1
EXHIBIT 10.25
CREDIT AGREEMENT
This Credit Agreement (as it may be amended or modified and in effect from
time to time, the "Agreement"), dated as of December 14, 1998, is among
Herbalife International of America, Inc., a California corporation (together
with the Parent and any Subsidiary which executes an addendum to this Agreement
pursuant to which it agrees to be bound by the terms and conditions hereof
applicable to the Borrower and satisfies the conditions set forth in Section
4.1, and each of their respective successors and assigns, collectively, but
severally and not jointly, the "Borrower"), Herbalife International, Inc. (the
"Parent"), and The First National Bank of Chicago (together with its successors
and assigns, the "Lender"). The parties hereto agree as follows:
ARTICLE I - DEFINITIONS
As used in this Agreement:
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the corporate base rate of interest announced by the
Lender from time to time, changing when and as said corporate base rate changes
and (ii) the sum of the federal funds effective rate (as published by the
Federal Reserve Bank of New York) for such day plus 1/2% per annum.
"Alternate Base Rate Loan" means a Loan that bears interest at the
Alternate Base Rate.
"Borrowing Date" means a date on which a Loan is made hereunder.
"Borrowing Notice" is defined in Section 2.5.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital Expenditures" means, without duplication, any maintenance
expenditures for any purchase or other acquisition of any asset which would be
classified as a fixed or capital asset on a consolidated balance sheet of the
Parent, Borrower, and its Subsidiaries prepared in accordance with generally
accepted accounting principles.
"Commitment" means the obligation of the Lender to make Loans and issue
Letters of Credit not exceeding the amount set forth opposite its signature
below or as set forth in any notice of assignment relating to any assignment
that has become effective pursuant to Section 12.3, as such amount may be
modified from time to time pursuant to the terms hereof.
"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation,
(iv) amortization and (v) extraordinary losses incurred
2
other than in the ordinary course of business, minus, to the extent included in
Consolidated Net Income, extraordinary gains realized other than in the ordinary
course of business, all calculated for the Parent, Borrower and its Subsidiaries
on a consolidated basis.
"Consolidated Interest Expense" means, with reference to any period, the
interest expense of the Parent, Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Maintenance Capital Expenditures" means, with reference to
any period, the Capital Expenditures of the Parent, Borrower and its
Subsidiaries calculated on a consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Parent, Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Tangible Net Worth" means at any time consolidated
stockholders' equity of the Parent, Borrower and its Subsidiaries calculated on
a consolidated basis as of such time, after subtracting therefrom the aggregate
amount of all intangible assets of the Parent and its Subsidiaries.
"Conversion/Continuation Notice" is defined in Section 2.6.
"Default" means an event described in Article VII.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Base Rate" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the rate at which the Lender offers to place deposits
in U.S. dollars with major banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the nearest equivalent amount of the relevant Eurodollar
Loan and having a maturity in the nearest equivalent to such Interest Period.
"Eurodollar Loan" means a Loan that bears interest at a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for the relevant
Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) one-half (.50%) percent per annum. The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Family Party" means all of the following: (a) Xxxx Xxxxxx (the "Designated
Family Member"); (b) any fiancee and any current or former spouse of the
Designated Family Member; (c) any lineal descendant (including by adoption) of
the Designated Family Member; (d) any brother or sister of the Designated Family
Member (each Person described in clauses (b), (c) and (d), a "Xxxxxx Family
Member"); (e) any of the following in his or her capacity as such: (i) the
executor,
2
3
administrator or personal representative of a Xxxxxx Family Member, (ii) the
trustee of the estate of a bankrupt or insolvent Xxxxxx Family Member, and (iii)
the guardian or conservator of a Xxxxxx Family Member who is adjudged disabled
or incompetent by a court of competent jurisdiction; (f) any trust (including a
voting trust) established principally for the benefit of a Xxxxxx Family Member;
(g) any limited partnership, limited liability partnership or limited liability
company in which a Xxxxxx Family Member holds all of the partnership interests
or membership interests, as applicable; and (h) any corporation with respect to
which a Xxxxxx Family Member holds sufficient shares to elect all of the
directors.
"Guarantor" means Herbalife International, Inc., a Nevada corporation.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations
for borrowed money, whether or not assumed, secured by Liens or payable out of
the proceeds or production from property now or hereafter owned or acquired by
such Person, (iv) obligations that are evidenced by notes, acceptances, or other
instruments, (v) obligations of such Person to purchase securities or other
property arising out of or in connection with the sale of the same or
substantially similar securities or property, (vi) capitalized lease
obligations, (vii) net liabilities under interest rate swap, exchange or cap
agreements, (viii) contingent obligations, (ix) amounts available to be drawn
under all letters of credit and (x) any other obligation for borrowed money or
other financial accommodation which in accordance with generally accepted
accounting principles would be shown as a liability on the consolidated balance
sheet of such Person. Notwithstanding the foregoing, Indebtedness shall not
include any nonrecourse Indebtedness of any Subsidiary resulting from the sale
of accounts receivable of the Borrower or any of its Subsidiaries.
"Interest Period" means, with respect to a Eurodollar Loan, a period of
one, three or six months commencing on a Business Day selected by the Borrower
pursuant to this Agreement. Such Interest Period shall end on the day that
corresponds numerically to such date one, three or six months thereafter,
provided, however, that if there is no such numerically corresponding day in
such next, third or sixth succeeding month, such Interest Period shall end on
the last Business Day of such next, third or sixth succeeding month. If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.
"Lending Installation" means any office, branch, subsidiary or affiliate of
the Lender.
"Letter of Credit" means standby letters of credit issued by the Lender for
the account of the Borrower, as amended or renewed.
"Letter of Credit Application" shall mean a letter of credit application on
the Lender's standard form (or such other form as the Lender may require).
3
4
"Letter of Credit Documents" means all applications, reimbursement and
security agreements given by the Borrower to the Lender in the Lender's standard
form for any Letter of Credit, and any amendment or renewal.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"Loan" means a borrowing hereunder (or a conversion or continuation
thereof).
"Loan Documents" means this Agreement and the Note and the other documents
and agreements contemplated hereby and executed by the Borrower and/or Parent in
favor of the Lender.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Lender thereunder.
"Note" is defined in Section 2.10.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lender or any
indemnified party arising under the Loan Documents.
"Parent" means Herbalife International, Inc., a Nevada corporation.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, limited liability company, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D of the Board of
Governors of the Federal Reserve System on Eurocurrrency liabilities.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or
4
5
more of its Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled. Unless otherwise expressly provided, all references
herein to a "Subsidiary" shall mean a Subsidiary of the Parent.
"Termination Date" means December 31, 2000, unless terminated prior to such
date pursuant to Section 2.1.
"Type" means, with respect to any Loan, its nature as an Alternate Base
Rate Loan or a Eurodollar Loan.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II - THE CREDITS
2.1. Commitment; Reduction of Commitment; Termination of Commitment. From
and including the date of this Agreement and prior to the Termination Date, the
Lender agrees, on the terms and conditions set forth in this Agreement, to make
Loans to the Borrower and issue Letters of Credit for such Borrower's account
from time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of the Commitment. The aggregate face amount of all
Letters of Credit shall not exceed $25,000,000 at any time. Each Letter of
Credit shall expire no later than the earlier of twelve (12) months from its
date of issuance or five (5) days prior to the Termination Date, or at such
other time as mutually agreed upon by Borrower and Lender. The issuance of
Letters of Credit shall constitute usage under the Commitment. The Borrower may
permanently reduce the Commitment, in integral multiples of $5,000,000, upon at
least five Business Days' written notice to the Lender; provided, however, that
the amount of the Commitment may not be reduced below the aggregate (i)
principal amount of the outstanding Loans and (ii) issued Letters of Credit. The
Borrower may terminate the Commitment upon at least five Business Days' written
notice to the Lender; provided, however, that concurrently with the termination
of the Commitment, the Borrower shall (i) repay all outstanding Loans and all
other Obligations then due and payable, and (ii) either (y) arrange for the
replacement and/or termination of all outstanding Letters of Credit, or (z)
continue to pay the fees described in Section 2.1(A)(i) and Section 2.4 with
respect to any remaining outstanding Letters of Credit. To the extent Letters of
Credit remain outstanding under this Section, the Borrower agrees that all
provisions of Article IX shall survive the termination of the Commitment and
such outstanding Letters of Credit shall continue to be guaranteed by the
Guarantor.
2.1(A). Provisions Regarding Letters of Credit.
(i) Requests for Letters of Credit and Letter of Credit Fees. Each
request for issuance of a Letter of Credit shall be made by the Borrower's
execution and
5
6
delivery of a Letter of Credit Application, appropriately completed, not
less than two Business Days prior to the proposed date of issuance. Upon
fulfillment of the conditions set forth in Article IV, the Lender shall
issue the Letter of Credit for the Borrower's account on the requested
date in accordance with the Lender's usual and customary business
practices. The Borrower shall pay the Lender a fee quarterly in arrears
with respect to each standby Letter of Credit issued equal to 55 basis
points per annum on the daily average amount available to be drawn on such
Letter of Credit. In addition, the Borrower shall pay agreed to incidental
issuing fees.
(ii) Reimbursement Obligations. Upon receipt of notice from the
Lender of any drawing under a Letter of Credit, the Borrower shall
reimburse the Lender for the amount of each draft presented under the
Letter of Credit which satisfied the presentment requirements of such
Letter of Credit. Unless funded with a Loan under Section 2.1(A)(iii), the
Borrower's reimbursement obligations to the Lender under this Section 2.1
(A)(ii) shall be due on demand and shall bear interest until paid at a per
annum rate of interest as described in Section 2.8.
(iii) Loans to Fund Reimbursement Obligations. The Lender's
payment of a draft drawn under or purporting to be drawn under a Letter of
Credit shall be deemed a request for a Loan under the Agreement in the
amount of the draft. Subject to the terms and conditions of this
Agreement, including the conditions set forth in Article IV, the Lender
shall make the Loan and apply Loan proceeds to the payment of the
Borrower's obligations under Section 2.1(A)(ii) with respect to that
draft.
(iv) Letter of Credit Collateral Account. From and after the
occurrence of a Default, the Borrower must maintain a special collateral
account (the "Letter of Credit Collateral Account") with the Lender with a
balance equal to the aggregate face amount of all Letters of Credit
outstanding plus accrued fees until the Default is cured or all of the
Borrower's obligations to the Lender are paid in full and the Commitment
is terminated. The Letter of Credit Collateral Account shall be in the
Borrower's name but under the sole dominion and control of the Lender. The
Borrower grants the Lender a security interest in the Letter of Credit
Collateral Account to secure the payment of the Borrower's obligations to
the Bank under this Agreement.
(v) Limitation of Aggregate Outstandings Under the Agreement.
Notwithstanding any provision of this Agreement to the contrary, the sum
of the outstanding Loans and Letters of Credit at any one time shall not
exceed $25,000,000.
2.2. Types of Loans; Minimum Amount; Lending Installations. Subject to the
terms of this Agreement, the Borrower may borrow, repay and reborrow at any time
prior to the Termination Date. The Loans may be Alternate Base Rate Loans or
Eurodollar Loans, or a combination thereof, selected by the Borrower in
accordance with Sections 2.5 and 2.6. Each Loan shall be in the minimum amount
of $100,000. The Lender may book the Loans at any Lending Installation, as
selected by the Lender. All terms of the Loan Documents shall apply to and may
be enforced by or on behalf of any such Lending Installation.
6
7
2.3. Principal Payments. The Borrower may from time to time pay, without
penalty or premium, in a minimum aggregate amount of $100,000, any portion of
the outstanding Alternate Base Rate Loans upon two Business Days' prior notice
to the Lender. The Borrower may from time to time pay, without penalty or
premium, all outstanding Eurodollar Loans, or, in a minimum aggregate amount of
$100,000 or any integral multiple of $100,000 in excess thereof, any portion of
the outstanding Eurodollar Loans upon three Business Days' prior notice to the
Lender; provided, however, that if any such payment occurs, whether because of
acceleration, prepayment or otherwise, or a Eurodollar Loan is not made on the
date specified by the Borrower for any reason other than default by the Lender,
the Borrower will indemnify the Lender for the breakage cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Loan. Any outstanding Loans and all other unpaid Obligations shall be paid in
full by the Borrower, and the Commitment to lend hereunder shall expire, on the
Termination Date.
2.4. Fees. The Borrower agrees to pay to the Lender a facility fee of
one-quarter of one (.25%) percent per annum on the Commitment (used or unused)
from the date hereof to and including the Termination Date, payable on the first
day of each quarter hereafter and on the Termination Date. All accrued fees
shall be payable on the effective date of any termination of the obligations of
the Lender to make Loans hereunder.
2.5. Method of Selecting Types and Interest Periods for New Loans. The
Borrower shall select the Type of Loan and the Interest Period, if any,
applicable to each Loan from time to time. The Borrower shall give the Lender
irrevocable notice (a "Borrowing Notice") not later than 11:00 a.m. (Chicago
time) on the Borrowing Date of each Alternate Base Rate Loan and three Business
Days before the Borrowing Date for each Eurodollar Loan, specifying for each
Loan: (i) the Borrowing Date, which shall be a Business Day, (ii) the aggregate
amount, (iii) the Type, and (iv) the Interest Period, if any, applicable
thereto. Such notice may be telephonic notice given in accordance with Section
2.11. The Lender will make the funds available to the Borrower at a location as
instructed by the Borrower.
2.6. Conversion and Continuation of Outstanding Loans. Alternate Base
Rate Loans shall continue as such unless and until converted into Eurodollar
Loans or are repaid. Each Eurodollar Loan shall continue until, and may not be
converted prior to, the end of the then applicable Interest Period therefor, at
which time such Eurodollar Loan shall be automatically converted into an
Alternate Base Rate Loan unless such Eurodollar Loan was repaid or the Borrower
shall have given the Lender irrevocable notice (a "Conversion/Continuation
Notice") requesting that, at the end of such Interest Period, such Eurodollar
Loan continue as such for the same or another Interest Period. The Borrower
shall give the Lender a Conversion/Continuation Notice prior to the date of the
requested conversion or continuation, but not later than the times identified
in Section 2.5 for Borrowing Notices, specifying for each Loan being converted
or continued: (i) the requested date which shall be a Business Day, (ii) the
aggregate amount and Type; and (iii) the amount and Type(s) of Loan(s) into
which such Loan is to be converted or continued and the duration of the Interest
Period, if any, applicable thereto. Such notice may be telephonic notice given
in accordance with Section 2.11.
7
8
2.7. Changes in Interest Rate. Each Alternate Base Rate Loan shall bear
interest, at the Alternate Base Rate, on the outstanding principal amount
thereof, for each day from and including the date such Loan is made or is
automatically converted from a Eurodollar Loan pursuant to Section 2.6 to but
excluding the date it is paid or is converted into a Eurodollar Loan pursuant to
Section 2.6. Changes in the Alternate Base Rate will take effect simultaneously
with each change in the Alternate Base Rate. Each Eurodollar Loan shall bear
interest on the outstanding principal amount thereof for each day during the
Interest Period applicable thereto from and including the first day of such
Interest Period to (but not including) the last day of such Interest Period at
the Eurodollar Rate applicable thereto. No Interest Period may end after the
Termination Date.
2.8. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.5 or 2.6, during the continuance of a Default or
Unmatured Default the Lender may, at its option, by notice to the Borrower,
declare that no Loan may be made as, converted into or continued as a Eurodollar
Loan, and declare that no Letters of Credit will be issued. During the
continuance of a Default, the Lender may, at its option, by notice to the
Borrower, declare that (i) each Eurodollar Loan shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to
such Interest Period plus 2% per annum, (ii) each Letter of Credit shall bear
interest on the daily average amount available to be drawn on each such Letter
of Credit plus 2% per annum, and (iii) each Alternate Base Rate Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate in effect from
time to time plus 2% per annum, provided that, during the continuance of a
Default under Section 7.2, 7.6 or 7.7, the interest rates set forth in clauses
(i) and (ii) above shall be applicable to all Loans without any election or
action on the part of the Lender.
2.9. Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Lender at the Lender's address, by noon (local time) on the date when
due. The Lender is hereby authorized to charge the account of the Borrower
maintained with the Lender for each payment of principal, interest and fees as
it becomes due hereunder.
2.10. Noteless Agreement; Evidence of Indebtedness. The Lender shall
maintain in accordance with its usual practice an account or accounts in which
it will record (a) the amount of each Loan made hereunder, the Type thereof and
the Interest Period with respect thereto, (b) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to the
Lender hereunder and (c) the amount of any sum received by the Lender hereunder
from the Borrower. The entries maintained in such accounts shall be prima facie
evidence of the existence and amounts of the Obligations therein recorded;
provided, however, that the failure of the Lender to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Obligations in accordance with their terms. The Lender may request
that the Loans be evidenced by a promissory note (a "Note"). In such event, the
Borrower shall prepare, execute and deliver to the Lender a Note payable to the
order of the Lender in a form supplied by the Lender. Thereafter, the Loans
evidenced by such Note and interest thereon shall at all times (including after
any assignment pursuant to Section 12.3) be represented by one or more Notes
payable to the order of the payee named therein or any assignee pursuant to
8
9
Section 12.3, except to the extent that the Lender or any such assignee
subsequently returns any such Note for cancellation and requests that such Loans
once again be evidenced as described above.
2.11. Telephonic Notices. The Borrower hereby authorizes the Lender to
extend, convert or continue Loans, effect selections of Types of Loans and to
transfer funds based on telephonic notices made by any person or persons the
Lender in good faith believes to be acting on behalf of the Borrower. If the
Borrower's records differ in any material respect from the action taken by the
Lender, the records of the Lender shall govern absent manifest error.
2.12. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Alternate Base Rate Loan shall be payable on the last day of each month,
commencing with the first such date to occur after the date hereof, on any date
on which the Alternate Base Rate Loan is prepaid due to acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Loan shall be
payable on the last day of its applicable Interest Period, on any date on which
the Eurodollar Loan is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Loan having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest and commitment fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day a Loan is made but not for the day of any
payment if payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on a Loan shall become due
on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
ARTICLE III - CHANGE IN CIRCUMSTANCES
The Borrower agrees to pay to the Lender such amounts as will compensate
the Lender for any increase in the cost to the Lender of making or maintaining
any Loan hereunder or of maintaining the Commitment to make Loans hereunder, by
reason of a change in any reserve (except Reserve Requirements), tax (excluding
any such tax based on the income of the Lender), capital guidelines, special
deposit, or similar requirement with respect to assets of, deposits with or for
the account of, or credit extended by, or commitments extended by, the Lender
which are imposed on, or deemed applicable by, the Lender, under any law,
treaty, rule, regulation (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System), any then binding and
effective interpretation thereof by any governmental, fiscal, monetary or other
authority charged with the administration thereof or having jurisdiction over
such Loan or the Lender, or any requirement imposed by any such authority,
whether or not having the force of law. Such additional amounts shall be payable
on demand. The Lender may suspend the availability of any Type of Eurodollar
Loan if maintenance of such Loan at a suitable Lending Installation becomes
illegal or if deposits matching such Loan are unavailable to the Lender or if
the Eurodollar Rate fails to reflect the cost to the Lender of making or
maintaining such Loan.
ARTICLE IV -- CONDITIONS PRECEDENT
9
10
4.1. Initial Loan. The Lender shall not be required to make the initial
Loan or issue a Letter of Credit hereunder unless the Borrower has furnished to
the Lender (i) a Note payable to the Lender, if so requested by the Lender, (ii)
an opinion of counsel, certificates of incumbency, resolutions, by-laws and
articles of incorporation of the Parent and the Borrower, (iii) a solvency
certificate with respect to Parent, certified by the chief financial officer of
the Parent and in a form satisfactory to the Lender, (iv) such other closing
documents as the Lender has requested, and (v) if requested by the Lender,
information satisfactory to the Lender regarding the Borrower's plan for
addressing Year 2000 issues, which such information can be delivered
telephonically in accordance with Section 2.11. "Year 2000 Issues" means
anticipated costs, problems and uncertainties associated with the inability of
certain computer applications to effectively handle data including dates on and
after January 1, 2000, as such inability affects the business, operations, and
financial condition of the Borrower and of the Borrower's material customers,
suppliers and vendors.
4.2. Each Loan. The Lender shall not be required to make any Loan (other
than a Loan that, after giving effect thereto and to the application of the
proceeds thereof, does not increase the aggregate amount of outstanding Loans),
or issue a Letter of Credit, unless on the applicable Borrowing Date: (i) there
exists no Default, or Unmatured Default; (ii) the representations and warranties
contained in Article V are true and correct as of such Borrowing Date except to
the extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true and
correct on and as of such earlier date; and (iii) all legal matters incident to
the making of such Loan shall be satisfactory to the Lender and its counsel.
Each Borrowing Notice with respect to each such Loan shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(i) and (ii) have been satisfied.
ARTICLE V -- REPRESENTATIONS AND WARRANTIES
The Parent and the Borrower each severally and not jointly represent and
warrant to the Lender that:
5.1. Corporate Existence and Standing. Each of the Parent and Borrower is
a person duly and properly incorporated or organized, as the case may be,
validly existing and (to the extent such concept applies to such Person) in good
standing under the laws of its jurisdiction of incorporation or organization and
has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted, except in each case as would not reasonably be
expected to have a Material Adverse Effect.
5.2. Authorization and Validity. The Parent and Borrower each has the
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution and delivery by the
Parent and Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Parent and
Borrower (to the extent such Person is a party thereto) enforceable against such
Person in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors, rights generally.
10
11
5.3. No Conflict; Government Consent. Neither the execution and delivery by
the Parent and Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate (i) any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Parent or Borrower or (ii) the Parent's or the
Borrower's or articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which the Parent or the
Borrower is a party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of the Parent or
the Borrower pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, adjudication, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Parent or the Borrower,
is required to be obtained by the Parent or the Borrower in connection with the
execution and delivery of the Loan Documents, the borrowings under this
Agreement, the payment and performance by the Parent or Borrower of the
Obligations or the legality, validity, binding effect or enforceability of any
of the Loan Documents against the Parent and the Borrower.
5.4. Financial Statements. The December 31, 1997 consolidated financial
statements of the Parent and its Subsidiaries and the December 31, 1997
financial statements of the Borrower and its Subsidiaries heretofore delivered
to the Lender were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Parent,
Borrower and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change. Since December 31, 1997, there has been no
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Parent or the Borrower which would reasonably be
expected to have a Material Adverse Effect.
5.6. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Parent or the Borrower which could reasonably be expected to have a Material
Adverse Effect. Other than any liability incident to any litigation, arbitration
or proceeding which could not reasonably be expected to have a Material Adverse
Effect the Parent or Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section 5.4
or delivered pursuant to Section 6.1.
5.7. Compliance With Laws. The Parent and the Borrower have complied in all
material respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct, of their respective
businesses or the ownership of their respective Property. Neither the Parent nor
the Borrower has received any notice to the effect that its operations are not
in material compliance with any of the requirements of applicable federal, state
and local environmental, health and safety
11
12
statutes and regulations or the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which non-compliance
or remedial action could reasonably be expected to have a Material Adverse
Effect.
5.8. Regulations. Margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) constitutes less than 25% of the value
of those assets of the Parent and the Borrower that are subject to any
limitation on sale, pledge, or other restriction hereunder. Neither the Parent
nor the Borrower is (i) an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended or (ii) a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
ARTICLE VI -- COVENANTS
During the term of this Agreement, unless the Lender shall otherwise
consent in writing:
6.1. Financial Reporting. The Parent will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lender:
(a) Within 90 days after the close of each of its fiscal years, (i) an
unqualified audit report certified by Deloitte & Touche LLP or other independent
certified public accountants, acceptable to the Lender, prepared in accordance
with generally accepted accounting principles on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants) for itself and its Subsidiaries, provided, that delivery of the
Parent's Form 10-K shall satisfy such requirement and (ii) internally prepared
financial statements acceptable to the Lender, prepared in accordance with
generally accepted accounting principles on a consolidated and consolidating
basis for the Borrower and its Subsidiaries, including (for each) balance sheets
as of the end of such period, related profit and loss and reconciliation of
surplus statements, and a statement of cash flows, accompanied by (i) any
management letter prepared by said accountants, and (ii) with respect to the
Parent and its Subsidiaries only, a certificate of said accountants that, in the
course of their examination necessary for their certification of the foregoing,
they have obtained no knowledge of any Default or Unmatured Default, or if any
such knowledge of any Default or Unmatured Default was obtained, stating the
nature and status thereof.
(b) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, for itself the Borrower and the Subsidiaries,
consolidated unaudited balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, ail certified by its chief financial officer, provided,
that delivery of the Parent's Form 1O-Q shall satisfy this requirement for the
Parent.
(c) Together with the financial statements required hereunder, a compliance
certificate (in a
12
13
the form attached as Exhibit A) signed by the Borrower's chief financial officer
showing the calculations necessary to determine compliance with Section 6.3 and
6.4 of this Agreement and stating that no Default or Unmatured Default exists,
or if any Default or Unmatured Default exists, stating the nature and status
thereof.
(d) Promptly upon (i) the furnishing thereof to the shareholders of the
Parent or Borrower, copies of all financial statements, proxy statements, and
other similar materials so furnished and (ii) the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular reports
which the Parent, Borrower or any of its Subsidiaries files with the Securities
and Exchange Commission.
(e) Such other information (including non-financial information) as the
Lender may from time to time reasonably request.
6.2. Affirmative Covenants. The Parent and the Borrower each will:
(a) use the proceeds of the Loans for general corporate purposes, and/or to
repay outstanding Loans in accordance with the terms hereof. The Parent and
Borrower will not, nor will they permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) or to make
any other acquisition of such margin stock.
(b) give prompt notice in writing to the Lender of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which would reasonably be expected to have a Material Adverse Effect.
(c) carry on and conduct its business in materially the same manner and in
materially the same fields of enterprise as it is presently conducted and do all
things necessary to remain duly incorporated or organized, validly existing and
(to the extent such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in its
jurisdiction of incorporation or organization, as the case may be, and maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.
(d) timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside and
except as would not reasonably be expected to have a Material Adverse Effect.
(e) comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject except as would not
reasonably be expected to have a Material Adverse Effect.
(f) permit the Lender, by its respective representatives and agents, to
inspect any of the Property, books and financial records of the Parent, Borrower
and each Subsidiary, to examine and
13
14
make copies of the books of accounts and other financial records of the Parent
Borrower and each Subsidiary, and to discuss the affairs, finances and accounts
of the Parent, Borrower and each Subsidiary with, and to be advised as to the
same by, their respective officers during normal business hours with prior
notice and at such reasonable times and intervals as the Lender may designate.
(g) The Parent and Borrower will take all actions reasonably necessary to
assure that Year 2000 Issues will not have a Material Adverse Effect on the
business operations or financial condition of the Parent and Borrower. Upon the
Lender's request, the Parent and Borrower will meet with the Lender to discuss
their plans to address Year 2000 Issues. Parent and Borrower will advise the
Lender of any reasonably anticipated Material Adverse Effect on the business
operations or financial condition of the Parent and Borrower as a result of Year
2000 Issues. Any such information requested by the Lender may be delivered by
telephonic notice given in accordance with Section 2.11.
6.3. Negative Covenants. Each of Parent and the Borrower will not:
(a) merge or consolidate with or into any other Person, except that a
Subsidiary may merge with the Parent or Borrower or a wholly-owned Subsidiary.
(b) create, incur, or suffer to exist any Lien in, of or on the Property of
the Parent or Borrower, except: (i) Liens for taxes, assessments or governmental
charges or levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate reserves in
accordance with generally accepted principles of accounting shall have been set
aside on its books; (ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the ordinary course of
business that secure payment of obligations not more than 60 days past due;
(iii) Liens arising out of pledges or deposits under worker's compensation laws,
unemployment insurance, old age pensions, or other social security or retirement
benefits, or similar legislation; (iv) Utility easements, building restrictions
and such other encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character and which
do not in any material way affect the marketability of the same or interfere
with the use thereof in the business of the Parent or Borrower; (v) Liens
arising from the existence of capitalized leases not in excess of $15,000,000
and (vi) Liens not described in clauses (i) through (v) above which do not in
the aggregate secure Indebtedness in excess of $15,000,000.
6.4. Financial Covenants. The Parent will maintain, on a consolidated
basis for itself, the Borrower and its Subsidiaries (all calculated in
accordance with generally accepted accounting principles consistently applied),
as of the end of each of its fiscal quarters:
(a) Consolidated Tangible Net Worth of not less than $100,000,000.
(b) A ratio of current assets to current liabilities of at least 1.30 to
1.0.
(c) A ratio, determined for the then most-recently ended four fiscal
quarters, of (i)
14
15
Consolidated EBITDA plus rents to (ii) Consolidated Interest Expense, plus
current maturities of obligations for borrowed money and other debt, plus
Consolidated Maintenance Capital Expenditures, plus rents and dividends, of at
least 1.25 to 1.0.
ARTICLE VII - DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
the Parent, Borrower or any of its Subsidiaries to the Lender under or in
connection with this Agreement, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
materially false on the date as of which made.
7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any commitment fee or other monetary obligations
under any of the Loan Documents within five business days after the same becomes
due.
7.3. The breach by the Parent or Borrower of any of the terms or provisions
of Section 6.2, 6.3 or 6.4.
7.4. The breach by the Parent or Borrower (other than a breach which
constitutes a Default under another Section of this Article VII) of any of the
terms or provisions of this Agreement which is not remedied within twenty
business days after written notice from the Lender.
7.5. Failure of the Parent or the Borrower or any Guarantor to pay
Indebtedness in an amount in excess of $10,000,000 when due; or a default shall
occur under any agreement governing any Indebtedness of the Parent or the
Borrower or any Guarantor in an amount in excess of $10,000,000 or any other
event shall occur or condition shall exist, the effect of which default, event
or condition is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Indebtedness of the Parent or the Borrower or any Guarantor in
an amount in excess of $10,000,000 shall be declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; provided, however, that the cure
or waiver of any third party Indebtedness default described in this Section 7.5
shall result in automatic cure of the corresponding Default under this Section
7.5 without any action by the parties hereto; or the Parent or the Borrower or
any Guarantor shall not pay, or admit in writing its inability to pay, its debts
generally as they become due.
7.6. The Parent or the Borrower or any Guarantor shall (i) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it or
any substantial portion of its Property, (iv) institute any proceeding seeking
an order for relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment
15
16
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such proceeding filed
against it, (v) take any corporate or partnership action to authorize or effect
any of the foregoing actions set forth in this Section 7.6 or (vi) fail to
contest in good faith any appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Parent or the
Borrower, a receiver, trustee, examiner, liquidator or similar official shall be
appointed for the Parent or the Borrower or any substantial portion of its
Property, or a proceeding described in Section 7.6(iv) shall be instituted
against the Parent or the Borrower and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of 60
consecutive days.
7.8. Any reportable event (as defined in Section 4043 of ERISA) shall occur
in connection with any Plan which could reasonably be expected to result in
losses, costs or expenses to the Parent and to the Borrower in excess of
$10,000,000 in the aggregate.
7.9. The Parent or the Borrower shall fail within 30 days to pay, bond or
otherwise discharge any judgment or order for the payment of money in excess of
$10,000,000, which is not stayed on appeal or otherwise being appropriately
contested in good faith.
7.10. The acquisition by any Person, or two or more Persons acting in
concert, in each case other than a Family Party of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 20% or more of the outstanding shares of
voting stock of the Parent or Borrower.
7.11. Any guaranty of the Obligations (a "Guaranty") shall fail to remain
in full force or effect or any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Guaranty, or any guarantor under a
Guaranty (a "Guarantor") shall fail to comply with any of the terms or
provisions of any Guaranty to which it is a party, or any Guarantor denies that
it has any further liability under any Guaranty to which it is a party, or gives
notice to such effect.
ARTICLE VIII - ACCELERATION, WAIVERS,
AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to the Borrower, the obligation of the Lender to make Loans or
issue Letters of Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Lender. If any other Default occurs, the Lender may
terminate or suspend the obligations to make Loans hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Parent and Borrower hereby expressly
waives.
8.2.Amendments. Subject to the provisions of this Article VIII, the Lender
and the Parent and Borrower may enter into agreements supplemental hereto for
the purpose of amending
16
17
the Loan Documents in any manner or waiving any Default hereunder.
8.3. Preservation of Rights. No delay or omission of the Lender to exercise
any right under the Loan Documents shall impair such right or be construed to be
a waiver of any Default or an acquiescence therein, and the making of a Loan
notwithstanding the existence of a Default or the inability of the Parent or
Borrower to satisfy the conditions precedent to such Loan shall not constitute
any waiver or acquiescence. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lender, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Lender until the
Obligations have been paid in full.
ARTICLE IX - GUARANTEE
9.1 Guarantee. (a) The Guarantor hereby unconditionally and irrevocably
guarantees to the Lender and its respective successors, endorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrower
when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
(b) The Guarantor further agrees to pay any and all reasonable expenses
(including without limitation, all reasonable fees and disbursements of counsel)
which may be paid or incurred by the Lender in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, the Parent or Borrower under this Section. This Section shall remain in
full force and effect until the Obligations are paid in full and the Commitments
are terminated, notwithstanding that from time to time prior thereto the
Borrower may be free from any Obligations.
(c) No payment or payments made by the Borrower or any other Person or
received or collected by the Lender from the Borrower or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantor hereunder which shall, notwithstanding any such
payment or payments, remain liable hereunder for the Obligations until the
Obligations are paid in full and the Commitments are terminated.
(d) The Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to the Lender on account of its liability under this
Section, it will notify the Lender in writing that such payment is made under
this Section for such purpose.
9.2 No Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, or any set-off or application of funds of the Guarantor by
the Lender, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Lender against the
17
18
Borrower or against any collateral security or guarantee or right of offset held
by the Lender for the payment of the Obligations, nor shall the Guarantor seek
or be entitled to seek any contribution or reimbursement from the Borrower in
respect of payments made by the Guarantor hereunder, until all amounts owing to
the Lender by the Borrower on account of the Obligations are paid in full and
the Commitments are terminated. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by the Guarantor in trust
for the Lender, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Lender in the
exact form received by the Guarantor (duly endorsed by the Guarantor to the
Lender, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Lender may determine. The provisions of this
paragraph shall survive the termination of this Agreement and the payment in
full of the Obligations and the termination of the Commitments.
9.3 Amendments, etc. with respect to the Obligations; Waiver of Rights. The
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor, and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Lender may be rescinded by such Lender, and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Lender, and any Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, in accordance with
the provisions thereof as the Lender may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Lender shall not have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against the Guarantor, the Lender may, but shall be under
no obligation to, make a similar demand on the Borrower or any other guarantor,
and any failure by the Lender to make any such demand or to collect any payments
from the Borrower or any such other guarantor or any release of the Borrower or
such other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Lender against the Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
9.4 Guarantee Absolute and Unconditional. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Lender upon this Agreement or
acceptance of this Agreement; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Agreement; and all dealings
between the Borrower and the Guarantor, on the one hand, and the Lender, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this
18
19
Agreement. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower and the
Guarantor with respect to the Obligations. This Article IX shall be construed as
a continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of this Agreement, any other Loan
Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance by the Borrower) which may at any time be
available to or be asserted by the Borrower against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of the
Guarantor under this Section 9.4, in bankruptcy or in any other instance (other
than a defense of payment or performance by the Borrower). When pursuing its
rights and remedies hereunder against the Guarantor, the Lender may, but shall
be under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by the Lender to pursue such other rights or remedies or to collect
any payments from the Borrower or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower or any such other Person or of any such
collateral security, guarantee or night of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Lender against the Guarantor. This Article IX shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and its successors and assigns, and shall inure to the benefit of the
Lender, and its respective successors, endorsees, transferees and assigns, until
all the Obligations and the obligations of the Guarantor under this Agreement
shall have been satisfied by payment in full and the Commitments shall be
terminated, notwithstanding that from time to time during the term of this
Agreement the Borrower may be free from any Obligations.
9.5 Reinstatement, This Article IX shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
9.6 Payments. The Guarantor hereby agrees that all payments required to be
made by it hereunder will be made to the Lender without set-off or counterclaim
in accordance with the terms of the Obligations, including, without limitation,
in the currency in which payment is due.
ARTICLE X -- GENERAL PROVISIONS
10.1. Entire Agreement; Severability of Provisions. The Loan Documents
embody the entire agreement and understanding between the Borrower and the
Lender and supersede all prior
19
20
agreements and understandings between the Borrower and the Lender relating to
the subject matter thereof. Any provision in any Loan Document that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
10.2. Benefits of this Agreement. This Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided, however, that
the parties hereto expressly agree that First Chicago Capital Markets, Inc. (the
"Arranger") shall enjoy the benefits of the provisions of Section 10.3 to the
extent specifically set forth therein and shall have the right to enforce such
provisions on its own behalf and in its own name to the same extent as if it
were a party to this Agreement.
10.3. Expenses; Indemnification. The Borrower shall reimburse or cause to
be reimbursed the Lender for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the
Lender, which attorneys may be employees of the Lender) paid or incurred by the
Lender (a) in connection with the preparation, negotiation, execution and
delivery of the Loan Documents in an amount not to exceed $5,000, and (b) any
amendment or modification of the Loan Documents made at the Borrower's request.
The Borrower also agrees to reimburse the Lender for any costs, internal charges
and out-of-pocket expenses (including attorneys' fees and time charges of
attorneys for and the Lender, which attorneys may be employees of the Lender)
paid or incurred by the Lender in connection with the collection and enforcement
of the Loan Documents. The Borrower further agrees to indemnify the Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Lender is
a party thereto) which any of them may pay or incur with respect to any
investigation, litigation or proceeding (including any insolvency proceeding or
appellate proceeding) arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder except
to the extent that they are determined in a final nonappealable judgement by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of any such Person. The obligations of the Borrower under
this Section shall survive the termination of this Agreement.
10.4. Survival of Representations; Taxes. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery of
the Note and the making of the Loans herein contemplated. Any taxes (excluding
federal income taxes on the overall net income of the Lender) or other similar
assessments or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
10.5 Confidentiality. For the purposes of this Section 10.5, "Confidential
Information" means information delivered to the Lender by or on behalf of the
Parent, the Borrower or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this
20
21
Agreement that is proprietary in nature and that was clearly marked or labeled,
that was given under circumstances which would reasonably indicate that such
information is proprietary in nature, or was otherwise adequately identified
when received by the Lender as being confidential information of the Parent, the
Borrower or such Subsidiary; provided that such term does not include
information that (a) was publicly known or otherwise known to the Lender prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by the Lender or any Person acting on the Lender's behalf,
(c) otherwise becomes known to the Lender other than through disclosure by the
Parent, the Borrower or any Subsidiary, or (d) constitutes financial statements
delivered to the Lender in connection with this Agreement that are otherwise
publicly available, The Lender will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by it in good
faith to protect confidential information of third parties delivered to it
provided that the Lender may deliver or disclose Confidential Information to
(i) its directors, officers, employees, agents, attorneys and affiliates, in
each case, who need to know such information, (ii) its financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 10.5, and
in each case, who need to know such information (iii) any financial institution
to which the Lender sells or offers to sell a portion of the Commitment or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
10.5), (iv) any federal or state regulatory authority having jurisdiction over
the Lender, or (v) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to such Lender, (x) in response to any subpoena or other
legal process, (y) in connection with any litigation to which the Lender is a
party or (z) if a Default has occurred and is continuing, to the extent the
Lender may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under this Agreement. Notwithstanding any other provision of this Agreement to
the contrary, no Confidential Information shall be provided to any Person which
engages, directly or indirectly, in a multi-level marketing, direct marketing or
retail distributorship business.
10.6 Force Majeure. None of the Parent, the Borrower or any Subsidiary
shall be responsible for delays in performance resulting from acts beyond its
control, and no action shall be taken by the Lender in connection with any
Default or Unmatured Default which resulted from acts beyond its control. Such
acts shall include but not be limited to acts of God, riots, acts of war or
terrorism, epidemics, nationalization, exportation, currency restrictions,
governmental regulations superimposed after the fact, fire, communication line
failures, power failures, earthquakes or other disasters.
ARTICLE XI -- SETOFF
In addition to, and without limitation of, any rights of the Lender under
applicable law, if the Borrower becomes insolvent, however evidenced, or any
Default occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any other
Indebtedness at any time held or owing by the Lender or any affiliate of the
Lender to or for the credit or account of the Borrower may be offset and applied
toward the
21
22
payment of the Obligations owing to the Lender, whether or not the Obligations,
or any part hereof, shall then be due.
ARTICLE XII - ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lender and their respective successors and assigns, except that (i) the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by the Lender must be made in compliance with
Section 12.3. Notwithstanding clause (ii) of this Section, the Lender may at any
time, without the consent of the Borrower, assign all or any portion of its
rights under this Agreement and any Note to a Federal Reserve Bank; provided,
however, that no such assignment to a Federal Reserve Bank shall release the
transferor Lender from its obligations hereunder. Any assignee or transferee of
the rights to any Loan or any Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder, transferee or assignee of the rights to such Loan.
12.2. Participations. The Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("Participants") participating interests
in $5,000,000 or more of any Loan owing to it, any Note held by it, the
Commitment or any other interest of the Lender under the Loan Documents. In the
event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under the Loan Documents shall remain
unchanged, the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, the Lender shall remain the
owner of its Loans and the holder of any Note issued to it in evidence thereof
for all purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if the Lender had not sold such
participating interests, and the Borrower and the Lender shall continue to deal
solely and directly with each other in connection with the Lender's rights and
obligations under the Loan Documents. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Article XI in respect of
its participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that the Lender shall retain the
right of setoff provided in Article XI with respect to the amount of
participating interests sold to each Participant. The Lender agrees to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Article XI, agrees to share with the Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Article XI as if each Participant were a Lender.
12.3. Assignments. The Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time assign to one or more banks
or financial institutions ("Purchasers") all or any part of its rights and
obligations under the Loan Documents, provided that any such assignment shall be
for a minimum amount of $5,000,000 of Commitments. In the event of any such
assignment, and to the extent Lender holds a majority of the outstanding
Commitments,
22
23
the Lender shall remain as the issuing bank for Letters of Credit and shall
serve as agent for the Lenders. The Borrower hereby agrees to execute any
amendment and/or any other document that may be necessary to effectuate such an
assignment. Such assignment shall be evidenced by the Lender's standard form (to
be supplied upon request). The consent of the Borrower shall be required prior
to an assignment becoming effective with respect to a Purchaser that is not a
Lender or an affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be required.
Such consent shall not be unreasonably withheld. Upon delivering to the Borrower
a notice of assignment, together with any required consent, such assignment
shall become effective on the effective date specified in such notice of
assignment. On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Lender party to the other Loan Documents and shall
have all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no further consent or
action by the Borrower shall be required to release the Lender with respect to
the percentage of the Commitment and Loans assigned to such Purchaser. Upon the
consummation of any such assignment to a Purchaser, the transferor Lender, the
Lender and the Borrower shall, if the Lender or the Purchaser desires, make
appropriate arrangements so that new Notes or, as appropriate, replacement
Notes, are issued to the Lender and Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
12.4. Dissemination of Information; Tax Treatment. The Borrower authorizes
the Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in the
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries. If any interest in any Loan Document is transferred to any
Transferee which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to deliver to
the Lender such completed forms with respect to withholding taxes as the
Borrower may reasonably require.
ARTICLE XIII - NOTICES
All notices, requests and other communications to any party hereunder shall
be in writing (including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party: (x) in the case of the Borrower or
the Lender, at its address, facsimile number or telex number set forth on the
signature pages hereof, or (y) in the case of any party, such other address,
facsimile number or telex number as such party may hereafter specify for the
purpose by notice to the other. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback is
received, (ii) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is
received (or if such delivery date is not a business day, then on the next
business day), (iii) if given by mail, three business days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section (or if such delivery date is not a
business day, then on the next business day); provided that notices to the
Lender under Article II shall not be effective until received.
23
24
ARTICLE XIV -- COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower and the Lender.
ARTICLE XV -- GOVERNING LAW; JURISDICTION; JURY TRIAL WAIVER
15.1. CHOICE OF LAW; CONSENT TO JURISDICTION. THE LOAN DOCUMENTS (OTHER
THAN THOSE CONTAINING A CONTRARY EXPRESS CH01CE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE LENDER OR ANY AFFILIATE THEREOF
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN
CHICAGO, ILLINOIS.
15.2. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
IN WITNESS WHEREOF, the Borrower, the Guarantor and the Lender have
executed this Agreement as of the date first above written.
[Signatures on Following Page]
24
00
XXXXXXXXX XXXXXXXXXXXXX
XX XXXXXXX, INC.
By: /s/ XXXXXXXXXXX PAIR By: /s/ XXXXXXX XXXXXXX
---------------------------- ----------------------------
Name: XXXXXXXXXXX PAIR Print Name: XXXXXXX XXXXXXX
-------------------------- --------------------
Title: EXECUTIVE VICE PRESIDENT, Title: EXECUTIVE VICE PRESIDENT &
CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER
SECRETARY (address)
0000 XXXXXXX XXXX XXXX XXXX
XXX XXXXXXX, XX 00000
PHONE: (000) 000-0000
-------------------------
FAX: (000) 000-0000
-------------------------
ATTENTION: XXX XXXXXXX
--------------------
HERBALIFE INTERNATIONAL, INC.
By: /s/ XXXXXXXXXXX PAIR By: /s/ XXXXXXX XXXXXXX
---------------------------- ----------------------------
Name: XXXXXXXXXXX PAIR Print Name: XXXXXXX XXXXXXX
-------------------------- --------------------
Title: EXECUTIVE VICE PRESIDENT Title: EXECUTIVE VICE PRESIDENT &
CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER
SECRETARY (address)
0000 XXXXXXX XXXX XXXX XXXX
XXX XXXXXXX, XX 00000
PHONE: (000) 000-0000
-------------------------
FAX: (000) 000-0000
-------------------------
ATTENTION: XXX XXXXXXX
--------------------
Commitment THE FIRST NATIONAL BANK OF CHICAGO
$25,000,000 By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Phone: ( )
-----------------
Phone: ( ) -
-------- -------
Attention:
-----------------
25
