SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
September 24, 1999
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IVC INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-23624 22-1567481
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(Commission file number) (IRS employer identification number)
500 Halls Mill Road, Freehold, New Jersey 07728
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(Address of principal executive offices)
Registrant's telephone number: (732) 308-3000
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<PAGE>
ITEM 5. OTHER EVENTS
On September 24, 1999, IVC Industries, Inc. entered into an Amended and
Restated Credit Agreement with Chase Manhattan Bank, its current bank, and
Citizens Business Credit Company, a subsidiary of the Royal Bank of Scotland.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, IVC
Industries, Inc. has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
IVC INDUSTRIES, INC.
By: /s/ Domenic Golato
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Domenic Golato
Chief Financial Officer
Date: October 1, 1999
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.1 Amended and Restated Credit Agreement, dated as of July 31, 1999,
among IVC Industries, Inc, Chase Manhattan Bank, Citizens Business
Credit Company and Chase Manhattan Bank, as Agent.
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[LOGO] CHASE
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
July 31, 1999
among
IVC INDUSTRIES, INC.,
THE LENDERS PARTY HERETO
and
THE CHASE MANHATTAN BANK,
as Agent
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================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I - Definitions........................................................1
SECTION 1.01. Defined Terms..........................................1
SECTION 1.02. Classification of Loans and Borrowings................19
SECTION 1.03. Terms Generally.......................................19
SECTION 1.04. Accounting Terms; GAAP................................19
SECTION 1.05. Existing Credit Agreement and Related Documents.......19
ARTICLE II - The Credits......................................................20
SECTION 2.01. Term Loan and Revolving Credit Commitments............20
SECTION 2.02. Loans and Borrowings..................................21
SECTION 2.04. Collections and Application...........................23
SECTION 2.05. [Reserved.]...........................................24
SECTION 2.06. Letters of Credit.....................................24
SECTION 2.07. Assumption as to Fundings.............................28
SECTION 2.08. Interest Elections....................................28
SECTION 2.09. Termination and Reduction of Revolving Credit
Commitments.........................................29
SECTION 2.10. Repayment of Loans; Evidence of Debt..................30
SECTION 2.11. Prepayment of Loans...................................31
SECTION 2.12. Fees..................................................32
SECTION 2.13. Interest..............................................33
SECTION 2.14. Alternate Rate of Interest............................33
SECTION 2.15. Increased Costs.......................................34
SECTION 2.16. Break Funding Payments................................35
SECTION 2.17. Taxes.................................................35
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.................................36
ARTICLE III - Representations and Warranties..................................37
SECTION 3.01. Organization; Powers; Subsidiaries....................37
SECTION 3.02. Authorization; Enforceability.........................38
SECTION 3.03. Governmental Approvals; No Conflicts..................38
SECTION 3.04. Financial Condition; No Material Adverse Change.......38
SECTION 3.05. Properties............................................39
SECTION 3.06. Litigation and Environmental Matters..................39
SECTION 3.07. Compliance with Laws and Agreements...................39
SECTION 3.08. Investment and Holding Company Status.................39
SECTION 3.09. Taxes.................................................39
SECTION 3.10. ERISA.................................................40
SECTION 3.11. Disclosure............................................40
SECTION 3.12. Year 2000.............................................40
SECTION 3.13. Solvency..............................................40
SECTION 3.14. As to the EDA Irvington Financing.....................41
SECTION 3.15. As to Collateral......................................41
<PAGE>
ARTICLE IV - Conditions.......................................................42
SECTION 4.01. Effective Date. ......................................42
SECTION 4.02. Each Credit Event.....................................44
ARTICLE V - Affirmative Covenants.............................................45
SECTION 5.01. Financial Statements and Other Information............45
SECTION 5.02. Notices of Material Events............................47
SECTION 5.03. Existence; Conduct of Business........................47
SECTION 5.04. Payment of Obligations................................47
SECTION 5.05. Maintenance of Properties; Insurance..................47
SECTION 5.06. Books and Records; Inspection Rights..................48
SECTION 5.07. Compliance with Laws..................................48
SECTION 5.08. Use of Proceeds and Letters of Credit.................48
SECTION 5.09. Landlord Waivers......................................49
ARTICLE VI - Negative Covenants...............................................49
SECTION 6.01. Indebtedness..........................................49
SECTION 6.02. Liens.................................................49
SECTION 6.03. Fundamental Changes...................................50
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions........................................50
SECTION 6.05. Hedging Agreements....................................51
SECTION 6.06. Restricted Payments...................................51
SECTION 6.07. Transactions with Affiliates..........................51
SECTION 6.08. Restrictive Agreements................................51
SECTION 6.09. As to Collateral......................................52
SECTION 6.10. Minimum Net Worth.....................................52
SECTION 6.11. Minimum Debt Service Coverage Ratio...................52
SECTION 6.12. Maximum Capital Expenditures..........................53
ARTICLE VII - Events of Default...............................................53
ARTICLE VIII - The Agent......................................................56
ARTICLE IX - Miscellaneous....................................................57
SECTION 9.01. Notices...............................................57
SECTION 9.02. Waivers; Amendments...................................58
SECTION 9.03. Expenses; Indemnity; Damage Waiver....................59
SECTION 9.04. Successors and Assigns................................60
SECTION 9.05. Survival..............................................62
SECTION 9.06. Counterparts; Integration; Effectiveness..............62
SECTION 9.07. Severability..........................................62
SECTION 9.08. Right of Setoff.......................................63
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process..................................63
SECTION 9.10. Headings..............................................63
SECTION 9.11. Confidentiality.......................................63
SECTION 9.12. Interest Rate Limitation..............................64
<PAGE>
SCHEDULES:
Schedule 1.01 - Applicable Rates
Schedule 2.01 - Lenders and Commitments
Schedule 3.01 - Subsidiaries
Schedule 3.06 - Disclosed Matters
Schedule 3.15(A) - Locations
Schedule 3.15(B) - Fee Owners of Leased Facilities
Schedule 6.01 - Certain Indebtedness
Schedule 6.02 - Certain Liens
Schedule 6.04 - Certain Loans to Employees
EXHIBITS:
Exhibit A-1 - Form of Promissory Note for Revolving Loans
Exhibit A-2 - Form of Promissory Note for Term Loans
Exhibit B - Form of Opinion of Counsel for the Obligors
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Assignment and Acceptance
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 31, 1999, among IVC
INDUSTRIES, INC., a Delaware corporation, the LENDERS party hereto, and THE
CHASE MANHATTAN BANK, as Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agent" means The Chase Manhattan Bank, in its capacity as agent for
the Lenders hereunder.
"Agreement" means this Amended and Restated Credit Agreement, as the
same may be amended from time to time.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%, and (c) the Base CD Rate in
effect on such day plus 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Base CD Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Federal Funds Effective Rate or the Base CD Rate, respectively.
"Applicable Percentage" means (a) as to any New Letter of Credit,
with respect to any Lender, the percentage of the total Revolving Credit
Commitments represented by such Lender's Revolving Credit Commitment (and if the
Revolving Credit Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Revolving Credit Commitments most
recently in effect, giving effect to any assignments); and (b) as to the
Existing Letter of Credit, with respect to any Lender, the Existing LC
Commitment of such Lender.
"Applicable Rate" means, for any day, with respect to any ABR
Revolving Loan, Eurodollar Revolving Loan, ABR Term Loan or Eurodollar Term
Loan, or with respect to the facility fees payable under Section 2.12, or with
respect to the participation fees payable with respect to the Existing Letter of
Credit under Section 2.12, or with respect to the participation fees payable
with respect to New Letters of Credit under Section 2.12, as the case may be,
the applicable rate per annum set forth on Schedule 1.01 of this Agreement under
the caption "ABR Revolving Spread", "Eurodollar Revolving
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2
Spread", "ABR Term Spread", "Eurodollar Term Spread", "Facility Fee Rate",
"Existing LC Fee Rate" or "New LC Fee Rate", as the case may be, based upon the
Designated Consolidated Leverage Ratio as of the relevant date of determination.
Each change in the Applicable Percentage resulting from a change in the
Designated Consolidated Leverage Ratio shall be effective with respect to all
outstanding Loans, Revolving Credit Commitments, Existing LC Commitments and
Letters of Credit on and after the first day of the calendar month following the
date of delivery to the Agent of the financial statements and certificates
required by subsections (a) or (b) (as the case may be) and (c) of Section 5.01
indicating such change until the date immediately preceding the first day of the
calendar month following the next date of delivery of such financial statements
and certificates indicating another such change. Notwithstanding the foregoing,
but subject to the next sentence, during the period commencing on the Effective
Date and ending on the first day of the calendar month following the date of
delivery of the first such financial statements and certificate, the Designated
Consolidated Leverage Ratio shall be deemed to be in Category 3 (as set forth on
Schedule 1.01) for purposes of determining the Applicable Rate. Notwithstanding
the foregoing, (a) at any time during which the Borrower has failed to deliver
the financial statements and certificate required by such subsections of Section
5.01, or (b) at any time after the occurrence and during the continuance of a
Default or an Event of Default, the Designated Consolidated Leverage Ratio shall
be deemed to be in Category 1 (as set forth on Schedule 1.01) for purposes of
determining the Applicable Rate.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Agent, in the form of
Exhibit D or any other form approved by the Agent.
"Authority" means the New Jersey Economic Development Authority.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Revolving Credit Commitments.
"Average Consolidated Funded Debt" means, with respect to any
Measuring Period, the average amount outstanding each day during such Measuring
Period of Consolidated Funded Debt. The Funded Debt outstanding under this
Agreement shall be computed daily to determine the average amount thereof
outstanding during any Measuring Period. In the case of all other Funded Debt,
the average amount thereof outstanding each day during each fiscal quarter shall
be deemed to be (a) the amount thereof outstanding on the first day of such
fiscal quarter, plus (b) the amount thereof outstanding on the last day of such
fiscal quarter, divided by (c) 2.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
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3
"Blocked Account" is defined in Section 2.04.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means IVC Industries, Inc., a Delaware corporation.
"Borrower's Revolving Account" is defined in Section 2.04.
"Borrower Security Agreement" means the Amended and Restated
Security Agreement dated the date hereof from the Borrower in favor of the
Agent.
"Borrowing" means Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Base" means, at any time, the sum of (A) 80% of the
amount of Eligible Receivables as of such time; plus (B) the lesser of (i) 50%
of the amount of Eligible Inventory as of such time, or (ii) $14,000,000;
provided, however, that the amount of any or all of such percentages may be
changed by the Agent from time to time in its sole reasonable discretion, and
such sum may be reduced by the Agent by the amount of reserves required by the
Agent in its sole reasonable discretion to be established from time to time.
Without limiting the generality of such proviso, the Agent may change such
percentage as to Eligible Receivables if the dilution of Receivables exceeds
12%.
"Borrowing Base Certificate" means a certificate, in the form
attached hereto as Exhibit C, signed by the chief financial officer of the
Borrower (or other officer of the Borrower acceptable to the Agent).
"Borrowing Base Parties" means the Borrower, IVOSC and Hall
(Canada).
"Borrowing Request" means a request by the Borrower for a Borrowing
in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" of a Person means, for any period, the amount
of gross expenditures (including obligations under Capital Leases) made by such
Person for fixed or capital assets, real property, plant and equipment, and all
renewals, improvements and replacements thereof incurred during such period.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
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4
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 51% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Borrower by any Person or
group.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Chase" means The Chase Manhattan Bank.
"CIBC Lien" means a Lien held by Canadian Imperial Bank of Commerce
on the Receivables of Hall (Canada), to the extent such Lien secures not more
than $500,000 at any time outstanding.
"Citizens" means Citizens Business Credit Company.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Term Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall have the meaning ascribed to such term in the
Security Agreements, and includes as well as the trademarks and applications
therefor described in the Existing Trademark Assignment.
"Consolidated Capital Expenditures" means, for any period, the
Capital Expenditures of the Borrower and its Consolidated Subsidiaries for such
period (computed on a consolidated basis in accordance with GAAP).
"Consolidated Debt Service Coverage Ratio" means, as to any period,
the ratio of (a) Consolidated EBITDA for such period, minus taxes paid in cash
by the Borrower and its Consolidated Subsidiaries during such period, minus
interest expense of the Borrower and its Consolidated Subsidiaries during such
period, minus Capital Expenditures made by the Borrower and its Consolidated
Subsidiaries during such period, plus Integration Capital Expenditures made by
the Borrower and its Consolidated Subsidiaries during such period (all
determined on a consolidated basis in accordance with GAAP); to (b) payments
required to be made by the Borrower and its Consolidated Subsidiaries on or of
Funded Debt during such period (excluding principal payments of Revolving Credit
Exposure) (determined on a consolidated basis in accordance with GAAP).
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5
"Consolidated EBITDA" means, with respect to any period, 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 Worth" means, as of any date of determination, the
Net Worth of the Borrower and its Consolidated Subsidiaries as of such date, as
computed on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in accordance
with GAAP.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Customer" means a buyer of goods from the Borrower.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Designated Consolidated Leverage Ratio" means, at any time, the
ratio for the most recently completed Measuring Period of (a) Average
Consolidated Funded Debt for such Measuring Period to (b) Consolidated EBITDA
for such Measuring Period (which Consolidated EBITDA shall be annualized, in the
case of the first two Measuring Periods).
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBITDA" means, with respect to any Person for any period, the sum
of (i) Net Income of such Person for such period, (ii) interest expense deducted
in determining such Net Income, (iii) Federal, state, local and foreign income
taxes deducted in determining such Net Income, (iv) depreciation deducted in
determining such Net Income, and (v) amortization of goodwill and other
intangibles (including deferred financing costs and debt discounts) deducted in
determining such Net Income, in each case determined in accordance with GAAP
consistently applied.
"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 date hereof with the prior written consent of the Agent.
"EDA Indenture" means the Trust Indenture dated as of October 1,
1995 between the Authority and First Fidelity Bank, National Association (now
known as First Union National Bank), as trustee.
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6
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Eligible Inventory" means that Inventory of a Borrowing Base Party
which is and continues to be in the sole reasonable discretion of the Agent
acceptable to the Agent for the purpose of being eligible for Revolving Loans
and New Letters of Credit. The criteria for eligibility may be revised by the
Agent from time to time in the exclusive reasonable judgment of the Agent.
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 a Borrowing Base Party and located at a location specified in
Section 3.15 with respect to such Borrowing Base Party or at such other location
where all action has been taken to perfect the security interest of the Agent
therein, and as to each such location a written landlord's waiver in favor of
the Agent (in a form satisfactory to the Agent) shall have been obtained by the
Borrower from the landlord of such premises and shall have been provided to the
Agent; and it is subject to no Lien of any kind (other than Permitted
Encumbrances), and such Borrowing Base Party has the right and power to grant a
security interest therein; (B) it is insured as required by Section 5.05 and by
the applicable Security Agreement pursuant to policies in full compliance with
such requirements; (C) it is in good and merchantable condition; (D) it is to be
sold to Customers in the ordinary course of business of the Borrowing Base
Party; (E) it is not returned items of Inventory that are damaged or not
suitable for resale as new in the ordinary course of business, and it is not
obsolete or repossessed items of Inventory, and it is not used goods or goods
taken in trade; and (F) the Agent has not notified the Borrower that the Agent,
in its sole reasonable judgment, deems such Inventory as unsatisfactory for any
reason. Notwithstanding clause (A) of the immediately preceding sentence,
Inventory may satisfy the location requirement of such clause (even though such
Inventory may not be physically located at a location specified in such clause)
if (x) such Inventory is being imported by a Borrowing Base Party, and (y) such
Borrowing Base Party has arranged for payment therefor by means of a documentary
New Letter of Credit which has been issued, and (z) the Agent has possession of
all necessary documents of title for such Inventory. 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 reasonable discretion, 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
Lenders with respect to the Agent's determination (if any) of value.
"Eligible Receivables" means those Receivables of a Borrowing Base
Party which are and continue to be in the sole reasonable discretion of the
Agent acceptable to the Agent for the purpose of being eligible for Revolving
Loans and New Letters of Credit. The criteria for eligibility may be revised
from time to time by the Agent in the exclusive reasonable judgment of the
Agent. A Receivable shall in no event be deemed to be an Eligible Receivable
unless it meets the following minimum requirements: (A) it is lawfully owned by
a Borrowing Base Party and subject to no Lien of any kind (other than Permitted
Encumbrances and, in the case of Receivables of Hall (Canada), the CIBC Lien) or
prior assignment, and such Borrowing Base Party has the right of assignment
thereof and the power to grant the security interest therein; (B) it is a
Receivable 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 Receivable; (D) no material part of
any goods whose sale has given rise to the Receivable has been returned or lost
(unless the same have been replaced by the Borrowing Base Party) 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
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7
shipped to the Customer thereunder; (F) it arose in the ordinary course of
business of the Borrowing Base Party; (G) the Customer thereunder is not an
Affiliate of a Borrowing Base Party; (H) if the Customer is located out of the
United States of America or Canada, all amounts owing under such Receivable are
(if required by the Agent) backed by a letter of credit issued by a commercial
bank, or by credit insurance, in each case 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 90 days have
elapsed from the invoice date; (K) no notice of the bankruptcy, receivership,
reorganization or insolvency of the Customer thereunder has been received by a
Borrowing Base Party; (L) it is not payable by a Customer with respect to which
50% or more of the dollar amount of that Customer's Receivables to the Borrowing
Base Parties (in the aggregate) remain unpaid more than 91 days from the date of
invoice; (M) the Agent has not notified the Borrower that the Receivable is not
of a credit quality acceptable to the Agent; (N) it is not a contra, a bill and
hold, or a credit and chargeback; and (O) when it is added to the other
Receivables of such Customer included in Eligible Receivables, the aggregate
amount thereof does not exceed 15% of the aggregate of all Eligible Receivables
of the Borrowing Base Parties (except for Costco Wholesale, whose concentration
limit may be 45% during the first nine months after the date of this Agreement,
35% thereafter until the date that is 18 months after the date of this
Agreement, and 25% thereafter).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer
<PAGE>
8
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excluded Taxes" means, with respect to the Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.19(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.17(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.17(a).
"Existing Credit Agreement" means the Credit Agreement dated as of
April 30, 1996 (as the same has been amended from time to time prior to the
Effective Date) among the Borrower, the Banks party thereto and the Agent, as
agent. Chase was at all times the sole Bank party to the Existing Credit
Agreement.
"Existing LC Commitment" means, with respect to each Lender, the
commitment of such Lender to acquire a participation in the Existing Letter of
Credit hereunder, expressed as a percentage of 100% of the Existing Letter of
Credit, as such commitment may be reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
Existing LC Commitment of Citizens is subject to a limitation as provided in
Section 2.06(k).
"Existing LC Disbursement" means a payment made by the Issuing Bank
pursuant to the Existing Letter of Credit.
"Existing LC Exposure" means, at any time, the sum of (a) the
aggregate undrawn amount of the Existing Letter of Credit at such time plus (b)
the aggregate amount of all Existing LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The Existing LC
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Existing LC Exposure at such time.
"Existing Letter of Credit" means the irrevocable direct-pay letter
of credit issued on April 30, 1996 by the Issuing Bank for the account of the
Borrower and for the benefit of First Union
<PAGE>
9
National Bank (as Trustee under the EDA Indenture) in the original maximum
stated amount of $5,106,850. The Existing Letter of Credit was originally issued
pursuant to the Existing Credit Agreement and (pursuant to Section 1.04 hereof)
is deemed to have been issued and is outstanding pursuant to this Agreement. The
current amount of the Existing Letter of Credit is $2,845,572.35.
"Existing Reimbursement Agreement" means the Letter of Credit
Reimbursement Agreement dated April 30, 1996 among the Borrower, IVOSC and the
Issuing Bank.
"Existing Trademark Assignment" means the Trademark Collateral
Assignment dated April 30, 1996 from the Borrower to the Agent.
"Existing UCC's" means all UCC-1 financing statements heretofore
filed against any of the Borrowing Base Parties, as debtor, in connection with
the Existing Credit Agreement.
"Facility Documents" means this Agreement, the Notes, the Borrower
Security Agreement, the Subsidiary Guaranties, the Subsidiary Security
Agreements, the Existing Reimbursement Agreement, and the Existing Trademark
Assignment.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" means the Fee Letter dated June 15, 1999 from Chase to
the Borrower, which was accepted by the Borrower on June 16, 1999.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Formula Amount" is defined in Section 2.01.
"Funded Debt" means, with respect to any Person, all Indebtedness of
such Person (irrespective of whether the maturity thereof is more than one year
or less than one year), other than Indebtedness of the character described in
clause (g) of the definition of "Indebtedness" in this Section 1.01.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Government Contract" means an order from or a contract with the
United States of America or any department, agency or instrumentality thereof.
<PAGE>
10
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hall (Canada)" means Hall Laboratories Ltd., a corporation
originally organized under the laws of British Columbia and now existing under
the laws of Yukon.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
<PAGE>
11
"Integration Capital Expenditures" means the amount of Consolidated
Capital Expenditures, not exceeding an aggregate amount of $1,500,000, made
during the fiscal year ending July 31, 2000 to effectuate the relocation of the
Borrower's Portland, Oregon facility to its Freehold, New Jersey facility
(including the acquisition of machinery and equipment for the Freehold facility
to replace the Portland facility).
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.08.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
first day of each calendar month and (b) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months' duration after
the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" shall mean and include, as to each Obligor, all
"inventory" (as such quoted term is defined in the New York Uniform Commercial
Code as in effect on the date hereof) of such Obligor, whether now owned or
hereafter acquired and wherever located, and (to the extent not included
therein) all of such Obligor's now owned or hereafter acquired goods,
merchandise and other personal property, wherever located, to be furnished under
any contract of sale or held for sale or lease, all raw materials, work in
process, finished goods or materials and supplies of any kind, nature or
description which are or might be used or consumed in such Obligor's business or
used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.
"Issuing Bank" means Chase, in its capacity as the issuer of Letters
of Credit and its successors in such capacity as provided in Section 2.06(i).
The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
"Issuing Bank" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.
"IVOSC" means International Vitamin Overseas Sales Corp., a New
Jersey corporation.
"LC Disbursement" means a payment made by the Issuing Bank pursuant
to a Letter of Credit.
<PAGE>
12
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time. The LC Exposure of any Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letters of Credit" means the Existing Letter of Credit and New
Letters of Credit.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the Revolving Loans and the Term Loans.
"Lockbox Account" is defined in Section 2.04.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower or any of the other Obligors to perform any of its obligations under
this Agreement or any of the other Facility Documents or (c) the rights of or
benefits available to the Lenders under this Agreement or any of the other
Facility Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $500,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.
<PAGE>
13
"Maturity Date" means July 31, 2002.
"Maximum Revolving Amount" is defined in Section 2.01.
"Measuring Period" means (a) the six-month period ending on January
31, 2000; (b) the nine-month period ending on April 30, 2000; and (c) each
12-month period ending on July 31, 2000 and on the last day of each fiscal
quarter of the Borrower thereafter.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Income" means, with respect to any Person for any period, the
aggregate net income (or net deficit) of such person equal to the aggregate
gross revenues and other proper income for such Person during such period less
the aggregate for such Person during such period of (without duplication) (i)
cost of goods sold, (ii) interest expense, (iii) operating expenses, (iv)
selling, general and administrative expenses, (v) taxes, (vi) depreciation,
depletion and amortization of assets and (vii) any other items that are treated
by such Person as expenses consistent with GAAP, but excluding from the
definition of Net Income any extraordinary gains or losses from the sale or
disposition of assets other than in the ordinary course of business, all
computed in accordance with GAAP consistently applied. The settlement payment to
be received by the Borrower from Roche that is described in Section 4.01(p)
shall for purposes of computing Net Income of the Borrower for purposes of this
Agreement be deemed to have been received on July 31, 1999.
"Net Worth" means, as to a Person as of any date of determination,
the excess of total assets of such Person over total liabilities of such Person,
computed in accordance with GAAP. The settlement payment to be received by the
Borrower from Roche that is described in Section 4.01(p) shall for purposes of
computing Net Worth of the Borrower for purposes of this Agreement be deemed to
have been received on July 31, 1999.
"New LC Disbursement" means a payment made by the Issuing Bank
pursuant to a New Letter of Credit.
"New LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding New Letters of Credit at such time plus (b)
the aggregate amount of all New LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The New LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total New LC
Exposure at such time.
"New Letter of Credit" means any letter of credit (whether a standby
letter of credit or a documentary letter of credit) issued by the Issuing Bank
pursuant to this Agreement, other than the Existing Letter of Credit.
"Notes" means the promissory notes executed and delivered by the
Borrower to the Lenders (respectively) pursuant to Section 2.10(f) to evidence
Loans.
"Obligations" means the due and punctual payment of (a) principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for
<PAGE>
14
payment or prepayment or otherwise, and (b) each payment required to be made by
the Borrower under this Agreement in respect of any Letter of Credit or under
the Existing Reimbursement Agreement in respect of the Existing Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(c) all other monetary obligations, including fees, commissions, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower or any of the
other Obligors to any or all of the Lenders or the Agent, or that are otherwise
payable to any Lender or the Agent, under or in connection with this Agreement
or any of the other Facility Documents; and the due and punctual performance of
all covenants, agreements, obligations and liabilities of the Borrower or any of
the other Obligors under or in connection with this Agreement or any of the
other Facility Documents.
"Obligors" means the Borrower, IVOSC, Hall (Canada) and each entity
that hereafter executes and delivers to the Agent a guaranty of the Obligations
pursuant to Section 6.04.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Payment Office" means the office of the Agent at 200 Jericho
Quadrangle, Jericho, New York 11753, Attention: Asset-Based Operations, or such
other office as the Agent may designate in writing from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary
course of business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
<PAGE>
15
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from Standard & Poor's or from
Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Receivables" shall mean and include, as to each Obligor, all of
such Obligor's "accounts" (as such quoted term is defined in the New York
Uniform Commercial Code as in effect on the date hereof), whether now owned or
hereafter acquired or now existing or hereafter arising, and (to the extent not
included therein) all of such Obligor's accounts receivable, contract rights,
instruments, documents, chattel paper, general intangibles relating to accounts,
drafts and acceptances, and all other forms of obligations owing to such Obligor
arising out of or in connection with the sale or lease of Inventory or the
rendition of services, all guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to the Agent hereunder.
"Register" has the meaning set forth in Section 9.04.
<PAGE>
16
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures, unused Revolving Credit Commitments, Existing LC Exposures and
Term Loan Exposures representing more than 70% of the sum of the total Revolving
Credit Exposures, unused Revolving Credit Commitments, Existing LC Exposures and
Term Loan Exposures at such time.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Borrower or any option, warrant or other right to acquire any such shares of
capital stock of the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender,
the commitment of such Lender to make Revolving Loans and to acquire
participations in New Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Credit Commitment is set forth on Schedule 2.01, or
in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Revolving Credit Commitment, as applicable.
"Revolving Credit Commitment Percentage" means, with respect to any
Lender at any time, a fraction whose numerator is the amount of the Revolving
Credit Commitment of such Lender at such time and whose denominator is the
aggregate Revolving Credit Commitments of all the Lenders at such time.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its New LC Exposure at such time.
"Revolving Loans" means the revolving loans made by the Lenders to
Borrower pursuant to subsection (b) of Section 2.01.
"Roche" means Hoffmann-La Roche Inc., a New Jersey corporation.
"Security Agreements" means the Borrower Security Agreement and the
Subsidiary Security Agreements.
"Settlement Date" means the Closing Date and thereafter (a) each
Business Day or (b) each Business Day occurring at such intervals as the Agent
may from time to time determine in its discretion.
"Specified Reserves" means reserves against availability under
Section 2.01(b), which reserves may include (but shall not be limited to) (a)
100% of the value (calculated at the higher of cost or fair market value) of
slow-moving Inventory and Inventory consisting of work in process, in-transit
<PAGE>
17
goods, obsolete goods, promotional goods, seconds and supplies; (b) $500,000 in
respect of the Eligible Receivables of Hall (Canada); and (c) a reserve in the
amount of $1,500,000 in respect of the integration of the Borrower's Portland,
Oregon facility into its Freehold, New Jersey facility, but such $1,500,000
reserve shall be reduced to zero if the Consolidated Debt Service Coverage Ratio
is equal to or greater than 1.0 to 1.0 on July 31, 2000 for the four-quarter
period then ending or on the last day of any fiscal quarter thereafter for the
four-quarter period then ending.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Agent is subject (a) with respect to the
Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months, and (b) with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Guaranties" means the Amended and Restated Guaranties
dated the date hereof from IVOSC and Hall (Canada) respectively in favor of the
Agent and the Lenders, and includes as well any guaranty hereafter delivered by
any Subsidiary pursuant to Section 6.04.
"Subsidiary Security Agreements" means the two Amended and Restated
Security Agreements dated the date hereof from IVOSC and Hall (Canada),
respectively, in favor of the Agent, and includes as well any security agreement
hereafter executed and delivered by a Subsidiary pursuant to Section 6.04.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Term Loan hereunder on the Effective Date as
set forth on Schedule 2.01.
"Term Loan Exposure" means, with respect to any Lender at any time,
the outstanding principal amount of such Lender's Term Loan at such time.
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"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to subsection (a) of Section 2.01.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the Agent
from three negotiable certificate of deposit dealers of recognized standing
selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower and the other Obligors of this Agreement and the other Facility
Documents, the borrowing of Loans, and the use of the proceeds thereof and the
issuance of Letters of Credit hereunder.
"Trustee" means First Union National Bank (formerly known as First
Fidelity Bank, National Association) as trustee under the EDA Indenture.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Week" means the time period commencing with a Thursday and ending
on the following Wednesday.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan" or a "Term Loan") or by Type (e.g., a "Eurodollar Loan or an
"ABR Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan").
Borrowings also may be classified and referred to by Class (e.g., a "Revolving
Borrowing" or a "Term Borrowing") or by Type (e.g., a "Eurodollar Borrowing" or
an "ABR Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and
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19
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
SECTION 1.05. Existing Credit Agreement and Related Documents. (a)
From and after the Effective Date, this Agreement amends and restates in its
entirety the Existing Credit Agreement. All loans outstanding under the Existing
Credit Agreement immediately prior to the Effective Date shall be paid in full
out of the initial Borrowing under this Agreement. All interest and fees in
respect of such loans that are accrued under the Existing Credit Agreement and
unpaid as of the Effective Date shall be paid by the Borrower either (at the
option of the Agent) on the Effective Date or thereafter upon demand by the
Agent.
(b) The Existing Letter of Credit shall continue to be outstanding
and shall remain in full force and effect. For purposes of this Agreement, the
Existing Letter of Credit shall (from and after the Effective Date) be deemed to
have been issued and to be outstanding under this Agreement. All fees with
respect to the Existing Letter of Credit that are accrued under the Existing
Credit Agreement and unpaid as of the Effective Date shall be paid by the
Borrower on the Effective Date or thereafter upon demand by the Agent.
(c) The Existing Reimbursement Agreement and the Existing Trademark
Assignment shall remain in full force and effect.
(d) From and after the Effective Date, the Subsidiary Guaranties
amend and restate in their entirety the guaranty dated April 30, 1996 (as the
same has been amended prior to the date hereof) executed by IVOSC and Hall
(Canada) in connection with the Existing Credit Agreement.
(e) From and after the Effective Date, the Security Agreements amend
and restate in their entirety the three security agreements dated April 30, 1996
(as the same have been amended prior to the date hereof) from the Borrower,
IVOSC and Hall (Canada) respectively in favor of the Agent, without any
interruption in the effectiveness of the Lien granted pursuant to such security
agreements.
(f) The Existing UCC's remain in full force and effect and are
effective to perfect the Lien of the Agent on the Collateral as security for the
Obligations. Any filing by the Agent of new UCC-1 financing statements against
the Borrower, IVOSC and Hall (Canada) in connection with this
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20
Agreement is a precautionary matter and shall not be construed to impair the
continuing effectiveness of the Existing UCC's.
ARTICLE II
The Credits
SECTION 2.01. Term Loan and Revolving Credit Commitments. (a)
Subject to the terms and conditions set forth herein, each Lender agrees to make
a Term Loan to the Borrower on the Effective Date in a principal amount equal to
such Lender's Term Loan Commitment. The Term Loan Commitments are not revolving
in nature, and amounts repaid or prepaid may not be reborrowed.
(b) Subject to the terms and conditions set forth herein, each
Lender agrees to make Revolving Loans to the Borrower from time to time during
the Availability Period in an aggregate principal amount that will not result in
either (i) such Lender's Revolving Credit Exposure exceeding such Lender's
Revolving Credit Commitment, or (ii) the aggregate of all the Lenders' Revolving
Credit Exposures exceeding the lesser of:
(x) $22,000,000 (the "Maximum Revolving Amount"); or
(y) the amount (the "Formula Amount") that is equal to the
Borrowing Base at such time, less all interest, fees,
charges and other amounts required to be paid by the
Borrower or any other Obligor to the Agent or any Lender
under or in connection with this Agreement or any other
Facility Document that have then accrued, less such
reserves (including the Specified Reserves) as the Agent
may reasonably deem proper and necessary from time to
time in its sole discretion.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Term Loan shall be made
as part of a Borrowing consisting of Term Loans made by the Lenders ratably in
accordance with their respective Term Loan Commitments. Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Revolving Credit
Commitments. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.14, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000 per Lender. Borrowings of more
than one Type and Class may be outstanding at the same
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21
time; provided that there shall not at any time be more than a total of five
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Funding of Borrowings. (a) To request a Borrowing, the
Borrower shall notify the Agent of such request by telephone (i) in the case of
a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing or (ii) in the case of
an ABR Borrowing, not later than 11:00 a.m., New York City time, on the Business
Day that is the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Agent of a written Borrowing Request in a form approved by the
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(aa) the aggregate amount of the requested Borrowing;
(bb) the date of such Borrowing, which shall be a Business Day;
(cc) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(dd) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(ee) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements
of subsection (c) of this Section.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this subsection, the Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
(b) In addition to the requests for Borrowings provided for in
subsection (a) of this Section, the Borrower hereby irrevocably requests, in
advance, ABR Revolving Loans in the amount of any amount (including presentment
of checks for payment on any demand deposit or disbursement account of the
Borrower with the Agent) required to be paid as interest, fees or other charges
under this Agreement, any other Facility Document or any other agreement with
the Agent or any Lender or with respect to any other Obligation, when such
amount becomes due.
(c) Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds by
12:00 noon, New York City time, to the account of the Agent most recently
designated by it for such purpose by notice to the Lenders. The Agent will make
such Loans available to the Borrower by promptly crediting the amounts so
received, in like funds, to an account of the Borrower maintained with the Agent
in New York City and designated by the Borrower in the applicable Borrowing
Request; provided that ABR Revolving Loans made to finance
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22
the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be
remitted by the Agent to the Issuing Bank; and provided further that Revolving
Loans made pursuant to the request contained in subsection (b) of this Section
shall be disbursed to the Agent to be applied to the outstanding Obligations
giving rise to such request. Each charge by the Agent to the Borrower's
Revolving Account for any such amount shall constitute an ABR Revolving
Borrowing and shall increase the amount of the outstanding Obligations.
(d) Notwithstanding anything to the contrary contained in subsection
(c) of this Section (with respect to the funding of Revolving Loans) or in
Section 2.18 (with respect to the payment of Revolving Loans), commencing on the
first Business Day following the Effective Date, the ABR Revolving Loans in each
ABR Revolving Borrowing shall be funded initially by the Agent, and each payment
of Revolving Loans shall be applied first to the ABR Revolving Loans funded by
the Agent. If the Agent determines to settle with the Lenders on a weekly basis
(or on the basis of any other interval other than daily on each Business Day),
then on or before 1:00 p.m. (New York City time) on each Settlement Date
commencing with the first Settlement Date following the Effective Date, the
Agent and the Lenders shall make certain payments as follows:
(i) if the aggregate amount of Revolving Loans made by the Agent
during the applicable Week (or other such interval) exceeds the aggregate
amount of repayments applied to outstanding Revolving Loans during such
Week (or such other interval), then each Lender shall provide the Agent
with funds in the amount of its Revolving Credit Commitment Percentage
such excess; and
(ii) if the aggregate amount of repayments applied to outstanding
Revolving Loans during the applicable Week (or such other interval)
exceeds the aggregate amount of Revolving Loans made by the Agent during
such Week (or such other interval), then the Agent shall provide each
Lender with its Revolving Credit Commitment Percentage of such excess.
If the Agent determines to settle with the Lenders on a weekly basis (or on the
basis of any other interval other than daily on each Business Day), the Agent
shall submit to each Lender a certificate with respect to payments received and
Revolving Loans made during the applicable Week (or such other interval). In all
events, such fundings by the Agent shall be subject to the provisions of Section
2.07. As among the Agent and the Lenders, each shall be entitled to the interest
required to be paid by the Borrower hereunder on the ABR Revolving Loans on the
basis of the ABR Revolving Loans which it has funded.
SECTION 2.04. Collections and Application. (a) The Borrower shall,
and shall cause each other Obligor to, instruct all their respective account
debtors to make all payments on account of Receivables to a lockbox account for
such Obligor under the Agent's dominion and control established by such Obligor
at the Agent (a "Lockbox Account"). There shall be a separate Lockbox Account
for each separate Obligor. All funds deposited in a Lockbox Account shall
immediately be deemed to be the Agent's property to be transferred to the
Blocked Account for such Obligor as provided below. The Borrower shall, and
shall cause each other Obligor, to execute all such documentation as the Agent
may deem necessary to establish the Lockbox Accounts.
(b) The Agent shall transfer all funds deposited in a Lockbox
Account for an Obligor to a blocked account for such Obligor under the Agent's
dominion and control established by such Obligor at the Agent (a "Blocked
Account"). There shall be a separate Blocked Account for each separate Obligor.
All funds deposited in a Blocked Account shall immediately become the property
of the Agent to be applied by the Agent to the Obligations as provided in
subsection (d) of this Section. All
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23
proceeds of Collateral received by any Obligor on account of any Collateral
shall be held by such Obligor in trust for the Agent, and Borrower shall, and
shall cause each other Obligor to, promptly deposit all such payments into the
Blocked Account of the applicable Obligor. The Borrower shall, and shall cause
each other Obligor to, execute all such documentation as the Agent may deem
necessary to establish the Blocked Accounts.
(c) Notwithstanding subsections (a) and (b) of this Section, Hall
(Canada) shall not be required to cause its account debtors to remit their
payments to its Lockbox Account or to remit the proceeds of other Collateral
received by it to its Blocked Account, unless and until the Agent directs Hall
(Canada) to do so in writing.
(d) The Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to the Receivables or any
other Collateral or that are the proceeds of Receivables or any other Collateral
may not be collectible by the Agent on the date received. In consideration of
the Agent's agreement to conditionally credit the Borrower's Revolving Account
on the Business Day on which the Agent receives those items of payment, in
computing the charges under this Agreement all items of payment shall be deemed
applied by the Agent on account of the Obligations two (2) Business Days after
deposit in the applicable Blocked Account, subject to final payment and
collection; provided however that all items of payment received by the Agent by
wire transfer or other same-day funds shall be deemed applied by the Agent on
account of the Obligations on the same day of receipt in the Blocked Account of
such funds if such funds are received in such Blocked Account not later than
3:00 p.m. (New York City time) on such date. The Agent is not required to credit
the Borrower's Revolving Account for the amount of any item of payment which is
unsatisfactory to the Agent, and the Agent may charge the Borrower's Revolving
Account for the amount of any item of payment which is returned to the Agent
unpaid.
(e) The Agent shall have the continuing and exclusive right to apply
or reverse and re-apply any payment and any and all proceeds of Collateral to
any Obligations. To the extent that any Obligor makes a payment or the Agent or
any Lender receives any payment or proceeds of Collateral for any Obligor's
benefit which is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor-in-possession, receiver, custodian or any other Person under any
bankruptcy, insolvency or reorganization law or under common law or otherwise,
then to such extent the Obligations shall be revived and continue as if such
payment or proceeds had not been received by the Agent or such Lender.
(f) The Agent shall maintain, in accordance with its customary
procedures, a loan account in the name of the Borrower (the "Borrower's
Revolving Account"), in which shall be recorded the date and amount of each
Revolving Loan and New Letter of Credit and the date and amount of each payment
in respect thereof; provided, however, that any failure by the Agent to record
the date and amount of any Revolving Loan or New Letter of Credit shall not
adversely affect the Agent or any Lender. For each month, the Agent shall send
to the Borrower a statement showing the accounting for the Revolving Loans made
and New Letters of Credit issued, payments made or credited in respect thereof,
and other transactions between the Agent and the Lenders (on the one hand) and
the Borrower (on the other hand) during such month. The monthly statements shall
be deemed correct and binding upon the Borrower in the absence of manifest error
and shall constitute an account stated among the Agent, the Lenders and the
Borrower, unless the Agent receives a written statement of the Borrower's
specific exceptions thereto within 60 days after such statement is received by
the Borrower. The records of the Agent with respect to the Borrower's Revolving
Account shall be prima facie evidence of the
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24
amounts of the Revolving Loans, New Letters of Credit and other charges thereto
and of payments applicable thereto.
SECTION 2.05. [Reserved.]
SECTION 2.06. Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request the issuance of New
Letters of Credit for its own account, in a form reasonably acceptable to the
Agent and the Issuing Bank, at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or
entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a New Letter of Credit (or the amendment,
renewal or extension of an outstanding New Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a New
Letter of Credit, or identifying the New Letter of Credit to be amended, renewed
or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such New Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such New Letter of Credit, the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend,
renew or extend such New Letter of Credit. If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank's
standard form in connection with any request for a New Letter of Credit. A New
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each New Letter of Credit the
Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the New LC Exposure shall not
exceed $1,000,000 and (ii) the sum of the total Revolving Credit Exposures shall
not exceed the lesser of the Maximum Revolving Amount or the Formula Amount at
such time.
(c) Expiration Date. Each New Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such New Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and (ii)
the date that is five Business Days prior to the Maturity Date.
(d) Participations. By the execution and delivery by a Lender of
this Agreement or of an Assignment and Assumption, and without any further
action on the part of the Issuing Bank or the Lenders, such Lender hereby
acquires from the Issuing Bank, and the Issuing Bank hereby grants to such
Lender, a participation in the Existing Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under the
Existing Letter of Credit. By the issuance of a New Letter of Credit (or an
amendment to a New Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, each Lender
hereby acquires from the Issuing Bank, and the Issuing Bank hereby grants to
each Lender, a participation in such New Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
New Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the
account of the Issuing Bank, such Lender's Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not
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25
reimbursed by the Borrower by the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit (other than an Existing LC
Disbursement for which the Borrower shall have paid the Agent in advance as
required by Section 3.01 (a) and (b) of the Existing Reimbursement Agreement),
the Borrower shall reimburse such LC Disbursement by paying to the Agent an
amount equal to such LC Disbursement not later than 12:00 noon, New York City
time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 12:00 noon, New York City time, on
(i) the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt;
provided that, if such LC Disbursement is a New LC Disbursement, the Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with an ABR Revolving
Borrowing in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing. If the Borrower fails to make such payment
when due, the Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Lender shall pay to the Agent its Applicable Percentage of the payment then due
from the Borrower, in the same manner as provided in Section 2.07 with respect
to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Agent of any payment from the Borrower pursuant to this
paragraph, the Agent shall distribute such payment to the Issuing Bank or, to
the extent that Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Agent, the Lenders nor the Issuing Bank, nor
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26
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Agent and the Borrower by telephone (confirmed by telecopy) of such
demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the
Lenders of any such replacement of the Issuing Bank. At the time any such
replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an
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27
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Agent or the Required Lenders (or, if the maturity of the Loans has been
accelerated, Lenders with LC Exposure representing greater than 50% of the total
LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Agent, in the name
of the Agent and for the benefit of the Lenders, an amount in cash equal to the
LC Exposure as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of
Article VII. Such deposit shall be held by the Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement.
The Agent shall have exclusive dominion and control, including the exclusive
right of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Agent and at the Borrower's risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
(k) Citizen's Commitment. The Existing LC Commitment of Citizens as
to the amount of Existing Letter of Credit that is undrawn as of the close of
business on the Maturity Date shall automatically be assigned to the Issuing
Bank as of the close of business on the Maturity Date, and Citizens shall
thereafter have no further participation in the undrawn amount of the Existing
Letter of Credit. Nothing in the immediately preceding sentence shall apply to
any Existing LC Disbursement that shall have been made on or before the Maturity
Date.
SECTION 2.07. Assumption as to Fundings. Unless the Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Agent such Lender's share of such
Borrowing, the Agent may assume that such Lender has made such share available
to the Agent on such date in accordance with Section 2.03 (or will make such
share available on the next Settlement Date, in the case of ABR Revolving Loans
when the Agent determines to settle with the Lenders on a basis other than daily
on each Business Day) and may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Borrowing available to the Agent on such
proposed date of Borrowing (or does not in fact make its share thereof available
to the Agent on the next Settlement Date, in the case of an ABR Revolving Loans
where the Agent determines to settle with the Lenders on a basis other than
daily on each Business Day), then the applicable Lender and the Borrower
severally agree to pay to the Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower (or such Settlement Date, if
applicable) to but excluding the date of payment to the Agent, at (i) in the
case
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of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.08. Interest Elections. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Agent of a written Interest Election Request in a form approved by the Agent and
signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration, in the case of a Eurodollar
Borrowing.
(d) Promptly following receipt of an Interest Election Request, the
Agent shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be
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29
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Agent, at the request
of the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
SECTION 2.09. Termination and Reduction of Revolving Credit
Commitments. (a) Unless previously terminated, the Revolving Credit Commitments
shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Revolving Credit Commitments; provided that (i) each reduction of
the Revolving Credit Commitments shall be in an amount that is an integral
multiple of $1,000,000 and not less than $3,000,000 and (ii) the Borrower shall
not terminate or reduce the Revolving Credit Commitments if, after giving effect
to any concurrent prepayment of the Revolving Loans in accordance with Section
2.11, the sum of the Revolving Credit Exposures would exceed the total Revolving
Credit Commitments.
(c) The Borrower shall notify the Agent of any election to terminate
or reduce the Revolving Credit Commitments under paragraph (b) of this Section
at least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments delivered by the Borrower may state that such notice is conditioned
upon the effectiveness of other credit facilities, in which case such notice may
be revoked by the Borrower (by notice to the Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Revolving Credit Commitments shall be permanent. Each reduction of the
Revolving Credit Commitments shall be made ratably among the Lenders in
accordance with their respective Revolving Credit Commitments.
(d) If the Borrower terminates or reduces the Revolving Credit
Commitments prior to the first anniversary of the Effective Date, the Borrower
shall pay to the Agent for the ratable benefit of the Lenders (in accordance
with their respective Revolving Credit Commitment Percentages) an early
termination or reduction fee in the amount of one percent (1%) of the Maximum
Revolving Amount (in the case of a termination) or one percent (1%) of the
amount of such reduction (in the case of a reduction).
SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan of such Lender on
the Maturity Date.
(b) The Term Loan Borrowings shall be due and payable as to
principal in 12 consecutive quarterly installments of $257,500 each, beginning
on October 31, 1999 and continuing on the last day of each fiscal quarter of the
Borrower thereafter, and the remaining principal amount of the Term Loan
Borrowings shall be due and payable in full on the Maturity Date. The Borrower
hereby unconditionally promises to pay to the Agent for the account of each
Lender the principal amount of the Term Loan of such Lender, on the dates set
forth in the immediately preceding sentence and in such Lender's ratable share
(based on its Term Loan Exposure as compared to the aggregate Term Loan
Exposures of all the Lenders) of the amounts set forth in the immediately
preceding sentence.
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(c) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(d) The Agent shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to
paragraph (c) or (d) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender and in
substantially the form attached hereto as Exhibit A-1 (in the case of Revolving
Loans) or Exhibit A-2 (in the case of a Term Loan). Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein.
SECTION 2.11. Prepayment of Loans. (a) The Borrower may at any time
and from time to time to prepay any Borrowing in whole or in part, subject (in
the case of a Term Loan Borrowing or a Eurodollar Revolving Borrowing) to prior
notice in accordance with paragraph (b) of this Section, and subject to the
payment of the amounts required to be paid pursuant to this Section and (in the
case of a Eurodollar Borrowing) Section 2.16.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Term Loan Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Revolving Credit Commitments as contemplated by Section 2.09,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.09. Promptly following receipt of any such
notice relating to a Borrowing, the Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Eurodollar Borrowing shall be
in an amount that would be permitted in the case of an advance of a Borrowing of
the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.13.
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(c) If the aggregate of the Revolving Credit Exposures of all the
Lenders at any time exceeds the lesser of the Maximum Revolving Amount or the
Formula Amount at such time, the Borrower shall immediately prepay Revolving
Loans to such an extent that there is no such excess.
(d) If the Term Loans are prepaid in whole or in part prior to the
first anniversary of the Effective Date, the Borrower shall pay to the Agent for
the ratable benefit of the Lenders (in accordance with the respective unpaid
principal amounts of their Term Loans) a prepayment fee in the amount of one
percent (1%) of the amount so prepaid (except as otherwise provided in
subsection (f) of this Section).
(e) If, as to any fiscal year of the Borrower, the amount of (i)
Consolidated EBITDA for such year, less (ii) the amount of income taxes of the
Borrower and its Consolidated Subsidiaries paid in cash in such year, less (iii)
interest expense of the Borrower and its Consolidated Subsidiaries for such
year, minus (iv) Consolidated Capital Expenditures for such year, exceeds zero,
then the Borrower shall prepay the Term Loans by an amount equal to fifty
percent (50%) of such excess. Such prepayment shall be made not later than 90
days after the end of each fiscal year in which there is such an excess.
(f) If the Borrower or any Subsidiary sells any of its equipment (as
the term "equipment" is defined in the New York Uniform Commercial Code as of
the date hereof), the Borrower shall prepay the Term Loans by an amount equal to
100% of the gross sales proceeds less ordinary and reasonable selling expenses.
Such prepayment shall be made within ten days after the receipt by the Borrower
or such Subsidiary of such proceeds. The Borrower shall not be required to pay
the prepayment fee described in subsection (d) of this Section as to a
prepayment made pursuant to this subsection.
(g) Any prepayment of Term Loans shall be applied in the inverse
order of maturity.
SECTION 2.12. Fees. (a) If for any quarter the average daily unpaid
amount of the Revolving Credit Exposure for each day of such quarter does not
equal the Maximum Revolving Amount, then the Borrower shall pay to the Agent for
the ratable benefit of the Lenders a facility fee equal to product of (i) the
Applicable Rate per annum multiplied by (ii) the amount by which the Maximum
Revolving Amount exceeds such average daily unpaid amount. Such fee shall be
payable to the Agent quarterly in arrears on the first day of each calender
quarter, commencing with the first calendar quarter following the Effective
Date, and on the Maturity Date. The facility fee shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed. Computation of such average for the quarter in which the Effective Date
occurs, and for the quarter in which the Maturity Date occurs, shall be
appropriately pro-rated..
(b) The Borrower agrees to pay to the Agent for the account of each
Lender a participation fee with respect to its participation in the Existing
Letter of Credit, which shall accrue at the Applicable Rate on the average daily
amount of such Lender's Existing LC Exposure (excluding any portion thereof
attributable to unreimbursed Existing LC Disbursements) during the period from
and including the Effective Date to but excluding the date on which such Lender
ceases to have any Existing LC Exposure. The Borrower also agrees to pay to the
Agent for the account of each Lender a participation fee with respect to its
participation in New Letters of Credit, which shall accrue at the Applicable
Rate on the average daily amount of such Lender's New LC Exposure (excluding any
portion thereof attributable to unreimbursed New LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date on which such Lender's Revolving Credit Commitment terminates and the date
on which such Lender ceases to have any New LC Exposure. The Borrower also
agrees to pay to the Issuing Bank a fronting fee, which shall accrue at the rate
per annum
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separately agreed upon between the Borrower and the Issuing Bank in the Fee
Letter, on the average daily amount of the New LC Exposure (excluding any
portion thereof attributable to unreimbursed New LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date of the termination of the Revolving Credit Commitments and the date on
which there ceases to be any New LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Revolving Credit Commitments terminate and any such fees accruing
after the date on which the Revolving Credit Commitments terminate shall be
payable on demand. Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed.
(c) The Borrower agrees to pay to the Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Agent in the Fee Letter. The Borrower shall also pay to the
Agent on demand all usual and customary fees and expenses of the Agent in
connection with the Lockbox Accounts and the Blocked Accounts.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Agent (or to the Issuing Bank, in the case
of fees payable to it) for distribution, in the case of facility fees and
participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances (absent manifest error).
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and upon termination of the Revolving
Credit Commitments; provided that (i) interest accrued pursuant to paragraph (c)
of this Section shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The
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33
applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Agent is advised by the Required Lenders that the Adjusted
LIBO Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders of making or maintaining their Loans included in
such Borrowing for such Interest Period;
then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans or made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Bank, as the case may be, such
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34
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(b) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent, or Lender or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and
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35
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agent, and each Lender and the
Issuing Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Agent, or such Lender or the
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the Agent at
the Payment Office, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.15,
2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such
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36
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Agent for the account of
the Lenders or the Issuing Bank hereunder that the Borrower will not make such
payment, the Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Agent forthwith on demand the amount so distributed to such Lender
or Issuing Bank with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.03, 2.06(d) or (e), 2.07 or 2.18(d), then the Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Agent for the account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
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37
SECTION 3.01. Organization; Powers; Subsidiaries. (a) Each of the
Borrower and its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
(b) Schedule 3.01 is a complete and accurate list of the
Subsidiaries of the Borrower, showing the jurisdiction of organization of each
Subsidiary and showing the percentage of the Borrower's (or another
Subsidiary's) ownership of the outstanding stock (or other equity interests) of
each Subsidiary.
(c) Neither the Borrower nor any Subsidiary is a partner in any
partnership, other than Hidel Partners (of which the Borrower owns 100% of the
partnership interests).
SECTION 3.02. Authorization; Enforceability. (a) The Transactions
are within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of this Agreement
and the other Facility Documents to which the Borrower is a party has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
(b) Each Facility Document to which any Subsidiary is a party is
within the corporate power of such Subsidiary, has been duly authorized,
executed and delivered by such Subsidiary and is a legal, valid and binding
obligation of such Subsidiary, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or any of their respective assets, or give rise to a right
thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended July 31, 1998, reported on by Amper Politziner &
Mattia P.A., independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended April 30, 1999, certified by
its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its Consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
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38
(b) Since July 31, 1998, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole. The Lenders
acknowledge that in July 1999 the Borrower effectuated an eight for one reverse
stock split as to its capital stock.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) None of the properties of the Borrower or any Subsidiary is
subject to any Lien, other than (i) Permitted Encumbrances, (ii) Liens in favor
of the Agent, (iii) Liens identified in Schedule 6.02, and (iv) until the
Effective Date, Liens in favor of Roche.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or any of the other Facility
Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the
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39
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Receivableing Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed the
fair market value of the assets of such Plan.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrower to the Agent or
any Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 3.12. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by September 30, 1999. The cost to the Borrower
of such reprogramming and testing and of the reasonably foreseeable consequences
of year 2000 to the Borrower (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Effect. The computer and management information
systems of the Borrower and its Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrower to conduct its business without Material
Adverse Effect.
SECTION 3.13. Solvency.
(a) The present fair saleable value of the assets of the Borrower
after giving effect to all the Transactions and the funding of the Revolving
Credit Commitments and the Term Loan Commitments hereunder exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including contingent liabilities) of the Borrower and its
Subsidiaries as they mature.
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40
(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 3.13), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
SECTION 3.14. 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 3.15. As to Collateral. (a) Schedule 3.15(A) hereto
accurately sets forth as to each of the Borrower and each Subsidiary, 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.
(b) During the five years preceding the Effective Date, neither the
Borrower nor any Subsidiary has been known by any name other than its current
name, except for the following names:
(i) Hall Laboratories, Inc.
(ii) International Vitamin Corporation
(c) With respect to the Borrowing Base Certificate most recently
submitted to the Agent, each Receivable included thereon within the category of
Eligible Receivables satisfies all the minimum requirements for eligibility set
forth in the definition of "Eligible Receivables" 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.
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41
(d) The registered trademarks and trademark applications identified
in the Existing Trademark Assignment comprise all of the registered trademarks
and trademark applications of the Borrower and all of the Subsidiaries.
(e) Schedule 3.15(B) accurately identifies the name and address of
the record title owner of each facility that is leased to the Borrower or to any
of the Subsidiaries.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue New Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Agent shall have received from each party hereto either (i)
a counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement.
(b) The Agent shall have received from each party to each other
Facility Document either (i) a counterpart thereof signed on behalf of
such party or (ii) written evidence satisfactory to the Agent (which may
include telecopy transmission of a signed signature page thereof) that
such party has signed a counterpart of such Facility Document; together
with appropriate signed UCC-1 financing statements.
(c) The Agent shall have received a favorable written opinion
(addressed to the Agent and the Lenders and dated the Effective Date) of
Edell & Associates, counsel for the Borrower and the other Obligors
(substantially in the form of Exhibit B) and of Campney & Murphy, British
Columbia counsel for Hall (Canada) and Preston Willis & Lackowicz, Yukon
counsel for Hall (Canada) (both in a form satisfactory to the Agent);
provided however that the Agent may (in its discretion) waive the
requirement that the opinions of Campney & Murphy and of Preston Willis &
Lackowicz be delivered by the Effective Date, but if the Agent does so
waive such requirement the Borrower shall cause such opinions to be
rendered within ten Business Days after the Effective Date. The Borrower
hereby requests such counsel to deliver such opinions.
(d) The Agent shall have received such documents and certificates as
the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower and each
Subsidiary, the authorization of the Transactions and any other legal
matters relating to the Borrower and each Subsidiary, this Agreement, the
other Facility Documents or the Transactions, all in form and substance
satisfactory to the Agent and its counsel.
(e) The Agent shall have received such lien searches as the Agent or
its counsel may reasonably request.
(f) The Agent shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer
of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
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42
(g) The Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder or under the Fee
Letter.
(h) The Agent shall have received such landlord's waivers as the
Agent may request from the owners (and, if applicable, sublandlords) of
the facilities leased to the Borrower or to any Subsidiary in Freehold,
New Jersey, Irvington, New Jersey, Portland, Oregon, and elsewhere, duly
executed by such owners (and, if applicable, such sublandlords), all in
form and substance satisfactory to the Agent.
(i) The Agent shall have received a certificate of insurance (in
form and substance satisfactory to the Agent) evidencing (i) that property
insurance is in effect on the equipment, fixtures and inventory of the
Borrower and each Subsidiary, and that the Agent has been named in a
lender-loss payable endorsement to the policy of such insurance; and (ii)
that liability (including product liability) insurance is in effect as to
the Borrower and each Subsidiary, and that the Agent is named as an
additional insured with respect thereto.
(j) The Agent shall have received appraisal reports as to the
machinery and equipment of the Borrower and the Subsidiaries performed by
an appraisal firm satisfactory to the Agent and at the cost of the
Borrower, each of which shall be satisfactory in form and substance to the
Agent.
(k) The Agent shall have received evidence satisfactory to it that
the total amount of Revolving Loans available to be borrowed by the
Borrower on the Effective Date is at least $6,000,000 more than the sum of
(x) the principal amount of the Revolving Loans to be borrowed by the
Borrower on the Effective Date, and (y) any New Letters of Credit to be
obtained by the Borrower on the Effective Date.
(l) The Agent shall have received from the Borrower a
management-prepared preliminary balance sheet, income statement and cash
flow statement for the fiscal year ended July 31, 1999, indicating a
Consolidated EBITDA of not less than $6,400,000 (excluding non-cash write
downs of not more than $6,500,000 associated with the sale of Vitamin
Specialties Corp., a former Subsidiary of the Borrower).
(m) The Agent shall have received from the Borrower a
management-prepared, projected consolidated balance sheet, income
statement and cash flow statement as of the end of each quarter during the
fiscal year ending July 31, 2000, and a management-prepared, projected
annual balance sheet and income statement for each of the fiscal years
ending July 31, 2001 and July 31, 2002, prepared in reasonable detail and
with an explanation of the significant assumptions on the basis of which
they are prepared, all of which shall be in form and substance
satisfactory to the Agent.
(n) The Agent shall have received a letter, in form and substance
satisfactory to the Agent, from Banque Nationale de Paris and the
Authority (which are parties to a mortgage financing of the Borrower's
Freehold, New Jersey premises) consenting to the obtaining by the Borrower
of credit hereunder and to the grant by the Subsidiaries of their
respective Subsidiary Guaranties and to the grant by the Borrower and the
Subsidiaries of the Lien in favor of the Agent on the Collateral.
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43
(o) The Agent shall have received evidence that all equipment leases
between Chase or any of its affiliates (as lessor) and the Borrower or any
Subsidiary (as lessee) have been paid or prepaid in full.
(p) The Agent shall have received written evidence satisfactory to
it (i) that a closing has occurred under a certain settlement between the
Borrower and Roche with respect to certain price-fixing and other
anticompetitive matters, and (ii) that, in connection with such
settlement, Roche has made a cash payment to the Borrower of at least
$11,500,000 less the amount (not in excess of $5,500,000) of past due
payables owing by the Borrower to Roche, and (iii) that the guaranty by
Roche of the Borrower's obligations in respect of Facility B under the
Existing Credit Agreement has been cancelled by the Agent, and (iv) that
all Liens of Roche on the assets and properties of the Borrower and its
Subsidiaries and Vitamin Specialties Corp. have been discharged (and
copies of such discharges shall have been provided to the Agent if
requested).
The Agent shall notify the Borrower and the Lenders of the Effective Date, and
such notice shall be conclusive and binding. Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue New
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived) at or prior to 3:00 p.m., New York
City time, on September 30, 1999 (and, in the event such conditions are not so
satisfied or waived, the Revolving Credit Commitments and the Term Loan
Commitments shall terminate at such time and no Lender other than the Issuing
Bank shall have an obligation to participate in the Existing Letter of Credit).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of the Borrower and of each
other Obligor set forth in this Agreement and in each other Facility
Document shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be
continuing.
(c) The Agent shall have received a current Borrowing Base
Certificate and such approvals, consents, opinions and documents as the
Agent may reasonably request.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
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44
ARTICLE V
Affirmative Covenants
Until the Revolving Credit Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder and all other Obligations have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements have been reimbursed,
the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated and consolidating balance sheet and
related statements of operations, stockholders' equity and cash flows as
of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by Amper
Politziner & Mattia or other independent public accountants acceptable to
the Agent (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such audit)
to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations
of the Borrower and its Consolidated Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating the Designated Consolidated
Leverage Ratio and demonstrating compliance (or the extent of
noncompliance) with the financial covenants contained in Article VI, and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
<PAGE>
45
(e) within 35 days (in the case of clause (i) of this subsection) or
20 days (in the case of clauses (ii) and (iii) of this subsection) after
the end of each calendar month, (i) a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such month,
and a consolidated income statement and statements of cash flow and
changes in stockholders' equity of the Borrower and its Consolidated
Subsidiaries for such calendar month and for the then-elapsed portion of
the fiscal year; (ii) a report as to the accounts payable of the Borrower
and each Subsidiary and the aging thereof; and (iii) a Borrowing Base
Certificate and such other reports as may be requested by the Agent as to
the Receivables and the Eligible Receivables of the Borrowing Base Parties
and the aging thereof, and as to the Inventory and Eligible Inventory of
the Borrowing Base Parties; in each case, in reasonable detail and in form
satisfactory to the Agent and certified to be true and correct by the
chief financial officer of the Borrower; together with a report as to all
activity in the Lockbox Accounts and the Blocked Accounts during such
month;
(f) on Monday of each week, a Borrowing Base Certificate as of the
preceding Wednesday (which Certificate shall additionally be sent to the
office of the Agent at 200 Jericho Quadrangle, Jericho, New York,
Attention: Asset-Based Operations, Telecopier No. 516-828-2030);
(g) on a weekly basis, if requested by the Agent, with respect to
the Borrower and each Subsidiary: (i) confirmatory assignment schedules,
(ii) the weekly invoice register with respect to its sales for the
preceding week, (iii) a weekly collection report for the preceding week,
and (iv) its weekly debit and credit adjustments journal for the preceding
week;
(h) immediately upon learning thereof, notice of any matter
materially affecting the value, enforceability or collectability of any
portion of the Collateral, including any reclamation by the Borrower or
any Subsidiary (or return to any of them) of a material amount of goods
and claims or disputes asserted by any Customer;
(i) not less than 30 days prior to the end of each fiscal year of
the Borrower, a quarter-by-quarter projected operating budget and cash
flow statement for the Borrower and each Subsidiary for the ensuing fiscal
year, together with a detailed schedule of assumptions on which such
projections were prepared, which shall be accompanied by a certificate
signed by the Financial Officer to the effect that such projections have
been prepared on the basis of sound financial planning practice consistent
with past budgets and financial statements and that the Financial Officer
has no reason to question the reasonableness of any material assumptions
on which such projections were prepared;
(j) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may
be; and
(k) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or the Collateral, or compliance with the
terms of this Agreement, as the Agent or any Lender may reasonably
request.
<PAGE>
46
SECTION 5.02. Notices of Material Events. The Borrower will furnish
to the Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting
the Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $10,000;
(d) the occurrence of any default by the Borrower under any lease to
the Borrower (or any claim by a landlord thereunder that such a default
exists); and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default.
SECTION 5.05. Maintenance of Properties; Insurance. (a) The Borrower
will, and will cause each of its Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
(b) The Borrower will, and will cause each of its Subsidiaries to,
at the cost and expense of the Borrower, in amounts and with carriers acceptable
to the Agent, (i) keep all its insurable properties, and properties in which it
has an interest, insured against the hazards of fire, smoke, sprinkler leakage,
those hazards covered by an extended coverage insurance policy and such other
hazards as is customary in the case of companies engaged in businesses similar
to its business, including business interruption insurance; (ii) maintain a bond
insuring against larceny, embezzlement and other criminal misappropriation of
the officers and employees of the Borrower and the Subsidiaries, who may either
singularly or jointly with others at any time have access to the assets or funds
of the Borrower or its Subsidiaries either directly or through authority to draw
upon such funds or to direct generally the disposition of such assets; (iii)
maintain public and product liability insurance against claims for personal
injury, death or property damage suffered by others; (iv) maintain all such
workers' compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which the Borrower or
<PAGE>
47
such Subsidiary is engaged in business; (v) furnish to the Agent (x) copies of
all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration thereof, and (y)
appropriate loss payable endorsements in form and substance satisfactory to the
Agent, naming the Agent as a co-insured and loss payee as its interest may
appear with respect to all insurance coverage referred to in clauses (i) and
(ii) above, and providing (aa) that all proceeds thereunder shall be payable to
the Agent, (bb) that no such insurance shall be affected by any act or neglect
of the insured or owner of the property described in such policy, and (cc) that
such policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days prior notice is given to the Agent. In the
event of any loss thereunder, the carriers named therein are hereby directed to
make payment for such loss to the Agent (and not to the Borrower or any
Subsidiary; and not jointly to the Agent and the Borrower or any Subsidiary). If
any insurance losses are paid by check, draft or other instrument payable to the
Borrower or any Subsidiary and the Agent jointly, the Agent may endorse the name
of the Borrower or such Subsidiary thereon, and do such other things as the
Agent may deem advisable to reduce the same to cash. Following the occurrence
and during the continuation of a Default, the Agent is hereby authorized to
adjust and compromise claims under insurance coverage referred to in clauses (i)
and (ii) above. All loss recoveries received by the Agent upon any such
insurance may be applied to the Obligations in such order as the Agent in its
sole discretion shall determine. Any surplus shall be paid by the Agent to the
Borrower or the applicable Subsidiary or applied as may be required by law.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties (except that the Borrower shall not be obligated to bear the cost of
more than one such inspection in any 12-month period at each of its Oregon and
British Columbia facilities, provided that no Event of Default exists), to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested. Without
limiting the generality of the immediately preceding sentence, the Borrower
shall pay to the Agent all expenses, costs and disbursements incurred by the
Agent in connection with the monitoring of Collateral, including any field
examination, collateral analysis or other business analysis, the need for which
is to be determined by the Agent and which monitoring is undertaken for the
Agent's benefit.
SECTION 5.07. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of
the Loans and the New Letters of Credit will be used only for working capital
and general corporate requirements, (including, out of the initial Borrowing on
the Effective Date, the refinancing of loans outstanding under the Existing
Credit Agreement and the payment of the equipment leases with Chase or its
affiliate). No part of the proceeds of any Loan or any New Letter of Credit will
be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations G, U and
X.
SECTION 5.09. Landlord Waivers. The Borrower will use its best
efforts to obtain landlords' waivers (in a form acceptable to the Agent) from
landlords of its several leased premises and to provide same to the Agent within
60 days after the Effective Date.
<PAGE>
48
ARTICLE VI
Negative Covenants
Until the Revolving Credit Commitments have expired or terminated
and the principal of and interest on each Loan and all fees payable hereunder
and all other Obligations have been paid in full and all Letters of Credit have
expired or terminated and all LC Disbursements have been reimbursed, the
Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof;
(c) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured
by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (ii) the
aggregate principal amount of Indebtedness permitted by this clause (c)
shall not exceed $1,000,000 at any time outstanding;
(d) indebtedness of Hall (Canada) to the Borrower not to exceed
$500,000 outstanding at any time; and
(e) until the Effective Date, Indebtedness to Roche.
SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Liens in favor of the Agent securing the Obligations;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset
of the Borrower or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
<PAGE>
49
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such
security interests secure Indebtedness permitted by clause (c) of Section
6.01, (ii) such security interests and the Indebtedness secured thereby
are incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 90% (or, in the case of a Capital Lease,
100%) of the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such security interests shall not apply to any
other property or assets of the Borrower or any Subsidiary;
(e) a Lien in favor of The Chase Manhattan Bank securing Hedging
Agreements; and
(f) until the Effective Date, Liens in favor of Roche.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or any material part of its assets (other than the sale of
Inventory in the ordinary course of business) , or any of the stock of any of
its Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve, except that the Borrower or a Subsidiary may sell
equipment no longer used or useful in its business provided that with respect to
such sales of equipment (i) the sale price is for fair market value, (ii) the
aggregate value of all such equipment sold does not exceed $250,000, and (iii)
the proceeds of such sale are applied to the prepayment of the Term Loans as
required by Section 2.11.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. (a) The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(i) Permitted Investments;
(ii) investments by the Borrower existing on the date hereof in the
capital stock of its Subsidiaries;
(iii) Guarantees constituting Indebtedness permitted by Section
6.01;
(iv) currently outstanding loans and advances to employees listed on
Schedule 6.04;
(v) in addition to the loans and advances to Hall (Canada) that are
permitted by Section 6.01(d), other investments in Hall (Canada) that do
not in the aggregate exceed $250,000 at any time outstanding.
<PAGE>
50
(b) Without limiting the generality in subsection (a) of this
section, the Borrower will not, and will not permit any Subsidiary to, form or
acquire any Subsidiary or Affiliate, or enter into any partnership, joint
venture or similar arrangement.
(c) If the Required Lenders (in their sole discretion) elect to
waive the restriction contained in subsection (b) of this section in any
instance so as to permit the Borrower or a Subsidiary to form or acquire any
Subsidiary, the conditions of such waiver will include (among other things) a
requirement that the Subsidiary (i) guarantee all of the Obligations, and (ii)
grant to the Agent a first-priority Lien on all its assets to secure the
Obligations as so guaranteed; and to that end such Subsidiary shall execute and
deliver to the Agent a Subsidiary Guarantee and a Subsidiary Security Agreement
(in substantially the same forms thereof that are being delivered to the Agent
by IVOSC on the Effective Date), together with such UCC-1 financing statements,
authorizing resolutions, legal opinions and other materials that the Agent may
reasonably request, and the Borrower shall pay all fees and expenses (including
filing fees and counsel fees) that the Agent may incur in connection therewith.
SECTION 6.05. Hedging Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any Hedging Agreement, other
than Hedging Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Borrower or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not, and will
not permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) the Borrower may
declare and pay dividends with respect to its capital stock payable solely in
additional shares of its common stock, and (b) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock.
SECTION 6.07. Transactions with Affiliates. The Borrower will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties.
SECTION 6.08. Restrictive Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Subsidiary; provided that the
foregoing shall not apply to restrictions and conditions imposed by law or by
this Agreement.
SECTION 6.09. As to Collateral. (a) The Borrower will not, and will
not permit any of its Subsidiaries 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 with respect to the
Borrower or such Subsidiary (as applicable) in Schedule 3.13, unless prior
thereto the Borrower or such Subsidiary (as applicable) 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
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51
financing statements and other instruments as may be necessary or (in the
reasonable judgment of the Agent) appropriate to continue the perfection of the
security interests granted by it to the Agent.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, permit any of the inventory, equipment or fixtures of the
Borrower or such Subsidiary to be located in any jurisdiction other than those
identified with respect to the Borrower or such Subsidiary (as applicable) in
Schedule 3.13, or to be maintained in the possession of any other Person, unless
prior thereto the Borrower or such Subsidiary (as applicable) shall have
notified the Agent and shall have delivered to the Agent for filing by the Agent
(at the cost of the Borrower) any and all UCC-1 financing statements and other
instruments, duly executed, as may be necessary or (in the reasonable judgment
of the Agent) appropriate to continue the perfection, protection and
preservation of the Liens granted by it to the Agent.
SECTION 6.10. Minimum Net Worth. The Borrower shall not permit or
suffer Consolidated Net Worth to be less than the following amounts on the
following dates respectively:
Date Amount
---- ------
(A) October 31, 1999 Consolidated Net Worth as of July 31, 1999
plus $325,000
(B) January 31, 2000 Consolidated Net Worth as of July 31, 1999
plus $775,000
(C) April 30, 2000 Consolidated Net Worth as of July 31, 1999
plus $1,150,000
(D) July 31, 2000 Consolidated Net Worth as of July 31, 1999
plus $1,600,000
(E) October 31, 2000 Consolidated Net Worth as of July 31, 1999
plus $2,000,000
(F) January 31, 2001 Consolidated Net Worth as of July 31, 1999
plus $2,500,000
(G) July 31, 2001 Consolidated Net Worth as of July 31, 1999
plus $3,900,000
SECTION 6.11. Minimum Debt Service Coverage Ratio. On each date
specified below, with respect to the four-quarter period ending on such date,
the Borrower shall not permit the Consolidated Debt Service Coverage Ratio to be
less than the amount set forth below opposite such date:
Consolidated Debt Service
Date Coverage Ratio
---- -------------------------
(A) July 31, 2000 1.0 to 1.0
(B) October 31, 2000 1.0 to 1.0
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52
(C) January 31, 2001 1.0 to 1.0
(D) April 30, 2001 1.0 to 1.0
(E) July 31, 2001 1.1 to 1.0
(F) The end of each fiscal quarter thereafter 1.1 to 1.0
SECTION 6.12. Maximum Capital Expenditures. The Borrower shall not
permit or suffer the amount of Consolidated Capital Expenditures to be more than
(a) $3,500,000 for the fiscal year ending July 31, 2000, or (b) $2,000,000 in
any fiscal year thereafter.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement, when and as the same shall
become due and payable, and such failure shall continue unremedied for a
period of three days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any other Facility Document or any amendment or modification
hereof or thereof or waiver hereunder or thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to
or in connection with this Agreement or any other Facility Document or any
amendment or modification hereof or thereof or waiver hereunder or
thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to
the Borrower's existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 15 days after notice thereof
from the Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Indebtedness of the Borrower or any Subsidiary to any Lender or to any
of its Affiliates (other than the Indebtedness under this Agreement) or in
respect of any Material Indebtedness to any other creditor, when and as
the same shall become due and payable;
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53
(g) any event or condition occurs that results in any Indebtedness
of the Borrower or any Subsidiary to any Lender or to any of its
Affiliates (other than Indebtedness under this Agreement) or any Material
Indebtedness to any other creditor becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice,
the lapse of time or both) the holder or holders of such Indebtedness or
such Material Indebtedness or any trustee or agent on its or their behalf
to cause such Indebtedness or such Material Indebtedness to become due, or
to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $500,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) a Change in Control shall occur;
(n) a default shall occur in the payment when due of amounts in
excess of $10,000 in the aggregate required to be paid to one or more
Lenders under one or more Hedging Agreements between (on the one hand)
such Lender and (on the other hand) the Borrower or any Subsidiary (after
the expiration of any applicable cure period expressly provided in such
Hedging Agreements);
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54
(o) a default (other than any default specified above in this
Article) shall occur under any Facility Document (other than this
Agreement) to which the Borrower is a party, and such default shall
continue unremedied for a period of 15 days after notice thereof from the
Agent to the Borrower (which notice will be given at the request of any
Lender);
(p) a default (other than any default specified above in this
Article) under any Facility Document to which any Subsidiary is a party,
and such default continues for a period of 15 days after notice thereof
from the Agent to the Borrower (which notice will be given at the request
of any Lender); or
(q) 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);
then, and in every such event (other than an event with respect to any Borrowing
Base Party described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Revolving Credit Commitments, and thereupon the Revolving Credit Commitments
shall terminate immediately; and (ii) declare the Loans and the other
Obligations then outstanding to be due and payable in whole (or in part, in
which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the Loans and the other
Obligations so declared to be due and payable, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to any Borrowing Base Party described in clause (h) or (i) of this
Article, the Revolving Credit Commitments shall automatically terminate and the
Loans and the other Obligations then outstanding, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and (iii) exercise any and all
remedies provided or allowed by any or all of the other Facility Documents or
otherwise available at law or in equity.
ARTICLE VIII
The Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Agent as its agent and authorizes the Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.
The bank serving as the Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Agent, and such bank and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or other Affiliate thereof as if it were not
the Agent hereunder.
The Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) the Agent shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) the Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers,
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55
except discretionary rights and powers expressly contemplated hereby that the
Agent is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), (c) except as expressly set forth
herein, the Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of
its Subsidiaries that is communicated to or obtained by the bank serving as
Agent or any of its Affiliates in any capacity, and (d) the Agent shall not be
under any duty to ascertain or inquire as to the observance or performance of
any agreements contained in, or conditions of, this Agreement or any other
Facility Document or to inspect or verify the properties, books, records or
reports of the Borrower or any other Obligor. The duties of the Agent as
respects Revolving Borrowings shall be mechanical and administrative in nature
only. The Agent shall not be liable for any action taken or not taken by it with
the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Agent by the
Borrower or a Lender, and the Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. The Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the Agent. The
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, the Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders and the Issuing Bank, appoint a successor Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall 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. The fees
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56
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
Each Lender agrees that if, by reason of an unanticipated change in
the Formula Amount at any time or otherwise, the outstanding amount of the
Revolving Credit Exposure exceeds at such time the Formula Amount, the Agent may
(in its discretion) nonetheless continue to make Revolving Loans (and the
Issuing Bank may in its discretion continue to issue New Letters of Credit) for
up to five Business Days after the Agent acquires actual knowledge of the
existence of such excess, pending the correction of such imbalance; and the
obligation of the Lenders to settle with the Agent by funding their Loans (and
to participate with the Issuing Bank in New Letters of Credit) shall not in any
way be impaired thereby.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 500 Halls Mill Road, Freehold, New
Jersey 07728, Attention of Mr. E. Joseph Edell (Telecopy No.
732-308-9793);
(b) if to the Agent, to The Chase Manhattan Bank, 600 Fifth Avenue,
4th Floor, New York, New York 10020, Attention: Credit Deputy (Telecopy
No. 212-332-4299);
(c) if to the Issuing Bank, to it at 600 Fifth Avenue, 4th Floor,
New York, New York 10020, Attention of IVC Account Officer (Telecopy No.
212-332-4297);
(d) if to any other Lender, to it at its address (or telecopy
number) set forth beneath its signature line below.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
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57
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Agent, the Issuing Bank or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the Agent,
the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agent or any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Agent with the consent of the Required Lenders; provided that no such agreement
shall (i) increase the Revolving Credit Commitment, the Term Loan Commitment or
the Existing LC Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Revolving Credit Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner
that would alter the pro rata sharing of payments required thereby, or increase
the 80% or 50% percentages or the $14,000,000 amount referred to in the
definition of "Borrowing Base", or release Collateral without the written
consent of each Lender, or (v) change any of the provisions of this Section or
the definition of "Required Lenders" or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent or the Issuing Bank hereunder without the prior written consent of the
Agent or the Issuing Bank, as the case may be. Notwithstanding clause (iv) of
the immediately preceding sentence, the Lenders acknowledge that the Agent may
without their consent discharge the Liens granted to it in connection with
Existing Credit Agreement on the assets of, and the capital stock in, Vitamin
Specialties Corp.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
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(b) The Borrower shall indemnify the Agent, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by the Issuing Bank to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by
the Borrower or any of its Subsidiaries, or any Environmental Liability related
in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Agent or the Issuing Bank under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Agent or the Issuing
Bank, as the case may be, such Lender's pro rata share of such amount (such pro
rata share being a fraction, the numerator of which is the sum of such Lender's
(i) Revolving Credit Exposure, plus (ii) Term Loan Exposure, plus (iii) Existing
LC Exposure, and the denominator of which is the sum of (x) the Revolving Credit
Exposure of all the Lenders, (y) the Term Loan Exposure of all the Lenders, and
(z) the Existing LC Exposure of all the Lenders; in each case, determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent or the Issuing Bank in its
capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit)
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59
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Agent, the Issuing Bank and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of any or all of its Revolving Credit Commitment and its Existing LC Commitment
and the Loans at the time owing to it); provided that (i) except in the case of
an assignment to a Lender or an Affiliate of a Lender, each of the Borrower and
the Agent and, in the case of an assignment of all or a portion of a Revolving
Credit Commitment or any Lender's obligations in respect of its LC Exposure, the
Issuing Bank must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Revolving Credit Commitment,
the amount of the Revolving Credit Commitment of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall not be less
than $5,000,000 unless each of the Borrower and the Agent otherwise consent,
(iii) each partial assignment of a Revolving Credit Exposure or a Term Loan
Exposure or an Existing LC Exposure shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to its Revolving Credit Exposure or Term Loan
Exposure or Existing LC Exposure (as the case may be), (iv) the parties to each
assignment shall execute and deliver to the Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Agent an administrative
questionnaire in form acceptable to the Agent; and provided further that any
consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices in The City of New York a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the particular Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Agent, the Issuing Bank
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
administrative questionnaire (unless the
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assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Agent shall accept
such Assignment and Acceptance and record the information contained therein in
the Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the Agent
or the Issuing Bank, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of any or all of its Revolving
Credit Commitment and its Existing LC Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Agent, the
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
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outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.01, this Agreement shall become effective when it shall have been executed by
the Agent and when the Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Agent, the Issuing Bank or any Lender may
<PAGE>
62
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.11. Confidentiality. Each of the Agent, the Issuing Bank
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than the Borrower. For the purposes of this Section, "Information" means all
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Agent, the Issuing Bank
or any Lender on a nonconfidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 9.12. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this
<PAGE>
63
Section shall be cumulated and the interest and Charges payable to such Lender
in respect of other Loans or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
<PAGE>
64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
IVC INDUSTRIES, INC.
By: /s/ E. Joseph Edell
--------------------------------------
E. Joseph Edell
Chief Executive Officer
THE CHASE MANHATTAN BANK, as Lender and as
Issuing Bank and as Agent,
By: /s/ John T. Zeller
--------------------------------------
John T. Zeller
Vice President
Address (in its capacity as Lender and
Issuing Bank):
The Chase Manhattan Bank
600 Fifth Avenue, 4th Floor
New York, New York 10020-2302
Attention: Credit Deputy
Telecopier No. 212-332-4299
CITIZENS BUSINESS CREDIT COMPANY
By: /s/ Vincent P. O'Leary
--------------------------------------
Vincent P. O'Leary
Senior Vice President
Address:
1 Penn Plaza - Suite 360
250 West 34th Street
New York, New York 10119
Attention: Mr. Vincent P. O'Leary
Telecopy No.: 212-760-8815
<PAGE>
1
EXHIBIT A-1
PROMISSORY NOTE
(Revolving Loans)
$____________________________ ___________________
(Date)
IVC INDUSTRIES, INC. (the "Borrower"), a corporation organized under
the laws of Delaware, for value received, hereby promises to pay to the order of
______________________ (the "Lender"), at the Payment Office, the principal sum
of ___________________________ Dollars ($_____________) or, if less, the amount
of Revolving Loans of the Lender under the Credit Agreement, in lawful money of
the United States of America and in immediately available funds, on the dates
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 office, in like money, at the rates of interest
provided in the Credit Agreement, on the dates and in the manner provided in the
Credit Agreement.
This is one of the promissory notes referred to in the Amended and
Restated Credit Agreement dated as of July 31, 1999 (which, as the same may
hereafter be amended from time to time, is called herein the "Credit Agreement")
among the Borrower, the Lenders party thereto (including the Lender), and The
Chase Manhattan Bank, as agent (the "Agent"). This Note evidences Revolving
Loans of the Lender under the Credit Agreement.
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.
The Borrower hereby waives presentment, notice of dishonor, protest
or 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:
------------------------------------
E. Joseph Edell
Chief Executive Officer
<PAGE>
1
EXHIBIT A-2
PROMISSORY NOTE
(Term Loan)
$____________________________ ___________________
(Date)
IVC INDUSTRIES, INC. (the "Borrower"), a corporation organized under
the laws of Delaware, for value received, hereby promises to pay to the order of
______________________ (the "Lender"), at the Payment Office, the principal sum
of ___________________________ Dollars ($_____________) in lawful money of the
United States of America and in immediately available funds, on the dates 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 office, in like money, at the rates of interest provided in
the Credit Agreement, on the dates and in the manner provided in the Credit
Agreement.
This is one of the promissory notes referred to in the Amended and
Restated Credit Agreement dated as of July 31, 1999 (which, as the same may
hereafter be amended from time to time, is called herein the "Credit Agreement")
among the Borrower, the Lenders party thereto (including the Lender), and The
Chase Manhattan Bank, as agent (the "Agent"). This Note evidences the Term Loan
of the Lender under the Credit Agreement.
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.
The Borrower hereby waives presentment, notice of dishonor, protest
or 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:
------------------------------------
E. Joseph Edell
Chief Executive Officer
<PAGE>
1
EXHIBIT B
OPINION OF COUNSEL FOR THE OBLIGORS
August ___, 1999
To the Lenders and the Agent
Referred to Below
c/o The Chase Manhattan Bank, as
Administrative Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
We have acted as counsel for IVC Industries, Inc., a Delaware
corporation (the "Borrower"), in connection with the Amended and Restated Credit
Agreement dated as of July 31, 1999 (the "Credit Agreement"), among the
Borrower, the banks and other financial institutions identified therein as
Lenders, and The Chase Manhattan Bank, as Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
We have also acted as counsel for IVOSC and Hall (Canada) in
connection with the Transactions.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. (a) The Borrower (i) is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, (ii) has all requisite
power and authority to carry on its business as now conducted and (iii) except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
(b) IVOSC (i) is a corporation duly organized, validly existing and
in good standing under the laws of New Jersey, (ii) has all requisite power and
authority to carry on its business as now conducted and (iii) except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
2. The Transactions are within the corporate powers of the Borrower
and IVOSC and have been duly authorized by all necessary corporate and, if
required, stockholder action.
<PAGE>
2
3. (a) The Credit Agreement, the Notes and the Borrower Security
Agreement have been duly executed and delivered by the Borrower and constitute
legal, valid and binding obligations of the Borrower, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
(b) The Guaranties and the Subsidiary Security Agreements have been
duly executed and delivered by IVOSC and Hall (Canada) and constitute legal,
valid and binding obligations of IVOSC or Hall (Canada) (as the case may be),
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
4. The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect, (b)
will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of any of the Obligors or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Obligor or its assets,
or give rise to a right thereunder to require any payment to be made by any
Obligor, and (d) will not result in the creation or imposition of any Lien on
any asset of any Obligor.
5. There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to our knowledge,
threatened against or affecting any Obligor (a) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect (other than the Disclosed Matters) or (b) that
involve the Credit Agreement, any of the other Facility Documents or the
Transactions.
6. Neither the Borrower nor any of its Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
7. (a) By its execution and delivery of the Borrower Security
Agreement, the Borrower effectively grants and confirms to the Agent a security
interest in the collateral described therein that is subject to Article 9 of the
Uniform Commercial Code, as security for the Obligations. The chief executive
office of the Borrower is located in New Jersey.
(b) By its execution and delivery of its Subsidiary Security
Agreement, IVOSC effectively grants and confirms to the Agent a security
interest in the collateral described therein that is subject to Article 9 of the
Uniform Commercial Code, as security for the Obligations. The chief executive
office of IVOSC is located in New Jersey.
<PAGE>
3
(c) By its execution and delivery of its Subsidiary Security
Agreement, Hall (Canada) effectively grants and confirms to the Agent a security
interest in the collateral described therein that is subject to Article 9 of the
Uniform Commercial Code, as security for the Obligations. The chief executive
office of Hall (Canada) is located in Surrey, British Columbia.
(d) We know of no liens on, or security interest in, any of the
Collateral, other than those liens and security interests identified in the lien
searches that we have provided to you.
We are members of the bar of the State of New Jersey and the
foregoing opinion is limited to the laws of the State of New Jersey, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. We note that the Facility Documents are governed by the laws
of the State of New York and, for purposes of the opinion expressed in paragraph
3 above, we have assumed that the laws of the State of New York do not differ
from the laws of New Jersey in any manner that would render such opinion
incorrect. This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other Person (other than your successors and assigns as
Lenders and Persons that acquire participations in your Loans) without our prior
written consent.
Very truly yours,
EDELL & ASSOCIATES, a Professional
Corporation
By:
------------------------------------
<PAGE>
1
EXHIBIT C
[FORM OF]
BORROWING BASE CERTIFICATE
<PAGE>
To: The Chase Manhattan Bank, as Agent
200 Jericho Quadrangle - 1st FL
Jericho, NY 11763
ATTN: IVC Account Manager
Subject: IVC Industries, Inc.
Borrowing Base Certificate No.
We hereby certify the following information:
I. GAAP ACCOUNTS RECEIVABLE:
A) Accounts receivable as of the date of the last submitted
certificate.
Add: New Sales @ Freehold $0
Add: New Sales @ Portland $0
Add: New Sales @ IVOSC $0
Add: New Sales @ Hall (Canada) $0
Add: New Sales @ IVC-Other $0
Less: New Cash Collections @ Freehold $0
Less: New Cash Collections @ Portland $0
Less: New Cash Collections @ IVOSC $0
Less: New Cash Collections @ Hall (Canada) $0
Less: New Cash Collections @IVC-Other $0
ACCOUNTS RECEIVABLE AS OF: $0
B) Accounts Receivable Aging as of:
Total A/R Current 31-60 61-80 Over 90
$0 $0 $0 $0 $0
C) Gross Accounts Receivable per Aging:
Less Ineligibles: Last Month
Over 90 Days $0 $0
Credit Balances in Over 90 Days $0 $0
Cross Age @ 50% $0 $0
Foreign $0 $0
Government $0 $0
Contras $0 $0
Volume Rebate Reserve $0 $0
Intercompany/Affiliates $0 $0
Concentration Reserves - COSTCO $0 $0
Concentration Reserves -Other $0 $0
Other $0 $0
Total Ineligibles $0 $0
Net Eligible Accounts Receivable per Aging: $0
LESS: Unposted Cash Receipts: $0
Net Eligible Accounts Receivable: $0
<PAGE>
II. GAAP INVENTORY:
Gross Inventory Date: $0
Less Ineligibles: $0
G/L Reserves $0
Work-In-Progress $0
Labels, Packaging, Supplies $0
Outside Warehouses $0
Planet Rx $0
$0
Other $0
Total Ineligibles: $0
Net Eligible Inventory: $0
A/R Availability @ 80% $0
A/R Availability @ 50% $0
Inventory CAP $14,000
Inventory Available $0
Borrowing Base Availability - Gross $0
LESS: Revolving Loans Outstanding as of: $0
LESS: New LC Exposure as of: $0
LESS: Accrued Interest and Fees $0
LESS: Specified Reserves $0
Borrowing Base Availability - Net $0
Total Revolving Loans Outstanding as of: $0
Total New LC Exposure as of: $0
Total Revolving Credit Exposure $0
Maximum Revolving Amount $22,000
Line Availability $22,000
Availability $0
The undersigned hereby represents and warrants that this is a correct statement
regarding the status of its accounts receivable and inventory assigned to Agent
and that the figures set forth herein are completely accurate. The undersigned
further warrants and represents that the Borrower is in compliance with the
terms and conditions combined contained in the Credit Agreement dated as of July
31, 1999. The undersigned further understands that the Revolving Loans and New
Letters of Credit to the Borrower will be based upon reliance on the information
contained herein.
IVC Industries, Inc.
- -------------------------------
Name:
Title:
<PAGE>
The Inventory of the Borrower and the Subsidiary Guarantors are leased at the
following places:
Gross Inventory
Street Address City/State Status 0/00/00
- -------------- ---------- ------ -------
500 Halls Mill Road Freehold, NJ Owned $0
589 Halls Mill Road Freehold, NJ Leased $0
181-40th Street Irvington, NJ Leased $0
3580 NE Broadway Portland, OR Leased $0
13080-80th Avenue Surrey, BC, Canada Leased $0
Total Inventory 0/00/00 $0
--
<PAGE>
1
EXHIBIT D
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of ________________,
1999 (as amended and in effect on the date hereof, the "Credit Agreement"),
among IVC Industries, Inc., the Lenders party thereto, and The Chase Manhattan
Bank, as Agent for the Lenders. Terms defined in the Credit Agreement are used
herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Revolving Credit Commitment and
the Existing LC Commitment (as applicable) of the Assignor on the Assignment
Date and Loans owing to the Assignor which are outstanding on the Assignment
Date, together with the participations in New Letters of Credit and New LC
Disbursements, and the Existing LC Commitment and Existing LC Disbursements, as
applicable, held by the Assignor on the Assignment Date,] but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the Agent together
with (i) if the Assignee is a Foreign Lender, any documentation required to be
delivered by the Assignee pursuant to Section 2.17(e) of the Credit Agreement,
duly completed and executed by the Assignee, and (ii) if the Assignee is not
already a Lender under the Credit Agreement, an administrative questionnaire in
the form supplied by the Agent, duly completed by the Assignee. The
[Assignee/Assignor] shall pay the fee payable to the Agent pursuant to Section
9.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
<PAGE>
2
================================================================================
Percentage Assigned of
Facility/Commitment (set
forth, to at least 8
decimals, as a percentage
of the Facility and the
Principal Amount aggregate Commitments of
Facility Assigned all Lenders thereunder)
-------- ---------------- -------------------------
- --------------------------------------------------------------------------------
Revolving Credit Commitment $ %
Assigned:
- --------------------------------------------------------------------------------
Revolving Loans Assigned:
================================================================================
Term Loan Assigned:
================================================================================
Existing LC Assigned:
================================================================================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
------------------------------------
Name:
Title:
[Name of Assignee] , as Assignee
By:
------------------------------------
Name:
Title:
The undersigned hereby consent to the within assignment:(1)
[Name of Borrower], The Chase Manhattan Bank,
as Agent,
By: By:
-------------------------------- ------------------------------------
Name: Name:
Title: Title:
- ----------
(1) Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
<PAGE>
3
The Chase Manhattan Bank,
as Issuing Bank
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE 1.01
APPLICABLE RATES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Designated ABR Eurodollar
Consolidated Revolving Revolving ABR Term Eurodollar Facility Existing LC New LC
Leverage Ratio Spread Spread Spread Term Spread Fee Rate Fee Rate Fee Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Category 1
Greater than or 0.50% 2.75% 0.75% 3.00% 0.50% 3.00% 2.75%
equal to 4.75
- --------------------------------------------------------------------------------------------------------
Category 2
Less than 4.75, 0.25% 2.50% 0.50% 2.75% 0.375% 2.75% 2.50%
but greater than
or equal to 4.0
- --------------------------------------------------------------------------------------------------------
Category 3
Less than 4.0, 0.25% 2.25% 0.50% 2.50% 0.25% 2.50% 2.25%
but greater than
or equal to 3.25
- --------------------------------------------------------------------------------------------------------
Category 4
Less than 3.25 0.00% 2.00% 0.25% 2.25% 0.25% 2.25% 2.00%
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.01
LENDERS AND COMMITMENTS
Name and Address Revolving Credit Term Loan Existing LC
of Lender Commitment Commitment Commitment
- --------- ---------- ---------- ----------
The Chase Manhattan Bank $14,666,400 $3,436,457 66.67%
600 Fifth Avenue, 4th Floor
New York, NY 10020-2302
Att: Credit Deputy
Telecopy No. 212-332-4297
Citizens Business Credit $7,333,600 $1,717,971 33.33%
Company
1 Penn Plaza - Suite 360
250 West 34th Street
New York, New York 10119
Att: Mr. Vincent P. O'Leary
Telecopy No. 212-760-8815
TOTAL $22,000,000 $5,154,428 100%
<PAGE>
SCHEDULE 3.01
SUBSIDIARIES OF BORROWER
Jurisdiction of Percentage of
Name and Address Incorporation Ownership
- ---------------- ------------- ---------
International Vitamin Overseas New Jersey 100%
Sales Corp.
500 Halls Mill Road
Freehold, NJ 07728
Hall Laboratories Ltd. Yukon Territory 100%
10360 80th Avenue #207
Surrey, British Columbia
Canada
(*NOTE - Vitamin Specialties Corp. ("VSC"), a Pennsylvania corporation,
technically remains a wholly owned subsidiary of the Borrower subject to a Stock
Purchase Agreement between Borrower and Archon Vitamin Corporation ("Archon")
dated July 13, 1999. By the terms of the Stock Purchase Agreement, a copy of
which has been provided to the Agent, Archon assumed operations of VSC as of
July 14, 1999, and all of the shares and assets of VSC shall be transferred to
Archon pursuant to the Stock Purchase Agreement upon release of the liens
relating thereto held by Hoffman-LaRoche, Inc. and The Chase Manhattan Bank,
which release shall occur as of the Effective Date of the Credit Agreement,
subject to the delivery by the Borrower to the Agent for execution by the Agent
and for filing by the Borrower of appropriate UCC-3 termination statements as to
the Agent's liens on the assets of VSC.)
<PAGE>
SCHEDULE 3.06
DISCLOSED MATTERS
(In the interest of full disclosure, the Borrower sets forth below a list of
pending and/or threatened litigation against the Borrower. While the Borrower
does not believe that even in the event of an adverse determination that some
and/or all of such matters could reasonably be expected to result in a Material
Adverse Effect, the Borrower supplies this information to the Bank, Lender and
Agent so as to provide full disclosure of these matters to the extent relevant.)
Pending Litigation
1. Willow International Sourcing, Inc. v. IVC Industries, Inc., Docket No.
L-4685-98, Superior Court of New Jersey, Law Division, Monmouth County -
Contract action; in preliminary discovery stage; based upon demands in
complaint amount at issue as alleged by plaintiff does not exceed
$60,000.00; IVC denies liability.
2. Zahler Nutrition Center v. IVC Industries, Inc., et al., Supreme Court of
the State of New York, Kings County, Index No. 98/22859 - action for
alleged long-term conversion of customer products by IVC salesman;
plaintiff has reliable proof of liability; plaintiff obtained default
judgment (not reduced to any monetary amount and subject to damage
hearing) by violation of court rules is subject to motion to vacate;
amount of damages unknown; plaintiff has made settlement demands of
$200,000.00 without documentation substantiating damage calculation; IVC
contests such amount; plaintiff owes IVC approximately $11,000 on unpaid
invoices; no discovery taken yet; settlement discussions continue.
3. Stonhard, Inc. v. Peter J. Saker, Inc., Hidel Partners, and IVC
Industries, Inc., Superior Court of New Jersey, Law Division, Monmouth
County, Docket No. L-2788-99 action by subcontractor to enforce
construction lien on 500 Halls Mill Road, Freehold, New Jersey; complaint
alleges damages totaling $84,000 based upon failure of General Contractor
(Saker, whom IVC paid) to pay subcontractor (Stonhard); parties are
presently attempting to negotiate an agreement under which IVC would pay
plaintiff $52,000 from funds owned to Saker from the reserves held by IVC
under the construction contract with Saker.
Threatened Litigation
1. Potential breach of contract action with respect to an alleged exclusive
distribution agreement between IVC Industries, Inc. (international
division) and Sunlight Distribution, Inc. with respect to certain regions
of China. The parties (business people not lawyers) are in discussions
trying to resolve the disputes by entering into an revised business
arrangement. Amount of damages that could be claimed, if any, are unknown
at this time but based upon current information do not appear to be
significant.
<PAGE>
SCHEDULE 3.15(A)
LOCATIONS AS TO BORROWER AND SUBSIDIARIES
Address of Chief Executive
Office and (if different)
place at which it keeps its Address of each place
records regarding its in which it keeps any
accounts receivable and equipment, inventory
Name of Entity contract rights or fixtures
IVC Industries, Inc. 500 Halls Mill Road 500 Halls Mill Road
Freehold, NJ 07728 Freehold, NJ 07728
569 Halls Mill Road
International Vitamin 500 Halls Mill Road Freehold, NJ 07728
Overseas Sales Corp. Freehold, NJ 07728
10360 80th Avenue
Suite 207
Hall Laboratories Ltd. 10360 80th Avenue #207 Surrey, British Columbia
Surrey, British Columbia Canada
Canada
209 40th Street
Irvington, NJ 07111
191 40th Street
Irvington, NJ 07111
4370 N.E. Halsey St.
Portland, OR 97213
4310 N.E. Halsey St.
Portland, OR 97213
3580 N.E. Broadway
Portland, OR 97232
6399 Shelby View Dr.
Suite 111
Memphis, TN 38134
(see PlanetRx agreement)
<PAGE>
SCHEDULE 3.15(B)
NAMES AND ADDRESS OF FEE OWNER (AND, AS
APPLICABLE, SUBLANDLORD) OF LEASED FACILITIES
Name and Address of Fee Owner
Facility Address: (or, as applicable, sublandlord)
- ----------------- --------------------------------
569 Halls Mill Road 569 Halls Mill Road LLC
Freehold, NJ 07728 P.O. Box 622
Rumson, NJ 07760
10360 80th Avenue Diversified Management
Suite 207 Suite 206
Surrey, British Columbia 131 Water Street
Canada Vancouver, British Columbia
Canada V6M4M3
209 40th Street Olympic Industrial Park (fee owner)
Irvington, NJ 07111 New Jersey Urban Renewal Partnership
1203 W. St. & George Avenue
Linden, NJ 07036
Essex Chemical Company (sublandlord)
2068 Hornes Lake Road
Suite 200
Williamsburg, VA 23185
191 40th Street Bernard and Zelda Levere (fee owner)
Irvington, NJ 07111 78 Hoover Drive
Creskill, NJ 07626
Essex Chemical Company (sublandlord)
2068 Hornes Lake Road
Suite 200
Williamsburg, VA 23185
4370 N.E. Halsey Street Advanced Data Concepts
Portland, OR 97213 Davis Business Center
4370 N.E. Halsey Street
Portland, OR 97213
<PAGE>
4310 N.E. Halsey Street Advanced Data Concepts
Portland, OR 97213 Davis Business Center
4370 N.E. Halsey Street
Portland, OR 97213
3580 N.E. Broadway Agora Holdings
Portland, OR 97232 3580 N.E. Broadway
Portland, OR 97232
<PAGE>
SCHEDULE 6.01 - CERTAIN INDEBTEDNESS
Creditor Amount
- -------- ------
1. EDA 1991- Freehold $3,850,000.00
First Union Serves as Trustee
L/C Banque Nationale de Paris
Final Payment Due 6/30/07
2. EDA 1995 - Irvington $2,840,000.00
First Union Serves as Trustee
L/C The Chase Manhattan Bank
Final Payment Due 6/30/03
3. Dime Savings-Equipment Leases $798,166.00
Final Payment Due 8/05
4. Chase Lease* #1 $267,895.00
Final Payment Due 9/1/01
5. Chase Lease* #2 $258,054.00
Final Payment Due 7/01/02
6. Chase Lease* #3 $55,364.00
Final Payment Due 8/1/02
7. Capital Lease Payable $3,316,459
569 Halls Mill Road
Freehold, New Jersey
Payable to 569 Halls Mill Road LLC
Final Payment Due 7/1/08
8. CIBC (Canadian Bank Loan) $455,581.00
9. Sanwa Business Credit Corporation $28,898.00
One South Wacker
37th Floor
Chicago, IL 60606
Final Payment Due 8/1/02
10. General Electric Capital Co. $172,534.72
1961 Hirst Drive
Moberly, MO 65270
Final Payment Due 1/1/04
(*NOTE: To be prepaid out of the initial borrowing.)
<PAGE>
SCHEDULE 6.02 - CERTAIN LIENS
Lienholder
1. Sanwa Business Credit Corporation Lien evidenced by financing
One South Wacker statements bearing filing nos.
37th Floor 416881, 416882 and 429506
Chicago, IL 60606
2. Dime Commercial Corp. Lien evidenced by financing
1180 Avenue of the Americas statement bearing filing nos.
New York, NY 10036 1861372 and 1998144510
3. General Electric Capital Co. Lien evidenced by financing
1961 Hirst Dr. statement bearing filing no.
Moberly, MO 65270 1886354
4. Canadian Imperial Bank Lien evidenced by PPSA
of Commerce Security Agreement no.
5th Floor 7665694
1066 W. Hastings Street
Vancouver, British Columbia
Canada V6E 4M1
5. New Jersey Economic Mortgages in favor of NJEDA
Development Authority and Bank of Paris listed on
200 South Warren Street book 5056 page 750 and
Trenton, NJ book 5056 page 754
Banque Nationale De Paris
Houston Agency
333 Clay Street
Suite 3400
Houston, TX 77002
6. First Union National Bank as Lien evidenced by financing
successor to First Fidelity Bank statement bearing filing no.
765 Broad Street 1997004059 which effected
Newark, NJ 07102 a continuation of lien
evidenced by financing statement
bearing file no. 68397
originally filed by NJEDA and
Bank of Paris and assigned to
First Fidelity Bank, N.A., NJ.
<PAGE>
Lien evidenced by financing
statement bearing filing no.
68398, which effected an
assignment from NJEDA and Bank
of Paris to First Fidelity Bank,
N.A., NJ.
<PAGE>
SCHEDULE 6.04 - CERTAIN LOANS TO EMPLOYEES
<TABLE>
<CAPTION>
Name of Employee Amount Interest Rate Maturity Date
- ---------------- ------ ------------- -------------
<S> <C> <C> <C>
1. E. Joseph Edell $366,246.00 5.0% 7/31/00
CEO as of 7/31/99(1) compounded monthly
2. I. Alan Hirschfeld $140,371.28 5.0% as of 2/1/99 3/1/03 (1st installment)
(Prior CFO resigned as of 7/31/99 compounded monthly 3/1/04 (2ndinstallment)
as of 3/1/99) 3/1/05 (3rd installment)
</TABLE>
(**Note - Loan terms for I. Alan Hirschfeld are pursuant to the Severance,
Consulting and Non-Competition Agreement dated March 1, 1999, between I.
Alan Hirschfeld and IVC Industries, Inc., a copy of which has been
provided to the Agent.)
(**Note - As of July 31, 1999, loans to Jack Dettra, Duane Baxter and
Lawrence Neuman, current and/or former employees of Borrower, have been
satisfied in accordance with the terms of the Loan Repayment Agreements
dated July 12, 1999, copies of which have been provided to the Agent.)
- ----------
(1) Please be advised that this figure represents the outstanding loan balance
due IVC from E. Joseph Edell reduced by the outstanding loan balance due
Beverlee Edell from IVC. (EJ Edell loan balance $734,274.00 less BEdell
loan balance $368,028 equals $366,246.00.)
