Exhibit 4.5
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CREDIT AGREEMENT
dated as of
April 23, 1998
among
GLOBAL HEALTH SUB, INC.,
as Borrower,
GLOBAL HEALTH SCIENCES, INC.,
as the Parent Guarantor,
the LENDERS party hereto,
CITICORP USA, INC.,
as Administrative Agent,
CITIBANK, N.A.,
as Issuing Bank,
and
BANK OF AMERICA NT&SA,
as Documentation Agent
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CITICORP SECURITIES, INC.,
as Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS............................................................................................1
Section 1.1. Defined Terms.............................................................................1
Section 1.2. Classification of Loans and Borrowings...................................................25
Section 1.3. Terms Generally..........................................................................25
Section 1.4. Accounting Terms; GAAP...................................................................26
Section 1.5. Terms Defined in the Uniform Commercial Code.............................................26
Section 1.6. Determination of Financial Ratios........................................................26
ARTICLE II. THE CREDITS..........................................................................................27
Section 2.1. Commitments..............................................................................27
Section 2.2. Loans and Borrowings.....................................................................27
Section 2.3. Requests for Borrowings..................................................................28
Section 2.4. Letters of Credit........................................................................28
Section 2.5. Funding of Borrowings....................................................................33
Section 2.6. Interest Elections.......................................................................33
Section 2.7. Termination and Reduction of Commitments; Certain Prepayments............................35
Section 2.8. Repayment of Loans: Evidence of Debt....................................................37
Section 2.9. Prepayment of Loans......................................................................38
Section 2.10. Fees....................................................................................39
Section 2.11. Interest................................................................................40
Section 2.12. Alternate Rate of Interest..............................................................41
Section 2.13. Increased Costs.........................................................................42
Section 2.14. Taxes...................................................................................43
Section 2.15. Payments Generally; Pro Rata Treatment; Sharing of Setoffs..............................45
Section 2.16. Replacement of Lender...................................................................47
ARTICLE III. CONDITIONS..........................................................................................47
Section 3.1. Effective Date...........................................................................47
Section 3.2. Each Credit Event........................................................................52
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.......................................................................53
Section 4.1. Organization; Powers; Capitalization.....................................................53
Section 4.2. Authorization; Enforceability............................................................53
Section 4.3. Governmental Approvals; No Conflicts.....................................................53
Section 4.4. Financial Condition; No Material Adverse Change..........................................54
Section 4.5. Properties...............................................................................55
Section 4.6. Litigation and Environmental Matters.....................................................55
Section 4.7. Compliance with Laws and Agreements......................................................56
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Section 4.8. Investment and Holding Company Status....................................................56
Section 4.9. Taxes....................................................................................56
Section 4.10. ERISA...................................................................................56
Section 4.11. Disclosure..............................................................................56
Section 4.12. Insurance...............................................................................57
Section 4.13. Labor Matters...........................................................................57
Section 4.14. Solvency................................................................................57
Section 4.15. Security Documents......................................................................57
Section 4.16. Federal Reserve Regulations.............................................................58
Section 4.17. Indebtedness............................................................................59
Section 4.18. Preferred Stock.........................................................................59
Section 4.19. Liens...................................................................................59
Section 4.20. Material Contracts......................................................................59
Section 4.21. Reorganization..........................................................................59
Section 4.22. Year 2000...............................................................................59
ARTICLE V. AFFIRMATIVE COVENANTS.................................................................................59
Section 5.1. Financial Statements and Other Information...............................................60
Section 5.2. Notices of Material Events...............................................................62
Section 5.3. Information Regarding Collateral.........................................................63
Section 5.4. Existence; Conduct of Business...........................................................63
Section 5.5. Payment of Obligations...................................................................64
Section 5.6. Maintenance of Properties................................................................64
Section 5.7. Insurance................................................................................64
Section 5.8. Casualty and Condemnation................................................................65
Section 5.9. Books and Records; Inspection and Audit Rights...........................................65
Section 5.10. Compliance with Laws....................................................................66
Section 5.11. Use of Proceeds and Letters of Credit...................................................66
Section 5.12. Additional Borrower Subsidiaries........................................................66
Section 5.13. Further Assurances......................................................................66
Section 5.14. Material Contracts......................................................................68
Section 5.15. Fiscal Year.............................................................................68
Section 5.16. Year 2000...............................................................................68
ARTICLE VI. NEGATIVE COVENANTS...................................................................................68
Section 6.1. Indebtedness; Preferred Equity Securities................................................68
Section 6.2. Liens....................................................................................70
Section 6.3. Fundamental Changes......................................................................71
Section 6.4. Investments, Loans, Advances, Guarantees and Acquisitions................................71
Section 6.5. Asset Sales..............................................................................72
Section 6.6. Maintenance of Holdings' Subchapter S Status, Capital Stock..............................73
Section 6.7. Restricted Payments; Certain Payments of Indebtedness....................................73
Section 6.8. Transactions with Affiliates.............................................................75
Section 6.9. Restrictive Agreements...................................................................75
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Section 6.10. Amendment of Material Documents.........................................................76
Section 6.11. Capital Expenditures....................................................................76
Section 6.12. Pro Forma Leverage Ratio................................................................76
Section 6.13. Consolidated EBITDA.....................................................................76
Section 6.14. Cash Interest Coverage Ratio............................................................77
Section 6.15. Fixed Charge Coverage Ratio.............................................................77
Section 6.16. Additional Subsidiaries.................................................................78
ARTICLE VII. EVENTS OF DEFAULT...................................................................................78
Section 7.1. Events of Default........................................................................78
ARTICLE VIII. THE ADMINISTRATIVE AGENT...........................................................................81
Section 8.1. Appointment of Agents....................................................................81
Section 8.2. Same Rights and Powers...................................................................81
Section 8.3. No Duties or Obligations; Not Liable.....................................................81
Section 8.4. Entitled to Rely.........................................................................82
Section 8.5. Sub-Agents; Related Parties..............................................................82
Section 8.6. Resignation of Administrative Agent......................................................82
Section 8.7. Concerning the Collateral................................................................82
Section 8.8. No Reliance..............................................................................83
Section 8.9. Arranger and Documentation Agent.........................................................84
ARTICLE IX. MISCELLANEOUS........................................................................................84
Section 9.1. Notices..................................................................................84
Section 9.2. Waivers; Amendments......................................................................84
Section 9.3. Expenses; Indemnity; Damage Waiver.......................................................85
Section 9.4. Successors and Assigns...................................................................87
Section 9.5. Survival.................................................................................90
Section 9.6. Counterparts; Integration; Effectiveness.................................................90
Section 9.7. Severability.............................................................................91
Section 9.8. Right of Setoff..........................................................................91
Section 9.9. Governing Law; Jurisdiction; Consent to Service of Process...............................91
Section 9.10. WAIVER OF JURY TRIAL....................................................................92
Section 9.11. Headings................................................................................92
Section 9.12. Confidentiality.........................................................................92
Section 9.13. Interest Rate Limitation................................................................93
Section 9.14. Acknowledgments.........................................................................93
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SCHEDULES:
Schedule 1.1-A -- Effective Date Capitalization Table
Schedule 1.1-B -- Material Leased Real Property
Schedule 1.6 -- Consolidated EBITDA
Schedule 2.1 -- Revolving Commitments
Schedule 3.1(b) -- UCC Filing Jurisdictions
Schedule 4.1(a) -- Corporate Structure/Capitalization Table
Schedule 4.3(a) -- Governmental Approvals
Schedule 4.3(c) -- Conflicts with Agreements
Schedule 4.4(f) -- Material Adverse Changes since December 31, 1997
Schedule 4.5(a) -- Title to Property
Schedule 4.5(c) -- Addresses of Real Property
Schedule 4.5(d) -- Bank Accounts
Schedule 4.6(a) -- Litigation
Schedule 4.6(b) -- Environmental Matters
Schedule 4.7 -- Compliance with Laws and Agreements
Schedule 4.12 -- Insurance
Schedule 4.15(a) -- Certificated Securities; Intercompany Notes; Instruments
Schedule 6.2 -- Existing Liens
Schedule 6.7(a)(vii) -- Permitted Payments
Schedule 6.8 -- Transactions with Affiliates
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Request
Exhibit C -- Form of Revolving Credit Note
Exhibit D -- Form of Guaranty, Indemnity and Subordination Agreement
Exhibit E -- Form of Pledge and Security Agreement
Exhibit F -- Form of Intercompany Note
Exhibit G -- Form of Closing Certificate
Exhibit H -- Form of Compliance Certificate
Exhibit I -- Form of Opinion of Counsel for the Loan Parties
Exhibit J -- Form of Opinion of FDA Counsel for the Loan Parties
Exhibit K -- Form of Perfection Notice
Exhibit L -- Form of Tax Distribution Certificate
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CREDIT AGREEMENT dated as of April 23, 1998, among GLOBAL
HEALTH SUB, INC., as Borrower, GLOBAL HEALTH SCIENCES, INC., as Parent
Guarantor, the LENDERS party hereto, CITICORP USA, INC., as Administrative
Agent, CITIBANK, N.A., as Issuing Bank, and BANK OF AMERICA NT&SA, as
Documentation Agent.
The Borrower has requested (a) the Lenders to extend credit in
the form of Loans during the Revolving Availability Period in an aggregate
principal amount at any time outstanding (less the amount of LC Exposure, as
hereafter defined, at such time) not in excess of $50,000,000, and (b) the
Issuing Bank to issue Letters of Credit during the LC Availability Period in an
aggregate face amount at any time outstanding not in excess of $10,000,000.
The Lenders are willing to extend such credit to the Borrower
and the Issuing Bank is willing to issue Letters of Credit for the account of
the Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. 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.
"Acquired Indebtedness" means (a) Indebtedness of any Person
that becomes a Borrower Subsidiary after the Effective Date pursuant to a
Permitted Acquisition, if such Indebtedness was outstanding prior to the time
such Person became a Borrower Subsidiary and was not created in contemplation of
or in connection with such Person becoming a Borrower Subsidiary and constitutes
either (i) Capital Lease Obligations or (ii) purchase money or other
Indebtedness incurred to finance or refinance the acquisition of fixed assets,
or (b) unsecured Indebtedness of the Borrower constituting Deferred Acquisition
Consideration.
"Acquisition" means the acquisition, in one transaction or a
series of transactions, by the Borrower or any of its Subsidiaries of all or
substantially all the stock, partnership or other equity interests or assets of
any other Person or all or substantially all of the assets of any division or
business of any other Person.
"Acquisition Consideration" means the purchase consideration
for any Permitted Acquisition and all other payments made and liabilities
incurred by any member of the Holdings Group in exchange for, or as part of, or
in connection with, any Permitted Acquisition, whether paid in cash or by
exchange of assets or otherwise and whether payable at or prior to the
consummation of such Permitted Acquisition or deferred for payment at any future
time, whether or not any such future payment is subject to the occurrence of any
contingency, and includes any and all payments and liabilities representing the
purchase price and any assumptions of
liabilities, "earn-outs" and other Profit Payment Agreements, consulting
agreements, services agreements and non-competition agreements and other
liabilities of every type and description.
"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.
"Administrative Agent" means CUSA, in its capacity as
administrative agent for the Lenders hereunder, and any successor of CUSA acting
in such capacity.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied to the Lenders by the Administrative Agent.
"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.
"Alternate Base Rate" means, as of any date, a fluctuating
interest rate per annum in effect from time to time, which rate per annum shall
at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there
is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of
1% per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly
on each Monday (or, if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar non-personal time deposits in the United
States, plus (iii) the average during such three-week period of the
annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit
Insurance
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Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in
the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Effective Rate.
Any change in the Alternate Base Rate due to a change in any amount calculated
under clause (a), (b) or (c) above shall be effective from and including the
effective date of such change in amount.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable ABR Margin" and "Applicable Eurodollar Margin"
mean, for any day with respect to any ABR Loan or any Eurodollar Loan,
respectively, the applicable rate per annum set forth below under the caption
"ABR Spread" or "Eurodollar Spread," respectively, based upon the Total Leverage
Ratio as of the most recent determination date, provided that at no time during
the six-month period immediately following the Effective Date shall the
Applicable ABR Margin or Applicable Eurodollar Margin be less than the
applicable rate per annum set forth below in Level II:
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Total Leverage Ratio: ABR Spread (p.a.) Eurodollar Spread (p.a.)
------------------------------------------------ ------------------------------ ------------------------
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Level I
-------
Greater than 4.50 to 1.00 1.50% 2.75%
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Level II
--------
Greater than 3.50 to 1.00 but less than or 1.25% 2.50%
equal to
4.50 to 1.00
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Level III
---------
Greater than 2.50 to 1.00 but less than or 1.00% 2.25%
equal to
3.50 to 1.00
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Level IV
--------
Less than or equal to 0.75% 2.00%
2.50 to 1.00
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------------------------------------------------ ------------------------------ ------------------------
For purposes of the foregoing, (a) the Total Leverage Ratio
shall be determined as of the last day of each fiscal quarter in the Borrower's
fiscal year based upon its consolidated financial statements delivered pursuant
to Section 5.1(a) or 5.1(b) (and the Compliance Certificate delivered in
connection therewith) and (b) each change in the Applicable ABR Margin or
Applicable Eurodollar Margin resulting from a change in the Total Leverage Ratio
shall be effective during the period commencing on and including the third
Business Day after the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the
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next such change, provided that the Total Leverage Ratio shall be deemed to be
in Level I (i) at any time that an Event of Default has occurred and is
continuing or (ii) if the Borrower fails to deliver the consolidated financial
statements and the Compliance Certificate required to be delivered by it
pursuant to Section 5.1(a) or 5.1(b), during the period from the expiration of
the time for delivery thereof until such consolidated financial statements and
Compliance Certificate are delivered.
"Arranger" means CSI.
"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 9.4), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Bank Hedging Agreement" means any interest rate Hedging
Agreement permitted under Article VI that is entered into by and between the
Borrower and any Hedging Bank with respect to interest rates under this
Agreement.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means Global Health Sub, Inc., a California corporation.
"Borrower Subsidiary" means any subsidiary of the Borrower.
"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 Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.3.
"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 and, 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" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Holdings
Group that are (or would be) set forth in a consolidated statement of cash
flows of the Holdings Group for such period prepared in accordance with GAAP
and (b) Capital Lease Obligations incurred by the Holdings Group during such
period, except any such expenditure made with (or in the amount of) the
proceeds of insurance, condemnation awards (or payment in lieu thereof) or
indemnity payments received from third parties for purposes of replacing or
repairing the assets in respect of which such
4
proceeds, awards or payments were received, so long as such expenditures are
made within 12 months of the occurrence of the damage to or loss of the assets
being repaired or replaced.
"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.
"Carrying Amount" means, with respect to any Indebtedness which is
issued at an original issue discount, the greater of (y) the amount of such
Indebtedness at any date of determination included on the consolidated
balance sheet of Holdings as determined in accordance with GAAP and (z) the
amount which would be due and payable at any date of determination under any
indenture or agreement under which such Indebtedness was issued if the
maturity date of such Indebtedness were accelerated as of such date.
"Cash Interest Coverage Ratio" means, as of any day, the ratio of (i)
Consolidated EBITDA for the 12-month period then ended (taken as a single
period) to (ii) the cash portion of Consolidated Interest Expense for such
period.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. ss. 9601 et seq.
"Change of Control" means, at any time, (a) the failure by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (i) to own, directly or indirectly, beneficially or of record, shares
representing in excess of 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Holdings or (ii)
to perform the functions of the Chairman of the Board of Directors of the
Borrower and Holdings; (b) a majority of the directors of Holdings are
Persons who were neither (i) nominated by the board of directors of Holdings
nor (ii) appointed by directors so nominated; (c) the acquisition of direct
or indirect Control of Holdings by any Person or group other than ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and management (including ▇▇▇▇ ▇▇▇▇▇▇▇); (d) failure by Holdings to
own directly or indirectly 100% of the outstanding Equity Interests in the
Borrower, free and clear of all Liens (other than Liens under the Loan
Documents); or (e) any event occurs that constitutes a "Change of Control,"
as such term is defined in the Senior Note Indenture or in any Supply
Agreement.
"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 2.13(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.
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"Citibank" means Citibank, N.A., a national banking association.
"Citicorp USA" means Citicorp USA, Inc., a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all property upon which any Lien in
favor of the Administrative Agent is purported to be granted pursuant to any
Security Document.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit H hereto or any other form approved by the Administrative Agent.
"Consolidated EBITDA" means, for any period, EBITDA determined on a
consolidated basis with respect to Holdings, the Borrower and the Borrower
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the interest
expense, both expensed and capitalized (including amortization of debt
issuance costs, original issue discount, interest paid in kind and the
interest component in respect of Capital Lease Obligations), accrued or paid
by Holdings and its Subsidiaries during such period, determined on a
consolidated basis in accordance with GAAP and in any event including (a)
interest, fees and costs under or in respect of this Agreement, (b) interest,
amortization of issue discount, fees and costs in respect of the Senior Notes
and (c) costs of interest rate Hedging Agreements.
"Control" of any Person means (a) the ownership, directly, or
indirectly, beneficially or of record, of shares representing 25% or more of
the aggregate ordinary voting power represented by the issued and outstanding
capital stock of such Person, or (b) the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies
of such Person, whether through the ability to exercise voting power, by
contract or otherwise. The terms "Controlling" and "Controlled" have meanings
correlative thereto.
"CSI" means Citicorp Securities, Inc., a Delaware corporation.
"D&F" means D&F Industries, Inc., a California corporation, and a
wholly-owned Subsidiary of the Borrower from and after the consummation of
the Reorganization.
"Default" means any event or condition that constitutes an Event of
Default or that upon notice or lapse of time (or both) would become an Event
of Default.
"Deferred Acquisition Consideration" means, as to any Permitted
Acquisition, effective at the consummation thereof, all Acquisition
Consideration for such Permitted Acquisition except Acquisition Consideration
that was paid in cash or by transfer of assets at or prior to the
consummation of such Permitted Acquisition. The amount of any Deferred
Acquisition Consideration (i) shall be determined by reference to the face
amount thereof, without any discount
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or allowance or reduction for any imputed interest, original issue discount or
present value discount or for any payment contingency, or (ii) if there is no
face amount, shall be based on management's good faith and reasonable estimate
of the amount payable thereunder discounted at an annual rate of 6%.
"Documentary Letter of Credit" means any letter of credit issued for
the account of the Borrower or any Borrower Subsidiary for the purpose of
providing the principal payment mechanism in connection with the purchase of
goods by the Borrower or such Borrower Subsidiary in the ordinary course of
business.
"Documentation Agent" means Bank of America NT&SA, in its capacity as
documentation agent for the Lenders.
"Dollars" or "$" refers to lawful money of the United States of America.
"Dynamic" means Dynamic Products, Inc., a California corporation, and a
wholly-owned Subsidiary of the Borrower from and after the consummation of
the Reorganization.
"EBITDA" of any Person for any period means (a) net income (or net
loss) for such period, plus (b) without duplication and to the extent
deducted from revenues in determining net income (or net loss), the sum of
(i) the aggregate amount of interest expense for such period, (ii) the
aggregate amount of letter of credit fees paid during such period, (iii) the
aggregate amount of income tax expense for such period, (iv) all amounts
attributable to depreciation and amortization for such period and (v)
non-cash charges during such period which are not expected to result in a
cash impact during the term of this Agreement, minus (c) without duplication
and to the extent added to revenues in determining net income for such
period, non-cash gains during such period, in each case determined in
accordance with GAAP for such Person.
"Effective Date" means the date on which the conditions specified in
Section 3.1 are satisfied (or waived in accordance with Section 9.2).
"Effective Date Capitalization Table" means the information set forth
on Schedule 1.1-A.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports
prepared by Holdings, the Borrower or any of the Subsidiaries (a) in the
ordinary course of such Person's business or (b) as required in connection
with a financing transaction or an acquisition or disposition of real estate)
or proceedings relating in any way to any Environmental Law or any permit
issued, or any approval given, under any such Environmental Law (hereinafter,
"Claims"), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contributions, indemnification, cost recovery,
7
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Laws" means all applicable laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, the preservation or
reclamation of natural resources, the generation, use, handling,
transportation, storage, treatment, disposal, exposure to, or Release or
threatened Release of any Hazardous Material, or to employee health and
safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties
or indemnities), of any member of the Holdings Group 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 any such liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means, with respect to any Person, any capital stock
of such Person or membership interests, partnership interests (whether
general or limited) or other equity interests in such Person, regardless of
type, class, preference or designation, and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls or claims of any
character with respect thereto, in each case whether outstanding on the
Effective Date or issued or granted at any time thereafter.
"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 any Plan; (f) the incurrence by
8
the Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any 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 Section 7.1.
"Excess Cash Flow" means, for any period, the sum of (a) Consolidated
EBITDA for such period, minus (b) the sum of (i) the cash portion of
Consolidated Interest Expense for such period, (ii) scheduled principal
repayments of Indebtedness of Holdings and its Subsidiaries on a Consolidated
basis for such period, (iii) the aggregate amount of all Tax Distribution
Amounts and other Restricted Payments permitted under Article VI hereof, in
each case to the extent actually paid, (iv) cash taxes paid by Holdings or
any of its Subsidiaries during such period, (v) cash Capital Expenditures
permitted under Article VI hereof during such period, (vi) mandatory
prepayments pursuant to Section 2.7(b) during such period with respect to the
Net Cash Proceeds from the Transfer of any asset and (vii) any increase in
working capital during such period, plus (c) any decrease in working capital
during such period.
"Excluded Taxes" means, with respect to the Administrative 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 2.16), 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 2.14(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 2.14(a).
"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 for such day (or, if
such day is not a Business Day, for the next preceding Business
9
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 Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means, with respect to any Loan Party, the chief
financial officer or treasurer of such Loan Party.
"Financing Transactions" means the execution, delivery and performance
by each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.
"Fixed Charge Coverage Ratio" means for any period, the ratio of (1)
(a) the sum of (i) Consolidated EBITDA for such period and (ii) rental
expense under leases of real or personal property, or mixed property, in each
case of Holdings and its Subsidiaries during such period, minus (b) Capital
Expenditures of Holdings and its Subsidiaries during such period to (2) the
sum of (i) the cash portion of Consolidated Interest Expense, (ii) all
scheduled repayments of principal amounts of Indebtedness (including the
principal portion of rentals accrued under capitalized leases), but excluding
any permanent reductions of the Commitments hereunder pursuant to Sections
2.7(b) through (e) and any other repayments of the Advances pursuant to
Section 2.9, (iii) rental expense under leases of real or personal property,
or mixed property, in each case of Holdings and its Subsidiaries during such
period, and (iv) the aggregate amount of all Tax Distribution Amounts
distributed by Holdings and its Subsidiaries during such period and all cash
taxes payable by Holdings and its Subsidiaries during such period.
"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.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governing Documents" means (a) the Certificate of Incorporation of
Holdings, (b) the Certificate of Incorporation of the Borrower, (c) the
By-laws of Holdings, (d) the By-Laws of the Borrower, and (e) the Certificate
or Articles of Incorporation and the By-Laws of each other Loan Party, in
each case, as in effect on the Effective Date (or, if later, in the case of
any Borrower Subsidiary, the date on which such Subsidiary becomes a Loan
Party) and amended from time to time thereafter in accordance with Section
6.10.
"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.
10
"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
(except endorsements for collection or deposit in the ordinary course of
business) and shall include without limitation 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.
"Guarantee Agreement" means the Guaranty, Indemnity and Subordination
Agreement substantially in the form of Exhibit D, made by Holdings and the
Borrower Subsidiaries in favor of the Administrative Agents for the benefit
of the Holders of the Obligations.
"Guarantors" means Holdings and each Borrower Subsidiary that has
executed the Guarantee Agreement.
"Hazardous Materials" means any substance, material or waste which is
regulated by any Governmental Authority of the United States as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste," "toxic
substance" or words of similar meaning or import under any provision of
Environmental Law, which includes, but is not limited to, petroleum,
petroleum products, asbestos, urea formaldehyde and polychlorinated byphenyls.
"Hedging Agreement" means any interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts, and other similar agreements.
"Hedging Bank" means any Lender or any of its Affiliates in its
capacity as a party to a Bank Hedging Agreement.
"Herbalife Bond" means Performance Bond No. 53-0110-54607-97-5 in the
face amount of $25,000,000 issued by United States Fidelity and Guaranty
Company to D&F and Raven Industries, Inc., d/b/a Omni-Pak Industries, Inc.,
with respect to the obligations of Herbalife International of America, Inc.,
under the Supply Agreements, as the same may be amended, supplemented,
modified or replaced from time to time.
"Holdings" means Global Health Sciences, Inc., a California corporation.
11
"Holdings Group" means, collectively, Holdings and its
Subsidiaries, including the Borrower.
"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 Deferred Acquisition Consideration and
all obligations of such Person in respect of the deferred purchase price of
property or services, but excluding current accounts payable incurred in the
ordinary course of business or (if so incurred prior to a Permitted Acquisition
and not in contemplation thereof) assumed in a Permitted Acquisition, (f) all
obligations of such Person or any other Person secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien (except a Permitted Encumbrance) on property then owned or
thereafter to be acquired by such Person, whether or not such Person has assumed
liability for the payment of such obligations, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations of such Person, contingent or otherwise, in respect of letters
of credit (including all LC Exposure), letters of guaranty or bankers
acceptances, (j) all obligations of such Person, contingent or otherwise, in
respect of Hedging Agreements, and (k) all obligations of such Person,
contingent or otherwise, under Profit Payment Agreements or to redeem,
repurchase or exchange any Equity Interests issued by such Person or by any
Affiliate of such Person or to pay dividends or make distributions in respect of
any such Equity Interests.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Information Memorandum" means the Confidential Information
Memorandum dated March 17, 1998, relating to the Borrower and the Transactions
and the related written Bank Meeting Presentation dated March 1998 with respect
thereto delivered to prospective Lenders on March 19, 1998.
"Intercompany Note" means a promissory note of a Loan Party to
another Loan Party in substantially the form of Exhibit F.
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.6.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the last day of each 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.
12
"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, except that (a) 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 (b) 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.
"Issuing Bank" means Citibank, in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.4(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.
"LC Availability Period" means the period from and including
the Effective Date to but excluding the earlier of (a) the date that is thirty
days prior to the Maturity Date and (b) the date of termination of the Revolving
Commitments.
"LC Disbursement" means a payment made by the Issuing Bank
pursuant to a Letter of Credit.
"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.
"LC Sublimit" means $10,000,000, as such amount may be reduced
from time to time pursuant to Section 2.7.
"Lenders" means the Persons listed on the signature pages
hereto as Lenders 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.
"Letter of Credit" means any letter of credit issued pursuant
to this Agreement.
"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
13
comparable to those currently provided on such page of such Service, as
determined by the Administrative 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 Citibank 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 any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, any agreement to give any of the foregoing, any
lien or retained security title of a conditional vendor, any easement, right of
way or other encumbrance on title to real property and, in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
"Loan Documents" means this Agreement, each promissory note
issued pursuant to Section 2.8(e), the Letters of Credit, the Guarantee
Agreement, the Security Documents and each other certificate, instrument or
agreement executed and delivered by any Loan Party in favor of the
Administrative Agent, any Issuing Bank or any Lender pursuant to the provisions
hereof or thereof, as each of the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with its respective terms.
"Loan Parties" means Holdings and each of its Subsidiaries.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Margin Stock" has the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, property, assets, prospects or condition
(financial or otherwise), of Holdings, the Borrower and the Borrower
Subsidiaries, taken as a whole, (b) the ability of the Borrower to pay the
Obligations or of any Loan Party to perform its agreements and other obligations
under the Loan Documents, or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or any of the rights or remedies of
the Administrative Agent, any Issuing Bank or the Lenders hereunder or
thereunder.
"Material Contract" means (a) any Supply Agreement, (b) any
employment contract that provides for annual compensation in excess of $250,000,
(c) any lease of Real Property set forth on Schedule 1.1-B and each other
material lease of Real Property entered into by a Loan Party after the Effective
Date or (d) any other agreement (written or oral) involving
14
total consideration payable to or by Holdings or any of its Subsidiaries in
excess of $10,000,000 (other than agreements or other arrangements for the
purchase of raw materials in the ordinary course of business).
"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 Holdings, the Borrower and the Borrower
Subsidiaries in an aggregate principal amount exceeding $2,000,000. For purposes
of determining the amount of Material Indebtedness at any time, the "principal
amount" of the obligations of Holdings, the Borrower or any Subsidiary in
respect of any Hedging Agreement at such time shall be the maximum aggregate
amount (giving effect to any netting agreements) that Holdings, the Borrower or
such Borrower Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.
"Maturity Date" means April 22, 2003.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA as to which Holdings, the Borrower or any Borrower
Subsidiary has any obligation or liability (contingent or otherwise).
"Net Cash Proceeds" means (a) all cash proceeds received by
Holdings, the Borrower or any Borrower Subsidiary from the issuance and sale of
any Equity Interests at any time after the Effective Date (except Equity
Interests sold to management employees of the Borrower or any Subsidiary and
other Equity Interests issued or sold in accordance with Section 6.7) or from
the incurrence of any Indebtedness (other than Indebtedness described in Section
6.1(a)), in each case net of underwriting discounts, commissions, issuance costs
and other reasonable costs incurred in connection with such transaction, (b) all
cash proceeds received by Holdings, the Borrower or any Borrower Subsidiary from
the Transfer of any assets (except Transfers described in clauses (a) through
(c) of Section 6.5) net of (i) costs of the sale or disposition incurred and
paid by members of the Holdings Group (including all reasonable and customary
fees and expenses with respect to legal, investment banking, brokerage,
accounting and other professional fees, sales commissions and disbursements),
(ii) income or gains taxes paid or estimated to be payable in cash within twelve
months of the consummation of such Transfer by any member of the Holdings Group
by reason of such Transfer, and other tax liabilities directly resulting
therefrom, (iii) any such cash proceeds that are applied to the repayment of any
Indebtedness permitted hereunder and permitted to be secured hereunder by the
property sold in such Transfer, and (iv) appropriate reserves maintained in
accordance with GAAP against any liabilities associated with such Transfer and
retained by the Borrower, Holdings or their respective Subsidiaries following
such Transfer, including without limitation pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Transfer.
"Obligations" means all direct or indirect obligations and
liabilities of the Borrower or any other Loan Party of any and every type and
description at any time arising under
15
or in connection with this Agreement or any other Loan Document, to the
Administrative Agent, the Arranger, the Documentation Agent, the Issuing Bank,
Citibank, any Lender, any Person entitled to indemnification pursuant to Section
9.3(b), or any of their respective Affiliates, successors, transferees or
assigns, whether or not the right of such Person to payment in respect of such
obligations and liabilities is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and whether or not such claim is discharged, stayed or
otherwise affected by any bankruptcy case or insolvency or liquidation
proceeding, and shall include (a) all liabilities of the Borrower for principal
of and interest on the Loans, (b) all liabilities of the Borrower in respect of
Letters of Credit, (c) all liabilities of the Borrower under the Loan Documents
for any fees, costs, taxes, expenses, indemnification and other amounts payable
thereunder, (d) all liabilities under the Guarantee Agreement and (e) all other
liabilities of the Borrower or any other Loan Party to any such Person under or
in respect of any of the Loan Documents or the Financing Transactions.
"Omni-Pak" means Raven Industries, Inc., a California
corporation (d/b/a Omni-Pak Industries, Inc.), and a wholly-owned Subsidiary of
the Borrower from and after the consummation of the Reorganization.
"Other Taxes" means any and all current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Parent Guarantor" means Holdings.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Perfection Notice" means a notice to a depositary bank in
substantially the form of Exhibit K or any other form approved by the
Administrative Agent.
"Permitted Acquisition" means any non-hostile Acquisition by
the Borrower or any Borrower Subsidiary if all of the following conditions are
met:
(a) before and immediately after giving effect thereto, (i) no
Default has occurred and is continuing or would result therefrom and
(ii) the representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects
on and as of the date of such Acquisition, as though made on and as of
such date, other than any such representations or warranties that by
their terms refer to a date other than the date of such Acquisition, in
which case such representations and warranties shall be true and
correct as of such other date,
(b) such Acquisition has not been preceded by an unsolicited
tender offer for such Person by the Borrower or any of its Affiliates,
16
(c) all transactions related thereto shall be consummated in
accordance with applicable laws,
(d) in the case of any Acquisition of shares or other Equity
Interests in any Person, such Acquisition is an Acquisition of 100% of
the Equity Interests in such Person and, after giving effect to such
Acquisition, such Person becomes a wholly-owned Subsidiary of the
Borrower,
(e) all actions required to be taken, if any, with respect to
any acquired or newly formed Subsidiary under Section 5.12 shall have
been taken,
(f) such assets are used for, or such Person is engaged in, a
line of business permitted under Section 6.3(b),
(g) at least (i) 21 days prior to entering into such
Acquisition, or any agreement therefor, the Borrower delivers notice
thereof to the Administrative Agent and (ii) 15 days prior to the
consummation of such Acquisition, the Borrower delivers to the
Administrative Agent and the Lenders a certificate signed by a
Financial Officer calculating the Total Leverage Ratio, Consolidated
EBITDA, Cash Interest Coverage Ratio, Fixed Charge Coverage Ratio and
the Pro Forma Operating Cash Flow (including, as set forth in
reasonable detail on a schedule thereto, all adjustments to be made in
calculating such Pro Forma Operating Cash Flow), each on a pro forma
basis so as to give effect to such Acquisition and all Deferred
Acquisition Consideration therefor and all other Indebtedness assumed
or incurred by any Loan Party in connection therewith, and attaching
the Borrower's then-current good faith and reasonable financial
projections for the first fiscal quarter ending after the consummation
of such Acquisition and the succeeding three quarters, demonstrating
(to the reasonable satisfaction of the Required Lenders) that, after
giving effect to such Acquisition, (A) the Borrower and Holdings would
have been in compliance with the covenants set forth in Sections 6.12
through 6.15 as of the last day of the Borrower's fiscal quarter most
recently ended prior to the consummation of such Acquisition and (B)
based solely on such projections and without any assurance that such
projections will be achieved, the Borrower can reasonably be expected
to remain in compliance with such covenants for the twelve-month period
following the consummation of such Acquisition, and to have sufficient
cash liquidity to conduct its business, to support working capital
requirements and to make required income tax distributions and pay its
debts and other liabilities as they become due,
(h) neither Holdings, the Borrower nor any Borrower Subsidiary
shall incur, assume or otherwise become liable for or subject to (i)
any Indebtedness in connection with such Acquisition (except for
Indebtedness permitted by Section 6.1), or (ii) any material contingent
liabilities, except for those constituting Indebtedness permitted by
Section 6.1,
(i) the aggregate consideration payable by the Loan Parties in
connection with such Acquisition does not exceed six times the Pro
Forma Operating Cash Flow of the
17
entity, or attributable to the assets, to be acquired in such Acquisition for
the 12-month period preceding the Acquisition,
(j) consummation of such Acquisition will not utilize or
require aggregate proceeds of Revolving Loans or Letters of Credit in
excess of $20,000,000, and
(k) such business or Person being acquired shall have had a
positive Pro Forma Operating Cash Flow for the twelve-month period
prior to the proposed Acquisition;
provided that if (i) an Acquisition satisfies the conditions set forth a clauses
(a) through (h) and (k) above and (ii) such Acquisition is funded solely from
internally generated cash flow of the Borrower and the Borrower Subsidiaries at
a time when no Revolving Loans or Letters of Credit are outstanding, then such
Acquisition shall be deemed a "Permitted Acquisition" within the meaning hereof.
"Permitted Encumbrances" means any of the following:
(a) Liens for Taxes, assessments or charges of any
Governmental Authority that are not yet due or are being contested in
compliance with Section 5.5;
(b) statutory Liens of landlords and 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 60 days or are
being contested in compliance with Section 5.5;
(c) Liens incurred or 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) Liens incurred or deposits made to secure the performance
of bids, tenders, contracts (other than for the repayment of
Indebtedness), 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;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under Section 7.1(k);
(f) 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
Borrower Subsidiary; and
18
(g) any interest or title of a lessor or secured by a lessor's
interest under any lease not otherwise prohibited by this Agreement;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"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 180 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
▇▇▇▇▇'▇;
(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 that 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
(without regard to the limitation on maturity contained in such clause)
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.
"Pledge and Security Agreement" means the Pledge and Security
Agreement substantially in the form of Exhibit E, entered into by the Borrower,
each Guarantor and the Administrative Agent for the benefit of the holders of
Obligations.
19
"Profit Payment Agreement" means any agreement to make any
payment the amount of which is, or the terms of payment of which are, in any
respect subject to or contingent upon the revenues, income, cash flow or profits
(or the like) of any Person or business.
"Pro Forma EBITDA" means, for any period, (a) Consolidated
EBITDA for such period, plus (or, if a negative number, minus) (b) the amount by
which such Consolidated EBITDA would have been increased (or, if a negative
number, decreased) for such period if (i) each Permitted Acquisition that was
consummated in such period had been consummated on the first day thereof, (ii)
Consolidated EBITDA had been computed after giving affect to all revenues,
charges and other items pertinent to the determination of Consolidated EBITDA
that were actually and properly recorded, in accordance with GAAP, in respect of
the assets or Person acquired in such Permitted Acquisition for the period prior
to the consummation of such Permitted Acquisition, minus (c) the amount by which
such Consolidated EBITDA would have been decreased for such period if any and
all revenues, gains, charges, losses and other items attributable to any
business or operations that were sold, discontinued or designated by the
Borrower as held for sale or for discontinuance were excluded in the calculation
thereof, plus (d) if and to the extent the proceeds of any Loan are used in such
period to pay the purchase price or any non-competition payment or other
consideration or costs for any Permitted Acquisition, the amount of interest
that would have accrued hereunder in such period prior to the time such Loan was
funded if such Loan had been outstanding throughout such period.
"Pro Forma Leverage Ratio" means, as of any day, the ratio of
(a) all Indebtedness of Holdings, the Borrower and the Borrower Subsidiaries
outstanding on such day (including without limitation all Indebtedness in
respect of the Senior Notes and the Loans and the aggregate LC Exposure), minus
cash on hand of the Borrower and the Borrower Subsidiaries, to (b) Pro Forma
Operating Cash Flow for Holdings, the Borrower and the Borrower Subsidiaries for
the 12-month period then ended.
"Pro Forma Operating Cash Flow" means, for any business or
Person for any period, EBITDA of such Person or attributable to such business
for such period, plus net cost savings for such period attributable to
termination of non-recurring costs and expenses related to the prior owners of
such business or Person (after giving effect to the costs of replacing services
provided by such prior owners), all such costs and expenses to be satisfactory
to the Administrative Agent and the Required Lenders.
"Real Property" means land, buildings and improvements owned
or leased by Holdings, the Borrower or any of their respective Subsidiaries, but
excluding all operating fixtures and equipment, whether or not incorporated into
such improvements.
"Register" has the meaning set forth in Section 9.4(c).
"Regulation U" means Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
20
"Regulation X" means Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"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.
"Release" has the meaning set forth in CERCLA Section 101(22)
(42 U.S.C. Section 9601(22)).
"Reorganization" means the following transactions to be
consummated pursuant to the Reorganization Agreement (after the consummation of
which transactions, on the Effective Date, (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇ will own 94% and 6%, respectively, of the capital stock of Holdings, (ii)
the Borrower will be a direct, wholly-owned Subsidiary of Holdings and (iii)
D&F, Omni-Pak, Dynamic and West Coast Sales will be direct, wholly-owned
subsidiaries of the Borrower):
(a) the change, prior to the Effective Date, by Holdings of
its name from "D&F Industries, Inc." to "Global Health Sciences, Inc.";
(b) the formation, prior to the Effective Date, by
Holdings of the Borrower;
(c) the formation, prior to the Effective Date, by the
Borrower of D&F, Raven Sub, Inc. ("New Raven"), New West Coast Sales,
Inc. ("New West Coast"), and Dynamic Sub, Inc. ("New Dynamic");
(d) the transfer, on the Effective Date, by Holdings to D&F of
all of its assets and liabilities except for its obligations under the
Senior Notes and the Loan Documents and the capital stock of the
Borrower;
(e) the acquisition, on the Effective Date, by the Borrower,
with proceeds of the issuance of the Senior Notes, of Omni-Pak, West
Coast Sales and Dynamic from their respective shareholders for
approximately $137,900,000 in cash; and
(f) the exchange, on the Effective Date, by the shareholders
of Holdings of approximately 59% of the outstanding capital stock of
Holdings for approximately $57,100,000 in cash, which stock so
exchanged will be cancelled and which cash payment will be made with
proceeds from the issuance of the Senior Notes.
"Reorganization Agreement" means the Agreement and Plan of
Reorganization, dated as of April 23, 1998, among Holdings, the Borrower, D&F,
Omni-Pak, Dynamic and West Coast Sales, and the Agreements and Plans of Merger
referred to (and defined) therein.
21
"Required Lenders" means, at any time, Lenders having Total
Exposures and unused Revolving Commitments representing more than 50% of the sum
of the Total Exposures and unused Revolving Commitments at such time.
"Restricted Payment" means (a) any payment or distribution,
direct or indirect, on account or in respect of (i) any Equity Interest in the
Borrower or any other Loan Party or (ii) the Senior Notes, other than regularly
scheduled semi-annual payments made by Holdings in respect thereof, all as
required by the terms thereof, (b) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
(i) any Equity Interest in the Borrower or any other Loan Party or (ii) the
Senior Notes by any Loan Party, other than any such redemption, purchase or
other acquisition for value by Holdings as required by the terms of the Senior
Notes, or (c) any payment or reimbursement, direct or indirect, on account of
any consulting fees, management fees, director fees, expenses, taxes,
indemnification obligations or other costs incurred or payable by or on behalf
of the Borrower or any other Loan Party to or for the benefit of the holder of
any Equity Interest in Holdings or any Affiliate of any such holder.
"Revolving 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 Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Total Exposure hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.7 or 7.1 or any other
provision of this Agreement and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.4. The
initial amount of each Lender's Revolving Commitment is set forth on Schedule
2.1, or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Revolving Commitment, as applicable (and the initial aggregate
amount of the Lenders' Revolving Commitments is $50,000,000).
"Revolving Credit Note" means a promissory note of the
Borrower to a Lender (or to such Lender and its registered assigns), in
substantially the form of Exhibit C, delivered pursuant to Section 2.8(e).
"Revolving Loan" means a Loan made pursuant to Section 2.1.
"S&P" means Standard & Poor's.
"Security Documents" means the Pledge and Security Agreement,
the Intercompany Notes, and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.12 or 5.13 to secure any
of the Obligations.
22
"Senior Note Guarantees" means the subordinated guaranty by
the Borrower and the Borrower Subsidiaries of Holdings' obligations in respect
of the Senior Notes, all as set forth in Article 10 of the Senior Note
Indenture.
"Senior Note Indenture" means the Indenture dated as of April
23, 1998, between Holdings and Chase Manhattan Bank & Trust Company, National
Association, as Trustee, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Senior Notes" means any and all securities issued or that may
be issued and outstanding under the Senior Note Indenture, and includes the
Notes and the Exchange Notes referred to (and defined) therein.
"Specified Event of Default" means, for the purposes of
Section 6.7(a), the occurrence of (i) any Event of Default specified in Section
7.1(a) or 7.1(b) (including without limitation any such Event of Default
occurring as a result of an acceleration following an Event of Default under
Section 7.1(h) or (i)) or (ii) any failure by the Borrower or Holdings to
observe or perform any covenant, condition or agreement contained in Section
6.11, 6.12, 6.13, 6.14 or 6.15.
"Statutory Reserve Rate" means, at any time, 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 (expressed as a
decimal) of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) established by the Board and then in effect
as to any Lender or any other bank that is a member bank of the Federal Reserve
System 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. For purposes solely of the compensation required by Section
2.14(e), 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 and without regard
to whether any Lender actually obtains or maintains eurocurrency funding for its
Eurodollar Loans. 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.
23
"Subsidiary" means any subsidiary of Holdings or the Borrower.
"Supply Agreements" means, collectively, (a) the Supply
Agreement dated as of September 2, 1997, between D&F and Herbalife International
of America, Inc., a California corporation ("Herbalife"), (b) the Supply
Agreement, dated as of September 2, 1997, between Herbalife and Omni-Pak
Industries, Inc., and (c) the Supply Agreement, dated as of September 2, 1997,
between Herbalife and Dynamic Industries, Inc., a predecessor of D&F, in each
case as the same may be amended, supplemented or otherwise modified from time to
time.
"Tax Distribution Amount" means the sum of:
(a) an amount equal to, for all federal income taxable years
of Holdings ending subsequent to the date hereof during which Holdings
qualified as an S Corporation under Subchapter S of the Code, the
greater of, for each such year, (i) the sum of (A) the product of (1)
all items of income, less all items of deduction, allocable to
Holdings' shareholders for federal income tax purposes for each such
federal taxable year as a result of Holdings' status as an S
Corporation, multiplied by (2) the highest individual federal income
tax rate for each such taxable year, minus (B) all items of credit
allocable to Holdings' shareholders for federal income tax purposes for
each such federal taxable year as a result of Holdings' status as an S
Corporation and (ii) the amount determined under (i) for federal
alternative minimum tax purposes; and
(b) an amount equal to, for all state and local income taxable
years of Holdings ending subsequent to the date hereof, the greater of,
for each such year, (i) the sum of (A) the product of (1) all items of
income, less all items of deduction, allocable to shareholders for
state and local income tax purposes for each such taxable year under
any provision of the relevant revenue and taxation code (the "Local
Code") comparable to Subchapter S of the Code or any comparable term
under the Local Code, multiplied by (2) the highest individual state
and local income tax rate for each such taxable year, minus (B) all
items of credit allocable to Holdings' shareholders for state and local
income tax purposes for each such relevant taxable year and (ii) the
amount determined under (i) for alternative minimum tax purposes under
any such Local Code.
Notwithstanding anything herein to the contrary, the Tax Distribution Amount
shall be reduced by the amount of income tax, if any, which Holdings is required
to withhold and pay over to any state taxing authority by reason of any
shareholder being a nonresident of that state.
"Tax Distribution Certificate" has the meaning specified in
Section 5.1(i).
"Taxes" means any and all current or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total 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 Applicable Percentage of the total LC Exposure at such time.
24
"Total Leverage Ratio" means, as of any day, the ratio of (a)
all Indebtedness of Holdings, the Borrower and the Borrower Subsidiaries
outstanding on such day (including, without limitation, all Indebtedness in
respect of the Senior Notes and the Loans and the aggregate LC Exposure), minus
cash on hand of the Borrower and the Borrower Subsidiaries to (b) Pro Forma
EBITDA for the 12-month period then ended.
"Transfer" has the meaning set forth in Section 6.5.
"Transaction Agreements" means, collectively, the
Reorganization Agreement and each agreement executed or delivered pursuant
thereto or in connection therewith.
"Transaction Parties" means each party to any Transaction
Agreement.
"Transactions" means the Reorganization, the issuance and sale
of the Senior Notes and the
Financing Transactions.
"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.
"West Coast Sales" means West Coast Sales, a California
corporation, and a wholly-owned Subsidiary of the Borrower from and after the
consummation of the Reorganization.
"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.
"Year 2000 Problem" means any significant risk that computer
hardware or software used in Holdings', the Borrower's or any of their
respective Subsidiaries' businesses or operations will not, in the case of dates
or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
Section 1.2. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g., a "Eurodollar Loan" or a "Eurodollar Revolving Loan," versus an "ABR
Loan" or an ABR Revolving Loan"). Borrowings also may be classified and referred
to by Type (e.g., a "Eurodollar Borrowing" versus an "ABR Borrowing").
Section 1.3. 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
25
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, (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
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 1.4. 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 Administrative 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 Administrative 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 1.5. Terms Defined in the Uniform Commercial Code.
When capitalized, the following terms used in this Agreement or the Security
Documents have the meanings given to them in the Uniform Commercial Code, as in
effect in the State of New York on the date of this Agreement: Accounts;
Certificated Security; Commodity Account; Commodity Contract; Commodity
Intermediary; Documents; Equipment; Financial Asset; Fixtures; General
Intangibles; Goods; Instruments; Inventory; Investment Property; Purchase Money
Security Interest; Securities Account; Securities Intermediary; Security;
Security Certificate; Security Entitlement; and Uncertificated Security.
Section 1.6. Detrmination of Financial Ratios. For purposes
of determining the Total Leverage Ratio, Consolidated EBITDA, the Cash Interest
Coverage Ratio and the Fixed Charge Coverage Ratio as of any day prior to the
first anniversary of the Effective Date, (a) Consolidated EBITDA for any period
occurring prior to the Effective Date shall be conclusively taken as equal to
the amount set forth for such period in Schedule 1.6 and (b) in computing the
Cash Interest Coverage Ratio and the Fixed Charge Coverage Ratio, the components
of the respective denominator of each shall be annualized by multiplying the
amount of each such component incurred in that portion of the relevant 12-month
period that follows the Effective Date by a fraction, the numerator of which is
365 and the denominator of which is the number of days in such portion of the
12-month period.
26
ARTICLE II.
THE CREDITS
Section 2.1. Commitments. Subject to the terms and conditions
set forth herein, each Lender severally and not jointly agrees to make Revolving
Loans to the Borrower from time to time during the Revolving Availability Period
in an aggregate principal amount that will not result in such Lender's Total
Exposure at any time exceeding such Lender's Revolving Commitment in effect at
such time. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Section 2.2. Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting
of Loans of the same Type made by the Lenders ratably in accordance with their
respective Revolving 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. The Revolving Commitments are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Sections 2.6(f), 2.6(g) and 2.12, 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. The exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement or such Lender's obligations under Section 2.14.
(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 $500,000 and not less than $1,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000, except that an
ABR Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Revolving Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.4(e).
Borrowings of more than one Type may be outstanding at the same time, but there
shall not at any time be more than a total of six 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.
27
Section 2.3. Requests for Borrowings. To request a Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) 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 (b)
in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of the proposed Borrowing, provided that any
such notice of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.4(e) may be given not later than 10:00
a.m., New York City time, on 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 Administrative Agent of a written
Borrowing Request in substantially the form of Exhibit B hereto, specifying
therein, in compliance with Section 2.2:
(i) the aggregate amount of such Borrowing;
(ii) the date of such Borrowing, which shall be
a Business Day;
(iii) subject to Section 2.2(b), whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(iv) 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
(v) the location and number of the Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.5.
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 Section 2.3, the
Administrative 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.
Section 2.4. Letters of Credit.
(a) Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit for its own account, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the LC 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.
28
(b) To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding 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 Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the 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 Letter of Credit is to expire (which shall comply with Section
2.4(c)), the amount of such 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 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 Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each 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 LC Exposure shall not exceed
the LC Sublimit in effect at such time and (ii) the aggregate Total Exposures
shall not exceed the aggregate Revolving Commitments in effect at such time.
(c) Each 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 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
thirty days prior to the Maturity Date.
(d) By the issuance of a Letter of Credit (or an amendment to
a Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby severally and not jointly acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Borrower on the date due as provided in Section 2.4(e), 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 Section 2.4(d) 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 Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
29
(e) If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative 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
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.3 that such payment be financed with an ABR
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 Borrowing. If the Borrower fails to make such payment when due,
the Administrative 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 severally and not jointly agrees to pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.5 with respect to Loans
made by such Lender (and Section 2.5 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly
pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.4(e), the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this Section 2.4(e) 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 Section 2.4(e) to reimburse the Issuing Bank for any
LC Disbursement (other than the funding of an ABR Borrowing as contemplated
above) shall constitute the payment of the purchase price for a participation
pursuant to Section 2.4(d) and, accordingly, shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) The Borrower's obligation to reimburse LC Disbursements as
provided in Section 2.4(e) 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
30
foregoing, that might, but for the provisions of this Section 2.4(f),
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower's obligations hereunder. None of the Administrative Agent,
the Lenders, the Issuing Bank or 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. 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 forever waived by the Borrower)
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 willful 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
that appear on their face to be in 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) 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
Administrative 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, but no failure to give or delay in giving such notice
shall relieve the Borrower of its obligation to reimburse the Issuing Bank and
the Lenders with respect to any such LC Disbursement or put the Issuing Bank
under any resulting liability to any Person or any resulting diminution of its
rights as against any Person.
(h) 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 (including the Applicable ABR Margin) then applicable to ABR
Revolving Loans, except that if the Borrower fails to reimburse such LC
Disbursement when due pursuant to Section 2.4(e),
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then Section 2.11(c) shall apply. Interest accrued pursuant to this Section
2.4(h) shall be for the account of the Issuing Bank and, after the date of
payment by any Lender pursuant to Section 2.4(d) for the purchase of a
participation, for the account of such Lender to the extent of such
participation.
(i) The Issuing Bank may be replaced at any time by written
agreement among the Borrower, the Administrative Agent, the replaced Issuing
Bank and the successor Issuing Bank. The Administrative 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
2.1m(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 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) If any Event of Default shall occur and be continuing, on
the Business Day that the Borrower receives notice from the Administrative 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 Section 2.4(j), the
Borrower shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to 105% of the LC Exposure as of such date plus any and all accrued
and unpaid interest thereon, except 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
Section 7.1(h) or 7.1(i). Each such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Administrative 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
Administrative Agent at the request of the Borrower 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 Administrative 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
32
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.
Section 2.5. Funding of Borrowings.
(a) 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 Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative 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 Sanwa Bank California in Rosemead, California, and
designated by the Borrower in the applicable Borrowing Request, except that ABR
Revolving Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.4(e) shall be remitted by the Administrative Agent to the
Issuing Bank.
(b) Unless the Administrative 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 Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.5(a) 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 Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative 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 to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative 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 Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
Section 2.6. 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
33
provided in this Section 2.6. 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 2.6, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.3 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 binding on the Borrower and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent in a
writing signed by the Borrower and complying with the provisions of Section
2.6(c) below.
(c) Each telephonic and written Interest Election Request
shall, within the restrictions specified in subsections (a) and (b) above,
specify the following information in compliance with Section 2.2:
(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 Section 2.6(c)(iii) and 2.6(c)(iv) 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.
(d) Promptly following receipt of an Interest Election
Request, the Administrative 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
34
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR Borrowing.
(f) If with respect to any Interest Period Lenders holding at
least 50% in principal amount of the then outstanding Loans advise the
Administrative Agent prior to the first day of the relevant Eurodollar Interest
Period that funding is not available to such Lenders in the London interbank
market in Dollars, then the Administrative Agent shall forthwith give notice
thereof to the Borrower, whereupon (until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist)
the right of the Borrower to elect to have Loans bear interest as Eurodollar
Borrowings shall be suspended, and each outstanding Eurodollar Borrowing shall
be converted into a ABR Borrowing on the last day of the then current Interest
Period therefor, notwithstanding any prior election by the Borrower to the
contrary.
(g) If at any time any Lender determines (which determination
shall, if made in good faith, be final and conclusive and binding upon all
parties) that the funding or continuation of, or conversion into, a Eurodollar
Borrowing has become unlawful or impermissible by compliance by such Lender in
good faith with any law, governmental rule, regulation or order of any central
bank or other Governmental Authority or quasi-governmental authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
such Lender may give notice of that determination, in writing, to the Borrower
and the Administrative Agent, and the Administrative Agent shall promptly
transmit the notice to each other Lender. When such notice is given by a Lender,
(a) the Borrower's right to request from the Lenders, and each Lender's
obligation (if any) to make, Eurodollar Rate Loans shall be immediately
suspended, and (b) if the affected Eurodollar Rate Loan or Loans are then
outstanding, the Borrower shall immediately, or if permitted by applicable law,
no later than the date permitted thereby, convert each such Loan into an ABR
Loan. If, at any time after a Lender gives notice under this Section 2.6(g),
such Lender determines that it may lawfully make Eurodollar Rate Loans of the
type referred to in such notice, such Lender shall promptly give notice of that
determination, in writing, to the Borrower and the Administrative Agent, and the
Administrative Agent shall promptly transmit the notice to each other Lender.
The Borrower's right to request from the Lenders, and each Lender's obligation,
if any, to make, Eurodollar Rate Loans shall thereafter be restored.
(h) Notwithstanding any contrary provision hereof, if an Event
of Default has occurred and is continuing, 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 2.7. Termination and Reduction of Commitments;
Certain Prepayments.
35
(a) Unless previously terminated, the Revolving Commitments
shall terminate, and all Obligations will be immediately due and payable, (i) on
the Maturity Date or (ii) upon the occurrence of a Change of Control (unless any
Event of Default arising from such Change of Control has been waived by all
Lenders pursuant to Section 9.2(b)).
(b) If and whenever Holdings or the Borrower or any Borrower
Subsidiary receives any Net Cash Proceeds, such amount shall be applied to
prepay the Revolving Loans (to the extent outstanding on the date of such
prepayment), and the Revolving Commitments shall be reduced, on the first
Business Day after receipt thereof by an amount equal to the Net Cash Proceeds
so received. After prepayment in full of all outstanding Loans, the remainder of
any such prepayment shall be deposited by the Borrower with the Administrative
Agent to be held as cash collateral (in accordance with Section 2.4(j)) up to an
aggregate amount equal to 105% of the LC Exposure at such time.
(c) Commencing with the fiscal year of the Borrower ending
December 31, 2001, the Borrower shall prepay on the 90th day following the last
day of such fiscal year, and annually thereafter, the Revolving Loans (to the
extent outstanding on the date of such prepayment), and the Revolving
Commitments shall be reduced, by an amount equal to 50% of the amount of Excess
Cash Flow for the fiscal year most recently ended. After prepayment in full of
all outstanding Loans, the remainder of any such prepayment shall be deposited
by the Borrower with the Administrative Agent to be held as cash collateral (in
accordance with Section 2.4(j)) up to an aggregate amount equal to 105% of the
LC Exposure at such time.
(d) No less than five Business Days prior to the date that
Holdings is required to make, or otherwise intends to make, an Asset Sale Offer
pursuant to Section 4.08(b) of the Senior Note Indenture (and as defined
therein), the Borrower shall prepay the Revolving Loans (to the extent
outstanding on the date of such prepayment), and the Revolving Commitments shall
be reduced, by an amount equal to the Excess Proceeds (as defined in the Senior
Note Indenture) at such time. After prepayment in full of all outstanding Loans,
the remainder of any such prepayment shall be deposited by the Borrower with the
Administrative Agent to be held as cash collateral (in accordance with Section
2.4(j)) up to an aggregate amount equal to 105% of the LC Exposure at such time.
(e) The Borrower may at any time terminate, or from time to
time reduce, the Revolving Commitments, provided that (i) each reduction of the
Revolving Commitments shall be in an amount that is an integral multiple of
$500,000 and not less than $1,000,000 and (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if and to the extent that, after giving
effect to such termination or reduction and any concurrent prepayment of the
Revolving Loans in accordance with Section 2.9, the sum of the Total Exposures
would exceed the total Revolving Commitments.
36
(f) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Revolving Commitments under Section 2.7(e)
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 such notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section 2.7(f) shall be irrevocable. Any termination or reduction of the
Revolving Commitments shall be permanent. Each reduction of the Revolving
Commitments shall be made ratably among the Lenders in accordance with their
respective Revolving Commitments.
(g) The LC Sublimit shall be permanently and automatically
reduced on the date of any termination or reduction of the Revolving Commitments
by an amount equal to the amount by which the aggregate Revolving Commitments
(after giving effect to such termination or reduction thereof) are less than
$10,000,000.
(h) Notwithstanding anything herein to the contrary, at any
time that Loans are outstanding the proceeds of which were used in connection
with the funding of a Permitted Acquisition, the Borrower may, in accordance
with Section 2.9, voluntarily prepay such Loans, in whole or in part, and
reborrow, in accordance with Article II and subject to the terms and conditions
hereof, an amount up to the principal amount of such prepayment at a later date;
provided that, concurrently with such reborrowing, the Borrower delivers a
certificate to the Administrative Agent certifying that the proceeds of such
reborrowing will be applied solely to (i) regularly scheduled payments of
interest on the Senior Notes or (ii) the payment of a Tax Distribution Amount
pursuant to Section 6.7, and such proceeds are in fact so applied.
Section 2.8. Repayment of Loans: Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan of such Lender on the Maturity Date.
(b) 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.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the 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 Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
37
(d) The entries made in the accounts maintained pursuant to
Sections 2.8(b) and 2.8(c) shall be prima facie evidence of the existence and
amounts of the obligations recorded therein, but the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans, and
to pay interest on the Loans, in accordance with the terms of this Agreement.
(e) 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 Revolving Credit Note payable to the order of such
Lender (or, if requested by such Lender, to such Lender and its registered
assigns). Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.4)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
Section 2.9. Prepayment of Loans.
(a) The Borrower shall prepay the Loans on each date
specified, and in the manner specified, in Section 2.7. In addition, (i) if on
any date the Total Exposure exceeds the Revolving Commitments in effect on such
date, the Borrower shall on such date prepay Revolving Loans in an amount equal
to such excess, and (ii) if on any date the LC Exposure exceeds the Revolving LC
Sublimit in effect on such date, the Borrower shall on such date deposit cash
collateral in an amount equal to 105% of such excess in the manner and on the
terms set forth in Section 2.4(j).
(b) The Borrower shall have the right at any time and from
time to time to prepay any Borrowing in whole or in part, subject to the
requirements of this Section 2.9.
(c) In the event of any termination of all the Revolving
Commitments, the Borrower shall repay or prepay all outstanding Borrowings on
the date of such termination. In the event of any partial reduction of the
Revolving Commitments, then (i) at or prior to the effective date of such
reduction or termination, the Administrative Agent shall notify the Borrower and
the Lenders of the aggregate Total Exposure after giving effect thereto and (ii)
if the aggregate Total Exposure would exceed the aggregate Revolving Commitments
after giving effect to such reduction or termination, then the Borrower shall,
on the date of such reduction or termination, prepay Borrowings in an amount
sufficient to eliminate such excess.
(d) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall specify such selection in the notice of such prepayment
pursuant to Section 2.9(e), but, in any event, each prepayment of Borrowings
shall be applied to prepay ABR Borrowings before any other Borrowings.
38
(e) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any optional 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 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, the principal amount
of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any 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 2.2, except as
necessary to apply fully the required amount of a mandatory prepayment. 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 2.11, and if any prepayment of a Eurodollar Loan is
made on a date other than the last day of the Interest Period applicable to such
Loan, the Borrower shall also pay all amounts owing pursuant to Section 2.13(e).
(f) Any provision hereof to the contrary notwithstanding, from
and after the date any Borrowing has been made in respect of a Permitted
Acquisition, each prepayment of Revolving Loans hereunder shall be deemed to be
applied, first, to Borrowings the proceeds of which were used for working
capital purposes, until all such Borrowings have been repaid in full, and,
second, to Borrowings made in respect of Permitted Acquisitions.
Section 2.10. Fees.
(a) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee, which shall accrue at the rate of
0.50% per annum on the average daily unused amount of the Revolving Commitment
of such Lender during the period from and including the date of this Agreement
to but excluding the date on which the Revolving Commitments are terminated.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees 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). For purposes of computing commitment fees with
respect to Revolving Commitments, a Revolving Commitment of a Lender shall be
deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of such Lender.
(b) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a participation fee with respect to its
participations in Letters of
39
Credit, which shall accrue at a rate equal to (i) with respect to all Letters of
Credit other than Documentary Letters of Credit, the Applicable Eurodollar
Margin (as in effect from day to day as such participation fee accrues) less 1/4
of 1% per annum, and (ii) with respect to Documentary Letters of Credit,
fifty-percent (50%) of the Applicable Eurodollar Margin (as in effect from day
to day as such participation fee accrues), in each case on the average daily
amount of such Lender's LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements), during the period from and including the date
of this Agreement to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure. The Borrower also agrees to pay to the Issuing Bank, solely for
the Issuing Bank's own account, a fronting fee which shall accrue at the rate of
1/4 of 1% per annum on the average daily amount of the LC Exposure relating to
all Letters of Credit during the period from and including the date of this
Agreement to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any 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 in arrears on the third Business Day following such last day, commencing
on the first such date to occur after the Effective Date, and, in addition, all
such fees shall be payable on the date on which the Revolving Commitments
terminate and any such fees accruing after the date on which the Revolving
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this Section 2.10(b) 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 (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account and for account of the Arranger, fees payable in the amounts
and at the times separately agreed upon between or among the Borrower, the
Administrative Agent and the Arranger.
(d) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
Section 2.11. Interest.
(a) The Loans comprising each Eurodollar Borrowing shall bear
interest for each day of each Interest Period selected for such Borrowing in
conformity with the provisions of this Agreement at the Adjusted LIBO Rate
determined for such Interest Period plus the Applicable Eurodollar Margin
determined as of such day.
40
(b) The Loans comprising each ABR Borrowing and, except to the
extent interest accrues thereon as set forth in Section 2.11(a), all other
Loans, reimbursement liabilities for LC Disbursements and other Obligations at
any time outstanding shall bear interest for each day at the Alternate Base Rate
in effect for such day plus the Applicable ABR Margin determined as of such day.
(c) Notwithstanding the provisions of Sections 2.11(a) and
2.11(b), if and for as long as any amount due for principal of or interest on
any Loan or any reimbursement liability for LC Disbursements remains unpaid and,
in addition, for each day on which any Event of Default has occurred and is
continuing, any and all outstanding Loans, reimbursement liabilities for LC
Disbursements and other Obligations (whether or not then due and payable) shall
bear interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of any Eurodollar Borrowing for which the Interest Period has
not then expired, 2 % per annum plus the rate (including the Applicable
Eurodollar Margin) otherwise applicable to such Eurodollar Borrowing as provided
in Section 2.11(a) and (ii) in the case of any other Loan, reimbursement
liability or other Obligation then outstanding, 2 % per annum plus the rate
(including Applicable ABR Margin) then applicable to ABR Revolving Loans as
provided in Section 2.11(b).
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments, except that, in any event, (i)
interest accrued pursuant to Section 2.11(c) 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 Revolving 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, except that interest computed by reference to clause (a) of
the definition of Alternate Base Rate shall be computed on the basis of a year
of 365 days (or 366 days in a leap year), and in each case shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
Section 2.12. Alternate Rate of Interest.
If prior to the commencement of any Interest Period for a
Eurodollar Borrowing:
(a) the Administrative 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
41
(b) the Administrative 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 (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative 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 2.13. 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 or any holding
company of 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 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 increases or would have the effect
of increasing the amount or cost of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender or Issuing
Bank, or reduces or would have the effect of reducing the rate of return on such
capital, and such Lender or Issuing Bank reasonably determines that the amount
or cost of such capital is increased, or the rate of return thereon is reduced,
by or based upon the existence or funding of such Lender's or Issuing Bank's
commitment to make loans and issue or participate in letters of credit under
this Agreement and other commitments of this type, 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
42
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, within three
Business Days after demand by such Lender or Issuing Bank, the Borrower shall
pay to such Lender or Issuing Bank, from time to time as specified by such
Lender or Issuing Bank, additional amounts sufficient to compensate such Lender
or Issuing Bank in the light of such circumstances, to the extent that such
Lender or Issuing Bank in good faith determines such increase in capital, or
reduction in the rate of return, to be allocable to the existence or funding of
its commitment.
(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 Section 2.13(a)
or 2.13(b) 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 2.13 shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such compensation.
(e) In the event of (i) 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), (ii) the conversion of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (iii) the failure to borrow, convert, continue or prepay any Revolving
Loan on the date specified in any notice delivered pursuant hereto, or (iv) 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 2.16, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 2.13 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 2.14. Taxes.
(a) Any and all payments by or on account of any obligation of
the Borrower hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes. If,
nevertheless, 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 2.14) the
Administrative Agent, Lender or Issuing Bank (as the case may be)
43
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 (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 Administrative Agent,
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
Administrative Agent, 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 or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.14) 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
Administrative 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 Administrative 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 Administrative Agent.
(e) Each Foreign Lender shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Foreign Lender's claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest," a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Foreign Lender delivers a
Form W-8, a certificate representing that such Foreign Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Foreign Lender claiming complete exemption from or reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement and the other
Loan Documents. Such forms shall be delivered by each Foreign Lender on or
before the date it becomes a party to this Agreement and on or before the date,
if any, such Foreign Lender changes its applicable lending office by designating
a different
44
lending office (a "New Lending Office"). In addition, each Foreign
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Foreign Lender. Notwithstanding any other
provision of this Section 2.14(e), a Foreign Lender shall not be required to
deliver any form pursuant to this 2.14(e) that such Foreign Lender is not
legally able to deliver.
(f) The Borrower shall not be required to indemnify any
Foreign Lender or to pay any additional amounts to any Foreign Lender in respect
of U.S. Federal withholding tax pursuant to Section 2.14(a) or 2.14(c) to the
extent that the obligation to pay such additional amounts would not have arisen
but for a failure by such Foreign Lender to comply with the provisions of
Section 2.14(e). Should a Lender become subject to Taxes because of its failure
to deliver a form required hereunder, Borrower shall, at Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
Section 2.15. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.
(a) The Borrower shall make each payment required to be made
by it hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.13, 2.14 or 2.16 or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative 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 Administrative Agent at the offices of
Citibank at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, except payments to be made
directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.13, 2.14, 2.16 and 9.3 shall be made directly to
the Persons entitled thereto and payments pursuant to other Loan Documents shall
be made to the Persons specified therein. The Administrative 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
under any Loan Document 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 under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative 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 parties, and (ii) second, towards
payment of principal and unreimbursed LC
45
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 setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, LC Disbursements, or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans, LC Disbursements 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
Revolving Loans, LC Disbursements 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 Revolving Loans, LC
Disbursements and participations in LC Disbursements. 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. The provisions of
this Section 2.15(c) 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, LC Disbursements or participations
in LC Disbursements to any assignee or participant, other than to Holdings, the
Borrower or any Borrower Subsidiary or Affiliate thereof (as to which the
provisions of this Section 2.15(c) 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 setoff 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 Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative 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
Administrative 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 Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
46
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.4(d), 2.4(e), 2.5(b), 2.15(d) or 9.3(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
Section 2.16. Replacement of Lender. If any Lender gives
notice of illegality pursuant to Section 2.6(g) or requests compensation under
Section 2.13, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.14, then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.4, provided that the Borrower shall be obligated to pay
the processing and recordation fee referred to therein), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), but (in each case) only if (i) the Borrower has received the prior
written consent of the Administrative Agent and the Issuing Bank, which consent
shall not unreasonably be withheld, (ii) such Lender has received payment of an
amount equal to the outstanding principal of its Revolving Loans, LC
Disbursements and participations in LC Disbursements, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder (including without
limitation all amounts owing to such replaced Lender pursuant to Sections 2.13,
2.14 and 2.15, including with limitation any amounts owing under Section 2.13(e)
as a result of such replacement), from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.14, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III.
CONDITIONS
Section 3.1. Effective Date. The obligations of the
Lenders to make the initial Loans and of the Issuing Bank to issue the initial
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 9.2):
(a) The Administrative Agent (or its counsel) 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
Administrative Agent (which may include
47
telecopy transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received counterparts
of the Pledge and Security Agreement signed on behalf of each Loan Party party
thereto, and:
(i) the Administrative Agent shall have received
delivery, in pledge, of (A) stock certificates representing all
outstanding shares of capital stock of each member of the Holdings
Group owned by or on behalf of any Loan Party as of the Effective Date,
after giving effect to the Transactions, and (B) Intercompany Notes
signed by each Loan Party evidencing all Indebtedness owed to another
Loan Party as of, and to be owing to such Loan Party at any time after,
the Effective Date after giving effect to the Transactions, together
(in each case) with stock powers and instruments of transfer, endorsed
in blank,
(ii) the Administrative Agent shall have received
evidence of all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under the Pledge and
Security Agreement signed on behalf of each Loan Party, and evidence
that such financing statements have been filed (or are in appropriate
form for filing) in the filing offices listed on Schedule 3.1(b),
(iii) the Administrative Agent shall have received
evidence of all consents (including without limitation consent under
the Supply Agreements) that may be required for the creation or
enforcement of the Administrative Agent's security interests created
under the Security Documents in any rights or claims of any Loan Party
under the Reorganization Agreement and each other Transaction
Agreement,
(iv) the Administrative Agent shall have received (A)
the results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to the Loan Parties in the jurisdictions
listed on Schedule 3.1(b), (B) copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.2 or have been released or will be released upon or promptly
following the Effective Date, and (C) Perfection Notices duly executed
by the Loan Party that is a depositor on each deposit account as to
which a Perfection Notice is required under Section 5.13(c).
(c) The Administrative Agent shall have received counterparts
of the Guarantee Agreement signed on behalf of each party thereto other than the
Administrative Agent.
(d) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent, the Issuing Bank and the
Lenders and
48
dated the Effective Date) of each of (i) Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel for
the Loan Parties, substantially in the form of Exhibit I, and (ii) Sidley &
Austin, special FDA counsel to the Loan Parties, substantially in the form of
Exhibit J, in each case covering such other matters relating to the Loan
Parties, the Loan Documents or the Transactions as the Required Lenders shall
reasonably request. The Borrower and Holdings hereby request such counsel to
deliver such opinions.
(e) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent, the Issuing Bank and the
Lenders and dated the Effective Date) of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Administrative Agent in form and substance satisfactory to the Administrative
Agent.
(f) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the Transactions,
all in form and substance satisfactory to the Administrative Agent and its
counsel.
(g) The Administrative Agent shall have received a certificate
in substantially the form of Exhibit G, 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 this Article III and
confirming the other matters set forth in Exhibit G;
(h) The Administrative 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 expenses required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan Document.
(i) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.7 is in effect.
(j) (i) All consents and approvals required to be obtained
from any Governmental Authority in connection with the Transactions and (ii) all
material consents and approvals of any other Person in connection with the
Transactions, including without limitation the consent of Herbalife
International of America, Inc., to the pledge of the Herbalife Bond shall have
been obtained, all applicable waiting periods and appeal periods shall have
expired, in each case without the imposition of any burdensome conditions and
there shall be no action by any Governmental Authority or other Person, actual
or threatened, that has a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the Transactions or the other transactions
contemplated hereby.
49
(k) The Lenders shall have received (i) audited consolidated
financial statements for D&F Industries, Inc., and Omni-Pak Industries, Inc.,
for the fiscal year ended December 31, 1997 (without giving effect to the
Transactions), and (ii) an unaudited pro forma condensed combined balance sheet
of Holdings, the Borrower and its Subsidiaries as of December 31, 1997,
reflecting all pro forma adjustments as if the Transactions had been consummated
on such date, and such unaudited pro forma condensed combined balance sheet
shall be consistent in all material respects with the forecasts and other
information previously provided to the Lenders. The aggregate amount of fees and
expenses (including underwriting discounts and commissions) payable or otherwise
borne by the Holdings Group in connection with the Transactions shall not exceed
$10,000,000.
(l) Except as otherwise approved in writing by the
Administrative Agent and Required Lenders, in each case acting in its sole and
individual discretion, (i) the Transaction Agreements shall not have been in any
respect modified or amended; (ii) no breach of any provision of any of the
Transaction Agreements shall have occurred, and (iii) no condition set forth in
any of the Transaction Agreements relating to the obligation of any party
thereunder or the consummation of the transactions contemplated thereby shall
have been waived.
(m) Holdings shall have received not less than $218,300,000 in
gross proceeds (less customary fees and commissions) from the issuance and sale
of the Senior Notes on the terms set forth in the Senior Note Indenture (which,
together with all documents, instruments or other agreements executed in
connection therewith, shall be satisfactory to the Administrative Agent and the
Lenders, and any Guarantees made in connection therewith shall be subordinated
to the Obligations on terms satisfactory to the Administrative Agent, the
Lenders and CSI) and shall have applied approximately $194,000,000 of such
proceeds for the consummation of the Reorganization.
(n) The Closing under (and as defined in) the Reorganization
Agreement shall have been consummated in accordance with the terms and
conditions therein set forth (which, together with all documents, instruments or
other agreements executed in connection therewith, shall be satisfactory to the
Administrative Agent and the Lenders), and applicable law, including without
limitation the consummation of the Reorganization, and all fees, costs and
expenses relating to the Transactions that are chargeable to or payable or
reimbursable by any member of the Holdings Group shall have been paid. The
Administrative Agent shall have received copies of the Transaction Agreements
and all instruments, agreements, certificates, opinions and other documents
delivered thereunder, certified by a Financial Officer of Holdings as complete
and correct.
(o) After giving effect to any Loans or Letters of Credit
requested on the Effective Date and the Borrower's disbursement of funds to pay
all amounts payable
50
by the Holdings Group as contemplated in Sections 3.1(h) and
3.1(m), the aggregate Total Exposure shall not exceed $1,500,000.
(p) The Administrative Agent shall be satisfied that, prior to
or concurrent with the closing of the Financing Transactions, the Holdings Group
shall have outstanding no Indebtedness other than (i) Indebtedness created and
outstanding under the Loan Documents and (ii) the Senior Notes.
(q) Each Supply Agreement and other Material Contract shall be
in full force and effect and each Loan Party party thereto shall be in
compliance with all of the terms and conditions thereof.
(r) There shall be no litigation or administrative or
investigative proceeding pending or threatened that could reasonably be expected
to have a Material Adverse Effect or which seeks to restrain, prevent or impose
materially adverse conditions upon the Transactions.
(s) The consummation of the Transactions and the other
transactions contemplated hereby shall not (a) violate any applicable law,
statute, rule or regulation or (b) conflict with, or result in a default or
event of default under, any material agreement of any member of the Holdings
Group (including the Transaction Documents).
(t) The Lenders shall have received financial projections for
the Holdings Group on a consolidated basis for fiscal years 1998 through 2003,
in each case, showing no material variance from the projections previously
provided to the Administrative Agent and in form and substance reasonably
satisfactory to the Administrative Agent.
(u) There shall have been no material adverse change in the
assets, business, properties, condition (financial or otherwise), prospects or
material agreements of Holdings and its Subsidiaries, taken individually or as a
whole, since December 31, 1997 (it being understood that the issuance of the
Senior Notes and the application of the proceeds thereof to consummate the
Reorganization in accordance with the terms of the Reorganization Agreement
shall not constitute such a material adverse change).
(v) The Administrative Agent shall have received a copy of an
executed written lease with respect to the Borrower's lease of the North
Enterprise Way property in Orange, California, such lease to be in form and
substance satisfactory to the Administrative Agent.
(w) The Administrative Agent shall have received landlord
waivers with respect to each of the properties identified on Schedule 1.1-B
hereof, each in form and substance satisfactory to the Administrative Agent.
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The Administrative 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 Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.2) at
or prior to 3:00 p.m., New York City time, on April 23, 1998 (and, in the event
such conditions are not so satisfied or waived, the Revolving Commitments shall
terminate at such time).
Section 3.2. 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 each Loan Party set
forth in the Loan Documents shall be true and correct in all material respects
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, as though made on
and as of such date, other than any such representations or warranties that by
their terms refer to a date other than the date of such Borrowing, issuance,
amendment, renewal or extension, in which case such representations and
warranties shall be true and correct as of such other date.
(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) No event shall have occurred that has had, or could
reasonably be expected to have, a Material Adverse Effect.
(d) After giving effect to such Borrowing or issuance,
amendment or renewal, the aggregate amount of all Revolving Loans outstanding at
such time, plus the aggregate undrawn amount of all outstanding Letters of
Credit at such time (plus the aggregate amount of all LC Disbursements that have
not yet been reimbursed by or on behalf of the Borrower at such time), in each
case the proceeds of which were or are to be used for any purpose other than the
funding of Permitted Acquisitions, shall not exceed $10,000,000 at any one time
(excluding any reborrowings permitted pursuant to Section 2.7(h)).
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 and Holdings on the date thereof as to the matters specified in this
Section 3.2.
52
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Each of the Borrower, Holdings and each Borrower Subsidiary
represents and warrants to the Administrative Agent, the Lenders and Issuing
Bank that:
Section 4.1. Organization; Powers; Capitalization. Each
member of the Holdings Group 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. All of the outstanding capital stock of
Holdings has been validly issued, is fully paid and non-assessable and is
owned, as of the date hereof, as set forth in Schedule 4.1(a). Set forth on
Schedule 4.1(a) hereto is a complete and accurate list of all Subsidiaries of
each Loan Party, showing as of the date hereof (as to each such Subsidiary),
after giving effect to the Reorganization, the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the percentage
of the outstanding shares of each such class owned (directly or indirectly)
by such Loan Party and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights at the
date hereof. All of the outstanding capital stock of all of such Subsidiaries
has been validly issued, is fully paid and non-assessable and is owned by
such Loan Party or one or more of its Subsidiaries free and clear of all
Liens, except those created by the Security Documents.
Section 4.2. Authorization; Enforceability. The Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by each Loan Party that is a party hereto and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of such Loan Party, 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 4.3. 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, are set forth on Schedule 4.3(a) and are in full
force and effect and except filings necessary to perfect Liens created under the
Loan Documents, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of any member of the Holdings
Group or any order of any Governmental Authority, (c) except as set forth in
Schedule 4.3(c), will not violate or result in a default under any indenture,
agreement or other instrument binding upon any member of the Holdings Group or
its assets, or give rise to a right thereunder to require any payment to be made
by any member of the Holdings Group, and (d) will not result in the creation
53
or imposition of any Lien on any asset of any member of the Holdings Group,
except Liens created under the Loan Documents.
Section 4.4. Financial Condition; No Material Adverse Change.
(a) Holdings and the Borrower have heretofore furnished to the
Lenders combined financial statements as of December 31, 1997 and 1996, audited
by Deloitte & Touche LLP. Such financial statements are free of material
misstatement and present fairly, in all material respects, the combined net
assets of the Holdings Group as of December 31, 1997 and December 31, 1996, and
the results of their operations and cash flows for the years ended December 31,
1997 and 1996 in conformity with GAAP.
(b) The financial projections included in the Information
Memorandum and the financial projections delivered to any of the Lenders prior
to date hereof were, as of the time of preparation thereof and as of the date
hereof, based on the best information available to Holdings and the Borrower
after due inquiry at the date thereof and on good faith estimates and
assumptions believed by Holdings and the Borrower to be reasonable, subject to
the uncertainties inherent in projections.
(c) Holdings and the Borrower have heretofore furnished to the
Lenders the pro forma consolidated balance sheets of Holdings and of the
Borrower as of the Effective Date, prepared giving effect to the Transactions as
if the Transactions had occurred on such date. Such pro forma consolidated
balance sheets (i) were prepared in good faith based on the same assumptions
used to prepare the pro forma financial statements included in the Information
Memorandum (which assumptions were, at the time of preparation of the
Information Memorandum, and are, as of the date hereof, believed by Holdings and
the Borrower to be reasonable), (ii) were based on the best information
available to Holdings and the Borrower after due inquiry at the date thereof,
(iii) reflect all adjustments necessary to give effect to the Transactions and
(iv) present fairly, in all material respects, the pro forma financial position
of Holdings and its consolidated subsidiaries and the Borrower and its
consolidated subsidiaries as of the Effective Date, as if the Transactions had
occurred on such date.
(d) Except as disclosed in the financial statements referred
to above or the notes thereto or in the Information Memorandum, after giving
effect to the Transactions, no member of the Holdings Group has, as of the
Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.
(e) Each financial statement delivered by any member of
Holdings Group at any time after the Effective Date pursuant to Section 5.1 will
be free of material misstatement and presents fairly, in all material respects,
the assets of the Person or consolidated group that is the subject thereof as of
the date thereof and the results of operations and cash flows of such Person or
group for the period therein described ended such date, in conformity with GAAP
but subject (except in the case of audited year-end financial statements) to
year-end adjustments.
54
(f) Except as disclosed in Schedule 4.4(f), since December 31,
1997, there has been no material adverse change in the business, assets,
operations, material agreements, prospects or condition (financial or
otherwise), of (i) the assets and business described in the Offering Memorandum
relating to the Senior Notes (as such terms are defined therein), or (ii) the
Borrower and the Borrower Subsidiaries, taken as a whole, or (iii) Holdings and
the Subsidiaries, taken as a whole, or (iv) the ability of any Loan Party to
perform its obligations under the Loan Documents (it being understood, in each
case, that the issuance of the Senior Notes and the application of the proceeds
thereof to consummate the Reorganization in accordance with the terms of the
Reorganization Agreement shall not constitute such a material adverse change).
Section 4.5. Properties; Bank Accounts.
(a) Except as disclosed in Schedule 4.5(a), each member of the
Holdings Group 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 member of the Holdings Group owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Holdings Group
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) Schedule 4.5(c) sets forth the address of each real
property that is owned or leased by the Holdings Group as of the Effective Date
after giving effect to the Transactions.
(d) Schedule 4.5(d) sets forth the account numbers and
locations of all bank accounts of Holdings, the Borrower and their respective
Subsidiaries.
Section 4.6. Litigation and Environmental Matters.
(a) Except as set forth on Schedule 4.6(a), there are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting any member of the Holdings Group (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 or (ii) that involve any of the Loan
Documents or the Transactions.
(b) Except with respect to any matters that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect or as set forth on Schedule 4.6(b), no member of the Holdings
Group (i) has failed to comply
55
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
Environmental Claim or any other claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.
Section 4.7. Compliance with Laws and Agreements.
Except as set forth in Schedule 4.7, each member of the Holdings Group is in
compliance with all laws, regulations and orders of any Governmental
Authority (including without limitation all Environmental Laws) 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 4.8. Investment and Holding Company Status. No
member of the Holdings Group 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.
Section 4.9. Taxes. Each member of the Holdings
Group 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 Taxes that are being contested in
good faith by appropriate proceedings and for which each member, as
applicable, has set aside on its books adequate reserves. On May 1, 1983,
Holdings validly elected to be treated as an S Corporation under Section 1362
of the Code (or any predecessor Code provision) and under the corresponding
provisions of applicable state and local laws where Holdings files income tax
returns. Holdings' election to be treated as an S Corporation has never been
terminated or revoked and is currently in effect.
Section 4.10. 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 Accounting Standards No. 87) are
reflected in the most recent financial statements in accordance with GAAP. The
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.
Section 4.11. Disclosure. The Borrower and Holdings have
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which any member of the Holdings Group is subject, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither
56
the Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished in writing by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (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.
Section 4.12. Insurance. Schedule 4.12 sets forth a
description of all insurance maintained by or on behalf of Holdings and the
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in
respect of such insurance that are due and payable have been paid. All insurance
required to be maintained pursuant to Section 5.7, including without limitation
the key man life insurance policy with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, has been
obtained and is in full force and effect.
Section 4.13. Labor Matters. The hours worked by and
payments made to employees of the Holdings Group have not been in violation of
the Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from any member of the
Holdings Group, or for which any claim may be made against any member of the
Holdings Group, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
such member. The consummation of the Transactions does not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which any member of the Holdings Group is
bound. As of the Effective Date, there are no strikes, lockouts or slowdowns
pending against any member of the Holdings Group or, to the knowledge of any
Loan Party, threatened.
Section 4.14. Solvency. Immediately after the
consummation of the Transactions on the Effective Date, immediately following
the making of each Loan made on the Effective Date and after giving effect to
the application of the proceeds of such Loans, and immediately following the
making of each Loan and the issuance, amendment or renewal of each Letter of
Credit at any time after the Effective Date, (a) the fair value of the assets
of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (d) no Loan
Party will have unreasonably small capital with which to conduct the business
in which it is engaged as such business is now conducted and is proposed to
be conducted following the Effective Date and following the making of each
Loan and the issuance, amendment or renewal of each Letter of Credit.
Section 4.15. Security Documents.
57
(a) The Pledge and Security Agreement is effective to create
in favor of the Administrative Agent, for the ratable benefit of the holders of
Obligations, a legal, valid and enforceable security interest in the property
therein described as collateral. All Securities in which any Loan Party owns any
interest are Certificated Securities. All such Certificated Securities, all
Intercompany Notes and all Instruments in which any Loan Party owns any interest
have been delivered to the Administrative Agent, in pledge as security for the
Obligations. The Administrative Agent's security interest therein constitutes a
fully perfected first priority and sole Lien on, and security interest in, all
right, title and interest of each Loan Party in all such Certificated
Securities, Intercompany Notes and Instruments, in each case free from any
adverse claim and prior and superior in right to any other Person. Schedule
4.15(a) sets forth all Certificated Securities, Intercompany Notes and
Instruments that have been delivered to, and are held in pledge by, the
Administrative Agent.
(b) Financing statements in appropriate form are filed in the
offices specified on Schedule 3.1(b), which constitute all offices in which a
financing statement is required to be filed or can be filed in order to perfect
a security interest in any such property. The Pledge and Security Agreement
constitutes a fully perfected Lien on, and security interest in, all right,
title and interest of the grantors thereunder in such Collateral in each case
prior and superior in right to any other Person, other than with respect to any
Lien that both (i) is expressly permitted by Section 6.2 and (ii) is imposed by
law and is entitled, as a matter of law, to priority over a security interest
that was duly perfected before such Lien attached.
(c) The Pledge and Security Agreement (and any supplement
thereto reflecting the addition of property acquired by any Loan Party after the
Effective Date) is in form sufficient for filing in the United States Patent and
Trademark Office and the United States Copyright Office and will constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in all property in which any Loan Party has any interest as
to which a security interest may be perfected by filing, recording or
registering a security agreement, financing statement or analogous-document in
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to any other
person.
Section 4.16. Federal Reserve Regulations.
(a) No member of the Holdings Group is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend credit
to others for the purpose of buying or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose or
58
(ii) for any purpose that entails a violation of, or that is inconsistent with,
the provisions of the Regulations of the Board, including Regulation U or X.
(c) Less than 25% of the assets of each member of the Holdings
Group subject to Section 6.2 or 6.5, on a consolidated basis, consists of Margin
Stock.
Section 4.17. Indebtedness. Neither Holdings nor the
Borrower nor any Borrower Subsidiary has any outstanding Indebtedness other
than (i) Indebtedness created and outstanding under the Loan Documents, (ii)
the Senior Notes issued by Holdings and guaranteed by the Borrower
Subsidiaries and outstanding on the terms set forth in the Senior Note
Indenture, and (iii) Indebtedness incurred after the Effective Date and
permitted to be incurred, and to remain outstanding, under Section 6.1.
Section 4.18. Preferred Stock. No member of the Holdings
Group has any outstanding preferred stock.
Section 4.19. Liens. None of the property or assets of
Holdings or the Borrower or any Borrower Subsidiary is subject to any Lien
except Liens permitted under Section 6.2.
Section 4.20. Material Contracts. Each Material Contract
is in full force and effect and each Loan Party party thereto is in material
compliance with all of the terms and conditions thereof.
Section 4.21. Reorganization. The Reorganization has
been consummated in accordance with the Reorganization Agreement.
Section 4.22. Year 2000. Each of Holdings and the
Borrower has reviewed its operations and those of its respective Subsidiaries
and Herbalife International of America, Inc., with a view to assessing
whether Holdings', the Borrower's or their respective Subsidiaries'
respective businesses will, in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of
data, be vulnerable to a Year 2000 Problem. Based on such review, each of
Holdings and the Borrower has no reason to believe that a Material Adverse
Effect will occur, or could reasonably be expected to occur, with respect to
its or its Subsidiaries' businesses or operations resulting from a Year 2000
Problem.
ARTICLE V.
AFFIRMATIVE COVENANTS
Until the Revolving Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, each
of the Borrower and Holdings covenants and agrees with the Lenders that:
59
Section 5.1. Financial Statements and Other Information.
The Borrower and Holdings will furnish to the Administrative Agent (with enough
copies for each Lender):
(a) commencing with the fiscal year of Holdings ending
December 31, 1998, within 90 days after the end of each fiscal year of Holdings,
its audited consolidated and unaudited 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 audited (in the case of such consolidated
statements) and reported on by independent public accountants of recognized
national standing (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 Holdings
and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) commencing with the fiscal quarter of Holdings ending June
30, 1998, within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, its consolidated and consolidating
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 Holdings 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) commencing with the first full fiscal month of Holdings
following the Effective Date through and including the fiscal month ending
October 31, 1998, within 30 days after the end of each fiscal month and the then
elapsed portion of the fiscal year, a consolidated balance sheet and related
statements of operations for D&F and Omni-Pak, and thereafter, as of the end of
each fiscal month for such fiscal month and the then elapsed portion of the
fiscal year of Holdings and each of the Borrower Subsidiaries, a consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows for each Borrower Subsidiary all certified by one of Holdings'
Financial Officers as presenting in all material respects the financial
condition and results of operations of Holdings and the Borrower Subsidiaries on
a consolidated or combined basis (as applicable) in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(d) concurrently with any delivery of financial statements
under Section 5.1(a) or 5.1(b), a Compliance Certificate of a Financial Officer
of Holdings (i) certifying as to whether a Default has occurred and,
if a Default has occurred,
60
specifying the details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.1, 6.4, 6.5, 6.7, 6.11, 6.12, 6.13,
6.14 and 6.15, and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of Holdings' audited financial
statements referred to in Section 4.4(a) and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
(e) concurrently with any delivery of financial statements
under Section 5.1(a), 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 Event of Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(f) within 15 days prior to the commencement of each fiscal
year of Holdings and the Borrower, a detailed consolidated budget for such
fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for such
fiscal year) and, promptly when available, any significant revisions of such
budget;
(g) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
any member of the Holdings Group 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, as the case may be;
(h) promptly upon receipt thereof, copies of all reports
submitted to Holdings or the Borrower by independent certified public
accountants in connection with each annual, interim or special audit of the
books of Holdings or any of its Subsidiaries made by such accountants, including
any management letter commenting on the Borrower's internal controls submitted
by such accountants to management in connection with their annual audit;
(i) prior to the payment of any Tax Distribution Amount, a
certificate (a "Tax Distribution Certificate") signed by the President or the
Chief Financial Officer of Holdings, certifying as to each Tax Distribution
Amount to be paid pursuant to Section 6.7 in a level of detail satisfactory to
the Administrative Agent and the Required Lenders, in substantially the form
attached hereto as Exhibit L;
(j) promptly upon any significant change in accounting
policies or reporting practices, notice and a description in reasonable detail
of such changes;
(k) promptly upon the adoption by any member of the Holdings
Group or any Affiliate thereof, or the creation of any obligation of any member
of the Holdings
61
Group or any Affiliate thereof to contribute to, any Multiemployer Plan, notice
and description in reasonably detail of such event;
(l) promptly upon the giving or receipt thereof, copies of all
notices, statements or reports given pursuant to or in connection with the
Senior Note Indenture and not otherwise then required to be furnished to the
Administrative Agent and each Lender pursuant to this Section 5.1; and
(m) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of any member of the Holdings Group, or compliance with the terms of any Loan
Document, as any Agent or Lender may reasonably request.
Section 5.2. Notices of Material Events.
The Borrower and Holdings will furnish to the Administrative
Agent (with enough copies for 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 any member of the Holdings Group 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 a Material Adverse Effect;
(d) promptly after obtaining knowledge of any one or
more of the following environmental matters, unless such environmental
matters would not, individually or when aggregated with all other such
matters, be reasonably expected to result in a Material Adverse Effect:
(i) any pending or threatened Environmental
Claim against Holdings, the Borrower or any of the Subsidiaries or any
Real Property;
(ii) any condition or occurrence on any Real
Property that (A) results in noncompliance by Holdings, the Borrower
or any of the Subsidiaries with any applicable Environmental Law or
(B) could reasonably be anticipated to form the basis of an
Environmental Claim against Holdings, the Borrower or any of the
Subsidiaries or any Real Property;
(iii) the taking of any removal or remedial action
in response to the actual or alleged presence of any Hazardous Material
on any Real Property; or
62
(iv) any event which makes any of the
representations contained in Sections 4.6(b) or 4.7 inaccurate in any
material respect;
(e) the occurrence of any Default or Event of Default under
and as defined in the Senior Note Indenture or any other Transaction Document;
(f) promptly upon receipt thereof, copies of any material
notices delivered under or any amendment to any Supply Agreement or other
Material Contract; and
(g) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 5.2 shall be accompanied by a statement
of a Financial Officer or other executive officer of Holdings and 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 5.3. Information Regarding Collateral. The
Borrower and Holdings will furnish to the Administrative Agent prompt written
notice of any change (a) in any Loan Party's corporate name or in any trade
name used to identify it in the conduct of its business or in the ownership
of its properties, (b) in the location of any Loan Party's chief executive
office, its principal place of business, any office in which it maintains
books or records relating to Collateral owned by it or any office or facility
at which Collateral owned by it is located (including the establishment of
any such new office or facility), (c) in any Loan Party's identity or
corporate structure, (d) resulting in any tangible Collateral being located
in or moved to, after the Effective Date, (i) any jurisdiction in which a
financing statement must be, but has not been, filed in order to perfect the
Administrative Agent's liens or (ii) any Real Property for which the
Administrative Agent has not received a landlord waiver in form and substance
satisfactory to the Administrative Agent (where the aggregate fair market
value of such Collateral being moved, together with the Collateral already
located at such property, exceeds $250,000), (e) in respect of any patents,
trademarks copyrights or applications therefor owned by or licensed to any
Loan Party, or (f) in any Loan Party's Federal Taxpayer Identification
Number. The Borrower and Holdings will not effect or permit any change
referred to in the preceding sentence unless, as applicable, a satisfactory
landlord waiver has been delivered to the Administrative Agent and all
filings have been made under the Uniform Commercial Code or otherwise that
are required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest
in all the Collateral and will promptly notify the Administrative Agent if
any material portion of the Collateral is damaged or destroyed.
Section 5.4. Existence; Conduct of Business. The Borrower
and Holdings will, and will cause each of their respective 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
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rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business.
Section 5.5. Payment of Obligations. Each of the Borrower
and Holdings will, and will cause each of their respective Subsidiaries to, pay
their respective Indebtedness and other obligations, including their respective
Tax liabilities, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) it has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, (c) such contest effectively
suspends collection of the contested obligation and no Lien arises or is created
to secure such obligation (except, in the case only of an ad valorem tax on real
or personal property, a Lien on the property that is the subject of the tax if
the enforcement of such Lien is suspended or stayed) and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.
Section 5.6. Maintenance of Properties. The Borrower and
Holdings will, and will cause each of their respective 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.
Section 5.7. Insurance.
(a) Each of the Borrower and Holdings will, and will cause
each of their respective Subsidiaries to, (i) maintain insurance with (A)
financially sound and reputable insurers with an A.M. Best rating of A- or
better (or, with respect to earthquake or flood insurance relating to Real
Property, Collateral or operations of the Borrower and the Borrower Subsidiaries
located in California only, an A.M. Best rating of B+ or better) or (B) Lloyd's
of London, in each case on such of its property and in at least such amounts and
against at least such risks as is customary with companies engaged in the same
or similar businesses operating in the same or similar locations, including
without limitation products liability insurance and public liability insurance
against claims for personal injury or death occurring upon, in or about or in
connection with the use of any properties owned, occupied or controlled by it
(including the insurance required pursuant to the Security Documents), each of
said policies of insurance to be satisfactory to the Required Lenders as to
form, amount and insurer; (ii) maintain such other insurance as may be required
by law; and (iii) furnish to the Administrative Agent certificates of insurance
and, upon written request, full information as to the insurance carried.
(b) Each of the Borrower and Holdings will, and will cause
each of their respective Subsidiaries to, cause the Administrative Agent to be
named as loss payee on all insurance policies relating to any Collateral
(including fire and extended coverage policies) or business interruption
insurance and as additional insured (but without any liability for any premiums)
on all liability policies maintained pursuant to Section 5.7(a), in each case
pursuant to appropriate endorsements in form and substance satisfactory to
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the Administrative Agent. Each policy referred to in this Section 5.7(b) also
shall provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium except upon not less than 10 days' prior written
notice thereof by the insurer to the Administrative Agent (giving the
Administrative Agent the right to cure defaults in the payment of premiums) or
(ii) for any other reason except upon not less than 30 days' prior written
notice thereof by the insurer to the Administrative Agent. The Borrower shall
deliver to the Administrative Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent) together with evidence satisfactory to the Administrative
Agent of payment of the premium therefor.
(c) The Borrower shall maintain at all times a key man life
insurance policy with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in an amount of no less than
$4,500,000, which insurance shall comply with the requirements of Sections
5.7(a) and 5.7(b) and shall be assigned to the Administrative Agent for the
benefit of the Lenders pursuant to the Security Documents.
Section 5.8. Casualty and Condemnation. Each of the
Borrower and Holdings will furnish to the Administrative Agent and the Lenders
prompt written notice of any casualty or other insured damage to any material
portion of any Collateral or the commencement of any action or proceeding for
the taking of any material portion of the Collateral or any part thereof or
interest therein under power of eminent domain or by condemnation or similar
proceeding.
Section 5.9. Books and Records; Inspection and Audit
Rights.
(a) Each of the Borrower and Holdings will, and will cause
each of the Borrower Subsidiaries to, (i) 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, and (ii) permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, 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.
(b) Each of the Borrower and Holdings will, and will cause
each of the Subsidiaries to, (i) from time to time upon the request of the
Required Lenders through the Administrative Agent, permit the Administrative
Agent or a single designated group of professionals (including investment
bankers, consultants, accountants, lawyers and appraisers) retained by the
Administrative Agent or the Lenders to conduct an audit, evaluation or appraisal
of the Collateral and (ii) pay the fees and expenses of the Administrative
Agent, the Lenders or such professionals with respect to such audit, evaluation
or appraisals.
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Section 5.10. Compliance with Laws. Each of the Borrower
and Holdings will, and will cause each of the Subsidiaries to, comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property (including without limitation ERISA and applicable
Environmental Laws), 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 5.11. Use of Proceeds and Letters of Credit. The
proceeds of all credit extended to the Borrower hereunder will be used only for
lawful corporate purposes of the Borrower that are permitted under this
Agreement; provided that the aggregate amount of all Revolving Loans outstanding
at any time, plus the aggregate undrawn amount of all outstanding Letters of
Credit at such time (plus the aggregate amount of all LC Disbursements that have
not yet been reimbursed by or on behalf of the Borrower at such time), in each
case the proceeds of which were or are to be used for any purpose other than the
funding of Permitted Acquisitions, shall not exceed $10,000,000 at any one time
(excluding reborrowings permitted pursuant to Section 2.7(h)); provided further
that, with respect to any Borrowing related to Permitted Acquisitions, (a) no
more than $20,000,000 of the proceeds of Revolving Loans or Letters of Credit
may be used to finance any single Permitted Acquisition, (b) on or after the
fourth anniversary of the Effective Date, the Borrower may no longer borrow
Revolving Loans or request the issuance of Letters of Credit to fund a Permitted
Acquisition, and (c) no such Borrowing may be made if (i) the remaining term of
the Supply Agreements is six months or less and (ii) Consolidated EBITDA
generated under the Supply Agreements in the twelve-month period preceding the
date of such proposed Borrowing accounts for more than 50% of Consolidated
EBITDA for such period. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
Section 5.12. Additional Borrower Subsidiaries. If any
additional Borrower Subsidiary is formed or acquired after the Effective Date,
each of Holdings and the Borrower will (a) notify the Administrative Agent and
the Lenders thereof, (b) cause such Borrower Subsidiary (i) to become a party to
the Subsidiary Guarantee Agreement, and each applicable Security Document in the
manner provided therein and (ii) to execute and deliver to the Administrative
Agent, in pledge, an Intercompany Note in an amount equal to all Investments in
such Borrower Subsidiary made or maintained, or contemplated to be made or
maintained, by any member of the Holdings Group, in each case within three
Business Days after such Borrower Subsidiary is formed or acquired, (c) promptly
take such actions to create and perfect Liens on such Borrower Subsidiary's
assets to secure the Obligations as the Administrative Agent or the Required
Lenders may reasonably request, and (d) if any shares of capital stock or
Indebtedness of such Borrower Subsidiary are owned by or on behalf of any Loan
Party, Holdings and the Borrower will cause such shares and promissory notes
evidencing such Indebtedness to be pledged pursuant to the Pledge and Security
Agreement within three Business Days after such Borrower Subsidiary is formed or
acquired.
Section 5.13. Further Assurances.
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(a) Each of the Borrower and Holdings will, and will cause
each of the Subsidiaries to, from time to time upon the request of the
Administrative Agent or the Required Lenders through the Administrative Agent,
at the expense of the Loan Parties, execute, deliver and acknowledge all
instruments, assignments, mortgages, deeds of trust, security agreements,
financing statements or other documents and take all other actions as the
Administrative Agent or such Required Lenders may in good ▇▇▇▇▇ ▇▇▇▇ necessary
or appropriate to create, perfect, ensure the priority of, protect or (if an
Event of Default is continuing at the time) lawfully enforce a Lien in favor of
the Administrative Agent for the ratable benefit of the holders of the
Obligations upon any property (whether now owned or hereafter acquired, whether
tangible or intangible, whether real, personal or mixed, and wherever located)
in which Holdings or the Borrower or any of their respective Subsidiaries has or
may have any interest.
(b) If at any time the aggregate fair value of any and all
assets owned by the Borrower or Holdings or any of their respective Subsidiaries
upon which the Administrative Agent does not hold a duly created, enforceable
and perfected Lien as security for the Obligations exceeds $1,000,000, the
Borrower and Holdings will notify the Administrative Agent and the Lenders
thereof and, if requested by the Administrative Agent or the Required Lenders,
will cause such assets to be subjected to a Lien in favor of the Administrative
Agent securing the Obligations and will take, and cause each Loan Party to take,
such actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in Section
5.13(a), all at the expense of the Loan Parties.
(c) Each of the Borrower and Holdings will, and will cause
each Loan Party to, (i) maintain any and all of its bank deposits and bank
deposit accounts (except for collection accounts that are automatically cleared
to a concentration account on a daily basis and disbursement accounts that are
funded on a daily zero balance basis) at a bank selected by it that is located
in a state under the laws of which a security interest in bank deposits and
deposit accounts may be created under the Uniform Commercial Code and perfected
by the giving of a Perfection Notice to the depositary bank, without any
requirement of acknowledgment or agreement on the part of the depositary bank
and without any requirement that the holder of such security interest maintain
dominion or control over such bank deposits and deposit accounts, (ii) give
notice to such depositary bank of the existence of the Administrative Agent's
security interest in each such deposit account and any and all present and
future deposits therein, by delivery of a Perfection Notice or as otherwise
required under such laws to perfect the Administrative Agent's security interest
therein, at or within 30 days after the opening of such deposit account, and
(iii) grant and permit no other Lien on any such bank deposits or deposit
accounts.
(d) Each of the Borrower and Holdings will, and will cause
each Loan Party to, maintain any and all Permitted Investments in such manner as
may be required to ensure that the Administrative Agent at all times holds a
duly perfected first and sole security interest therein as security for the
Obligations.
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(e) Each of the Borrower and Holdings will, and will cause
each Loan Party to, deliver to the Administrative Agent a landlord waiver, in
form and substance satisfactory to the Administrative Agent, for each location
acquired or leased by a Loan Party after the Effective Date where the aggregate
fair market value of all inventory, equipment and other personal property
located at such property exceeds $250,000.
Section 5.14. Material Contracts. Each of the Borrower and
Holdings will, and will cause each Subsidiary to, comply in all material
respects with each Material Contract to which it is a party, including without
limitation the Supply Agreements, and shall maintain each such Material Contract
in full force and effect, exercising all renewals and extensions thereof in
accordance with its terms and on substantially the same terms (and in no event
on terms materially less favorable to the Loan Parties).
Section 5.15. Fiscal Year. Each of the Borrower and
Holdings will, and will cause each Subsidiary to, maintain a fiscal year that
ends on December 31.
Section 5.16. Year 2000. Each of Holdings and the Borrower
shall review and monitor, and shall cause each of its respective Subsidiaries to
review and monitor, its operations and those of its respective Subsidiaries with
a view to assessing whether its businesses, or the businesses of any of its
respective Subsidiaries, will be vulnerable to a Year 2000 Problem or will be
vulnerable to the effect of a Year 2000 Problem suffered by any of Holdings, the
Borrower, any of their respective Subsidiaries or Herbalife International of
America, Inc. Each of Holdings and the Borrower shall take, and shall cause each
of its respective Subsidiaries to take, all actions necessary and commit
adequate resources to assure that its computer-based and other systems are able
to effectively process data, including dates before, on and after January 1,
2000, without experiencing any Year 2000 Problem that results in, or could
reasonably be expected to result in, a Material Adverse Effect. At the request
of the Administrative Agent, the Borrower will provide the Administrative Agent
with reasonable assurances and substantiations (including without limitation the
results of internal or external audit reports) reasonably acceptable to the
Administrative Agent as to the capability of Holdings, the Borrower and their
respective Subsidiaries to conduct its and their businesses and operations
before, on and after January 1, 2000, without experiencing a Year 2000 Problem
that results in, or could reasonably be expected to result in, a Material
Adverse Effect.
ARTICLE VI.
NEGATIVE COVENANTS
Until the Revolving Commitments have expired or terminated and
the principal of and interest on each Loan and all fees payable hereunder have
been paid in full and all Letters of Credit have expired or terminated and all
LC Disbursements shall have been reimbursed, each of the Borrower and Holdings
covenants and agrees with the Lenders that:
Section 6.1. Indebtedness; Preferred Equity Securities.
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(a) Each of the Borrower and Holdings will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(i) Indebtedness created under the Loan
Documents;
(ii) Indebtedness of Holdings under the Senior Notes
not to exceed $225,000,000 in aggregate principal amount or Carrying
Amount and Indebtedness of the Borrower and the Borrower Subsidiaries
under the Senior Note Guarantees (provided that a Borrower Subsidiary
may be a party to the Senior Note Guarantee only if such Borrower
Subsidiary has, prior to or concurrently with becoming a party thereto,
become a party to the Guarantee Agreement), all on the terms set forth
in the Senior Note Indenture;
(iii) Indebtedness of (A) any Borrower Subsidiary to
the Borrower, (B) Holdings to the Borrower consisting of loans made by
the Borrower to Holdings in place of, and in an amount not in excess
of, any dividend permitted (at the time such loan is made) to be paid
by the Borrower to Holdings under Section 6.7 so long as the proceeds
of such loan are applied by Holdings as required under Section 6.7 as
if such loan had been paid as a dividend, or (C) the Borrower to any
Borrower Subsidiary, which Indebtedness is, in each case, evidenced by
an Intercompany Note held by the Administrative Agent in pledge
pursuant to the Pledge and Security Agreement; provided that the
Indebtedness described in clause (C) above shall be subordinated in
right of payment to the final payment in full in cash of all
Obligations under the Loan Documents;
(iv) Acquired Indebtedness, Capital Lease Obligations
and purchase money and other Indebtedness incurred by the Borrower or a
Borrower Subsidiary to finance or refinance the acquisition,
construction or improvement of tangible fixed assets, if the aggregate
principal amount of all such Acquired Indebtedness, Capital Lease
Obligations and purchase money and other Indebtedness at any time
outstanding does not exceed $8,000,000, and Guarantees by the Borrower
of such Indebtedness;
(v) Indebtedness under Hedging Agreements entered
into in the ordinary course of business to hedge or mitigate risks to
which the Borrower or any Borrower Subsidiary is exposed in the conduct
of its business or the management of its liabilities and, in any event,
not entered into for speculative purposes, and interest rate Hedging
Agreements in conjunction with Indebtedness under this Agreement;
provided that, with respect to interest rate protection obligations,
the aggregate notional principal amount thereof does not exceed the
principal amount of the Indebtedness to which such interest rate
obligation relates;
(vi) other unsecured Indebtedness in an aggregate
principal amount not exceeding $1,000,000 at any time outstanding.
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(b) The Borrower and Holdings will not, and will not permit
any Subsidiary to, (i) issue any preferred stock or (ii) be or become liable in
respect of any obligation (contingent or otherwise) to purchase, redeem, retire,
acquire or make any other payment in respect of any Equity Interest in any
member of the Holdings Group, except as permitted by Section 6.7.
Section 6.2. Liens. Each of the Borrower and Holdings
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 created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Loan Party
existing on the date hereof and set forth in Schedule 6.2, but only so long as
(i) such Lien is not enforceable against any other property or asset and (ii)
such Lien secures only those obligations that it secures on the date hereof;
(d) any Lien on any property or asset owned by the Borrower or
a Borrower Subsidiary that was existing on such property or asset prior to the
acquisition thereof by the Borrower or such Borrower Subsidiary or that was
owned by any Person that becomes a Borrower Subsidiary after the date hereof
prior to the time such Person became a Borrower Subsidiary, in each case if (i)
such Lien was not created in contemplation of or in connection with such
acquisition or such Person becoming a Borrower Subsidiary, as the case may be,
(ii) such Lien is not enforceable against any other property or assets of the
Borrower or any Borrower Subsidiary and (iii) such Lien secures only those
obligations (including Acquired Indebtedness other than Acquisition
Consideration) that it secures on the date of such acquisition or the date such
Person becomes a Borrower Subsidiary, as the case may be;
(e) Liens on tangible fixed assets acquired, constructed or
improved by the Borrower or any Borrower Subsidiary securing Indebtedness
permitted by Section 6.1(a)(iv), if (i) the Indebtedness secured by any such
purchase money Lien does not exceed 100% of the cost of acquiring, constructing
or improving such tangible fixed assets and (ii) such security interests are not
enforceable against any other property or assets of the Borrower or any Borrower
Subsidiary;
(f) leases or subleases of Real Property granted by any Loan
Party to any other Person in the ordinary course of business;
(g) Liens in the nature of trustees' Liens granted pursuant to
any indenture governing any Indebtedness otherwise permitted hereunder, in each
case in favor of the trustee under such indenture and securing only obligations
to pay
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compensation to such trustee, to reimburse its expenses and to indemnify
it under the terms thereof; and
(h) renewals or extensions of any Liens otherwise
permitted pursuant to clauses (a) - (g) hereof.
Section 6.3. Fundamental Changes.
(a) Each of the Borrower and Holdings 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 liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing, (i) any solvent
Borrower Subsidiary may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, and (ii) any solvent Borrower Subsidiary
may merge with any other solvent Borrower Subsidiary in a transaction in which
the surviving entity is a Borrower Subsidiary and a Loan Party, and (iii) a
newly-formed wholly-owned Subsidiary of the Borrower that has no assets except
the purchase consideration and purchase rights for a Permitted Acquisition may
merge with any Person that is being acquired in a Permitted Acquisition, if the
surviving entity is a solvent Borrower Subsidiary and a Loan Party, and (iv) a
Person acquired in a Permitted Acquisition may merge with and into a Borrower
Subsidiary, if the Borrower Subsidiary is the surviving entity.
(b) The Borrower will not, and will not permit any of the
Borrower Subsidiaries to, engage in any business other than businesses of the
type engaged in by the Borrower and such Borrower Subsidiaries on the date
hereof and businesses reasonably related thereto, including without limitation
businesses associated with the vertical integration of any such otherwise
permitted business; provided that nothing herein shall be deemed to permit
Holdings, the Borrower or any of their respective Subsidiaries to engage in the
opening, management or operation of retail establishments.
(c) Holdings will not own any assets other than all
outstanding common stock of the Borrower or conduct any business or activity
other than activities reasonably incidental to the ownership of such common
stock and to the issuance of the Senior Notes.
Section 6.4. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower and Holdings will not, and will not permit any
Subsidiary 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
Equity Interest in, Indebtedness of, or other securities (including any option,
warrant or other right to acquire any of the foregoing) issued by, or make or
permit to exist any loans or advances to, or 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:
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(a) as contemplated by the Reorganization;
(b) Permitted Acquisitions;
(c) Permitted Investments and investments in Subsidiaries in
which the Administrative Agent has a duly perfected first priority security
interest for the benefit of the holders of the Obligations;
(d) investments by Holdings in all outstanding common stock of
the Borrower, if all outstanding common stock of the Borrower is held by the
Administrative Agent in pledge pursuant to the Pledge and Security Agreement;
and investments by the Borrower in common stock of, or an Intercompany Note
issued by, any Borrower Subsidiary, if (i) such Borrower Subsidiary is a
wholly-owned Subsidiary, (ii) such Borrower Subsidiary has become party to the
Subsidiary Guarantee Agreement and the Security Documents and (iii) such
investments are represented by Certificated Securities or Intercompany Notes
that are held by the Administrative Agent in pledge pursuant to the Pledge and
Security Agreement;
(e) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(f) Hedging Agreements permitted under Section 6.1;
(g) loans or advances to employees (i) for the purpose of (i)
travel, entertainment or relocation in the ordinary course of business and (ii)
enabling such employees to buy stock of Holdings in an aggregate and cumulative
amount not exceeding $750,000 at any time outstanding during the term of this
Agreement;
(h) Indebtedness permitted by Section 6.1 and Guarantees
thereof;
(i) operating deposit accounts maintained with banks in the
ordinary course of business and in conformity with Section 5.13(c); and
(j) other investments in an aggregate amount not to
exceed $2,000,000 at any time outstanding.
Section 6.5. Asset Sales. The Borrower and Holdings
will not, and will not permit any Subsidiary to, sell, transfer, exchange,
lease or otherwise dispose of (collectively, "Transfer") any property or
asset, or issue or permit to remain outstanding any Equity Interest in any
Subsidiary other than common stock of the Borrower owned by Holdings and
common stock of any Borrower Subsidiary owned by the Borrower or another
Borrower Subsidiary, except:
(a) sales of inventory, used or surplus equipment and
Permitted Investments in the ordinary course of business and trade-ins or
trade-ups of equipment;
72
(b) Transfers to the Borrower or a Borrower Subsidiary that is
a wholly-owned Subsidiary and that has become a party to the Subsidiary
Guarantee Agreement and the Security Documents;
(c) sales of assets acquired in connection with a Permitted
Acquisition and identified on a schedule submitted to and approved by the
Required Lenders prior to the consummation of such Permitted Acquisition; and
(d) other Transfers of assets, if (i) the aggregate fair
market value of all assets sold, transferred or otherwise disposed of in
reliance upon this Section 6.5(d) does not exceed $5,000,000 in the aggregate
during the term of this Agreement and (ii) such sale, transfer or other
disposition is made for fair market value and solely for cash consideration;
provided that, if such Transfer involves a sale transfer or disposition of
Equity Interests in a Borrower Subsidiary, such sale, transfer or other
disposition does not constitute a sale of less than all outstanding Equity
Interests in a Borrower Subsidiary; provided further that the Net Cash Proceeds
of any Transfer pursuant to this Section 6.5(d) are applied pursuant to Section
2.7(b).
Section 6.6. Maintenance of Holdings' Subchapter S
Status, Capital Stock.
Each of the Borrower and Holdings will not, and will not
permit any of the Subsidiaries to, do or suffer to exist any act which could (a)
cause Holdings' election to be treated as an S Corporation pursuant to the
provisions of Subchapter S of the Code to be terminated or revoked or (b) result
in the creation of a Lien on or otherwise encumber, or constitute a pledge or
hypothecation of, any capital stock issued by Holdings.
Section 6.7. Restricted Payments; Certain Payments of
Indebtedness.
(a) Each of the Borrower and Holdings will not, and will not
permit any Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except that (i) Holdings may declare and pay
dividends with respect to its capital stock payable solely in additional shares
of like capital stock, (ii) a Borrower Subsidiary may declare and pay dividends
to the Borrower or another Borrower Subsidiary, (iii) Holdings may exchange the
Notes for the Exchange Notes (each as defined in the Senior Note Indenture),
provided that the aggregate principal amount of such Exchange Notes shall not
exceed the aggregate principal amount of such Notes outstanding as of the date
of such exchange and such Exchange Notes are on substantially identical terms
with such Notes, (iv) Holdings may pay reasonable and customary directors' fees,
indemnifications and similar payments and arrangements in connection therewith,
(v) Holdings may grant options to executive management to acquire capital stock
and other stock equivalents of Holdings pursuant to a share incentive plan and
may issue such capital stock and stock equivalents to such Persons in accordance
with such plan, (vi) Holdings may pay, and the Borrower may declare and pay to
Holdings cash dividends in amounts sufficient to enable Holdings to pay,
California income taxes imposed on corporations organized under Subchapter S of
the Code, payable by
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Holdings, franchise or other taxes, payable by Holdings, to maintain its
corporate existence and fees, indemnities and other amounts referred to in
clause (iv) above, (vii) Holdings may pay or distribute, and the Borrower may
declare and pay to Holdings cash dividends in amounts sufficient to enable
Holdings to pay or distribute, (A) payments to shareholders of Holdings pursuant
to the Reorganization Agreement and consistent with past practices of Holdings
for the purpose of distributing net income generated by Holdings for the period
from January 1, 1998, through the Effective Date, less $2,000,000, (B) payments
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ in an amount not exceeding $4,000,000
in connection with the transactions contemplated by the Reorganization
Agreement, and (C) the payments described on Schedule 6.7(a)(vii), (viii) so
long as Holdings has delivered a Tax Distribution Certificate as required by
Section 5.1(i), Holdings may declare and pay cash dividends in any fiscal year
(and the Borrower and the Borrower Subsidiaries may pay dividends in order to
permit Holdings to declare and pay such cash dividends) in an aggregate amount
not to exceed the Tax Distribution Amount for such fiscal year or, to the extent
not previously distributed, the Tax Distribution Amount for a prior fiscal year,
(ix) so long as no Specified Event of Default has occurred and is continuing or
would result therefrom, the Borrower may declare and pay cash dividends to
Holdings in amounts sufficient to permit Holdings to make payment of regularly
scheduled interest payments as and when due in respect of the Senior Notes, and
(x) so long as no Event of Default has occurred and is continuing or would
result therefrom, Holdings may, and the Borrower may declare and pay cash
dividends to Holdings in amounts sufficient to permit Holdings to, repurchase
its capital stock from employees of Holdings or its Subsidiaries following the
death or termination of employment of each such employee, all in an aggregate
amount not to exceed $1,000,000 during any fiscal year;
provided, however, that all cash dividends received by Holdings shall be
promptly applied by Holdings for the purposes, and only for the purposes, for
which such dividends were permitted to be made hereunder.
(b) Each of the Borrower and Holdings will not, and will not
permit any Subsidiary to, make or agree to pay or make, directly or indirectly,
any payment or other distribution (whether in cash securities or other property)
of or in respect of principal of or interest on any Indebtedness, or any payment
or other distribution (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 Indebtedness,
except:
(i) payments in respect of the Obligations and
payments of regularly scheduled interest and principal payments as and
when due in respect of any other Indebtedness permitted hereunder
(except that neither the Borrower nor any Borrower Subsidiary shall
make any such payment on the Senior Notes in violation of the
subordination provisions of the Senior Note Guarantees); and
74
(ii) in the case of Holdings, payment of regularly
scheduled interest payments and principal payments required to be made
under the Senior Note Indenture as and when due in respect of the
Senior Notes and the consummation of the Exchange Offer referred to in
the Senior Note Indenture.
Section 6.8. Transactions with Affiliates. Each of the
Borrower and Holdings will not, and will not permit any Subsidiary 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 their respective Affiliates, except (a) transactions
in the ordinary course of business that are 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, (b) transactions
between or among the Borrower and Borrower Subsidiaries that are wholly-owned
Subsidiaries and are party to the Subsidiary Guarantee Agreement and the
Security Documents, (c) payments by the Borrower and the Borrower Subsidiaries
in respect of Taxes attributable to the Borrower and the Borrower Subsidiaries,
if such payments (i) are made directly to the taxing authority to which such
Taxes are due, (ii) are made when such Taxes (or estimated tax payments in
respect thereof) are due, and (iii) do not exceed the difference between (A) the
amount of such Taxes that the Borrower and the Borrower Subsidiaries would be
required to pay under a separate return, less (B) any and all deductions,
credits and refunds in respect of such Taxes that are attributable to the
accrual or payment of interest on the Senior Notes or any other charges or
losses of Holdings or that otherwise are claimed, taken or received by Holdings,
(d) payments and transactions permitted by Section 6.7, and (e) transactions
pursuant to the agreements listed on Schedule 6.8, each as in effect on the date
hereof.
Section 6.9. Restrictive Agreements. Each of the Borrower
and Holdings will not and will not permit any Subsidiary 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 any member of Holdings Group 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 Borrower
Subsidiary or to Guarantee Indebtedness of the Borrower or any Borrower
Subsidiary or to transfer assets to or engage in any other transaction with the
Borrower or any Borrower Subsidiary, except (i) restrictions and conditions
imposed by law or by any Loan Document, (ii) restrictions and conditions imposed
under the Senior Note Indenture, (iii) customary restrictions and conditions
contained in agreements relating to the sale of a Borrower Subsidiary pending
such sale, if such restrictions and conditions apply only to the Subsidiary that
is to be sold and such sale is permitted hereunder, (iv) restrictions or
conditions upon the creation, incurrence or existence of a Lien that are imposed
by any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) customary provisions in leases restricting the
assignment or subleasing thereof.
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Section 6.10. Amendment of Material Documents. Each of the
Borrower and Holdings will not, and will not permit any Subsidiary to, amend,
modify or waive any of its rights, in each case in any way that could be adverse
to Holdings, the Borrower, their respective Subsidiaries, or the Administrative
Agent, the Issuing Bank or any Lender, under (a) any of the Governing Documents,
except changes in the certificate of incorporation or by-laws or similar
governing articles or agreements of any Loan Party that do not relate to or
affect any of the Transactions and are implemented after 30 days prior written
notice to the Administrative Agent and the Lenders, unless within such 30-day
period the Borrower is advised by Required Lenders that, in the opinion of
Required Lenders, such change would be adverse to the interests of the Lenders,
(b) the Transaction Agreements, (c) the Senior Note Indenture or (d) the Supply
Agreements or any other Material Contract.
Section 6.11. Capital Expenditures. The Borrower and
Holdings will not make any Capital Expenditures except (a) Permitted
Acquisitions and (b) other Capital Expenditures made by the Borrower or a
Borrower Subsidiary in an amount which, in the aggregate for all such other
Capital Expenditures made by the Borrower and the Borrower Subsidiaries, does
not in any period of four fiscal quarters ending on the last day of any fiscal
quarter, commencing with the fiscal quarter ending December 31, 1998, exceed 3%
of revenues of the Borrower and the Borrower Subsidiaries for such four-quarter
period determined on a consolidated basis in accordance with GAAP.
Section 6.12. Pro Forma Leverage Ratio. Each of the
Borrower and Holdings will not permit the Pro Forma Leverage Ratio to exceed, as
of the last day of any fiscal quarter ending during any period set forth below,
the ratio set forth opposite such period:
Period Total Leverage Ratio
------ --------------------
First fiscal quarter 1998 to and
including third fiscal quarter 1999 5.0 to 1.0
Fourth fiscal quarter 1999 to and
including third fiscal quarter 2000 4.25 to 1.0
Fourth fiscal quarter 2000 and
thereafter 4.0 to 1.0
Section 6.13. Consolidated EBITDA. The Borrower and
Holdings will not permit Consolidated EBITDA for any period of four fiscal
quarters ending as of the last day of any fiscal quarter ending during any
period set forth below to be less than the amount set forth opposite such
period:
Minimum Consolidated
--------------------
Period EBITDA
------ -------
First fiscal quarter 1998 to and $40,000,000
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including third fiscal quarter 1999
Fourth fiscal quarter 1999 to and 50,000,000
including third fiscal quarter 2000
Fourth fiscal quarter 2000 to and 60,000,000
including third fiscal quarter 2001
Fourth fiscal quarter 2001 to and 70,000,000
including third fiscal quarter 2002
Fourth fiscal quarter 2002 and thereafter 80,000,000
including
Section 6.14. Cash Interest Coverage Ratio. The Borrower
and Holdings will not permit the Cash Interest Coverage Ratio, determined as of
the last day of any fiscal quarter ending during any period set forth below, to
be less than the ratio set forth opposite such period below:
Period Minimum Ratio
------ -------------
First fiscal quarter 1998 to and including
third fiscal quarter 1999 1.75 to 1.0
Fourth fiscal quarter 1999 to and 2.00 to 1.0
including third fiscal quarter 2000
Fourth fiscal quarter 2000 to and 2.50 to 1.0
including third fiscal quarter 2001
Fourth fiscal quarter 2001 and thereafter 2.75 to 1.0
Section 6.15. Fixed Charge Coverage Ratio. The Borrower
and Holdings will not permit the Fixed Charge Coverage Ratio, determined as of
the last day of any fiscal quarter ending during any period set forth below, to
be less than the ratio set forth opposite such period:
Period Minimum Ratio
------ -------------
First fiscal quarter 1998 to and including
third fiscal quarter 1999 1.05 to 1.0
Fourth fiscal quarter 1999 to and 1.25 to 1.0
including third fiscal quarter 2000
Fourth fiscal quarter 2000 to and 1.35 to 1.0
including third fiscal quarter 2001
77
Period Minimum Ratio
------ -------------
Fourth fiscal quarter 2001 to and 1.45 to 1.0
including third fiscal quarter 2002
Fourth fiscal quarter 2002 and thereafter 1.50 to 1.0
Section 6.16. Additional Subsidiaries. The Borrower and
Holdings will not, and will not permit any Subsidiary to, create any additional
Subsidiary, unless such Subsidiary is a Borrower Subsidiary.
ARTICLE VII.
EVENTS OF DEFAULT
Section 7.1. 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 Section 7.1(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of any member of the Holdings Group in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made;
(d) the Borrower or Holdings shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.2, 5.4, 5.11 or 5.15
or in Article VI;
(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than
those specified in Sections 7.1(a), 7.1(b) or 7.1(d), and such failure shall
continue unremedied for a period of 10 days after (i) notice thereof is given to
the Borrower by any Agent or Lender or (ii) any Loan Party acknowledges such
failure in writing;
78
(f) any member of the Holdings Group shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(after giving effect to the expiration of any grace or cure period set forth
therein);
(g) any event or condition occurs that results in any Material
Indebtedness 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 any Material Indebtedness or any trustee or agent on its or
their behalf to cause any 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 any member of the Holdings Group 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 any member of the Holdings Group 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 or such member of the Holdings
Group shall consent to such proceeding or petition or the entry of any such
order or decree;
(i) any member of the Holdings Group 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 Section 7.1(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for any member of the Holdings Group or for a substantial
part of any of their 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) any member of the Holdings Group 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 $2,000,000 not fully covered by insurance (other
than normal deductibles and where coverage has been confirmed in writing by the
applicable insurer) shall be rendered against any member or members of the
Holdings Group 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 legally taken by a judgment creditor
79
to attach or levy upon any assets of any member of the Holdings Group to enforce
any such 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 liability of any member or
members of the Holdings Group in an aggregate amount exceeding $2,000,000;
(m) any Loan Party shall repudiate, disavow or purport to
revoke any of its obligations under any Loan Document or shall commence or
overtly threaten or join or acquiesce in any litigation seeking to invalidate or
annul, or seeking any other relief from or as to, any of the provisions of any
Loan Document on any ground; or any such litigation shall be commenced by any
Person other than a Loan Party and shall not be dismissed within 60 days
thereof;
(n) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under the
Loan Documents;
(o) any Supply Agreement shall have been terminated, or a
notice of termination shall have been delivered thereunder, or a material
default shall have occurred and be continuing thereunder; or
(p) any Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
or Holdings described in Section 7.1(h) or 7.1(i)), and at any time thereafter
during the continuance of such event, the Administrative 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 Commitments, and thereupon the Revolving Commitments shall terminate
immediately, and (ii) declare the Loans 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
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, 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 the Borrower or Holdings
described in Section 7.1(h) or 7.1(i), the Revolving Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, 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.
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ARTICLE VIII.
THE ADMINISTRATIVE AGENT
Section 8.1. Appointment of Agents. Each of the Lenders
and the Issuing Bank hereby (a) irrevocably appoints CUSA as the Administrative
Agent and (b) authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
Section 8.2. Same Rights and Powers. The Administrative
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
Administrative Agent, and the Administrative Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any Transaction Party or any Subsidiary or other Affiliate thereof or any other
Person as if it were not the Administrative Agent hereunder.
Section 8.3. No Duties or Obligations; Not Liable. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative 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 9.2), and (c) except as expressly
set forth in the Loan Documents, the Administrative 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 Holdings or any of their respective
Subsidiaries that is communicated to or obtained by the Administrative Agent or
any of its Affiliates in any capacity. The Administrative 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 the Administrative Agent's own gross negligence or
willful misconduct. The Administrative Agent shall not be deemed to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative 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 any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
(v) the creation, enforceability, perfection, priority or sufficiency of any
Lien, or (vi) the satisfaction of any condition set forth in Article III or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
81
Section 8.4. Entitled to Rely. The Administrative 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 Administrative 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
Administrative 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.
Section 8.5. Sub-Agents; Related Parties. The
Administrative 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
Administrative Agent. The Administrative 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 this Article VIII
shall apply to any such sub-agent and to the Related Parties of the
Administrative 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 the Administrative Agent.
Section 8.6. Resignation of Administrative Agent. Subject
to the appointment and acceptance of a successor to the Administrative Agent as
provided in this Section 8.6, the Administrative 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 Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent that 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 Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
upon between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article VIII and Section 9.3 shall
continue in effect for the benefit of such retiring Administrative 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 Administrative
Agent. In connection with such resignation, the retiring Administrative Agent
shall execute such financing statements and other documents and instruments of
transfer necessary to maintain the perfection of all security interests securing
the Obligations and to effect the transfer in connection therewith to the
succeeding Administrative Agent.
Section 8.7. Concerning the Collateral.
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(a) The Administrative Agent and the Lenders authorizes and
directs the Administrative Agent to enter into the Security Documents for the
benefit of the Lenders and to perform all obligations of the Administrative
Agent thereunder, including (without limitation) obligations to release
Collateral. Each Lender and each Issuing Bank agrees that any action taken by
the Required Lenders (or, where required by the express terms of this Agreement,
a greater or lesser proportion of the Lenders) in accordance with the provisions
of this Agreement or the Security Documents, and the exercise by the Required
Lenders (or, where so required, such greater or lesser proportion) of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon each Lender and Issuing
Bank.
(b) Each Lender and each Issuing Bank hereby agrees that it
will, upon request of the Borrower or the Administrative Agent, confirm the
Administrative Agent's authority to release, or direct the Administrative Agent
to release, any Lien held by the Administrative Agent:
(i) against all of the Collateral, upon payment in
full of the Obligations and expiration or termination of the
obligations of each Lender and Issuing Bank under this Agreement;
(ii) against any part of the Collateral sold or
disposed of by the Borrower or any Borrower Subsidiary, if such sale or
disposition is permitted by and is made in accordance with this
Agreement; and
(iii) against any Collateral which the Administrative
Agent is required to release pursuant to the Security Documents.
(c) The Administrative Agent shall not be accountable or
liable for any release of Collateral which (i) the Administrative Agent in good
faith believes is required under the Security Documents or any other Loan
Document, or (ii) results from any failure to give, or delay in giving, any
notice of termination of any rights of the Borrower pursuant to the Security
Documents or any other Loan Document.
Section 8.8. No Reliance. Each Lender acknowledges that
it has, independently and without reliance upon the Administrative 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 Administrative 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 other Loan Document or related agreement or any
document furnished hereunder or thereunder.
83
Section 8.9. Arranger and Documentation Agent. The
Arranger and the Documentation Agent shall have no duties or obligations under
this Agreement or the other Loan Documents in their respective capacities as
Arranger and Documentation Agent.
ARTICLE IX.
MISCELLANEOUS
-------------
Section 9.1. 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 any member of the Holdings Group, to it at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of Chief Financial
Officer (Telecopy No. 714-771-7487);
(b) if to the Administrative Agent, to Citicorp USA, Inc., c/o
Citibank Delaware, ▇ ▇▇▇▇'▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇/1), with a copy to
Citicorp Securities, Inc., Citibank Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy No. 213-624-3743);
(c) if to the Issuing Bank, to Citibank, N.A., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No.
▇▇▇-▇▇▇-▇▇▇▇/1), with a copy to the Administrative Agent; and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
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.
Section 9.2. Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, the
Issuing Bank or any Lender in exercising any right or power hereunder or under
any other Loan Document 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 Administrative Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
84
therefrom shall in any event be effective unless the same shall be permitted by
Section 9.2(b), 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 Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders, except
that (i) no such agreement shall (A) increase the Revolving Commitment of any
Lender without the written consent of such Lender, (B) 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, (C) 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 the Revolving Commitments, without
the written consent of each Lender affected thereby, (D) change Section 2.15(b)
or 2.15(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (E) change any of
the provisions of this Section 9.2 or the definition of the term "Required
Lenders" or any other provision of any Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the written
consent of each Lender, (F) release any Guarantor from its Guarantee under the
Guarantee Agreement (except as expressly provided in the Guarantee Agreement or
on a sale of such Guarantor permitted hereby), or decrease its liability in
respect of such Guarantee, without the written consent of each Lender, (G)
release all or any substantial part of the Collateral from the Liens of the
Security Documents, without the written consent of each Lender or (H) waive an
Event of Default resulting from a Change of Control without the written consent
of each Lender; or (ii) amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Issuing Bank without the prior written
consent of the Administrative Agent or the Issuing Bank, as the case may be.
Section 9.3. Expenses; Indemnity; Damage Waiver.
(a) Each of the Borrower and Holdings jointly and severally
agree to pay (i) all out-of-pocket expenses incurred by the Administrative
Agent, the Arranger and their respective Affiliates, including the reasonable
fees, charges and disbursements of counsel for the Administrative Agent and the
Arranger, in connection with the negotiation and syndication of the credit
facilities provided for herein, the preparation and
85
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all 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 Administrative Agent, the
Arranger, the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, the Issuing Bank
or any Lender and any advisors, appraisers, consultants, or other professional
engaged by them or by such counsel (provided that, with respect to any audit,
evaluation or appraisal of the Collateral pursuant to Section 5.9(b), such
expenses shall be limited to the single designated group of professionals
retained by the Administrative Agent or the Lenders to perform such audit,
evaluation or appraisal), in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section 9.3, 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 or during the pendency of any bankruptcy or insolvency proceeding.
(b) Each of the Borrower and Holdings agree jointly and
severally to defend and indemnify the Administrative Agent, the Arranger, the
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (all, collectively, "Indemnitees"), against, and to 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 any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their respective
obligations thereunder 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 currently or formerly owned or operated by any
Transaction Party or any of their Subsidiaries, or any Environmental Liability
related in any way to any Transaction Party or any of the 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, except only
that no Indemnitee shall be indemnified hereunder if and to the extent that any
such losses, claims, damages, liabilities or related expenses incurred or
sustained by it are determined by final judgment of a court of competent
jurisdiction to have resulted directly and primarily from the gross negligence
or willful misconduct of such Indemnitee; provided that Holdings and the
Borrower shall have no obligation under this Section 9.3(b) to any Indemnitee
with respect to any and all losses, claims, damages, liabilities and related
86
expenses arising out of the presence or release of any Hazardous Material that
is first used, manufactured, emitted, generated, treated, located, released,
stored or disposed of on any Real Property after such Real Property is
transferred to any Indemnitee or its successors by foreclosure sale, deed in
lieu of foreclosure or similar transfer, except to the extent such manufacture,
emission, generation, treatment, location, release, storage, disposal or
violation is related to any action taken, or the failure to take any action, by
Holdings, the Borrower or their respective Subsidiaries.
(c) To the extent that any Loan Party fails to pay any amount
required to be paid by it to the Administrative Agent or the Issuing Bank under
Section 9.3(a) or 9.3(b), each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount, but (in each case) only
if and to the extent 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 Administrative Agent or the Issuing Bank in its capacity as
such. For purposes hereof, a Lender's "pro rata share" shall be determined based
upon its share of the sum of the Total Exposures and unused Revolving
Commitments at the time.
(d) Each of the Borrower and Holdings will not assert, will
cause each of their respective Subsidiaries never to assert, and for themselves
and each of their respective present and future Subsidiaries and their
respective Related Parties hereby forever waives, releases and agrees not to ▇▇▇
upon, any claim against any Indemnitee, on any theory of liability (whether
based upon contract, or founded upon tort or any legal duty or otherwise), for
any special, indirect, consequential damages and, to the fullest extent a claim
for punitive damages is permitted to be waived by law, for punitive 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 or any act, omission, claim,
breach, wrongful conduct, or other occurrence or event in any respect relating
hereto.
(e) All amounts due under this Section 9.3 shall be
payable promptly after written demand therefor.
Section 9.4. 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 neither the Borrower nor Holdings may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any such attempted assignment or
transfer without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any
87
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) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative 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 its Revolving Commitment and the Loans at the time owing to it), if
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent and the Issuing Bank 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 Commitment or Loans, the amount of the Revolving
Commitment or Loans 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 Administrative Agent) shall be an integral
multiple of $1,000,000 and not less than $5,000,000 unless each of the Borrower
and the Administrative Agent otherwise consent, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender's rights and obligations under this Agreement, (iv) the parties to each
assignment shall execute and deliver to the Administrative 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
Administrative Agent an Administrative Questionnaire; provided, however, that
any consent of the Borrower otherwise required under this Section 9.4 shall not
be required if an Event of Default has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to Section 9.4(d), 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 2.13, 2.14, 2.15 and 9.3). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 9.4(b) 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 Section 9.4(e).
(c) The Administrative 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 Revolving
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof
88
from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Loan Parties, the Administrative 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 assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
9.4(b) and any written consent to such assignment required by Section 9.4(b),
the Administrative 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 Section 9.4(d).
(e) Any Lender may, without the consent of the Borrower, the
Administrative 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 its
Revolving Commitment and the Loans owing to it), but in such event (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 Loan Parties, the Administrative
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 the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, except 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 9.2(b) that affects such Participant.
Subject to Section 9.4(f), the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to
Section 9.4(b). To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.8 as though it were a Lender, if such
Participant agrees to be subject to Section 2.15(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.14 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
89
benefits of Section 2.14 unless (i) 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 2.14(e) as though it were a
Lender and (ii) such Participant is eligible for exemption from the withholding
tax referred to therein, following compliance with Section 2.14(e).
(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. 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 9.5. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents 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 Administrative
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 unless the same is waived in writing, 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 outstanding and so long as the Revolving
Commitments have not expired or terminated. The provisions of Sections 2.13,
2.14, 2.15 and 9.3 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 Revolving Commitments or the termination of this Agreement or any
provision hereof.
Section 9.6. 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,
the other Loan Document and any separate letter agreements with respect to fees
payable to the Administrative 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 any and all agreements relating to the fees and compensation
payable to CUSA or CSI in connection with the Transactions. Except as provided
in Section 3.1, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof that, 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
90
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
Section 9.7. 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 9.8. 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 such 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. Each Lender agrees promptly to
notify the Borrower after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender and its respective Affiliates
under this Section 9.8 are in addition to other rights and remedies (including
other rights of setoff) that such Lender may have.
Section 9.9. Governing Law; Jurisdiction; Consent to
Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) Each of the Borrower and Holdings hereby irrevocably and
unconditionally submits, for itself and its property and for each other Loan
Party 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 any
Loan Document, 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 or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this
91
Agreement or any other Loan Document against any Loan Party or their properties
in the courts of any jurisdiction.
(c) Each of the Borrower and Holdings hereby irrevocably and
unconditionally waives, for itself and each other Loan Party, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in Section 9.9(b). 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 of the Borrower and Holdings hereby irrevocably and
unconditionally consents, for itself and each other Loan Party, to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.10.
Section 9.11. 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 9.12. Confidentiality. Each of the Administrative
Agent, the Issuing Bank, the Documentation Agent, the Arranger and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its Affiliates and 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
92
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section 9.12, 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 9.12 or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Holdings. For the purposes of
this Section 9.12, the term "Information" means all information received from
the Holdings Group relating to the or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Holdings Group,
but, in the case of information received from the Holdings Group after the date
hereof, only if 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 9.12 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 9.13. 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 that are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") that 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 Section 9.13 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.
Section 9.14. Acknowledgments. Each of Holdings and the
Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery ofthis Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or fiduciary duty to Holdings or the Borrower or any
of their respective Subsidiaries arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Administrative Agent and the Lenders, on the one hand, and Holdings and the
Borrower and their respective Subsidiaries, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
93
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among (i) the Lenders, or (ii) among Holdings and the Borrower and their
respective Subsidiaries, on the one hand, and the Lenders, on the other hand, or
(iii) among Holdings and the Borrower and their respective Subsidiaries, on the
one hand, and the Administrative Agent, on the other hand.
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
GLOBAL HEALTH SUB, INC.,
as Borrower
By:
---------------------------
Name:
Title:
GLOBAL HEALTH SCIENCES, INC.,
as Parent Guarantor
By:
---------------------------
Name:
Title:
CITICORP USA, INC.,
as Administrative Agent
By:
---------------------------
Name:
Title:
CITIBANK, N.A.,
as Issuing Bank
By:
---------------------------
Name:
Title:
S-1
BANK OF AMERICA NT&SA,
as Documentation Agent
By:
---------------------------
Name:
Title:
S-2
CITICORP USA, INC.,
as Lender
By:
---------------------------
Name:
Title:
S-3
BANK OF AMERICA NT&SA,
as Lender
By:
---------------------------
Name:
Title:
S-4
SANWA BANK CALIFORNIA,
as Lender
By:
---------------------------
Name:
Title:
S-5
▇▇▇▇▇ FARGO BANK, N.A.,
as Lender
By:
---------------------------
Name:
Title:
▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇,
▇▇▇ ▇▇▇▇ and Grand Cayman Branches,
as Lender
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
S-7