend, amend
or waive any rights under its Certificate of Incorporation, By-Laws or any
Senior Subordinated Transaction Document in a manner that (i) is adverse to
Lenders without the prior written consent of Lenders; (ii) which affects or
diminishes the rights of Lenders as stockholder of Parent in any manner
different from the rights of other holders of the Class A Common Stock of the
Borrower without obtaining the prior written consent of Lenders; or (iii) that
otherwise violates the terms of this Agreement.
6.8 Transactions with Affiliates. Except to the extent expressly
----------------------------
permitted pursuant to Sections 6.5 and 6.6, Borrower shall not and shall not
permit any of its Domestic Subsidiaries to, directly or indirectly, enter into
any transaction with, including the purchase, sale or exchange of property or
the rendering of any service to any Subsidiary of Borrower or other Affiliate of
Borrower and whether or not such transaction would otherwise be permitted under
any of the other provisions of the Senior Subordinated Loan Documents, except in
the ordinary course of and pursuant to the reasonable requirements of Borrower's
or such Domestic Subsidiary's business, as the case may be, and upon fair and
reasonable terms no less favorable to Borrower or such Domestic Subsidiary than
could be obtained in a comparable arms-length transaction with an unaffiliated
Person.
6.9 Fiscal Year. None of Parent, Borrower or Borrower's Domestic
-----------
Subsidiaries shall change their fiscal year.
6.10 Investment Banking, Broker's and Finder's Fees. Except as set forth
----------------------------------------------
on Schedule 6.10 attached hereto, none of Parent, Borrower or Borrower's
-------------
Subsidiaries shall pay or agree to pay, or reimburse any other Person with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee or broker's fee to any Person in connection with the consummation
of the Senior Subordinated Loan Transactions. Each of Parent, Borrower and
Borrower's Subsidiaries shall defend and indemnify Lenders against and hold
Lenders harmless from all claims of any Person for any such fees and all costs
and expenses, including, without limitation, attorneys' fees, incurred by
Lenders in connection therewith, except for claims arising from agreements,
commitments or actions of Lenders.
6.11 Capital Expenditures. Parent, Borrower and Borrower's Domestic
--------------------
Subsidiaries shall not make or incur any Capital Expenditures if, after giving
effect thereto, the aggregate amount of all Capital Expenditures made by the
Parent, Borrower and Borrower's Subsidiaries would exceed $6,000,000 in any
fiscal year of Borrower plus a carry-over amount equal to 50% of the amount
permitted in each year and not expended during that fiscal year. None of
Borrower, Parent or Borrower's Subsidiaries shall, directly or indirectly, make
any Capital Expenditures that are not directly related to the business conducted
on the date hereof by such entity.
6.12 Allocation of Consideration. None of Parent, Borrower or
---------------------------
Borrower's Subsidiaries shall take any action in preparation of tax returns or
financial statements that is inconsistent with the allocation of the
consideration paid by Lenders for the Senior Subordinated Notes and the
Warrants.
30
<PAGE>
6.13 Financial Covenants.
-------------------
(a) Fixed Charge Coverage Ratio.
---------------------------
(i) Borrower shall not permit the Fixed Charge Coverage Ratio,
as determined as of August 31, 2000, for the three-month period
ending on such date, to be less than 0.53 to 1.00;
(ii) Borrower shall not permit the Fixed Charge Coverage Ratio,
as determined as of November 30, 2000, for the six-month period
ending on such date, to be less than 0.61 to 1.00;
(iii) Borrower shall not permit the Fixed Charge Coverage Ratio,
as determined as of February 28, 2001, for the nine-month period
ending on such date, to be less than 0.67 to 1.00; and
(iv) Borrower shall not permit the Fixed Charge Coverage Ratio,
as determined as of each date set forth below for the twelve-month
period ending on such date, to be less than the ratio set forth below
opposite date:
<TABLE>
<CAPTION>
Date Minimum Ratio
---- -------------
<S> <C>
May 31, 2001 0.70 to 1.00
August 31, 2001 0.70 to 1.00
November 30, 2001 0.72 to 1.00
February 28, 2002 0.73 to 1.00
May 31, 2002 0.74 to 1.00
August 31, 2002 0.76 to 1.00
November 30, 2002 0.77 to 1.00
February 28, 2003 0.78 to 1.00
May 31, 2003 0.78 to 1.00
August 31, 2003 0.79 to 1.00
November 30, 2003 and the last
day of each fiscal quarter of Borrower ending
thereafter 0.80 to 1.00
</TABLE>
(b) Leverage Ratios.
---------------
(i) Borrower shall not permit the Total Leverage Ratio, as
determined as of each date set forth below, for the twelve-month period ending
on such date, to be greater than the ratio set forth below opposite date:
<TABLE>
<CAPTION>
Date Maximum Ratio
---- -------------
<S> <C>
August 31, 2000 5.00 to 1.00
November 30, 2000 5.00 to 1.00
February 28, 2001 5.00 to 1.00
May 31, 2001 4.25 to 1.00
August 31, 2001 4.25 to 1.00
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
November 30, 2001 4.25 to 1.00
February 28, 2002 4.00 to 1.00
May 31, 2002 4.00 to 1.00
August 31, 2002 3.75 to 1.00
November 30, 2002 3.50 to 1.00
February 28, 2003 3.50 to 1.00
May 31, 2003 3.25 to 1.00
August 31, 2003 3.25 to 1.00
November 30, 2003 3.25 to 1.00
February 29, 2004 and the last
day of each fiscal quarter of the
Borrower ending thereafter 3.13 to 1.00
</TABLE>
(ii) Borrower shall not permit the Senior Leverage Ratio, as
determined as of each date set forth below, to be greater than the ratio
set forth below opposite date:
<TABLE>
<CAPTION>
Date Maximum Ratio
---- -------------
<S> <C>
August 31, 2000 4.38 to 1.00
November 30, 2000 4.38 to 1.00
February 28, 2001 4.38 to 1.00
May 31, 2001 3.75 to 1.00
August 31, 2001 3.75 to 1.00
November 30, 2001 3.75 to 1.00
February 28, 2002 3.50 to 1.00
May 31, 2002 3.50 to 1.00
August 31, 2002 3.50 to 1.00
November 30, 2002 3.00 to 1.00
February 28, 2003 3.00 to 1.00
May 31, 2003 2.75 to 1.00
August 31, 2003 2.75 to 1.00
November 30, 2003 2.75 to 1.00
February 29, 2004 and the last
day of each fiscal quarter of the
Borrower ending
thereafter 2.50 to 1.00
</TABLE>
(c) Interest Coverage Ratio.
-----------------------
(i) Borrower shall not permit the Interest Coverage Ratio, as
determined as of August 31, 2000, for the three-month period ending
on such date, to be less than 1.60 to 1.00;
(ii) Borrower shall not permit the Interest Coverage Ratio, as
determined as of November 30, 2000, for the six-month period ending
on such date, to be less than 1.76 to 1.00;
32
<PAGE>
(iii) Borrower shall not permit the Interest Coverage Ratio, as
determined as of February 28, 2001, for the nine-month period ending
on such date, to be less than 1.84 to 1.00; and
(iv) Borrower shall not permit the Interest Coverage Ratio, as
determined as of each date set forth below for the twelve-month
period ending on such date to be the less than the ratio set forth
below opposite such date:
<TABLE>
<CAPTION>
Date Minimum Ratio
---- -------------
<S> <C>
May 31, 2001 2.00 to 1.00
August 31, 2001 2.24 to 1.00
November 30, 2001 2.24 to 1.00
February 28, 2002 2.32 to 1.00
May 31, 2002 2.40 to 1.00
August 31, 2002 2.48 to 1l00
November 30, 2002 2.64 to 1.00
February 28, 2003 2.88 to 1.00
May 31, 2003 2.96 to 1.00
August 31, 2003 3.28 to 1.00
November 30, 2003 3.28 to 1.00
February 28, 2004 3.60 to 1.00
May 31, 2004 3.60 to 1l00
August 31, 2004 3.60 to 1.00
November 30, 2004 and the last day of each fiscal
quarter of Borrower ending thereafter
4.00 to 1.00
</TABLE>
6.14 Limitation on Creation of Subsidiaries. None of Parent, Borrower or
--------------------------------------
Borrower's Domestic Subsidiaries shall establish or create any Subsidiary,
provided that the Parent, Borrower and Borrower's Domestic Subsidiaries shall be
permitted to establish or create Subsidiaries only so long as such entity
provides notice to Lenders promptly (and in any event within ten (10) business
days) after the formation, or any other act which results in a Person becoming a
Subsidiary of such entity and, at Lenders' request, cause a Person becoming a
Subsidiary of such entity to execute in form and substance satisfactory to
Lenders, a guaranty sufficient to obligate such Subsidiary for repayment of all
or a portion of the Obligations.
33
<PAGE>
6.15 Parent Limitations. Parent shall not engage in any business or
------------------
activities other than its present activities and the ownership of all of the
capital stock of Borrower, the performance of its obligations under this
Agreement and the other Related Transaction Documents to which it is a party,
the performance of its obligation to its shareholders and the administrative and
reporting activities in each case incidental thereto.
6.16 Unconditional Purchase Obligations. None of Parent, Borrower, or
----------------------------------
Borrower's Domestic Subsidiaries shall enter into or be a party to any contract
for the purchase of materials, supplies or other property or services if such
contract requires that payment be made by it regardless of whether delivery is
ever made of such materials, supplies or other property or services.
6.17 Limitation on Derivative Transactions. None of Parent, Borrower or
-------------------------------------
Borrower's Domestic Subsidiaries shall enter into any Derivative Transactions,
except as required or permitted under the Senior Loan Documents.
6.18 No Guaranties. None of Parent, Borrower, or Borrower's Domestic
-------------
Subsidiaries shall directly or indirectly, issue or assume any Guaranty with
respect to the Liabilities of any other Person, including any Subsidiary or
Affiliate of Borrower, except (a) by the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, (b) by the giving of customary indemnities in connection with the sale
of Inventory or other asset dispositions permitted hereunder and (c)
Indebtedness permitted to be incurred pursuant to Section 6.1.
6.19 Limitation on Transactions Under ERISA. None of Parent, Borrower
--------------------------------------
or Borrower's Domestic Subsidiaries shall directly or indirectly:
(a) amend, or permit any ERISA Affiliate to amend, a Benefit Plan
resulting in an increase in current liability for the plan year such that
Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such a Benefit Plan under Section 401(a)(29) of the Code; or
(b) allow the representation made in Section 4.9 to be untrue at any
time.
6.20 Additional Restrictive Covenants. Except for Permitted Restrictive
--------------------------------
Covenants, none of Parent, Borrower or Borrower's Domestic Subsidiaries shall
directly of indirectly, create or otherwise cause or suffer to exist or become
effective (a) any consensual restriction limiting the ability (whether by
covenant, event of default, subordination or otherwise and including any such
the effect of which is to require the providing of equal and ratable security to
any other Person in the event a Lien is granted to or for the benefit of Agent
and the Lenders) to (i) pay dividends or make any other distributions on shares
of its Capital Securities held by Borrower or any other Subsidiary of Borrower;
(ii) pay any Liability owed to Borrower or any other Subsidiary; (iii) make any
loans or advances to other Investments in Borrower or in any other Subsidiary of
Borrower; or (iv) create or permit to exist any Lien upon the assets of Borrower
or any Subsidiary of Borrower, other than Liens permitted under Section 6.2.
6.21 Certain Structural Changes. Parent shall not convert its
--------------------------
organizational structure to any form of "pass-through" entity, whether general
or limited partnership, limited liability company or otherwise.
34
<PAGE>
ARTICLE 7
DEFAULT
-------
7.1 Events of Default. The occurrence and continuation of any of the
-----------------
following events shall constitute an Event of Default hereunder:
(a) Borrower shall fail to pay when due (i) any interest owing on the
Obligations, (ii) any Principal or (iii) any other amounts due to Lenders
under any of the terms of this Agreement, including, without limitation,
amounts required to paid pursuant to Section 2.7; or
(b) dissolution, liquidation, winding up or cessation of the business
of Parent, Borrower or Subsidiary Guarantor, or the failure of Parent,
Borrower or Subsidiary Guarantor to meet its debts as they mature, or the
calling of one or more meetings of Parent's, Borrower's or Subsidiary
Guarantor's major creditors for purposes of obtaining a moratorium on
payment or compromise of such entity's debts; or
(c) (i) an Event of Default (as defined in the Senior Loan Documents)
shall occur and be continuing and the Senior Lender shall have accelerated
the Senior Indebtedness as a result of such Event of Default or (ii) the
occurrence of a default or event of default (in each case which shall
continue beyond the expiration of any applicable grace periods) which
permits, the acceleration of the maturity of, any note, agreement or
instrument evidencing any other Indebtedness of Borrower or any of its
Subsidiaries (other than the Senior Indebtedness), and the aggregate
principal amount of all such Indebtedness with respect to which a default
or an event of default has occurred, or the maturity of which is permitted
to be accelerated, exceeds $1,000,000; or
(d) any representation or warranty made herein by Borrower, or in any
certificate or financial statement furnished by Borrower pursuant to the
provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made or furnished; or
(e) Borrower shall default in the performance of or compliance with
any of the covenants set forth in Sections 5.1, 5.2, 5.5, 5.9, 5.11 and
5.12 or in Article 6 hereof and in the case of Section 5.4, which default
in performance or failure to comply is not cured within five (5) days of
its occurrence;
(f) Borrower shall default in the performance of or compliance with
any other covenant, condition or provision of this Agreement or any other
Senior Subordinated Loan Document to which it is a party (and not
constituting an Event of Default under any of the other subsections of this
Section 7.1) and such default shall not be remedied for a period of fifteen
(15) Business Days of its occurrence; or
(g) a proceeding shall have been instituted in a court having
jurisdiction seeking a decree or order for relief in respect of Parent,
Borrower or Subsidiary Guarantor in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Parent, Borrower
or Subsidiary Guarantor, as the case may be, or for any substantial part of
its property, or for the winding-up or liquidation of its affairs,
35
<PAGE>
and such proceeding shall remain undismissed or unstayed and in effect for
a period of sixty (60) consecutive days or such court shall enter a decree
or order granting the relief sought in such proceeding; or
(h) Parent, Borrower or Subsidiary Guarantor shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of Parent,
Borrower or Subsidiary Guarantor, as the case may be, or for any
substantial part of its property, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay, or admits in
writing its inability or refusal to pay, its debts as they become due, or
shall take any corporate action in furtherance of any of the foregoing; or
(i) any guaranty delivered pursuant to Section 3(f) or 6.14 hereof
shall cease to be in full force and effect with respect to any guarantor
thereof; or any guarantor (or any Person by, through or on behalf of such
guarantor) under a guaranty delivered pursuant to Section 3(f) or 6.14
hereof shall contest in any manner the validity, binding nature or
enforceability of any guaranty with respect to such guarantor; or
(j) if Borrower has not provided evidence reasonably satisfactory to
the Lenders of action taken by Parent to file a NYSE supplemental listing
for the shares of Common Stock into which the Warrants are exercisable
within thirty (30) days after the date hereof; or
(k) (A) payment by Borrower after the date hereof of Required Earn-
Out Payments in an aggregate amount exceeding 9,150,000 Deutsche Marks, or
(B) payment by Borrower after the date hereof of any Required Earn-Out
Payment if, immediately before or after giving effect thereto, a Default or
an Event of Default shall have occurred and be continuing.
7.2 Consequences of Event of Default.
--------------------------------
(a) Bankruptcy. If an Event of Default specified in Sections 7.1(g)
----------
or (h) hereof shall occur, the unpaid balance of the Senior Subordinated
Notes and interest accrued thereon and all other liabilities of Borrower
hereunder and thereunder shall be immediately due and payable, without
presentment, demand notice, protest or any other demand or notice in
connection with the delivery, acceptance, performance, default or
enforcement of the Senior Subordinated Notes, all of which are hereby
expressly waived.
(b) Other Defaults. If any other Event of Default shall occur,
--------------
Lenders may, at their option declare the unpaid balance of the Senior
Subordinated Notes and interest accrued thereon and all other liabilities
of Borrower thereunder and hereunder shall be immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived.
7.3 Other Rights. The rights and remedies of Lenders upon the occurrence
------------
of an Event of Default set forth in Section 7.2 hereof are in addition to and
not in limitation of any other rights it may have under applicable law and other
agreements.
36
<PAGE>
ARTICLE 8
MISCELLANEOUS
-------------
8.1 Successors and Assigns in General.
---------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
Borrower may not assign or transfer its rights hereunder or any interest
herein or delegate its duties hereunder without the prior written consent
of Lenders. Lenders or any assignees of Lenders may assign all or any
portion of its interest in and rights under this Agreement and the Senior
Subordinated Notes to any other Person (an "Assignee"), or grant a
--------
participating or beneficial interest in this Agreement and the Obligations
to any lending institution (a "Participant"). Lenders shall give Borrower
-----------
prompt written notice of any assignment of or participation in the
Obligations. Borrower shall maintain a register (the "Register"), which
--------
shall include, without limitation, a record of ownership that identifies
each owner of any interest in the Obligations, for registration as to the
rights to principal and interest on the Senior Subordinated Notes and shall
promptly register any such assignment or participation in the Obligations
upon receipt of such notice. The Register shall be available for inspection
by any Lender at any reasonable time and from time to time upon reasonable
prior notice. To facilitate any assignment or participation, Borrower
shall, from time to time at the request of Lenders, execute and deliver to
Lenders or to such party or parties as Lenders may designate, any and all
further instruments as may in the reasonable opinion of Lenders be
necessary or advisable to give full force and effect to any transfer
contemplated by this Section.
(b) Notwithstanding anything to the contrary contained in Section
-------
8.1(a), the Loans (including the Senior Subordinated Notes evidencing such
------
Loans) are registered obligations and the right, title, and interest of the
Lenders and their assignees in and to such Loans or any interest therein
shall be transferrable only upon recordation of such transfer and of the
transferee and its interest in and to the loans in the Register. No
transfer by a Lender or an assignee of any interest in any of the Loans
shall be permitted or effective unless and until the transfer and the
transferee's interest in the Loans is recorded in the Register. No sale of
a participation shall be permitted or effective unless and until such sale
of a participating interest in the Loans and any other amounts owing under
this Agreement is recorded in the Register. In the case of a participation,
the Register shall record the participant's interest in the Loans and any
other amounts owing under this Agreement that such participant has
purchased. All recordations of transfer and of the transferee's interest
shall be conclusive, absent manifest error, as to beneficial ownership of
interests in the Loans. A Note shall only evidence the Lenders' or an
assignees right, title and interest in and to the related Loans, and in no
event is any such Note to be considered a bearer instrument or obligation.
This Section 8.1 shall be construed so that the Loans are at all times
-----------
maintained in "registered form" within the meaning of Sections 163(f),
871(h)(2) and 881(c)(2) of the Code and any related regulations (or any
successor provisions of the Code or such regulations). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and Borrower and the Lenders may treat each Person whose name is
recorded in the Register (other than a participant) as a Lender hereunder
for all purposes hereof.
37
<PAGE>
8.2 Modifications, Amendments or Waivers. The provisions of this
------------------------------------
Agreement may be modified, amended or waived, but only by a written instrument
signed by Lenders and Borrower.
8.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay
---------------------------------------------------------
or failure of Lenders in exercising any right, power or remedy hereunder shall
affect or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a right,
power or remedy preclude any further exercise thereof or of any other right,
power or remedy. The rights and remedies hereunder of Lenders are cumulative
and not exclusive of any rights or remedies which they would otherwise have.
Any waiver, permit, consent or approval of any kind or character on the part of
Lenders of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent in such writing specifically set forth.
8.4 Reimbursement of Expenses; Taxes. Borrower agrees upon demand to
--------------------------------
pay or reimburse Lenders for all of their reasonable out-of-pocket expenses,
including, without limitation, all travel expenses and all reasonable legal,
consulting, accounting and independent analyst, audit, and appraisal fees and
expenses, from time to time (a) arising in connection with the Related
Transactions or Related Transaction Documents or the Senior Subordinated Loan
Transactions; (b) relating to any amendments, waivers or consents pursuant to
the provisions hereof or thereof; and (c) arising in connection with the
enforcement of the Related Transaction Documents, collection of the Obligations
or actions for declaratory relief in any way related thereto or the protection
or preservation of any rights of Lenders hereunder. Borrower also agrees to pay
and save Lenders harmless from all liability for any stamp or other similar
documentary or recording taxes which may be payable in connection with this
Agreement and the other Related Transaction Documents or the performance of any
transactions contemplated hereby or thereby. Upon Lenders' exercise of the
Warrants, Borrower agrees to pay $11,750 to Lenders as consideration for
Lenders' financial review of Borrower undertaken by Lenders in connection with
such exercise.
8.5 Notices. All notices and other communications given to or made upon
-------
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telexed or telecopied
communication) and mailed, telexed, telecopied or delivered by hand or by
reputable overnight courier service to the respective parties, as follows:
Borrower: Weider Nutrition Group, Inc.
2002 South 5070 West
Salt Lake City, UT 84104
Attn: Dan Thomson
Telecopy: (801) 975-1924
With a copy to: Latham & Watkins
5800 Sears Tower
Chicago, IL 60606
Attn: Jeffrey G. Moran, Esq.
Telecopy: (312) 993-9767
Lenders: c/o Wynnchurch Capital
150 Field Drive
Lake Forest, IL 60046
38
<PAGE>
Attn: John Hatherly
Telecopy: (847) 604-6105
With a copy to: Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, IL 60606
Attn: Laurence R. Bronska, Esq.
Telecopy: (312) 715-4800
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except
as otherwise expressly herein provided, be effective upon delivery if delivered
by hand; when deposited with a reputable courier service, delivery charges
prepaid; when deposited in the mail, postage prepaid; or in the case of telex or
telecopy, when received.
8.6 Survival. All representations, warranties, covenants,
--------
indemnifications, consents and agreements of Borrower contained herein or made
in writing in connection herewith shall survive the execution and delivery of
this Agreement, the making of the term loan hereunder and the issuance of the
Senior Subordinated Notes and, except as set forth otherwise herein, shall
remain in effect through the date that all amounts due hereunder are paid to
Lenders.
8.7 Governing Law; Consent to Jurisdiction and Service of Process; Waiver
---------------------------------------------------------------------
of Jury Trial.
-------------
(a) Governing Law. THIS AGREEMENT, THE SENIOR SUBORDINATED NOTES AND
-------------
THE OTHER SENIOR SUBORDINATED LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DEEMED TO BE CONTRACTS
UNDER THE LAWS OF THE STATE OF ILLINOIS AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT
OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF ILLINOIS OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
(b) Consent to Jurisdiction and Service of Process. BORROWER AND
----------------------------------------------
LENDERS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND AGREE THAT ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
SENIOR SUBORDINATED NOTES OR ANY OF THE OTHER SENIOR SUBORDINATED LOAN
DOCUMENTS MAY BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND WAIVES ANY DEFENSE OF FORUM
-----
NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
--- ----------
THEREBY. BORROWER DESIGNATES AND APPOINTS THE CORPORATION SERVICE COMPANY,
AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH
IRREVOCABLY AGREE IN WRITING PURSUANT TO AN APPOINTMENT OF AGENT AGREEMENT
TO SO SERVE AS THEIR AGENT TO RECEIVE ON THEIR BEHALF SERVICE OF ALL
PROCESS IN
39
<PAGE>
ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO BORROWER AT THE ADDRESS STATED IN SECTION 8.5; PROVIDED,
--------
HOWEVER, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY FAILURE TO MAIL
-------
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY
AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE, BORROWER AGREES THAT
SERVICE UPON THEM BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDERS TO BRING PROCEEDINGS
AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
--------------------
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER SENIOR SUBORDINATED LOAN
DOCUMENT. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF TRIAL BY JURY.
8.8 Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
8.9 Headings. Section and subsection headings in this Agreement are
--------
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
8.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by any of the parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
8.11 Indemnification.
---------------
(a) General. (i) In addition to Borrower's other obligations under
-------
this Agreement and the other Senior Subordinated Loan Documents, Borrower
agrees to defend, protect, indemnify and hold harmless Lenders, their
Assignees and Participants, and all of their respective officers,
directors, shareholders, partners, employees, attorneys, consultants and
agents (including, without limitation, those retained in connection with
the satisfaction or attempted satisfaction of any of the conditions set
forth in this Agreement) (collectively, the
40
<PAGE>
"Indemnitees") from and against any and all losses, damages, liabilities,
-----------
obligations, penalties, fees, costs and expenses (including, without
limitation, reasonable attorneys' and paralegals' fees, costs and expenses)
incurred by such Indemnitees, whether prior to or from and after the date
of this Agreement, whether direct or indirect,, as a result of or arising
from or relating to any suit, investigation, action or proceeding by any
Person, either threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any law or regulation (other than
suits or other actions by Borrower against an Indemnitee where Borrower is
successful on the merits), regardless of whether the Indemnitee seeking
indemnification is a party to the action or proceeding for which
indemnification is sought, including, without limitation, any federal or
state securities or labor laws, or under any Environmental and Safety
Requirements or common law principles arising from or in connection with
any of the following: (A) Borrower's negotiation, preparation, execution or
performance of the Senior Subordinated Loan Documents, or any other
documents, agreements, certificates or instruments executed or delivered in
connection with the Related Transactions, including, without limitation,
the Related Transaction Documents, (B) Lenders' furnishing of funds to
Borrower under this Agreement or under the Senior Subordinated Notes or (C)
any matter relating to the financing transactions contemplated by this
Agreement, the other Senior Subordinated Loan Documents or by any document,
agreement, certificate or instrument executed or delivered in connection
with the transactions contemplated hereby or thereby (including, without
limitation, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Obligations)
(collectively, "Indemnified Matters"). Notwithstanding the foregoing,
-------------------
Indemnified Matters shall not include losses, damages, liabilities,
obligations, penalties, fees, costs and expenses incurred by any Indemnitee
in connection with any violations of law or governmental regulations by
such Indemnitee or to the extent that it is finally judicially determined
to have resulted from such Indemnitee's own gross negligence or willful
misconduct. To the extent that this undertaking to indemnify, pay and hold
harmless set forth in this Section 8.11 may be unenforceable for any
reason, Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of
all Indemnified Matters incurred by Indemnitees.
(b) Environmental Liabilities. Without limiting the generality of
-------------------------
the indemnity set forth in Section 8.11(a) hereof, Borrower hereby further
agrees to indemnify and to hold harmless Lenders and all Indemnitees from
and against any and all losses, liabilities, damages, obligations,
penalties, injuries, costs, fees (including, without limitation, reasonable
attorneys', paralegals' and expert witnesses' fees, costs and expenses),
expenses and claims of any and every kind whatsoever paid, incurred or
suffered by, or asserted against, Lenders or any Indemnitee for, with
respect to, or as a direct or indirect result of, the past, present or
future events, activities or operations on, or the past, present or future
condition of, any property owned, operated or otherwise used by Borrower,
Parent or Borrower's Subsidiaries, any Environmental Affiliate, or its
predecessors or successors, or any off-site hazardous, toxic or otherwise
dangerous material, substance or waste treatment, storage or disposal
facility associated therewith (the "Properties"), including, without
----------
limitation, the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release into, onto or
from the Properties of any toxic, hazardous or otherwise dangerous
substance, material or waste, including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental and Safety Requirement regardless of
whether caused by, or within the control of, Borrower, Parent or Borrower's
Subsidiaries.
41
<PAGE>
8.12 Payment Set Aside. To the extent that Borrower make a payment or
-----------------
payments to Lenders, or Lenders exercise their rights of setoff, and such
payment or payments or the proceeds of such setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to Borrower, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
8.13 Interpretation. In this Agreement and each other Senior Subordinated
--------------
Loan Document, unless a clear, contrary intention appears, (a) the singular
number includes the plural number and vice versa; and (b) reference to any
---- -----
gender includes each other gender (including the neuter gender). Unless
otherwise indicated herein, all section references contained herein are to
Sections of this Agreement, whether or not the words "hereof", "herein", "above"
or "below" or words of like import are utilized in connection with such section
references. All uses of the word "including" shall be deemed to mean "including,
but not limited," whether or not such qualifying words are specifically set
forth.
8.14 Approval of Lenders. Whenever this Agreement contemplates, permits
-------------------
or requires an approval, consent, or other action by Lenders or any Lender, such
approval, consent or other action shall only be given or taken if Lenders
holding more than two-thirds of the Principal on the Senior Subordinated Notes
so agree in writing; except in the case of an exercise of Lender's right under
Section 2.4(c) above, in which case any individual Lender may exercise such
right as to such Lender.
[signature page follows]
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
LENDERS:
-------
WYNNCHURCH CAPITAL PARTNERS, L.P.
By: Wynnchurch Partners, L.P., its general
partner
By: Wynnchurch Management, Inc., its
general partner
By: /s/ John Tomes
-----------------------------------
Name: John Tomes
Its: Vice President
WYNNCHURCH CAPITAL PARTNERS CANADA, L.P.
By: Wynnchurch Partners Canada, L.P., its general
partner
By: Wynnchurch Canada GP, Inc., its general
partner
By: /s/ John Tomes
------------------------------------
Name: John Tomes
Its: Vice President
BORROWER:
--------
WEIDER NUTRITION GROUP, INC.
By: /s/ Joseph W. Baty
----------------------------------------
Name: Joseph W. Baty
---------------------------------------
Its: CFO
---------------------------------------
Signature page to Senior Subordinated Loan Agreement
43
<PAGE>
Schedule 2.1
Purchase and Sale of the Senior Subordinated Notes
Lender Principal Amount Purchase Price
------ ---------------- --------------
Wynnchurch Capital $4,795,534 $3,105,010
Partners, L.P.
Wynnchurch Capital $5,204,466 $3,370,125
Partners Canada, L.P.
<PAGE>
Schedule 2.5
------------
Payments
Name
Investment Fee
--------------
Wynnchurch Capital Ltd. LaSalle Bank National Association
Account Number: 5800232646
ABA Number: 071000505
All Other Payments
------------------
Wynnchurch Capital Partners, L.P. LaSalle Bank National Association
Account Number: 5800232661
ABA Number: 071000505
Wynnchurch Capital Partners Canada, L.P. LaSalle Bank National Association
Account Number: 5800232695
ABA Number: 071000505
<PAGE>
Schedule 4.3
Capitalization
(a)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Entity Shareholders/Parent Corp. Issued Shares Authorized Shares Ownership %
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weider Nutrition Weider Health & 15,687,432 Class B 85 million 62.79%
International, Fitness (50 million Class
Inc. A, 25 million
General Public/Etc. 9,334,036 Class A Class B and 10 37.30%
million preferred)
----------------------------------------------------------------------------------------------------------------------
Weider Nutrition Weider Nutrition 179.24 Class B 100,000 100% in Aggr.
Group, Inc. International, Inc. 1,015.93 Class A (50 thousand Class
A and 50 thousand
Class B)
----------------------------------------------------------------------------------------------------------------------
WNG Holdings Weider Nutrition 100 2 million 100%
(International) Group, Inc. (1 million common
Ltd. and 1 million
preferred)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(b)
Weider Nutrition International, Inc. 1997 Equity Participation Plan, as amended-
3,500,000 shares reserved for issuance thereunder
Steve Young has 18,271 unvested shares of Weider Nutrition International, Inc.
Class A Common Stock granted to him under a Phantom Stock Agreement
Robert Reynolds and Richard Bizzaro have rights under their separation
agreements with Weider Nutrition International, Inc./Weider Nutrition Group or
Weider Health & Fitness if the stock does not achieve certain price levels
<PAGE>
Schedule 4.10
Subsidiaries
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Entity Name State of Shareholders/ Issued Shares Ownership %
Incorp. Parent Corp.
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WNG Holdings Nevada Weider Nutrition Group, 100 100%
(International) Inc.
Ltd.
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 4.5
Compliance with Laws, Certain Operations
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Attorney Work Product - Confidential
--------------------------------------------------------------------------------------------------
MATTER VENUE STATUS
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Michael Morelli and Supreme Court of New York, Lawsuit filed in New York in March
Stuart Zuckerman, et. New York County 1999 on behalf of an alleged class
al. v. Weider Nutrition (Latham - NY) alleging false advertising and unfair
Group competition claims with respect to the
Company's manufacture and sale of its
Steel Bar products in New York. The
lawsuit is similar to litigation
previously filed in California (the
California plaintiff's attorney is
involved in this matter). The Company
filed a motion to dismiss the matter,
which was denied by the court in
December 1999. The Company is
contesting the application for the
California attorneys to be admitted
pro hoc vice in New York. Limited
discovery is proceeding.
--------------------------------------------------------------------------------------------------
Lisa Fasig, et. al. v. Circuit Court of Lee Lawsuit filed in Florida in May 1999
Weider Nutrition County, Florida is similar to the New York Steel Bar
International litigation described above (the
(Latham - NY California plaintiff's attorney is
Local Counsel - Florida) involved in this matter). The Company
has filed a motion to dismiss the
matter, which is currently pending
before the court. The Company is
contesting the application for the
California attorneys to be admitted
pro hoc vice in Florida.
--------------------------------------------------------------------------------------------------
Shane A. Garrett, et. al. 18/th/ Judicial District In late March 2000, Mr. Garrett's
v. WNI and Genesis Court, Sedgwick County, family initiated a lawsuit in state
Health Club, Inc. Kansas court in Kansas alleging personal
Case No. 00 C0910 injuries from a cardiac arrest while
working out leading to brain hypoxia,
(Insurance counsel) which occurred in 1998. Mr. Garret
(Latham & Watkins NY) alleges that the personal injuries
were caused by a purported interaction
between ephedrine alkaloids and
caffeine in the Company's ABB Ripped
Force drink
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Attorney Work Product - Confidential
--------------------------------------------------------------------------------------------------
MATTER VENUE STATUS
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------------------------------------
and Mr. Garret's asthma medication.
medication. The Company tendered the
matter to its insurance carriers, and
believes that any potential adverse
outcome of the matter will be covered
by insurance policies. The Company is
reviewing the complaint and preparing
an answer to the allegations.
--------------------------------------------------------------------------------------------------
Koberstein v. Weider Superior Court of Arizona, In October 1999, Koberstein filed a
Nutrition International, Maricopa County lawsuit in Arizona state court
Inc., GNC, Hi-Health, CV99-12548 alleging that she has suffered
et. al. personal injury as a result of taking
(Insurance counsel) the Company's Excel Energy product
(Latham NY) over a period of several years. GNC,
a co-defendant, tendered the defense
of this matter to the Company. The
Company has tendered the defense of
this to its insurance carrier, which
has accepted defense of the matter
under a reservation of rights. The
insurance carrier has agreed to also
accept the defense of GNC. Limited
discovery is proceeding.
--------------------------------------------------------------------------------------------------
Joseph Long Claim Delaware In June 2000, the Company received
letters from attorneys representing
the estate of Mr. Long. The attorneys
allege that Mr. Long passed away as a
result of an adverse interaction
caused by one of the Company's drinks
containing ephedrine. The Company
disputes the allegations and is
investigating the matter. The Company
will tender the matter to its
insurance carriers.
--------------------------------------------------------------------------------------------------
Weider Nutrition Group, United States District Weider brought an action against James
Inc. and Weider Court for the District of Horn and certain related parties for
Nutrition International, Utah, Central Division, various breaches of a settlement
Inc. v. Horn Case No. 2:97-CV-0326B agreement as well as trade dress
infringement. Horn counter-claimed
(Stoel Rives alleging unlawful termination of the
D. Gerber) distributorship and breach of a
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Attorney Work Product - Confidential
--------------------------------------------------------------------------------------------------
MATTER VENUE STATUS
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------------------------------------
settlement agreement and also brought
a defamation action against Weider and
Messrs. Bizzaro and Reynolds.
In April 1998, Weider was granted an
injunction against Van Horn
Technologies (VHT) and Nature's Best
requiring them to repackage and
reformulate certain drink products
infringing upon Weider products. In
April 1999, the portion of the action
regarding VHT and Nature's Best was
settled.
The parties are conducting discovery
with respect to the remaining claims
and are preparing for trial. The
parties have recently agreed to use
non-binding mediation to try to
resolve the matter and are discussing
tentative dates for the mediation.
--------------------------------------------------------------------------------------------------
Coastal Healthcare (Stoel Rives) The Company terminated its agreement
Contract with Coastal Healthcare regarding the
purchase of certain functional food
beverages. Coastal alleged that
Weider failed to perform certain
obligations under the contract and has
claimed damages as a result of the
alleged failure. After various
settlement discussions between the
parties, Coastal sent a demand letter
to the Company in July 1999 alleging
damages in the amount of $10 million.
In August 1999, the Company proposed
another settlement offer which
included, among other items, a payment
of $500,000 to Coastal. The Company
has not received any correspondence
from Coastal since proposing the last
settlement offer.
--------------------------------------------------------------------------------------------------
FTC Inquiry Re: PhenCal (Patton Boggs-Denver) In late 1997, the Company received an
access letter from the Federal Trade
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Attorney Work Product - Confidential
--------------------------------------------------------------------------------------------------
MATTER VENUE STATUS
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------------------------------------
Commission ("FTC") regarding the
Company's advertising with respect to
the Company's PhenCal products. After
discussions between the Company and
the FTC concerning the Company's
scientific substantiation supporting
the advertising claims, the FTC
forwarded a proposed consent order to
the Company in June 1998. The initial
proposed consent order provided for,
among other items, the payment of an
unspecified amount to the FTC, broad
injunctive relief prohibiting the
Company from making claims for its
products and more specific injunctive
relief prohibiting the Company from
making certain diet and weight loss
claims for its products without
adequate scientific substantiation.
The Company contested the FTC
allegations, and the FTC removed the
payment provisions and broad
injunctive relief provisions from the
proposed consent order.
In January 1999, the FTC raised
concerns about general advertising by
the Company, in particular with
respect to alleged implicit cancer
prevention claims in the Company's
advertisements for its "Breast Health"
products. The Company informed the FTC
that it was working with the NAD
regarding these claims. The Company
subsequently resolved the matter with
the NAD.
In June 1999, the Company signed the
Agreement with the FTC containing the
proposed Consent Decree. In October
1999, the Company was informed that
the Commissioners of the FTC rejected
the proposed Consent Decree. In
November 1999 and at
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Attorney Work Product - Confidential
--------------------------------------------------------------------------------------------------
MATTER VENUE STATUS
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------------------------------------
times thereafter, the Company received
Civil Investigative Demands from the
FTC for information regarding its Phen
Cal and Breast Health products. The
Company has been responding to the
Demands. After preliminary discussions
between the Company and the FTC, in
March 2000 the FTC forwarded a revised
proposed consent decree to the
Company. The revised proposed consent
decree included broad injunctive
relief and payment ($500,000)
provisions. In June 2000, senior
management met with the FTC to resolve
outstanding issues. After discussions
between the parties, the Company
believes it will enter into a proposed
consent decree providing for, among
other items, specific injunctive
relief prohibiting the Company from
making certain diet and weight loss
claims, disease and safety claims and
comparative health claims without
adequate scientific substantiation.
The proposed decree will also contain
payment provisions in the amount of
$400,000.
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 4.9
ERISA
WNG 401(k) Plan.
Medical, Dental and Life Insurance plans for employees.
Long-term disability insurance.
<PAGE>
Schedule 4.14
Tax Matters
Weider Nutrition International, Inc. ("WNI") and all of its domestic
subsidiaries file a consolidated Federal income tax return with the Internal
Revenue Service and either combined or separate company state income tax returns
with the appropriate state agencies. In some states, WNI and its subsidiaries
(either domestic or worldwide, depending on the state) are required to be
included in the tax filings of Weider Health and Fitness ("WHF"). WHF prepares
and files these particular state tax returns and pays the tax liabilities
reflected thereon, and, in such capacity, acts as an agent for WNI. There is a
written Tax Sharing Agreement (revised prior to the consummation of the IPO)
between WNI and WHF that stipulates WNI and its subsidiaries are liable to WHF
for the state tax liabilities as determined if WNI had filed separate state
returns. At this time, WNI and its subsidiaries have satisfied all state tax
liabilities due to WHF.
All foreign subsidiaries of WNI file and pay tax in accordance with
the laws and rules of their respective countries. No significant tax issues or
unsatisfied liabilities exist at this time.
Prior to the IPO of WNI, Weider Nutrition Group, Inc. ("WNG") was a
direct subsidiary of WHF and was included in all of WHF's federal and state
income tax returns. The Internal Revenue Service has examined the consolidated
federal return for WHF and all subsidiaries for the fiscal year ended May 31,
1995 and 1996. No adjustments have been assessed or proposed that would impact
WNG (a direct subsidiary of WNI after the IPO).
In addition, Weider Nutrition Group, Inc. is undergoing a Utah sales
and use tax audit from April 1, 1997 to March 31, 2000 and a Utah personal
property audit for all property as of January 1, 2000. All of these audits are
still in the information-gathering phase. No adjustments or assessments have
been proposed at this time.
<PAGE>
Schedule 4.15
Contracts
Lease with SCI Development Services Incorporated for property located at 2002
South 5070 West, Salt Lake City, UT 84104
Mariz licensing agreement
Senior Loan Agreement
<PAGE>
Schedule 4.16
Absence of Changes
None.
<PAGE>
Schedule 4.17
Intellectual Property
None.
<PAGE>
Schedule 4.19
Environmental and Safety Matters
None.
<PAGE>
Schedule 4.21
Affiliate Transactions
Officer Notes:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Principal
----------------------------------------------------------------------------------------------------------------------------------
Original Original Interest Balance Amount Balance Current
--------------------------------------
Payer/Description Date Amount Rate 05/31/99 Additions Received 05/31/00 Portion
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
RICHARD BIZZARO
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due on 06/02/97 - 8.00% 2,044,536 - - 2,044,536 -
various dates, 5 years from date
of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
ROBERT REYNOLDS
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 06/02/97 - 8.00% 1,362,419 - - 1,362,419 -
on various dated, 5 years
from date of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
RICK BLAIR
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 06/02/97 - 8.00% 249,626 40,842 - 290,468 -
on various dates, 5 years
from date of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
STEVE YOUNG
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 06/02/97 - 8.00% 121,767 - - 121,767 -
on various dates, 5 years
from date of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
DAVE MASTROIANNI
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 06/02/97 - 8.00% 181,744 - 6,744 175,000 -
on various dates, 5 years
from date of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
STEVE KRZESKI
----------------------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 06/02/97 - 8.00% 193,673 - - 193,673 -
on various dates, 5 years
from date of draw.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
ACCRUED INTEREST
------------------------------------------------------------------------------------------------------------------
Long-term Balance Interest Amount Balance
--------------------------------------
Payer/Description Portion 05/31/99 Income Received 05/31/00
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
RICHARD BIZZARO
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due on 2,044,536 302,743 165,283 - 468,026
various dates, 5 years from date
of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
ROBERT REYNOLDS
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 1,362,419 192,385 110,083 - 302,468
on various dates, 5 years
from date of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
RICK BLAIR
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 290,468 28,115 20,758 - 48,873
on various dates, 5 years
from date of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
STEVE YOUNG
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 121,767 12,062 9,832 - 21,894
on various dates, 5 years
from date of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
DAVE MASTROIANNI
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 175,000 22,006 14,280 - 36,286
on various dates, 5 years
from date of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
STEVE KRZESKI
------------------------------------------------------------------------------------------------------------------
Loan, secured by stock. Due 193,673 18,926 15,565 - 34,491
on various dates, 5 years
from date of draw.
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 4.21
Affiliate Transactions
(Continued)
Management Agreement between Holdings and Weider Nutrition Ltd. (UK)
Management Agreement between Holdings and Weider Nutrition GmbH (Germany)
Management Agreement between Holdings and Weider Fitness SARL (France)
Management Agreement between Holdings and Weider Nutrition Italia SrL (Italy)
Management Agreement between Holdings and Weider Nutrition SL (Spain)
Advertising Agreement with Weider Publications
Mariz Licensing Agreement
Joe Weider Licensing Agreement
Separation Agreements with Richard Bizzaro and Robert Reynolds
IFBB Sponsorship Agreement
Body builder sponsorships with Weider Health & Fitness
<PAGE>
Schedule 6.1
Indebtedness
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Payee/Description Original Original Amount Interest Balance Additions Currency
Date Rate 5/31/99 Payments Transaction
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
HEINKE'S
-------------------------------------------------------------------------------------------------------------------------
Retirement Obligation 2/1/97 225,000 10.00% 313,664 0 118,364 0
-------------------------------------------------------------------------------------------------------------------------
ZIONS FIRST NATIONAL BANK
-------------------------------------------------------------------------------------------------------------------------
Note payable in monthly 10/1/93 3,280,000 7.63% 2,755,313 0 124,517 0
installments of $27,827 including
interest. Secured by building.
-------------------------------------------------------------------------------------------------------------------------
W.C. PADGETT
-------------------------------------------------------------------------------------------------------------------------
Capital lease payable in monthly 6/1/95 404,860 7.00% 327,103 0 23,693 0
installments of $3,820 including
interest.
-------------------------------------------------------------------------------------------------------------------------
U.S. BANCORP
-------------------------------------------------------------------------------------------------------------------------
Capital lease payable in monthly 1/1/97 136,284 8.96% 63,457 0 35,044 0
installments of $3,276 including
interest. Secured by mfg.
equipment
-------------------------------------------------------------------------------------------------------------------------
AFCO
-------------------------------------------------------------------------------------------------------------------------
Note payable in monthly 9/1/99 188,484 6.76% 0 188,484 167,067 0
installments of $21,537
including interest. For
insurance
-------------------------------------------------------------------------------------------------------------------------
AFCO
-------------------------------------------------------------------------------------------------------------------------
Note payable in monthly 5/1/00 219,802 7.559% 0 219,802 23,814 0
installments of $25,198
including interest. For
insurance.
-------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Payee/Description Balance Current Long-term ACCRUED INTEREST
5/31/00 Portion Portion
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance Interest Amount
5/31/99 Expense Paid
--------------------------------------------------------------------------------------------------------------------
HEINKE'S
--------------------------------------------------------------------------------------------------------------------
Retirement Obligation 195,300 122,600 72,700 21,636 21,636
--------------------------------------------------------------------------------------------------------------------
ZIONS FIRST NATIONAL BANK
--------------------------------------------------------------------------------------------------------------------
Note payable in monthly 2,630,796 135,071 2,495,725 - 209,410 209,410
installments of $27,827 including
interest. Secured by building.
--------------------------------------------------------------------------------------------------------------------
W.C. PADGETT
--------------------------------------------------------------------------------------------------------------------
Capital lease payable in monthly 303,410 25,406 278,004 22,156 22,156
installments of $3,820 including
interest.
--------------------------------------------------------------------------------------------------------------------
U.S. BANCORP
--------------------------------------------------------------------------------------------------------------------
Capital lease payable in monthly 28,413 28,413 0 4,270 4,270
installments of $3,276 including
interest. Secured by mfg.
equipment
--------------------------------------------------------------------------------------------------------------------
AFCO
--------------------------------------------------------------------------------------------------------------------
Note payable in monthly 21,417 21,417 0 - 5,983 5,983
installments of $21,537
including interest. For
insurance
--------------------------------------------------------------------------------------------------------------------
AFCO
--------------------------------------------------------------------------------------------------------------------
Note payable in monthly 195,988 195,988 0 - 1,385 1,385
installments of $25,198
including interest. For
insurance.
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 6.2
Liens
ZIONS FIRST NATIONAL BANK
Land and Building located at 1960 South 4250 West, Salt Lake City, Utah
W. C. PADGETT
Land and Building located at 1756 Industrial Road, Walterboro, South
Carolina
U.S. BANCORP
One new process system, including:
1 processor
3 tanks
1 agitator
2 pumps
2 divert panels
25 valves,
fittings and materials
water filtration material
labor and controls
Equipment located at 3905 W. Diablo Dr., Las Vegas, Nevada, including:
Batch Tanks
Product Pumps
Product Meters
Carbon Filter or U.V.
Prefilters and Microfilters
Platforms
CIP System
Sanitary Installation
Boiler/Steam Lines
Electrical Panels
CITICORP
Operating Lease - Equipment
SOUTHERN PACKAGING MACHINERY, INC.
Operating Lease - Equipment
IBM CREDIT CORP.
Operating Lease - Equipment (computers)
MELLON FIRST UNITED
<PAGE>
Operating Lease - Equipment (sweeper/scrubber)
REVCO
Operating Lease - Equipment (copy machines)
PITNEY BOWES CREDIT CORPORATION
Operating Lease - Equipment (mailing system)
<PAGE>
Schedule 6.10
Investment Banking, Broker's and Finder's Fees
None.
<PAGE>
Schedule 4.22
Employee Matters
None.
<PAGE>
Section 4.7
Litigation
See Schedule 4.5.
<PAGE>
Section 6.5
Investments
See Schedule 4.21.
512,845 Shares of Nutraceutical Corporation (Nasdaq: "NUTR")
