SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 30, 1996
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IVC Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 33-730406 22-1567481
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 Halls Mill Road, Freehold, New Jersey 07728
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 308-3000
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International Vitamin Corporation
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
Reference is made to the Registrant's press release dated May 1, 1996,
which is incorporated herein by reference and included as an exhibit
hereto.
On April 30, 1996, Hall Laboratories, Inc., an Oregon corporation
engaged in the manufacturing, packaging, sales and distribution of vitamins
and nutritional supplements primarily on the West Coast ("Hall"), was
merged with and into the Registrant (the "Merger"). Pursuant to the merger
agreement executed in connection therewith, all of the outstanding equity
securities of Hall were exchanged for 3,821,363 shares of the Registrant's
common stock. The merger consideration was based on arms' length
negotiations between Hall and the Registrant.
In connection with the Merger, the Registrant entered into a $26.5
million credit facility with The Chase Manhattan Bank (National
Association) pursuant to which the Bank was granted security interests in
the Registrant's assets; a portion of the revolving credit facility portion
of such credit facility is guaranteed (the "Guaranty") by a certain third
party (the "Guarantor"). In connection with the Guaranty, the Guarantor
has been granted second priority security interests in the Registrant's
assets to secure the Registrant's guaranty reimbursement obligations.
Item 7. Financial Statements and Exhibits.
Financial Statements:
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Financial statement information for Hall and pro forma financial
information for the Registrant after giving effect to the Merger is not yet
available. Such information will be filed under cover of Form 8-K/A as
soon as it is available, but no later than July 15, 1996.
Exhibits:
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2.1 Merger Agreement dated as of November 13, 1995, amended and
restated as of February 13, 1996, among International Vitamin
Corporation, Hall Laboratories, Inc., Andrew M. Pinkowski, Rita
Pinkowski, Vicki Welsh Jones and The Amelia Welsh Jones Trust
under a Trust Agreement dated 6/4/93 (incorporated by reference to
Appendix A to the Registrant's Proxy Statement and Annual Report
to Shareholders dated March 5, 1996).
3.3 Amended Certificate of Incorporation of IVC Industries, Inc.
3.4 Amended and Restated By-laws of IVC Industries, Inc.
10.5 Registration Rights Agreement dated April 30, 1996 among IVC
Industries, Inc., Andrew M. Pinkowski, Rita Pinkowski, Vicki Welsh
Jones, The Amelia Welsh Jones Trust under
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a Trust Agreement dated 6/4/93, Lawrence A. Newman, Duane
Baxter, Peter W. Schreiber, John H. Dettra, Jr. and Larry
Corbridge.
10.6 International Vitamin Corporation 1995 Stock Option Plan
(incorporated by reference to the Registrant's Statement and
Annual Report to Shareholders dated March 5, 1996).
10.7 Credit Agreement dated as of April 30, 1996 among IVC Industries,
Inc., the Banks party thereto and The Chase Manhattan Bank
(National Association), as Agent.
10.8 Guaranty dated as of April 30, 1996 by the Guarantor.*
10.9 Guaranty Reimbursement Agreement dated as of April 30, 1996 by IVC
Industries, Inc., International Vitamin Overseas Sales Corp. and
Hall Laboratories, Ltd. in favor of the Guarantor.*
10.10 Letter of Credit Reimbursement Agreement dated as of April 30,
1996 by and between IVC Industries, Inc., International Vitamin
Overseas Sales Corp. and The Chase Manhattan Bank (National
Association).
10.11 Subordination and Intercreditor Agreement dated as of April 30,
1996 by the Guarantor, The Chase Manhattan Bank (National
Association), IVC Industries, Inc., International Vitamin Overseas
Sales Corp. and Hall Laboratories, Ltd.*
10.12 Security Agreement dated as of April 30, 1996 by IVC Industries,
Inc. in favor of the Guarantor.*
10.13 Security Agreement dated as of April 30, 1996 by International
Vitamin Overseas Sales Corp. in favor of the Guarantor.*
10.14 Security Agreement dated as of April 30, 1996 by Hall
Laboratories, Ltd. in favor of the Guarantor.*
10.15 Trademark Collateral Assignment Agreement dated as of April 30,
1996 by IVC Industries, Inc.*
10.16 Employment Agreement dated as of April 30, 1996 between IVC
Industries, Inc. and Andrew M. Pinkowski.
99.2 Press Release dated May 1, 1996.
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* Confidential information indicated by Xs has been omitted and
filed separately with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IVC INDUSTRIES, INC.
Date: May 14, 1996 /s/ E. Joseph Edell
-----------------------------------------
Name: E. Joseph Edell
Title: Chairman and Chief Executive Officer
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EXHIBIT INDEX
Sequential
Exhibit Page No.
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2.1 Merger Agreement dated as of November 13, 1995,
amended and restated as of February 13, 1996, among
International Vitamin Corporation, Hall Laboratories,
Inc., Andrew M. Pinkowski, Rita Pinkowski, Vicki
Welsh Jones and The Amelia Welsh Jones Trust under
a Trust Agreement dated 6/4/93 (incorporated by reference
to Appendix A to the Registrant's Proxy Statement and
Annual Report to Shareholders dated March 5, 1996).
3.3 Amended Certificate of Incorporation of IVC Industries, Inc. 7
3.4 Amended and Restated By-laws of IVC Industries, Inc. 14
10.5 Registration Rights Agreement dated April 30, 1996 among
IVC Industries, Inc., Andrew M. Pinkowski, Rita Pinkowski,
Vicki Welsh Jones, The Amelia Welsh Jones Trust under a
Trust Agreement dated 6/4/93, Lawrence A. Newman, Duane
Baxter, Peter W. Schreiber, John H. Dettra, Jr. and Larry
Corbridge. 49
10.6 International Vitamin Corporation 1995 Stock Option Plan
(incorporated by reference to the Registrant's Statement and
Annual Report to Shareholders dated March 5, 1996).
10.7 Credit Agreement dated as of April 30, 1996 among IVC
Industries, Inc., the Banks party thereto and The Chase Manhattan
Bank (National Association), as Agent. 68
10.8 Guaranty dated as of April 30, 1996 by the Guarantor.* 166
10.9 Guaranty Reimbursement Agreement dated as of April 30, 1996
by IVC Industries, Inc., International Vitamin Overseas Sales
Corp. and Hall Laboratories, Ltd. in favor of the Guarantor.* 176
10.10 Letter of Credit Reimbursement Agreement dated as of
April 30, 1996 by and between IVC Industries, Inc., International
Vitamin Overseas Sales Corp. and The Chase Manhattan Bank
(National Association). 181
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Sequential
Exhibit Page No.
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10.11 Subordination and Intercreditor Agreement dated as of
April 30, 1996 by the Guarantor, The Chase Manhattan
Bank (National Association), IVC Industries, Inc.,
International Vitamin Overseas Sales Corp. and Hall
Laboratories, Ltd.* 217
10.12 Security Agreement dated as of April 30, 1996 by IVC
Industries, Inc. in favor of the Guarantor.* 230
10.13 Security Agreement dated as of April 30, 1996 by International
Vitamin Overseas Sales Corp. in favor of the Guarantor.* 234
10.14 Security Agreement dated as of April 30, 1996 by Hall
Laboratories, Ltd. in favor of the Guarantor.* 238
10.15 Trademark Collateral Assignment Agreement dated as of
April 30, 1996 by IVC Industries, Inc.* 242
10.16 Employment Agreement dated as of April 30, 1996 between
IVC Industries, Inc. and Andrew M. Pinkowski. 245
99.2 Press Release dated May 1, 1996. 257
_______________
* Confidential information indicated by Xs has been omitted and
filed separately with the Securities and Exchange Commission.
Exhibit 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL VITAMIN CORPORATION
International Vitamin Corporation (the "Corporation") hereby certifies
that:
A. The Corporation was originally incorporated under International
Vitamin Corporation on September 15, 1971.
B. The Restated Certificate of Incorporation set forth herein was duly
adopted in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by a resolution of the Board of
Directors setting forth the Restated Certificate of Incorporation and declaring
its advisability and written consents, given pursuant to Section 228 of the
General Corporation Law of the State of Delaware, and by adoption by a majority
of the holders of all outstanding stock.
C. The Certificate of Incorporation of the Corporation as now in full
force and effect is hereby restated, integrated and amended to red in full as
follows:
FIRST. The name of the Corporation is International Vitamin Corporation.
SECOND. The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name of its registered agent in such address is The Prentice-Hall
Corporation System.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law.
FOURTH. The Corporation shall have authority to issue 10,000,000 shares of
Common Stock of the par value of $.01 per share.
FIFTH. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the following provision are inserted in this
Restated Certificate of Incorporation for the regulation and conduct of the
business and affairs of the Corporation:
1. The election of directors of the Corporation need not be by
written ballot unless the By-Laws so require.
2. The business and affairs of the Corporation shall be managed by,
or under the direction of, a Board of Directors consisting of not less than two
(2) nor more than eight (8) persons. The exact number of directors within the
minimum and maximum limitations specified herein shall be fixed from time to
time by resolution of a majority of the whole Board of Directors.
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3. The directors of the Corporation, by the affirmative vote of a
majority of the whole Board, at any regular or special meeting, shall have the
power to adopt, amend or repeal By-Laws of the Corporation, provided, however,
that such power of the Board shall not divest the stockholders of the
Corporation of their power to adopt, amend or repeal By-Laws of the Corporation.
4. In addition to the powers and authorities conferred upon the
Board of Directors of the Corporation by this Restated Certificate of
Incorporation, the Board of Directors of the Corporation may exercise all such
powers and take all such actions as may be exercised or taken by the
Corporation, subject, however, to the provisions of the laws of the State of
Delaware, this Restated Certificate of Incorporation and the By-Laws of the
Corporation.
5. Any vote or votes authorizing liquidation of the Corporation or
proceedings for its dissolution may provide, subject to the rights of creditors
and preferred stockholders, if any, for the distribution pro rata among the
stockholders of the Corporation of the assets of the Corporation, wholly or in
part, in cash or in kind, whether such assets be in cash or other property, and
any such vote or votes may authorize the Board of Directors of the Corporation
to determine the valuation of the different assets of the Corporation for the
purpose of such liquidation and may divide or authorize the Board of Directors
to divide such assets or any part thereof among the stockholders of the
Corporation, in such manner that every stockholder will receive a proportionate
amount in value (determined as aforesaid) of cash and/or property of the
Corporation upon such agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
SIXTH. The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SEVENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court or equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the
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ampliation of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise and
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH. If any Article of this Certificate of Incorporation or any portion
thereof is found to be void or unenforceable by a court of competent
jurisdiction, the remaining Articles or portions of said Article, as the case
may be, shall nevertheless remain in full force and effect as though the
unenforceable part had been severed and deleted.
IN WITNESS WHEREOF, International Vitamin Corporation has caused this
Restated Certificate of Incorporation to be executed by Arthur S. Edell, its
President, and attested by its Secretary, Peter Olesinski, this 28th day of
January, 1994.
INTERNATIONAL VITAMIN CORPORATION
By: /s/ Arthur S. Edell
-------------------------------
Arthur S. Edell, President
Attest:
/s/ Peter Olesinski
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Peter Olesinski, Secretary
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL VITAMIN CORPORATION
International Vitamin Corporation a corporation organized and existing by
virtue of the General Corporation law of the State of Delaware does hereby
certify that:
FIRST. At the annual meeting of shareholders held on April 4, 1995, an
appropriate majority of the holders of the shares of common stock entitled to
vote authorized the amendment of the Certificate of Incorporation so that the
Article thereof numbered "FOURTH" shall be read as follows:
"FOURTH. The Corporation shall have authority to issue twenty-five million
(25,000,000) shares of Common Stock of the par value of $.01 per share and two
million (2,000,000) shares of preferred stock of the par value of $.01 per
share."
SECOND. The said amendment was duly adopted in accordance with provisions
of Section 242 of the General Corporate Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by Arthur S. Edell, its President and E. Joseph Edell, Chief Executive
Officer, this 17th day of April, 1995.
INTERNATIONAL VITAMIN CORPORATION
By: /s/ Arthur S. Edell
-----------------------------
Arthur S. Edell, President
Attest:
By: /s/ E. Joseph Edell
-----------------------
E. Joseph Edell, Chief
Executive Officer
<PAGE>
State of New Jersey
County of Monmouth
This instrument was acknowledged before me the 17th day of April, 1995 by
Arthur S. Edell as President of International Vitamin Corporation, who
acknowledged that he had executed the same for the purpose, consideration and in
the capacity therein stated, and as the act and deed of said corporation. He
further acknowledged to me that the facts stated therein are true and correct.
/s/ Barbara Schockoert
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Notary Public
My commission expires:
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<PAGE>
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
INTERNATIONAL VITAMIN CORPORATION
The undersigned, the Chairman of International Vitamin
Corporation, a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), does
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hereby certify:
FIRST: That the Board of Directors of the Corporation has adopted by
written consent a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by changing Article First, so that, as amended, said Article will be and
read as follows:
"FIRST: The name of the Corporation is IVC Industries, Inc."
SECOND: That a majority of the outstanding stock entitled to vote on
the amendment of the Certificate of Incorporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware has been voted in favor of the amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this document on this
19th day of March, 1996.
INTERNATIONAL VITAMIN CORPORATION
By: /s/ E. Joseph Edell
---------------------------------
Attest:
By: /s/ Sheldon Drucker
------------------------
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State of New Jersey
County of Monmouth
This instrument was acknowledged before me on the 19th day of March,
1996 by E.J. Edell as Chairman of International Vitamin Corporation, who
acknowledged that he had executed the same for the purpose, consideration and in
the capacity therein stated, and as the act and deed of said corporation. He
further acknowledged to me that the facts stated therein are true and correct.
/s/ Barbara Schockoert
--------------------------------
Notary Public
My commission expires:
_____________________________
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Exhibit 3.4
IVC INDUSTRIES, INC.
(formerly known as International Vitamin Corporation)
* * * * *
AMENDED AND RESTATED BY-LAWS
* * * * *
The following are the By-laws of IVC Industries, Inc. (formerly known as
International Vitamin Corporation), amended and restated as of April 29, 1996.
ARTICLE I
OFFICES
1.1 The registered office of the Company shall be located at 500 Halls
Mill Road, Freehold, New Jersey 07728.
1.2 The Company may also have offices at such other places both within and
without the State of New Jersey as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 All meetings of the shareholders for the election of Directors shall
be held at the principal offices of the Company,
<PAGE>
or at such other place either within or without the State of New Jersey as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of shareholders for any other purpose may be
held at such time and place, within or without the State of New Jersey, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2.2 Annual meeting of shareholders, for the purpose of electing directors
and of transacting such other business as may come before it, shall be held at
the office of the corporation or at such other place as may be fixed by the
Board of Directors and specified in the notice of the meeting and within four
(4) months after the close of the fiscal year, or as soon thereafter as
practicable.
2.3 Written notice of the annual meeting stating the place, date and hour
of the meeting shall be given to each shareholder entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
2.4 (a) No notice of the time, place, or purposes of any regular or
special meeting of shareholders need be given to any shareholder who, in person,
or by proxy, either attends the
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meeting or, in a writing which is filed with the records of the meeting, waives
the notice either before or after the meeting.
(b) Any shareholder who has signed a waiver of notice of the meeting
shall be bound by the proceedings of that meeting in all respects as if due
notice of that meeting had been given.
2.5 (a) For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors may provide
that the share transfer books shall be closed for a stated period not to exceed,
in any case, fifty (50) days. If the transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
(b) In lieu of closing the share transfer books, the Board of
Directors may fix in advance a date as the record date for any determination of
shareholders, such date in any case to be not more than fifty (50) days and, in
case of a meeting of shareholders, not less than ten (10) days prior to the date
on
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which the action requiring that determination of shareholders is to be taken.
(c) If the share transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring the dividend is adopted, as
the case may be, is the record date for determination of shareholders.
2.6 The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
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notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
2.7 Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the Chairman of the Board, or the Board of Directors or those
shareholders who hold in the aggregate 10% or more of the outstanding shares and
entitled to cast votes which all shareholders are entitled to cast at the
particular meeting. The meeting shall be called by the Chairman of the Board or
Secretary at the request in writing of a majority of the Board of Directors, or
at the request in writing of shareholders owning 10% or more of the outstanding
shares and entitled to vote which all shareholders are entitled to cast at a
particular meeting. Such request shall state the purpose or purposes of
proposed meeting.
2.8 Written notice of a special meeting stating the place, date and hour
of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten
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(10) nor more than sixty (60) days before the date of the meeting, to each
shareholder entitled to vote at such meeting.
2.9 The Chairman of the Board, or in his absence the President, shall
call to order meetings of shareholders and shall act as Chairman of such
meetings. The Board of Directors or the shareholders may appoint any
shareholder or any director or officer of the corporation to act as Chairman of
any meeting in the absence of the Chairman of the Board and the President. The
Secretary of the corporation shall act as Secretary of all meetings of
shareholders, but in the absence of the Secretary the presiding officer may
appoint any shareholder or any director or officer to act as Secretary of any
meeting.
2.10 Business transacted at any special meeting of shareholders shall be
limited to the purposes stated in the notice. The order of business at annual
and special meetings of shareholders shall, to the extent appropriate, be as
follows:
(1) Call to order;
(2) Determination of the presence of a quorum;
(3) Consideration of minutes not previously approved;
(4) Report of the President and other officers;
(5) Election of Directors;
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(6) Consideration of unfinished business;
(7) Consideration of new business; and
(8) Adjournment.
2.11 The holders of a majority of the voting stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting.
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2.12 When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of the statutes or of the certificate of
incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question. Elections for Directors
need not be by ballot unless a shareholder demands election by ballot at the
election and before the voting begins.
2.13 Unless otherwise provided in the certificate of incorporation each
shareholder shall at every meeting of the shareholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such shareholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
2.14 Unless a proxy is irrevocable --
(a) The later execution by the shareholder of a different proxy
revokes the earlier one; and
(b) An attempt to vote by the shareholder who is present at the
meeting revokes all other proxies executed by him.
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2.15 Holders of fractional share or scrip shall have no right to vote at
or participate in any meeting of shareholders.
2.16 (a) In advance of any meeting of shareholders, the Board of
Directors may appoint any persons, other than nominees for office, as inspectors
of election to act at that meeting or any adjournment thereof. If inspectors of
election are not appointed, the chairman of any meeting may, and on the request
of any shareholder or shareholder's proxy shall, appoint inspectors of election
at the meeting. The number of inspectors shall be either one or three. If
appointed at a meeting on the request of one or more shareholders or proxies,
the majority of shares present shall determine whether one or three inspectors
are to be appointed. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by appointment by the
Board of Directors in advance of the meeting, or at the meeting by the person
acting as chairman.
(b) The inspectors of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity, and effect of
proxies. The inspectors shall also receive votes, ballots, or consents, hear
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and determine all challenges and questions in any way arising in connection with
the right to vote, count and tabulate all votes or consents, determine the
result, and do such acts as may be proper to conduct the election or vote with
fairness to all shareholders. The inspectors of election shall perform their
duties impartially, in good faith, to the best of their ability, and as
expeditiously as is practical.
(c) If there are three inspectors of election the decision, act, or
certificate of a majority is effective in all respects as the decision, act, or
certificate of all.
(d) On request of the chairman of the meeting or of any shareholder
or his proxy the inspectors shall make a report in writing of any challenge or
question or matter determined by them and execute a certificate of any fact
found by them. Any report or certificate made by them is prima facie evidence
of the facts stated therein.
2.17 Shareholder approval shall be required for a plan or arrangement
(under (a) below) or, prior to the issuance of designated securities (under (b),
(c), or (d) below) when:
(a) A stock option or purchase plan is to be established or other
arrangement made pursuant to which stock may
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be acquired by officers or directors, except for warrants or rights issued
generally to security holders of the company or broadly based plans or
arrangements including other employees except in a case where the shares are
issued to a person not previously employed by the company, as an inducement
essential to the individual's entering into an employment contract with the
company, and except for the establishment of a plan or arrangement under which
the amount of securities which may be issued does not exceed the lesser of 1% of
the number of shares of common stock, 1% of the voting power outstanding, or
25,000 shares.
(b) The issuance will result in a change of control of the issuer.
(c) In connection with the acquisition of the stock or assets of
another company if:
(i) any director, officer or substantial shareholder of the
issuer has a 5% or greater interest (or such persons collectively have a 10% or
greater interest), directly or indirectly, in the company or assets to be
acquired or in the consideration to be paid in the transaction or series of
related transactions and the present or potential issuance of common
11
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stock, or securities convertible into or exercisable for common stock, could
result in an increase in outstanding common shares or voting power of 5% or
more; or
(ii) where the present or potential issuance of common stock, or
securities convertible into or exercisable for common stock, other than a public
offering for cash, if the common stock has or will have upon issuance voting
power equal to or in excess of 20% of the voting power outstanding before the
issuance of stock or securities convertible into or exercisable for common
stock, or the number of shares of common stock to be issued is or will be equal
to or in excess of 20% of the number of shares of common stock outstanding
before the issuance of the stock or securities.
(d) In connection with a transaction other than a public offering
involving:
(i) the sale or issuance by the issuer of common stock (or
securities convertible into or exercisable for common stock) at a price less
than the greater of book or market value which together with sales by officers,
Directors or substantial shareholders of the company equals 20% or more of
common stock of
12
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20% or more of the voting power outstanding before the issuance; or
(ii) the sale or issuance by the company of common stock (or
securities convertible into or exercisable common stock) equal to 20% or more of
the common stock or 20% or more of the voting power outstanding before the
issuance for less than the greater of book or market value of the stock.
ARTICLE III
DIRECTORS
3.1 The number of Directors which shall constitute the whole board shall
be not less than seven (7) nor more than fifteen (15). Among such number of
Directors as shall constitute the whole board of the Company, except as noted
hereafter, not less than three (3) Directors shall meet the qualifications set
forth in Section 3.15 hereof (each an "Outside Director" and, together, the
----------------
"Outside Directors"); provided, that, in the event of the death, incapacity,
----------------- --------------
resignation or removal of an Outside Director such that the number of remaining
Outside Directors is less than the number of Outside Directors required by this
Section 3.1, the Board of Directors shall promptly appoint a
13
<PAGE>
replacement Outside Director. Within the limits above specified, the number of
Directors shall be determined by resolution of the Board of Directors or by the
holders of a majority of the outstanding stock of the Corporation entitled to
vote; provided, that, if the number of Directors determined pursuant to this
--------------
sentence shall be more than eight (8), the number of Outside Directors shall be
increased to a number such that the Outside Directors shall constitute at least
a majority of the whole board. The Directors shall be elected at the annual
meeting of the shareholders, except as provided in Section 3.2 of this Article,
and each Director elected shall hold office until his successor is elected and
qualified.
3.2 Vacancies and newly created directorships resulting from any increase
in the authorized number of Directors may be filled by a majority of the
Directors then in office, though less than a quorum, or by a sole remaining
Director or by the holders of a majority of the outstanding stock of the Company
entitled to vote, and the Directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no Directors in office, then an election
of Directors may be held in
14
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the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the Directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any shareholder or
shareholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such Directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the Directors chosen by the Directors then in
office.
3.3 The business and affairs of the corporation shall be managed by or
under the direction of its Board of Directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these By-laws directed or required
to be exercised or done by the shareholders.
3.4 The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of New Jersey.
15
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3.5 Regular meetings of the Board of Directors may be held with or without
notice at such time and at such place as shall from time to time be determined
by the Board.
3.6 Special meetings of the board may be called by the Chairman of the
Board of Directors on two (2) days' notice to each Director, either personally
or by mail or by telegram; and special meetings shall be called by the Chairman
of the Board or Secretary on ten (10) days' notice to each Director, either
personally or by mail or telegram, on the written request of two Directors,
unless the board consists of only one Director, in which case, special meetings
shall be called by the Chairman of the Board or Secretary in like manner and on
like notice on the written request of the sole Director.
3.7 At all meetings of the board a majority of the Directors shall
constitute a quorum for the transaction of business and the act of a majority of
the Directors present at any meeting at which there is a quorum present shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. A Director who
abstains from participation in a particular course of business shall nonetheless
be counted for
16
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purposes of determining a quorum. If a quorum shall not be present at any
meeting of the Board of Directors the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.8 Unless otherwise restricted by the certificate of incorporation or
these By-laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
3.9 Unless otherwise restricted by the certificate of incorporation or
these By-laws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in a meeting can hear each
other, and such participation in a meeting shall constitute presence in person
at the meeting.
17
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3.10 At every meeting of the Board of Directors, the Chairman of the Board
of Directors, if there is such an officer, and if not or in the Chairman's
absence, the Vice Chairman of the Board of Directors, if there is such an
officer, and if not or in the Vice Chairman's absence, the President, or in the
President's absence, a Vice President designated by the President, or in the
absence of such designation, a chairman chosen by a majority of the Directors
present, shall preside. The Secretary of the corporation shall act as Secretary
of the Board of Directors. In case the Secretary shall be absent from any
meeting, the chairman may appoint any person to act as Secretary of the meeting.
3.11 The Board of Directors, by resolution adopted by a majority of the
entire Board, may designate from among its members one or more committees, each
consisting of two (2) or more Directors, and each of which, to the extent
provided in such resolution, shall have all the authority of the Board (except
as otherwise provided by law, the Articles of Incorporation, as amended, or
these By-laws). However, no such committee shall have authority as to any of
the following matters:
18
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(a) the submission to shareholders of any action as to which
shareholders' authorization or approval is required by law, the Articles of
Incorporation, as amended, or these By-laws;
(b) the filling of vacancies by the Board of Directors or on any
committee;
(c) the fixing of compensation of the Directors for serving on the
Board or on any committee;
(d) the amendment or repeal of these By-laws, or the adoption of new
By-laws;
(e) the amendment or repeal of any resolution of the Board of
Directors unless, by its terms, it is expressly made so amendable or repealable;
(f) the issuance of any shares or evidence of indebtedness of the
corporation or the declaration of any dividend;
(g) the amendment of the certificate of incorporation, (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in Section 151(a) fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, and distribution
19
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of assets of the corporation or the conversion into, or the exchange of such
shares for shares of any other class or classes or any other series of the same
or any other class or classes of stock of the corporation) adopting an agreement
of merger or consolidation;
(h) recommendation to the shareholders of the sale, lease or exchange
of all or substantially all of the corporations property and assets; and
(i) recommendation to the shareholders of a dissolution of the
corporation or a revocation of dissolution.
3.12 Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
3.13 Unless otherwise restricted by the certificate of incorporation or
these By-laws, the Board of Directors shall have the authority to fix the
compensation of Directors. The Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
Director. No such payment shall preclude any Director from serving the
corporation in any other capacity and
20
<PAGE>
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
3.14 Unless otherwise restricted by the certificate of incorporation or
these By-laws, any Director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of shares entitled to vote
at an election of Directors.
3.15 "Outside Director" shall mean a Director who (i) does not have any
----------------
material direct financial interest or any material indirect financial interest
in the Company or in any affiliate of the Company (excluding direct or indirect
ownership of less than 5% of the shares of the Company's capital stock or
options to purchase shares of the Company's capital stock), (ii) is not
connected with the Company or any affiliate of the Company as an officer,
employee, promoter, underwriter, trustee, partner or person performing similar
functions and (iii) is not, and has not been for a period of at least five (5)
years, a director of any affiliate of the Company.
21
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ARTICLE IV
NOTICES
4.1 Whenever, under the provisions of the statutes or of the certificate
of incorporation or of these By-laws, notice is required to be given to any
Director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such Director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
Directors may also be given by telegram or facsimile telephonic transmission.
4.2 Whenever any notice is required to be given under the provisions of
the statutes or of the certificate of incorporation or of these By-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
22
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ARTICLE V
OFFICERS
5.1 The officers of the corporation shall be chosen by the Board of
Directors and shall be Chairman of the Board of Directors, Vice Chairman of the
Board of Directors, President, Executive Vice Presidents, and a Secretary and a
Treasurer. The Board of Directors may also designate persons for the positions
of Chief Executive Officer (who shall be either the Chairman of the Board of
Directors or the President), Vice Presidents, Treasurer, Chief Operating
Officer, Chief Financial Officer and Controller, and one or more Assistant
Secretaries and Assistant Treasurers, as they deem necessary. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these By-laws otherwise provide.
5.2 The Board of Directors at its first meeting after each annual meeting
of shareholders shall choose the officers of the Company.
5.3 The Board of Directors may appoint such other officers and agents as
it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform
23
<PAGE>
such duties as shall be determined from time to time by the Board.
5.4 The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
5.5 The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
5.6 The Chairman of the Board, if there shall be such an officer, shall,
if present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to the
Chairman by the Board of Directors or prescribed by the By-laws.
5.7 The Vice Chairman of the Board, if there be such an officer, shall, if
present, preside at all meetings of the Board of Directors in the absence of the
Chairman of the Board. The Vice Chairman shall exercise and perform such other
powers and duties as may be from time to time assigned to the Vice Chairman by
the Board of Directors or prescribed by the By-laws.
24
<PAGE>
5.8 The President, subject to the provisions of these By-laws and to the
direction of the Board of Directors, shall be responsible for the general
management and control of the business and affairs of the corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall sign stock certificates, execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
5.9 Approval by the Board of Directors is required for all material
contracts to which the Company is a party to. A material contract includes, but
is not limited to, a contract in which the corporation grants an exclusive
distribution license for a geographic area, transfers any interest in the
Company's technology, or relates to repackaging of the Company's products.
5.10 In the absence of the President or in the event of his inability or
refusal to act, the Executive Vice Presidents, the Vice Presidents and the
Presidents of Divisions, in the order designated by the Directors, or in the
absence of any
25
<PAGE>
designation, then in the order of their election, shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. The Presidents of Divisions, the
Executive Vice Presidents and the Vice Presidents shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
5.11 The Secretary shall attend all meetings of the Board of Directors and
all meetings of the shareholders and record all the proceedings of the meetings
of the corporation and of the Board of Directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
He shall give, or cause to be given, notice of all meetings of the shareholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he, or an Assistant Secretary, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
his signature or by the signature of such Assistant Secretary. The Board of
Directors
26
<PAGE>
may give general authority to any other officer to affix the seal of the
corporation and to attest the affixing by his signature.
ARTICLE VI
RESIGNATIONS AND REMOVALS
6.1 Any Director or officer of the corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time be not specified therein,
then upon receipt thereof. The acceptance of such resignation shall not be
necessary to make it effective.
6.2 The Board of Directors, at any meeting thereof called for the purpose,
may, at any time, remove with or without cause from office or terminate the
employment of any officer, agent or member of any committee, and may remove with
cause any Director.
The shareholders entitled to vote for the election of Directors may remove
any Director with or without cause.
27
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ARTICLE VII
CERTIFICATES FOR SHARES
7.1 The shares of the corporation shall be represented by a certificate or
shall be uncertificated. Certificates shall be signed by, or in the name of the
corporation by, the Chairman or the President, or the Secretary of the
corporation.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that
the corporation will furnish without charge to each shareholder who so requests
the powers, designations, preferences and relative participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
7.2 Any or all of the signatures on a certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued
28
<PAGE>
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
7.3 The Board of Directors may direct a new certificate or certificates or
uncertificated shares to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates or uncertificated shares, the Board
of Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
7.4 Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or
29
<PAGE>
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Upon receipt of proper transfer
instructions from the registered owner of uncertificated shares such
uncertificated shares shall be canceled and issuance of new equivalent
uncertificated shares or certificated shares shall be made to the person
entitled thereto and the transaction shall be recorded upon the books of the
corporation.
7.5 In order that the corporation may determine the shareholders entitled
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. A
determination of shareholders of record entitled to notice of
30
<PAGE>
or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
7.6 The corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Dividends upon the capital stock of the corporation, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
31
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8.2 Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
8.3 The Board of Directors shall present at each annual meeting, and at
any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
8.4 All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Director may from time to time designate.
8.5 The fiscal year of the corporation shall begin on August 1 and end on
July 31.
8.6 The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the
32
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words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise. No
written act of the Company shall be declared invalid for lack of a seal if
signed by the duly authorized officer of the Company.
8.7 All deeds, bonds, mortgages, contracts and other instruments or
documents requiring a seal may be signed in the name of the corporation by the
President or by any other officer authorized to sign such instrument or document
by the Board of Directors, and such authority may be general or confined to
specific instances.
ARTICLE IX
AMENDMENTS
9.1 These By-laws may be altered, amended or repealed or new By-laws may
be adopted by the shareholders or by the Board of Directors at any regular
meeting of the shareholders or of the Board of Directors or at any special
meeting of the shareholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new By-laws be contained in the
notice of such special meeting; provided, however, that any such
-----------------
33
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action by the Board of Directors to alter, amend, repeal or adopt new By-laws,
which action alters, amends, repeals or otherwise effectively modifies Section
3.1 or Section 3.15 of Article III of these By-laws, must receive the unanimous
consent or approval of the Outside Directors. If the power to adopt, amend or
repeal By-laws is conferred upon the Board of Directors by the certificate of
incorporation it shall not divest or limit the power of the shareholders to
adopt, amend or repeal By-laws.
ARTICLE X
INDEMNIFICATION
10.1 The corporation shall indemnify its officers, Directors, employees
and agents to the full extent permitted by the General Corporation Law of
Delaware, as amended from time to time.
Any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (whether or not by or in the right of
the Corporation) by reason of the fact that he is or was a Director, officer,
incorporator, employee, or agent of the corporation, or
34
<PAGE>
is or was serving at the request of the corporation as a Director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the corporation to the
full extent then permitted by law against expenses (including attorney's fees),
judgments, fines (including excise taxes assessed on a person with respect to an
employee benefit plan), and amounts paid in settlement incurred by him in
connection with such action, suit, or proceeding. Such right of indemnification
shall inure whether or not the claim asserted is based on matters which antedate
the adoption of this Section 10.1. Such right of indemnification shall continue
as to a person who has ceased to be a Director, officer, incorporator, employee,
partner, trustee, or agent and shall inure to the benefit of the heirs and
personal representatives of such a person. The indemnification provided by this
Section 10.1 shall not be deemed exclusive of any other rights which may be
provided now or in the future under any provision currently in effect or
hereafter adopted by any agreement, by vote of shareholders, by resolution of
disinterested Directors, by provision of law, or otherwise.
35
Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 30, 1996, among IVC
INDUSTRIES, INC., a Delaware corporation (the "Company"), Andrew M. Pinkowski,
Rita Pinkowski, Vicki Welsh Jones and The Amelia Welsh Jones Trust under a Trust
Agreement dated 6/4/93 (collectively, the "Shareholders"), Lawrence A. Newman,
Duane J. Baxter, Peter W. Schreiber, John H. Dettra, Jr. and Lawrence Corbridge
(collectively, the "SAR Holders" and, together with the Shareholders, the
"Securityholders").
WHEREAS, the Company, Hall Laboratories, Inc. ("Hall") and the
Shareholders have entered into an Agreement and Plan of Merger dated November
13, 1995, as amended and restated on February 13, 1996 (the "Merger Agreement"),
pursuant to which all of the outstanding equity securities and stock
appreciation rights of Hall shall be acquired by the Company (the
"Acquisition"); and
WHEREAS, in connection with the Acquisition, and pursuant to the
Merger Agreement, the Company has agreed to provide the Securityholders with
certain registration rights as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
-------------------
The following terms, as used in this Agreement, have the following
respective meanings:
"Covered Securities" means all or any Shares (as defined below)
------------------
received by the Securityholders in connection with the Acquisition.
"Equity Securities" means any capital stock or other equity interest
-----------------
or any securities convertible into or exchangeable for capital stock or any
other rights, warrants or
<PAGE>
options to acquire any of the foregoing securities or ownership interests or
ownership claims.
"Person" means any natural person, corporation, limited partnership,
------
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government agency or political
subdivision thereof.
"Registrable Securities" shall have the meaning set forth in the
----------------------
Registration Rights Agreement dated April 25, 1995 between the Company and E.
Joseph Edell, Beverlee Edell, I. Alan Hirschfeld, Susan H. Hirschfeld, Lindsey
F. Hirschfeld, Jennifer P. Hirschfeld, Katy L. Hirschfeld and Marc Z. Edell.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Shares" means the Company's common stock, par value $.01 per share.
------
ARTICLE II
Registration Rights
-------------------
2.1. Demand Registration. (a) If at any time commencing three years
-------------------
from the date of this Agreement one or more of the Securityholders holding at
least 7% of the Covered Securities shall notify the Company in writing that he
or they wish to offer or cause to be offered for public sale all or a portion of
the Covered Securities, the Company will so notify all Securityholders holding
Covered Securities. Upon written request of any Securityholder given within 30
days after the receipt by such Securityholder from the Company of such
notification, the Company agrees promptly to prepare and file a registration
statement with the Securities and Exchange Commission (the "Commission") to
register under the Securities Act any or all Covered Securities held by the
requesting Securityholders and to use its best efforts to have such registration
statement declared
2
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effective as promptly as practicable. Subject to Section 2.5(b) hereof, the
Company shall not be required to effect more than one registration pursuant to
this Section 2.1; provided, however, that the Company shall not be obligated to
effect any such registration unless the securities requested to be included
therein represent at least 7% of the Covered Securities.
(b) A request pursuant to this Section 2.1 shall state the
number of Covered Securities requested to be registered and the intended method
of disposition thereof. If at the time of receipt of any request for
registration pursuant to this Section 2.1 there shall be any public sale of
Registrable Securities or other securities contemplated or in progress by the
Company or, to the knowledge of the Company, by any other Person, then, upon
receipt of such request, the Company agrees to notify the Securityholders
advising the Securityholders that they may elect to withdraw such request and
participate in such public offering pursuant to Section 2.2, if at such time
such Securityholders would have been entitled to participate in a registration
under such Section. Promptly upon receipt of any request pursuant to this
Section 2.1 or, if the provisions of the preceding sentence shall be applicable
to such request, promptly upon receipt of notice that any Securityholder wishes
to maintain his or her request, the Company will send a notice to all other
holders of Covered Securities, together with a copy of the request and, if the
provisions of the preceding sentence shall be applicable to such request, notice
of such public offering. Such other holders may elect to participate in the
registration by notice to the Company given within 30 days following the date of
the Company's notice of request for registration.
2.2. Incidental Registration. (a) If at any time after the date
-----------------------
hereof the Company proposes to register any Equity Securities under the
Securities Act for sale to the public (other than pursuant to a registration
statement on Form S-4 or Form S-8 (or any successor forms) or any other forms
not available for registering Covered Securities for sale to the public), either
for the Company's account or for the account of others, the Company shall, not
less than 30 nor more than 90 days prior to the proposed date of filing a
registration statement under the Securities Act, give written notice to all
Shareholders of its intention to do so. Upon the written request of any
Shareholder
3
<PAGE>
given within 30 days after transmittal by the Company of such notice, the
Company will use its best efforts to cause the Covered Securities requested to
be registered to be so registered under the Securities Act. A request pursuant
to this Section 2.2(a) shall state the number of Covered Securities requested to
be registered and the intended method of disposition thereof. The rights
granted in this Section 2.2(a) shall apply in each case where the Company
proposes to register Equity Securities regardless of whether such rights may
have been exercised previously. The rights granted in this Section 2.2(a) shall
not apply to the SAR holders or the Covered Securities held by such Persons
until three years from the date of this Agreement.
(b) Nothing in this Agreement shall be deemed to require the
Company to proceed with any registration of its securities pursuant to Section
2.2 after giving the notice provided in paragraph (a) above; provided, however,
-------- -------
that in any event the Company shall pay any registration expenses incurred in
connection therewith.
2.3. Registration Procedures. If and whenever the Company is
-----------------------
required by the provisions of this Article II to use it best efforts to effect
the registration of any securities under the Securities Act, the Company will as
expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for a
period of time required for the disposition of such securities by the
holders thereof;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
securities covered by such registration statement whenever the seller
or sellers of such securities shall desire to sell or otherwise
dispose of the same;
4
<PAGE>
(c) furnish to each seller and to each duly authorized
underwriter of each seller such number of authorized copies of a
prospectus, including copies of a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as such seller or underwriter may reasonably request in
order to facilitate the public sale or other disposition of the
securities owned by such seller;
(d) use its best efforts to register or qualify the
securities covered by such registration statement under such
securities or blue sky laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be
necessary under such securities or blue sky laws to enable such seller
to consummate the public sale or other disposition in such
jurisdictions of the securities to be sold by such seller, except that
the Company shall not for any such purpose be required to qualify to
do business in any jurisdiction wherein it is not qualified or to file
any general consent to service of process;
(e) before filing the registration statement or prospectus
or amendments or supplements thereto, furnish to counsel selected by
the holders of Covered Securities included in such registration
statement copies of all such documents proposed to be filed, all of
which shall be subject to the approval of such counsel;
(f) furnish, at the request of any seller, (1) to the
underwriters, on the date that such seller's securities are delivered
to the underwriters for sale pursuant to such registration, an opinion
of the independent counsel representing the Company for the purposes
of such registration addressed to such underwriters, in such form as
the underwriters may reasonably request, or (2) if such securities are
not being sold through underwriters, then to the sellers, on the date
that the registration statement with respect to such securities
becomes effective, an opinion, dated such date, of the independent
counsel representing the Company for the purposes of such
registration, stating that such registration statement has become
effective under the Securities Act and that (i) to
5
<PAGE>
the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Securities Act, (ii) the registration statement, the related
prospectus, and each amendment or supplement thereto comply as to form
in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements contained therein), (iii) the descriptions in the
registration statement or the prospectus, or any amendment or
supplement thereto, of all legal matters and contracts and other legal
documents or instruments are accurate and fairly present the
information required to be shown, and such counsel does not know of
any legal or governmental proceedings, pending or contemplated,
required to be described in the registration statement or prospectus,
or any amendment or supplement thereto, which are not described as
required, nor of any contracts or documents or instruments of a
character required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, or to be filed as
exhibits to the registration statement, which are not described and
filed or incorporated by reference as required; such counsel shall
also confirm that he has no reason to believe that either the
registration statement or the prospectus, or any amendment or
supplement thereto (other than financial material as to which such
counsel need make no statement) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which made, not misleading; and in the case of
clauses (1) and (2) above, a letter dated such date, from the
independent certified public accountants of the Company addressed to
the underwriters, if any, and if such securities are not being sold
through underwriters, then to the sellers and, if such accountants
refuse to deliver such letter to such sellers, then to the Company,
stating that they are independent certified public accountants within
the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements and other financial data of the
6
<PAGE>
Company included in the registration statement or the prospectus, or
any amendment or supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act. Such opinion of counsel shall additionally cover such other
legal matters with respect to the registration in respect of which
such opinion is being given as sellers may reasonably request. Such
letter from the independent certified public accountants shall
additionally cover such other financial matters (including information
as to the period ending not more than 5 business days prior to the
date of such letter) with respect to the registration in respect of
which such letter is being given as the holders holding a majority of
the Covered Securities being so registered may reasonably request;
(g) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of such securities;
(h) provide and cause to be maintained a transfer agent and
registrar for all Covered Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(i) use its best efforts to list all Covered Securities
covered by such registration statement on any securities exchange on
which any class of Covered Securities is then listed; and
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than 18 months after the effective date of the registration
statement, an earnings statement covering the period of at least 12
months beginning with the first full month after the effective date of
such registration statement, which earnings statements shall satisfy
the provisions of Section 11(a) of the Securities Act.
7
<PAGE>
2.4. Expenses. All expenses incurred in effecting the
--------
registrations provided for in this Article II (excluding underwriters' discounts
and commissions which shall be borne pro rata by those holders for whom Covered
Securities are being registered), including without limitation all registration
and filing fees (including all expenses incident to filing with the National
Association of Securities Dealers, Inc. and any securities exchange), printing
expenses, fees and disbursements of counsel for the Company, fees of the
Company's independent auditors and accountants, expenses of any audits incident
to or required by any such registration and expenses of complying with the
securities or blue sky laws of any jurisdictions pursuant to subsection 2.3(d)
hereof, shall be paid by the Company. In addition to the foregoing, in the case
of a registration pursuant to Section 2.2 hereof, the Company shall also pay the
fees and disbursements of one counsel for all selling shareholders participating
in such offering for performance of the normal and customary functions of
counsel for selling shareholders in each such registration provided for in this
Article II.
2.5. Marketing Restrictions. (a) If (i) any holder of Covered
----------------------
Securities requests registration of Covered Securities under Section 2.1 or
Section 2.2, (ii) the offering proposed to be made is to be an underwritten
public offering and (iii) the managing underwriters of such public offering
furnish a written opinion that the total amount of securities to be included in
such offering would exceed the maximum amount of securities (as specified in
such opinion) which can be marketed at a price reasonably related to the then
current market value of such securities and without materially and adversely
affecting such offering, then the rights of the holders of Covered Securities to
include such securities in such registration to participate in such offering
shall be in the following order of priority (regardless of whether, in the case
of a registration pursuant to Section 2.2, the offering is initiated by the
Company or by any other Person):
First: The holders of Registrable Securities shall be
-----
entitled to include that number of Registrable Securities such that such holders
will receive net proceeds of not less than $3,125,000 in the offering;
8
<PAGE>
Second: The holders of Covered Securities and the holders
------
of Registrable Securities shall be entitled to participate pro rata among
themselves in accordance with the number of securities requested to be
registered by each such holder;
Third: The Company shall be entitled to participate pro
-----
rata in accordance with the number of securities requested to be registered by
the Company;
and no securities (issued or unissued) other than those registered and included
in the underwritten offering shall be offered for sale or other disposition by
the Company in a transaction which would require registration under the
Securities Act (including any additional offering which is to be registered
pursuant to Section 2.1) until the expiration of 180 days after the effective
date of the registration statement requested pursuant to this Article II or such
shorter period as may be acceptable to the holders of Covered Securities
participating in such underwritten offering.
(b) Notwithstanding the foregoing, in the event the
Shareholders who request registration pursuant to Section 2.1 hereof are unable
to sell, in the aggregate, at least 7% of the Covered Securities in such
offering, the Shareholders shall be permitted to require the Company to effect
one additional registration in accordance with the provisions of Section 2.1.
2.6. Time Limitations; Termination of Rights. (a) No request
---------------------------------------
shall be made with respect to any registration pursuant to Section 2.1 within
120 days immediately following the effective date of any registration statement
filed pursuant to this Article II.
(b) Notwithstanding the foregoing provisions of this
Article II, the rights to registration shall terminate as to any particular
Covered Securities when (i) such Covered Securities shall have been effectively
registered under the Securities Act and sold by the holder thereof in accordance
with such registration, (ii) such Covered Securities shall have been sold in
compliance with Rule 144 promulgated under the Securities Act or (iii) written
opinions, to the effect that such Covered
9
<PAGE>
Securities may be sold without registration under the Securities Act or
applicable state law and without restriction as to the volume and timing of such
sales, shall have been received from counsel for both the Company and the
holders thereof.
2.7. Compliance with Rule 144. At the request of any holder of
------------------------
Covered Securities who proposes to sell Covered Securities in compliance with
Rule 144 promulgated under the Securities Act, assuming that at such time the
provisions of such Rule are applicable to such holder and, in the event such
holder is or could be deemed to be an "affiliate" of the Company within the
meaning of the Securities Act, and the Company is then required to file reports
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
the Company shall (a) forthwith furnish to such holder a written statement as to
its compliance with the filing requirements of the Commission as set forth in
such Rule, as such Rule may be amended from time to time, and (b) make such
additional filings of reports with the Commission as will enable the holders to
make sales of Covered Securities pursuant to such Rule.
2.8. Company's Indemnification. In the event of any
-------------------------
registration under the Securities Act of any Covered Securities pursuant to this
Article II, the Company hereby agrees to execute an agreement with any
underwriter participating in the offering thereof containing such underwriter's
standard form representations and indemnification provisions and to indemnify
and hold harmless each holder disposing of Covered Securities, each Person, if
any, who controls such holder within the meaning of the Securities Act and each
other Person (including each underwriter) who participates in the offering of
Covered Securities, against any losses, claims, damages or liabilities, joint or
several, to which such holder, controlling person or participating person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which the Covered
Securities are registered under the Securities Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission
10
<PAGE>
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each such holder,
controlling person and participating person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability or proceeding; provided, however, that the Company will
-------- -------
not be liable in any case to any such holder, controlling person or
participating person to the extent that any loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in a registration statement, preliminary or
final prospectus or amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by such holder or controlling or participating person, as the case may be,
specifically for use in the preparation thereof.
2.9. Indemnification by Holder. (a) As a condition of the
-------------------------
Company's obligation under this Article II to effect any registration under the
Securities Act, there shall be delivered to the Company an agreement or
agreements duly executed by each holder for whom Covered Securities are to be so
registered, whereby such holder agrees to indemnify and hold harmless the
Company, each person referred to in clause (1), (2) or (3) of Section 11(a) of
the Securities Act in respect of the registration statement and each other
person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company, such person or such other controlling person may become
subject under the Securities Act or otherwise, but only to the extent that the
losses, claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which the Covered
Securities are to be registered under the Securities Act, in any preliminary
prospectus or final prospectus contained therein or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which, in each case, is
made in or omitted from the registration statement, preliminary or final
prospectus or
11
<PAGE>
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
holder specifically for use in the preparation thereof; provided, however, that
-------- -------
the indemnification obligations of each such holder shall be limited to the net
proceeds received by such holder from the sale of Covered Securities pursuant to
such registration.
(b) At the request of the managing underwriter in connection
with any underwritten offering of the Company's securities, each holder for whom
Covered Securities are being registered shall enter into an indemnity agreement
in customary form with such underwriter.
2.10. Contribution. If the indemnification provided for in
------------
Section 2.8 or 2.9 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 2.9 were
12
<PAGE>
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
2.11. Notification of and Participation in Actions. Promptly
--------------------------------------------
after receipt by an indemnified party under this Article II of notice of
commencement of any action, the indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Article II,
notify the indemnifying party of the commencement thereof, but the omission so
to notify the indemnifying party will not relieve it from any liability unless
the indemnifying party can demonstrate that it has actually been prejudiced
thereby and will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Article II. In case any such action
is brought against the holder of any Covered Securities and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to said holder of Covered Securities. In case any such
action is brought against the Company and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to the Company, and, after notice from the indemnifying party to
the Company of its election to assume the defense thereof, the indemnifying
party will not be liable to the Company under this Article II for any legal or
other expenses subsequently incurred by the Company, in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to
13
<PAGE>
such claim or litigation. The reimbursement required by this Section 2.11 shall
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.
2.12. Underwriting Requirements. (a) In the event of an
-------------------------
underwritten offering of the Company's securities, each holder for whom Covered
Securities are being registered pursuant to Section 2.1 or Section 2.2 hereof
shall, as a condition to inclusion of such Covered Securities in such
registration, execute and deliver to the underwriter an underwriting agreement
in customary form. The underwriters shall be selected (i) by the holders of
Covered Securities, in the case of a registration pursuant to Section 2.1 (which
underwriters shall be reasonably acceptable to the Company and, in the event the
holders of Registrable Securities elect to participate in such registration,
reasonably acceptable to such holders) or (ii) by the Company in the case of a
registration pursuant to Section 2.2.
(b) At the request of the managing underwriter in
connection with any underwritten offering of the Company's securities, the
holders for whom Covered Securities are being registered shall enter into
customary "lock-up" agreements pursuant to which each such holder will agree to
not effect any sale or distribution of Covered Securities for a period of no
more than 180 days beginning on the effective date of any such registration
(except as part of such registration).
2.13. Furnish Information. It shall be a condition precedent to
-------------------
the obligations of the Company to take any action pursuant to Article II that
the holders furnish to the Company such information regarding them, the Covered
Securities held by them and the intended method of disposition of such
securities as the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company.
14
<PAGE>
ARTICLE III
Benefits of Agreement
---------------------
3.1. Benefits of Registration. The obligations of the Company
------------------------
under this Agreement shall inure to the benefit of, and be enforceable by, the
Securityholders and their successors, transferees and assigns as holders from
time to time of Covered Securities.
3.2. Permitted Transfers. The registration rights granted
-------------------
herein may be transferred to any transferee who acquires Covered Securities from
any Securityholder; provided that any transferring Securityholder gives written
notice at the time of such transfer to the Company stating the name and address
of the transferee and identifying the Covered Securities so transferred,
accompanied by a signature page to this Agreement pursuant to which such
transferee agrees to be bound by the terms and conditions hereof.
ARTICLE IV
Miscellaneous
-------------
4.1. No Inconsistent Agreements. The Company will not, at any
--------------------------
time after the effective date of this Agreement, enter into, and is not now a
party to or otherwise bound by, any agreement or contract (whether written or
oral) with respect to any of its securities which is inconsistent in any respect
with the registration rights granted by the Company pursuant to this Agreement.
4.2. No Other Grant of Registration Rights. The Company will
-------------------------------------
not at any time grant to any other persons any rights with respect to the
registration of any securities of the Company which have priority over or are
inconsistent with the registration rights granted by the Company pursuant to
this Agreement.
15
<PAGE>
4.3. Notices. Notices and other communications provided for
-------
herein shall be in writing and shall be given in the manner and with the effect
provided in the Merger Agreement. Such notices and communications shall be
addressed if to a holder of Covered Securities, to its address as shown on the
transfer records of the Company, unless such holder shall notify the Company
that notices and communications should be sent to a different address (or
facsimile number), in which case notices and communications shall be sent to the
address (or such facsimile number) specified by such holder.
4.4. Waivers; Amendments. No failure or delay of any holder of
-------------------
Covered Securities 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 such holder are cumulative and
not exclusive of any rights or remedies which it would otherwise have. The
provisions of this Agreement may be amended, modified or waived only by an
agreement in writing signed by the party against whom enforcement thereof is
sought or the predecessor in interest of such party and any such waiver shall be
effective only in the specific instance and for the purpose for which given.
Notwithstanding the foregoing, no amendment, modification or waiver of any
provision of this Agreement shall be effective against a holder of Covered
Securities unless (a) agreed to in writing by such holder or (b) agreed to in
writing by such holder's predecessor in interest and notation thereof is set
forth on the certificate evidencing such holder's Covered Securities as the case
may be. No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
4.5. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of Delaware without giving
effect to the conflicts of law principles thereof.
4.6. Survival of Agreements; Representations and Warranties,
-------------------------------------------------------
etc. All warranties, representations and covenants
- ---
16
<PAGE>
made by the Company herein or in any certificate or other instrument delivered
by or on behalf of it in connection with this Agreement or the Covered
Securities shall be considered to have been relied upon by the holders of
Covered Securities and shall survive the issuance and delivery of the Covered
Securities regardless of any investigation made by such holder, and shall
continue in full force and effect so long as this Agreement is in effect. All
statements in any such certificate or other instrument shall constitute
representations and warranties hereunder.
4.7. Covenants To Bind Successors and Assigns. All the
----------------------------------------
covenants, stipulations, promises and agreements in this Agreement contained by
or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
4.8. Severability. In case any one or more of the provisions
------------
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. 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.
4.9. Section Headings. The 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 be taken into consideration in interpreting this
Agreement.
17
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be duly executed, all as of the day and year above written.
IVC INDUSTRIES, INC.
By: /s/ E.Joseph Edell
------------------------
Name:
Title:
/s/ Andrew M. Pinkowski
------------------------------
Andrew M. Pinkowski
/s/ Rita Pinkowski
-------------------------------
Rita Pinkowski
/s/ Vicki Welsh Jones
-------------------------------
Vicki Welsh Jones
AMELIA WELSH JONES TRUST UNDER
TRUST AGREEMENT DATED 6/4/93
By:/s/ Vicki Welsh Jones, Trustee
------------------------------
Vicki Welsh Jones, as Trustee
/s/ Lawrence A. Newman
--------------------------------
Lawrence A. Newman
/s/ Duane J. Baxter
--------------------------------
Duane J. Baxter
/s/ Peter W. Schreiber
--------------------------------
Peter W. Schreiber
18
<PAGE>
/s/ John H. Dettra, Jr.
---------------------------------
John H. Dettra, Jr.
/s/ Larry D. Corbridge
----------------------------------
Lawrence Corbridge
19
Exhibit 10.7
CREDIT AGREEMENT
dated as of April 30, 1996
among
IVC INDUSTRIES, INC.,
the Banks party hereto
and
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . 17
ARTICLE 2. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.01. Facility A . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.02. Facility B . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.03. Purpose . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.04. Borrowing Procedures . . . . . . . . . . . . . . . . . 19
Section 2.05. Prepayments and Conversions . . . . . . . . . . . . . . 19
Section 2.06. Interest Periods; Renewals . . . . . . . . . . . . . . 19
Section 2.07. Changes of Commitments . . . . . . . . . . . . . . . . 20
Section 2.08. Certain Notices . . . . . . . . . . . . . . . . . . . . 20
Section 2.09. Minimum Amounts . . . . . . . . . . . . . . . . . . . . 20
Section 2.10. Interest . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.12. Payments Generally . . . . . . . . . . . . . . . . . . 22
ARTICLE 3. LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.01. Letter of Credit . . . . . . . . . . . . . . . . . . . 23
Section 3.02. Letter of Credit Participations . . . . . . . . . . . . 23
Section 3.03. Reimbursement Agreement . . . . . . . . . . . . . . . . 25
Section 3.04. Letter of Credit Fee . . . . . . . . . . . . . . . . . 25
Section 3.05. Letter of Credit Transaction Fees and Charges . . . . . 26
Section 3.06. Purpose . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC. . . . . . . . . . . . . . . 26
Section 4.01. Additional Costs . . . . . . . . . . . . . . . . . . . 26
Section 4.02. Limitation on Types of Loans . . . . . . . . . . . . . 28
Section 4.03. Illegality . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03 29
ARTICLE 5. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . 30
Section 5.01. Documentary Conditions Precedent . . . . . . . . . . . 30
Section 5.02. Additional Conditions Precedent . . . . . . . . . . . . 33
Section 5.03. Deemed Representations . . . . . . . . . . . . . . . . 33
<PAGE>
ARTICLE 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . 34
Section 6.01. Incorporation, Good Standing and Due Qualification . . 34
Section 6.02. Corporate Power and Authority; No Conflicts . . . . . . 34
Section 6.03. Legally Enforceable Agreements . . . . . . . . . . . . 34
Section 6.04. Litigation . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.05. Financial Statements . . . . . . . . . . . . . . . . . 35
Section 6.06. Ownership and Liens . . . . . . . . . . . . . . . . . . 36
Section 6.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.08. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.09. Subsidiaries and Ownership of Stock . . . . . . . . . . 37
Section 6.10. Credit Arrangements . . . . . . . . . . . . . . . . . . 37
Section 6.11. Operation of Business . . . . . . . . . . . . . . . . . 37
Section 6.12. Hazardous Materials . . . . . . . . . . . . . . . . . . 38
Section 6.13. No Default on Outstanding Judgments or Orders . . . . . 40
Section 6.14. No Defaults on Other Agreements . . . . . . . . . . . . 40
Section 6.15. Labor Disputes and Acts of God . . . . . . . . . . . . 40
Section 6.16. Governmental Regulation . . . . . . . . . . . . . . . . 40
Section 6.17. Partnerships . . . . . . . . . . . . . . . . . . . . . 40
Section 6.18. No Forfeiture Proceeding . . . . . . . . . . . . . . . 41
Section 6.19. Solvency . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.20. As to the EDA Irvington Financing . . . . . . . . . . . 41
Section 6.21. As to Collateral . . . . . . . . . . . . . . . . . . . 42
Section 6.22. As to the Merger . . . . . . . . . . . . . . . . . . . 42
Section 6.23. Closing Date Effect . . . . . . . . . . . . . . . . . . 43
ARTICLE 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 43
Section 7.01. Maintenance of Existence . . . . . . . . . . . . . . . 43
Section 7.02. Conduct of Business . . . . . . . . . . . . . . . . . . 43
Section 7.03. Maintenance of Properties . . . . . . . . . . . . . . . 44
Section 7.04. Maintenance of Records . . . . . . . . . . . . . . . . 44
Section 7.05. Maintenance of Insurance . . . . . . . . . . . . . . . 44
Section 7.06. Compliance with Laws . . . . . . . . . . . . . . . . . 44
Section 7.07. Right of Inspection . . . . . . . . . . . . . . . . . . 44
Section 7.08. Reporting Requirements . . . . . . . . . . . . . . . . 45
Section 7.09. Registered Trademarks . . . . . . . . . . . . . . . . . 48
ARTICLE 8. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.01. Debt . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.02. Guaranties, Etc. . . . . . . . . . . . . . . . . . . . 49
Section 8.03. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.04. Leases . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.05. Investments . . . . . . . . . . . . . . . . . . . . . . 52
<PAGE>
Section 8.06. Dividends . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.07. Sale of Assets . . . . . . . . . . . . . . . . . . . . 53
Section 8.08. Stock of Subsidiaries, Etc. . . . . . . . . . . . . . . 53
Section 8.09. Transactions with Affiliates . . . . . . . . . . . . . 53
Section 8.10. Mergers, Acquisitions, Etc. . . . . . . . . . . . . . . 54
Section 8.11. As to Collateral . . . . . . . . . . . . . . . . . . . 54
Section 8.12. New Freehold /Howell Real Estate . . . . . . . . . . . 54
ARTICLE 9. FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . 55
Section 9.01. EBITDA . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.02. Cash Flow Leverage Ratio . . . . . . . . . . . . . . . 55
Section 9.03. Tangible Net Worth . . . . . . . . . . . . . . . . . . 55
Section 9.04. Current Ratio . . . . . . . . . . . . . . . . . . . . . 57
Section 9.05. Interest Coverage . . . . . . . . . . . . . . . . . . . 57
Section 9.06. Capital Expenditures . . . . . . . . . . . . . . . . . 57
Section 9.07. No Quarterly Loss . . . . . . . . . . . . . . . . . . . 57
ARTICLE 10. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.01. Events of Default . . . . . . . . . . . . . . . . . . . 58
Section 10.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 11. THE AGENT; RELATIONS AMONG BANKS AND BORROWER. . . . . . . . . 62
Section 11.01. Appointment, Powers and Immunities of Agent . . . . . . 62
Section 11.02. Reliance by Agent . . . . . . . . . . . . . . . . . . . 62
Section 11.03. Defaults . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.04. Rights of Agent as a Bank . . . . . . . . . . . . . . . 63
Section 11.05. Indemnification of Agent . . . . . . . . . . . . . . . 63
Section 11.06. Documents . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.07. Non-Reliance on Agent and Other Banks . . . . . . . . . 64
Section 11.08. Failure of Agent to Act . . . . . . . . . . . . . . . . 65
Section 11.09. Resignation or Removal of Agent . . . . . . . . . . . . 65
Section 11.10. Amendments Concerning Agency Function . . . . . . . . . 65
Section 11.11. Liability of Agent . . . . . . . . . . . . . . . . . . 65
Section 11.12. Transfer of Agency Function . . . . . . . . . . . . . . 65
Section 11.13. Non-Receipt of Funds by the Agent . . . . . . . . . . . 66
Section 11.14. Withholding Taxes . . . . . . . . . . . . . . . . . . . 66
Section 11.15. Several Obligations and Rights of Banks . . . . . . . . 66
Section 11.16. Pro Rata Treatment of Loans, Etc . . . . . . . . . . . 67
Section 11.17. Sharing of Payments Among Banks . . . . . . . . . . . . 67
Section 11.18. Successor Agent . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.01. Amendments and Waivers . . . . . . . . . . . . . . . . 68
<PAGE>
Section 12.02. Usury . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.03. Expenses . . . . . . . . . . . . . . . . . . . . . . . 69
Section 12.04. Survival . . . . . . . . . . . . . . . . . . . . . . . 69
Section 12.05. Assignment; Participations . . . . . . . . . . . . . . 69
Section 12.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.07. Setoff . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.08. JURISDICTION; IMMUNITIES . . . . . . . . . . . . . . . 73
Section 12.09. Table of Contents; Headings . . . . . . . . . . . . . . 74
Section 12.10. Severability . . . . . . . . . . . . . . . . . . . . . 74
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . 74
Section 12.12. Integration . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 74
Section 12.14. Confidentiality . . . . . . . . . . . . . . . . . . . . 74
Section 12.15. Treatment of Certain Information . . . . . . . . . . . 75
EXHIBITS
Exhibit A-1 Facility A Note
Exhibit A-2 Facility B Note
Exhibit B Authorization Letter
Exhibit C Subsidiary Guaranty
Exhibit D-1 Borrower Security Agreement
Exhibit D-2 Subsidiary Security Agreement
Exhibit E Opinion of Counsel for Borrower and
Subsidiary Guarantors
Exhibit F Assignment and Assumption Agreement
Exhibit G Confidentiality Agreement
Exhibit H Trademark Assignment
Exhibit I Borrowing Base Certificate
SCHEDULES
Schedule I Subsidiaries of Borrower
Schedule II Credit Arrangements
Schedule III Hazardous Materials
Schedule IV Locations as to Borrower and Subsidiaries
Schedule V Title Owners
Schedule VI Employee Loans and Advances
Schedule 6.4 Litigation
<PAGE>
CREDIT AGREEMENT dated as of April 30, 1996 among IVC INDUSTRIES, INC., a
corporation organized under the laws of Delaware (formerly known as
International Vitamin Corporation) (the "Borrower"), each of the banks which is
a party hereto (individually a "Bank" and collectively the "Banks") and THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association
organized under the laws of the United States of America, as agent for the Banks
(in such capacity, together with its successors in such capacity, the "Agent").
The Borrower desires that the Banks extend credit as provided herein and
the Banks are prepared to extend such credit. Accordingly, the Borrower, the
Banks and the Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement, the following terms
-----------
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
---- -----
"Account" has the meaning given to such term in Article 9 of the New York
Uniform Commercial Code as in effect on the date hereof.
"Additional Costs" is defined in Section 4.01.
"Affiliate" means any Person: (a) which directly or indirectly controls,
or is controlled by, or is under common control with, the Borrower or any of its
Subsidiaries; (b) which directly or indirectly beneficially owns or holds 5% or
more of any class of voting stock of the Borrower or any such Subsidiary; (c) 5%
or more of the voting stock of which is directly or indirectly beneficially
owned or held by the Borrower or such Subsidiary; or (d) which is a partnership
in which the Borrower or any of its Subsidiaries is a general partner. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Credit Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the
like refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Assignment and Assumption Agreement" is defined in Section 12.05.
"Authority" means the New Jersey Economic Development Authority.
"Authorization Letter" means the letter agreement executed by the Borrower
in the form of Exhibit B.
---------
<PAGE>
"Bank Percentage" has the meaning ascribed to it in the paragraph that
defines the term "Commitments" in this Section 1.01.
"Banking Day" means any day on which commercial banks are not authorized or
required to close in New York City and whenever such day relates to a Fixed Rate
Loan or notice with respect to any Fixed Rate Loan, a day on which dealings in
Dollar deposits are also carried out in the London interbank market.
"Borrower Security Agreement" means the security agreement in the form of
Exhibit D-1 to be delivered by the Borrower under the terms of this Agreement.
- -----------
"Borrowing Base" means, at any time, the sum of (A) 85% of the amount of
Eligible Accounts as of such time; plus (B) until April 30, 1998, the lesser of
(i) 50% of the amount of Eligible Inventory as of such time, or (ii) $6,500,000;
plus (C) when and for so long as the New Freehold/Howell Real Estate is
encumbered by the first mortgage in favor of the Agent that is described in
Section 8.12, 50% of the New Freehold/Howell Real Estate Value; provided,
however, that the amount of any or all of such percentages may be changed by the
Agent from time to time in its reasonable discretion upon 30 days' prior written
notice to the Borrower. On and after April 30, 1998, no Inventory will be
included in the Borrowing Base, and clause (B) in the immediately preceding
sentence will be zero.
"Borrowing Base Certificate" means a certificate, in the form attached as
Exhibit I hereto, signed by the chief financial officer of the Borrower (or
other officer of the Borrower acceptable to the Agent).
"Capital Expenditures" of a Person means, for any period, the Dollar amount
of gross expenditures (including obligations under Capital Leases) made by such
Person for fixed assets, real property, plant and equipment, and all renewals,
improvements and replacements thereof incurred during such period.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed and
delivered by the Borrower, the Bank(s) initially party hereto and the Agent.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitments" of a Bank consist of such Bank's Facility A Commitment and
its Facility B Commitment. The "Facility A Commitment" of a Bank means the
obligation of such Bank to make its Facility A Loans under this Agreement in the
aggregate principal amount set forth below opposite the name of such Bank (as
such amount may be reduced or otherwise modified from time to time in accordance
with the terms of this Agreement). The "Facility B Commitment" of a
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<PAGE>
Bank means the obligation of such Bank to make its Facility B Loans under this
Agreement in the aggregate principal amount set forth below opposite the name of
such Bank (as such amount may be reduced or otherwise modified from time to time
in accordance with the terms of this Agreement). The "Bank Percentage" of a
Bank means the percentage set forth below opposite the name of such Bank, which
represents the ratio (expressed as a percentage) of such Bank's Facility A
Commitment and Facility B Commitment to the Facility A Commitments and the
Facility B Commitments of all the Banks:
Facility A Facility B Bank
Bank Commitment Commitment Percentage
---- ---------- ---------- ----------
The Chase Manhattan Bank
(National Association) $15,000,000 $6,500,000 100%
------------ ----------- ------
Total of all Banks $15,000,000 $6,500,000 100%
"Consolidated Capital Expenditures" means for any period the capital
expenditures of the Borrower and its Consolidated Subsidiaries for such period,
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" means Current Assets of the Borrower and its
Consolidated Subsidiaries, as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Current Liabilities" means Current Liabilities of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Consolidated EBITDA" with respect to any period means the EBITDA of the
Borrower and its Consolidated Subsidiaries for such period, as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its
Consolidated Subsidiaries, as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income" with respect to any period means the Net Income
of the Borrower and its Consolidated Subsidiaries for such period, as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary of the Borrower whose
accounts are or are required to be consolidated with the accounts of the
Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means the Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
3
<PAGE>
"Current Assets" of a Person means all assets of such Person treated as
current assets in accordance with GAAP.
"Current Liabilities" of a Person means all liabilities of such Person
treated as current liabilities in accordance with GAAP, including without
limitation and without duplication (a) all obligations payable on demand or
within one year after the date in which the determination is made and (b)
installment and sinking fund payments required to be made within one year after
the date on which determination is made, but excluding all such liabilities or
obligations which are renewable or extendable at the option of such Person to a
date more than one year from the date of determination; but excluding all
amounts outstanding under Facility A and Facility B prior to one year before the
Facility A Expiration Date and the Facility B Expiration Date.
"Customer" means a buyer of goods from the Borrower.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness of such Person for the deferred purchase
price of property or services (except trade payables in the ordinary course of
business); (c) Unfunded Benefit Liabilities of such Person (if such Person is
not the Borrower, determined in a manner analogous to that of determining
Unfunded Benefit Liabilities of the Borrower); (d) the face amount of any
outstanding letters of credit issued for the account of such Person; (e)
obligations of such Person arising under acceptance facilities; (f) guaranties,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations of such Person to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; (g) obligations secured by any Lien on property of such
Person; and (h) obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to the
extent permitted by law, any other amount payable by the Borrower under this
Agreement or any Note that is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period from and
including the due date, to, but excluding the date on which such amount is paid
in full equal to 2% above the Variable Rate as in effect from time to time plus
the Margin (if any) (provided that, if the amount so in default is principal of
a Fixed Rate Loan and the due date thereof is a day other than the last day of
the Interest Period therefor, the "Default Rate" for such principal shall be,
for the period from and including the due date and to but excluding the last day
of the Interest Period therefor, 2% above the interest rate for such Loan as
provided in Section 2.10 hereof and, thereafter, the rate provided for above in
this definition).
"Designated Party" means the Person identified as the Designated Party in
the Designated Party Identification Agreement dated the date hereof among such
Person, the Agent and the Borrower.
4
<PAGE>
"Designated Party Guaranty" means the Guaranty of Facility B from the
Designated Party in favor of the Agent and the Banks dated the date hereof (as
the same may hereafter be amended or supplemented from time to time).
"Designated Party Subordination and Intercreditor Agreement" means the
Subordination and Intercreditor Agreement among the Designated Party, the Agent,
the Borrower, IVOSC and Hall (Canada) dated the date hereof (as the same may
hereafter be amended or supplemented from time to time).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" of a Person with respect to any period means such Person's
earnings before (a) interest, taxes, depreciation and amortization for such
period; and (b) costs (including without limitation integration costs) of the
Merger, provided that such costs do not exceed $1,500,000 in the aggregate as to
all periods from and after the fiscal quarter ending April 30, 1996; and (c)
non-cash charges as to stock appreciation rights as to 632,000 shares at market
price but in no event more than $1,750,000 in the aggregate, as to the fiscal
quarter ending April 30, 1996; all as determined in accordance with GAAP.
"EDA Bond Agreement" means the Bond Agreement dated as of October 1, 1995
between the Authority and the Borrower, as the same may be amended after the
Closing Date with the prior written consent of the Bank.
"EDA Indenture" means the Trust Indenture dated as of October 1, 1995
between the Authority and First Fidelity Bank, National Association, as trustee.
"Eligible Account" means those Accounts of the Borrower or a Subsidiary
Guarantor which are and continue to be in the sole discretion (which shall not
be unreasonable) of the Agent acceptable to the Agent for the purpose of being
eligible for Facility A Loans. The criteria for eligibility may be revised from
time to time by the Agent in the exclusive judgment (which shall not be
unreasonable) of the Agent upon 30 days' prior written notice to the Borrower,
which notice shall set forth the reason for such revision. An Account shall in
no event be deemed to be an Eligible Account unless it meets the following
minimum requirements: (A) it is lawfully owned by the Borrower or such
Subsidiary Guarantor and subject to no Lien of any kind (other than Liens
permitted under Section 8.03), or prior assignment, and the Borrower or such
Subsidiary Guarantor has the right of assignment thereof and the power to grant
the security interest therein; (B) it is an Account that is valid and
enforceable (such enforceability being subject to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
in general), representing the undisputed indebtedness of a Customer; (C) it is
not subject to any defense, setoff or counterclaim, and if it is subject to any
credit, deposit, allowance or adjustment, then the amount of such credit,
deposit, allowance or adjustment is not included in the amount of the Eligible
Account; (D) no material part of any goods whose sale has given rise to the
Account has been returned or lost (unless the same have been replaced by the
Borrower or such Subsidiary Guarantor)
5
<PAGE>
or rejected or damaged; (E) the sale was an absolute sale and not on consignment
or on approval or on a sale-or-return basis, and such sale is not subject to any
other repurchase or return agreement, and such goods have been shipped to the
Customer thereunder; (F) it arose in the ordinary course of business of the
Borrower or such Subsidiary Guarantor; (G) the Customer thereunder is not an
Affiliate of the Borrower or such Subsidiary Guarantor; (H) if the Customer is
located out of the United States of America or Canada, all amounts owing under
such Account are (if required by the Agent) backed by a letter of credit issued
by a commercial bank reasonably satisfactory to the Agent; (I) it does not arise
under a Government Contract, unless the Agent is satisfied that all steps have
been taken to perfect the Agent's rights with respect thereto under the Federal
Assignment of Claims Act; (J) no more than 91 days have elapsed from the billing
or invoice date; (K) no notice of the bankruptcy, receivership, reorganization
or insolvency of the Customer thereunder has been received by the Borrower or
such Subsidiary Guarantor; (L) it is not payable by a Customer with respect to
which 60% or more of the dollar amount of that Customer's Accounts to the
Borrower and the Subsidiary Guarantors (in the aggregate) remain unpaid more
than 91 days from the date of invoice; (M) the Agent has not notified the
Borrower that the Account is not of a credit quality acceptable to the Agent.
Notwithstanding the foregoing, no Accounts of Hall (Canada) shall be considered
Eligible Accounts unless and until the Borrower (at its cost) provides to the
Agent (i) an opinion of counsel for Hall (Canada) addressed to the Agent and the
Banks as to the matters relating to Hall (Canada) that are set forth in sections
1 through 5 of the form of opinion attached hereto as Exhibit E and as to such
other matters as the Agent may reasonably request, in form and substance
reasonably acceptable to the Agent; and (ii) appropriate lien searches from
appropriate public offices in British Columbia confirming that there is no Lien
of record against any assets of Hall (Canada) (other than any Lien permitted by
this Agreement); and (iii) a certificate of a public official of British
Columbia to the effect that Hall (Canada) is duly incorporated and in good
standing under the laws of British Columbia.
"Eligible Inventory" means that Inventory of the Borrower or a Subsidiary
Guarantor which is and continues to be in the sole discretion (which shall not
be unreasonable) of the Agent acceptable to the Agent for the purpose of being
eligible for Facility A Loans. The criteria for eligibility may be revised by
the Agent from time to time in the exclusive judgment (which shall not be
unreasonable) of the Agent upon 30 days' prior written notice to the Borrower,
which notice shall set forth the reason for such revision. Inventory shall in
no event be deemed to be Eligible Inventory unless it meets the following
minimum requirements: (A) it is lawfully owned by and in possession of the
Borrower or such Subsidiary Guarantor at a location specified in Section 6.21
with respect to the Borrower or such Subsidiary Guarantor or at such other
places where all action has been taken to perfect the security interest of the
Bank therein, and it is subject to no Lien of any kind (other than Liens
permitted under Section 8.03), and the Borrower or such Subsidiary Guarantor has
the right and power to grant a security interest therein; (B) it is insured as
required by Section 7.05 hereof pursuant to policies in full compliance with the
requirements of such Section; (C) it is in good and merchantable condition; (D)
it is to be sold to Customers in the ordinary course of business of the Borrower
or such Subsidiary Guarantor; (E) it is not obsolete, returned or repossessed
items of Inventory or used goods or goods taken in trade; and (F) the Agent has
not notified the Borrower that the Agent, in its sole judgment, (which shall not
be unreasonable) deems such Inventory as
6
<PAGE>
unsatisfactory for any reason. The Agent shall be the sole judge of the value
of any Inventory, based upon its good faith analysis of such information as it
deems, in its sole discretion (which shall not be unreasonable), to be relevant
or applicable in making such determination; but such prerogative of the Agent as
to valuation shall not in any way whatsoever place the Agent under a duty to the
Banks with respect to the Agent's determination (if any) of value.
Notwithstanding the foregoing, no Inventory of Hall (Canada) shall be considered
Eligible Inventory unless and until the Borrower (at its cost) provides to the
Agent (i) an opinion of counsel for Hall (Canada) addressed to the Agent and the
Banks as to the matters relating to Hall (Canada) that are set forth in sections
1 through 5 of the form of opinion attached hereto as Exhibit E and as to such
other matters as the Agent may reasonably request, in form and substance
reasonably acceptable to the Agent; and (ii) appropriate lien searches from
appropriate public offices in British Columbia confirming that there is no Lien
of record against any assets of Hall (Canada) (other than any Lien permitted by
this Agreement); and (iii) a certificate of a public official of British
Columbia to the effect that Hall (Canada) is duly incorporated and in good
standing under the laws of British Columbia.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Eurodollar Loan" means a Loan when and to the extent the interest rate
therefor is determined on the basis of clause (a) of the definition of "Fixed
Base Rate".
"Event of Default" has the meaning given such term in Section 10.01.
"Facility A" means the credit extended by the Banks to the Borrower
pursuant to Section 2.01.
7
<PAGE>
"Facility A Commitment" has the meaning ascribed to it in the paragraph
that defines the term "Commitments" in this Section 1.01.
"Facility A Expiration Date" means March 31, 1999; provided, however, that
the Borrower may extend the Facility A Expiration Date to August 31, 1999
provided that (a) the Borrower gives written notice to the Agent and the Banks
- -------- ----
of its election to extend the same not later than February 15, 1999, and (b) no
unwaived Default or Event of Default exists on the day such notice is given or
on March 31, 1999; and provided, further, that if March 31, 1999 or August 31,
1999 (as applicable) is not a Banking Day, then the Facility A Expiration Date
shall be the immediately preceding Banking Day.
"Facility A Loan" means any loan made by a Bank pursuant to Section 2.01.
"Facility B" means the credit extended by the Banks to the Borrower
pursuant to Section 2.02.
"Facility B Commitment" has the meaning ascribed to it in the paragraph
that defines the term "Commitments" in this Section 1.01.
"Facility B Expiration Date" means March 31, 1999; provided, however, that
the Borrower may extend the Facility B Expiration Date to August 31, 1999
provided that (a) the Borrower gives written notice to the Agent and the Banks
- -------- ----
of its election to extend the same not later than February 15, 1999, and (b) no
unwaived Default or Event of Default exists on the day such notice is given or
on March 31, 1999; and provided, further, that if March 31, 1999 or August 31,
1999 (as applicable) is not a Banking Day, then the Facility B Expiration Date
shall be the immediately preceding Banking Day.
"Facility B Loan" means any loan made by a Bank pursuant to Section 2.02.
"Facility Documents" means this Agreement, the Notes, the Authorization
Letter, the Borrower Security Agreement, the Trademark Assignment, the
Subsidiary Guaranty, and each Subsidiary Security Agreement, the Reimbursement
Agreement, the Designated Party Guaranty, and the Designated Party Subordination
and Intercreditor Agreement.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions as
published by the Federal Reserve Bank of New York for such day (or for any day
that is not a Banking Day, for the immediately preceding Banking Day).
"Fixed Base Rate" means with respect to an Interest Period for a Fixed Rate
Loan:
8
<PAGE>
(a) for a Eurodollar Loan, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) quoted at approximately
11:00 a.m. London time by the principal London branch of the Reference Bank
two Banking Days prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of Dollar deposits
in immediately available funds, for a period, and in an amount, comparable
to the Interest Period and principal amount of the Eurodollar Loan which
shall be made by the Reference Bank and outstanding during such Interest
Period; and
(b) for a Money Market Rate Loan, the rate per annum offered
(if any) by the Reference Bank to the Borrower on the first day of
the Interest Period with respect thereto. For any single borrowing, such
rate for such borrowing will remain fixed during such Interest Period.
"Fixed Rate" means, with respect to an Interest Period for a Fixed Rate
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined by the Agent to be equal to the quotient of (i) the Fixed Base
Rate for such Loan for such Interest Period, divided by (ii) one minus the
Reserve Requirement for such Loan for such Interest Period.
"Fixed Rate Loan" means a Eurodollar Loan or Money Market Rate Loan.
"Forfeiture Proceeding" means any action, proceeding or investigation
pending against the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"Funded Debt" means, with respect to any Person, all Debt of such Person
(irrespective of whether the maturity thereof is more than one year or less than
one year), other than Debt of the character described in clause (c) in the
----- ----
definition of the term "Debt".
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the date hereof, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
6.05 (except for changes concurred in by the Borrower's independent public
accountants).
"Government Contract" means an order from or a contract with the United
State of America or any department, agency or instrumentality thereof.
"Hall" means Hall Laboratories, Inc., which (until immediately prior to the
execution and delivery of this Agreement) was an Oregon corporation.
9
<PAGE>
"Hall (Canada)" means Hall Laboratories, Ltd., a corporation organized
under the laws of British Columbia.
"Hazardous Material" is defined in Section 6.12.
"Interest Period" means, with respect to any Fixed Rate Loan, the period
commencing on the date such Loan is made, converted from another type of Loan or
renewed, as the case may be, and ending, as the Borrower may select pursuant to
Section 2.06: (a) in the case of a Eurodollar Loan, on the numerically
corresponding day in the first, second, third, or sixth or (as available) ninth
or twelfth calendar month thereafter, provided that each such Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate calendar
month; and (b) in the case of a Money Market Rate Loan, on a day not later than
thirty days thereafter.
"Interest Rate Protection Agreement" means an interest rate protection
agreement (including, without limitation, an interest rate swap, cap, collar or
other similar agreement) satisfactory in form and substance to the Agent.
"Inventory" has the meaning given such term in the New York Uniform
Commercial Code as in effect on the date hereof.
"IVOSC" means International Vitamin Overseas Sales Corp., a New Jersey
corporation.
"LC Rate" means initially 1.5%; provided, however, that after the end of
--------
each fiscal quarter from and after April 30, 1996, the LC Rate shall be subject
to change as hereinafter provided. Where the quotient of (i) Consolidated
Funded Debt on the last day of any fiscal quarter, divided by (ii) Consolidated
EBITDA for such fiscal quarter and the three preceding fiscal quarters (on a
combined basis for such four quarters) is within one of the ranges set forth
below, the applicable LC Rate shall be the rate set forth opposite such range:
Range LC Rate
----- -------
(A) Equal to or greater than 5.7: 2%
(B) Less than 5.7, but 1.5%
greater than or equal to
3.0:
(C) Less than 3.0, but 1.25%
greater than or equal to
2.0:
(D) Less than 2.0: 1.0%;
10
<PAGE>
provided, however, that if an Event of Default exists, the LC Rate shall be the
- -------- -------
amount set forth in line (A) above. Each change in the LC Rate following the
end of a fiscal quarter shall become effective on the earlier to occur of (x)
the first day of the calendar month following the delivery by the Borrower to
the Agent of the financial statements for such fiscal quarter required by
Section 7.08(a) or (b) of this Agreement, or (y) the day on which the Borrower
delivers to the Agent a certificate executed by the chief financial officer or
chief operating officer of the Borrower stating the amount of such quotient (and
the elements thereof) as of the last day of such fiscal quarter. No change in
the LC Rate shall be retroactive, except that if such certificate of such
officer proves (upon such delivery of such financial statements with respect to
such quarter) to have been inaccurate and such inaccuracy shall have resulted in
an understatement or overstatement of the LC Rate, then such understatement or
overstatement shall be corrected retroactively to such date on which such
certificate of the chief financial officer was delivered.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as such
for such type of Loan on its signature page hereof or such other office of such
Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Borrower as the office by which its Loans of such
type are to be made and maintained.
"Letter of Credit" has the meaning ascribed to it in Section 3.01.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means a Facility A Loan or a Facility B Loan.
"Margin" means initially (i) in the case of a Fixed Rate Loan under
Facility A, 225 basis points; (ii) in the case of a Variable Rate Loan under
Facility A, 25 basis points; (iii) in the case of a Fixed Rate Loan under
Facility B, 50 basis points; and (iv) in the case of a Variable Rate Loan under
Facility B, zero; provided, however, that after the end of each fiscal quarter
--------
from and after April 30, 1996, the Margin shall be subject to change as
hereinafter provided. Where the quotient of (i) Consolidated Funded Debt on the
last day of any fiscal quarter, divided by (ii) Consolidated EBITDA for such
fiscal quarter and the three preceding fiscal quarters (on a combined basis for
such four quarters) is within one of the ranges set forth below, the applicable
Margin shall be the amount of basis points set forth opposite such range:
11
<PAGE>
<TABLE><CAPTION>
For a For a For a
For a Variable Fixed Variable
Fixed Rate Rate Loan Rate Loan Rate Loan
Loan under under under under
Range Facility A Facility A Facility B Facility B
----- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C>
(A) Equal to or
greater than 5.7:
275 50 50 0
(B) Less than 5.7, but
greater than or
equal to 3.0:
225 25 50 0
(C) Less than 3.0, but
greater than or
equal to 2.0:
175 0 50 0
(D) Less than 2.0: 125 0 37.5 0;
</TABLE>
provided, however, that if an Event of Default exists, the Margin shall be the
- -------- -------
amount set forth in line (A) above. Each change in the Margin following the end
of a fiscal quarter shall become effective on the earlier to occur of (x) the
first day of the calendar month following the delivery by the Borrower to the
Agent of the financial statements for such fiscal quarter required by Section
7.08(a) or (b) of this Agreement, or (y) the day on which the Borrower delivers
to the Agent a certificate executed by the chief financial officer or chief
operating officer of the Borrower stating the amount of such quotient (and the
elements thereof) as of the last day of such fiscal quarter. No change in the
Margin shall be retroactive, except that if such certificate of such officer
proves (upon such delivery of such financial statements with respect to such
quarter) to have been inaccurate and such inaccuracy shall have resulted in an
understatement of the Margin, then such understatement or overstatement shall be
corrected retroactively to such date on which such certificate of the chief
financial officer was delivered.
"Merger" means the merger of Hall into the Borrower. The Merger is
occurring simultaneously with the execution and delivery of this Agreement.
"Merger Agreement" means the Amended and Restated Agreement and Plan of
Merger dated as of February 13, 1996 between the Borrower, Hall, Andrew M.
Pinkowski, Rita Pinkowski, Vicki Walsh Jones and The Amelia Walsh Jones Trust
under a trust agreement dated June 4, 1993.
12
<PAGE>
"Money Market Rate Loan" means a Loan when and to the extent the interest
rate therefor is determined on the basis of clause (b) of the definition of
"Fixed Base Rate".
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"Net Income" of a Person means, with respect to any period, the net income
of such person for such period computed in accordance with GAAP.
"New Freehold/Howell Real Estate" means the land, together with the
improvements thereon, consisting of approximately 48.15 acres located in
Freehold Township and Howell Township, N.J., known as Lots 2.01, 3 and 3Q in
Block 79 in Freehold Township, and Lot 16.01 in Block 64 in Howell Township.
"New Freehold/Howell Real Estate Value" means the lesser of (i) $1,350,000
or (ii) the appraised value of the New Freehold/Howell Real Estate as determined
by a written M.A.I. appraisal obtained by the Borrower at its expense from an
appraiser approved by the Agent that is reasonably acceptable in form and
substance to the Agent.
"Note" means a promissory note of the Borrower to a Bank in the form of
Exhibit A-1 (in the case of Facility A Loans) or Exhibit A-2 (in the case of
- ----------- -----------
Facility B Loans) hereto evidencing the Facility A Loans or Facility B Loans (as
the case may be) made by such Bank hereunder.
"Option Rights" means options, warrants and other securities and rights
entitling the holder to purchase from the Borrower shares of capital stock of
the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by the Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by the
Reference Bank at its principal office as its prime commercial lending rate.
"Principal" means each of (i), (ii), (iii) and (iv) below:
13
<PAGE>
(i) E. Joseph Edell;
(ii) Arthur S. Edell;
(iii) I. Alan Hirschfeld;
(iv) Andrew M. Pinkowski.
"Principal Office" means the principal office of the Agent, presently
located at 1 Chase Manhattan Plaza, New York, New York 10081.
"Reference Bank" means The Chase Manhattan Bank (National Association),
including any corporate successor thereto.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including such Bank of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Reimbursement Agreement" means the Letter of Credit Reimbursement
Agreement dated the date hereof (as the same may hereafter be amended or
supplemented from time to time) among the Borrower, IVOSC and the Bank.
"Reimbursement Obligation" means the obligation of the Borrower set forth
in the Reimbursement Agreement to reimburse the Agent with interest for any
amount paid by the Agent on a drawing under the Letter of Credit.
"Release" is defined in Section 6.12.
"Required Banks" means Banks whose aggregate Bank Percentages are at least
50%.
"Required Payment" is defined in Section 11.13.
14
<PAGE>
"Reserve Requirement" means, for any Fixed Rate Loan for any Interest
Period the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the Fixed Base Rate is to be determined as
provided in the definition of "Fixed Base Rate" in this Section 1.01 or (ii) any
category of extensions of credit or other assets which include Fixed Rate Loans.
"Security Agreements" means the Borrower Security Agreement and each
Subsidiary Security Agreement.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Subsidiary Guarantors" means Hall (Canada) and IVOSC and any other Person
that becomes a Subsidiary Guarantor pursuant to Section 8.05.
"Subsidiary Guaranty" means the guaranty in the form of Exhibit C to be
---------
delivered by the Subsidiary Guarantors under the terms of this Agreement.
"Subsidiary Security Agreement" means each security agreement in the form
of Exhibit D-2 to be delivered by a Subsidiary Guarantor under the terms of this
-----------
Agreement.
"Tangible Net Worth" of a Person means, at any date of determination
thereof, the excess of total assets of such Person over total liabilities of
such Person, excluding however from the determination of total assets: (i) all
assets which would be classified as intangible assets under GAAP, including
without limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, and deferred charges (including, without limitation,
unamortized debt discount and expense organization cost, and research and
development costs); and (ii) any write-up in the book value of any asset since
July 31, 1995; provided, however, that notwithstanding their classification as
--------
intangible assets, deferred promotional allowances of the Borrower and its
Consolidated Subsidiaries shall be included in (and not excluded from) the
determination of total assets of the Borrower and its Consolidated Subsidiaries,
but not to any extent greater than $2,500,000 in the aggregate as to the
Borrower and its Consolidated Subsidiaries.
"Trademark Assignment" means the trademark assignment in the form of
Exhibit H to be delivered by the Borrower under the terms of this Agreement.
15
<PAGE>
"Trustee" means First Union National Bank (formerly known as First Fidelity
Bank, National Association), as trustee under the EDA Indenture.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of the Borrower or any ERISA
Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day.
"Variable Rate Loan" means any Loan when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate.
Section 1.02. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE LOANS.
Section 2.01. Facility A. (a) Subject to the terms and conditions of
----------
this Agreement, each of the Banks severally agrees to make loans (the "Facility
A Loans") to the Borrower from time to time from and including the date hereof
to but excluding the Facility A Expiration Date, up to but not exceeding in
aggregate principal amount at any one time outstanding, the lesser of:
(i) such Bank's Facility A Commitment; or
(ii) such Bank's Bank Percentage of the Borrowing Base.
Within such limits, the Borrower may borrow, repay and reborrow Facility A Loans
on the terms and conditions set forth in this Agreement; provided however that
--------
if the aggregate principal amount of the Facility A Loans outstanding at any
time exceeds the amount of the Borrowing Base as of such time, such excess shall
be immediately repaid by the Borrower.
(b) The Facility A Loans may be outstanding as Variable Rate
Loans or Eurodollar Loans or Money Market Rate Loans (each a "type" of Loans).
Each type of Facility A Loans of each Bank shall be made and maintained at such
Bank's Lending Office for such type of Loans.
16
<PAGE>
(c) The Facility A Loans shall be due and payable in full on the
Facility A Expiration Date.
(d) The Facility A Loans of each Bank shall be evidenced by a
single promissory note in favor of such Bank in the form of Exhibit A-1, dated
-----------
the date of this Agreement, duly completed and executed by the Borrower.
Section 2.02. Facility B. (a) Subject to the terms and conditions of this
----------
Agreement, each of the Banks severally agrees to make Loans (the "Facility B
Loans") to the Borrower from time to time from and including the date hereof to
but excluding the Facility B Expiration Date, up to but not exceeding in
aggregate principal amount at any one time outstanding the lesser of:
(x) such Bank's Facility B Commitment; or
(y) (if the Designated Party has given notice to the Agent
that the Maximum Principal Liability (as defined in the Designated Party
Guaranty) of the Designated Party under the Designated Party Guaranty is to
be changed to an amount less than $6,500,000) such Bank's Bank Percentage
of such Maximum Principal Liability as so changed or proposed to be
changed.
Within such limits, the Borrower may borrow, repay and reborrow Facility B Loans
on the terms and conditions set forth in this Agreement; provided however that
--------
if the Designated Party at any time gives notice to the Agent that the Maximum
Principal Liability of the Designated Party under the Designated Party Guaranty
is to be changed to an amount less than $6,500,000, and if the aggregate
principal amount of Facility B Loans outstanding at the time of such notice
exceeds the Maximum Principal Liability as so changed or proposed to be changed,
then such excess shall be immediately repaid by the Borrower.
(b) The Facility B Loans may be outstanding as Variable Rate
Loans or Eurodollar Loans or Money Market Rate Loans (each a "type" of Loans).
Each type of Facility B Loans of each Bank shall be made and maintained at such
Bank's Lending Office for such type of Loans.
(c) The Facility B Loans shall be due and payable in full on the
Facility B Expiration Date.
(d) The Facility B Loans of each Bank shall be evidenced by a
single promissory note in favor of such Bank in the form of Exhibit A-2, dated
-----------
the date of this Agreement, duly completed and executed by the Borrower.
Section 2.03. Purpose. The Borrower shall use the proceeds of the Loans
-------
(a) to pay and satisfy all outstanding borrowings previously incurred by the
Borrower and Hall from
17
<PAGE>
the Designated Party, and by the Borrower from NatWest Bank N.A., and by Hall
from United States National Bank of Oregon and by Hall (Canada) from Canadian
Imperial Bank of Commerce; and (b) to pay and satisfy certain other notes
payable previously executed and delivered by the Borrower or Hall and
outstanding on the Closing Date that do not exceed $425,000 in the aggregate;
and (c) for working capital; and (d) to the extent of up to $1,500,000, to
finance a portion of the Borrower's costs in acquiring after the Closing Date
the New Freehold /Howell Real Estate. Such proceeds shall not be used for the
purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation U.
Section 2.04. Borrowing Procedures. The Borrower shall give the Agent
--------------------
notice of each borrowing to be made hereunder as provided in Section 2.08. Not
later than 2:00 p.m. New York City time on the date of such borrowing, each Bank
shall, through its Lending Office and subject to the conditions of this
Agreement, make the amount of the Loan to be made by it on such day available to
the Agent at the Principal Office and in immediately available funds for the
account of the Borrower. The amount so received by the Agent shall, subject to
the conditions of this Agreement, be made available to the Borrower, in
immediately available funds, by the Agent crediting an account of the Borrower
designated by the Borrower and maintained with the Agent at the Principal
Office.
Section 2.05. Prepayments and Conversions. The Borrower shall have the
---------------------------
right to make prepayments of principal, or to convert one type of Loans into
another type of Loans, at any time or from time to time; provided that: (a) the
Borrower shall give the Agent notice of each such prepayment or conversion as
provided in Section 2.08; and (b) Fixed Rate Loans may be prepaid or converted
only on the last day of an Interest Period for such Loans, provided however that
if the Borrower pays the amount required to be paid under Section 4.05 with
respect thereto, the Borrower may prepay or convert Fixed Rate Loans prior to
the last day of an Interest Period for such Loans.
Section 2.06. Interest Periods; Renewals. (a) In the case of each Fixed
--------------------------
Rate Loan, the Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in Section 1.01, subject to
the following limitations: (i) no Interest Period may extend beyond the
Facility A Expiration Date (in the case of a Facility A Loan) or the Facility B
Expiration Date (in the case of a Facility B Loan); (ii) notwithstanding clause
(i) above, no Interest Period for a Eurodollar Loan shall have a duration of
less than one month, and if any such proposed Interest Period would otherwise be
for a shorter period, such Interest Period shall not be available; (iii) if an
Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless (in the case of a
Eurodollar Loan) such Banking Day would fall in the next calendar month in which
event such Interest Period shall end on the immediately preceding Banking Day;
(iv) no more than ten Interest Periods of each Bank under each Facility may be
outstanding at any one time.
(b) Upon notice to the Agent as provided in Section 2.08, the
Borrower may renew any Fixed Rate Loan on the last day of the Interest Period
therefor as the same type of
18
<PAGE>
Loans with an Interest Period of the same or different duration in accordance
with the limitations provided above. If the Borrower shall fail to give notice
to the Agent of such a renewal, such Fixed Rate Loan shall automatically become
a Variable Rate Loan on the last day of the current Interest Period.
Section 2.07. Changes of Commitments. The Borrower shall have the right
----------------------
to reduce or terminate the amount of unused Facility A Commitments or unused
Facility B Commitments at any time or from time to time, provided that: (a) the
Borrower shall give notice of each such reduction or termination to the Agent as
provided in Section 2.08; and (b) each partial reduction shall be in an
aggregate amount at least equal to $1,000,000. Commitments once reduced or
terminated may not be reinstated.
Section 2.08. Certain Notices. Notices by the Borrower to the Agent of
---------------
each borrowing pursuant to Section 2.04, and each prepayment or conversion
pursuant to Section 2.05 and each renewal pursuant to Section 2.06(b), and each
reduction or termination of Commitments pursuant to Section 2.07 shall be
irrevocable and shall be effective only if received by the Agent not later than
1:00 p.m. New York City time, (a) in the case of borrowings and prepayments of,
conversions into and (in the case of Fixed Rate Loans) renewals of (i) Variable
Rate Loans and Money Market Rate Loans, on the day thereof, and (ii) Fixed Rate
Loans, four Banking Days prior thereto; (b) in the case of reductions or
termination of Commitments, three Banking Days prior thereto. Each such notice
shall specify the Loans to be borrowed, prepaid, converted or renewed and the
amount (subject to Section 2.09) and type of the Loans to be borrowed, or
converted, or prepaid or renewed (and, in the case of a conversion, the type of
Loans to result from such conversion and, in the case of a Fixed Rate Loan, the
Interest Period therefor) and the date of the borrowing or prepayment, or
conversion or renewal (which shall be a Banking Day) and whether such Loan is
under Facility A or Facility B. Each such notice of reduction or termination
shall specify the amount of the Commitments to be reduced or terminated and
whether such Commitments are under Facility A or Facility B. The Agent shall
promptly notify the Banks of the contents of each such notice.
Section 2.09. Minimum Amounts. Except for (a) borrowings which exhaust
---------------
the full remaining amount of Commitments, (b) prepayments or conversions which
result in the prepayment or conversion of all Loans of a particular type under a
Facility, (c) conversions made pursuant to Section 4.04 or (d) repayments
described in the proviso in the last sentence of Section 2.01(a) or 2.02(a),
each borrowing, prepayment, conversion and renewal of principal of Loans of a
particular type under a Facility shall be in an amount not less than $200,000,
and in increments of $25,000, in the aggregate for all Banks (borrowings,
prepayments, conversions or renewals of or into Loans of different types or, in
the case of Fixed Rate Loans, having different Interest Periods or under
different Facilities at the same time hereunder to be deemed separate
borrowings, prepayments, conversions and renewals for the purposes of the
foregoing, one for each type or Interest Period under each Facility).
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Section 2.10. Interest. (a) Interest shall accrue on the outstanding and
--------
unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan is due at the following rates
per annum: (i) for a Variable Rate Loan, at a variable rate per annum equal to
the Variable Rate plus the applicable Margin and (ii) for a Fixed Rate Loan, at
a fixed rate equal to the Fixed Rate plus the applicable Margin. If the
principal amount of any Loan and any other amount payable by the Borrower
hereunder or under a Note shall not be paid when due (at stated maturity, by
acceleration or otherwise), interest shall accrue on such amount to the fullest
extent permitted by law from and including such due date to but excluding the
date such amount is paid in full at the Default Rate.
(b) The interest rate on each Variable Rate Loan shall change
when the Variable Rate changes and interest on each such Loan shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed. Interest on each Fixed Rate Loan shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Agent shall notify the Borrower and the Banks.
(c) Accrued interest shall be due and payable in arrears upon
any payment of principal or conversion and (i) for each Variable Rate Loan, on
the last day of each calendar month, commencing the first such date after such
Loan; and (ii) for each Fixed Rate Loan, on the last day of the Interest Period
with respect thereto and, in the case of an Interest Period greater than three
months, at three-month intervals after the first day of such Interest Period;
provided that interest accruing at the Default Rate shall be due and payable
from time to time on demand of the Agent.
Section 2.11. Fees. (a) The Borrower shall pay to the Agent for the
----
account of each Bank a commitment fee on the daily average unused Facility A
Commitment of such Bank for the period from and including the date hereof to the
earlier of the date the Facility A Commitments are terminated or the Facility A
Expiration Date, at a rate per annum equal to .375%, calculated on the basis of
a year of 360 days for the actual number of days elapsed. The accrued
commitment fee shall be due and payable in arrears upon any reduction (on the
amount of such reduction) or termination of the Facility A Commitments and on
the last day of each calendar quarter, commencing on the last day of the first
such quarter after the Closing Date.
(b) The Borrower shall pay to the Agent for the account of each
Bank a commitment fee on the daily average unused Facility B Commitment of such
Bank for the period from and including the date hereof to the earlier of the
date the Facility B Commitments are terminated or the Facility B Expiration
Date, at a rate per annum equal to .25%, calculated on the basis of a year of
360 days for the actual number of days elapsed. The accrued commitment fee
shall be due and payable in arrears upon any reduction (on the amount of such
reduction) or termination of the Facility B Commitments and on the last day of
each calendar quarter, commencing on the last day of the first such quarter
after the Closing Date.
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(c) The Borrower shall pay to the Agent as compensation for its
services hereunder an agency fee in the amount heretofore mutually agreed,
except that such agency fee shall not be due or accrue in respect of the one
year period from the Closing Date until the first anniversary thereof. The
agency fee shall be due and payable in advance on the first anniversary of the
Closing Date and each subsequent anniversary thereof during the term of this
Agreement.
Section 2.12. Payments Generally. All payments under this Agreement or
------------------
the Notes or any other Facility Document shall be made to the Agent, for (as the
case may be) its own account or the account of the Banks, in Dollars in
immediately available funds not later than 1:00 p.m. New York City time on the
relevant dates specified above (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Banking Day).
The Agent, or any Bank for whose account any such payment is to be made, may
(but shall not be obligated to) debit the amount of any such payment which is
not made by such time to any ordinary deposit account of the Borrower with the
Agent or such Bank, as the case may be, and any Bank so doing shall promptly
notify the Agent. The Borrower shall, at the time of making each payment under
this Agreement or the Notes or any other Facility Document, specify to the Agent
the principal or other amount payable by the Borrower under this Agreement or
the Notes or any other Facility Document to which such payment is to be applied
(and in the event that it fails to so specify, or if a Default or Event of
Default has occurred and is continuing, the Agent may apply such payment as it
may elect in its sole discretion (subject to Section 11.16)). If the due date
of any payment under this Agreement or the Notes or any other Facility Document
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension. Each payment
received by the Agent hereunder or under any Note or any other Facility Document
for the account of a Bank shall be paid promptly to such Bank, in immediately
available funds, for the account of such Bank's Lending Office.
ARTICLE 3. LETTER OF CREDIT.
Section 3.01. Letter of Credit. (a) Subject to the terms and conditions
----------------
of this Agreement, the Agent agrees that it will on the Closing Date issue an
irrevocable direct-pay letter of credit for the account of the Borrower and for
the benefit of the Trustee in the maximum stated amount of $5,106,850, in such
form as may be approved by the Agent (which, together with any letter of credit
that may hereafter be issued by the Agent in substitution or replacement
thereof, will be called herein the "Letter of Credit"). The Letter of Credit
shall have an expiry date not later than May 15, 2003.
Section 3.02. Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by the Agent of the Letter of Credit, the Agent shall be deemed to have
sold and transferred to each Bank, and each Bank shall be deemed irrevocably and
unconditionally to have purchased and received from the Agent without recourse
or warranty, an undivided interest and participation, to the extent of such
Bank's Bank Percentage, in such Letter of Credit, each
21
<PAGE>
drawing made thereunder and the obligations of the Borrower under this Agreement
with respect thereto.
(b) The Agent will exercise the same care as it normally
exercises with respect to its letters of credit in which no participations are
sold, but the Agent shall have no other obligations to any Bank and shall have
no liability to any Bank for any action taken or omitted to be taken by the
Agent in respect of the Letter of Credit except for the Agent's own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them relating in any way whatsoever to the
Letter of Credit, except for its or their own gross negligence or willful
misconduct. Without in any way limiting the foregoing, each Bank acknowledges
that the Agent shall have no greater responsibility in the operation of the
Letter of Credit than is specified in the Uniform Customs and Practice for
Documentary Credits (1994 revision), International Chamber of Commerce
Publication No. 500.
(c) If at any time the Agent shall make a payment in respect of
a drawing under the Letter of Credit and shall not be immediately reimbursed by
the Borrower therefor, the Agent shall promptly notify each Bank thereof, and
each Bank shall immediately pay to the Agent an amount equal to such Bank's Bank
Percentage of such payment, together with interest on such amount for each day
from the date of such payment by the Agent to the date of such payment by such
other Bank, at the Federal Funds Rate for the first two days during such period
and at the Variable Rate thereafter.
(d) Whenever the Agent receives payment from the Borrower as
reimbursement for a drawing under the Letter of Credit as to which the Agent has
previously received payment from Banks pursuant to paragraph (c) of this
Section, the Agent shall promptly remit to each Bank that has so paid the Agent
such Bank's Bank Percentage of all amounts received by the Agent from the
Borrower and applied by the Agent to the satisfaction of such reimbursement
obligation of the Borrower.
(e) Except to the extent recovered by the Agent from the Borrower
promptly following demand therefor, each Bank will promptly pay to the
Agent an amount equal to such Bank's Bank Percentage of any and all costs,
expenses, claims, losses and liabilities incurred by the Agent, at any time on
or after the issuance date, in connection with the Letter of Credit (including,
without limitation, the collection or enforcement of any obligations in respect
thereof), except for those incurred by reason of the Agent's gross negligence or
willful misconduct. If the Agent for any reason is required to return or pay to
another Person any amount paid to the Agent in respect of the Letter of Credit
after the Agent makes payment to any Bank in respect thereof, such Bank will
repay to the Agent upon request the amount so paid to such Bank to the extent of
such other Bank's Bank Percentage of the amount required to be returned or paid,
together with interest thereon at the Federal Funds Rate for the period
commencing on the date such amount was required to be returned or paid by the
Agent.
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(f) The obligations of each Bank to make payments to the Agent with
respect to drawings paid by the Agent under the Letter of Credit shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, irrespective of any of the following:
(i) any lack of validity or enforceability of this Agreement
or any of the other Facility Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against the beneficiary named
in the Letter of Credit, the Agent, any Bank, or any other Person, whether
in connection with this Agreement, the Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including, without
limitation, any underlying transaction between the Borrower and the
beneficiary named in such Letter of Credit) or any failure of the Agent to
notify any Bank of the issuance, extension or renewal of the Letter of
Credit;
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Agent under the Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit, provided that such payment does not
constitute gross negligence or willful misconduct on the part of the Agent;
(v) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or any
other Facility Document;
(vi) the occurrence of any Default or Event of Default, or
the nonsatisfaction of any other condition precedent to the making of a
Loan; or
(vii) any other circumstance or event whatsoever, whether or
not similar to any of the foregoing, provided that the same does not
constitute gross negligence or willful misconduct on the part of the Agent.
Section 3.03. Reimbursement Agreement. The Borrower shall pay and perform
-----------------------
its obligations under the Reimbursement Agreement at the time(s) provided
therein, including (without limitation) the obligation to pay and reimburse the
Agent for all drawings under the Letter of Credit.
Section 3.04. Letter of Credit Fee. The Borrower shall pay to the Agent
--------------------
(for the account of the Banks, ratably in accordance with their respective Bank
Percentages) a letter of
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credit fee at the LC Rate per annum of the maximum stated amount from time to
time of the Letter of Credit. Such fee shall be due and payable in arrears on
the last day of each calendar quarter, and shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed. The Agent shall remit
to the Banks (ratably in accordance with their respective Bank Percentages) such
letter of credit fee promptly upon the Agent's receipt thereof from the
Borrower.
Section 3.05. Letter of Credit Transaction Fees and Charges. The Borrower
---------------------------------------------
shall also pay to the Agent (for its own account, and not for the account of the
Banks) the Agent's customary letter of credit transaction fees and charges in
connection with the Letter of Credit. Such customary fees and charges shall be
as set forth in the Agent's letter of credit fee schedule from time to time
advised to the Borrower.
Section 3.06. Purpose. The Letter of Credit shall not be used for the
-------
purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation U.
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC.
Section 4.01. Additional Costs. (a) The Borrower shall pay directly to
----------------
each Bank and the Agent from time to time within ten days after demand therefor
such amounts as such Bank or the Agent may determine to be necessary to
compensate it for any costs which such Bank or the Agent determines are
attributable to its making or maintaining any Fixed Rate Loans under this
Agreement or its Notes or its obligation to make any such Loans hereunder, or
its issuance or maintaining or making payment under the Letter of Credit, or any
reduction in any amount receivable by such Bank hereunder in respect of any such
Loans or such obligation or such Letter of Credit (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change which: (i) changes the basis of taxation
of any amounts payable to such Bank or the Agent under this Agreement or its
Note in respect of any of such Loans or Letter of Credit (other than taxes
imposed on the overall net income of such Bank or the Agent or of its Lending
Office for any of such Loans by the jurisdiction in which such Bank has its
principal office or such Lending Office); or (ii) imposes or modifies any
reserve, special deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Bank or the
Agent (including any of such Loans or any deposits referred to in the definition
of "Fixed Base Rate" in Section 1.01); or (iii) imposes any other condition
affecting this Agreement or its Notes or the Letter of Credit (or any of such
extensions of credit or liabilities). Each Bank or the Agent will notify the
Borrower of any event occurring after the date of this Agreement which will
entitle such Bank or the Agent (as the case may be) to compensation pursuant to
this Section 4.01(a) as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation. If any Bank requests
compensation from the Borrower under this Section 4.01(a), or under Section
4.01(c), the
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Borrower may, by notice to such Bank (with a copy to the Agent), require that
such Bank's Loans of the type with respect to which such compensation is
requested be converted in accordance with Section 4.04.
(b) Without limiting the effect of the foregoing provisions of
this Section 4.01, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to which the interest rate on
Fixed Rate Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Fixed Rate
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Bank
to make or renew, and to convert Loans of any other type into, Loans of such
type hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect (and all Loans of such type held by such Bank then outstanding
shall be converted in accordance with Section 4.04).
(c) Without limiting the effect of the foregoing provisions of
this Section 4.01 (but without duplication), the Borrower shall pay directly to
each Bank from time to time within ten days after request therefor such amounts
as such Bank may determine to be necessary to compensate such Bank for any costs
which it determines are attributable to the maintenance by it or any of its
affiliates pursuant to any law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the force of law and
whether in effect on the date of this Agreement or thereafter) of any court or
governmental or monetary authority of capital in respect of its Loans hereunder
or its obligation to make Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
such Bank to a level below that which it could have achieved but for such law,
regulation, interpretation, directive or request). Each Bank will notify the
Borrower if it is entitled to compensation pursuant to this Section 4.01(c) as
promptly as practicable after it determines to request such compensation.
(d) Determinations and allocations by a Bank for purposes of
this Section 4.01 of the effect of any Regulatory Change pursuant to subsections
(a) or (b), or of the effect of capital maintained pursuant to subsection (c),
on its costs of making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect of Loans or
such obligation, and of the additional amounts required to compensate such Bank
under this Section 4.01, shall be conclusive, provided that such determinations
and allocations are made on a reasonable basis and are set forth in reasonable
detail and provided to the Borrower together with the request for payment
thereof.
(e) Any Bank claiming any additional amount under this Section
4.01 agrees to use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different
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Lending Office if the making of such designation would avoid the need for, or
reduce the amount of, any such additional amounts.
(f) In the event that any Bank requests compensation pursuant to
this Section 4.01, the Borrower shall be entitled to require such Bank (on at
least 30 days' prior written notice to such Bank and the Agent) to assign its
rights and obligations under this Agreement (including its Facility A Commitment
and Facility B Commitment and the Loans owing to it and its participation in the
Letter of Credit) to a new lender obtained by the Borrower (provided that such
lender is reasonably acceptable to the Agent), which assignment shall be
effected in accordance with and subject to all the terms and conditions of
Section 12.05.
Section 4.02. Limitation on Types of Loans. Anything herein to the
----------------------------
contrary notwithstanding, if:
(a) the Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "Fixed Base Rate" in Section 1.01 are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for Fixed Rate Loans as provided in this
Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Fixed Base Rate" in Section 1.01 upon the basis of which
the rate of interest for Fixed Rate Loans is to be determined do not adequately
cover the cost to the Banks of making or maintaining such Loans;
then the Agent shall give the Borrower and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks shall be under no
obligation to make or renew Loans of such type or to convert Loans of any other
type into Loans of such type and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Loans of the affected type,
either prepay such Loans or convert such Loans into another type of Loans in
accordance with Section 2.05.
Section 4.03. Illegality. Notwithstanding any other provision in this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to (a) honor its obligation to make or renew Fixed Rate Loans hereunder
or convert Loans of any type into Loans of such type, or (b) maintain Fixed Rate
Loans hereunder, then such Bank shall promptly notify the Borrower thereof (with
a copy to the Agent) and such Bank's obligation to make or renew Fixed Rate
Loans and to convert other types of Loans into Loans of such type hereunder
shall be suspended until such time as such Bank may again make, renew, or
convert and maintain such affected Loans and such Bank's outstanding Fixed Rate
Loans, as the case may be, shall be converted in accordance with Section 4.04.
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Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03. If
------------------------------------------------------
the Loans of any Bank of a particular type (Loans of such type being herein
called "Affected Loans" and such type being herein called the "Affected Type")
are to be converted pursuant to Section 4.01 or 4.03, such Bank's Affected Loans
shall be automatically converted into Variable Rate Loans on the last day(s) of
the then current Interest Period(s) for the Affected Loans (or, in the case of a
conversion required by Section 4.01(b) or 4.03, on such earlier date as such
Bank may specify to the Borrower with a copy to the Agent) and, unless and until
such Bank gives notice as provided below that the circumstances specified in
Section 4.01 or 4.03 which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so converted,
all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Variable
Rate Loans; and
(b) all Loans which would otherwise be made or renewed by such Bank as
Loans of the Affected Type shall be made instead as Variable Rate Loans
and all Loans of such Bank which would otherwise be converted into Loans of the
Affected Type shall be converted instead into (or shall remain as) Variable Rate
Loans; and
(c) if Loans of other Banks of the Affected Type are subsequently
converted into Loans of another type (other than Variable Rate Loans), such
Bank's Variable Rate Loans shall be automatically converted on the
conversion date into Loans of such other type to the extent necessary so that,
after giving effect thereto, all Loans under each Facility held by such Bank and
the Banks whose Loans are so converted are held pro rata (as to principal
amounts, types and Interest Periods) in accordance with their respective
Commitments under such Facility.
If such Bank gives notice to the Borrower (with a copy to the Agent) that
the circumstances specified in Section 4.01 or 4.03 which gave rise to the
conversion of such Bank's Affected Loans pursuant to this Section 4.04 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type are outstanding, such Bank's
Variable Rate Loans shall be automatically converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Loans of the Affected
Type to the extent necessary so that, after giving effect thereto, all Loans
held by the Banks holding Loans of the Affected Type under each Facility and by
such Bank are held pro rata (as to principal amounts, types and Interest
Periods) in accordance with their respective Commitments under such Facility.
Section 4.05. Certain Compensation. The Borrower shall pay to the Agent
--------------------
for the account of each Bank, within ten days after the request of such Bank
through the Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
which such Bank determines is attributable to:
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(a) any payment, prepayment, conversion or renewal of a Fixed
Rate Loan made by such Bank on a date other than the last day of an Interest
Period for such Loan (whether by reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or renew
a Fixed Rate Loan to be made, converted into or renewed by such Bank on the date
specified therefor in the relevant notice under Section 2.04, 2.05 or 2.06, as
the case may be.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of: (i) the amount of interest which otherwise
would have accrued on the principal amount so paid, prepaid, converted or
renewed or not borrowed, converted or renewed for the period from and including
the date of such payment, prepayment or conversion or failure to borrow, convert
or renew to but excluding the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, convert or renew, to but
excluding the last day of the Interest Period for such Loan which would have
commenced on the date specified therefor in the relevant notice) at the
applicable rate of interest for such Loan provided for herein; over (ii) the
amount of interest (as reasonably determined by such Bank) such Bank would have
bid in the London interbank market for Dollar deposits for amounts comparable to
such principal amount and maturities comparable to such period. A determination
of any Bank as to the amounts payable pursuant to this Section 4.05 shall be
conclusive absent manifest error and are set forth in reasonable detail and
provided to the Borrower together with the request for payment thereof.
ARTICLE 5. CONDITIONS PRECEDENT.
Section 5.01. Documentary Conditions Precedent. The obligations of the
--------------------------------
Banks to make the Loans constituting the initial borrowing, and of the Agent to
issue the Letter of Credit, are subject to the condition precedent that the
Agent shall have received on or before the date of such Loans and such issuance
each of the following, in form and substance satisfactory to the Agent and its
counsel:
(a) the Notes duly executed by the Borrower;
(b) the Borrower Security Agreement, the Reimbursement
Agreement, the Trademark Assignment, the Authorization Letter, the Designated
Party Subordination and Intercreditor Agreement, and the Designated Party
Identification Agreement duly executed by the Borrower;
(c) the Designated Party Guaranty, the Designated Party
Subordination and Intercreditor Agreement and the Designated Party
Identification Agreement, duly executed by the Designated Party;
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(d) the Subsidiary Guaranty duly executed by the Subsidiary Guarantors;
(e) a Subsidiary Security Agreement duly executed by each of the
Subsidiary Guarantors;
(f) a Borrowing Base Certificate dated the Closing Date duly executed
by the Borrower;
(g) (x) financing statements (UCC-1) duly executed by the
Borrower in form suitable for filing under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Agent or any Bank, desirable
to perfect the security interest created by the Borrower Security Agreement and
the Subsidiary Security Agreements; and (y) certified copies of requests for
information (Form UCC-11) identifying all of the financing statements on file
with respect to the Borrower, Hall and the Subsidiary Guarantors in all
jurisdictions referred to under (x), indicating that no party claims an interest
in any of the Collateral (as defined in such Security Agreements);
(h) UCC-3 termination statements and other appropriate
discharges of Liens duly executed by NatWest Bank N.A., U.S. National Bank of
Oregon, Canadian Imperial Bank of Commerce and any other holder of a Lien not
permitted by this Agreement;
(i) UCC-3 amendments duly executed by the Designated Party
confirming the subordination of its security interests in the assets of the
Borrower to the security interests of the Agent therein;
(j) a letter from Amper Politziner & Mattia that authorizes the
Agent and the Banks (in compliance with N.J.S.A. 2A:53A-25) to rely on the
--------
financial statements of the Borrower prepared by them;
(k) a certificate of the Secretary or Assistant Secretary of the
Borrower dated the Closing Date (x) attesting to all corporate action taken by
the Borrower, including resolutions of its Board of Directors and (as
applicable) its shareholders, authorizing the Merger and the execution, delivery
and performance of the Facility Documents to which it is a party and each other
document to be delivered pursuant to this Agreement; and (y) certifying the
names and true signatures of the officers of the Borrower authorized to sign the
Facility Documents to which it is a party and the other documents to be
delivered by the Borrower under this Agreement;
(l) a certificate of a duly authorized officer of the Borrower,
dated the Closing Date, stating that the representations and warranties in
Article 6 are true and correct in all material respects on such date as though
made on and as of such date and that no event has occurred and is continuing
which constitutes a Default or Event of Default;
29
<PAGE>
(m) a certificate of the Secretary or Assistant Secretary of
each of the Subsidiary Guarantors dated the Closing Date (x) attesting to all
corporate action taken by such Subsidiary Guarantor, including resolutions of
its Board of Directors, authorizing the execution, delivery and performance of
the Facility Documents to which it is a party; and (y) certifying the names and
true signatures of the officers of each such Subsidiary Guarantor authorized to
sign the Facility Documents to which it is a party;
(n) a favorable opinion of counsel for the Borrower and the
Subsidiary Guarantors, dated the Closing Date, in substantially the form of
Exhibit E and as to such other matters as the Agent or any Bank may reasonably
- ---------
request;
(o) a certificate of the Secretary of Assistant Secretary of the
Designated Party dated the Closing Date (x) attesting to all corporate action
taken by the Designated Party, including resolutions of its Board of Directors,
authorizing the execution, delivery and performance of the Designated Party
Guaranty and (y) certifying the names and true signatures of the officers of the
Designated Party authorized to sign the Facility Documents to which the
Designated Party is a party;
(p) a favorable opinion of counsel for the Designated Party
dated the Closing Date as to such matters as the Agent or any Bank may
reasonably request;
(q) evidence satisfactory to the Agent that the Merger is
effective simultaneously with the execution and delivery of this Agreement,
including evidence that an appropriate certificate of merger is being filed with
the Secretary of State of Delaware and the Secretary of State of Oregon
simultaneously with the execution and delivery of this Agreement;
(r) evidence that the Trustee has accepted the Letter of Credit
and that it has released the letter of credit previously issued to it for the
account of the Borrower by NatWest Bank N.A.;
(s) a landlord's waiver from the owner and the sublandlord of
the Borrower's subleased manufacturing facility in Irvington, New Jersey, duly
executed by such owner and sublandlord; and a landlord's waiver from the
landlord of the Borrower's manufacturing facility in Portland, Oregon, duly
executed by such landlord;
(t) a certificate of insurance evidencing (i) that property
insurance is in effect on the equipment, fixtures and inventory of the Borrower
and each Subsidiary Guarantor and (ii) that the Agent has been named in a
lender-loss payable endorsement to the policy of such insurance.
Section 5.02. Additional Conditions Precedent. The obligations of the
-------------------------------
Banks to make any Loans pursuant to a borrowing which increases the amount
outstanding hereunder
30
<PAGE>
(including the initial borrowing), and to issue the Letter of Credit, shall be
subject to the further conditions precedent that on the date of such Loans or
issuance:
(a) the following statements shall be true:
(i) the representations and warranties contained in Article
6 are true and correct in all material respects on and as of the date of
such Loans or issuance as though made on and as of such date (except
insofar as such representations and warranties relate expressly to an
earlier date); and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Loans or such issuance; and
(b) the Agent shall have received a current Borrowing Base Certificate and
such approvals, consents, opinions and documents as the Agent may reasonably
request.
Section 5.03. Deemed Representations. Each notice of borrowing hereunder
----------------------
and acceptance by the Borrower of the proceeds of such borrowing shall
constitute a representation and warranty that the statements contained in
Section 5.02(a) are true and correct in all material respects both on the date
of such notice and, unless the Borrower otherwise notifies the Agent prior to
such borrowing, as of the date of such borrowing.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 6.01. Incorporation, Good Standing and Due Qualification. Each of
--------------------------------------------------
the Borrower and its Subsidiaries is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, except where the failure
to so qualify would not have a material adverse effect on the financial
condition, operations, properties or business of the Borrower or any of its
Subsidiaries.
Section 6.02. Corporate Power and Authority; No Conflicts. The execution,
-------------------------------------------
delivery and performance by the Borrower and by each Subsidiary of the Borrower
of the Facility Documents to which it is a party have been duly authorized by
all necessary corporate action and do not and will not: (a) require any consent
or approval of its stockholders; (b) contravene its charter or by-laws; (c)
violate any provision of, or require any filing (other than the filing of the
financing statements contemplated by the Security Agreements and the filing of
the Trademark Assignments in the United States Patent and Trademark Office),
registration,
31
<PAGE>
consent or approval under, any law, rule, regulation (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
or any of its Subsidiaries; (d) result in a breach of or constitute a default or
require any consent under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or by which it
or its properties may be bound or affected; (e) result in, or require, the
creation or imposition of any Lien (other than as created under the Security
Agreements and the Trademark Assignment), upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower or any Subsidiary of
the Borrower; or (f) cause the Borrower or any Subsidiary of the Borrower to be
in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
Section 6.03. Legally Enforceable Agreements. Each Facility Document to
------------------------------
which the Borrower or any Subsidiary of the Borrower is a party is a legal,
valid and binding obligation of the Borrower or such Subsidiary (as the case may
be) enforceable against the Borrower or such Subsidiary (as the case may be) in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance, moratorium
and other similar laws affecting creditors' rights generally.
Section 6.04. Litigation. Except as set forth in Schedule 6.4, there are
----------
no actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened, against or affecting the Borrower or any Subsidiary of the Borrower
before any court, governmental agency or arbitrator, which may, in any one case
or in the aggregate, materially adversely affect the financial condition,
operations, properties or business of the Borrower or any such Subsidiary or of
the ability of the Borrower or such Subsidiary to perform its obligations under
the Facility Documents to which it is a party.
Section 6.05. Financial Statements. (a) The consolidated balance sheet of
--------------------
the Borrower and its Consolidated Subsidiaries as at July 31, 1995, and the
related consolidated income statement and statements of cash flows and changes
in stockholders' equity of the Borrower and its Consolidated Subsidiaries for
the fiscal year then ended, and the accompanying footnotes, together with the
opinion thereon of Amper, Politziner & Mattia, independent certified public
accountants, and the interim consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at October 31, 1995, and the related consolidated
income statement and statement of cash flows and changes in stockholders' equity
for the three month period then ended, copies of which have been furnished to
each of the Banks, fairly present the financial condition of the Borrower and
its Consolidated Subsidiaries as at such dates and the results of the operations
of the Borrower and its Consolidated Subsidiaries for the periods covered by
such statements, all in accordance with GAAP consistently applied (subject to
year end adjustments and the absence of footnotes, in the case of the interim
financial statements). Since July 31, 1995, there has been no material adverse
change in the condition (financial or otherwise), business or operations of the
Borrower or any of its Subsidiaries.
32
<PAGE>
(b) The consolidated balance sheet of Hall and its Consolidated
Subsidiary as at January 31, 1995, and the related consolidated income statement
and statements of cash flows and changes in stockholders' equity of Hall and its
Consolidated Subsidiary for the fiscal year then ended, and the accompanying
footnotes, together with the opinion thereon of Yergen and Meyer, independent
certified public accountants, and the interim consolidated balance sheet of Hall
and its Consolidated Subsidiary as at October 31, 1995, and the related
consolidated income statement and statement of cash flows and changes in
stockholders' equity for the nine month period then ended, copies of which have
been furnished to each of the Banks, fairly present the financial condition of
Hall and its Consolidated Subsidiary as at such dates and the results of the
operations of Hall and its Consolidated Subsidiary for the periods covered by
such statements, all in accordance with GAAP consistently applied (subject to
year end adjustments and the absence of footnotes, in the case of the interim
financial statements). From and after January 31, 1995, there has been no
material adverse change in the condition (financial or otherwise), business or
operations of Hall or its Subsidiary.
(c) There were (immediately prior to the execution and delivery
of this Agreement) no liabilities of Hall or its Consolidated Subsidiary, and
there are no liabilities of the Borrower or any of its Consolidated
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements described in subsection (a) or subsection (b) of this
Section or in the notes thereto, other than liabilities arising in the ordinary
course of business of Hall and its Consolidated Subsidiary or of the Borrower
and its Consolidated Subsidiaries since October 31, 1995.
(d) Prior to the Closing Date, the Borrower has delivered to the
Agent a pro-forma balance sheet of the Borrower (after giving effect to the
Merger) as of the Closing Date, and projections of its income statements as of
certain dates in the future. In the reasonable and good-faith opinion of the
Borrower on and as of the Closing Date, (i) such balance sheet fairly presents
the financial condition of the Borrower as of the Closing Date; and (ii) such
projections present the expected results of operations of the Borrower for the
respective periods ended on such dates, based upon assumptions which the
Borrower believed to be reasonable when made and the Borrower has no reason to
believe such assumptions are not reasonable on the Closing Date.
(e) No information, exhibit or report furnished by the Borrower
in writing to the Agent or any of the Banks in connection with the negotiation
of this Agreement contained to the Borrower's knowledge any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading.
Section 6.06. Ownership and Liens. Each of the Borrower and the
-------------------
Consolidated Subsidiaries of the Borrower has title to, or valid leasehold
interests in, all of its properties and assets, real and personal, including the
properties and assets, and leasehold interests reflected in the financial
statements referred to in Section 6.05 (other than any properties or assets
disposed of in the ordinary course of business), and none of the properties and
assets owned by the
33
<PAGE>
Borrower or any Subsidiary of the Borrower and none of its leasehold interests
is subject to any Lien, except as disclosed in such financial statements (but
excluding Liens in favor of NatWest Bank N.A., U.S. National Bank of Oregon and
Canadian Imperial Bank of Commerce, even though they may be disclosed in such
financial statements) or as may be permitted hereunder (including without
limitation those identified on Schedule II) and except for the Lien created by
the Security Agreements and the Trademark Assignments.
Section 6.07. Taxes. Each of the Borrower and its Subsidiaries and Hall
-----
and its Subsidiaries has filed or caused to be filed all tax returns (federal,
state and local) required to be filed and has paid or caused to be paid all
taxes, assessments and governmental charges and levies shown thereon to be due,
including interest and penalties.
Section 6.08. ERISA. Each Plan, and, to the best knowledge of the
-----
Borrower, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable Federal or
state law, and no event or condition is occurring or exists concerning which the
Borrower would be under an obligation to furnish a report to the Bank in
accordance with Section 7.08(h) hereof. As of the most recent valuation date
for each Plan, each Plan was "fully funded" (which for purposes of this Section
6.08 shall mean that the fair market value of the assets of the Plan is not less
than the present value of the accrued benefits of all participants in the Plan,
computed on a Plan termination basis) or the present value of accrued benefits
(determined on such basis) does not exceed the fair market value of the Plan's
assets by an amount which is material.
Section 6.09. Subsidiaries and Ownership of Stock. Schedule I is a
----------------------------------- ----------
complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of the Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been validly issued, is fully paid and
nonassessable and is owned by the Borrower free and clear of all Liens.
Section 6.10. Credit Arrangements. Schedule II is a complete and correct
------------------- -----------
list of all credit agreements, indentures, purchase agreements, guaranties,
Capital Leases and other investments, agreements and arrangements presently in
effect providing for or directly relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Section 6.11. Operation of Business. Each of the Borrower and its
---------------------
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or
34
<PAGE>
rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, except where the failure to possess any such
right would not materially adversely affect the financial condition, operations,
properties or business of the Borrower or any Subsidiary of the Borrower; and to
the knowledge of the Borrower, neither the Borrower nor any of its Subsidiaries
is in violation of any valid rights of others with respect to any of the
foregoing.
Section 6.12. Hazardous Materials. The Borrower and each of its
-------------------
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a material adverse
effect on the consolidated financial condition, operations or business of the
Borrower and its Consolidated Subsidiaries. The Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would not have a material adverse effect
on the consolidated financial condition, operations or business of the Borrower
and its Consolidated Subsidiaries.
In addition, except as set forth in Schedule III hereto, or except as would
------------
not have a material adverse effect on the consolidated financial condition,
operations, or business of the Borrower and its Consolidated Subsidiaries:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Borrower or any of its Subsidiaries to have any permit, license
or authorization required in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. Sec. 9601(22) ("Release"), of any substance
-------
regulated under Environmental Laws ("Hazardous Materials") generated by the
-------------------
Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has handled
any Hazardous Material, other than as a generator, on any property now or
previously owned or leased by the Borrower or any of its Subsidiaries; and
(i) no polychlorinated biphenyl is or has been present at
any property now or previously owned or leased by the Borrower or any of
its Subsidiaries;
(ii) no asbestos is or has been present at any property now
or previously owned or leased by the Borrower or any of its Subsidiaries;
35
<PAGE>
(iii) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at any property now or previously
owned or leased by the Borrower or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now or
previously owned by the Borrower or any of its Subsidiaries; and
(c) Neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental Response and
Liability Information System as provided by 40 C.F.R. Sec. 300.5 ("CERCLIS") or
on any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against the
Borrower or any of its Subsidiaries for clean-up costs, remedial work, damages
to natural resources or for personal injury claims, including, but not limited
to, claims under CERCLA.
(d) No Hazardous Material generated by the Borrower or any of
its Subsidiaries has been recycled, treated, stored, disposed of or Released by
the Borrower or any of its Subsidiaries at any location other than those listed
in Schedule III hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS or on any similar
state list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any
Environmental laws on any of the real property or properties owned or leased by
the Borrower or any of its Subsidiaries, and no government actions have been
taken or are in process which could subject any of such properties to such Liens
and neither the Borrower nor any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(g) There have been no environmental investigations, studies,
audits, test, reviews or other analyses conducted by or which are in the
possession of the Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or any of
its Subsidiaries which have not been made available to the Banks.
36
<PAGE>
Section 6.13. No Default on Outstanding Judgments or Orders. Each of the
---------------------------------------------
Borrower and its Subsidiaries has satisfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
Section 6.14. No Defaults on Other Agreements. Neither the Borrower nor
-------------------------------
any Subsidiary of the Borrower is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which could reasonably be expected to have a
material adverse effect on the business, properties, assets, operations or
conditions, financial or otherwise, of the Borrower or any such Subsidiary or
its ability to carry out its obligations under the Facility Documents to which
it is a party. Neither the Borrower nor any Subsidiary of the Borrower is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, except where such default would not result in
a material adverse effect on the business, properties, assets or financial
condition of the Borrower or any Subsidiary of the Borrower.
Section 6.15. Labor Disputes and Acts of God. Neither the business nor
------------------------------
the properties of the Borrower or of any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), materially and adversely
affecting such business or properties or the operation of the Borrower or such
Subsidiary.
Section 6.16. Governmental Regulation. Neither the Borrower nor any
-----------------------
Subsidiary of the Borrower is subject to regulation under the Public Utility
Holding Company Act of 1935, the Investment Company Act of 1940, the Interstate
Commerce Act, the Federal Power Act or any statute or regulation limiting its
ability to incur indebtedness for money borrowed or to obtain the Letter of
Credit as contemplated hereby.
Section 6.17. Partnerships. Neither the Borrower nor any of its
------------
Subsidiaries is a partner in any partnership other than Hidel Partners (of which
the Borrower owns 100% of the Partnership Interests).
Section 6.18. No Forfeiture Proceeding. No Forfeiture Proceeding is
------------------------
pending or, to the knowledge of the Borrower, threatened.
Section 6.19. Solvency.
--------
(a) The present fair saleable value of the assets of the Borrower after
giving effect to all the transactions contemplated by the Facility Documents
and the funding of all Commitments hereunder exceeds the amount that will be
required to be paid on or in respect of
37
<PAGE>
the existing debts and other liabilities (including contingent liabilities) of
the Borrower and its Subsidiaries as they mature.
(b) The property of the Borrower does not constitute
unreasonably small capital for the Borrower to carry out its business as now
conducted and as proposed to be conducted including the capital needs of the
Borrower.
(c) The Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower, and
of amounts to be payable on or in respect of debt of the Borrower). The cash
available to the Borrower after taking into account all other anticipated uses
of the cash of the Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of the Borrower when such amounts are required
to be paid.
(d) The Borrower does not believe that final judgments against
it in actions for money damages will be rendered at a time when, or in an amount
such that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section 6.19), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
Section 6.20. As to the EDA Irvington Financing. None of the provisions
---------------------------------
of any of:
(i) the EDA Indenture;
(ii) the EDA Bond Agreement; or
(iii) the Remarketing Agreement dated as of October 1,
1995 between the Borrower and First Fidelity Bank, N.A.
has been modified or waived, and all of such documents are in full force and
effect. The Borrower is not in default under any of such documents.
Section 6.21. As to Collateral. (a) Schedule IV hereto accurately sets
---------------- -----------
forth as to each of the Borrower and each Subsidiary of the Borrower, the
address of (i) its chief executive office and (if different) the place at which
it keeps its records regarding its accounts receivable; and (ii) each place in
which it keeps any inventory, equipment or fixtures.
38
<PAGE>
(b) During the five years preceding the Closing Date, neither
the Borrower nor any Subsidiary of the Borrower has been known by any name other
than its current name, except for the following names:
(i) Hall Laboratories, Inc.
(ii) International Vitamin Corporation
(iii) International Vitamin Supplements, Inc.
(iv) Vitamin Factory Outlets, Inc.
(v) American Vitamin Products, Inc.
(vi) Hidel Partners
(vii) Ilan Packaging, Inc.
(c) With respect to the Borrowing Base Certificate most recently
submitted to the Agent, each Account included thereon within the category of
Eligible Accounts satisfies all the minimum requirements for eligibility set
forth in the definition of "Eligible Accounts" in Section 1.01 of this
Agreement; and each item of Inventory included thereon within the category of
"Eligible Inventory" satisfies all the minimum requirements for eligibility
contained in the definition of "Eligible Inventory" in Section 1.01 of this
Agreement.
(d) The registered trademarks and trademark applications
identified in the Trademark Assignments comprise all of the registered
trademarks and trademark applications of the Borrower and all of its
Subsidiaries.
(e) The names and addresses of the record title owners of the
leased facilities of the Borrower or any of its Subsidiaries identified on
Schedule V hereto are as identified on such Schedule V.
- ----------
Section 6.22. As to the Merger. (a) The Merger has been duly authorized
----------------
by all necessary corporate action on the part of the Borrower and Hall.
(b) Consummation of the Merger does not (i) require any consent
or approval of any stockholders of the Borrower or Hall that has not already
been obtained; (ii) violate any provision of, or require any filing (other than
the filing of certificates of merger with the Secretaries of State of Delaware
and Oregon), registration, consent or approval under, any law, rule, regulation,
order, writ, injunction or decree applicable to the Borrower or Hall or any of
their respective Subsidiaries (other than any such required filings or
registrations that have already been made and any of such required consents or
approvals that have already been obtained); (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement, or under
any other material agreement, lease or instrument, to which the Borrower or Hall
or any of their respective Subsidiaries is a party or by which any of the
property of any of them is bound.
39
<PAGE>
(c) Simultaneously with the execution and delivery of this
Agreement, appropriate certificates of merger are being filed with the
Secretaries of State of Delaware and Oregon and the Merger is becoming
effective.
(d) No shareholder of the Borrower or Hall has given notice to
the Borrower or Hall of its intention to exercise statutory appraisal rights
with respect to the Merger.
Section 6.23. Closing Date Effect. On the Closing Date, all the
-------------------
representations and warranties contained in this Article 6 are true
simultaneously with the execution and delivery of this Agreement and after
giving effect to the Merger.
ARTICLE 7. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement or the Letter of Credit shall remain outstanding
or the Reimbursement Obligation shall remain unpaid, the Borrower shall:
Section 7.01. Maintenance of Existence. Preserve and maintain, and
------------------------
(except to the extent of any merger of a Subsidiary into the Borrower as
permitted hereby) cause each Subsidiary of the Borrower to preserve and
maintain, its corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each such Subsidiary
to qualify and remain qualified, as a foreign corporation in each jurisdiction
in which such qualification is required.
Section 7.02. Conduct of Business. Continue, and cause each Subsidiary of
-------------------
the Borrower to continue, to engage in the same general manner in a business of
the same general type as conducted by the Borrower and Hall and their respective
Subsidiaries immediately prior to the execution and delivery of this Agreement.
Section 7.03. Maintenance of Properties. Maintain, keep and preserve, and
-------------------------
cause each Subsidiary of the Borrower to maintain, keep and preserve, all of its
properties, (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
Section 7.04. Maintenance of Records. Keep, and cause each Subsidiary of
----------------------
the Borrower to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrower and such Subsidiaries.
Section 7.05. Maintenance of Insurance. Maintain, and cause each
------------------------
Subsidiary of the Borrower to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies
40
<PAGE>
engaged in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage thereof. The
policy of property insurance covering the inventory, equipment and fixtures of
the Borrower or any Subsidiary Guarantor shall name the Agent under a lender
loss payable endorsement in form acceptable to the Agent.
Section 7.06. Compliance with Laws. Comply, and cause each Subsidiary of
--------------------
the Borrower to comply, in all respects with all applicable laws, rules,
regulations and orders (except where any failure to comply would not have a
material effect on the financial condition, operations, properties or business
of the Borrower or any of its Subsidiaries), such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property (except to the extent
that the same is being contested in good faith by appropriate proceedings and
adequate reserves are set aside therefor).
Section 7.07. Right of Inspection. At any reasonable time and from time
-------------------
to time, permit the Agent or any Bank or any agent or representative thereof,
(i) to examine and make copies and abstracts from the records and books of
account of, and visit the properties of, the Borrower and any of its
Subsidiaries, all at the cost of the Borrower, except that the Borrower shall
not be obligated to bear the cost of more than two such inspections in any 12-
month period at each of its Oregon and British Columbia facilities; and (ii) to
discuss the affairs, finances and accounts of the Borrower and any such
Subsidiary with any of their respective officers and directors and the
Borrower's independent accountants, provided however that in the case of any
such meeting with the Borrower's accountants, such meeting is scheduled through
the Borrower and the Borrower is permitted to be present.
Section 7.08. Reporting Requirements. Furnish directly to the Agent and
----------------------
to each of the Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
a consolidated income statement and statements of cash flows and changes in
stockholders' equity of the Borrower and its Consolidated Subsidiaries for such
fiscal year, all in the form required to be set forth in Form 10K required to be
submitted to the Securities and Exchange Commission and all prepared in
accordance with GAAP and accompanied by an opinion thereon acceptable to the
Agent by Amper, Politziner & Mattia or other independent accountants of
recognized standing selected by the Borrower; such financial statements shall be
accompanied by a letter from such accountants that authorizes the Agent and the
Banks (in compliance with N.J.S.A. 2A:53A-25) to rely on such financial
--------
statements, which letter shall be in form reasonably satisfactory to the Agent;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Borrower,
a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such quarter and a consolidated
41
<PAGE>
income statement and statements of cash flows and changes in stockholders'
equity, of the Borrower and its Consolidated Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, all in the form required to be set forth in Form 10Q required to
be submitted to the Securities and Exchange Commission and all prepared in
accordance with GAAP and certified by the chief financial officer of the
Borrower (subject to year-end adjustments);
(c) promptly upon receipt thereof, copies of any reports
submitted to the Borrower or any of its Subsidiaries by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any such Subsidiary made by such accountants;
(d) simultaneously with the delivery of the financial statements
referred to above, a certificate of the chief financial officer of the Borrower
(i) certifying that to the best of his knowledge no Default or Event of Default
has occurred and is continuing or, if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article 9;
(e) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(f) promptly after becoming aware thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries which, if determined adversely
to the Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower or such
Subsidiary;
(g) as soon as possible and in any event within 10 days after
becoming aware of the occurrence of each Default or Event of Default a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days after
the Borrower knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of the Borrower setting
forth details respecting such event or condition and the action, if any, which
the Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy
42
<PAGE>
of any report or notice required to be filed with or given to PBGC by the
Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event (provided that a failure to
meet the minimum funding standard of Section 412 of the Code or Section 302
of ERISA including, without limitation, the failure to make on or before
its due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the Code) and
any request for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the Borrower
or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt of
the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated under Section
4041A of ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA would result in
the loss of tax-exempt status of the trust of which such Plan is a part if
the Borrower or an ERISA Affiliate fails to timely provide security to the
Plan in accordance with the provisions of said Sections;
43
<PAGE>
(vii) any event or circumstance exists which may
reasonably be expected to constitute grounds for the Borrower or any ERISA
Affiliate to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more
Plans increase after the date of this Agreement in an amount which is
material in relation to the financial condition of the Borrower;
(i) promptly after the request of any Bank, copies of each
annual report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to the Borrower or an ERISA
Affiliate;
(j) promptly after the furnishing thereof, copies of any
material statement or report furnished to any other party pursuant to the terms
of any indenture, loan or credit or similar agreement and not otherwise required
to be furnished to the Banks pursuant to any other clause of this Section 7.08;
(k) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Borrower or any of
its Subsidiaries sends to its stockholders, and copies of all regular, periodic
and special reports, and all registration statements which the Borrower or any
such Subsidiary files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange;
(l) promptly after the commencement thereof or promptly after
the Borrower knows of the commencement or threat thereof, notice of any
Forfeiture Proceeding; and
(m) within 15 days after the end of each calendar month, a
Borrowing Base Certificate and such other reports as may be requested by the
Agent as to the Accounts and the Eligible Accounts of the Borrower and the aging
thereof, and as to the Inventory and Eligible Inventory of the Borrower, in
reasonable detail and in form satisfactory to the Bank, which shall be certified
to be true and correct by the chief financial officer of the Borrower;
(n) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its Subsidiaries
as the Agent or any Bank may from time to time reasonably request (including,
without limiting the generality of the foregoing, financial statements described
in paragraph (a) and (b) of this Section that are consolidating as to the
Borrower and its Consolidated Subsidiaries).
44
<PAGE>
Section 7.09. Registered Trademarks. Assign, and cause each Subsidiary of
---------------------
the Borrower to assign, to the Agent any trademark that the Borrower or such
Subsidiary hereafter registers with the U.S. Patent and Trademark Office,
promptly after such registration is effected (which assignment shall be in
substantially the form attached hereto as Exhibit H).
Section 7.10. Interest Rate Protection Agreement. Enter into, within 30
----------------------------------
days after the Closing Date, an Interest Rate Protection Agreement with a
counterparty acceptable to the Agent, with respect to a principal amount of
$5,000,000, for a duration, at an effective rate, and on other terms and
conditions that are satisfactory to the Agent in all respects.
Section 7.11. Pledge of Note Receivable. Pledge and deliver to the Agent,
-------------------------
within 30 days after the Closing Date, the promissory note held by the Borrower
evidencing the deferred purchase price payable to the Borrower in respect of
certain real estate in Oregon previously sold by Hall to the maker of such note;
and assign (by an instrument in recordable form) to the Agent the mortgage
securing such promissory note; all pursuant to documentation reasonably
satisfactory in form and substance to the Agent and at the cost of the Borrower;
Section 7.12. Subordination of Edell Debt. Cause Arthur Edell to execute
---------------------------
and deliver in favor of the Agent and the Banks an agreement (reasonably
satisfactory in form and substance to the Agent) by which he subordinates to the
prior payment in full of the Notes and the other obligations of the Borrower
under the Facility Documents, repayment by the Borrower to him of the loan
previously made by him to the Borrower in the original principal amount of
$300,000; and the Borrower shall not repay such loans except that, provided no
Event of Default exists, (i) the Borrower may pay interest thereon at not more
than 6% per year and (ii) the Borrower may pay principal of not more than
$85,000 in any 12-month period.
ARTICLE 8. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement or the Letter of Credit shall remain outstanding
or the Reimbursement Obligation shall remain unpaid, the Borrower shall not:
Section 8.01. Debt. Create, incur, assume or suffer to exist, or permit
----
any Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Debt, except:
(a) Debt of the Borrower and its Subsidiaries under this
Agreement, the Notes, the Subsidiary Guaranty and the other Facility Documents;
(b) Debt described in Schedule II, including renewals,
-----------
extensions or refinancings thereof, provided that the then-outstanding principal
amount thereof does not increase (but excluding in all events, Debt to NatWest
Bank N.A., U.S. National Bank of Oregon and Canadian Imperial Bank of Commerce);
45
<PAGE>
(c) Debt of the Borrower subordinated on terms satisfactory to
the Agent to the Borrower's obligations under this Agreement and the Notes;
(d) Debt of the Borrower or any such Subsidiary permitted under
Section 8.02 and Section 8.03;
(e) Debt in respect of letters of credit issued for the account
of the Borrower or any such Subsidiary in an aggregate face amount outstanding
at any time of up to $500,000 (excluding the Letter of Credit);
(f) Debt of the Borrower under the Interest Rate Protection
Agreement described in Section 7.10;
(g) Debt of Hall (Canada) to the Borrower not to exceed $500,000
outstanding at any time; and
(h) Debt of the Borrower to Hall (Canada) that is incurred as a
currency hedge, not to exceed $500,000 outstanding at any time.
Section 8.02. Guaranties, Etc. Assume, guarantee, endorse or otherwise be
---------------
or become directly or contingently responsible or liable, or permit any
Subsidiary of the Borrower to assume, guarantee, endorse or otherwise be or
become directly or indirectly responsible or liable (including, but not limited
to, an agreement to purchase any obligation, stock, assets, goods or services or
to supply or advance any funds, asset, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except (a) the Subsidiary Guaranty and (b) guaranties
by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
Section 8.03. Liens. Create, incur, assume or suffer to exist, or permit
-----
any Subsidiary of the Borrower to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens in favor of the Agent on behalf of the Banks securing
the Loans and other obligations of the Borrower hereunder and under the other
Facility Documents;
(b) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being
46
<PAGE>
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established;
(d) Liens under workmen's compensation, unemployment insurance,
social security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens arising in connection with
court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(h) Liens securing obligations of such a Subsidiary to the Borrower;
(i) The Lien on the real estate of the Borrower located in
Freehold, New Jersey securing an obligation to the Authority and Banque
Nationale de Paris, Houston Agency, in the original principal amount of
$5,600,000, and any renewal, extension or refinancing thereof provided that the
same does not increase the then-outstanding principal amount of such obligation;
but not the extension of such Lien to other property;
(j) purchase money Liens on any property hereafter acquired or
the assumption of any Lien on property existing at the time of such acquisition,
or a Lien incurred in connection with any conditional sale or other title
retention agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is
acquired by the Borrower or any such Subsidiary in the ordinary course of
its business and the Lien on any such property is created substantially
contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so created, assumed
or existing shall not exceed 90% (or, in the case of a Capital Lease, 100%)
of the lesser of cost or fair market value as of the time of acquisition of
the property covered thereby to the Borrower or such Subsidiary acquiring
the same;
47
<PAGE>
(iii) each such Lien shall attach only to the property
so acquired and fixed improvements thereon; and
(iv) the Debt secured by all such Liens in favor of any
Person other than the Reference Bank shall not exceed $500,000 at any time
outstanding in the aggregate.
(k) One or more liens in favor of the Designated Party on the
same assets and properties of the Borrower and its Subsidiaries as are
encumbered by Liens in favor of the Agent that are subject and subordinate to
such Liens in favor of the Agent; and
(l) Lien securing a principal amount that does not exceed
$1,500,000 encumbering the New Freehold/Howell Real Estate in favor of the New
Jersey Economic Development Authority and any lender(s) with whom such Authority
financing may be placed, which refinances and replaces any Lien thereon in favor
of the Agent;
(m) Liens listed on Schedule II, including renewals, extensions
-----------
or refinancings thereof, provided that the then-outstanding principal amount of
no such Lien is increased.
Section 8.04. Leases. Create, incur, assume or suffer to exist, or permit
------
any Subsidiary of the Borrower to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (a) leases existing on the date of this Agreement and any extensions or
renewals thereof; (b) leases (other than Capital Leases) which do not in the
aggregate require the Borrower and its Subsidiaries on a consolidated basis to
make payments (including taxes, insurance, maintenance and similar expense which
the Borrower or any Subsidiary is required to pay under the terms of any lease)
in any fiscal year of the Borrower in excess of $500,000; and (c) Capital Leases
permitted by Section 8.03.
Section 8.05. Investments. Make any loan or advance to any Person, or
-----------
purchase or otherwise acquire any capital stock, obligations or other securities
of any Person, or make any capital contribution to any Person, or otherwise
invest in or acquire any interest in any Person, or permit any Subsidiary of the
Borrower to do so, except: (a) direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition; (b) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank operating within the United States of
America having capital and surplus in excess of $200,000,000; (d) for stock,
obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to the Borrower or any such Subsidiary; (e)
currently outstanding loans and advances to employees listed on Schedule VI
hereof, and further loans and advances to employees made during fiscal year 1997
not to exceed $700,000; (f) in addition to the loans and advances to Hall
(Canada) that are permitted by Section 8.01(g), other investments in Hall
(Canada) that do not in the aggregate exceed $250,000 at any time outstanding;
(g)
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<PAGE>
acquisitions of any Person (whether by way of the acquisition of the capital
stock of such Person or of the assets of such Person) provided that (i) the
aggregate amount of all such acquisitions pursuant to this clause (g) does not
exceed $100,000, (ii) the Agent is advised in reasonable detail of the nature
and extent of the direct and contingent liabilities of such Person that are
being assumed, and the Agent approves the same, and (iii) (if assets are being
acquired) such assets are free of all Liens other than Liens permitted hereby
and upon such acquisition the Bank has a perfected security interest therein,
and (iv) (if capital stock is being acquired) such Person becomes a Subsidiary
Guarantor, by executing and delivering to the Agent a Subsidiary Guaranty, a
Subsidiary Security Agreement and appropriate UCC-1 financing statements, as
well as authorizing resolutions.
Section 8.06. Dividends. Declare or pay any dividends, purchase, redeem,
---------
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Borrower or another
such Subsidiary, except that the Borrower may declare and deliver dividends and
make distributions payable solely in common stock of the Borrower.
Section 8.07. Sale of Assets. Sell, lease, assign, transfer or otherwise
--------------
dispose of, or permit any Subsidiary of the Borrower to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests), except: (a) for inventory
disposed of in the ordinary course of business; (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
(c) that any such Subsidiary may sell, lease, assign, or otherwise transfer its
assets to the Borrower; (d) for the sale of assets that are being sold as part
of the consolidation of the Borrower following the Merger; (e) the sale of
equipment that is being replaced by other equipment of equal or greater value;
and (f) the sale of other equipment, provided that (i) no single item sold
pursuant to this clause (f) has a value in excess of $250,000, (ii) the
aggregate value of all items sold pursuant to this clause (f) from the Closing
Date through October 31, 1997 does not exceed $500,000, and (iii) the aggregate
value of all items sold pursuant to this clause (f) from the Closing Date
through the Facility A Expiration Date does not exceed $750,000; provided,
--------
however, that in the case of clauses (b), (d), (e) and (f), such sales and
dispositions shall be for not less than fair market value.
Section 8.08. Stock of Subsidiaries, Etc. Sell or otherwise dispose of
--------------------------
any shares of capital stock of any of its Subsidiaries or permit any such
Subsidiary to issue any additional shares of its capital stock, except
directors' qualifying shares.
Section 8.09. Transactions with Affiliates. Enter into any transaction,
----------------------------
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service,
49
<PAGE>
with any Affiliate or permit any Subsidiary of the Borrower to enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Section 8.10. Mergers, Acquisitions, Etc. Merge or consolidate with, or
--------------------------
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire all or substantially all
of the assets or of a line of business of any Person (or enter into any
agreement to do any of the foregoing), or permit any Subsidiary of the Borrower
to do so, except (i) that any such Subsidiary may merge into or transfer assets
to the Borrower, and (ii) an acquisition described in Section 8.05(g) may be
made.
Section 8.11. As to Collateral. (a) Not relocate, and not permit any
----------------
Subsidiary Guarantor to relocate, its chief executive office (or, if different,
the place at which it keeps its records regarding its accounts receivable) to a
place other than the place identified in Schedule 6.21(a), unless prior thereto
the Borrower or such Subsidiary Guarantor shall have given written notice
thereof to the Agent and shall have executed and delivered to the Agent for
filing by the Agent (at the cost of the Borrower) any and all UCC-1 financing
statements and other similar instruments as may be necessary or appropriate to
continue the perfection of the security interests granted by it to the Agent.
(b) Not permit any of the inventory, equipment or fixtures of
the Borrower or any Subsidiary Guarantor to be located in any jurisdiction other
than those identified in Section 6.21(a) with respect to the Borrower or such
Subsidiary Guarantor, unless prior thereto the Borrower or such Subsidiary
Guarantor shall have notified the Agent in writing and shall have executed and
delivered to the Agent for filing by the Agent (at the cost of the Borrower) any
and all UCC-1 financing statements and other similar instruments as may be
necessary or appropriate to continue the perfection of the security interests
granted by it to the Agent.
Section 8.12. New Freehold /Howell Real Estate. Acquire the New Freehold
--------------------------------
/Howell Real Estate unless within 90 days after such acquisition:
(a) the Borrower first submits to the Agent an
environmental report as to such real estate that is satisfactory in scope
and substance to the Agent; and
(b) the Borrower or its Subsidiary (whichever acquires the
same) executes and delivers to the Agent a mortgage and an assignment of
leases, in form and substance satisfactory to the Agent, to secure all the
obligations of the Borrower under the Facility Documents; and
50
<PAGE>
(c) the Borrower or such Subsidiary (at its cost) provides
to the Agent a policy of title insurance in the amount of the purchase
price of the New Freehold /Howell Real Estate that insures that the
aforesaid mortgage in favor of the Agent is a valid first-priority lien
(subject only to such exceptions to such insurance as the Agent may in its
reasonable discretion approve) together with a survey of the New Freehold
/Howell Real Estate; and
(d) the Borrower or such Subsidiary shall, at or before
such acquisition, provide to the Agent such other instruments,
certificates, information and assurances with respect to the New Freehold
Howell Real Estate as the Agent may reasonably request;
and, in any event
(e) if the New Freehold/Howell Real Estate is to be
acquired by a Subsidiary instead of the Borrower, such Subsidiary shall be
a wholly-owned direct Subsidiary of the Borrower; and
(f) any requirements of the N.J. Industrial Site Recovery
Act have been satisfied in connection with the conveyance of the New
Freehold/Howell Real Estate to the Borrower or such Subsidiary.
ARTICLE 9. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement or the Letter of Credit shall remain outstanding
or the Reimbursement Obligation shall be unpaid:
Section 9.01. EBITDA. The Borrower shall not permit Consolidated EBITDA
------
(i) for the 12-month period ending January 31, 1997 to be less than $6,000,000;
or (ii) for the 12-month period ending January 31, 1998 to be less than
$8,000,000.
Section 9.02. Cash Flow Leverage Ratio. The Borrower shall maintain as at
------------------------
the end of each fiscal year of the Borrower a ratio of Funded Debt to
Consolidated EBITDA of not greater than:
(i) as at July 31, 1996: 5.6:1.0
(ii) as at July 31, 1997: 3.7:1.0
(iii) as at July 31, 1998: 2.5:1.0
(iv) as at July 31, 1999
and as at the end of each
fiscal year thereafter: 2.0:1.0.
51
<PAGE>
Section 9.03. Tangible Net Worth. The Borrower shall maintain at all
------------------
times a Consolidated Tangible Net Worth of not less than the following amounts:
(A) Through July 30, 1996: $12,000,000;
(B) July 31, 1996 until
July 30, 1997: The amount identified in (A) above,
plus 50% of Consolidated Net Income
for the fiscal year ending July 31,
1996;
(C) July 31, 1997 until
July 30, 1998: The amount identified in (B) above,
plus 50% of Consolidated Net Income
for the fiscal year ending July 31,
1997;
(D) July 31, 1998 until
July 30, 1999: The amount identified in (C) above,
plus 50% of Consolidated Net Income
for the fiscal year ended July 31,
1998;
(E) July 31, 1999 until
July 30, 2000: The amount identified in (D) above,
plus 50% of Consolidated Net Income
for the fiscal year ending July 31,
1999;
(F) July 31, 2000 until
July 30, 2001: The amount identified in (E) above,
plus 50% of Consolidated Net Income
for the fiscal year ending July 31,
2000;
(G) July 31, 2001 until
July 30, 2002: The amount identified in (F) above,
plus 50% of Consolidated Net Income
for the fiscal year ended July 31,
2001;
(H) July 31, 2002 until
July 30, 2003: The amount identified in (G) above,
plus 50% of Consolidated Net Income
for the fiscal year ended July 31,
2002.
Section 9.04. Current Ratio. The Borrower shall at all times maintain a
-------------
ratio of Consolidated Current Assets to Consolidated Current Liabilities of not
less than 1.6:1.0.
52
<PAGE>
Section 9.05. Interest Coverage. The Borrower shall maintain a ratio of
-----------------
(x) Consolidated EBITDA in respect of each fiscal year of the Borrower to (y)
cash interest expense in respect of all Consolidated Funded Debt for such year,
of not less than:
(i) as at July 31, 1996 2.75:1.0
(ii) as at July 31, 1997 3.5:1.0
(iii) as at July 31, 1998
and as at the end of
each fiscal year thereafter 4.5:1.0.
Section 9.06. Capital Expenditures. The Borrower shall not permit its
--------------------
Consolidated Capital Expenditures in any fiscal year of the Borrower (excluding
the acquisition cost of the New Freehold/Howell Real Estate) to be greater than:
(i) for the 12 month period
ending April 30, 1997 $2,500,000
(ii) for the 12 month period
ending April 30, 1998 $1,500,000
(iii) for the 12 month period
ending April 30, 1999 $1,500,000
(iv) for the 12 month period
ending April 30, 2000 $1,400,000
(v) for the 12 month period
ending April 30, 2001
and each 12 month period
thereafter $1,200,000.
Section 9.07. No Quarterly Loss. The Borrower shall not incur a net loss
-----------------
after taxes and extraordinary items (on a consolidated basis with its
Consolidated Subsidiaries) in more than one fiscal quarter in any period of four
consecutive fiscal quarters beginning after April 30, 1996.
ARTICLE 10. EVENTS OF DEFAULT.
Section 10.01. Events of Default. Any of the following events shall be an
-----------------
"Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any
Note as and when due and payable; or (ii) fail to pay interest on any Note or
any fee or other amount due hereunder as and when due and payable and such
failure shall continue for three days; or (iii) fail to pay any
53
<PAGE>
regular monthly installment or any fee required to be paid under the
Reimbursement Agreement as and when due and payable and such failure shall
continue for three days; or (iv) fail to pay the Reimbursement Obligation on the
day of any drawing under the Letter of Credit;
(b) any representation or warranty made or deemed made by the
Borrower or any Subsidiary of the Borrower in this Agreement or in any other
Facility Document or which is contained in any certificate, document, opinion,
financial or other written statement furnished at any time under or in
connection with this Agreement or any other Facility Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made;
(c) the Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.03 or Articles 8 or 9; or (ii) fail
to pay, perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this Section 10.01) in any Facility Document and such failure shall
continue for 30 consecutive days;
(d) the Designated Party Guaranty or the Designated Party
Subordination and Intercreditor Agreement shall at any time after its execution
and delivery and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Designated Party, or the Designated Party shall deny it has any
further liability or obligation thereunder or shall fail to perform its
obligations thereunder;
(e) the Borrower or any Subsidiary of the Borrower shall: (i)
fail to pay any Debt, including but not limited to indebtedness for borrowed
money (other than the Notes), of the Borrower or such Subsidiary, as the case
may be, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or (ii) fail
to perform or observe any term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any such
Debt, when required to be performed or observed, if the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration of, after
the giving of notice or passage of time, or both, the maturity of such Debt,
whether or not (except as otherwise provided in Section 10.01(p)) such failure
to perform or observe shall be waived by the holder of such indebtedness;
provided that (in the case of both (i) and (ii)) the aggregate principal amount
- -------- ----
of such Debt as to which such failure to pay has occurred (and not merely the
installment or other portion thereof not paid), or as to which the maturity is
or is permitted to be accelerated by reason of such failure to perform or
observe, shall be $500,000 or more; or any such indebtedness whose principal
amount is $500,000 or more shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof;
(f) the Borrower, or any Subsidiary of the Borrower, or the
Designated Party: (i) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (ii) shall
make an assignment for the benefit of creditors, petition or
54
<PAGE>
apply to any tribunal for the appointment of a custodian, receiver or trustee
for it or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a period of 60 days
or more; or (v) (other than in the case of the Designated Party) shall be the
subject of any proceeding under which its assets may be subject to seizure,
forfeiture or divestiture; or (vi) by any act or omission shall indicate its
consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (vii) shall suffer
any such custodianship, receivership or trusteeship to continue undischarged for
a period of 60 days or more;
(g) one or more judgments, decrees or orders for the payment of
money in excess of $500,000 in the aggregate shall be rendered against the
Borrower or any Subsidiary of the Borrower and such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of 30 consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending appeal;
(h) any event or condition shall occur or exist with respect to
any Plan or Multiemployer Plan concerning which the Borrower is under an
obligation to furnish a report to the Banks in accordance with Section 7.08(h)
hereof and as a result of such event or condition, together with all other such
events or conditions, the Borrower or any ERISA Affiliate has incurred or in the
opinion of the Required Banks is reasonably likely to incur a liability to a
Plan, a Multiemployer Plan, the PBGC, or a Section 4042 Trustee (or any
combination of the foregoing) which is material in relation to the financial
position of the Borrower;
(i) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material;
(j) if, during the lifetime of a Principal, the number of shares
of capital stock of the Borrower owned by such Principal and members of his
immediate family sharing the same household on the Closing Date (the "Closing
Date Shares") is reduced to less than 70% of the Closing Date Shares by sales or
other transfers (other than sales or transfers to their issue, which will be
deemed to continue to be owned by such Principal) by such Principal or members
of his immediate family sharing the same household after the Closing Date (and
for purposes hereof, 50% of the shares acquired by a Principal after the Closing
Date pursuant to Option Rights owned by such Principal on the Closing Date shall
be deemed to be included in the Closing Date Shares of such Principal);
provided, however, that such restriction on the sale or transfer of such shares
by Andrew Pinkowski and such members of his family shall not continue beyond the
third anniversary of the Closing Date;
55
<PAGE>
(k) during any period of 12 consecutive months, commencing on
the date of this Agreement, individuals who at the beginning of such 12-month
period were directors of the Borrower cease for any reason to constitute a
majority of the board of directors of the Borrower; or
(l) I. Alan Hirschfeld ceases to serve as the full-time chief operating
officer (or other position acceptable to the Agent) of the Borrower, unless
either (i) Mr. Hirschfeld is replaced within six months thereafter by a Person
selected by the Borrower whom the Agent reasonably approves in writing as such
replacement or (ii) all of E. Joseph Edell, Arthur S. Edell and Andrew M.
Pinkowski continue to serve full time as (respectively) the chairman/chief
executive officer, president and vice chairman (or other positions acceptable to
the Agent) of the Borrower;
(m) there is a seizure by or forfeiture in favor of any
governmental authority of any property of the Borrower or any of its
Subsidiaries having a value in excess of $1,000,000, other than by eminent
domain proceedings where the Borrower or such Subsidiary receives reasonable
compensation therefor;
(n) the Subsidiary Guaranty shall at any time after its
execution and delivery and for any reason cease to be in full force and effect
as to any Subsidiary Guarantor or shall be declared null and void as to any
Subsidiary Guarantor, or the validity or enforceability thereof shall be
contested in writing by a Subsidiary Guarantor or a Subsidiary Guarantor shall
deny in writing it has any further liability or obligation thereunder or shall
fail to perform its obligations thereunder;
(o) any Security Agreement shall at any time after its execution
and delivery and for any reason cease: (A) to create a valid and perfected first
priority security interest in and to the property purported to be subject to
such Agreement; or (B) to be in full force and effect; or shall be declared null
and void; or the validity or enforceability thereof shall be contested in
writing by the grantor thereunder, or the grantor thereunder shall deny in
writing it has any further liability or obligation under the Security Agreement,
or the grantor thereunder shall fail to perform any of its obligations
thereunder;
(p) an unwaived "Event of Default" occurs under the EDA
Indenture or the EDA Bond Agreement (as the term "Event of Default" is defined
in the EDA Indenture or the EDA Bond Agreement); or
(q) a default occurs under the Interest Rate Protection
Agreement referred to in Section 7.10, or such Agreement is terminated or
otherwise ceases to be in effect prior to the stated maturity thereof.
Section 10.02. Remedies. If any Event of Default shall occur and be
--------
continuing, the Agent may or, upon request of the Required Banks, shall by
notice to the Borrower, do any or
56
<PAGE>
all of the following: (a) declare the Facility A Commitments and the Facility B
Commitments to be terminated, whereupon the same shall forthwith terminate; (b)
declare the outstanding principal of the Notes, all interest thereon and all
other amounts payable under this Agreement or the Notes or the Reimbursement
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower (provided that, in the case of an
Event of Default referred to in Section 10.01(f) above with respect to the
Borrower, such Commitments shall be immediately terminated, and the Notes, all
interest thereon and all such other amounts payable shall be immediately due and
payable without any notice and without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower); and (c) direct the Borrower immediately to pay (and the Borrower
agrees that upon receipt of such a notice, or upon the occurrence of an Event of
Default referred to in Section 10.01(f) with respect to the Borrower, the
Borrower will immediately pay) to the Agent such additional amount of cash as is
equal to the then maximum stated amount of the Letter of Credit, to be held as
security by the Agent for the satisfaction of the reimbursement obligation of
the Borrower in respect thereof. Upon the occurrence of an Event of Default,
the Agent may also exercise any and all other remedies that may be available to
it under the Facility Documents, the EDA Indenture and the EDA Bond Agreement
(to the extent it may have remedies under the EDA Indenture and the EDA Bond
Agreement) and such other remedies as may be legally available to it.
Section 10.03. Rescission. If an Event of Default described in clauses
----------
(i), (ii), (iii) or (iv) of Section 10.01(a) or in clause (ii) of Section
10.01(c) occurs that the Designated Party is entitled to cure or cause to be
cured under Section 2 of the Designated Party Guaranty, and if such Event of
Default is cured within the time allowed under the Designated Party Guaranty,
then any declaration or direction that is described in clauses (a), (b) or (c)
of Section 10.02 and that is based solely on such cured Event of Default shall
be rescinded by the Agent; provided, however, that in no event shall such
--------
rescission be required if any other Event of Default has occurred and is
continuing.
Section 10.04. Reimbursement Default. If an Event of Default occurs and
---------------------
the Designated Party pays in full its obligation under the Designated Party
Guaranty, and if the Borrower does not reimburse the Designated Party therefor
(a "Reimbursement Default"), such Reimbursement Default shall not in and of
itself constitute an Event of Default if the Agent and the Required Banks (or,
if necessary, all the Banks) waive or modify all other Events of Default that
may exist.
ARTICLE 11. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 11.01. Appointment, Powers and Immunities of Agent. Each Bank
-------------------------------------------
hereby irrevocably (but subject to removal by the Required Banks pursuant to
Section 11.09) appoints and authorizes the Agent to act as its agent hereunder
and under any other Facility
57
<PAGE>
Document with such powers as are specifically delegated to the Agent by the
terms of this Agreement and any other Facility Document, together with such
other powers as are reasonably incidental thereto. The Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and any other Facility Document, and shall not by reason of this Agreement be a
trustee for any Bank. The Agent shall not be responsible to the Banks for any
recitals, statements, representations or warranties made by the Borrower or any
officer or official of the Borrower or any other Person contained in this
Agreement or any other Facility Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Facility Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Facility Document or any other document or
instrument referred to or provided for herein or therein, for the perfection or
priority of any collateral security for the Loans or the Reimbursement
Obligation or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder. The Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agent nor
any of its directors, officers, employees or agents shall be liable or
responsible for any action taken or omitted to be taken by it or them hereunder
or under any other Facility Document or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct. The
Borrower shall pay any fee agreed to by the Borrower and the Agent with respect
to the Agent's services hereunder.
Section 11.02. Reliance by Agent. The Agent shall be entitled to rely upon
-----------------
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent may deem and treat each Bank as
the holder of the Loans made by it and its participations in the Letter of
Credit for all purposes hereof unless and until an Assignment and Assumption
Agreement shall have been furnished to the Agent in accordance with Section
12.05, but the Agent shall not be required to deal with any Person who has
acquired a participation in any Loan or in any such participation from a Bank.
As to any matters not expressly provided for by this Agreement or any other
Facility Document, the Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions signed by
the Required Banks, and such instructions of the Required Banks and any action
taken or failure to act pursuant thereto shall be binding on all of the Banks
and any other holder of all or any portion of any Loan or any such
participation.
Section 11.03. Defaults. The Agent shall not be deemed to have knowledge
--------
of the occurrence of a Default or Event of Default (other than the non-payment
of principal of or interest on the Loans to the extent the same is required to
be paid to the Agent for the account of the Banks) unless the Agent has received
notice from a Bank or the Borrower specifying such Default or Event of Default
and stating that such notice is a "Notice of Default." In the event that the
Agent receives such a notice of the occurrence of a Default or Event of Default,
the Agent
58
<PAGE>
shall give prompt notice thereof to the Banks (and shall give each Bank prompt
notice of each such non-payment). The Agent shall (subject to Section 11.08)
take such action with respect to such Default or Event of Default which is
continuing as shall be directed by the Required Banks; provided that, unless and
until the Agent shall have received such directions, the Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Banks;
and provided further that the Agent shall not be required to take any such
action which it determines to be contrary to law.
Section 11.04. Rights of Agent as a Bank. With respect to its Commitments
-------------------------
and the Loans made by it and the Letter of Credit, the Agent in its capacity as
a Bank hereunder shall have the same rights and powers hereunder as any other
Bank and may exercise the same as though it were not acting as the Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include the Agent in its capacity as a Bank. The Agent and its affiliates may
(without having to account therefor to any Bank) accept deposits from, lend
money to (on a secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with, the Borrower (and any of its affiliates)
as if it were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Banks. Although the
Agent and its affiliates may in the course of such relationships and
relationships with other Persons acquire information about the Borrower, its
Affiliates and such other Persons, the Agent shall have no duty to disclose such
information to the Banks.
Section 11.05. Indemnification of Agent. The Banks agree to indemnify the
------------------------
Agent (to the extent not reimbursed under Section 12.03 or under the applicable
provisions of any other Facility Document, but without limiting the obligations
of the Borrower under Section 12.03 or such provisions), ratably in accordance
with their respective Bank Percentages (without giving effect to any
participations, in all or any portion of its Loans, sold by a Bank to any other
Person), for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, any other
Facility Document or any other documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses which the Borrower is obligated to pay under
Section 12.03 or under the applicable provisions of any other Facility Document
but excluding, unless a Default or Event of Default has occurred, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents or instruments; provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
Section 11.06. Documents. The Agent will forward to each Bank, promptly
---------
after the Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
59
<PAGE>
Section 11.07. Non-Reliance on Agent and Other Banks. Each Bank agrees
-------------------------------------
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other
Facility Document. The Agent shall not be required to keep itself informed as
to the performance or observance by the Borrower of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary
of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any Subsidiary of the Borrower (or any
of their Affiliates) which may come into the possession of the Agent or any of
its affiliates. The Agent shall not be required to file this Agreement, any
other Facility Document or any document or instrument referred to herein or
therein, for record or give notice of this Agreement, any other Facility
Document or any document or instrument referred to herein or therein, to anyone.
Section 11.08. Failure of Agent to Act. Except for action expressly
-----------------------
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 11.05 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 11.09. Resignation or Removal of Agent. Subject to the appointment
-------------------------------
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving written notice thereof to the Banks and the Borrower, and the
Agent may be removed at any time with or without cause by the Required Banks;
provided that the Borrower and the other Banks shall be promptly notified
thereof. Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Agent, which (if other than the Bank having the
next largest Bank Percentage) shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation or the Required Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a bank which has an office in New York, New York. The
Required Banks or the retiring Agent, as the case may be, shall upon the
appointment of a successor Agent promptly so notify the Borrower and the other
Banks. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
60
<PAGE>
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 11.10. Amendments Concerning Agency Function. The Agent shall not
-------------------------------------
be bound by any waiver, amendment, supplement or modification of this Agreement
or any other Facility Document which affects its duties hereunder or thereunder
unless it shall have given its prior consent thereto.
Section 11.11. Liability of Agent. The Agent shall not have any
------------------
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Facility Document.
Section 11.12. Transfer of Agency Function. Without the consent of the
---------------------------
Borrower or any Bank, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrower and the Banks
thereof, and provided further that unless such transfer is required by law, such
transfer does not require the Borrower to incur additional cost or expense that
is material in amount.
Section 11.13. Non-Receipt of Funds by the Agent. Unless the Agent shall
---------------------------------
have been notified by a Bank or the Borrower (either one as appropriate being
the "Payor") prior to the date on which such Bank is to make payment hereunder
to the Agent of the proceeds of a Loan or the Borrower is to make payment to the
Agent, as the case may be (either such payment being a "Required Payment"),
which notice shall be effective upon receipt, that the Payor does not intend to
make the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment (and, if such recipient is the Borrower and
the Payor Bank fails to pay the amount thereof to the Agent forthwith upon
demand, the Borrower) shall, on demand, repay to the Agent the amount made
available to it together with interest thereon for the period from the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to the average daily Federal Funds Rate for
such period.
Section 11.14. Withholding Taxes. Each Bank represents that it is entitled
-----------------
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, in the
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<PAGE>
event that the payment of interest by the Borrower is treated for U.S. income
tax purposes as derived in whole or in part from sources from within the U.S.,
such Bank will furnish to the Agent Form 4224 or Form 1001 of the Internal
Revenue Service, or such other forms, certifications, statements or documents,
duly executed and completed by such Bank as evidence of such Bank's exemption
from the withholding of U.S. tax with respect thereto. The Agent shall not be
obligated to make any payments hereunder to such Bank in respect of any Loan or
reimbursement of a drawing under the Letter of Credit or any Commitment of such
Bank until such Bank shall have furnished to the Agent the requested form,
certification, statement or document.
Section 11.15. Several Obligations and Rights of Banks. The failure of any
---------------------------------------
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but no
Bank shall be responsible for the failure of any other Bank to make a Loan to be
made by such other Bank. The amounts payable at any time hereunder to each Bank
shall be a separate and independent debt, and each Bank shall be entitled to
protect and enforce its rights arising out of this Agreement, and it shall not
be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
Section 11.16. Pro Rata Treatment of Loans, Etc. Except to the extent
--------------------------------
otherwise provided: (a) each borrowing under Section 2.04 shall be made from
the Banks, each reduction or termination of the amount of the Commitments under
Section 2.07 shall be applied to the Commitments of the Banks, and each payment
of commitment fee accruing under Section 2.11 shall be made for the account of
the Banks, pro rata according to the amounts of their respective unused
Commitments for the particular Facility; (b) each conversion under Section 2.05
of Loans of a particular type under the particular Facility (but not conversions
provided for by Section 4.04), shall be made pro rata among the Banks holding
Loans of such type under the particular Facility according to the respective
principal amounts of such Loans by such Banks; (c) each prepayment and payment
of principal of or interest on Loans of a particular type and a particular
Interest Period under the particular Facility shall be made to the Agent for the
account of the Banks holding Loans of such type and Interest Period pro rata in
accordance with the respective unpaid principal amounts of such Loans of such
Interest Period under the particular Facility held by such Banks.
Section 11.17. Sharing of Payments Among Banks. If a Bank shall obtain
-------------------------------
payment of any principal of or interest on any Loan or the Reimbursement
Obligation made by it through the exercise of any right of setoff, banker's
lien, counterclaim, or by any other means, it shall promptly purchase from the
other Banks participations in (or, if and to the extent specified by such Bank,
direct interests in) the Loans made by the other Banks and the Letter of Credit
in such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Banks shall share the benefit of such payment
(net of any expenses which may be incurred by such Bank in obtaining or
preserving such benefit) pro rata in accordance with their respective Bank
Percentages. To such end the Banks shall make appropriate adjustments among
62
<PAGE>
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored. The Borrower agrees that any Bank
so purchasing a participation (or direct interest) in the Loans made by other
Banks or the Letter of Credit may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation (or direct
interest). Nothing contained herein shall require any Bank to exercise any such
right or shall affect the right of any Bank to exercise, and retain the benefits
of exercising, any such right with respect to any other indebtedness of the
Borrower.
Section 11.18. Successor Agent. Any bank, corporation or association into
---------------
which the Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its business and assets as a
whole or substantially as a whole, or any bank, corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor Agent hereunder
---- -----
and vested with all the powers, discretions, immunities, privileges and all
other matters as was its predecessor, without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 11.19. Designated Party Subordination and Intercreditor Agreement.
----------------------------------------------------------
Each Bank hereby authorizes and ratifies the execution and delivery by the
Agent, on behalf of such Bank, of the Designated Party Subordination and
Intercreditor Agreement, together with all amendments to and waivers of the
provisions of such Agreement that the Agent (in its reasonable judgment)
considers necessary or appropriate, and such Bank hereby agrees to be bound by
the terms and conditions thereof.
ARTICLE 12. MISCELLANEOUS.
Section 12.01. Amendments and Waivers. Except as otherwise expressly
----------------------
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent and
the Required Banks, or by the Borrower and the Agent acting with the consent of
the Required Banks, and any provision of this Agreement may be waived by the
Required Banks or by the Agent acting with the consent of the Required Banks;
provided that no amendment, modification or waiver shall, unless by an
- --------
instrument signed by all of the Banks or by the Agent acting with the consent of
all of the Banks: (a) increase or extend the term, or extend the time or waive
any requirement for the reduction or termination, of the Facility A Commitments
or the Facility B Commitments, (b) extend the date fixed for the payment of
principal of or interest on any Loan, (c) reduce the amount of any payment of
principal thereof or the rate at which interest is payable thereon or any fee
payable hereunder, (d) alter the terms of this Section 12.01, or (e) amend the
definition of the term "Required Banks", and provided, further, that any
-------- -------
amendment of Article 11 hereof or any amendment which increases the obligations
of the Agent hereunder shall require the consent of
63
<PAGE>
the Agent. No failure on the part of the Agent or any Bank to exercise, and no
delay in exercising, any right hereunder or under any other Facility Document
shall operate as a waiver thereof or preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided under this
Agreement or under any other Facility Document are cumulative and not exclusive
of any remedies otherwise legally available.
Section 12.02. Usury. Anything herein to the contrary notwithstanding, the
-----
obligations of the Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to a Bank
limiting rates of interest which may be charged or collected by such Bank.
Section 12.03. Expenses. The Borrower shall reimburse the Agent on demand
--------
for all reasonable costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel for the Agent) incurred by
the Agent in connection with the preparation of this Agreement, the Notes, the
Letter of Credit and the other Facility Documents; and the Borrower shall
reimburse the Agent and the Banks on demand for all reasonable costs, expenses
and charges (including, without limitation, reasonable fees and charges of
external legal counsel for the Agent and each Bank and costs allocated by their
respective internal legal departments) incurred by the Agent or any Bank in
connection with the modification of, or enforcement of their rights under, this
Agreement, the Notes, the Letter of Credit or any of the other Facility
Documents. The Borrower agrees to indemnify the Agent and each Bank and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages or expenses
incurred by any of them arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to any actual or proposed use by the
Borrower or any Subsidiary of the Borrower of the proceeds of the Loans or any
Letter of Credit, including without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
Section 12.04. Survival. The obligations of the Borrower under Sections
--------
4.01, 4.05 and 12.03 shall survive the repayment of the Loans and the expiration
of the Letter of Credit and the termination of the Commitments.
Section 12.05. Assignment; Participations. (a) This Agreement shall be
--------------------------
binding upon, and shall inure to the benefit of, the Borrower, the Agent, the
Banks and their respective successors and assigns, except that the Borrower may
not assign or transfer its rights or obligations hereunder.
(b) After first obtaining the approval of the Agent and the
Borrower, which approval will not be unreasonably withheld, each Bank may assign
to one or more banks, finance
64
<PAGE>
companies, insurance or other financial institutions all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Facility A Commitment and Facility B Commitment and the Loans owing to it and
its participations in the Letter of Credit); provided, however, that (i) each
-------- -------
such assignment shall be of a constant, and not a varying, percentage of the
assigning Bank's rights and obligations under this Agreement and the assignment
shall cover the same percentage of such Bank's Facility A Commitment and
Facility B Commitment and Loans and participation in the Letter of Credit; (ii)
unless the Agent and the Borrower otherwise consent, the aggregate amount of the
Commitments of the assigning Bank being assigned pursuant to each such
assignment (determined as of the effective date of the Assignment and Assumption
Agreement with respect to such assignment) shall in no event be less than One
Million Dollars ($1,000,000); (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its approval and acceptance, an Assignment
and Assumption Agreement in substantially the form attached hereto as Exhibit F
---------
with such changes therein (if any) as the Agent may approve (the "Assignment and
Assumption Agreement"); (iv) the Agent shall receive from the assignor a
processing fee of Five Thousand Dollars ($5,000); and (v) in any event there
shall at no time be more than four (4) Banks party to this Agreement. Without
restricting the right of the Agent or the Borrower to reasonably object to any
bank, finance company, insurance or other financial institution becoming an
assignee of an interest of a Bank hereunder, each proposed assignee must be an
existing Bank or a bank, finance company, insurance or other financial
institution which (i) has (or, in the case of a bank which is a subsidiary, such
bank's parent has) a rating of its senior unsecured debt obligations of not less
than Baa-1 by Moody's Investors Services, Inc. or a comparable rating by a
rating agency acceptable to the Agent and (ii) has total assets in excess of Ten
Billion Dollars ($10,000,000,000). Upon such execution, delivery, approval and
acceptance, and on the effective date specified in the applicable Assignment and
Assumption Agreement, (a) the assignee thereunder shall become a party hereto
and a "Bank" for purposes hereof and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Assumption
Agreement, shall have the rights and obligations of a Bank hereunder and (b) the
Bank-assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Assumption
Agreement, relinquish its rights and be released from its obligations under this
Agreement.
(c) By executing and delivering an Assignment and Assumption
Agreement, the Bank-assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Assumption Agreement, such assigning
Bank makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Facility Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Facility Document or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any Subsidiary or the performance or observance by the
Borrower or any Subsidiary of any of their respective obligations under any
Facility Document
65
<PAGE>
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements referred to in Section 7.08(a)
and (b) and such other Facility Documents and other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Assumption Agreement; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Facility Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Bank.
(d) The Agent shall maintain a copy of each Assignment and
Assumption Agreement delivered to and accepted by it and shall record the names
and addresses of each Bank and the Facility A Commitment and the Facility B
Commitment of, and principal amount of the Loans owing to, and the amount of the
participation in the Letter of Credit of, such Bank from time to time. The
Borrower, the Agent and the Banks may treat each Person whose name is so
recorded as a Bank hereunder for all purposes of this Agreement.
(e) Upon its receipt of an Assignment and Assumption Agreement
executed by an assigning Bank and an assignee and consented to by the Borrower,
the Agent shall, if such Assignment and Assumption Agreement has been properly
completed and is in substantially the form of Exhibit F, (i) accept such
Assignment and Assumption Agreement, (ii) record the information contained
therein and (iii) give prompt notice thereof to the Borrower and the Banks.
Upon request, the Borrower will execute and deliver to the Agent an appropriate
replacement promissory note or replacement promissory notes in favor of each
assignee (and assignor, if such assignor is retaining a portion of its
Commitments and Loans) reflecting such assignee's (and assignor's) Commitments.
Upon execution and delivery of such replacement promissory notes, the original
promissory notes evidencing all or a portion of the Commitments and Loans being
assigned shall be cancelled and returned to the Borrower.
(f) Each Bank may sell participations to one or more banks,
finance companies, insurance or other financial institutions in or to all or a
portion of its rights and obligations under this Agreement (including without
limitation all or a portion of its Commitments and the Loans owing to it);
provided, however, that (i) such Bank's obligations under this Agreement
- -------- -------
(including without limitation its Commitments and its participation in the
Letter of Credit) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such participant shall have no rights under any of the Facility Documents,
(iv) the Borrower, the Agent and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and with regard to any and all payments to be
made under
66
<PAGE>
this Agreement and its Notes, and (v) the agreement executed by such Bank in
favor of the participant shall not give the participant the right to require
such Bank to take or omit to take any action hereunder except action directly
relating to (x) the extension of a payment date with respect to any portion of
the principal of or interest on any amount outstanding hereunder allocated to
such participant, (y) the reduction of the principal amount outstanding
hereunder or (z) the reduction of the rate of interest payable on such amount or
any amount of fees payable hereunder to a rate or amount, as the case may be,
below that which the participant is entitled to receive under its agreement with
such Bank.
(g) The Borrower will use reasonable efforts to cooperate with
the Agent and Banks in connection with the assignment of interests under this
Agreement or the sale of participations herein.
(h) No Bank shall be permitted to assign or sell all or any
portion of its rights and obligations under this Agreement to the Borrower or
any Affiliate of the Borrower.
(i) Any Bank that proposes to sell any assignment or
participation hereunder may furnish any information concerning the Borrower and
its Affiliates in the possession of such Bank from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Bank shall require any such prospective assignee or such participant
(prospective or otherwise) to agree in writing to maintain the confidentiality
of such information, as provided in Section 12.14.
(j) In addition to the assignments and participations permitted
under the foregoing provisions of this Section, any Bank may (without any need
to comply with any of the formal or procedural requirements of this Section)
assign and pledge all or any portion of its Commitments and Loans to (i) any
affiliate of such Bank or (ii) any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Bank from its obligations hereunder.
Section 12.06. Notices. Unless otherwise specifically provided herein, any
-------
notice, consent or other communication herein required or permitted to be given
shall be in writing and may be personally served, telecopied or sent by courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy or three
days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed); provided that the burden of providing
--------
receipt of a telecopy shall not be met by a transmission report generated by the
sender's telecopy machine. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Section) shall be as set forth below each party's name on the signature
pages hereof, or, as to each party, at such other address as may be designated
by such party in a written notice to all of the other parties.
67
<PAGE>
Section 12.07. Setoff. The Borrower agrees that, in addition to (and
------
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of such Bank's offices, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement (either directly or as participant in the Letter of Credit)
or under such Bank's Notes which is not paid when due (regardless of whether
such balances are then due to the Borrower), in which case it shall promptly
notify the Borrower and the Agent thereof; provided that such Bank's failure to
give such notice shall not affect the validity thereof. Payments by the Borrower
hereunder shall be made without setoff or counterclaim.
SECTION 12.08. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
-------------- --------------------------------------------------
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES
- ------------------------------------------------------------------------------
FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING
- ------------------------------------------------------------------------------
OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER FACILITY DOCUMENT
- --------------------------------------------------------------------------------
OR THE LETTER OF CREDIT, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
- ----------------------------------------------------------------------------
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
- -----------------------------------------------------------------------------
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE
- -------------------------------------------------------------------------------
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
- ------------------------------------------------------------------------------
OF COPIES OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN SECTION
- -----------------------------------------------------------------------------
12.06. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
- -----------------------------------------------------------------------
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
- ----------------------------------------------------------------------------
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER
- --------------------------------------------------------------------------
FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN
- ---------------------------------------------------------------------------
ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE
- -----------------------------------------------------------------------------
BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT
- -------------------------------------------------------------------------------
SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING
- ------------------------------------------------------------------------------
IN NEW YORK COUNTY. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.
- -----------------------------------------------------------------------------
(b) Nothing in this Section 12.08 shall affect the right of the
Agent or any Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Bank to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
from service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with
68
<PAGE>
respect to itself or its property, the Borrower hereby irrevocably waives such
immunity in respect of its obligations under this Agreement and the Notes.
Section 12.09. Table of Contents; Headings. Any table of contents and the
---------------------------
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 12.10. Severability. The provisions of this Agreement are intended
------------
to be severable. If for any reason any provision of this Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11. Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 12.12. Integration. The Facility Documents set forth the entire
-----------
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 12.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------- --------------------------------------------------------
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
- -------------------------------------------------------------------------------
Section 12.14. Confidentiality. Each Bank and the Agent agrees (on behalf
---------------
of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower or any Subsidiary of the Borrower pursuant to
this Agreement or otherwise which is identified in writing by the Borrower as
being confidential at the time the same is delivered to the Banks or the Agent
(or their affiliates, directors, officers, employees or representatives),
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks or the Agent, (iii) to bank examiners,
auditors or accountants, (iv) in connection with any litigation to which any one
or more of the Banks is a party or (v) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to the
respective Bank a Confidentiality Agreement in substantially the form of Exhibit
-------
G hereto.
- -
Section 12.15. Treatment of Certain Information. The Borrower (a)
--------------------------------
acknowledges that services may be offered or provided to it (in connection with
this Agreement
69
<PAGE>
or otherwise) by each Bank or by one or more of their respective subsidiaries or
affiliates and (b) acknowledges that information delivered to each Bank by the
Borrower may be provided to each such subsidiary and affiliate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
IVC INDUSTRIES, INC.
By:/s/ I. Alan Hirschfeld
-------------------------------------
Name:
Title:
Address for Notices:
500 Halls Mill Road
Freehold, New Jersey 07728
Attention: Mr. I. Alan Hirschfeld
Telecopier No.: 908-308-4488
with a simultaneous copy to:
----------------------------
IVC Industries, Inc.
500 Halls Mill Road
Freehold, New Jersey 07728
Attention: Mr. E. Joseph Edell
Telecopier No: 908-308-4488
70
<PAGE>
AGENT:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:/s/ Jo Morrison
------------------------------------
Name:
Title:
Address for Notices:
New York Agency
4 Chase Metrotech Center
13th Floor
Brooklyn, New York 11245
Telecopier No.: 718-242-6909
with a simultaneous copy to:
---------------------------
Chase National Corporate
Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, NJ 07604
Attention: Mr. Peter M. Fitzsimmons
Telecopier No.: 201-228-8231
71
<PAGE>
BANKS:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:/s/ Jo Morrison
------------------------------------
Name:
Title:
Lending Office:
The Chase Manhattan Bank (National
Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank (National
Association)
1 Chase Manhattan Plaza
New York, New York 10081
with a simultaneous copy to:
---------------------------
Chase National Corporate
Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, NJ 07604
Attention: Mr. Peter M. Fitzsimmons
Telecopier No.: 201-228-8231
72
<PAGE>
EXHIBIT A-1
PROMISSORY NOTE
(Facility A)
$15,000,000 April ____, 1996
IVC INDUSTRIES, INC. (the "Borrower"), a corporation organized under the
laws of Delaware, for value received, hereby promises to pay to the order of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) (the "Bank"), at the principal
office of the Agent at 1 Chase Manhattan Plaza New York, New York 10081, for the
account of the appropriate Lending Office of the Bank, the principal sum of
Fifteen Million Dollars ($15,000,000) or, if less, the amount loaned by the Bank
to the Borrower under Facility A pursuant to the Credit Agreement, in lawful
money of the United States of America and in immediately available funds, on the
date(s) and in the manner provided in the Credit Agreement. The Borrower also
promises to pay interest on the unpaid principal balance hereof, for the period
such balance is outstanding, at said principal office for the account of said
Lending Office, in like money, at the rates of interest as provided in the
Credit Agreement, on the dates and in the manner provided in said Credit
Agreement.
The date and amount of each type of Facility A Loan made by the Bank to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Bank on its books and, prior to any transfer of this
Note (or, at the discretion of the Bank, at any other time), endorsed by the
Bank on the schedule attached hereto or any continuation thereof.
This is one of the Facility A Notes referred to in that certain Credit
Agreement (as amended from time to time, the "Credit Agreement") dated as of the
date hereof among the Borrower, the Banks party thereto (including the Bank) and
The Chase Manhattan Bank (National Association), as agent (the "Agent"). This
Note evidences the Facility A Loans made by the Bank thereunder.
All capitalized terms used in this Note and not defined shall have the
respective meanings ascribed to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayments
on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Note.
<PAGE>
This Note shall be governed by, and interpreted and construed in accordance
with, the laws of the State of New York.
IVC INDUSTRIES, INC.
By:___________________________
Name:
Title:
-2-
<PAGE>
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
<PAGE>
EXHIBIT A-2
PROMISSORY NOTE
(Facility B)
$6,500,000 April ____, 1996
IVC INDUSTRIES, INC. (the "Borrower"), a corporation organized under the
laws of Delaware, for value received, hereby promises to pay to the order of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) (the "Bank"), at the principal
office of the Agent at 1 Chase Manhattan Plaza New York, New York 10081, for the
account of the appropriate Lending Office of the Bank, the principal sum of Six
Million Five Hundred Thousand Dollars ($6,500,000) or, if less, the amount
loaned by the Bank to the Borrower under Facility B pursuant to the Credit
Agreement, in lawful money of the United States of America and in immediately
available funds, on the date(s) and in the manner provided in the Credit
Agreement. The Borrower also promises to pay interest on the unpaid principal
balance hereof, for the period such balance is outstanding, at said principal
office for the account of said Lending Office, in like money, at the rates of
interest as provided in the Credit Agreement, on the dates and in the manner
provided in said Credit Agreement.
The date and amount of each type of Facility B Loan made by the Bank to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Bank on its books and, prior to any transfer of this
Note (or, at the discretion of the Bank, at any other time), endorsed by the
Bank on the schedule attached hereto or any continuation thereof.
This is one of the Facility B Notes referred to in that certain Credit
Agreement (as amended from time to time, the "Credit Agreement") dated as of the
date hereof among the Borrower, the Banks party thereto (including the Bank) and
The Chase Manhattan Bank (National Association), as agent (the "Agent"). This
Note evidences the Facility B Loans made by the Bank thereunder.
All capitalized terms used in this Note and not defined shall have the
respective meanings ascribed to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayments
on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in accordance
with, the laws of the State of New York.
IVC INDUSTRIES, INC.
By:___________________________
Name:
Title:
<PAGE>
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
<PAGE>
EXHIBIT C
GUARANTY
--------
REFERENCE IS HEREBY MADE to the Credit Agreement dated April _____, 1996
(which, as the same may hereafter be amended from time to time, will be called
herein the "Credit Agreement") among IVC Industries, Inc., a Delaware
corporation (the "Borrower"), the Banks party thereto, and The Chase Manhattan
Bank (National Association), as Agent. All capitalized terms used herein and not
defined shall have the respective meanings ascribed to them in the Credit
Agreement.
WHEREAS, the Credit Agreement provides for the extension of credit by the
Agent and the Banks to the Borrower: and
WHEREAS, all the obligations and liabilities (whether now existing or
hereafter arising) of the Borrower to any or all of the Agent and the Banks
under the Credit Agreement or any of the other Facility Documents (whether for
principal, interest, fees, reimbursement obligations, indemnification
obligations, costs of enforcement or otherwise) will be called herein the
"Obligations"; and
WHEREAS, each of the undersigned (each, a "Guarantor") expects to obtain
substantial economic benefit from the extension of credit by the Banks and the
Agent to the Borrower under the Credit Agreement; and
WHEREAS, the execution and delivery of this guaranty by the Guarantors is
required in order to induce the Banks and the Agent to enter into the Credit
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and to induce the Banks and the Agent to enter
into the Credit Agreement, the Guarantors hereby jointly and severally agree
with the Banks and the Agent as follows:
1. The Guarantors hereby absolutely, unconditionally, jointly and severally
guarantee to the Agent and the Banks that the Borrower will promptly pay,
perform and observe all the Obligations, and that all sums stated to be payable
in, or which become payable under, the Facility Documents by the Borrower will
be promptly paid in full when due, whether at stated maturity or earlier by
reason of acceleration or otherwise, and, in the case of one or more extensions
of time of payment or performance or renewals of any Obligation, that the same
will be promptly paid or performed (as the case may be) when due according to
such extension or renewal, whether at stated maturity or earlier by reason of
acceleration or otherwise, irrespective of the validity, regularity, or
enforceability of any of the Facility Documents and irrespective of any present
or future law or order of any government (whether of right or in fact and
whether the
-1-
<PAGE>
Agent or any Bank shall have consented thereto) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any Obligation of
the Borrower or other obligor or to vary the terms of payment; provided,
--------
however, that the liability of any Guarantor hereunder with respect to the
- -------
Obligations shall not exceed at any time 90% of Adjusted Net Worth (as
hereinafter defined) of such Guarantor. The term "Adjusted Net Worth" of a
Guarantor means the current Net Worth of such Guarantor, plus (as and when Net
Worth increases) any increase in such amount of Net Worth after the date hereof
(without any decrease for any reduction after the date hereof in current Net
Worth as so increased). The term "Net Worth" of a Guarantor means the amount of
all assets of such Guarantor, at a fair valuation, less the total liabilities of
such Guarantor (including contingent liabilities other than the liabilities of
such Guarantor under this guaranty) .
2. The Guarantors agree that, as among the Guarantors, the Agent and the
Banks, the Obligations may be declared to be due and payable for purposes of
this guaranty notwithstanding any stay, injunction or other prohibition which
may prevent, delay or vitiate any such declaration as against the Borrower and
that, in the event of any such declaration (or attempted declaration), such
Obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of this guaranty. The
Guarantors further guarantee that all payments made by the Borrower to the Agent
and the Banks of any Obligation will, when made, be final and agree that if any
such payment is recovered from, or repaid by, the Agent or any Bank in whole or
in part in any bankruptcy, insolvency or similar proceeding instituted by or
against the Borrower, this guaranty shall continue to be fully applicable to
such Obligation to the same extent as though the payment so recovered or repaid
had never been originally made on such Obligation.
3. This is a guaranty of payment and not of collection only.
4. The Guarantors hereby consent that from time to time, without notice to
or further consent of any Guarantor, the payment, performance or observance of
any or all of the Obligations may be waived or the time of payment or
performance thereof extended or accelerated, or renewed in whole or in part, or
the terms of the Facility Documents or any part thereof may be changed and any
collateral therefor may be exchanged, surrendered or otherwise dealt with as the
Agent may determine, and any of the acts mentioned in the Facility Documents may
be done, all without affecting the liability of any Guarantor hereunder. The
Guarantors hereby waive presentment of any instrument, demand of payment,
protest and notice of non-payment or protest thereof or of any exchange, sale,
surrender or other handling or disposition of such collateral, and any
requirement that the Agent or any Bank exhaust any right, power or remedy or
proceed against the Borrower under the Facility Documents or against any other
person under any other guaranty of, or security for, any of the Obligations. The
Guarantors hereby further waive any defense whatsoever which might constitute a
defense available to, or discharge of, the Borrower or a guarantor. No payment
by any Guarantor pursuant to any provision hereunder shall entitle such
Guarantor, by subrogation to the rights of the Agent or any Bank or otherwise,
to any payment by the Borrower (or out of the property of the Borrower)
-2-
<PAGE>
except after payment in full of all sums (including interest, costs and
expenses) which may be or become payable by the Borrower to the Agent and the
Banks at any time or from time to time; provided, however, if any Guarantor is
an "insider" of the Borrower, as such term is defined in Section 101 of the
Federal Bankruptcy Code, such Guarantor hereby irrevocably waives any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the Agent and the
Banks against the Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Borrower in respect thereof.
5. This guaranty shall be a continuing guaranty, and any other guarantor,
and any other party liable upon or in respect of any Obligation hereby
guaranteed may be released without affecting the liability of any Guarantor. The
liability of the Guarantors hereunder shall be joint and several with each other
and joint and several with the liability of any other guarantor or other party
upon or in respect of the Obligations.
6. The Agent or any Bank may assign its rights and powers hereunder, with
all or any of the Obligations, and, in the event of such assignment, the
assignee hereof or of such rights and powers, shall have the same rights and
remedies as if originally named herein.
7. Notice of acceptance of this guaranty and of the incurring of any and
all of the Obligations of the Borrower pursuant to the Facility Documents is
hereby waived. This guaranty and all rights, obligations and liabilities arising
hereunder shall be governed by and construed according to the laws of the State
of New York. Unless the context otherwise requires, all terms used herein which
are defined in the Uniform Commercial Code shall have the meanings therein
stated.
8. Each Guarantor agrees that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim the Agent or any Bank may
otherwise have, each of the Agent and each Bank shall be entitled, at its
option, to setoff and apply balances (general or special, time or demand,
provisional or final) held by it for account of such Guarantor at any of its
offices in dollars or in any other currency, against any amounts owing hereunder
that are not paid when due (regardless of whether such balances are then due to
such Guarantor), in which case it shall promptly notify such Guarantor thereof;
provided however that any failure to give such notice shall not affect the
validity thereof.
9. No provision of this guaranty may be modified or waived without the
prior written consent of the Agent and the Required Banks.
10. Without limiting the rights of the Agent or any Bank under any other
agreement, any financial accommodation (including, without limitation, interest
accruing at the agreed to contract rate after the commencement of any
bankruptcy, reorganization or similar proceeding) extended by a Guarantor to or
for the account of the Borrower, or in respect of which the Borrower may be
liable to a Guarantor in any capacity, is hereby subordinated to all the
-3-
<PAGE>
Obligations, and such financial accommodation of such Guarantor to the Borrower,
if the Agent so requests, shall be collected, enforced and received by such
Guarantor as trustee for the Agent and the Banks and be paid over to the Agent
on account of the Obligations but without reducing or affecting in any manner
the liability of such Guarantor, or any other Guarantor, under the other
provisions of this guaranty.
11. Each Guarantor hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in New York City in any action or
proceeding arising out of or relating to this guaranty, and each Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
Each Guarantor irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to such
Guarantor at its address specified on the signature page hereof. Each Guarantor
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 paragraph shall affect the
rights of the Agent and the Banks to serve legal process in any other manner
permitted by law or affect the rights of the Agent and the Banks to bring any
action or proceeding against such Guarantor or any of its property in the courts
of any other jurisdiction. To the extent that a Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its property,
such Guarantor hereby irrevocably waives such immunity in respect of its
Obligations under this guaranty. Each Guarantor hereby expressly waives any and
every right to a trial by jury in any action on or related to this guaranty, the
Obligations or the enforcement of either or all of the same, and does further
expressly waive any and every right to interpose any counterclaim in any such
action or proceeding.
12. The Guarantors agree to reimburse the Agent and the Banks on demand for
all reasonable costs, expenses, and charges (including, without limitation,
reasonable attorneys' fees) incurred by the Agent or the Banks in connection
with any enforcement of this guaranty.
13. The rights, powers and remedies granted to the Agent and the Banks
herein shall be cumulative and in addition to any rights, powers and remedies to
which the Agent and the Banks may be entitled either by operation of law or
pursuant to the Facility Documents or any other document or instrument delivered
or from time to time to be delivered to the Agent or any Bank in connection with
the Facility Documents.
IN WITNESS WHEREOF, the Guarantors have caused this instrument to be duly
executed by their proper officers this day of April, 1996.
WITNESS: HALL LABORATORIES, LTD.
_____________________________ By:_____________________________
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<PAGE>
Name:_______________________ Name:________________________
Title:_______________________
Address of Guarantor:
13060 80th Avenue #207
Surrey, British Columbia, Canada
WITNESS: INTERNATIONAL VITAMIN OVERSEAS SALES
CORP.
_____________________________ By:_____________________________
Name:_______________________ Name:________________________
Title:_______________________
Address of Guarantor:
500 Halls Mill Road
Freehold, NJ 07728
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<PAGE>
EXHIBIT D-1
SECURITY AGREEMENT
------------------
(Borrower)
THIS AGREEMENT, dated as of the _____ day of April, 1996, is
made by IVC INDUSTRIES, INC., a Delaware corporation (the "Grantor"), in favor
of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) in its capacity as Agent
under the Credit Agreement hereinafter referred to (the "Agent").
Preliminary Statement
---------------------
A. Contemporaneously herewith, the Grantor is entering
into a certain Credit Agreement dated the date hereof (which, as the same may be
hereafter amended or supplemented from time to time, will be called herein the
"Credit Agreement") among itself, the Banks party thereto and the Agent. All
capitalized terms used herein and not defined shall have the respective meanings
ascribed to them in the Credit Agreement.
B. The execution and delivery of this Agreement is
required in order to induce the Banks and the Agent to enter into the Credit
Agreement.
NOW, THEREFORE, for good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), and in order to
induce the Banks and the Agent to enter into the Credit Agreement, the Grantor
hereby agrees as follows:
As used in this Agreement, the term "Liabilities" shall mean
all indebtedness, obligations and liabilities of every kind and nature of the
Grantor to any or all of the Banks and the Agent under any or all of the Credit
Agreement and the other Facility Documents. The term "Security" shall mean all
personal property and fixtures of the Grantor, whether now or hereafter existing
or now owned or hereafter acquired and wherever located, of every kind and
description, tangible or intangible, including, but not limited to, all money,
goods (including equipment, farm products and inventory), instruments,
securities, documents, chattel paper, accounts, contract rights, general
intangibles, credits, claims (including, without limitation, the balance of
every deposit account of the Grantor with the Agent or any Bank and any other
claim of the Grantor against the Agent or any Bank), demands, precious metals
and any other property, rights and interests of the Grantor, and shall include
the proceeds, products and accessions of and to any thereof.
As security for the payment of all the Liabilities, the
Grantor hereby grants to the Agent a security interest in and a general lien
upon the Security.
At any time and from time to time, upon the demand of the
Agent, the Grantor will: (1) deliver and pledge to the Agent, indorsed and/or
accompanied by such instruments of assignment and transfer in such form and
substance as the Agent may request, any and all instruments, documents and/or
chattel paper comprising the Security as the Agent may specify in
<PAGE>
its demand; (2) give, execute, deliver, file and/or record any notice,
statement, instrument, document, agreement or other papers that may be necessary
or desirable, or that the Agent may request, in order to create, preserve,
perfect, or validate any security interest granted pursuant hereto or to enable
the Agent to exercise and enforce its rights hereunder or with respect to such
security interest; (3) keep and stamp or otherwise mark any and all documents
and chattel paper and its individual books and records relating to inventory,
accounts and contract rights in such manner as the Agent may require; and (4)
permit representatives of the Agent or any Bank at any time during business
hours to inspect its inventory and to inspect and make abstracts from the
Grantor's books and records pertaining to inventory, accounts, contract rights,
chattel paper, instruments and documents. The right is expressly granted to the
Agent, at its discretion, to file one or more financing statements under the
Uniform Commercial Code naming the Grantor as debtor and the Agent as secured
party and indicating therein the types or describing the items of Security
herein specified. A photographic or other reproduction of this agreement shall
be sufficient as a financing statement. With respect to the Security, or any
part thereof, which at any time shall come into the possession or custody or
under the control of the Agent or any Bank or any of their agents, associates or
correspondents, for any purpose, the right is expressly granted to the Agent, at
its discretion, to transfer to or register in the name of itself or its nominee
any of the Security; to exchange any of the Security for other property upon any
reorganization, recapitalization or other readjustment and in connection
therewith to deposit any of the Security with any committee or depositary upon
such terms as it may determine; if an Event of Default exists, to notify any
account debtor or obligor on an instrument to make payment to the Agent; and to
exercise or cause its nominee to exercise all or any powers with respect to the
Security with the same force and effect as an absolute owner thereof; all
without notice (except such notice as may be required by applicable law and
cannot be waived) and without liability except to account for property actually
received by it. Without limiting the generality of the foregoing, payments,
distributions and/or dividends (other than ordinary cash dividends paid prior to
the occurrence of an Event of Default) in securities, property or cash,
including without limitation dividends representing stock or liquidating
dividends or a distribution or return of capital upon or in respect of the
Security or any part thereof or resulting from any split-up, revision or
reclassification of the Security or any part thereof or received in exchange for
the Security or any part thereof as a result of a merger, consolidation or
otherwise, shall be paid directly to and retained by the Agent and held by it
until applied as herein provided, as additional collateral security pledged
under and subject to the terms hereof. The Agent shall be deemed to have
possession of any of the Security in transit to or set apart for it or any of
its agents, associates, or correspondents.
The Agent at its discretion may, if an Event of Default
exists, in its name or in the name of the Grantor or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Security, but shall be under no obligation
to do so, or the Agent may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any of the Security,
without thereby incurring responsibility to, or discharging or otherwise
affecting any liability of, the Grantor. The Agent shall not be required to
take any steps necessary to preserve any rights against prior parties to any of
the Security. If an Event of Default exists, the Agent may use or operate any
of the Security for the
-2-
<PAGE>
purpose of preserving the Security or its value in the manner and to the extent
the Agent reasonably deems appropriate, but the Agent shall be under no
obligation to do so. Upon the occurrence and during the continuance of an Event
of Default, the Grantor shall, at the request of the Agent, assemble the
Security at such place or places as the Agent designates in its request, and, to
the extent permitted by applicable law, the Agent shall have the right, with or
without legal process and with or without prior notice or demand, to take
possession of the Security or any part thereof and to enter any premises for the
purpose of taking possession thereof. The Agent shall have the rights and
remedies with respect to the Security of a secured party under the Uniform
Commercial Code (whether or not such Code is in effect in the jurisdiction where
the rights and remedies are asserted). In addition, with respect to the
Security, or any part thereof, which shall then be or shall thereafter come into
the possession or custody of the Agent, any Bank or any of their agents,
associates or correspondents, the Agent may sell or cause to be sold in the
Borough of Manhattan, New York City, or elsewhere, in one or more sales or
parcels, at such price as the Agent may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or any of the
Security, at any broker's board or at public or private sale, in any reasonable
manner permissible under the Uniform Commercial Code (except that, to the extent
permitted thereunder, the Grantor hereby waives the requirements of said Code),
and the Agent or anyone else may be the purchaser of any or all of the Security
so sold and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any equity of redemption, of the Grantor, any such
demand, notice or right and equity being hereby expressly waived and released.
The Grantor will pay to the Agent all reasonable expenses (including reasonable
attorneys' fees and legal expenses incurred by any or all of the Agent and the
Banks) of, or incidental to, the enforcement of any of the provisions hereof or
of any of the Liabilities, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement of any of the Security or
receipt of the proceeds thereof, and for the care of the Security and defending
or asserting the rights and claims of the Agent in respect thereof, by
litigation or otherwise, including expense of insurance; and all such expenses
shall be indebtedness within the terms of this agreement. The Agent shall apply
the net cash receipts from the Security to the payment of the Liabilities, in
such order and priority as the Agent may elect. Notwithstanding that the Agent,
whether in its own behalf and/or in behalf of another or others, may continue to
hold Security and regardless of the value thereof, the Grantor shall be and
remain liable for the payment in full, principal and interest, of any balance of
the Liabilities and expenses at any time unpaid.
No delay on the part of the Agent in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. The rights, remedies and
benefits herein expressly specified are cumulative and not exclusive of any
rights, remedies or benefits which any or all of the Agent and the Banks may
otherwise have. The Grantor hereby waive(s) presentment, notice of dishonor and
protest of all instruments included in or evidencing the Liabilities or the
Security and any and all other notices and demands whatsoever, whether or not
relating to such instruments.
No provision hereof shall be modified or limited except by a written
instrument executed by the party sought to be charged therewith, expressly
referring hereto and to the provision
-3-
<PAGE>
so modified or limited. This agreement shall be binding upon the Grantor and
its successors and assigns, and shall inure to the benefit of the Agent and the
Banks and their respective successors and assigns, shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether or
not of the character contemplated at the date of this agreement; and shall be
governed by and construed according to the laws of the State of New York.
Unless the context otherwise requires, all terms used herein which are defined
in the New York Uniform Commercial Code shall have the meanings therein stated.
IVC INDUSTRIES, INC.
By:____________________________________
Name:
Title:
-4-
<PAGE>
EXHIBIT D-2
SECURITY AGREEMENT
------------------
(Subsidiary)
THIS AGREEMENT, dated as of the _____ day of April, 1996, is
made by _______________________, a ________ corporation (the "Grantor"), in
favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) in its capacity as
Agent under the Credit Agreement hereinafter referred to (the "Agent").
Preliminary Statement
---------------------
A. Contemporaneously herewith, IVC Industries, Inc., a
Delaware corporation (the "Borrower"), is entering into a certain Credit
Agreement dated the date hereof (which, as the same may be hereafter amended or
supplemented from time to time, will be called herein the "Credit Agreement")
among itself, the Banks party thereto and the Agent. All capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Credit Agreement.
B. Contemporaneously herewith, the Grantor is executing
and delivering a guaranty dated the date hereof (which, as the same may
hereafter be amended or supplemented from time to time, will be called herein
the "Subsidiary Guaranty") in favor of the Agent and the Banks, pursuant to
which the Grantor is guaranteeing all the obligations and liabilities (now
existing or hereafter arising) of the Grantor to any or all of the Agent and the
Banks under the Credit Agreement or any of the other Facility Documents.
C. The execution and delivery of this Agreement is
required in order to induce the Banks and the Agent to enter into the Credit
Agreement.
NOW, THEREFORE, for good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), and in order to
induce the Banks and the Agent to enter into the Credit Agreement, the Grantor
hereby agrees as follows:
As used in this Agreement, the term "Liabilities" shall mean
all obligations and liabilities (now existing or hereafter arising) of the
Grantor to any or all of the Agent and the Banks under the Subsidiary Guaranty.
The term "Security" shall mean all personal property and fixtures of the
Grantor, whether now or hereafter existing or now owned or hereafter acquired
and wherever located, of every kind and description, tangible or intangible,
including, but not limited to, all money, goods (including equipment, farm
products and inventory), instruments, securities, documents, chattel paper,
accounts, contract rights, general intangibles, credits, claims (including,
without limitation, the balance of every deposit account of the Grantor with the
Agent or any Bank and any other claim of the Grantor against the Agent or any
Bank), demands, precious metals and any other property, rights and interests of
the Grantor, and shall include the proceeds, products and accessions of and to
any thereof.
<PAGE>
As security for the payment of all the Liabilities, the
Grantor hereby grants to the Agent a security interest in and a general lien
upon the Security.
At any time and from time to time, upon the demand of the
Agent, the Grantor will: (1) deliver and pledge to the Agent, indorsed and/or
accompanied by such instruments of assignment and transfer in such form and
substance as the Agent may request, any and all instruments, documents and/or
chattel paper comprising the Security as the Agent may specify in its demand;
(2) give, execute, deliver, file and/or record any notice, statement,
instrument, document, agreement or other papers that may be necessary or
desirable, or that the Agent may request, in order to create, preserve, perfect,
or validate any security interest granted pursuant hereto or to enable the Agent
to exercise and enforce its rights hereunder or with respect to such security
interest; (3) keep and stamp or otherwise mark any and all documents and chattel
paper and its individual books and records relating to inventory, accounts and
contract rights in such manner as the Agent may require; and (4) permit
representatives of the Agent or any Bank at any time during business hours to
inspect its inventory and to inspect and make abstracts from the Grantor's books
and records pertaining to inventory, accounts, contract rights, chattel paper,
instruments and documents. The right is expressly granted to the Agent, at its
discretion, to file one or more financing statements under the Uniform
Commercial Code naming the Grantor as debtor and the Agent as secured party and
indicating therein the types or describing the items of Security herein
specified. A photographic or other reproduction of this agreement shall be
sufficient as a financing statement. With respect to the Security, or any part
thereof, which at any time shall come into the possession or custody or under
the control of the Agent or any Bank or any of their agents, associates or
correspondents, for any purpose, the right is expressly granted to the Agent, at
its discretion, to transfer to or register in the name of itself or its nominee
any of the Security; to exchange any of the Security for other property upon any
reorganization, recapitalization or other readjustment and in connection
therewith to deposit any of the Security with any committee or depositary upon
such terms as it may determine; if an Event of Default exists, to notify any
account debtor or obligor on an instrument to make payment to the Agent; and to
exercise or cause its nominee to exercise all or any powers with respect to the
Security with the same force and effect as an absolute owner thereof; all
without notice (except such notice as may be required by applicable law and
cannot be waived) and without liability except to account for property actually
received by it. Without limiting the generality of the foregoing, payments,
distributions and/or dividends (other than ordinary cash dividends paid prior to
the occurrence of an Event of Default), in securities, property or cash,
including without limitation dividends representing stock or liquidating
dividends or a distribution or return of capital upon or in respect of the
Security or any part thereof or resulting from any split-up, revision or
reclassification of the Security or any part thereof or received in exchange for
the Security or any part thereof as a result of a merger, consolidation or
otherwise, shall be paid directly to and retained by the Agent and held by it
until applied as herein provided, as additional collateral security pledged
under and subject to the terms hereof. The Agent shall be deemed to have
possession of any of the Security in transit to or set apart for it or any of
its agents, associates, or correspondents.
The Agent at its discretion may, if an Event of Default
exists, in its name or in the name of the Grantor or otherwise, demand, sue for,
collect or receive any money or property
-2-
<PAGE>
at any time payable or receivable on account of or in exchange for, or make any
compromise or settlement deemed desirable with respect to, any of the Security,
but shall be under no obligation to do so, or the Agent may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms of,
or release, any of the Security, without thereby incurring responsibility to, or
discharging or otherwise affecting any liability of, the Grantor. The Agent
shall not be required to take any steps necessary to preserve any rights against
prior parties to any of the Security. If an Event of Default exists, the Agent
may use or operate any of the Security for the purpose of preserving the
Security or its value in the manner and to the extent the Agent reasonably deems
appropriate, but the Agent shall be under no obligation to do so. Upon the
occurrence and during the continuance of an Event of Default, the Grantor shall,
at the request of the Agent, assemble the Security at such place or places as
the Agent designates in its request, and, to the extent permitted by applicable
law, the Agent shall have the right, with or without legal process and with or
without prior notice or demand, to take possession of the Security or any part
thereof and to enter any premises for the purpose of taking possession thereof.
The Agent shall have the rights and remedies with respect to the Security of a
secured party under the Uniform Commercial Code (whether or not such Code is in
effect in the jurisdiction where the rights and remedies are asserted). In
addition, with respect to the Security, or any part thereof, which shall then be
or shall thereafter come into the possession or custody of the Agent, any Bank
or any of their agents, associates or correspondents, the Agent may sell or
cause to be sold in the Borough of Manhattan, New York City, or elsewhere, in
one or more sales or parcels, at such price as the Agent may deem best, and for
cash or on credit or for future delivery, without assumption of any credit risk,
all or any of the Security, at any broker's board or at public or private sale,
in any reasonable manner permissible under the Uniform Commercial Code (except
that, to the extent permitted thereunder, the Grantor hereby waives the
requirements of said Code), and the Agent or anyone else may be the purchaser of
any or all of the Security so sold and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any equity of redemption,
of the Grantor, any such demand, notice or right and equity being hereby
expressly waived and released. The Grantor will pay to the Agent all reasonable
expenses (including reasonable attorneys' fees and legal expenses incurred by
any or all of the Agent and the Banks) of, or incidental to, the enforcement of
any of the provisions hereof or of any of the Liabilities, or any actual or
attempted sale, or any exchange, enforcement, collection, compromise or
settlement of any of the Security or receipt of the proceeds thereof, and for
the care of the Security and defending or asserting the rights and claims of the
Agent in respect thereof, by litigation or otherwise, including expense of
insurance; and all such expenses shall be indebtedness within the terms of this
agreement. The Agent shall apply the net cash receipts from the Security to the
payment of the Liabilities, in such order and priority as the Agent may elect.
Notwithstanding that the Agent, whether in its own behalf and/or in behalf of
another or others, may continue to hold Security and regardless of the value
thereof, the Grantor shall be and remain liable for the payment in full,
principal and interest, of any balance of the Liabilities and expenses at any
time unpaid.
No delay on the part of the Agent in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. The rights, remedies and
benefits herein expressly specified are cumulative and not exclusive of any
rights,
-3-
<PAGE>
remedies or benefits which any or all of the Agent and the Banks may otherwise
have. The Grantor hereby waive(s) presentment, notice of dishonor and protest
of all instruments included in or evidencing the Liabilities or the Security and
any and all other notices and demands whatsoever, whether or not relating to
such instruments.
No provision hereof shall be modified or limited except by a written
instrument executed by the party sought to be charged therewith, expressly
referring hereto and to the provision so modified or limited. This agreement
shall be binding upon the Grantor and its successors and assigns, and shall
inure to the benefit of the Agent and the Banks and their respective successors
and assigns, shall constitute a continuing agreement, applying to all future as
well as existing transactions, whether or not of the character contemplated at
the date of this agreement; and shall be governed by and construed according to
the laws of the State of New York. Unless the context otherwise requires, all
terms used herein which are defined in the New York Uniform Commercial Code
shall have the meanings therein stated.
_________________________________
By:_______________________________
Name:
Title:
-4-
<PAGE>
EXHIBIT H
TRADEMARK COLLATERAL ASSIGNMENT
-------------------------------
IVC INDUSTRIES, INC. (formerly known as INTERNATIONAL VITAMIN CORPORATION),
a Delaware corporation (the "Assignor"), does hereby grant, assign and convey to
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent under the Credit
Agreement referred to below (the "Agent"), the registered trademarks and
trademark applications identified on Annex I hereto and the goodwill represented
thereby (the "Trademarks") together with all the proceeds thereof, as collateral
security for all the Liabilities (as hereinafter defined);
SUBJECT TO a reservation on the part of the Assignor (until the occurrence
of an Event of Default, as hereinafter defined) of a license to use the
Trademarks for the Assignor's own benefit, provided that such use does not
violate the terms of the Credit Agreement or any of the other Facility
Documents. The license so reserved shall terminate upon the occurrence of an
Event of Default.
This Assignment is being executed and delivered pursuant to the Credit
Agreement dated as of the date hereof (which, as the same may hereafter be
amended or supplemented from time to time, will be called, the "Credit
Agreement") between the Assignor, the Banks party thereto and the Agent. All
capitalized terms used in this Assignment and not defined shall have the
respective meanings ascribed to them in the Credit Agreement.
As used herein, the term "Liabilities" means all indebtedness, obligations
and liabilities of every kind and nature of the Assignor to any or all of the
Banks and the Agent under any or all of the Credit Agreement and the other
Facility Documents.
The assignment effected hereby shall be governed by Article 9 of the New
York Uniform Commercial Code. Upon the occurrence and during the continuance of
an Event of Default, the Assignee shall have the rights and remedies of a
secured party as set forth therein (including, without limitation, the right to
dispose of the Trademarks and to apply the proceeds of the disposition to
satisfy the Obligations) and otherwise available at law or in equity.
The Agent shall have no duties with respect to the Trademarks, other than
the duties of a secured party under the New York Uniform Commercial Code.
Without limiting the generality of the foregoing, the Agent shall have no duty
to prosecute any action for trademark infringement against any person.
The address of the Agent for purposes of this Assignment is:
The Chase Manhattan Bank (National Association)
1 Chase Manhattan Plaza
New York, New York 10081
<PAGE>
with a simultaneous copy to:
---------------------------
Chase National Corporate Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, New Jersey 07604
Attention: Mr. Peter M. Fitzsimmons
or such other address as the Agent may designate to the Assignor in writing from
time to time.
IN WITNESS WHEREOF, the Assignor has executed this Assignment as of this
____ day of April, 1996.
ATTEST/WITNESS: IVC INDUSTRIES, INC.
___________________________ By:________________________________
STATE OF _____________ :
: SS.:
COUNTY OF ____________ :
On this ____ day of April, 1996, before me, the undersigned, personally
appeared _____________________, the _________________________ of IVC Industries,
Inc., who, I am satisfied, is the person who signed the foregoing instrument,
and he or he did acknowledge that he or she signed and delivered the same in his
or her capacity as such officer, and that he or she was authorized to do so, and
that the foregoing instrument is the voluntary act and deed of such corporation,
made by virtue of the authority of its board of directors.
______________________________
Notary Public
-2-
<PAGE>
ANNEX I
-------
Registration or Date of Registration
Trademark Application Number or Application
- --------- ------------------ --------------------
Exhibit 10.8
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
GUARANTY
--------
REFERENCE IS HEREBY MADE to the Credit Agreement dated April 30, 1996 among
IVC Industries, Inc., a Delaware corporation (the "Borrower"), the Banks party
thereto, and The Chase Manhattan Bank (National Association), as Agent. (Such
credit agreement, as the same may hereafter be amended or supplemented from time
to time, will be called herein the "Credit Agreement"; provided however that the
consent of the Guarantor (as hereinafter defined) is required for certain
changes to the Credit Agreement, as provided in Section 5 hereof). All
capitalized terms used herein and not defined shall have the respective meanings
ascribed to them in the Credit Agreement.
WHEREAS, the Credit Agreement provides for (among other things) the Banks
to make Facility B Loans from time to time to the Borrower, the aggregate
principal amount of which at any time outstanding is not to exceed $6,500,000;
and
WHEREAS, the Facility B Loans of each Bank will be evidenced by a Facility
B Note of the Borrower in favor of such Bank (and the term "Facility B Notes" as
used herein will include not only the one or more Facility B Notes being
executed and delivered by the Borrower simultaneously with the execution and
delivery of the Credit Agreement, but also all Facility B Notes that the
Borrower may, in substitution or replacement thereof, hereafter execute and
deliver to one or more Banks, provided that the aggregate principal amount of
all Facility B Notes outstanding at any time does not exceed $6,500,000); and
WHEREAS, xxxxxxxxxxxxxxxxxxxxxx, a New Jersey corporation (the
"Guarantor"), expects to obtain substantial economic benefit from the Facility B
Loans to be made to the Borrower under the Credit Agreement; and
WHEREAS, the execution and delivery of this guaranty by the Guarantor is
required in order to induce the Banks and the Agent to enter into the Credit
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and to induce the Banks and the Agent to enter
into the Credit Agreement, the Guarantor hereby agrees with the Banks and the
Agent as follows:
1. The Guarantor hereby absolutely and unconditionally (except for the
condition set forth in Section 15 hereof) guarantees to the Banks and the
Agent the full and prompt payment, from time to time when the same shall
become due and payable (whether in installments, at stated maturity, upon
acceleration, upon mandatory prepayment, or otherwise), of all the
obligations of the Borrower under the Facility B Notes, including the
principal of and interest on each Facility B Note (collectively, the
"Obligations"). The liability of the Guarantor under this guaranty shall
expire on
<PAGE>
October 31, 1999, unless on or before such date a demand for payment shall have
been made by the Agent upon or after the occurrence of an Event of Default.
2. (a) The maximum amount of the liability of the Guarantor under this
guaranty for the aggregate principal amount of the Facility B Notes outstanding
from time to time (the "Maximum Principal Liability") shall initially be
$6,500,000. After the end of each Measuring Period (as hereinafter defined),
the Guarantor may (subject to the terms and conditions of this Section 2) change
the Maximum Principal Liability to an amount less than $6,500,000 that is equal
to the Sales Function Amount (as hereinafter defined) for the most recently
completed Measuring Period, by giving written notice of such change to the Agent
and the Borrower (the "Change Notice"); provided, however, that if such change
--------
in the Maximum Principal Liability is a reduction, such change shall not become
effective until 25 days after the Change Notice is given to the Agent; and
provided, further, that (in a case where such change is a reduction) if:
- -------- -------
(i) the aggregate outstanding principal balance of the Facility B Notes
exceeds the Maximum Principal Liability as so proposed to be reduced; and
(ii) the Borrower does not make payment to the Agent, within ten days after
the Guarantor gives the Change Notice, in respect of the Facility B Notes
in an amount sufficient to reduce the aggregate outstanding principal
balance of the Facility B Notes to the proposed reduced Maximum Principal
Liability;
then, within three business days after demand by the Agent, the Guarantor shall
pay such excess to the Agent for application to such reduction of the aggregate
outstanding principal balance of the Facility B Notes, and (absent the existence
of any Event of Default other than the Borrower's failure to pay such excess)
the Guarantor shall not be required to pay any more than such excess on account
of the Event of Default consisting of the Borrower's failure to pay such excess;
and provided further that if the Agent at any time makes a demand on the
-------- -------
Guarantor for payment in full of the Facility B Notes upon or after the
occurrence of an Event of Default, there shall thereafter be no reduction in the
Maximum Principal Liability until the Facility B Notes have been paid in full.
(b) If the Guarantor reduces the Maximum Principal Liability so as to
equal the Sales Function Amount for the most recently completed Measuring
Period, and if thereafter the Sales Function Amount for a subsequent
Measuring Period is greater than such reduced Maximum Principal Liability,
then the Guarantor shall promptly give a Change Notice that increases the
Maximum Principal Liability to the Sales Function Amount for such
subsequent Measuring Period.
(c) The term "Sales Function Amount" as to a Measuring Period means
(A) the excess (if any) of the Actual Purchases (as hereinafter defined)
for such Measuring Period; over the Benchmark (as hereinafter defined) for
such Measuring Period, multiplied by (B) the Applicable Percentage (as
-------------
hereinafter defined) with respect to such Measuring Period; less (C) the
----
amount of any open account past due balance owing by the Borrower,
International Vitamin Overseas Sales Corp. or Hall Laboratories, Ltd. to
the Guarantor in respect of the purchase of Product (as hereinafter
defined) that shall, as of the end of such Measuring Period, have remained
outstanding more than
2
<PAGE>
5 business days after xxxxxxx shall have notified the Borrower in writing
that such account is past due.
The term "Actual Purchases" for a Measuring Period means the dollar
amount of purchases actually made by the Borrower, Hall Laboratories, Ltd.
and International Vitamin Overseas Sales Corp. from the Guarantor during
such Measuring Period of goods and products of every kind whatsoever
("Product"); provided, however, that with respect only to the Measuring
-------- -------
Period for the 12 months ended April 30, 1997, "Actual Purchases" means
13/12ths of such dollar amount. Additionally, if the amount of Actual
Purchases during the Measuring Period ending April 30, 1997 exceeds
$23,300,000, then 50% of such excess shall be deemed to be Actual Purchases
for the Measuring Period ending October 31, 1997; and if the amount of
Actual Purchases during the Measuring Period ending October 31, 1997
exceeds $23,000,000, then 50% of such excess shall be deemed Actual
Purchases during the Measuring Period ending October 31, 1998.
The term "Measuring Period" means one of the periods of time set forth
below; and the term "Benchmark" for a Measuring Period means the dollar amount
set forth opposite such Measuring Period below; and the term "Applicable
Percentage" for a Measuring Period means the percentage set forth opposite such
Measuring Period below:
Measuring Period Benchmark Applicable Percentage
-----------------------------------------
(A)The 12-month period ending
April 30, 1997 $12,000,000 68.5%
(B)The 12-month period ending
October 31, 1997 $10,000,000 50%
(C)The 12-month period ending
April 30, 1998 $13,000,000 50%
(D)The 12-month period ending
October 31, 1998 $13,000,000 45%
(E)The 12-month period ending
April 30, 1999 $14,000,000 45%
By way of illustration, two examples of the foregoing are set forth on Exhibit A
hereto.
(d) Each Change Notice shall set forth the computation of the Sales
Function Amount for the most recently completed Measuring Period.
(e) Upon and after any demand by the Agent for payment in full of the
Facility B Notes upon or after the occurrence of an Event of Default, there
shall be no further reduction in the Maximum Principal Liability. Without
limiting the generality of the immediately preceding
3
<PAGE>
sentence, if a Change Notice shall have been given and the Agent demands payment
in full of the Facility B Notes before the effective date of the reduction
proposed in such Change Notice (which date shall be not less than 30 days after
such Change Notice is given), then the reduction proposed in such Change Notice
shall not take effect.
(f) No demand for payment by the Guarantor under this Guaranty may be made
unless an Event of Default shall have occurred. The Guarantor shall be
obligated to make payment hereunder immediately upon receipt of such a demand in
writing from the Agent, except that if the only Event of Default that shall have
occurred is one described in clauses (ii), (iii) or (iv) of Section 10.01(a) of
the Credit Agreement or clause (ii) of Section 10.01(c) of the Credit Agreement,
then the Guarantor shall not be obligated to make such payment unless such Event
of Default continues for 30 days after such demand is made.
(g) The Guarantor further agrees with the Agent and the Banks that the
Guarantor will not prior to the payment of the Facility B Notes in full refuse
to sell, or curtail, delay or condition its sales, to the Borrower of Product
under normal commercial terms and conditions, as long as (x) the Borrower meets
all normal commercial terms and conditions, including not being materially past
due in its payment obligations to the Guarantor for Product purchased and (y)
the Guarantor has not been required to make payment under this Guaranty.
3. The Guarantor agrees that, as among the Guarantor, the Agent and the
Banks, the Obligations may be declared to be due and payable for purposes of
this guaranty notwithstanding any stay, injunction or other prohibition which
may prevent, delay or vitiate any such declaration as against the Borrower and
that, in the event of any such declaration (or attempted declaration), such
Obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantor for purposes of this guaranty.
Similarly, if the Agent is legally precluded from making a demand on the
Guarantor under the Guaranty by reason of the automatic stay of the Federal
Bankruptcy Code or any other stay or injunction, the Guarantor shall be
obligated to make payment hereunder at any time as the Agent may elect on or
after the occurrence of an Event of Default, and such demand will be deemed to
have been given at such time without the necessity of an actual demand. The
Guarantor further guarantees that all payments made by the Borrower to the Agent
and the Banks of any Obligation will, when made, be final and agrees that if any
such payment is recovered from, or repaid by, the Agent or any Bank in whole or
in part in any bankruptcy, insolvency or similar proceeding instituted by or
against the Borrower, this guaranty shall continue to be fully applicable to
such Obligation to the same extent as though the payment so recovered or repaid
had never been originally made on such Obligation.
4. This is a guaranty of payment and not of collection only.
5. The Guarantor hereby consents that from time to time, without notice
to or further consent of any Guarantor, the payment, performance or observance
of any or all of the Obligations or any and all of the other obligations of the
Borrower under the Facility Documents may be waived or the time of payment or
performance thereof extended or accelerated, or renewed in whole or in part, or
the terms of the Facility Documents or any part thereof may be changed and any
collateral
4
<PAGE>
therefor may be exchanged, surrendered or otherwise dealt with as the Agent may
determine, and any of the acts mentioned in the Facility Documents may be done,
all without affecting the liability of the Guarantor hereunder; except that
------ ----
until such time as a demand is made by the Agent for payment under this guaranty
for payment in full of the Obligations, without the consent of the Guarantor
(which shall not be unreasonably withheld if the Agent requests such consent)
none of the provisions of the Credit Agreement or the other Facility Documents
as existing on the Closing Date (the "Closing Date Credit Agreement" and the
"Closing Date Facility Documents") may be affirmatively waived or modified by
the Agent and the Banks (whether the Required Banks or all the Banks, whichever
is necessary to effectuate such waiver or modification under Section 12.01 of
the Credit Agreement), if such waiver or modification would (x) constitute a
Restricted Change (as hereinafter defined) and (y) materially adversely affect
the Guarantor. No failure or delay on the part of the Agent and the Banks in
exercising any right or remedy shall operate as a waiver or modification of any
provision of the Closing Date Credit Agreement or other Closing Date Facility
Document. The Guarantor hereby waives presentment of any instrument, demand of
payment, protest and notice of non-payment or protest thereof or of any
exchange, sale, surrender or other handling or disposition of such collateral,
and any requirement that the Agent or any Bank exhaust any right, power or
remedy or proceed against the Borrower under the Facility Documents or against
any other person under any other guaranty of, or security for, any of the
Obligations. The Guarantor hereby further waives any defense whatsoever which
might constitute a defense available to, or discharge of, the Borrower or a
guarantor. As used herein, the term "Restricted Change" means:
(i) any change in the maturity of Facility B (including without
limitation the definition of Facility B Expiration Date, beyond the
possible extension already contemplated in the definition of Facility B
Expiration Date); provided, however, that the acceleration of such maturity
on or after the occurrence of an Event of Default shall not constitute a
Restricted Change;
(ii) any change in the time required for the payment of interest under
Facility B;
(iii) any increase in total amount of the Facility B Commitments
of all the Banks above $6,500,000;
(iv) any increase in the interest rate on Facility B above that
provided for in the Closing Date Credit Agreement; provided however that in
no event shall the determination by the Agent of the Money Market Rate
constitute a Restricted Change, nor shall the changes contemplated in the
definition of the term "Margin" in the Closing Date Credit Agreement
constitute a Restricted Change;
(v) any release of collateral for Facility B, unless such collateral
is already encumbered by a Lien in favor of the Guarantor to secure the
reimbursement of the Guarantor for any payment made by it under this
Guaranty;
5
<PAGE>
(vi) any release of any Subsidiary Guarantor from liability under its
Subsidiary Guaranty, unless such Subsidiary Guarantor is already
independently liable to the Guarantor to reimburse the Guarantor for any
payment made by the Guarantor under this Guaranty;
(vii) any increase or reduction in the total amount of the
Facility A Commitments of all the Banks; provided however that the
reasonable exercise by the Agent of its rights under the Credit Agreement
(for purposes of computing the Borrowing Base) to change the advance rate
as to Eligible Accounts and Eligible Inventory, and to revise the criteria
for eligibility of Eligible Accounts and Eligible Inventory, shall not
constitute a Restricted Change;
(viii) any shortening of the maturity of Facility A, other than an
acceleration of such maturity on or after the occurrence of an Event of
Default; and
(ix) any waiver or modification of Section 10.01(j) of the Closing
Date Credit Agreement.
6. This guaranty shall be a continuing guaranty, and (except as
otherwise provided in Section 5 hereof) any other guarantor and any other
party liable upon or in respect of any Obligation hereby guaranteed may be
released without affecting the liability of the Guarantor. The liability
of the Guarantor hereunder shall be and remain in effect irrespective of
the validity, regularity or enforceability of the Facility B Notes or any
of the other Facility Documents and irrespective of any present or future
law or order of any government (whether of right or in fact and whether the
Agent or any Bank shall have consented thereto) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any Obligation
or to vary the terms of payment.
7. Subject to Section 15 hereof, the Agent or any Bank may assign
its rights and powers hereunder, with all or any of the Obligations, and,
in the event of such assignment, the assignee hereof or of such rights and
powers, shall have the same rights and remedies as if originally named
herein.
8. Notice of acceptance of this guaranty and of the incurring of any
and all of the Obligations is hereby waived. This guaranty and all rights,
obligations and liabilities arising hereunder shall be governed by and
construed according to the laws of the State of New York. Unless the
context otherwise requires, all terms used herein which are defined in the
Uniform Commercial Code shall have the meanings therein stated.
9. The Guarantor agrees that, in addition to (and without limitation
of) any right of setoff, banker's lien or counterclaim the Agent or any
Bank may otherwise have, each of the Agent and each Bank shall be entitled,
at its option, to setoff and apply balances (general or special, time or
demand, provisional or final) held by it for account of such Guarantor at
any of its offices in dollars or in any other currency, against any amounts
owing hereunder that are not paid when due (regardless of whether such
balances are then due to such Guarantor), in which case it shall promptly
6
<PAGE>
notify such Guarantor thereof; provided however that any failure to give
such notice shall not affect the validity thereof.
10. No provision of this guaranty may be modified or waived without
the prior written consent of the Agent.
11. The Guarantor hereby expressly waives any and every right to a
trial by jury in any action on or related to this guaranty, the Obligations
or the enforcement of either or all of the same, and does further expressly
waive any and every right to interpose any counterclaim in any such action
or proceeding.
12. The Guarantor agrees to reimburse the Agent and the Banks on
demand for all reasonable costs, expenses, and charges (including, without
limitation, reasonable attorneys' fees) incurred by the Agent or the Banks
in connection with any enforcement of this guaranty.
13. The rights, powers and remedies granted to the Agent and the
Banks herein shall be cumulative and in addition to any rights, powers and
remedies to which the Agent and the Banks may be entitled either by
operation of law or pursuant to the Facility Documents or any other
document or instrument delivered or from time to time to be delivered to
the Agent or any Bank in connection with the Facility Documents.
14. The Guarantor acknowledges and agrees that any payments received
by the Agent or any Bank from the Borrower, and any amount recovered by the
Agent or any Bank from the Borrower or any other guarantor of the
obligations of the Borrower (including, without limitation, the
Obligations), and any amounts realized from any collateral for the
obligations of the Borrower (including, without limitation, the
Obligations), may be applied by the Agent or such Bank to obligations of
the Borrower other than the Obligations, with no resulting reduction in the
----- ----
liability of the Guarantor under this Guaranty; provided however that if
--------
the Borrower designates in writing to the Agent, contemporaneously with its
making of any payment to the Agent, that such payment is to be applied to
reduce the outstanding amount of the Obligations, and if no Default or
Event of Default exists at the time such payment is made, and if no Default
or Event of Default would result from such application of such payment,
then the Agent shall apply such payment so as to reduce the outstanding
amount of the Obligations.
15. It is a condition to the liability of the Guarantor under this
Guaranty and the Designated Party Subordination and Intercreditor Agreement
that Chase (as hereinafter defined) shall not sell assignments or
participations in the IVC Credit (as hereinafter defined) to such an extent
that Chase would own less than 50% of the aggregate IVC Credit. As used
herein, the term "Chase" means The Chase Manhattan Bank (National
Association) and also includes any entity that is a successor thereto
(including without limitation the bank resulting from the pending merger of
such Bank and Chemical Bank) and any entity that is (directly or
indirectly) wholly owned by the bank holding company that owns such Bank or
successor entity. The term "IVC Credit" means the outstanding credit
extended by the Agent and the Banks to the Borrower under the Credit
Agreement.
7
<PAGE>
16. Any notice, consent or other communication herein required or
permitted to be given shall be in writing and may be personally served or
sent by courier service or United States mail and shall be deemed to have
been given when delivered in person or by courier service, or three days
after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed). For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section) shall be as set forth below, or, as
to each party, at such other address as may be designated by such party in
a written notice to all of the other parties:
If to the Guarantor:
-------------------
xxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
-- With a simultaneous copy to:
---------------------------
xxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
If to the Agent or the Banks:
----------------------------
The Chase Manhattan Bank
(National Association), as Agent
New York Agency
4 Chase Metrotech Center
13th Floor
Brooklyn, NY 00245
-- With a simultaneous copy to:
---------------------------
Chase National Corporate Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, NJ 07604
Attention: Mr. Peter M. Fitzsimmons
8
<PAGE>
If to the Borrower:
------------------
IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. I. Alan Hirschfeld
-- With a simultaneous copy to:
---------------------------
IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. E. Joseph Edell
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be
duly executed by its proper officers this 30th day of April, 1996.
WITNESS: xxxxxxxxxxxxxxx
_________________________________ By:______________________________
Name:___________________________ Name: ________________________
Title:__________________________
9
<PAGE>
EXHIBIT A
Examples of computation of changes
in Maximum Principal Liability
------------------------------
1.* Assume the amount of Actual Purchases for the Measuring Period ending
April 30, 1997 is $20 million. The Benchmark for such Measuring Period is $12
million and the Aggregate Percentage for such Measuring Period is 68.5%. At and
after the end of such Measuring Period, the Guarantor may reduce the Maximum
Principal Liability to $5.48 million: $20 million less $12 million equals $8
----
million; multiplied by 68.5% equals $5.48 million.
---------- --
2.* Assume the amount of Actual Purchases for the Measuring Period ending
October 31, 1997 is $20 million. The Benchmark for such Measuring Period is $10
million, and the Applicable Percentage for such Measuring Period is 50%. At and
after the end of such Measuring Period, the Guarantor may change the Maximum
Principal Liability to $5 million: $20 million less $10 million equals $10
----
million; multiplied by 50% equals $5 million.
---------- --
* The above calculations assume that there are no overdue open
account balances referred to in Section 2(c) hereof.
10
Exhibit 10.9
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
GUARANTY REIMBURSEMENT AGREEMENT
--------------------------------
THIS AGREEMENT, dated this 30th day of April, 1996 by IVC INDUSTRIES, INC.,
a Delaware corporation ("IVC"), INTERNATIONAL VITAMIN OVERSEAS SALES CORP., a
New Jersey corporation ("IVOSC"), and HALL LABORATORIES, LTD., a corporation
organized under the laws of British Columbia ("Hall (Canada)", and collectively
with IVC and IVOSC, the "Obligors"), in favor of XXXXXXXXXXXXXXXXXXXXXX, a New
Jersey corporation ("xxxxx").
Preliminary Statement
---------------------
1. IVC is this day entering into a credit agreement dated the
date hereof (which will be called herein the "Credit Agreement")
among itself, the Banks party thereto (the "Banks") and The Chase
Manhattan Bank (National Association), as Agent (the "Agent").
2. IVOSC and Hall (Canada) are subsidiaries of IVC.
3. In order to induce the Banks and the Agent to enter into the
Credit Agreement, xxxxx this day executing and delivering (i) a
guaranty in favor of the Banks and the Agent of all of the
obligations of IVC under the Facility B Notes (as such term is
defined in the Credit Agreement) being executed and delivered by
IVC under the Credit Agreement (which guaranty will be called
herein the "xxxxx Guaranty"), and (ii) a Subordination and
Intercreditor Agreement among itself, the Obligors and the Agent
(the "Subordination and Intercreditor Agreement").
4. It is a condition precedent to the execution and delivery by
xxxxx of the xxxxx Guaranty and the Subordination and
Intercreditor Agreement that the Obligors enter into this
Agreement in favor of xxxxx.
NOW, THEREFORE, for ten dollars and other good and valuable consideration,
and in order to induce xxxxx to execute and deliver the xxxxx Guaranty and the
Subordination and Intercreditor Agreement, the Obligors hereby agree as follows.
1. Reimbursement Obligation. The Obligors hereby jointly and
------------------------
severally agree to pay to xxxxx, upon demand but subject to Section 6 hereof,
any and all amounts that shall hereafter be paid by xxxxx to the Banks and the
Agent under (x) the xxxxx Guaranty or (y) the Subordination and Intercreditor
Agreement, together with (z) interest on such amounts at the Default Rate
applicable to Facility A under the Closing Date Credit Agreement (as the term
<PAGE>
"Closing Date Credit Agreement" is defined in the xxxxx Guaranty) from the date
so paid by xxxxx until such amounts are reimbursed to xxxxx hereunder.
2. Obligations Absolute. The obligations of the Obligors under this
--------------------
Agreement shall be absolute and unconditional under any and all circumstances
and irrespective of the existence of any claim, counterclaim, setoff, defense or
other right which the Obligors (or any of them) may have at any time against
xxxx, the Agent or any Bank relating to the transaction contemplated by the xxxx
Guaranty, the Credit Agreement, the Other Facility Documents (as defined in the
Credit Agreement) or otherwise.
3. Payments. All payments required to be made under this Agreement
--------
shall be paid in United States dollars at the office of xxxxx at
xxxxxxxxxxxxxxxxxxxx, xxxxxx, xxx xxxxxx xxxxxxxxxx.
4. Collection Costs. In addition to all other amounts required to
----------------
be paid by the Obligors under this Agreement, the Obligors shall jointly and
severally pay to xxxxx all reasonable costs (including, without limitation, the
reasonable fees and disbursements of counsel for xxxxx) incurred by xxxxx in
enforcing this Agreement.
5. Security Agreements. To secure its obligations under this
-------------------
Agreement, each Obligor is this day executing and delivering in favor of xxxxx a
security agreement (each, an "Obligor Security Agreement") and IVC is executing
and delivering in favor of xxxxx a trademark collateral agreement (the "IVC
Trademark Assignment").
6. Subordination and Intercreditor Agreement. Notwithstanding
-----------------------------------------
anything to the contrary contained in this Agreement or any Obligor Security
Agreement or the IVC Trademark Assignment, this Agreement and the Obligor
Security Agreements and the Trademark Collateral Assignment, are subject to the
terms of the Subordination and Intercreditor Agreement, which defines (as
between xxxxx, on the one hand, and the Banks and the Agent, on the other hand)
the relative rights and priorities of xxxxx, the Banks and the Agent in respect
of the obligations of the Obligors to them (respectively) and the collateral
therefor.
7. Right of Inspection. For so long as the xxxxx Guaranty or the
-------------------
reimbursement obligation of the Obligors in respect thereof is outstanding, the
Obligors shall, at any reasonable time and from time to time, permit xxxxx (i)
to examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Obligors, all at the cost of the
Obligors, except that the Obligors shall not be obligated to bear the cost of
more than two such inspections in any 12-month period at their Oregon and
British Columbia facilities; and (ii) to discuss the affairs, finances and
accounts of the Obligors with any of their respective officers and directors and
IVC's independent accountants, provided however that in the case of any such
meeting with such accountants, such meeting shall be scheduled through IVC and
IVC is permitted to be present.
2
<PAGE>
8. Notices. Any notice, consent or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served or sent by courier service or United States mail and shall be deemed to
have been given when delivered in person or by courier service, or three days
after deposit in the United States mail (registered or certified, with postage
prepaid and properly addressed). For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Section) shall be as set forth below, or, as to each party, at such other
address as may be designated by such party in a written notice to the other
parties:
If to xxxxx:
-----------
xxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxx
Attention: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
With a simultaneous copy to:
---------------------------
xxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Attention: xxxxxxxxxxxxxxxxxxx
If to any Obligor:
-----------------
c/o IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. I. Alan Hirschfeld
With a simultaneous copy to:
IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. E. Joseph Edell
9. Writing Required. None of the provisions of this Agreement may
----------------
be changed or waived orally or by any course of dealing, but only by an
instrument in writing signed by the party to be charged therewith.
10. Complete Agreement. This Agreement and the other written
------------------
agreements referred to herein set forth in full the agreement and understanding
of the parties hereto with
3
<PAGE>
respect to the subject matter hereof and thereof, and they supersede and replace
any and all prior or contemporaneous understandings and agreements, whether
written or oral.
4
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Obligors
as of the day and year first above written.
IVC INDUSTRIES, INC.
By:/s/ I. Alan Hirschfeld
----------------------------------
Name: ___________________
Title:_____________________
INTERNATIONAL VITAMIN OVERSEAS SALES CORP.
By:/s/ Arthur S. Edell
-------------------------------------
Name: ___________________
Title:_____________________
HALL LABORATORIES, LTD.
By:/s/ Andrew M. Pinkowski
-----------------------------
Name: ___________________
Title:_____________________
5
Exhibit 10.10
________________________________________________________________________________
________________________________________________________________________________
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
By and Between
IVC INDUSTRIES, INC. and
INTERNATIONAL VITAMIN OVERSEAS SALES CORP.
and
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
Dated: As of April 30, 1996
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
THIS LETTER OF CREDIT REIMBURSEMENT AGREEMENT dated as of the 30th day
of April, 1996, is by and among IVC INDUSTRIES, INC. (formerly known as
International Vitamin Corporation), a Delaware corporation ("IVC"), having an
address at 500 Halls Mill Road, Freehold, New Jersey 07728, INTERNATIONAL
VITAMIN OVERSEAS SALES CORP., a New Jersey corporation ("IVOSC"), having an
address at 500 Halls Mill Road, Freehold, New Jersey 07728 (IVC and IVOSC are
hereinafter collectively referred to as the "Companies") and THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), a national banking association having an address at
4 Chase Metrotech Center, 8th Floor, Brooklyn, New York 11245, Attention:
Standby Letter of Credit Department (the "Bank").
WHEREAS, the New Jersey Economic Development Authority (the
"Authority") has issued $5,000,000.00 aggregate principal amount of New Jersey
Economic Development Authority Economic Development Bonds (International Vitamin
Corporation Project) Series 1995 (the "Bonds") pursuant to an Indenture of Trust
dated as of October 1, 1995 (the "Indenture") between First Fidelity Bank,
National Association (now known as First Union National Bank), as Trustee (the
"Trustee"), and the Authority; and
WHEREAS, the Companies have requested the Bank, as agent under the
Credit Agreement hereinafter described, to issue an irrevocable direct-pay
letter of credit in the form of Exhibit A hereto (such letter of credit, and any
letter of credit that the Bank may issue in substitution or replacement thereof,
being herein called the "Letter of Credit") for the account of IVC in an amount
not exceeding $5,106,850.00, of which the sum of $5,000,000.00 shall be in
respect of the principal of the Bonds, and the remainder shall be in respect of
up to 65 days' interest on the outstanding Bonds computed at the rate of twelve
percent (12.00%) per annum accrued on the outstanding Bonds on or prior to the
maturity (whether at the stated maturity date or upon redemption or acceleration
or otherwise) thereof; and
WHEREAS, IVC is entering into this Agreement in order to induce the
Bank to issue the Letter of Credit; and
WHEREAS, IVOSC is also entering into this Agreement as required by the
Indenture in order to induce the Bank to issue the Letter of Credit;
WHEREAS, the parties hereto intend (i) that the Letter of Credit
replace a letter of credit previously issued October 5, 1995
<PAGE>
by a different bank for the account of IVC in favor of the Trustee in respect of
the Bonds, and (ii) that the Letter of Credit constitute an "Alternate Credit
Facility" under the Indenture, and (iii) that this Agreement be deemed the
"Reimbursement Agreement" for the purpose of the Indenture.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Bank to issue the Letter of Credit, the Companies and the Bank hereby
agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01. In General. For all purposes of this Agreement, except as
----------
otherwise expressly provided herein:
(a) Accounting terms not otherwise defined herein shall have the
meanings assigned to them in accordance with accounting principles and practices
generally accepted in the United States of America ("GAAP"); and
(b) Each reference in this Agreement to a particular person shall be
deemed to include a reference to such person's successors and permitted assigns.
1.02. Specific Terms Defined. The following terms (including both
----------------------
the singulars and plurals thereof) shall have the meanings respectively assigned
to them directly or by reference below in this Section 1.02:
"A Drawing" shall mean a drawing under the Letter of Credit with
respect to a payment of principal on the Bonds.
"Affiliate" means with respect to the Companies (a) any Person
(including any Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with the Companies, or (b) any Person
or entity who is a director or officer of (i) the Companies, or (ii) any Person
described in clause (a) above. For purposes of this definition, control of an
entity shall mean the power, directly or indirectly (i) to vote five percent
(5%) or more of the securities having ordinary voting power for the election of
directors of such entity, or (ii) to
2
<PAGE>
direct or cause the direction of the management and policies of such entity
whether by contract or otherwise.
"Agreement" means this Letter of Credit and Reimbursement Agreement
(including all Schedules and Exhibits annexed hereto), as the same may be
amended, supplemented or modified from time to time.
"Authority" shall mean the New Jersey Economic Development Authority.
"B Drawing" shall mean a drawing under the Letter of Credit with
respect to a payment of interest on the Bonds.
"Bank" has the meaning set forth in the preamble.
"Banks" means the Banks party to the Credit Agreement.
"Bank Rate" shall mean the Prime Rate, plus two percent (2%) per
annum.
"Bond Agreement" shall mean that certain Bond Agreement dated as of
October 1, 1995, between the Authority and IVC relating to the Bonds.
"Bond Documents" shall mean the Indenture, the Bond Agreement and all
other documents delivered in connection with the Bonds.
"Bonds" shall have the meaning set forth in the preamble.
"Business Day" means any day of the year, other than a Saturday,
Sunday or legal holiday, on which banks located in the city in which the
principal office of the Trustee is located and in the city in which the
principal office of the Bank is located are not required or authorized to remain
closed.
"C Drawing" shall mean a drawing under the Letter of Credit with
respect to a tender of Bonds pursuant to the Indenture.
"Companies" has the meaning set forth in the preamble.
3
<PAGE>
"Credit Agreement" means the Credit Agreement dated the date hereof
among IVC, the Banks party thereto, and the Bank as agent (as the same may
hereafter be amended or supplemented from time to time).
"Date of Issuance" shall mean the date of issuance of the Letter of
Credit.
"Default Rate" means two percent (2%) per annum in excess of the Bank
Rate.
"Event of Default" has the meaning ascribed to such term in Section
6.01 of this Agreement.
"Facility Documents" has the meaning ascribed to such term in the
Credit Agreement.
"Indenture" shall mean the Trust Indenture dated as of October 1, 1995
between the Authority and the Trustee relating to the Bonds.
"Letter of Credit" shall have the meaning set forth in the preamble
hereto.
"Operating Account" shall mean a bank account of each or both of the
Companies required to be maintained with the Bank pursuant to this Agreement.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Project Facilities" has the meaning ascribed to such term in the
Indenture.
"Pledged Bonds" means any Bonds purchased with the proceeds of a C
Drawing under the Letter of Credit pursuant to the Indenture, which Bonds are
pledged by the Companies to the Bank hereunder.
4
<PAGE>
"Prime Rate" means that rate of interest from time to time announced
by the Bank at its principal office as its prime commercial lending rate.
"Related Documents" means, collectively, (a) this Agreement, (b) the
Letter of Credit; (c) the Bonds; (d) the Bond Documents; and (e) any other
document or instrument executed by either or both of the Companies for the
benefit of the Bank relating to any of the documents hereinbefore mentioned.
"Termination Date" shall mean the last day a drawing is available
under the Letter of Credit.
"Trustee" shall mean First Union National Bank (formerly known as
First Fidelity Bank, National Association), as trustee under the Indenture.
ARTICLE II
AGREEMENT OF THE BANK TO ISSUE THE LETTER OF CREDIT
---------------------------------------------------
2.01. Agreement of the Bank to Issue the Letter of Credit. Subject
---------------------------------------------------
to the terms and conditions of this Agreement, the Bank agrees to issue the
Letter of Credit simultaneously with the execution and delivery of this
Agreement.
2.02. Term of Letter of Credit. Subject to earlier termination in
------------------------
accordance with the terms of the Letter of Credit, the term of the Letter of
Credit shall terminate on May 15, 2003 (the "Letter of Credit Maturity Date").
ARTICLE III
REIMBURSEMENT OBLIGATIONS AND OTHER PAYMENTS
--------------------------------------------
3.01. Draws and Other Fees and Expenses Under the Letter of
-----------------------------------------------------
Credit. The Companies hereby agree to pay to the Bank:
- ------
(a) on or before the 20th day of each month, commencing with the month
of May, 1996, an amount necessary to accumulate in equal installments the amount
to be drawn under the Letter of Credit on the immediately succeeding date of any
"A Drawing";
(b) on or before the 20th day of each month, commencing with the month
of May, 1996, an amount equal to thirty (30) days
5
<PAGE>
interest at the rate of twelve percent (12%) per annum on the Stated Amount of
the Letter of Credit (as defined in the Letter of Credit), provided that on the
Business Day next succeeding each B Drawing, the Bank shall credit the Operating
Account in an amount equal to the difference between the amount paid by the
Companies to the Bank pursuant to this Section 3.01(b) and the amount of the B
Drawing;
(c) in the case of any drawing on the Letter of Credit (including an A
Drawing, a B Drawing or a C Drawing) that is not reimbursed out of funds
theretofore deposited with the Bank pursuant to subsection (a) and (b) of this
Section, the Companies shall on the same day such drawing is made reimburse the
Bank the amount of such drawing;
(d) on the Date of Issuance, an amount equal to the aggregate amount
due from the Companies pursuant to subparagraphs 3.01(a) and (b) above for one
month, which amount shall be held in reserve by the Bank, subject to the
Companies' performance of their obligations hereunder;
(e) on each date that any amount is drawn under the Letter of Credit
pursuant to any drawing referred to in clauses (a) or (b) herein above, a
drawing fee in the amount of $150.00 per each draw, subject to change based upon
any change in the Bank's standard fee schedule;
(f) upon each transfer of the Letter of Credit in accordance with its
terms a sum equal to $1,500.00;
(g) upon a termination of the Letter of Credit prior to the
Termination Date, an early termination fee in the amount of $5,000.00;
(h) upon demand, any and all reasonable expenses incurred by the Bank
in enforcing any rights under this Agreement and the other Related Documents;
and
(i) upon demand, any and all reasonable charges the Bank may make in
connection with drawings under the Letter of Credit and any and all reasonable
expenses which the Bank incurs relative to the Letter of Credit.
6
<PAGE>
3.02. Authorization to Reimburse Draws. The Companies hereby
--------------------------------
authorize the Bank to apply the amounts set forth in subparagraphs 3.01(a) and
(b) above to reimburse the Bank for any such drawings honored by the Bank and
made to the Trustee on the Letter of Credit and further acknowledge that the
Companies are paying said amounts set forth in subparagraphs 3.01(a) and (b)
above to the Bank for the purpose of reimbursing the Bank for drawings honored
on the Letter of Credit. To the extent not otherwise paid pursuant to paragraphs
3.01(a) and (b) above, the Companies shall reimburse the Bank for all amounts
drawn under the Letter of Credit for any reason, upon demand, and in no event
later than the same day on which the drawing on the Letter of Credit occurs.
3.03. Pledged Bonds. The Companies hereby pledge to the Bank, and
-------------
grant to the Bank a first priority lien and security interest in, the Pledged
Bonds. The Pledged Bonds shall be released from time to time as provided in the
Indenture. Until so released, the Pledged Bonds shall bear interest at the Bank
Rate.
3.04. Letter of Credit Fee. The Companies hereby covenant and
--------------------
agree to pay to the Bank a letter of credit fee with respect to the Letter of
Credit in the amount and at the times provided in the Credit Agreement.
3.05. Default Rate. Any amount not paid when due under this
------------
Article III shall bear interest from the date such payment is due at a per annum
rate equal to the Default Rate (as such term is defined in the Credit
Agreement).
3.06. Place of Payment; Automatic Debit. All payments by or on
---------------------------------
behalf of the Companies to the Bank hereunder shall be made on the date such
payment becomes due in lawful currency of the United States and in immediately
available funds at the Bank's office at 4 Chase Metrotech Center, 8th Floor,
Brooklyn, New York 11245, Attention: Standby Letter of Credit Department, or at
such other place as may be designated by the Bank by written notice to IVC.
Each Company agrees to maintain at the Bank the Operating Account and authorizes
the Bank to debit automatically such Operating Account (or any other deposit
account of such Company with the Bank) for the amounts due and owing as payment
under this Agreement. In the event the amount so charged shall create an
overdraft, the Companies agree to pay to the Bank any and
7
<PAGE>
all fees then in effect associated with overdrafts until the overdraft is paid
in full. During any time in which an overdraft is created and outstanding, this
Agreement shall be deemed to be in default (and shall bear interest at the
Default Rate) and the Bank shall not be required to honor any checks drawn on or
transfers from such deposit accounts. The creation of any overdrafts shall not
be deemed to be a payment hereunder or a waiver by the Bank of any Event of
Default hereunder and nothing herein shall obligate the Bank to create any such
overdraft. Any payment due on a day which is not a Business Day (as defined in
the Letter of Credit) shall be paid on the next succeeding Business Day.
3.07. Evidence of Debt. The Bank shall maintain in accordance with
----------------
its usual practice an account or accounts evidencing the indebtedness of the
Companies resulting from each drawing under the Letter of Credit, the amounts of
principal and interest payable and paid from time to time hereunder or other
reimbursable costs and expenses hereunder.
ARTICLE IV
OBLIGATIONS ABSOLUTE; INDEMNIFICATION
-------------------------------------
4.01. Absolute Obligations. The obligations of the Companies
--------------------
under this Agreement shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Companies (or either of them) may have or have had against the Bank or
any of the other Banks or any other Person, including, without limitation, any
defense based upon the failure of any drawing under the Letter of Credit to
conform to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such drawing.
4.02. Proper Drawing. The Bank may honor, as complying with the
--------------
terms of the Letter of Credit, any instrument or other document otherwise in
order signed or issued by a successor-in-interest under law, or legal
representative of, the party authorized under such Letter of Credit to draw or
issue such instruments or other documents.
4.03. Uniform Customs and Practice. The Uniform Customs and
----------------------------
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, shall be
8
<PAGE>
binding on the Companies and the Bank except to the extent otherwise agreed
herein.
4.04. Acceptance of Documents. The Bank shall be required to make
-----------------------
payment under the Letter of Credit only upon presentation of documents that
strictly conform to the terms of such Letter of Credit. The Bank may, however,
make payment under the Letter of Credit upon presentation of documents that
substantially conform to the terms of such Letter of Credit, and the Companies's
obligation to reimburse the Bank for amounts paid under the Letter of Credit
shall not be affected by insubstantial variations in any such documents from the
strict requirements of such Letter of Credit.
4.05. Acts of Beneficiaries of Letters of Credit. The Companies
------------------------------------------
assume all risks for the acts or omissions of the beneficiary of the Letter of
Credit relating to such Letter of Credit.
4.06. Disclaimer of Liability; Indemnification. (a) Except in
----------------------------------------
cases of gross negligence or willful misconduct, neither the Bank, nor the
Bank's correspondents, nor any of the other Banks shall be responsible for, or
incur any liability to anyone for: (1) failure to pay or to accept if such
failure is due to any applicable legal or regulatory restriction in force at the
time and place of presentment; (2) any matter respecting the documents relating
to the Letter of Credit, including without limitation: the validity,
sufficiency, or genuineness of such documents, even if such documents should in
fact prove to be in any or all respects invalid, insufficient, fraudulent, or
forged, failure of any draft to bear any reference or adequate reference to the
Letter of Credit, or failure of any person to note the amount of any draft on
the reverse of the Letter of Credit; or (3) errors, omissions, interruptions, or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
wireless, or otherwise, whether or not they be in cipher. In addition, neither
the Bank nor any of the other Banks shall be responsible for any error, neglect,
or default of any of the Bank's correspondents. None of the foregoing
occurrences shall affect, impair, or prevent the vesting of any of the Bank's
rights or powers hereunder.
(b) The Companies agree to hold the Bank, the other Banks and
the correspondents of any of them indemnified and
9
<PAGE>
harmless against any and all claims, loss, liability, damage or cost, including
reasonable counsel fees and allocated costs of internal counsel, arising from or
in connection with the Letter of Credit, including without limitation, any such
claim, liability, damage or cost arising out of any transfer, sale, delivery,
surrender or endorsement of any document at any time(s) held by the Bank or held
for its account by any correspondent, or arising out of any action for
injunctive or other judicial or administrative relief and affecting, directly or
indirectly, the Bank, or any of the other Banks or any of their correspondents
except for matters arising from gross negligence or willful misconduct of the
indemnified party.
4.07. Modifications to Letter of Credit. If, at the request of
---------------------------------
either Company, there is, with respect to the Letter of Credit, any extension of
the time for presentment of drafts, acceptances, or documents, any increases in
the amount thereof, or any other modification of the terms thereof, with or
without notice to others, this Agreement shall be binding upon the Companies
with regard to: such Letter of Credit as so modified; any drafts, acceptances,
documents, and property relating to or covered thereby; and any action taken by
the Bank or any of the Bank's correspondents in accordance with such extension,
increase, or other modification.
ARTICLE V
INSURANCE PROCEEDS
------------------
5.01. Application of Insurance Proceeds. In the event of any
---------------------------------
damage to or destruction of the Project Facilities by fire or other casualty,
the Bank shall consent to the application of insurance proceeds to the repair,
replacement or restoration of the Project Facilities, so long as (i) no Event of
Default occurs and is continuing and (ii) no redemption of the Bonds is required
to be made as a result of such damage or destruction. If an Event of Default
does occur and is continuing, or if such redemption is required to be made, such
proceeds shall (at the option of the Bank) be applied to the redemption of the
Bonds or to the payment of the obligations of IVC under this Agreement or the
Credit Agreement or to the repair, replacement or restoration of the Project
Facilities. If the Bank does consent to the application of insurance proceeds
to the repair, replacement or restoration of the Project Facilities, the
Companies shall undertake such repair,
10
<PAGE>
replacement or restoration promptly and with due diligence, and such proceeds
shall be disbursed to IVC, in accordance with the Bank's standard construction-
loan procedures, to pay or reimburse IVC for the cost of such repairs,
replacements or restoration; in the event such insurance proceeds are (in the
reasonable estimate of the Bank) insufficient to effect a complete repair,
replacement or restoration of the Project Facilities, the Companies shall (upon
the request of the Bank at any time) deposit in the Acquisition Fund (as defined
in the Indenture) an amount equal to such deficiency. The Companies hereby
assign to the Bank all their right to receive the proceeds of insurance covering
the Project Facilities and direct any insurer to pay all such proceeds directly
to the Bank and authorize the Bank to endorse in the name of the Companies any
draft for such proceeds.
ARTICLE VI
DEFAULTS AND REMEDIES
---------------------
6.01. Event of Default. As used in this Agreement, the term
----------------
"Event of Default" has the meaning ascribed to such term in the Credit
Agreement.
6.02. Remedies. Upon the occurrence and during the continuance of
--------
an Event of Default, the Bank may take one or more of the following remedial
steps:
(a) Exercise any or all remedies available to it under the
Credit Agreement and the other Facility Documents;
(b) Declare to be immediately due and payable all amounts owing
under this Agreement, whereupon the same shall become immediately due and
payable, without presentment, demand for payment, protest, notice of nonpayment
or protest, notice of dishonor or any other notice or demand whatsoever, all of
which are hereby expressly waived;
(c) Give notice to the Trustee pursuant to the Indenture
requesting the Trustee to declare the principal of the Bonds and all interest
accrued and unpaid to be due and payable;
(d) Pursue any and all remedies available to the Bank under the
Related Documents;
11
<PAGE>
(e) Take any action at law or in equity to collect from the
Companies the payments then due and thereafter to become due under this
Agreement or to enforce performance and observance of any obligation, agreement
or covenant of the Companies under this Agreement or the other Related
Documents;
(f) The Bank shall have the right immediately, and without
notice or other action, to set-off any money owed by the Bank in any capacity to
a Company against the liability of such Company to the Bank, and the Bank shall
be deemed to have exercised such right to set-off and to have made a charge
against any such money immediately upon the occurrence of such Event of Default,
even though the actual book entries may be made at some time subsequent thereto;
and
(g) Exercise any and all of either remedies legally available to
it.
6.03. No Remedy Exclusive. No remedy herein conferred or reserved
-------------------
to the Bank is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or any other Related
Document or Facility Document or now or hereafter existing at law or in equity
or by statute. No delay or omission to exercise any right or power accruing
upon any Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Bank to exercise any remedy reserved to it in this Article, it shall not be
necessary to give notice.
6.04. No Additional Waiver Implied by One Waiver. In the event
------------------------------------------
any agreement contained in any Related Document should be breached by any party
and thereafter such breach should be waived by any party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder .
ARTICLE VII
MISCELLANEOUS
-------------
12
<PAGE>
7.01. Addresses for Notices. Unless otherwise specifically
---------------------
provided herein, any notice, consent or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied or sent by courier service or United States mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or three days after deposit in the United States mail (registered
or certified, with postage prepaid and properly addressed); provided, however,
--------
that notices by the Companies (or either of them) to the Bank shall not be
effective until receipt; and provided further that the burden of providing
-------- -------
receipt of a telecopy shall not be met by a transmission report generated by the
sender's telecopy machine. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Section) shall be as set forth below, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties.
If to the Companies:
-------------------
IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. I. Alan Hirschfeld
If to the Bank:
--------------
The Chase Manhattan Bank (National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
with a simultaneous copy to:
---------------------------
Chase National Corporate Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, New Jersey 07604
Attention: Mr. Peter M. Fitzsimmons
7.02. Successors and Assigns. Whenever in this Agreement any of
----------------------
the parties hereto is referred to, such reference
13
<PAGE>
shall be deemed to include the successors and assigns of such party except that
the Companies shall not have the right to assign its rights or obligations
hereunder or any interest herein.
7.03. Survival. All covenants, agreements, representations and
--------
warranties made by the Companies herein or in any of the Related Documents or
any certificate or instrument contemplated hereby shall survive any independent
examination made by the Bank and the execution and delivery of this Agreement
and the Related Documents, and said certificates or instruments and shall
continue so long as any obligations are outstanding and unsatisfied, applicable
statute of limitations to the contrary notwithstanding.
7.04. New York Law Governs. This Agreement shall be construed in
--------------------
accordance with and governed by the laws of the State of New York.
7.05. Waivers in Writing. The waiver of any provisions of this
------------------
Agreement or any other Related Documents, or consent to any departure by the
Companies therefrom, shall in no event be effective unless the same shall be in
writing and signed by the Bank by an authorized person. Any such waiver shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Companies in any case shall entitle them to any other
further notice or demand in the same circumstances.
7.06. Amendments, Etc. No amendment, modification, termination or
----------------
waiver of any provision of this Agreement or any Related Document shall be
effective unless the same shall be in writing and signed by the parties hereto
and no waiver of any provision of this Agreement or any Related Document or
consent to any departure by a party therefrom shall in any event be effective
unless the same shall be in writing and signed by the other party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Companies in
any case shall entitle the Companies to any other further notices or demand in
similar or other circumstances.
7.07. Failure to Exercise Rights. Neither any failure nor any
--------------------------
delay on the part of the Bank in exercising any
14
<PAGE>
right, power or privilege hereunder or under any Related Document shall operate
as a waiver hereof or thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
7.08. Captions. The section headings contained herein are for
--------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
7.09. Severability. In the event any provision of this Agreement
------------
or any Related Document shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or thereof.
7.10. Advice of Counsel. The Companies hereby confirm actual and
-----------------
full knowledge and acceptance of the terms and provisions of the Related
Documents and this Agreement, as to all of which the Companies further
acknowledge that the Companies have received the advice of counsel.
7.11. Costs and Expenses. The Companies agree to pay on demand
------------------
(a) all reasonable costs and expenses of the Bank in connection with the
preparation, printing, execution, delivery and administration of this Agreement,
the Related Documents and the other instruments and documents to be delivered
hereunder (including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel and reasonable fees and costs of inspections with respect
thereto), and (b) all reasonable costs and expenses, if any, of the Bank in
connection with the enforcement against the Companies of this Agreement, the
Related Documents and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of legal
counsel with respect thereto).
7.12 WAIVER OF JURY TRIAL. AFTER CONSULTATION WITH COUNSEL,
--------------------
AND WITH KNOWLEDGE OF THE CONSEQUENCES, THE COMPANIES AND THE BANK HEREBY WAIVE
ALL RIGHTS TO DEMAND A JURY TRIAL AND AGREE THAT ALL SUITS WILL BE HEARD BY
JUDGE ONLY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers on the date first hereinabove
written.
15
<PAGE>
COMPANIES:
Attest: IVC INDUSTRIES, INC., a Delaware
corporation
By:/s/ Sheldon Drucker By:/s/ E. Joseph Edell
---------------------- -----------------------
Name: Name:
Title: Title:
Attest: INTERNATIONAL VITAMIN OVERSEAS SALES
CORP., a New Jersey corporation
By:/s/ Sheldon Drucker By:/s/ Arthur S.Edell
--------------------------- ---------------------------
Name: Name:
Title: Title:
BANK:
Witness: THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking
association
By:/s/ Jo Morrison
By:____________________________ --------------------------
Name: Name:
Title: Title:
16
<PAGE>
EXHIBIT A
IRREVOCABLE LETTER OF CREDIT
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
First Union National Bank (formerly
known as First Fidelity Bank,
National Association)
765 Broad Street
Newark, New Jersey 07102
Attn: Corporate Trust Department
Date: April ___, 1996
CREDIT NO. PC801162
Dear Sirs:
The Chase Manhattan Bank (National Association) (the "Bank"), at the
request and for the account of IVC Industries, Inc. (formerly known as
International Vitamin Corporation), a Delaware corporation ("Company"), hereby
establishes its Irrevocable Letter of Credit No. PC801162 in favor of First
Union National Bank (formerly known as First Fidelity Bank, National
Association) as Trustee ("Trustee") for the benefit of bondholders under the
Indenture of Trust, dated as of October 1, 1995 (the "Indenture"), between the
Trustee and the New Jersey Economic Development Authority (the "Issuer")
pursuant to which $5,000,000.00 in aggregate principal amount of the Issuer's
bonds designated "New Jersey Economic Development Authority Economic Development
Bonds (International Vitamin Corporation Project) Series 1995" (the "Bonds")
have been issued.
This credit is available by the Trustee's draft(s) at sight drawn on
the Bank and the certificates described and upon the terms and conditions set
forth below, up to an aggregate
<PAGE>
amount not exceeding $5,106,850.00 (hereinafter, as reduced and/or reinstated
from time to time, the "Stated Amount"), of which an amount not exceeding
$5,000,000.00 (the "Principal Component") may be drawn upon with respect to
payment of the purported unpaid principal amount of the outstanding Bonds and an
amount not exceeding $106,850.00 (the "Interest Component") may be drawn upon
with respect to payment of up to 65 days' interest on the Bonds accrued on the
Bonds (computed on the basis of an interest rate on the Bonds of 12% per annum
notwithstanding the actual rate payable from time to time on the Bonds) on or
prior to the maturity (whether at the stated maturity date or upon redemption or
acceleration or otherwise) thereof. This Letter of Credit shall be effective
immediately and shall expire on May 15, 2003 (the "Expiration Date"), unless
terminated earlier in accordance with the provisions hereof.
1. Funds under this Letter of Credit are available to you
against your sight draft(s) drawn on us, stating on their face: "Drawn under
The Chase Manhattan Bank (National Association) Irrevocable Letter of Credit
No. PC801162 and any of the following:
(A) if the drawing is being made with respect to any
payment of principal on the Bonds (an "A Drawing"), accompanied by a written
certificate signed by a purported Authorized Officer of the Trustee in the form
of Exhibit A attached hereto appropriately completed;
---------
(B) if the drawing is being made with respect to a payment
of interest on the Bonds (a "B Drawing"), accompanied by a written certificate
signed by a purported Authorized Officer of the Trustee in the form of Exhibit B
---------
attached hereto appropriately completed; and
(C) if the drawing is being made with respect to a tender
of Bonds (a "C Drawing"), accompanied by a written certificate signed by a
purported Authorized Officer of the Trustee in the form of Exhibit C attached
---------
hereto appropriately completed.
2. Presentation of such draft(s) and certificate(s) shall be
made at our office located at 4 Chase Metrotech Center, 8th Floor, Brooklyn, New
York 11245, Attention: Standby Letter
2
<PAGE>
of Credit Department, or at any office in the City and State of New York which
may be designated by us by a least five (5) business days' prior written notice
delivered to you at your office specified in Paragraph 9. Notwithstanding the
foregoing, such a sight draft(s) and such certificate(s) shall be presented to
our affiliate, Chase National Corporate Services, Inc., by means of facsimile to
(201) 288-8231, Attention: Mr. Peter M. Fitzsimmons (or such other facsimile
number as we may hereafter advise you in writing) accompanied by your
certification that the original documents, draft(s) and certificate(s) will be
delivered on the next succeeding business day to the Bank at the address set
forth in the preceding sentence. The date of receipt of the original documents,
draft(s) and certificate(s) will be deemed to be the date of actual presentment
under this Letter of Credit. We hereby agree that all drafts drawn under and in
compliance with the terms of this Letter of Credit will be duly honored by us
upon delivery of the draft(s) and certificate(s) as specified above, if
presented at such office on or before the Expiration Date hereof. If a drawing
is received by us hereunder at or prior to 11:00 A.M., New York time, on a
business day, and provided that such drawing and the documents presented in
connection therewith conform to the terms and conditions hereof, payment shall
be made to you of the amount specified, in immediately available funds, by no
later than 3:30 P.M., New York time, on the same business day. If a drawing is
received by us hereunder after 11:00 A.M., New York time, on a business day, and
provided that such drawing and the documents presented in connection therewith
conform to the terms and conditions hereof, payment shall be made to you of the
amount specified, in immediately available funds, by no later than 3:30 P.M.,
New York time, on the succeeding business day. Payments by the Bank under this
Letter of Credit will be made from the Bank's own funds. If requested by you in
your sight draft, payment under this Letter of Credit may be made by deposit of
immediately available funds into a designated account that you maintain with us.
As used herein "business day" shall mean any day of the year, other than a
Saturday, Sunday or legal holiday, on which banks located in the city in which
your principal offices are located and in the city in which the principal office
of the Bank is located are not required or authorized to remain closed.
3. Drawings hereunder honored by us shall not, in the
aggregate, exceed the Stated Amount, as the Stated Amount may
3
<PAGE>
have been reinstated by us as described in the succeeding paragraph 4. Each
drawing honored by the Bank hereunder shall pro tanto reduce the amount
--- -----
available under this Letter of Credit, which amount may be reinstated by us as
described in the succeeding paragraph 4. Notwithstanding the foregoing, any
amount drawn pursuant to an "A Drawing" shall not be subject to reinstatement.
4. After payment by us of a "B Drawing", the obligation of the
Bank to honor drawings under this Letter of Credit in respect of interest
accrued on Bonds outstanding under the Indenture will be reinstated to an amount
up to but not exceeding an amount equal to 65 days' interest on the outstanding
Principal Component (computed at the rate of 12% per annum) at 5:00 P.M. (New
York City time) on the fifteenth day following the honoring of such "B Drawing",
unless prior to such time the Trustee has received at its office specified in
Paragraph 9 written notice from the Bank to the effect that the Bank elects not
to reinstate such obligation because either (i) the Company has not paid to the
Bank all amounts (including interest, if any) due the Bank under the
Reimbursement Agreement in respect of such "B Drawing", or (ii) an Event of
Default (as defined in the Reimbursement Agreement) has occurred and is
continuing. After payment by us of a "C Drawing", the Principal Component and
the Interest Component shall be reinstated when and to the extent, but only when
and to the extent, that the Bank is reimbursed for any amount drawn hereunder by
a Drawing for principal or interest. Any reimbursement amounts from remarketed
Bonds shall be accompanied by a written certificate signed by a purported
Authorized Officer of the Trustee in the form of Exhibit D attached hereto
---------
appropriately completed.
5. Upon receipt by us of a certificate signed by a purported
Authorized Officer of the Trustee in the form of Exhibit E attached hereto
---------
appropriately completed, the Principal Component and the Interest Component
shall be permanently reduced by the respective amounts stated therein. Any
partial reduction of the Stated Amount relating to principal shall be in the
amount of any such "A Drawing". If the amount hereunder shall be so reduced, we
may require you to surrender this Letter of Credit to us on the tenth business
day after your receipt of notice from us and to accept on such date, in
substitution of this Letter of Credit, a substitute Irrevocable Letter of
Credit, dated such
4
<PAGE>
date, for an amount equal to the amount to which the amount available to be
drawn hereunder shall have been so reduced, but otherwise in a form and having
terms identical to this Letter of Credit.
6. Only you as Trustee may make a drawing under this Letter of
Credit. Upon the payment to you or to your account of the amount specified in a
sight draft drawn hereunder, we shall be fully discharged of our obligation
under this Letter of credit with respect to such sight draft and we shall not
thereafter be obligated to make any further payments under this Letter of Credit
in respect of such sight draft to you or any other person who may have made to
you or makes to you a demand for payment of principal of or interest on, any
Bond. The Bank makes no representation as to the correctness of the amount
demanded.
7. This Letter of Credit applies only to the payment of
principal of the Bonds and up to 65 days' interest accruing on the Bonds on or
prior to the maturity (whether at the stated maturity date or upon redemption or
acceleration or otherwise) of the Bonds and does not apply to any interest that
may accrue on Bonds after such maturity. Interest shall be calculated on the
basis of a 365/366 day year.
8. Upon the earliest of (i) the honoring by the Bank of the
final drawing available to be made hereunder, (ii) our receipt of a certificate
signed by your purported duly Authorized Officer and a purported duly authorized
officer of the Company stating that "(a) no Bonds remain Outstanding (as defined
in the Indenture) and (b) upon receipt by The Chase Manhattan Bank (National
Association) of this certificate, The Chase Manhattan Bank (National
Association) Irrevocable Letter of Credit No. PC801162 shall terminate"; (iii)
our receipt of a certificate signed by your purported duly authorized officer
and a purported duly authorized officer of the Company stating that: "(a) the
conditions precedent to the cancellation of The Chase Manhattan Bank (National
Association) Irrevocable Letter of Credit No. PC801162 set forth in Section 404
of the Indenture have been satisfied and an Alternate Letter of Credit (as
defined in the Indenture) has been accepted and (b) upon receipt by The Chase
Manhattan Bank (National Association) of this Certificate, The Chase Manhattan
Bank (National Association) Irrevocable Letter of Credit No. PC801162 shall
terminate"; and (v) the Expiration
5
<PAGE>
Date, this Letter of Credit shall automatically terminate and be delivered to
the Bank for cancellation.
9. This Letter of Credit is subject to the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, ICC Publication No. 500 (the
"Uniform Customs"). This Letter of Credit shall be deemed to be a contract made
under the laws of the State of New York and shall, as to matters not governed by
the Uniform Customs, be governed by and construed in accordance with the laws of
the State of New York including, without limitation, Article 5 of the Uniform
Commercial Code as in effect in the State of New York. Communications with
respect to this Letter of Credit shall be in writing and shall be addressed to
us at 4 Chase Metrotech Center, 8th Floor, Brooklyn, New York 11245, Attention:
Standby Letter of Credit Department (with a simultaneous copy to Chase National
Corporate Services, Inc., Heights Plaza, 777 Terrace Avenue, 3rd Floor,
Hasbrouck Heights, New Jersey 07604, Attention: Mr. Peter M. Fitzsimmons) (or
such other address as we may designate to you in writing), specifically
referring thereon to The Chase Manhattan Bank (National Association) Irrevocable
Letter of Credit No. PC801162 and shall be addressed to you at 765 Broad Street,
Routing #C76505, Newark, New Jersey 07102, specifically referring thereon to The
Chase Manhattan Bank (National Association) Irrevocable Letter of Credit No.
PC801162.
10. This Letter of Credit is transferable in its entirety (but
not in part) to any transferee who has purportedly succeeded to you as Trustee
under the Indenture and such transferred Letter of Credit may be successively
transferred. Transfer of the available drawing(s) under this Letter of Credit
to such transferee shall be effected upon the presentation to us of this Letter
of Credit accompanied by the transfer form in the form of Exhibit F attached
---------
hereto and payment of a transfer fee in the amount of $1,500 by the Company.
11. As used herein, "Authorized Officer" shall mean any of your
purported Vice Presidents, Assistant Vice Presidents, Corporate Trust Officers,
Assistant Corporate Trust Officers, Operations Officers or Assistant Operations
Officers.
12. This Letter of Credit sets forth in full our undertaking,
and such undertaking shall not in any way be
6
<PAGE>
modified, amended, amplified or limited by reference to any document, instrument
or agreement referred to herein (including, without limitation, the Bonds),
except only the certificate(s) and the sight draft(s) referred to herein; and
any such reference shall not be deemed to incorporate herein by reference any
document, instrument or agreement except for such certificate(s) and such sight
draft(s).
Very truly yours,
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)
By:
------------------------------------
7
<PAGE>
EXHIBIT A
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
CERTIFICATE FOR A DRAWING
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
$5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
Re: Irrevocable Letter of Credit No. PC801162
Dear Sirs:
The undersigned, an Authorized Officer of First Union National Bank
(formerly known as First Fidelity Bank, National Association), as Trustee (the
"Trustee") under an Indenture of Trust, dated as of October 1, 1995 by and
between the New Jersey Economic Development Authority and the Trustee, hereby
certifies to The Chase Manhattan Bank (National Association) (the "Bank") with
reference to the above-referenced Irrevocable Letter of Credit issued by the
Bank in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the
Bonds.
2. The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ with respect to the payment of
principal of the Bonds, which amount has or shall have become due and payable
pursuant to the Indenture, upon maturity or as a result of acceleration or
redemption of the Bonds. None of such Bonds is held of record by IVC
Industries, Inc. (formerly known as International Vitamin
<PAGE>
Corporation) (the "Company") or by the undersigned for the account of the
Company or the Bank.
3. The amount demanded hereby, together with the aggregate of
all prior payments made pursuant to "A Drawings" and the principal portion of
unreimbursed "C Drawings" under the above-referenced Letter of Credit, does not
exceed the Principal Component of the above-referenced Letter of Credit.
4. The amount demanded hereby does not exceed the amount
available on the date hereof to be drawn under the above-referenced Letter of
Credit in respect of the principal of the Bonds.
5. Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the payment when due
of the principal amount owing on account of the Bonds pursuant to the Indenture,
(b) no portion of said amount shall be applied by the undersigned for any other
purpose and (c) no portion of said amount shall be commingled with other funds
held by the undersigned.
As used herein, the terms "Authorized Officer", "Indenture", "Bonds",
"A Drawing", "C Drawing" and "Principal Component", shall have the respective
meanings assigned to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of __________, 19__.
FIRST UNION NATIONAL BANK, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
cc: IVC Industries, Inc.
<PAGE>
EXHIBIT B
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
CERTIFICATE FOR B DRAWING
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
Re: Irrevocable Letter of Credit No. PC801162
Dear Sirs:
The undersigned, an Authorized Officer of First Union National Bank
(formerly known as First Fidelity Bank, National Association), as Trustee (the
"Trustee") under an Indenture of Trust, dated as of October 1, 1995 by and
between the New Jersey Economic Development Authority and the Trustee, hereby
certifies to The Chase Manhattan Bank (National Association) (the "Bank") with
reference to the above-referenced Irrevocable Letter of Credit issued by the
Bank in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the
Bonds.
2. The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ with respect to the payment of
accrued interest on the Bonds, which amount has or shall have become due and
payable pursuant to the Indenture upon any Interest Payment Date, maturity or as
a result of acceleration or redemption of the Bonds. None of such Bonds is held
of record by IVC Industries, Inc. (formerly known as
<PAGE>
International Vitamin Corporation) (the "Company") or by the undersigned for the
account of the Company or the Bank.
3. The amount demanded hereby does not exceed the amount
available on the date hereof to be drawn under the above-referenced Letter of
Credit in respect of interest on the Bonds.
4. Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the payment when due
of the interest owing on account of the Bonds pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for any other purpose
and (c) no portion of said amount shall be commingled with other funds held by
the undersigned.
As used herein, the terms, "Authorized Officer", "Indenture",
"Interest Payment Date" and "Bonds", shall have the respective meanings assigned
to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of __________, 19__.
FIRST UNION NATIONAL BANK, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
cc: IVC Industries, Inc.
<PAGE>
EXHIBIT C
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
CERTIFICATE FOR C DRAWING
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
Re: Irrevocable Letter of Credit No. PC801162
Dear Sirs:
The undersigned, an Authorized Officer of First Union National Bank
(formerly known as First Fidelity Bank, National Association), as Trustee (the
"Trustee") under an Indenture of Trust, dated as of October 1, 1995 by and
between the New Jersey Economic Development Authority and the Trustee, hereby
certifies to The Chase Manhattan Bank (National Association) (the "Bank") with
reference to the above-referenced Irrevocable Letter of Credit issued by the
Bank in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the
Bonds.
2. The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ which is equal to the sum of (i)
$__________ with respect to the payment of unpaid principal and (ii) $__________
with respect to accrued and unpaid interest on the Bonds to be purchased as a
result of tender pursuant to the terms of the Indenture, other than Bonds or
portions thereof, presently held of record by IVC Industries, Inc. (formerly
known as International Vitamin Corporation) (the
<PAGE>
"Company") or by the undersigned for the account of the Company or the Bank.
3. The amount demanded hereby does not exceed the amount
available on the date hereof to be drawn under the above-referenced Letter of
Credit and was computed in compliance with the terms and conditions of the Bonds
and the Indenture.
4. Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the payment when due
of the principal and interest owing on account of the tendered Bonds pursuant to
the Indenture, (b) no portion of said amount shall be applied by the undersigned
for any other purpose and (c) no portion of said amount shall be commingled with
other funds held by the undersigned.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon the Bank's honoring of this drawing, the amounts available to be
drawn by the Trustee with respect to any subsequent redemption, tender or final
drawing shall be decreased accordingly, unless reinstated in accordance with the
terms and conditions of the Letter of Credit.
As used herein, the terms, "Authorized Officer", "Indenture", "Bonds"
and "C Drawing", shall have the respective meanings assigned to such terms in
the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of __________, 19__.
FIRST UNION NATIONAL BANK, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
cc: IVC Industries, Inc.
<PAGE>
EXHIBIT D
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
Re: Irrevocable Letter of Credit No. PC801162
Dear Sirs:
The undersigned, an Authorized Officer of First Union National Bank
(formerly known as First Fidelity Bank, National Association), as Trustee (the
"Trustee") under an Indenture of Trust, dated as of October 1, 1995 by and
between the New Jersey Economic Development Authority and the Trustee, hereby
certifies to The Chase Manhattan Bank (National Association) (the "Bank") with
reference to the above-referenced Irrevocable Letter of Credit issued by the
Bank in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the
Bonds.
2. The amount of $__________ paid to you today is a payment to
reimburse you for amounts drawn under the Letter of Credit as C Drawings.
As used herein, the terms, "Authorized Officer", "Indenture", "Bonds"
and "C Drawing" shall have the respective meanings assigned to such terms in the
above-referenced Letter of Credit.
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of __________, 19__.
FIRST UNION NATIONAL BANK, as Trustee
By:
------------------------------------
<PAGE>
EXHIBIT E
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
CERTIFICATE FOR THE PERMANENT REDUCTION
OF THE STATED AMOUNT
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The undersigned, a duly Authorized Officer of First Union National
Bank (formerly known as First Fidelity Bank, National Association) (the
"Trustee"), hereby certifies the following to The Chase Manhattan Bank (National
Association) (the "Bank") with reference to the Bank's Letter of Credit No.
PC801162 (the "Letter of Credit"). Any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit.
1. The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
2. The aggregate principal amount of the Bonds Outstanding (as
defined in the Indenture) has been reduced to $__________.
3. The Principal Component is hereby correspondingly reduced to
$__________.
4. The Interest Component is hereby reduced to $__________
[calculated by multiplying the amount in the last line of
paragraph 2 by _____% and multiplying the product thereof by
the quotient of 65 divided by 365], to reflect the amount of
interest allocable to the reduced amount of principal set
forth in paragraph 3 hereof.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of
the ______ day of __________, 19__.
<PAGE>
FIRST UNION NATIONAL BANK, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT F
---------
to Letter of Credit
-------------------
[Letterhead of Trustee]
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
5,000,000 ECONOMIC DEVELOPMENT BONDS
(INTERNATIONAL VITAMIN CORPORATION PROJECT) SERIES 1995
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
8th Floor
Brooklyn, New York 11245
Attention: Standby Letter of Credit Department
Re: Irrevocable Letter of Credit No. PC801162
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety. The transferee has succeeded the undersigned as Trustee
under the Trust Indenture (as described in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in such
Letter of Credit are transferred to the transferee and the transferee shall have
the sole rights as beneficiary thereof, including sole rights relating to any
amendments, whether increases or extensions or other amendments and whether now
existing or hereafter made. All amendments are to be advised direct to the
transferee with your customary notice of transfer.
<PAGE>
The Letter of Credit is returned to you herewith. We ask that you
effect this transfer of the Letter of Credit and, if so requested by the
transferee, you issue a new Letter of Credit in favor of the transferee with
provisions consistent with the Letter of Credit.
Yours very truly,
FIRST UNION NATIONAL BANK, as Trustee
SIGNATURE AUTHENTICATED
By:
- ----------------------------------- ------------------------------------
Name:
----------------------------------
Title:
---------------------------------
- -----------------------------------
(Authorized Signature)
Exhibit 10.11
Confidential information indicated by Xs has been omitted and filed separately
with the Securities and Exchange Commission.
SUBORDINATION AND INTERCREDITOR AGREEMENT
-----------------------------------------
THIS AGREEMENT, dated this 30th day of April, 1996, by
XXXXXXXXXXXXXXXXXXXXXX, a New Jersey corporation ("xxxxx"); THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), in its capacity as agent for the Banks party to the
Credit Agreement referred to below (the "Agent"); IVC INDUSTRIES, INC., a
Delaware corporation ("IVC"); INTERNATIONAL VITAMIN OVERSEAS SALES CORP., a New
Jersey corporation ("IVOSC"); and HALL LABORATORIES, LTD., a corporation
organized under the laws of British Columbia ("Hall (Canada)" and, collectively
with IVC and IVOSC, the "Obligors").
Preliminary Statement
---------------------
A. Reference is made to the Credit Agreement dated the date
hereof among IVC, the Banks party thereto, and The Chase Manhattan Bank
(National Association), as agent. (Such credit agreement, as the same may be
hereafter amended or supplemented from time to time, will be called herein the
"Credit Agreement"; provided however that the consent of xxxxx is required for
certain changes to the Credit Agreement, as provided in Section 5 of the xxxx
Guaranty hereinafter referred to). All capitalized terms used herein and not
defined shall have the respective meanings ascribed to them in the Credit
Agreement.
B. Any and all of the liabilities and obligations now or
hereafter owing by any or all of the Obligors to any or all of the Agent and the
Banks under the Credit Agreement or any of the other Facility Documents shall be
called herein the "Senior Debt". All security interests, collateral assignments
and other liens contemporaneously herewith or hereafter granted by any Obligor
to the Agent to secure any or all of the Senior Debt shall be called herein the
"Senior Liens".
C. xxxxx is this day executing and delivering to the Agent and
the Banks a guaranty (the "xxxxx Guaranty") of certain obligations of IVC to the
Agent and the Banks under the Credit Agreement. In turn, the Obligors are this
day executing and
<PAGE>
delivering to xxxxx a guaranty reimbursement agreement (the "Guaranty
Reimbursement Agreement"), pursuant to which the Obligors agree (among other
things) to reimburse and pay to xxxxx any and all amounts paid by xxxxx to the
Agent and the Banks under the xxxxx Guaranty. xxxxx may also extend or have
extended other credit to any or all of the Obligors. As used herein, the term
"Subordinated Debt" shall mean all current and future obligations of any or all
of the Obligors to xxxxx of any kind and nature whatsoever, except for trade
------ ---
credit extended by xxxxx to an Obligor for the purchase by such Obligor from
xxxxx of goods in the ordinary course of business on open account or as may be
evidenced by promissory notes ("Trade Credit"). Any and all security interests,
liens and collateral assignments heretofore, contemporaneously herewith or
hereafter granted by any or all of the Obligors to xxxx to secure any or all of
the Subordinated Debt or any other existing or future obligations or liabilities
of an Obligor to xxxx (including without limitation Trade Credit) shall be
called herein the "Subordinate Liens".
D. In order to induce the Agent and the Banks to enter into the
Credit Agreement, and in order to induce xxxxx to execute and deliver the xxxxx
Guaranty, the parties hereto are executing and delivering this Subordination
Agreement.
NOW, THEREFORE, for ten dollars ($10.00) and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto hereby agree as follows:
SECTION 1. Agreement to Subordinate. Each of xxxxx and each Obligor
------------------------
agrees that (i) the Subordinated Debt is and shall be subordinate, to the extent
and in the manner hereinafter set forth, in right of payment to the prior
payment in full of the Senior Debt, and (ii) the Subordinated Liens are and
shall be subordinate, to the fullest extent permitted by law to the Senior
Liens, notwithstanding the perfection, order of perfection or failure to perfect
any such security interest, collateral assignment or other lien, or the filing
or recording, order of filing or recording or failure to file or record this
Agreement or any instrument or other document in any filing or recording office
in any jurisdiction.
2
<PAGE>
SECTION 2. Restrictions on Payment of the Subordinated Debt. xxxxx
------------------------------------------------
will not ask, demand, sue for, take or receive, directly or indirectly, from any
Obligor in cash or other property, by set-off, by realizing upon collateral or
in any other manner, payment of any or all of the Subordinated Debt unless and
until the Senior Debt shall have been paid in full; provided, however, that
-------- -------
(a) xxxxx may commence a legal proceeding against any or
all of the Obligors to collect the Subordinated Debt or to realize
upon the Subordinate Liens following the payment by xxxxx of any
amount under the xxxx Guaranty, provided that xxxxx shall not commence
-------- ----
such proceeding until 90 days elapse after xxxxx has notified the
Agent in writing that such a payment has occurred and that xxxxx
intends to commence such a legal proceeding upon the expiration of
such 90 day period; and provided further that all amounts collected by
-------- -------
xxxxx from such legal proceeding shall be immediately paid by xxxxx to
the Agent for application to the payment or prepayment of the Senior
Debt until the Senior Debt shall have been paid in full; and
(b) unless and until the Agent has notified xxxxx in
writing that an Event of Default has occurred, xxxxx may collect
interest on the principal amount of Subordinated Debt of an Obligor at
a rate agreed to between Xxxxx and such Obligor, but in no event in
excess of the Default Rate applicable to Facility A under the Closing
Date Credit Agreement (as "Closing Date Credit Agreement" is defined
in the xxxxx Guaranty).
No Obligor will make any payment in respect of any of the Subordinated Debt, or
take any other action, in contravention of any of the provisions of this
Agreement.
SECTION 3. Additional Provisions Concerning Subordination. Each of
----------------------------------------------
xxxxx and each Obligor agrees as follows:
(a) In the event of any dissolution, winding up, liquidation,
arrangement or reorganization relating to any Obligor, whether in any
bankruptcy, insolvency, arrangement, reorganization or receivership proceedings
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities
3
<PAGE>
of an Obligor or otherwise, any payment or distribution of any kind (whether in
cash, securities or other property) which otherwise would be payable or
deliverable upon or with respect to the Subordinated Debt shall be paid or
delivered directly to the Agent for application (in the case of cash) to, or as
collateral (in the case of securities or other non-cash property) for, the
payment or prepayment of the Senior Debt until the Senior Debt shall have been
paid in full.
(b) In any proceeding referred to in subsection (a) of this
Section 3 commenced by or against an Obligor,
(i) the Agent may, and is hereby irrevocably authorized and
empowered (in its own name or in the name of xxxxx or
otherwise), but shall have no obligation, to, (A) demand,
sue for, collect and receive every payment or distribution
referred to in subsection (a) of this Section 3 and give
acquittance therefor, and (B) file claims and proofs of
claim in respect of the Subordinated Debt and take such
other action (including, without limitation, voting the
Subordinated Debt or enforcing any security interest or
other lien securing payment of the Subordinated Debt) as the
Agent may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the Agent
and the Banks hereunder; and
(ii) xxxxx will duly and promptly take such action as the
Agent may request (A) to collect the Subordinated Debt for
the account of the Agent and the Banks and to file
appropriate claims or proofs of claim with respect thereto,
(B) to execute and deliver to the Agent such powers of
attorney, assignments or other instruments as the Agent may
request in order to enable it to enforce any and all claims
with respect to, and any security interests and other liens
securing payment of, the Subordinated Debt, and (C) to
collect and receive any and all payments or distributions
which may be payable or deliverable upon or with respect to
the Subordinated Debt and apply them to (in the case of
cash), or as collateral for (in the case of
4
<PAGE>
securities or other non-cash property), the payment or
prepayment of the Senior Debt until the Senior Debt shall
have been paid in full.
(c) All payments or distributions upon or with respect to the
Subordinated Debt which are received by xxxxx contrary to the provisions of this
Agreement shall be received in trust for the benefit of the Agent and the Banks,
shall be segregated from other funds and property held by xxxxx and shall be
forthwith paid over to the Agent in the same form as so received (with any
necessary indorsement) to be applied (in the case of cash) to or held as
collateral (in the case of securities or other non-cash property) for the
payment or prepayment of the Senior Debt until the Senior Debt shall have been
paid in full.
(d) The Agent is hereby authorized to demand specific
performance of this Agreement at any time when xxxxx shall have failed to comply
with any of the provisions of this Agreement applicable to xxxxx whether or not
the Obligor shall have complied with any of the provisions hereof applicable to
the Obligor, and xxxxx hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to such remedy of
specific performance.
SECTION 4. Obligations of the Obligors Unconditional. Nothing
-----------------------------------------
contained in this Agreement is intended to or shall impair, as between any
Obligor and xxxxx, the obligation of such Obligor, which is absolute and
unconditional, to pay the Subordinated Debt of such Obligor as and when the same
shall become due and payable in accordance with its terms, or affect the
relative rights of Xxxxx and creditors of any Obligor other than holders of the
Senior Debt; nor shall anything herein prevent xxxxx from exercising all
remedies otherwise permitted under applicable law upon default in respect of the
Subordinated Debt, subject to the rights of holders of Senior Debt under the
foregoing provisions of this Agreement. The subordination provisions of this
Agreement are and are intended solely for the purpose of defining the rights of
xxxxx, on the one hand, and the holders of the Senior Debt, on the other hand.
SECTION 5. Further Assurances.
------------------
Each of xxxxx and each Obligor shall, at its expense and at any time
and from time to time, promptly execute and deliver all
5
<PAGE>
further instruments and other documents, and take all further action, that may
be necessary or, in the opinion of the Agent desirable, or that the Agent may
request, in order to protect any right or interest granted or purported to be
granted hereby or to enable the Agent or any Bank to exercise and enforce its
rights and remedies hereunder.
SECTION 6. Negative Covenants of xxxxx. So long as any of the Senior
---------------------------
Debt shall remain outstanding, xxxxx will not, without the prior written consent
of the Agent:
(a) sell, assign, pledge, encumber or otherwise dispose of the
Subordinated Debt or collateral securing the Subordinated Debt unless such sale,
assignment, pledge, encumbrance or disposition is made expressly subject to this
Agreement;
(b) permit the terms of any Subordinated Debt to be changed in such a
manner as to have a material adverse effect upon the rights or interests of the
Bank hereunder;
(c) subject to Section 2 hereof, realize upon, or otherwise exercise
any remedies with respect to, any collateral securing any Subordinated Debt; or
(d) commence, or join with any creditor other than the Agent and one
or more of the Banks in commencing, any proceeding referred to in Section 3(a)
hereof.
SECTION 7. Senior Debt Unconditional.
-------------------------
(a) All rights and interests of the Agent and the Banks hereunder,
and all agreements and obligations of Xxxxx and the Obligors hereunder, shall
remain in full force and effect irrespective of: (i) any lack of validity or
enforceability of any agreement or instrument relating to the Senior Debt, (ii)
any change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Senior Debt, or any other amendment or waiver of
or any consent to departure from any agreement or instrument relating to the
Senior Debt (but nothing in this clause shall impair any of the provisions of
Section 5 of the Xxxxx Guaranty), (iii) any exchange or release of, or non-
perfection of any lien on or security interest in, any collateral, or any
release or amendment or waiver of or consent to departure
6
<PAGE>
from any guaranty, for all or any of the Senior Debt (but nothing in this clause
shall impair any of the provisions of Section 5 of the Xxxxx Guaranty), or (iv)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, any Obligor in respect of the Senior Debt or xxxxx or any
Obligor in respect of this Agreement.
(b) This Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the Agent or any Bank upon
the insolvency, bankruptcy or reorganization of any Obligor or otherwise, all as
though such payment had not been made.
SECTION 8. Waivers. Each of xxxxx and each Obligor hereby waives (i)
-------
promptness and diligence as to the exercise by the Agent and each Bank of any of
its remedies in respect of the Senior Debt, (ii) notice of acceptance and notice
of the incurrence of any obligation by any Obligor, (iii) notice of any actions
taken by the Agent, any Bank or any Obligor under any agreement or instrument
relating to the Senior Debt; (iv) all other notices, demands and protests, and
all other formalities of every kind in connection with the enforcement of the
Senior Debt or of the obligations of xxxxx and the Obligors hereunder, the
omission of or delay in which, but for the provisions of this Section, might
constitute grounds for relieving xxxxx or any Obligor of its obligations
hereunder, and (v) any requirement that the Agent or any Bank protect, secure,
perfect or insure any security interest or other lien or any property subject
thereto or exhaust any right to take any action against any Obligor or any other
person or any collateral.
SECTION 9. Subrogation. No payment or distribution to the Agent or
-----------
any Bank pursuant to the provisions of this Agreement shall entitle xxxxx to
exercise any rights of subrogation in respect thereof until the Senior Debt
shall have been paid in full. Upon the payment in full of the Senior Debt, the
Agent and the Bank shall execute and deliver to Xxxxx such instruments as xxxxx
may reasonably request to confirm any common law right of subrogation of Xxxxx
with respect to payments made by it to the Agent and the Banks (it being
understood however that any right of subrogation of Xxxxx is subject to the
provisions of the xxxxx Guaranty, including without limitation Section 5 and 6
thereof); provided however that
7
<PAGE>
neither the Agent nor the Bank shall be required to incur any material cost or
liability in complying with such request.
SECTION 10. Insurance Proceeds and Condemnation Awards. In the event
------------------------------------------
the Agent (irrespective of whether or not it is required to do so) shall release
its right, title and interest in and to the proceeds under policies of insurance
on the collateral encumbered by the Senior Lien, and/or its right, title and
interest in and to any awards, or its right, title and interest in and to other
compensation made for any damages, losses or compensation for other rights by
reason of a taking in eminent domain, xxxxx shall automatically be deemed to
have released for such purpose all of its right, title and interest, if any, in
and to all such insurance proceeds or awards and xxxxx agrees that the balance
of such proceeds remaining shall be applied to the reduction of the Senior Debt
to the extent of the Senior Debt.
SECTION 11. Expenses. xxxxx and each Obligor agree, jointly and
--------
severally, to pay upon demand to the Agent the amount of any and all expenses,
including (without limitation) the reasonable fees and disbursements of counsel
for the Agent, which the Agent may incur in connection with the enforcement of
any rights or interests hereunder.
SECTION 12. Certain Rights of xxxxx to Compel Acceleration. (a)
----------------------------------------------
If an Event of Default under Section 10.01(j) of the Credit Agreement occurs,
xxxxx shall be entitled (on 15 days' advance written notice by xxxxx to the
Agent) to require the Agent and the Banks to accelerate the maturity of the
Facility B Notes, provided that xxxxx makes payment to the Agent of the
-------- ----
outstanding balance of the Facility B Notes immediately upon such acceleration.
(b) Neither the Agent nor any of the Banks shall have an
obligation to notify xxxxx of the occurrence of an Event of Default under
Section 10.01(j) of the Credit Agreement. The Borrower shall give xxxxx written
notice thereof within ten days after any such occurrence.
SECTION 13. Binding Effect on Banks. The Agent is entering into
-----------------------
this Agreement in its capacity as Agent for the Banks under the Credit
Agreement, and this Agreement shall inure to the benefit of and be binding upon
the Banks (including both the
8
<PAGE>
Bank(s) initially party to the Credit Agreement and Banks that become party to
the Credit Agreement after the Closing Date).
SECTION 14. Old Mortgage. xxxxx hereby agrees that any and all
------------
mortgages heretofore granted by IVC or Hidel Partners to xxxxx with respect to
any real estate currently owned by IVC or Hidel Partners in Freehold, New Jersey
are hereby terminated and cancelled. Upon the request of IVC or the Agent,
xxxxx shall execute and deliver to such requesting party a duly executed
discharge, in recordable form of each such mortgage.
SECTION 15. Limitation on Extent of Lien; Springing Lien. (a) The
--------------------------------------------
Obligors and xxxxx acknowledge and agree with each other that the security
interests evidenced by the UCC-1 financing statements being executed by them
contemporaneously herewith secure only the liabilities of the Obligors under the
Guaranty Reimbursement Agreement. If an Event of Default occurs, xxxxx shall be
entitled to require that such security interests be spread so as to secure, as
well, the Trade Credit; and to that end, each Obligor shall (within 10 days
after the date hereof) execute and deliver to xxxxx a security agreement and
such UCC-1 financing statements as xxxxx may request that expressly state that
they secure the Trade Credit (which shall be in substantially the same form as
the security agreement and UCC-1 financing statements being executed by each
Obligor in favor of xxxxx contemporaneously herewith), which shall be held by
xxxxx and not considered delivered unless and until an Event of Default occurs
and xxxxx notifies the Obligors that it considers the same to have been
delivered.
(b) xxxxx agrees that the security interest heretofore granted by any
Obligor or Hall Laboratories, Inc. ("Hall") to xxxxx are hereby amended such
that they shall hereafter secure only the obligations of the Obligors under the
Guaranty Reimbursement Agreement.
SECTION 16. Reporting Requirements. IVC shall deliver to Xxxxx all
----------------------
of the financial statements, certificates, reports, notices and other
information required to be provided to the Agent and the Banks under Section
7.08 of the Credit Agreement, at the times provided in such Section 7.08.
9
<PAGE>
SECTION 17. Notices. Any notice, consent or other communication
-------
herein required or permitted to be given shall be in writing and may be
personally served or sent by courier service or United States mail and shall be
deemed to have been given when delivered in person or by courier service, or
three days after deposit in the United States mail (registered or certified,
with postage prepaid and properly addressed). For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is delivered
as provided in this Section) shall be as set forth below, or, as to each party,
at such other address as may be designated by such party in a written notice to
all of the other parties:
If to xxxxx:
-----------
xxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxx xxxxxxxxxx
xxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxx
-- With a simultaneous copy to:
---------------------------
xxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxx xxxxxxxxxx
xxxxxxxxxx xxxxxxxxxxxxxxxxxxx
If to the Agent or the Banks:
----------------------------
The Chase Manhattan Bank
(National Association), as Agent
New York Agency
4 Chase Metrotech Center
13th Floor
Brooklyn, NY 11245
-- With a simultaneous copy to:
---------------------------
Chase National Corporate Services, Inc.
Heights Plaza
777 Terrace Avenue, 3rd Floor
Hasbrouck Heights, NJ 07604
Attention: Mr. Peter M. Fitzsimmons
10
<PAGE>
If to any of the Obligors:
-------------------------
c/o IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. I. Alan Hirschfeld
-- With a simultaneous copy to:
---------------------------
IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Attention: Mr. E. Joseph Edell
SECTION 18. Miscellaneous.
-------------
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the party against whom such
amendment is sought to be enforced, and no waiver of any provision of this
Agreement, and no consent to any departure therefrom, shall be effective unless
it is in writing and signed by the party against whom the same is sought to be
enforced, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided however
that in all events the Banks shall be bound by any such amendment, waiver or
consent signed by the Agent.
(b) No failure on the part of the Agent or any Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(c) This Agreement shall (i) be binding on xxxxx and the Obligors and
their respective successors and assigns, and (ii) inure to the benefit of the
Agent and the Banks and their successors, transferees and assigns.
(d) The term "Senior Debt" shall include (without limitation) (x) any
advances hereafter made by the Bank pursuant to the terms of the Credit
Agreement or any other Facility Document, and (y) interest accruing on the
principal comprising the Senior Debt after, as well as before, the commencement
of any bankruptcy
11
<PAGE>
or reorganization proceeding at the interest rate specified in the Credit
Agreement or other Facility Document.
(e) This Agreement shall be governed by and construed in accordance
with the law of the State of New York.
(f) This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized, as of the date first above written.
XXXXXXXXXXXXXXXXXXXXXX
By:___________________________
Name: _____________________
Title:_____________________
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), AS AGENT
By:/s/ Jo Morrison
---------------------------
Name: _____________________
Title:_____________________
IVC INDUSTRIES, INC.
By:/s/ I. Alan Hirschfeld
---------------------------
Name: _____________________
Title:_____________________
12
<PAGE>
INTERNATIONAL VITAMIN OVERSEAS SALES CORP.
By:/s/ Arthur S. Edell
---------------------------
Name: _____________________
Title:_____________________
HALL LABORATORIES, LTD.
By:/s/ Andrew M. Pinkowski
----------------------------
Name: _____________________
Title:_____________________
13
Exhibit 10.12
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
SECURITY AGREEMENT
------------------
THIS AGREEMENT, dated as of the 30th day of April, 1996, is made by
IVC INDUSTRIES, INC., a Delaware corporation (the "Grantor"), in favor of
XXXXXXXXXXXXXXXXXXXXXX, a New Jersey corporation (the "Secured Party").
Preliminary Statement
---------------------
A. Contemporaneously herewith, the Grantor is executing and
delivering to the Secured Party a certain Guaranty Reimbursement Agreement dated
the date hereof from itself, International Vitamin Overseas Sales Corp. (the
"IVOSC") and Hall Laboratories, Ltd. ("Hall (Canada)") in favor of the Secured
Party (the "Guaranty Reimbursement Agreement"). Pursuant to the Guaranty
Reimbursement Agreement, the Debtor has agreed to reimburse and pay to the
Secured Party (among other things) any and all amounts that may be paid by the
Secured Party to the Banks and the Agent (as defined therein) under a certain
guaranty being executed and delivered by the Secured Party in favor of the Banks
and the Agent. Such guaranty guarantees certain indebtedness of the Debtor to
the Banks and the Agent.
B. The execution and delivery of this Agreement is required in order
to induce the Secured Party to execute and deliver such guaranty.
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and in order to induce the
Secured Party to execute and deliver the aforesaid guaranty, the Grantor hereby
agrees as follows:
As used in this Agreement, the term "Liabilities" shall mean all
indebtedness, obligations and liabilities of every kind and nature of the
Grantor to the Secured Party under the Guaranty Reimbursement Agreement. The
term "Security" shall mean all personal property and fixtures of the Grantor,
whether now or hereafter existing or now owned or hereafter acquired and
wherever located, of every kind and description, tangible or intangible,
including, but not limited to, all money, goods (including equipment, farm
products and inventory), instruments, securities, documents, chattel paper,
accounts, contract rights, general intangibles, credits, claims, demands,
precious metals and any other property, rights and interests of the Grantor, and
shall include the proceeds, products and accessions of and to any thereof. The
term "Reimbursement Default" means a default on the part of the Debtor in paying
when due any amount required to be paid to the Secured Party under the Guaranty
Reimbursement Agreement.
As security for the payment of all the Liabilities, the Grantor hereby
grants to the Secured Party a security interest in and a general lien upon the
Security.
<PAGE>
At any time and from time to time, upon the demand of the Secured
Party, the Grantor will: (1) deliver and pledge to the Secured Party, indorsed
and/or accompanied by such instruments of assignment and transfer in such form
and substance as the Secured Party may request, any and all instruments,
documents and/or chattel paper comprising the Security as the Secured Party may
specify in its demand; (2) give, execute, deliver, file and/or record any
notice, statement, instrument, document, agreement or other papers that may be
necessary or desirable, or that the Secured Party may request, in order to
create, preserve, perfect, or validate any security interest granted pursuant
hereto or to enable the Secured Party to exercise and enforce its rights
hereunder or with respect to such security interest; (3) keep and stamp or
otherwise mark any and all documents and chattel paper and its individual books
and records relating to inventory, accounts and contract rights in such manner
as the Secured Party may require; and (4) permit representatives of the Secured
Party at any time during business hours to inspect its inventory and to inspect
and make abstracts from the Grantor's books and records pertaining to inventory,
accounts, contract rights, chattel paper, instruments and documents. The right
is expressly granted to the Secured Party, at its discretion, to file one or
more financing statements under the Uniform Commercial Code naming the Grantor
as debtor and the Secured Party as secured party and indicating therein the
types or describing the items of Security herein specified. A photographic or
other reproduction of this agreement shall be sufficient as a financing
statement. With respect to the Security, or any part thereof, which at any time
shall come into the possession or custody or under the control of the Secured
Party or any of their agents, associates or correspondents, for any purpose, the
right is expressly granted to the Secured Party, at its discretion, to transfer
to or register in the name of itself or its nominee any of the Security; to
exchange any of the Security for other property upon any reorganization,
recapitalization or other readjustment and in connection therewith to deposit
any of the Security with any committee or depositary upon such terms as it may
determine; if a Reimbursement Default exists, to notify any account debtor or
obligor on an instrument to make payment to the Secured Party; and to exercise
or cause its nominee to exercise all or any powers with respect to the Security
with the same force and effect as an absolute owner thereof; all without notice
(except such notice as may be required by applicable law and cannot be waived)
and without liability except to account for property actually received by it.
Without limiting the generality of the foregoing, payments, distributions and/or
dividends (other than ordinary cash dividends paid prior to the occurrence of a
Reimbursement Default) in securities, property or cash, including without
limitation dividends representing stock or liquidating dividends or a
distribution or return of capital upon or in respect of the Security or any part
thereof or resulting from any split-up, revision or reclassification of the
Security or any part thereof or received in exchange for the Security or any
part thereof as a result of a merger, consolidation or otherwise, shall (unless
required to be paid to the Agent) be paid directly to and retained by the
Secured Party and held by it until applied as herein provided, as additional
collateral security pledged under and subject to the terms hereof. The Secured
Party shall be deemed to have possession of any of the Security in transit to or
set apart for it or any of its agents, associates, or correspondents.
The Secured Party at its discretion may, if a Reimbursement Default
exists, in its name or in the name of the Grantor or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Security, but shall be under
2
<PAGE>
no obligation to do so, or the Secured Party may extend the time of payment,
arrange for payment in installments, or otherwise modify the terms of, or
release, any of the Security, without thereby incurring responsibility to, or
discharging or otherwise affecting any liability of, the Grantor. The Secured
Party shall not be required to take any steps necessary to preserve any rights
against prior parties to any of the Security. If a Reimbursement Default
exists, the Secured Party may use or operate any of the Security for the purpose
of preserving the Security or its value in the manner and to the extent the
Secured Party reasonably deems appropriate, but the Secured Party shall be under
no obligation to do so. Upon the occurrence and during the continuance of a
Reimbursement Default, the Grantor shall, at the request of the Secured Party,
assemble the Security at such place or places as the Secured Party designates in
its request, and, to the extent permitted by applicable law, the Secured Party
shall have the right, with or without legal process and with or without prior
notice or demand, to take possession of the Security or any part thereof and to
enter any premises for the purpose of taking possession thereof. The Secured
Party shall have the rights and remedies with respect to the Security of a
secured party under the Uniform Commercial Code (whether or not such Code is in
effect in the jurisdiction where the rights and remedies are asserted). In
addition, with respect to the Security, or any part thereof, which shall then be
or shall thereafter come into the possession or custody of the Secured Party or
any of its agents, associates or correspondents, the Secured Party may sell or
cause to be sold in the Borough of Manhattan, New York City, or elsewhere, in
one or more sales or parcels, at such price as the Secured Party may deem best,
and for cash or on credit or for future delivery, without assumption of any
credit risk, all or any of the Security, at any broker's board or at public or
private sale, in any reasonable manner permissible under the Uniform Commercial
Code (except that, to the extent permitted thereunder, the Grantor hereby waives
the requirements of said Code), and the Secured Party or anyone else may be the
purchaser of any or all of the Security so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
equity of redemption, of the Grantor, any such demand, notice or right and
equity being hereby expressly waived and released. The Grantor will pay to the
Secured Party all reasonable expenses (including reasonable attorneys' fees and
expenses) of, or incidental to, the enforcement of any of the provisions hereof
or of any of the Liabilities, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement of any of the Security or
receipt of the proceeds thereof, and for the care of the Security and defending
or asserting the rights and claims of the Secured Party in respect thereof, by
litigation or otherwise, including expense of insurance; and all such expenses
shall be indebtedness within the terms of this agreement. The Secured Party
shall apply the net cash receipts from the Security to the payment of the
Liabilities, in such order and priority as the Secured Party may elect.
Notwithstanding that the Secured Party, whether in its own behalf and/or in
behalf of another or others, may continue to hold Security and regardless of the
value thereof, the Grantor shall be and remain liable for the payment in full,
principal and interest, of any balance of the Liabilities and expenses at any
time unpaid.
No delay on the part of the Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. The rights, remedies and
benefits herein expressly specified are cumulative and not exclusive of any
rights, remedies or benefits which the Secured Party may otherwise have. The
Grantor hereby waive(s)
3
<PAGE>
presentment, notice of dishonor and protest of all instruments included in or
evidencing the Liabilities or the Security and any and all other notices and
demands whatsoever, whether or not relating to such instruments.
No provision hereof shall be modified or limited except by a written
instrument executed by the party sought to be charged therewith, expressly
referring hereto and to the provision so modified or limited. This agreement
shall be binding upon the Grantor and its successors and assigns, and shall
inure to the benefit of the Secured Party and its successors and assigns, shall
constitute a continuing agreement, applying to all future as well as existing
transactions, whether or not of the character contemplated at the date of this
agreement; and shall be governed by and construed according to the laws of the
State of New York. Unless the context otherwise requires, all terms used herein
which are defined in the New York Uniform Commercial Code shall have the
meanings therein stated.
The Debtor agrees that it will not after the date hereof grant any security
interest in any of the Security to any other creditor without the written
consent of the Secured Party (which shall not be unreasonably withheld), except
for (i) purchase money security interests as to the acquisition of equipment;
(ii) security interests that refinance and replace other security interests
encumbering the same Security, provided that the amount of any security interest
so granted does not exceed the then-outstanding amount secured by the security
interest so refinanced; and (iii) other security interests ("basket security
interests") that secure an amount not in excess of $500,000 in the aggregate as
to all such basket security interests of the Debtor, IVOSC and Hall (Canada).
The security interest and lien granted hereby are subject and subordinate
to the security interest and lien granted to the Agent pursuant to the security
agreement dated the date hereof from the Debtor in favor of the Agent.
IVC INDUSTRIES, INC.
By:/s/ I. Alan Hirschfeld
--------------------------------------
Name:
Title:
4
Exhibit 10.13
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
SECURITY AGREEMENT
------------------
THIS AGREEMENT, dated as of the 30th day of April, 1996, is made by
INTERNATIONAL VITAMIN OVERSEAS SALES CORP., a New Jersey corporation (the
"Grantor"), in favor of XXXXXXXXXXXXXXXXXXXXXX, a New Jersey corporation (the
"Secured Party").
Preliminary Statement
---------------------
A. Contemporaneously herewith, the Grantor is executing and
delivering to the Secured Party a certain Guaranty Reimbursement Agreement dated
the date hereof from itself, IVC Industries, Inc. ("IVC") and Hall Laboratories,
Ltd. in favor of the Secured Party (the "Guaranty Reimbursement Agreement").
Pursuant to the Guaranty Reimbursement Agreement, the Debtor has agreed to
reimburse and pay to the Secured Party (among other things) any and all amounts
that may be paid by the Secured Party to the Banks and the Agent (as defined
therein) under a certain guaranty being executed and delivered by the Secured
Party in favor of the Banks and the Agent. Such guaranty guarantees certain
indebtedness of IVC to the Banks and the Agent, for the payment of which the
Debtor is also fully liable.
B. The execution and delivery of this Agreement is required in order
to induce the Secured Party to execute and deliver such guaranty.
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and in order to induce the
Secured Party to execute and deliver the aforesaid guaranty, the Grantor hereby
agrees as follows:
As used in this Agreement, the term "Liabilities" shall mean all
indebtedness, obligations and liabilities of every kind and nature of the
Grantor to the Secured Party under the Guaranty Reimbursement Agreement. The
term "Security" shall mean all personal property and fixtures of the Grantor,
whether now or hereafter existing or now owned or hereafter acquired and
wherever located, of every kind and description, tangible or intangible,
including, but not limited to, all money, goods (including equipment, farm
products and inventory), instruments, securities, documents, chattel paper,
accounts, contract rights, general intangibles, credits, claims, demands,
precious metals and any other property, rights and interests of the Grantor, and
shall include the proceeds, products and accessions of and to any thereof. The
term "Reimbursement Default" means a default on the part of the Debtor in paying
when due any amount required to be paid to the Secured Party under the Guaranty
Reimbursement Agreement.
As security for the payment of all the Liabilities, the Grantor hereby
grants to the Secured Party a security interest in and a general lien upon the
Security.
<PAGE>
At any time and from time to time, upon the demand of the Secured
Party, the Grantor will: (1) deliver and pledge to the Secured Party, indorsed
and/or accompanied by such instruments of assignment and transfer in such form
and substance as the Secured Party may request, any and all instruments,
documents and/or chattel paper comprising the Security as the Secured Party may
specify in its demand; (2) give, execute, deliver, file and/or record any
notice, statement, instrument, document, agreement or other papers that may be
necessary or desirable, or that the Secured Party may request, in order to
create, preserve, perfect, or validate any security interest granted pursuant
hereto or to enable the Secured Party to exercise and enforce its rights
hereunder or with respect to such security interest; (3) keep and stamp or
otherwise mark any and all documents and chattel paper and its individual books
and records relating to inventory, accounts and contract rights in such manner
as the Secured Party may require; and (4) permit representatives of the Secured
Party at any time during business hours to inspect its inventory and to inspect
and make abstracts from the Grantor's books and records pertaining to inventory,
accounts, contract rights, chattel paper, instruments and documents. The right
is expressly granted to the Secured Party, at its discretion, to file one or
more financing statements under the Uniform Commercial Code naming the Grantor
as debtor and the Secured Party as secured party and indicating therein the
types or describing the items of Security herein specified. A photographic or
other reproduction of this agreement shall be sufficient as a financing
statement. With respect to the Security, or any part thereof, which at any time
shall come into the possession or custody or under the control of the Secured
Party or any of their agents, associates or correspondents, for any purpose, the
right is expressly granted to the Secured Party, at its discretion, to transfer
to or register in the name of itself or its nominee any of the Security; to
exchange any of the Security for other property upon any reorganization,
recapitalization or other readjustment and in connection therewith to deposit
any of the Security with any committee or depositary upon such terms as it may
determine; if a Reimbursement Default exists, to notify any account debtor or
obligor on an instrument to make payment to the Secured Party; and to exercise
or cause its nominee to exercise all or any powers with respect to the Security
with the same force and effect as an absolute owner thereof; all without notice
(except such notice as may be required by applicable law and cannot be waived)
and without liability except to account for property actually received by it.
Without limiting the generality of the foregoing, payments, distributions and/or
dividends (other than ordinary cash dividends paid prior to the occurrence of a
Reimbursement Default) in securities, property or cash, including without
limitation dividends representing stock or liquidating dividends or a
distribution or return of capital upon or in respect of the Security or any part
thereof or resulting from any split-up, revision or reclassification of the
Security or any part thereof or received in exchange for the Security or any
part thereof as a result of a merger, consolidation or otherwise, shall (unless
required to be paid to the Agent) be paid directly to and retained by the
Secured Party and held by it until applied as herein provided, as additional
collateral security pledged under and subject to the terms hereof. The Secured
Party shall be deemed to have possession of any of the Security in transit to or
set apart for it or any of its agents, associates, or correspondents.
The Secured Party at its discretion may, if a Reimbursement Default
exists, in its name or in the name of the Grantor or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Security, but shall be under
2
<PAGE>
no obligation to do so, or the Secured Party may extend the time of payment,
arrange for payment in installments, or otherwise modify the terms of, or
release, any of the Security, without thereby incurring responsibility to, or
discharging or otherwise affecting any liability of, the Grantor. The Secured
Party shall not be required to take any steps necessary to preserve any rights
against prior parties to any of the Security. If a Reimbursement Default
exists, the Secured Party may use or operate any of the Security for the purpose
of preserving the Security or its value in the manner and to the extent the
Secured Party reasonably deems appropriate, but the Secured Party shall be under
no obligation to do so. Upon the occurrence and during the continuance of a
Reimbursement Default, the Grantor shall, at the request of the Secured Party,
assemble the Security at such place or places as the Secured Party designates in
its request, and, to the extent permitted by applicable law, the Secured Party
shall have the right, with or without legal process and with or without prior
notice or demand, to take possession of the Security or any part thereof and to
enter any premises for the purpose of taking possession thereof. The Secured
Party shall have the rights and remedies with respect to the Security of a
secured party under the Uniform Commercial Code (whether or not such Code is in
effect in the jurisdiction where the rights and remedies are asserted). In
addition, with respect to the Security, or any part thereof, which shall then be
or shall thereafter come into the possession or custody of the Secured Party or
any of its agents, associates or correspondents, the Secured Party may sell or
cause to be sold in the Borough of Manhattan, New York City, or elsewhere, in
one or more sales or parcels, at such price as the Secured Party may deem best,
and for cash or on credit or for future delivery, without assumption of any
credit risk, all or any of the Security, at any broker's board or at public or
private sale, in any reasonable manner permissible under the Uniform Commercial
Code (except that, to the extent permitted thereunder, the Grantor hereby waives
the requirements of said Code), and the Secured Party or anyone else may be the
purchaser of any or all of the Security so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
equity of redemption, of the Grantor, any such demand, notice or right and
equity being hereby expressly waived and released. The Grantor will pay to the
Secured Party all reasonable expenses (including reasonable attorneys' fees and
expenses) of, or incidental to, the enforcement of any of the provisions hereof
or of any of the Liabilities, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement of any of the Security or
receipt of the proceeds thereof, and for the care of the Security and defending
or asserting the rights and claims of the Secured Party in respect thereof, by
litigation or otherwise, including expense of insurance; and all such expenses
shall be indebtedness within the terms of this agreement. The Secured Party
shall apply the net cash receipts from the Security to the payment of the
Liabilities, in such order and priority as the Secured Party may elect.
Notwithstanding that the Secured Party, whether in its own behalf and/or in
behalf of another or others, may continue to hold Security and regardless of the
value thereof, the Grantor shall be and remain liable for the payment in full,
principal and interest, of any balance of the Liabilities and expenses at any
time unpaid.
No delay on the part of the Secured Party in exercising any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. The rights,
remedies and benefits herein expressly specified are cumulative and not
exclusive of any rights, remedies or benefits which the Secured Party may
otherwise have. The Grantor hereby
3
<PAGE>
waive(s) presentment, notice of dishonor and protest of all instruments included
in or evidencing the Liabilities or the Security and any and all other notices
and demands whatsoever, whether or not relating to such instruments.
No provision hereof shall be modified or limited except by a written
instrument executed by the party sought to be charged therewith, expressly
referring hereto and to the provision so modified or limited. This agreement
shall be binding upon the Grantor and its successors and assigns, and shall
inure to the benefit of the Secured Party and its successors and assigns, shall
constitute a continuing agreement, applying to all future as well as existing
transactions, whether or not of the character contemplated at the date of this
agreement; and shall be governed by and construed according to the laws of the
State of New York. Unless the context otherwise requires, all terms used herein
which are defined in the New York Uniform Commercial Code shall have the
meanings therein stated.
The Debtor agrees that it will not after the date hereof grant any
security interest in any of the Security to any creditor without the written
consent of the Secured Party (which shall not be unreasonably withheld), except
for (i) purchase money security interests as to the acquisition of equipment;
(ii) security interests that refinance and replace other security interests
encumbering the same Security, provided that the amount of any security interest
so granted does not exceed the then outstanding amount secured by the security
interest so refinanced; and (iii) other security interests ("basket security
interests") that secure an amount not in excess of $500,000 in the aggregate as
to all such basket security interests of the Debtor, IVC and Hall (Canada).
The security interest and lien granted hereby are subject and
subordinate to the security interest and lien granted to the Agent pursuant to
the security agreement dated the date hereof from the Debtor in favor of the
Agent.
INTERNATIONAL VITAMIN OVERSEAS SALES CORP.
By:/s/ Arthur S. Edell
------------------------------------
Name:
Title:
4
Exhibit 10.14
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
SECURITY AGREEMENT
------------------
THIS AGREEMENT, dated as of the 30th day of April, 1996, is made by
HALL LABORATORIES, LTD., a corporation organized under the laws of British
Columbia (the "Grantor"), in favor of XXXXXXXXXXXXXXXXXXXXXX, a New Jersey
corporation (the "Secured Party").
Preliminary Statement
---------------------
A. Contemporaneously herewith, the Grantor is executing and
delivering to the Secured Party a certain Guaranty Reimbursement Agreement dated
the date hereof from itself, IVC Industries, Inc. ("IVC") and International
Vitamin Overseas Sales Corp. ("IVOSC") in favor of the Secured Party (the
"Guaranty Reimbursement Agreement"). Pursuant to the Guaranty Reimbursement
Agreement, the Debtor has agreed to reimburse and pay to the Secured Party
(among other things) any and all amounts that may be paid by the Secured Party
to the Banks and the Agent (as defined therein) under a certain guaranty being
executed and delivered by the Secured Party in favor of the Banks and the Agent.
Such guaranty guarantees certain indebtedness of IVC to the Banks and the Agent,
for the payment of which the Debtor is also liable.
B. The execution and delivery of this Agreement is required in order
to induce the Secured Party to execute and deliver such guaranty.
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and in order to induce the
Secured Party to execute and deliver the aforesaid guaranty, the Grantor hereby
agrees as follows:
As used in this Agreement, the term "Liabilities" shall mean all
indebtedness, obligations and liabilities of every kind and nature of the
Grantor to the Secured Party under the Guaranty Reimbursement Agreement. The
term "Security" shall mean all personal property and fixtures of the Grantor,
whether now or hereafter existing or now owned or hereafter acquired and
wherever located, of every kind and description, tangible or intangible,
including, but not limited to, all money, goods (including equipment, farm
products and inventory), instruments, securities, documents, chattel paper,
accounts, contract rights, general intangibles, credits, claims, demands,
precious metals and any other property, rights and interests of the Grantor, and
shall include the proceeds, products and accessions of and to any thereof. The
term "Reimbursement Default" means a default on the part of the Debtor in paying
when due any amount required to be paid to the Secured Party under the Guaranty
Reimbursement Agreement.
<PAGE>
As security for the payment of all the Liabilities, the Grantor hereby
grants to the Secured Party a security interest in and a general lien upon the
Security.
At any time and from time to time, upon the demand of the Secured
Party, the Grantor will: (1) deliver and pledge to the Secured Party, indorsed
and/or accompanied by such instruments of assignment and transfer in such form
and substance as the Secured Party may request, any and all instruments,
documents and/or chattel paper comprising the Security as the Secured Party may
specify in its demand; (2) give, execute, deliver, file and/or record any
notice, statement, instrument, document, agreement or other papers that may be
necessary or desirable, or that the Secured Party may request, in order to
create, preserve, perfect, or validate any security interest granted pursuant
hereto or to enable the Secured Party to exercise and enforce its rights
hereunder or with respect to such security interest; (3) keep and stamp or
otherwise mark any and all documents and chattel paper and its individual books
and records relating to inventory, accounts and contract rights in such manner
as the Secured Party may require; and (4) permit representatives of the Secured
Party at any time during business hours to inspect its inventory and to inspect
and make abstracts from the Grantor's books and records pertaining to inventory,
accounts, contract rights, chattel paper, instruments and documents. The right
is expressly granted to the Secured Party, at its discretion, to file one or
more financing statements under the Uniform Commercial Code naming the Grantor
as debtor and the Secured Party as secured party and indicating therein the
types or describing the items of Security herein specified. A photographic or
other reproduction of this agreement shall be sufficient as a financing
statement. With respect to the Security, or any part thereof, which at any time
shall come into the possession or custody or under the control of the Secured
Party or any of their agents, associates or correspondents, for any purpose, the
right is expressly granted to the Secured Party, at its discretion, to transfer
to or register in the name of itself or its nominee any of the Security; to
exchange any of the Security for other property upon any reorganization,
recapitalization or other readjustment and in connection therewith to deposit
any of the Security with any committee or depositary upon such terms as it may
determine; if a Reimbursement Default exists, to notify any account debtor or
obligor on an instrument to make payment to the Secured Party; and to exercise
or cause its nominee to exercise all or any powers with respect to the Security
with the same force and effect as an absolute owner thereof; all without notice
(except such notice as may be required by applicable law and cannot be waived)
and without liability except to account for property actually received by it.
Without limiting the generality of the foregoing, payments, distributions and/or
dividends (other than ordinary cash dividends paid prior to the occurrence of a
Reimbursement Default) in securities, property or cash, including without
limitation dividends representing stock or liquidating dividends or a
distribution or return of capital upon or in respect of the Security or any part
thereof or resulting from any split-up, revision or reclassification of the
Security or any part thereof or received in exchange for the Security or any
part thereof as a result of a merger, consolidation or otherwise, shall (unless
required to be paid to the Agent) be paid directly to and retained by the
Secured Party and held by it until applied as herein provided, as additional
collateral security pledged under and subject to the terms hereof. The Secured
Party shall be deemed to have possession of any of the Security in transit to or
set apart for it or any of its agents, associates, or correspondents.
2
<PAGE>
The Secured Party at its discretion may, if a Reimbursement Default
exists, in its name or in the name of the Grantor or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Security, but shall be under no obligation
to do so, or the Secured Party may extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any of
the Security, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Grantor. The Secured Party shall not
be required to take any steps necessary to preserve any rights against prior
parties to any of the Security. If a Reimbursement Default exists, the Secured
Party may use or operate any of the Security for the purpose of preserving the
Security or its value in the manner and to the extent the Secured Party
reasonably deems appropriate, but the Secured Party shall be under no obligation
to do so. Upon the occurrence and during the continuance of a Reimbursement
Default, the Grantor shall, at the request of the Secured Party, assemble the
Security at such place or places as the Secured Party designates in its request,
and, to the extent permitted by applicable law, the Secured Party shall have the
right, with or without legal process and with or without prior notice or demand,
to take possession of the Security or any part thereof and to enter any premises
for the purpose of taking possession thereof. The Secured Party shall have the
rights and remedies with respect to the Security of a secured party under the
Uniform Commercial Code (whether or not such Code is in effect in the
jurisdiction where the rights and remedies are asserted). In addition, with
respect to the Security, or any part thereof, which shall then be or shall
thereafter come into the possession or custody of the Secured Party or any of
its agents, associates or correspondents, the Secured Party may sell or cause to
be sold in the Borough of Manhattan, New York City, or elsewhere, in one or more
sales or parcels, at such price as the Secured Party may deem best, and for cash
or on credit or for future delivery, without assumption of any credit risk, all
or any of the Security, at any broker's board or at public or private sale, in
any reasonable manner permissible under the Uniform Commercial Code (except
that, to the extent permitted thereunder, the Grantor hereby waives the
requirements of said Code), and the Secured Party or anyone else may be the
purchaser of any or all of the Security so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
equity of redemption, of the Grantor, any such demand, notice or right and
equity being hereby expressly waived and released. The Grantor will pay to the
Secured Party all reasonable expenses (including reasonable attorneys' fees and
expenses) of, or incidental to, the enforcement of any of the provisions hereof
or of any of the Liabilities, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement of any of the Security or
receipt of the proceeds thereof, and for the care of the Security and defending
or asserting the rights and claims of the Secured Party in respect thereof, by
litigation or otherwise, including expense of insurance; and all such expenses
shall be indebtedness within the terms of this agreement. The Secured Party
shall apply the net cash receipts from the Security to the payment of the
Liabilities, in such order and priority as the Secured Party may elect.
Notwithstanding that the Secured Party, whether in its own behalf and/or in
behalf of another or others, may continue to hold Security and regardless of the
value thereof, the Grantor shall be and remain liable for the payment in full,
principal and interest, of any balance of the Liabilities and expenses at any
time unpaid.
3
<PAGE>
No delay on the part of the Secured Party in exercising any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. The rights,
remedies and benefits herein expressly specified are cumulative and not
exclusive of any rights, remedies or benefits which the Secured Party may
otherwise have. The Grantor hereby waive(s) presentment, notice of dishonor and
protest of all instruments included in or evidencing the Liabilities or the
Security and any and all other notices and demands whatsoever, whether or not
relating to such instruments.
No provision hereof shall be modified or limited except by a written
instrument executed by the party sought to be charged therewith, expressly
referring hereto and to the provision so modified or limited. This agreement
shall be binding upon the Grantor and its successors and assigns, and shall
inure to the benefit of the Secured Party and its successors and assigns, shall
constitute a continuing agreement, applying to all future as well as existing
transactions, whether or not of the character contemplated at the date of this
agreement; and shall be governed by and construed according to the laws of the
State of New York. Unless the context otherwise requires, all terms used herein
which are defined in the New York Uniform Commercial Code shall have the
meanings therein stated.
The Debtor agrees that it will not after the date hereof grant any
security interest in any of the Security to any creditor without the written
consent of the Secured Party (which shall not be unreasonably withheld), except
for (i) purchase money security interests as to the acquisition of equipment;
(ii) security interests that refinance and replace other security interests
encumbering the same Security, provided that the amount of any security interest
so granted does not exceed the then-outstanding amount secured by the security
interest so refinanced; and (iii) other security interests ("basket security
interests") that secure an amount not in excess of $500,000 in the aggregate as
to all such basket security interests of the Debtor, IVC and IVOSC.
The security interest and lien granted hereby are subject and
subordinate to the security interest and lien granted to the Agent pursuant to
the security agreement dated the date hereof from the Debtor in favor of the
Agent.
HALL LABORATORIES, LTD.
By:/s/ Andrew M. Pinkowski
-----------------------------------
Name:
Title:
4
Exhibit 10.15
CONFIDENTIAL INFORMATION INDICATED BY XS HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
TRADEMARK COLLATERAL ASSIGNMENT
-------------------------------
IVC INDUSTRIES, INC. (formerly known as INTERNATIONAL VITAMIN
CORPORATION), a Delaware corporation (the "Assignor"), does hereby grant, assign
and convey to XXXXXXXXXXXXXXXXXXXXXX, a New Jersey corporation (the "Assignee"),
the registered trademarks and trademark applications identified on Annex I
hereto and the goodwill represented thereby (the "Trademarks") together with all
the proceeds thereof, as collateral security for all the Liabilities (as
hereinafter defined);
SUBJECT TO a reservation on the part of the Assignor (until the
occurrence of a Reimbursement Default, as hereinafter defined) of a license to
use the Trademarks for the Assignor's own benefit. The license so reserved
shall terminate upon the occurrence of a Reimbursement Default.
This Assignment is being executed and delivered pursuant to the
Guaranty Reimbursement Agreement dated the date hereof from the Assignor,
International Vitamin Overseas Sales Corp. and Hall Laboratories, Ltd. in favor
of the Assignee (the "Guaranty Reimbursement Agreement").
As used herein, the term "Liabilities" means all indebtedness,
obligations and liabilities of every kind and nature of the Assignor to the
Assignee under the Guaranty Reimbursement Agreement. The term "Reimbursement
Default" means a default on the part of the Assignor in paying when due any
amount required to be paid to the Assignee under the Guaranty Reimbursement
Agreement.
The assignment effected hereby shall be governed by Article 9 of the
New York Uniform Commercial Code. Upon the occurrence and during the
continuance of a Reimbursement Default, the Assignee shall have the rights and
remedies of a secured party as set forth therein (including, without limitation,
the right to dispose of the Trademarks and to apply the proceeds of the
disposition to satisfy the Obligations) and otherwise available at law or in
equity.
The Assignee shall have no duties with respect to the Trademarks,
other than the duties of a secured party under the New York Uniform Commercial
Code. Without limiting the generality of the foregoing, the Assignee shall have
no duty to prosecute any action for trademark infringement against any person.
<PAGE>
The address of the Assignee for purposes of this Assignment is:
Xxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxx xxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
or such other address as the Assignee may designate to the Assignor in writing
from time to time.
The assignment effected hereby is subject and subordinate to the
assignment of the Trademarks effected pursuant to the Trademark Collateral
Assignment dated the date hereof from the Assignor to The Chase Manhattan Bank
(National Association) as Agent.
IN WITNESS WHEREOF, the Assignor has executed this Assignment as of
this 30th day of April, 1996.
ATTEST/WITNESS: IVC INDUSTRIES, INC.
By:/s/ E. Joseph Edell
___________________________ -------------------------------------
STATE OF _____________ :
: SS.:
COUNTY OF ____________ :
On this 30th day of April, 1996, before me, the undersigned,
personally appeared _____________________, the _________________________ of IVC
Industries, Inc., who, I am satisfied, is the person who signed the foregoing
instrument, and he or he did acknowledge that he or she signed and delivered the
same in his or her capacity as such officer, and that he or she was authorized
to do so, and that the foregoing instrument is the voluntary act and deed of
such corporation, made by virtue of the authority of its board of directors.
______________________________
Notary Public
2
<PAGE>
ANNEX I
-------
Registration or Date of Registration
Trademark Application Number or Application
- --------- ------------------ ------------------------
Exhibit 10.16
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated as of April 30, 1996, by and between IVC Industries,
Inc., a Delaware corporation (the "Company"), and Andrew M. Pinkowski
("Pinkowski").
WHEREAS, the Company wishes to assure itself of the services of
Pinkowski; and
WHEREAS, Pinkowski is willing to enter into this Employment Agreement
upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties agree as follows:
1. Employment
----------
The Company shall employ Pinkowski and Pinkowski shall serve the
Company as Vice Chairman and advisor during the term of employment set forth in
Section 2 of this Agreement. Pinkowski shall report only to the Board of
Directors of the Company. Pinkowski shall devote his best efforts and his entire
business time to advancing the interests of the Company. Pinkowski's powers and
authority as an employee of the Company shall be superior to those of any other
officer or employee of the Company other than the Chairman of the Board.
Pinkowski's duties shall be consistent with his title as Vice Chairman.
Pinkowski agrees, subject to his election as such, to serve as a Director, and
as a member of any committee of the Board of Directors, of the Company or any
subsidiary of the Company during such term of employment at no additional
compensation. It is understood that Pinkowski's services during the term of
employment shall be performed primarily in the Portland, Oregon metropolitan
area, subject to
<PAGE>
such reasonable travel outside that area in and outside the United States as the
performance of his duties and the business of the Company may reasonably
require.
2. Term of Employment
------------------
Pinkowski's "term of employment," as such phrase is used throughout
this Agreement, shall mean the period beginning on the date hereof and ending on
the third anniversary of the date hereof, unless earlier terminated as provided
in Section 4 hereof.
3. Compensation
------------
The Company shall pay Pinkowski an annual base salary of $180,000 for
the term of his employment, payable in equal installments in accordance with the
Company's customary payroll practices. It is understood that the Company may,
in the discretion of its Board of Directors, increase such annual base salary.
4. Termination of Employment
-------------------------
(a) Pinkowski's employment shall terminate upon his death, and may be
terminated, at the option of the Company by notice to Pinkowski (such
termination to be effective 30 days after the Company's giving of such notice),
only (i) as a result of his "disability," as defined in Section 4(b) below, or
(ii) for "cause," as defined in Section 4(c) below.
(b) As used herein, "disability" shall mean such physical or mental
disability or incapacity of Pinkowski which has substantially prevented him from
performing his principal duties hereunder during any period of 150 consecutive
calendar days or for a total of 180 calendar days (whether or not consecutive)
in any 365-day period.
2
<PAGE>
(c) As used herein, "cause" shall mean (i) willful misconduct
involving bad faith by Pinkowski in respect of his obligations under this
Agreement, which misconduct causes or was intended by Pinkowski to cause
significant injury to the Company, or (ii) commission of a crime involving moral
turpitude which would adversely affect the Company should Pinkowski continue to
serve as an employee of the Company. "Cause" shall not include a bona fide
disagreement over a corporate policy so long as Pinkowski does not willfully
violate on a continuing basis specific written directions from the Board of
Directors, which directions are consistent with the provisions of this
Agreement.
(d) On the termination of Pinkowski's employment as a result of his
death or disability or for cause, the Company shall pay to Pinkowski or to his
beneficiaries or personal representative (or, in the case of his death, and
failing designation by him, to his estate) any unpaid annual base salary accrued
as of the date of such termination promptly upon such termination.
(e) If Pinkowski's employment is terminated by the Company before the
expiration of the term of employment for any reason other than death, disability
or cause, then Pinkowski shall be entitled to receive, and the Company shall be
obligated to pay, his base salary as set forth in Section 3(a) hereof during the
remainder of the term of employment, such base salary to be paid on the dates it
would have been paid had Pinkowski's employment not been terminated before the
expiration of the term of employment. Pinkowski shall also continue to
participate in all plans and programs of the Company referred to in Section 5(a)
hereof to the extent that such continued participation is possible under the
general terms and provisions of
3
<PAGE>
such plans and programs. In the event that Pinkowski's continued participation
in any such plan or program providing health, disability or life insurance is
barred, then in lieu thereof Pinkowski shall receive for the remainder of the
term of employment amounts equal to the out-of-pocket cost (grossed up for tax
effect) to Pinkowski of participation in plans or programs providing
substantially similar benefits to those under the plan or program providing
health, disability or life insurance from which such participation is barred.
Such payments, in addition to payments of base salary, shall be in full
satisfaction of all claims by Pinkowski arising out of this Agreement and,
subject to the provisions of Section 6, Pinkowski may but shall have no
obligation to obtain other employment.
(e) If any of the events set forth in this Section 4(f) occurs,
Pinkowski may, by not less than thirty (30) days' notice to the Company,
terminate his services hereunder, and Pinkowski shall then have no further
obligations under this agreement:
(i) the Company shall fail to perform in any material respect
its obligations hereunder or shall violate or fail to comply in any material
respect with the provisions hereof or fail in any way to fulfill the obligations
contained in this Agreement and such failure shall continue for thirty days
after notice thereof by Pinkowski; or
(ii) other than in connection with termination of Pinkowski's
employment for death, disability or cause, Pinkowski shall fail to have been re-
elected to the Board of Directors, or shall have been removed from such
position.
If Pinkowski terminates employment under this Section 4(f), he
shall be entitled to receive the base salary and other compensation as set forth
in Section 3 and the other
4
<PAGE>
compensation or perquisites set forth in Section 5 for the remainder of the term
of employment, and, except as set forth in Sections 3 and 5, he shall be
entitled to no further compensation or benefits hereunder.
5. Other Benefits
--------------
(a) During the term of employment, Pinkowski shall be entitled to
participate and shall be included in any pension, 401(k), stock option or other
similar plan or program of the Company as may be in effect from time to time for
executives of the Company generally or specifically, and to participate in any
group insurance, hospitalization, medical, health and accident, disability or
similar plans or programs of the Company now existing or hereafter established
for executives of the Company generally or specifically by the Board of
Directors of the Company, subject to any modification or termination of such
plans or programs by the Company. Notwithstanding the foregoing, such group
insurance, hospitalization, etc. shall be offered to Pinkowski by the Company
under plans and on terms no less favorable than Pinkowski presently enjoys in
his employment at Hall Laboratories, Inc. ("Hall") and Pinkowski's prior
employment at Hall shall be given full credit in any vesting or waiting period
applicable to any benefit described in this Section 5(a).
(b) The Company agrees to reimburse Pinkowski for all reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder in accordance with the policies of the Company. In recognition
that the Company's business is often enhanced by participation of spouses in
entertainment of customers and suppliers and their spouses, Pinkowski shall be
entitled to take his spouse on business trips and along during
5
<PAGE>
business entertainment when and where appropriate at the Company's expense,
including travel to the Company's headquarters from Pinkowski's home in
Portland, Oregon. Pinkowski and his spouse shall be entitled to travel business
class and if such class is not offered, first class.
(c) The Company agrees to furnish Pinkowski, during the term of
employment, with office space, assistance, facilities and accommodations
commensurate with his position and adequate for the performance of his duties
hereunder.
(d) During each year of the term of employment, Pinkowski shall be
entitled to twelve weeks of paid vacation (in addition to all customary U.S.
holidays) at such time or times as may be selected by him which do not
unreasonably interfere with the proper performance of his duties hereunder. In
the event that Pinkowski does not use all twelve weeks of vacation during any
year of the term of employment, the Company shall pay Pinkowski an amount in
cash equal to a pro rata portion of his base salary for such unused portion no
later than 60 days after the end of each such year.
(e) Each year during the term of his employment, Pinkowski shall be
entitled to receive a car allowance equal to $900 per month. The car allowance
shall cover all costs associated with Pinkowski's car, including, without
limitation, gas, insurance and repairs.
6. Restrictive Covenants
---------------------
(a) Except as required in the performance of his duties to the
Company, or as authorized in writing by the Company, Pinkowski shall not at any
time, during or after the term of employment, disclose or use, directly or
indirectly, any confidential information belonging to or used by the Company or
any of its subsidiaries and of which Pinkowski shall obtain
6
<PAGE>
knowledge by reason of his employment hereunder. All such confidential
information shall be retained by Pinkowski in trust in a fiduciary capacity for
the sole benefit of the Company. Such confidential information includes, but is
not limited to, information with respect to marketing, advertising and sales
presentation methods and materials, customer and supplier lists, external and
internal business forms, manuals, corporate planning, manufacturing,
distribution and marketing processes, procedures, devices and materials utilized
by the Company in providing goods to customers, plans for expansion into new
areas or markets and information regarding internal operations together with all
written and graphic materials relating to all or any part of the same. This
restriction may not and shall not be used by the Company to challenge any
employment of Pinkowski following the termination of his employment with the
Company based upon information which has become part of Pinkowski's general
knowledge.
(b) During the term of employment and for two years thereafter,
Pinkowski shall not, directly or indirectly, knowingly employ or retain, or
knowingly arrange to have any other person or entity employ or retain, any
person who furnished services to the Company in a managerial or sales capacity
at any time during the term of employment as an employee, consultant or
otherwise.
(c) Pinkowski shall not, at any time during or after the term of
employment, knowingly disparage in any material manner or in any material
respect the Company or any of its subsidiaries or their respective financial
soundness and responsibility, personnel, products or practices.
7
<PAGE>
(d) Upon termination of the term of employment or at any other time
as the Board of Directors of the Company may request, Pinkowski shall promptly
deliver to the Company all confidential data and materials in his possession,
including, but not limited to, sales presentation materials, other internal and
external business forms, manuals, correspondence, notes and customer and
supplier lists together with all copies thereof, and Pinkowski shall not make or
retain any copy or extract of any of the foregoing.
(e) As a means reasonably calculated to prevent Pinkowski from
disclosing or making accessible to any person or entity any confidential
information Pinkowski acquired during the term of employment which would cause
the Company's business to be prejudiced, and because disclosure or use of such
information is difficult to detect and establish, during the term of employment
and for two years thereafter Pinkowski agrees not to, directly or indirectly,
engage or become interested in, as owner, stockholder, partner, lender,
investor, director, officer, employee, consultant or otherwise, any business
competitive with that engaged in by the Company, located within or without the
United States; provided, however, that nothing herein shall prohibit Pinkowski
from owning, solely as an investment, stock or other securities of a competitive
business: (i) which is listed on a national securities exchange or regularly
traded in the over-the-counter market; (ii) where his holdings do not exceed one
percent of the issued and outstanding capital stock or other securities of such
competitive business; and (iii) so long as he, in fact, does not have the power
to control or direct the management or policies of such competitive business and
does not serve as a director or officer of, and is not otherwise associated
with, such competitive business.
8
<PAGE>
(f) Pinkowski acknowledges that his breach of any of the restrictive
covenants contained in this Section 6 can cause irreparable damage to the
Company for which the remedy at law would not be adequate. Accordingly, in
addition to any other remedy provided by law or in equity, the Company shall be
entitled to injunctive relief restraining Pinkowski from any actual or
threatened violation of this Section 6 or any other appropriate decree of
specific performance (without any bond or other security being required),
including, without limitation, any injunction restraining Pinkowski from
rendering any services to any person or entity in competition with the then
business being conducted by the Company to whom all or any part of any
confidential information and materials has been disclosed by Pinkowski.
7. Consulting Services
-------------------
Upon expiration of the term of employment, Pinkowski shall be
available to provide consulting services to the Company on a mutually agreeable
basis and schedule for a term of five years (unless earlier terminated as
described below), at a compensation to Pinkowski of $80,000 a year during such
term. Pinkowski shall not be required to provide consulting services on more
than 60 days in any one year of the term. The provision of Section 6 shall be
applicable during the entire term of the consultnig services. During the term
of the consulting services Pinkowski agrees that, in the event he is elected to
serve on the Company's Board of Directors, as a member of any committee thereof
or on the Board of Directors of any subsidiary of the Company he shall so serve
and receive no additional compensation for his services as a director or
committee member. Either the Company or Pinkowski may end the term of the
consulting services on 60 days prior written notice in the event Pinkowski at
any time sells
9
<PAGE>
shares of the Company's stock and realizes aggregate cash proceeds in excess of
$3 million from such sale(s).
8. Notices
-------
Any notice made or other communication made or given in connection
with this agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered mail, return receipt requested, to
a party as its address set forth below or at such other address as a party may
specify by notice to the other:
(a) to Pinkowski:
5725 SW Menefee
Portland, Oregon 97201
Phone No.: (503) 452-4836
(b) to the Company:
500 Halls Mill Road
Freehold, New Jersey 07728
Attention: I. Alan Hirschfeld
Phone No.: (908) 308-3000
Telecopy No.: (908) 308-4488
9. Prior Agreements
----------------
This Agreement supersedes and replaces all prior understandings,
arrangements and agreements of employment between the Company and Pinkowski.
10. Assigns and Successors
----------------------
Subject to the limitations below, this Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, representatives and successors.
10
<PAGE>
This Agreement shall not be assignable by Pinkowski, and shall be assignable by
the Company only to any corporation resulting from the reorganization, merger or
consolidation of the Company with any other corporation or any corporation to
which the Company may sell all or substantially all of its assets, and it must
be so assigned by the Company to, and accepted as
binding upon it by such other corporation, in connection with any such
reorganization, merger, consolidation or sale.
11. Invalid or Unenforceable Provisions
-----------------------------------
In the event any provision of this Agreement shall be determined to be
invalid or unenforceable in any respect, the remaining provisions of this
Agreement shall not be affected thereby and shall continue in full force and
effect.
12. Amendment
---------
This Agreement may be amended or modified only by a written instrument
signed by both the Company and Pinkowski.
13. Construction
------------
This Agreement shall be construed under the laws of the State of
Delaware applicable to agreements made and to be performed therein. Section
headings are for convenience only and shall not be considered a part of the
terms and provisions of the Agreement.
11
<PAGE>
14. Waiver
------
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement.
IN WITNESS WHEREOF, International Vitamin Corporation has caused this
Agreement to be executed by its duly authorized officer, and Andrew Pinkowski
has hereunto set his hand, as of the 30th day of April, 1996.
IVC INDUSTRIES, INC.
By: /s/ E. Joseph Edell
------------------------------------
Name:
Title:
/s/ Andrew M. Pinkowski
-------------------------------
Andrew M. Pinkowski
12
Exhibit 99.2
PRESS RELEASE
BARRY KAPLAN ASSOCIATES For Immediate Release:
================================================================================
623 River Road, Fair Haven, New Jersey 07704 (908) 747-0702
FAX (908) 758-1837
Press Contact:
Barry S. Kaplan
Company Contact:
I. Alan Hirschfeld
(908) 308-3000
IVC INDUSTRIES COMPLETES MERGER WITH HALL LABORATORIES
Freehold, N.J., May, 1, 1996 - IVC INDUSTRIES INC. (NASDAQ SMALL CAP: IVCO)
announced today that it completed its merger with Hall Laboratories, Inc. on
Tuesday, April 30, 1996, and entered into a new $26,500,000 financing facility
with The Chase Manhattan Bank N.A. The Company also announced that its board
of directors has been reconstituted to consist of E. Joseph Edell, Chairman and
Chief Executive Officer of the Company, Arthur S. Edell, President of the
Company, I. Alan Hirschfeld, Chief Operating Officer of the Company, Andrew
M. Pinkowski, Vice Chairman of the Company, Dennis E. Groat, Mark S. Gold, M.D.
and David Papofsky. Messrs. Gold and Papofsky were named to the board to fill
vacancies created by the resignations of Theodore Sall and Mac Allen Culver.
"By combining Hall and IVC, we have created a company that is much stronger
than the sum of its parts," said I. Alan Hirschfeld, Chief Operating Officer.
"We are excited about the opportunities which the merger presents us with and
we are looking forward to putting our integration plans in place over the next
several fiscal quarters."
IVC INDUSTRIES, INC. is engaged in the manufacturing, packaging and worldwide
sales and distribution of vitamins and nutritional supplements through drug
stores, supermarkets and mass merchandising chains as well as health food
stores and independent drug stores. Its products are distributed under the
"Fields of Nature," "Rybutol," "Nature's Wonder," "American Vitamin," "Synergy
Plus" and "Nature's Blend" brands as well as under the private labels (store
Brands) of its retail chain store customers. The Company has recently
introduced its new Revlon line of products which are marketed under a license
agreement with Revlon.
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