SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
VitaminShoppe.com, Inc.
--------------------------------------------------------------------------------
(Name of Issuer)
Class A Common Stock, Par Value $.01 Per Share
--------------------------------------------------------------------------------
(Title of Class of Securities)
92848M 10 4
--------------------------------------------------------------------------------
(CUSIP Number)
Jeffrey J. Horowitz
Vitamin Shoppe Industries Inc.
4700 Westside Avenue
North Bergen, NJ 07047
(201) 866-7711
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 19, 2000
---------------------------------------------------------
(Date of Event which Requires Filing of this
Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [_].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
__________________________ _________________________
CUSIP No. 92848M 10 4 Page 2 of 8 Pages
__________________________ _________________________
__________________________ _________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Vitamin Shoppe Industries Inc.
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS
OO
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
________________________________________________________________________________
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 13,081,500
OWNED BY ________________________________________________________________
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH
________________________________________________________________
9 SOLE DISPOSITIVE POWER
13,081,500
________________________________________________________________
10 SHARED DISPOSITIVE POWER
0
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,081,500
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
64.3%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
CO
________________________________________________________________________________
2
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Item 1. Security and Issuer.
--------------------
This Statement relates to the class A common stock, par value of $.0l
per share (the "Class A Common Stock"), of VitaminShoppe.com, Inc., a Delaware
corporation (the "Issuer"). The address of the principal executive offices of
the Issuer is 444 Madison Avenue, Suite 802, New York, NY 10022.
Item 2. Identity and Background.
------------------------
(a) This Statement is filed on behalf of Vitamin Shoppe Industries
Inc. (the "Reporting Person").
The shares of Class A Common Stock reported as beneficially owned by
the Reporting Person are not yet issued but are issuable upon the conversion of
the 13,081,500 shares of Class B Common Stock of the Issuer, par value $0.01 per
share (the "Class B Common Stock") currently held by the Reporting Person. At
the option of the holder, each share of Class B Common Stock is convertible into
one share of Class A Common Stock. Each share of Class B Common Stock
automatically converts into one share of Class A Common Stock upon any sale to a
person or entity not affiliated with the Reporting Person. The shares of Class B
Common Stock are entitled to six votes per share.
VS Investors LLC ("VS LLC"), a Delaware limited liability company, owns
70% of the capital stock of the Reporting Person. FdG Associates Acquisition
L.P. ("FdG Associates"), a Delaware limited partnership, is the managing member
of VS LLC. FdG Acquisition Corp. ("FdG Acquisition"), a Delaware corporation, is
the general partner of FdG Associates. Charles de Gunzburg is on the board of
directors of FdG Acquisition and the Reporting Person, and is also the president
and 50% owner of the capital stock of FdG Acquisition. M. Anthony Fisher is on
the board of directors of FdG Acquisition, the Reporting Person and the Issuer,
and is also the owner of 50% of the capital stock of Acquisition. None of VS
LLC, FdG Associates, FdG Acquisition, Mr. de Gunzburg or Mr. Fisher has the
power to vote or dispose of any of the Class B Common Stock held by the
Reporting Person or the underlying Class A Common Stock reported in this
Schedule 13D as beneficially owned by the Reporting Person.
(b) The Reporting Person has its principal office and business at 4700
Westside Avenue, North Bergen, NJ 07047.
(c) The Reporting Person is a New York corporation that is a retailer
and direct marketer of vitamins, minerals, nutritional supplements, herbs,
sports nutrition formulas, homeopathic remedies and other health-related
products.
Set forth on Schedule A to this Statement, and incorporated herein by
reference, is the name, business address, present principal occupation or
employment (and the name, principal business and address of any corporation or
other organization in which such employment is conducted) and citizenship of
each director and executive officer of the Reporting Person.
(d) During the last five years, neither the Reporting Person nor, to
the best knowledge of the Reporting Person, any of its executive officers or
directors has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
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<PAGE>
(e) During the last five years, neither the Reporting Person nor, to
the best knowledge of the Reporting Person, any of its executive officers or
directors has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration.
-------------------------------------------------
As described in Item 2(a) above, the Reporting Person does not own any
shares of Class A Common Stock. With respect to the Class B Common Stock owned
by the Reporting Person which is covered by this Statement and which is
convertible into Class A Common Stock, the Class B Common Stock was acquired
prior to the date the Class A Common Stock was registered pursuant to Section 12
of the Securities Act of 1933, as amended. The Reporting Person contributed
assets to the Issuer in exchange for the shares of Class B Common Stock.
Item 4. Purpose of Transaction.
-----------------------
The Reporting Person had previously reported beneficial ownership of
the Class A Common Stock on Schedule 13G under the Securities Exchange Act of
1934, as amended. On December 19, 2000, the Reporting Person submitted a letter
to the Board of Directors of the Issuer setting forth the Reporting Person's
proposal to merge the Issuer with and into the Reporting Person. The Reporting
Person would be the surviving corporation in the merger and all of the
shareholders of the Issuer other than the Reporting Person would receive the
merger consideration equal to $1.00 in cash per share of the Class A Common
Stock. A copy of the Reporting Person's proposal is attached hereto as Exhibit 1
and is incorporated herein by reference, and the description herein of such
letter is qualified in its entirety by reference to such letter.
The Reporting Person intends to take steps necessary to complete the
proposed transaction, including, but not limited to, the discussion, negotiation
and consummation of a merger agreement. There can be no assurance, however, that
such a transaction will be consummated, or, if it is consummated, that such a
transaction will be consummated on the terms and conditions set forth in the
Reporting Person's proposal. The proposed business combination would be subject
to a number of conditions, including the approval of the Board of Directors and
shareholders of the Issuer and the Reporting Person. In addition, the proposed
transaction is conditioned on the Reporting Person obtaining the approval of the
Reporting Person's senior lenders and its subordinated debt holders.
The Board of Directors of the Issuer (the "Issuer Board") is expected
to form a Special Committee consisting of independent members of the Issuer
Board to consider the Reporting Person's proposal.
The Reporting Person expects to evaluate on an ongoing basis the
Issuer's financial condition, business, operations and prospects, the market
price for the Class A Common Stock, conditions in the securities markets
generally, general economic conditions and other factors. Accordingly, the
Reporting Person reserves the right to change its plans and intentions at any
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<PAGE>
time, as it deems appropriate. In particular, the Reporting Person may purchase
shares of Class A Common Stock, or may sell or otherwise dispose of all or
portions of the Class A Common Stock it beneficially owns, in public and private
transactions and/or may enter into privately negotiated derivative transactions
with institutional counterparts to hedge the market risk of some or all of its
position in, or to obtain greater exposure to, the shares of Class A Common
Stock it beneficially owns or other securities. Any such transaction may be
effected at any time or from time to time, subject to any applicable limitation
imposed on the sale of any of its Class A Common Stock by the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended.
If the Reporting Person successfully completes the merger of the Issuer
with and into the Reporting Person, the Issuer's Class A Common Stock will be
delisted from NASDAQ and eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities and Exchange Act of 1934, as amended.
Depending on the response of the independent directors on the Issuer
Board to the Reporting Person's proposal and other factors deemed relevant by
the Reporting Person, including changes in the Issuer's business or financial
situation, the Reporting Person reserves the right to formulate other plans
and/or make other proposals, and take such actions with respect to its
investment in the Issuer, including any or all of the actions set forth in
paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions as it
may determine. Moreover, the Reporting Person reserves the right to amend or
withdraw the proposal at any time in its sole discretion. Except as set forth in
this Item 4 and in furtherance of the proposed transaction, the Reporting Person
has no plans or proposals which relate to or would result in any of the actions
set forth in parts (a) through (j) of Item 4 of Schedule 13D. The Reporting
Person may at any time reconsider and change its plans or proposals relating to
the foregoing.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) As of December 19, 2000, the Reporting Person beneficially owned
13,081,500 shares of Class A Common Stock, or approximately 64.3% percent of the
outstanding capital stock of the Issuer. Such percentage amount is based upon
the number of shares of capital stock issued and outstanding as of November 1,
2000, as described in the Issuer's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2000.
(b) As of December 19, 2000, the Reporting Person has the right to
acquire and thereby directly beneficially owns and has the sole direct power to
vote and dispose of 13,081,500 shares of Class A Common Stock.
(c) In the 60 days prior to the date of filing of this Statement,
neither the Reporting Person nor, to the best knowledge of the Reporting Person,
any of its directors and executive officers has effected any transactions in
shares of Class A Common Stock, except as disclosed in this Statement.
(d) No other person is known by the Reporting Person to have the right
to receive or the power to direct the receipt of dividends from, and the
proceeds from the sale of, the shares of Class A Common Stock to which this
Statement relates.
5
<PAGE>
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
----------------------------------------------------------------------
to Securities of the Issuer.
----------------------------
Pursuant to a Stockholders Agreement, dated July 27, 1999, among the
Issuer, the Reporting Person and the holders of Series A Preferred Stock of the
Issuer, the Reporting Person agreed to take such action as may be necessary to
cause to be nominated and elected as a member of the Issuer Board one individual
designated by J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P.
The description herein of such Stockholders Agreement is qualified in
its entirety by reference to the Stockholders Agreement attached hereto as
Exhibit 2, which is incorporated herein by reference.
Pursuant to a Registration Rights Agreement, dated July 27, 1999, among
the Issuer, the Reporting Person, the holders of Series A Preferred Stock of the
Issuer and Thomas Weisel Partners LLC, registration rights were granted by the
Issuer to the Reporting Person with respect to the shares of Class A Common
Stock which this statement relates. See also Item 4 above.
The description herein of such Registration Rights Agreement is
qualified in its entirely by reference to the Registration Rights Agreement
attached hereto as Exhibit 3, which is incorporated herein by reference.
Pursuant to a Pledge Agreement, dated as of May 15, 1997, between the
Reporting Person and Antares Capital Corporation, as collateral agent (the
"Collateral Agent"), to secure the Reporting Person's loan obligations to the
lenders under a Credit Agreement, as amended, dated as of May 15, 1997, all of
the shares of Class B Common Stock of the Issuer held of record by the Reporting
Person have been pledged to the Collateral Agent. The Pledge Agreement contains
standard default and similar provisions which give the Collateral Agent the
voting and/or investment power over such Class B Common Stock in the event the
Reporting Person defaulted on its obligations under the Credit Agreement.
The description herein of such Pledge Agreement is qualified in its
entirety by reference to the Pledge Agreement attached hereto as Exhibit 4,
which is incorporated herein by reference.
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<PAGE>
Item 7. Materials to be Filed as Exhibits.
----------------------------------
Exhibit No. Description
----------- -----------
1 Proposal Letter, dated December 19, 2000.
2 Stockholders Agreement, dated July 27, 1999, by and
among the Issuer, the Reporting Person and the holders
of Series A Preferred Stock of the Issuer set forth on
Schedule 1 thereto (incorporated by reference to
Exhibit 10.8 filed with the Issuer's Registration
Statement on Form S-1, dated July 27, 1999, Commission
File No. 333-83849).
3 Registration Rights Agreement, dated July 27, 1999, by
and among the Issuer, the Reporting Person, the
holders of Series A Preferred Stock of the Issuer set
forth on Schedule 1 thereto and Thomas Weisel
Partners, LLC (incorporated by reference to Exhibit
10.9 filed with the Issuer's Registration Statement on
Form S-1, dated July 27, 1999, Commission File No.
333-83849).
4 Pledge Agreement, dated May 15, 1997.
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 19, 2000
VITAMIN SHOPPE INDUSTRIES INC.
By: /s/ Jeffrey J. Horowitz
-------------------------------------
Jeffrey J. Horowitz
Chairman
8
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF VITAMIN SHOPPE INDUSTRIES INC.
Set forth below is the name and present principal occupation or
employment of each director and executive officer of Vitamin Shoppe Industries
Inc. (the "Reporting Person"). Except as set forth below, each person's present
principal occupation or employment is with the Reporting Person. The Reporting
Person is a New York corporation that is a retailer and direct marketer of
vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas,
homeopathic remedies and other health-related products. The principal business
address of the Reporting Person is 4700 Westside Avenue, North Bergen, NJ 07047.
Each person listed below is a citizen of the United States, except for Mr.
Charles de Gunzburg who is a citizen of France.
Directors
---------
Name and Business Address Present Principal Occupation or Employment
------------------------- ------------------------------------------
Jeffrey J. Horowitz Chairman of Reporting Person; Chief
Executive Officer of the Issuer;
Director of Issuer
Helen Horowitz Vice President (non-employee officer)
M. Anthony Fisher Senior Managing Director of FdG
c/o FdG Associates Associates; Partner of Fisher Brothers;
299 Park Avenue, Chairman of the Issuer
New York, NY 10171
Charles de Gunzburg Vice Chairman of First Spring Corporation
c/o FdG Associates
299 Park Avenue
New York, NY 10171
David S. Gellman Managing Director of FdG Associates;
c/o Fisher Brothers Director of the Issuer; Assistant
299 Park Avenue Secretary of the Reporting Person
New York, NY 10171
Howard L. Romanow Principal of FdG Associates
c/o FdG Associates
299 Park Avenue
New York, NY 10171
Stephen P. Murray General Partner of Chase Capital Partners;
Chase Capital Partners Director of the Issuer
1221 Avenue of the Americas
New York, NY 10020
<PAGE>
Executive Officers
------------------
(Who Are Not Directors)
Name Present Principal Occupation or Employment
---- ------------------------------------------
Michael M. Morris Chief Information Officer
Douglas Jones Director of Operations and Analysis
Larry Paul Director of Retail Operations
Patti Ann Kelly Director of Scientific and Regulatory
Affairs
<PAGE>
Index to Exhibits
-----------------
Exhibit No. Description
----------- -----------
1 Proposal Letter, dated December 19, 2000.
2 Stockholders Agreement, dated July 27, 1999, by and
among the Issuer, the Reporting Person and the holders
of Series A Preferred Stock of the Issuer set forth on
Schedule 1 thereto (incorporated by reference to
Exhibit 10.8 filed with the Issuer's Registration
Statement on Form S-1, dated July 27, 1999, Commission
File No. 333-83849).
3 Registration Rights Agreement, dated July 27, 1999, by
and among the Issuer, the Reporting Person, the
holders of Series A Preferred Stock of the Issuer set
forth on Schedule 1 thereto and Thomas Weisel
Partners, LLC (incorporated by reference to Exhibit
10.9 filed with the Issuer's Registration Statement on
Form S-1, dated July 27, 1999, Commission File No.
333-83849).
4 Pledge Agreement, dated May 15, 1997.
<PAGE>
Exhibit 1
Proposal to Board of VitaminShoppe.com, Inc.
[LOGO OMITTED]
December 19, 2000
By Hand
-------
Board of Directors
VitaminShoppe.com, Inc.
444 Madison Avenue, Suite 802
New York, New York 10022
Ladies and Gentlemen:
This letter will serve to set forth in writing the general outline
of the transaction we are proposing (the "Proposed Transaction") between Vitamin
Shoppe Industries Inc. ("VSI") and VitaminShoppe.com, Inc. (the "Company").
We have been considering the most effective way for VSI and the
Company to maximize their collective resources and optimize efficiency. We have
determined that it would be desirable for the Company's business to become
wholly owned by VSI, and accordingly are proposing to acquire all of the shares
of common stock of the Company not currently held by VSI.
The Proposed Transaction would be accomplished by means of a merger
of the Company with VSI. The shareholders of the Company other than VSI would
receive merger consideration equal to $1.00 per share in cash. This price
represents a premium of 174% over the average closing price of the Company's
stock over the past 20 trading days.
The Proposed Transaction would be effected pursuant to a merger
agreement in form and substance customary for transactions of this sort, which
would be entered into only following: (i) approval and recommendation by the
unaffiliated members of the Company's Board of Directors, who we would expect to
serve as a Special Committee of the Board in connection with the consideration
of the Proposed Transaction, (ii) the receipt by the Company of an opinion from
your independent financial advisor as to the fairness, from a financial point of
view of the Proposed Transaction to the shareholders of the Company unaffiliated
with VSI, and (iii) approval by VSI's Board of Directors.
4700 WESTSIDE AVENUE, NORTH BERGEN, NEW JERSEY 07047
TELEPHONE 201-866-7711 FACSIMILE 201-453-9038 www.vitaminshoppe.com
<PAGE>
Board of Directors
VitaminShoppe.com, Inc.
December 19, 2000
Page 2
The Proposed Transaction is subject to VSI obtaining the approval of
VSI's senior lender and its subordinated debt holders, which we expect to obtain
in a timely manner. In anticipation of, and in preparation for, the Proposed
Transaction, we would expect the Company to continue its efforts to reduce
expenses and conserve its cash resources.
We and our legal advisors (Paul, Hastings, Janofsky & Walker LLP)
are prepared to meet with the Special Committee and its legal and financial
advisors at your convenience to review the Proposed Transaction and anything
else that may be of interest or assistance. Please contact Thomas L. Fairfield
of Paul Hastings at (212) 318-6432 if you would like to arrange a meeting or
telephone conference.
I look forward to continuing to work with you on the Proposed
Transaction.
Sincerely,
/s/ Jeffrey J. Horowitz
-----------------------
Jeffrey J. Horowitz
<PAGE>
Exhibit 4
Pledge Agreement
EXECUTION COPY
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 15, 1997, among VITAMIN
SHOPPE INDUSTRIES INC., a New York corporation (the Borrower"),
VS INVESTORS LLC, a Delaware limited liability company (the
"LLC Guarantor"), each Subsidiary of the Borrower listed on
Schedule I hereto (each such Subsidiary individually a
"Subsidiary Pledgor" and collectively, the "Subsidiary
Pledgors"; the Borrower, the LLC Guarantor and the Subsidiary
Pledgors are referred to collectively herein as the "Pledgors")
and ANTARES LEVERAGED CAPITAL CORP., a Delaware corporation
("Antares"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of May 15, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Borrower; the financial institutions party thereto (the
"Lenders"); The Chase Manhattan Bank, a New York banking corporation ("Chase"),
as issuing bank (in such capacity, the "Issuing Bank") and as an administrative
agent (in such capacity, an "Administrative Agent"); and Antares, as paying
agent (in such capacity, the "Paying Agent"), as an administrative agent (in
such capacity, an "Administrative Agent" and, together with Chase, the
"Administrative Agents") and as Collateral Agent for the Lenders. Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have agreed to guarantee, among other things,
all the obligations of the Borrower under the Credit Agreement. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned upon, among other things, the execution and delivery by the
Pledgors of a Pledge Agreement in the form hereof to secure (a) the due and
punctual payment by the Borrower of (i) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
<PAGE>
2
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including indemnities and reasonable and invoiced fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the other Loan Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Pledgor under or pursuant to any
Guarantee Agreement or the other Loan Documents and (d) the due and punctual
payment and performance of all obligations of the Borrower under each Interest
Rate Protection Agreement entered into with any counterparty that was a Lender
at the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding clauses (a) through
(d) being referred to collectively as the "Obligations"). Capitalized terms used
herein and not defined herein shall have meanings assigned to such terms in the
Credit Agreement.
Accordingly, the Pledgors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment or performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of the Pledgor's right, title and
interest in, to and under (a) the shares of capital stock owned by it and listed
on Schedule II hereto and any shares of capital stock of any Subsidiary obtained
in the future by the Pledgor and the certificates representing all such shares
(the "Pledged Stock"); provided that the Pledged Stock shall not include (i)
more than 65 % of the issued and outstanding shares of stock of any Foreign
Subsidiary or (ii) to the extent that applicable law requires that a Subsidiary
of the Pledgor issue directors' qualifying shares, such qualifying shares;
(b)(i) the debt securities listed opposite the name of the Pledgor on Schedule
II hereto, (ii) any debt securities in the future issued to the Pledgor and
(iii) the promissory notes and any other instruments evidencing such debt
securities (the "Pledged Debt Securities"); (c) all other property that may be
delivered to and held by the Collateral Agent pursuant to the terms hereof; (d)
subject to Section 5, all payments of principal or interest, dividends, cash,
instruments and other property from
<PAGE>
3
time to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses (a)
and (b) above; (e) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred to in clauses
(a), (b), (c) and (d) above; and (f) all proceeds of any of the foregoing (the
items referred to in clauses (a) through (f) above being collectively referred
to as the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by undated stock
powers duly executed in blank or other instruments of transfer reasonably
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request and (b) all other property
comprising part of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other instruments or
documents as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent from time
to time any and all Pledged Securities, and any and all certificates or other
instruments or documents representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money in
excess of $100,000 owed to the Pledgor by any person to be evidenced by a duly
executed promissory note or other instrument reasonably satisfactory to the
Collateral Agent that is pledged and delivered or otherwise assigned to the
Collateral Agent pursuant to the terms thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the capital
stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the Pledgor
(i) is and will at all times continue to be the direct owner, beneficially and
of record, of the Pledged Securities indicated on Schedule II, (ii) holds the
same free and clear of
<PAGE>
4
all Liens, other than those permitted by Section 6.02 of the Credit Agreement,
(iii) will make no assignment, pledge, hypothecation or transfer of, or create
or permit to exist any security interest in or other Lien on, the Collateral,
other than pursuant hereto, and (iv) subject to Section 5, will cause any and
all Collateral, whether for value paid by the Pledgor or otherwise, to be
forthwith deposited with the Collateral Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend its
title or interest thereto or therein against any and all Liens (other than the
Lien created by this Agreement and the Liens permitted by Section 6.02 of the
Credit Agreement), however arising, of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity of the
pledge effected hereby;
(e) by virtue of the execution and delivery by such Pledgor of this
Agreement, when the Pledged Securities, certificates or other documents
representing or evidencing the Collateral are delivered to the Collateral Agent
in accordance with this Agreement, the Collateral Agent will obtain a valid and
perfected first lien upon and security interest in such Pledged Securities as
security for the payment and performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the Collateral
Agent, on behalf of the Secured Parties, the rights of the Collateral Agent in
the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and validly
issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged Stock is
accurate and complete in all material respects as of the date hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement does
not violate Regulation G, T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. After the
occurrence and during the continuance of an Event of Default, the Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent
<PAGE>
5
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The Collateral Agent
shall at all times have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Pledgors in writing of its intention to
exercise the rights described in this Section 5:
(a) (i)Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of
this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such Pledgor will not be entitled to exercise any
such right if the result thereof could materially and adversely affect the
rights of a holder of the Pledged Securities or the rights and remedies of
any of the Secured Parties under this Agreement or the Credit Agreement or
any other Loan Document or the ability of the Secured Parties to exercise
the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to each Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers it is entitled to exercise pursuant to
subparagraph (i) above and to receive the cash dividends it is entitled to
receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement, the other Loan Documents and
applicable laws. All noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return of
capital, capital surplus or paid-in surplus, and all other distributions
(other than distributions referred to in the preceding sentence) made on or
in respect of the Pledged Securities, whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the Collateral,
and, if received by any Pledgor, shall not be commingled by such Pledgor
with any of its other funds or property but shall be held separate and
apart
<PAGE>
6
therefrom, shall be held in trust for the benefit of the Collateral Agent
and shall be forthwith delivered to the Collateral Agent in the same form
as so received (with any necessary endorsement).
(b) All rights of any Pledgor to dividends, interest or principal that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and
authority to receive and retain such dividends, interest or principal. All
dividends, interest or principal received by any Pledgor contrary to the
provisions of this Section 5 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of such
Pledgor and shall be forthwith delivered to the Collateral Agent upon
demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the
Collateral Agent pursuant to the provisions of this paragraph (b) shall be
retained by the Collateral Agent in an account to be established by the
Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 7. After all Events of
Default have been cured or waived, the Collateral Agent shall, within five
Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash dividends, interest or principal (without
interest), that such Pledgor would otherwise be permitted to retain
pursuant to the terms of paragraph (a)(iii) above and which remain in such
account.
(c) All rights of any Pledgor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i)
of this Section 5, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and consensual
rights and powers, provided that, unless otherwise directed by the Required
Lenders, the Collateral Agent shall have the right from time to time
following and during the continuance of an Event of Default to permit the
Pledgors to exercise such rights. After all Events of Default have been
cured or waived, such Pledgor will have the right to exercise the voting
and consensual rights and powers that it would otherwise be entitled to
exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that
<PAGE>
7
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Pledgor, and, to the extent permitted by
applicable law, each Pledgor hereby waives all rights of redemption, stay,
valuation and appraisal that such Pledgor now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written
notice (which each Pledgor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Pledgor's Collateral. Such notice (i) in the
case of a public sale, shall state the time and place for such sale, (ii) in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange, and (iii) in the case of a private sale, shall state the time after
which any such sale is to be made. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice of such sale. At any such sale,
the Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid in full by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by applicable law, private) sale made
pursuant to this Section 6, any Secured Party may bid for or purchase, free from
any right of redemption, stay or appraisal on the part of any Pledgor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to it from such Pledgor
as a credit against the purchase price, and it may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and (c) such Pledgor shall
<PAGE>
8
not be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section 6
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. If an Event of Default
shall have occurred and be continuing, and the Collateral Agent shall have taken
any action pursuant to Section 6, the Collateral Agent shall apply the proceeds
of any such sale, as well as any Collateral consisting of cash, as follows:
FIRST, to the payment of all reasonable and invoiced out-of-pocket
costs and expenses incurred by the Collateral Agent in connection with
such sale or otherwise in connection with this Agreement, any other Loan
Document or any of the Obligations, including all court costs and the
reasonable fees and reasonable out-of-pocket expenses of its agents and
legal counsel, the repayment of all advances made by the Collateral Agent
hereunder or under any other Loan Document on behalf of any Pledgor and
any other reasonable costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
<PAGE>
9
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees
to pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and
the Indemnitees (as defined in Section 9.05 of the Credit Agreement) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
reasonable charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the Transactions and the other transactions contemplated thereby or (ii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) If for any reason the indemnification set forth in paragraph (b)
above is unavailable to any Indemnitee or insufficient to hold it harmless, then
each Pledgor shall contribute to the amount paid or payable to such Indemnitee
as a result of such loss, claim, damage, liability or expense in such proportion
as is appropriate to reflect not only the relative benefits received by such
Pledgor, on the one hand, and such Indemnitee, on the other hand, but also the
relative fault of such Pledgor, on the one hand, and such Indemnitee, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to all Pledgors, on the one hand, and all
Indemnities, on the other hand, shall be deemed to be in the same proportion as
(i) the total value received or proposed to be received by the Borrower and the
other Pledgors in connection with the Commitments (whether or not any Loans are
made) bears to (ii) the Fees. The indemnity, reimbursement and contribution
obligations of each Pledgor under paragraph (b) above and under this paragraph
(c) shall be in addition to any liability which such Pledgor may otherwise have
to an Indemnitee and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of such Pledgor and any
Indemnitee.
<PAGE>
10
(d) Promptly after receipt by an Indemnitee of notice of the
commencement of any Proceedings, such Indemnitee will, if a claim in respect
thereof is to be made against any Pledgor, notify the Borrower in writing of the
commencement thereof, provided that (i) the omission so to notify the Borrower
will not relieve it or any other Pledgor from any liability which it or such
Pledgor may have hereunder except to the extent it has been materially
prejudiced by such failure and (ii) the omission so to notify the Borrower will
not relieve it or any other Pledgor from any liability which it or such Pledgor
may have to an Indemnitee otherwise than on account of the indemnity agreement
provided for hereunder. In case any such Proceedings are brought against any
Indemnitee and it notifies the Borrower of the commencement thereof, the
Borrower will be entitled to participate therein, and, to the extent that it may
elect by written notice delivered to such Indemnitee, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnitee, provided that,
if the defendants in any such Proceedings include both such Indemnitee and the
Borrower or any other Pledgor and such Indemnitee shall have concluded that
there may be legal defenses available to it which are different from or
additional to those available to the Borrower or such Pledgor, such Indemnitee
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such Proceedings on behalf of
such Indemnitee. Upon receipt of notice from the Borrower to such Indemnitee of
its election so to assume the defense of such Proceedings and approval by such
Indemnitee of counsel, neither the Borrower nor any other Pledgor shall be
liable to such Indemnitee for expenses incurred by such Indemnitee in connection
with the defense thereof (other than reasonable costs of investigation) unless
(i) such Indemnitee shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that neither the Borrower nor any other
Pledgor shall be liable for the reasonable expenses of more than one separate
counsel (plus no more than one separate local counsel in any jurisdiction),
approved by the Agents, representing the Indemnitees who are parties to such
Proceedings), (ii) the Borrower shall not have employed counsel reasonably
satisfactory to such Indemnitee to represent such Indemnitee within a reasonable
time after notice of commencement of the Proceedings, (iii) the Borrower shall
have authorized in writing the employment of counsel for such Indemnitee or (iv)
the use of counsel chosen by the Borrower to represent such Indemnitee would
present such counsel with a conflict of interest; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(e) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this
<PAGE>
11
Section 8 shall be payable on written demand therefor and shall bear interest
at the rate specified in Section 2.07 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
<PAGE>
12
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 11 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 12. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any
<PAGE>
13
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument
relating to any of the foregoing, (c) any exchange, release or nonperfection of
any other collateral, or any release or amendment or waiver of or consent to or
departure from any guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations).
SECTION 13. Termination or Release. (a) This Agreement and the
security interests granted hereby shall terminate when all the Obligations have
been indefeasibly paid in full and the Lenders have no further commitment to
lend under the Credit Agreement, the L/C Exposure has been reduced to zero and
the Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Pledgor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.08(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and/or deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 13 shall be without recourse to
or warranty by the Collateral Agent.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it at the address set forth on Schedule I hereto with a copy to the Borrower.
SECTION 15. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 16. Binding Effect; Several Agreement; Assignments. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Pledgor or the
Collateral Agent that are
<PAGE>
14
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. This Agreement shall become effective as to
any Pledgor when a counterpart hereof executed on behalf of such Pledgor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be binding
upon such Pledgor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that no Pledgor shall have the right to assign its rights hereunder or
any interest herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement or the other
Loan Documents. If all of the capital stock of a Pledgor is sold, transferred or
otherwise disposed of to a person that is not an Affiliate of the Borrower
pursuant to a transaction permitted by Section 6.05 of the Credit Agreement,
such Pledgor shall be released from its obligations under this Agreement without
further action. This Agreement shall be construed as a separate agreement with
respect to each Pledgor and may be amended, modified, supplemented, waived or
released with respect to any Pledgor without the approval of any other Pledgor
and without affecting the obligations of any other Pledgor hereunder.
SECTION 17. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and,
except for any terminations, amendments or modifications thereof in accordance
with the terms hereof, shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit by the Issuing Bank, regardless of any
investigation made by the Secured Parties or on their behalf, and, except for
any terminations, amendments or modifications thereof in accordance with the
terms hereof, shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any other fee or amount payable under
this Agreement or any other Loan Document is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments and the L/C
Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
<PAGE>
15
SECTION 18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 19. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute a single contract, and shall become
effective as provided in Section 16. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 20. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 21. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
<PAGE>
16
SECTION 22. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 23. Additional Pledgors. Pursuant to Section 5.11 of the
Credit Agreement, each Domestic Subsidiary (other than any Inactive Subsidiary)
of the Borrower that was not in existence or not such a Subsidiary on the date
of the Credit Agreement is required to enter in this Agreement as a Subsidiary
Pledgor upon becoming such a Subsidiary if such Domestic Subsidiary owns or
possesses property of a type that would be considered Collateral hereunder. Upon
execution and delivery by the Collateral Agent and such a Subsidiary of an
instrument in the form of Annex 1, such Subsidiary shall become a Subsidiary
Pledgor hereunder with the same force and effect as if originally named as a
Subsidiary Pledgor herein. The execution and delivery of such instrument shall
not require the consent of any Pledgor hereunder. The rights and obligations of
each Pledgor hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Pledgor as a party to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
VITAMIN SHOPPE INDUSTRIES INC.
By: /s/ Jeffery J. Horowitz
-------------------------
Name: Jeffery J. Horowitz
Title: President
VS INVESTORS LLC
By: FdG Associates Acquisition L.P., the
Class C Member
By: FdG Acquisition Corp., its General
Partner
By: /s/ Charles de Gunzburg
--------------------------
Name: Charles de Gunzburg
Title: President
ANTARES LEVERAGED CAPITAL CORP.,
as Collateral Agent,
By: /s/ Daniel B. Glickman
------------------------
Name: Daniel B. Glickman
Title:
<PAGE>
Annex I to the
Pledge Agreement
SUPPLEMENT NO. ____ dated as of [ ], to the PLEDGE
AGREEMENT dated as of May 15, 1997 among VITAMIN SHOPPE
INDUSTRIES INC., a New York corporation (the "Borrower"); VS
INVESTORS LLC, a Delaware limited liability company (the "LLC
Guarantor"); each subsidiary of the Borrower listed on
Schedule I hereto (each such subsidiary individually a
"Subsidiary Pledgor" and collectively, the "Subsidiary
Pledgors"; the Borrower and Subsidiary Pledgors are referred
to collectively herein as the "Pledgors"); and ANTARES
LEVERAGED CAPITAL CORP., a Delaware corporation ("Antares"),
as collateral agent (in such capacity, the "Collateral Agent")
for the Secured Parties (as defined in the Credit Agreement
referred to below).
Reference is made to the Credit Agreement dated as of May 15, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Borrower; the financial institutions party thereto (the
"Lenders"); The Chase Manhattan Bank, a New York banking corporation ("Chase"),
as issuing bank (in such capacity, the "Issuing Bank") and as an administrative
agent (in such capacity, an "Administrative Agent"); and Antares, as paying
agent (in such capacity, the "Paying Agent"), as an administrative agent (in
such capacity, an "Administrative Agent" and, together with Chase, the
"Administrative Agents") and as Collateral Agent for the Lenders. Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
The Pledgors have entered into the Pledge Agreement in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit.
Pursuant to Section 5.11 of the Credit Agreement, each Domestic Subsidiary
(other than any Inactive Subsidiary) of the Borrower that was not in existence
or not such a Subsidiary on the date of the Credit Agreement is required to
enter into the Pledge Agreement as a Subsidiary Pledgor upon becoming such a
Subsidiary if such Subsidiary owns or possesses property of a type that would be
considered Collateral under the Pledge Agreement. Section 23 of the Pledge
Agreement provides that such Subsidiaries may become Subsidiary Pledgors under
the Pledge Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Pledgor") is executing
this Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Pledgor under the Pledge Agreement in order to induce the
Lenders to make additional Loans and the Issuing Bank to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
<PAGE>
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 23 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Subsidiary Pledgor under the Pledge
Agreement with the same force and effect as if originally named therein as a
Subsidiary Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Subsidiary Pledgor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Pledgor thereunder are true and correct on
and as of the date hereof. In furtherance of the foregoing, the New Pledgor, as
security for the payment and performance in full of the Obligations (as defined
in the Pledge Agreement), does hereby create and grant to the Collateral Agent,
its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and for the benefit of the
Secured Parties, their successors and assigns, a security interest in and lien
on all of the New Pledgor's right, title and interest in and to the Collateral
(as defined in the Pledge Agreement) of the New Pledgor. Each reference to a
"Subsidiary Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed to
include the New Pledgor. The Pledge Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms subject
to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provision the economic effect of which comes
as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
its address as set forth hereunder its signature below, with a copy to in case
of the Borrower.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
[Name of New Pledgor],
by
________________________________
Name:
Title:
ANTARES LEVERAGED CAPITAL CORP.,
as Collateral Agent,
by
________________________________
Name:
Title:
