-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U++koMOWE14sm64SjhhtFPcYdMbixnvqYL+Te48tDOh6qW2gplAiriPUP+9G2XF7 ZCJU5xQXoGn0zMHspn0Brg== 0001042910-00-000062.txt : 20000202 0001042910-00-000062.hdr.sgml : 20000202 ACCESSION NUMBER: 0001042910-00-000062 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000107 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REXALL SUNDOWN INC CENTRAL INDEX KEY: 0000901620 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 591688986 STATE OF INCORPORATION: FL FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-21884 FILM NUMBER: 507389 BUSINESS ADDRESS: STREET 1: 6111 BROKEN SOUND PARKWAY N W CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5612419400 MAIL ADDRESS: STREET 1: 6111 BROKEN SOUND PARKWAY NW CITY: BOCA RATON STATE: FL ZIP: 33487 8-K 1 CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) January 7, 2000 --------------- Commission File Number 0-21884 ------- REXALL SUNDOWN, INC. -------------------- (Exact Name of Registrant as Specified in its Charter) FLORIDA 59-1688986 ------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 6111 Broken Sound Parkway, NW, Boca Raton, Florida 33487 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (561) 241-9400 N/A --- (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition of Assets --------------------- On January 7, 2000, Rexall Sundown, Inc. (the "Registrant"), a Florida corporation, consummated its acquisition (the "Transaction") of MET-Rx Nutrition, Inc. ("MET-Rx"), a Delaware corporation, in accordance with the Merger Purchase Agreement dated December 14, 1999 (the "Merger Purchase Agreement") by and between Rexall, RSM Acquisition Corp., MET-Rx and all of the stockholders of MET-Rx. The Merger Purchase Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and is expressly incorporated by reference herein. In connection with the Merger Purchase Agreement, MET-Rx entered into an Employment Agreement (the "Employment Agreement") with A. Scott Connelly, MD to serve as Chief Technical Officer of MET-Rx. The Employment Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and is expressly incorporated by reference herein. MET-Rx is based in Irvine, California and markets and sells national branded sports nutrition supplements including MET-Rx(R) powdered protein drink mixes, MET-Rx Protein Plus(TM), Source One(TM) and MET-Rx Natural Krunch food bars and other sports nutrition supplements The aggregate purchase price for the Transaction was $108 million (including the assumption of indebtedness), subject to certain adjustments. The amount of consideration was determined through arm's length negotiations between the parties. The Registrant funded the Transaction, in part, through its line of credit pursuant to that certain Credit Agreement dated January 7, 2000 (the "Credit Agreement") by and among Registrant as Borrower, Bank Of America, N.A., as Administrative Agent and as Lender and the Lenders Party Thereto From Time To Time. The Credit Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is expressly incorporated by reference herein. The Transaction was accounted for as a purchase. The press release dated January 7, 2000 announcing the consummation of the Transaction is filed as Exhibit 99.1 to this Current Report on Form 8-K and is expressly incorporated by reference herein. Item 7. Financial Statements, Pro-Forma Financial Information and Exhibits ------------------------------------------------------------------ (a) Financial Statements of Business Acquired. It is currently impracticable to provide the financial information required pursuant to Item 7(a) prior to the due date of this Report. This Report will be amended within 60 days of the date that this Report was required to be filed to include such financial information. (b) Pro Forma Financial Information. It is currently impracticable to provide the pro forma financial information required pursuant to Item 7(b) prior to the due date of this Report. This Report will be amended within 60 days of the date that this Report was required to be filed to include such pro forma financial information. (c) Exhibits 2.1 Merger Purchase Agreement dated December 14, 1999 by and between Rexall Sundown, Inc., RSM Acquisition Corp., MET-Rx Nutrition, Inc. and all of the stockholders of MET-Rx Nutrition, Inc. 10.1 Credit Agreement dated January 7, 2000 by and among Rexall Sundown, Inc. as Borrower, Bank Of America, N.A., as Administrative Agent and as Lender and The Lenders Party Thereto From Time To Time 10.2 Employment Agreement dated January 7, 2000 by and between MET-Rx Nutrition, Inc. and A. Scott Connelly, M.D. 99.1 Press Release dated January 10, 2000. 2 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. REXALL SUNDOWN, INC. Date: January 13, 2000 /s/ Damon DeSantis --------------------------------------------- Name: Damon DeSantis Title: President and Chief Executive Officer 3 EX-2.1 2 MERGER PURCHASE AGREEMENT MERGER PURCHASE AGREEMENT Agreement entered into as of December 14, 1999, by and among Rexall Sundown, Inc., a Florida corporation (the "Buyer"), RSM Acquisition Corp., a Delaware corporation and a wholly-owned Subsidiary of the Buyer (the "Transitory Subsidiary"), the persons set forth on the Schedule of Sellers attached hereto (collectively the "Sellers") and MET-Rx Nutrition, Inc., a Delaware corporation (the "Company"). The Buyer, the Transitory Subsidiary, the Sellers and the Company are referred to collectively herein as the "Parties". This Agreement contemplates a transaction in which the Buyer will acquire all of the outstanding capital stock of the Company for cash through a reverse subsidiary merger of the Transitory Subsidiary with and into the Company. Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 1. Definitions. "Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorney's fees and expenses. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. "Allocable Portion" means, with respect to the share of any Seller, in a particular amount that percentage set forth opposite the Seller's name on the Schedule of the Allocable Portions. "Business" has the meaning set forth in Section 6(b) below. "Buyer" has the meaning set forth in the preface above. "Certificate of Merger" has the meaning set forth in Section 2(d) below. "Closing" has the meaning set forth in Section 2(c) below. "Closing Date" has the meaning set forth in Section 2(c) below. "COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B. "Code" means the Internal Revenue Code of 1986, as amended. "Common Share" means any share of the Common Stock, par value $.01 per share, of the Company. "Company" has the meaning set forth in the preface above. "Confidential Information" has the meaning ascribed to such term in that certain confidentiality agreement between Buyer and the Company, dated as of May 25, 1999. 1 "Contracts" has the meaning set forth in Section 4(p) below. "CPSC" has the meaning set forth in Section 4(z) below. "Disclosure Schedule" has the meaning set forth in Section 4 below. "Effective Time" has the meaning set forth in Section 2(e) below. "Employee Benefit Plan" means any (a) nonqualified deferred compensation or retirement plan or arrangement, (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan, or (d) Employee Welfare Benefit Plan. "Employee Pension Benefit Plan" has the meaning set forth in ERISA Section 3(2). "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section 3(1). "Environmental Requirements" shall mean all federal, state and local statutes, regulations, ordinances concerning pollution or protection of the environment, including without limitation all those relating to the generation, handling, transportation, treatment, storage, disposal or cleanup of hazardous materials or wastes, as such requirements are enacted and in effect on or prior to the Closing Date. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FDA" has the meaning set forth in Section 4(z) below. "Financial Statement" has the meaning set forth in Section 4(g) below. "Foundation" has the meaning set forth in Section 8(c)(ii) below. "Foundation Litigation" has the meaning set forth in Section 8(c)(i) below. "FTC" has the meaning set forth in Section 4(z) below. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indebtedness" means interest bearing indebtedness for borrowed money evidenced by a note, bond, debenture or other debt security. "Indemnified Party" has the meaning set forth in Section 8(f) below. "Indemnifying Party" has the meaning set forth in Section 8(f) below. "Intellectual Property" means patents, invention disclosures, registered trademarks, trade names, registered copyrights and registered service marks, and any applications for registration of the foregoing, and any goodwill associated therewith, domain names and computer software (except for licenses of commercially available software). "Knowledge" means, with respect to any statement in this Agreement that is qualified as to the Knowledge of Sellers, the actual knowledge of the Sellers 2 after reasonable investigation with regard to the particular matters set forth in such statement or the actual knowledge of the employees of the Company primarily responsible for the particular matters referred to in such statement. "Material Adverse Effect" means a material adverse effect on the business, financial condition, operations, assets or results of operations of the Company and its Subsidiaries taken as a whole. "Merger" has the meaning set forth in Section 2(a) below. "Merger Consideration" has the meaning set forth in Section 2(e) below. "Most Recent Balance Sheet" means the balance sheet contained within the Most Recent Financial Statements and attached to the Disclosure Schedule. "Most Recent Financial Statements" has the meaning set forth in Section 4(g) below. "Most Recent Fiscal Year End" has the meaning set forth in Section 4(g) below. "Ordinary Course of Business" means the ordinary course of business consistent with the Company's past custom and practice. "Party" has the meaning set forth in the preface above. "Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). "Preferred Share" means any share of the Preferred Stock, par value $.01 per share, of the Company. "Purchase Price" has the meaning set forth in Section 2(b) below. "Recovered Monies" has the meaning set forth in Section 8(c)(i) below. "Securities Act" means the Securities Act of 1933, as amended. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended. "Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic's, materialmen's, and similar liens, (b) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, and (c) purchase money liens set forth on the Disclosure Schedule and liens securing rental payments under the capital lease arrangements set forth on the Disclosure Schedule. "Seller" has the meaning set forth in the preface above. "Share" is used to collectively refer to Common Shares and Preferred Shares. "S Tax Claim" has the meaning set forth in Section 8(a) below. "Subsidiary" means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors. "Surviving Corporation" has the meaning set forth in Section 2(a) below. 3 "Tax" means any federal, state, local, or foreign tax with respect to the income, business, operations, or properties of the Company and its Subsidiaries, including any interest, penalty, or addition thereto, whether disputed or not. "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Territory" has the meaning set forth in Section 6(b) below. "Third Party Claim" has the meaning set forth in Section 8(f) below. "Transitory Subsidiary" has the meaning set forth in the preface above. "USDA" has the meaning set forth in Section 4(z) below. 2. Basic Transaction. (a) The Merger. On and subject to the terms and conditions of this Agreement, the Transitory Subsidiary will merge with and into the Company (the "Merger") at the Effective Time. The Company shall be the corporation surviving the Merger (the "Surviving Corporation"). (b) Purchase Price. (i) In consideration of the Merger, the Buyer agrees to pay the aggregate Purchase Price in accordance with the provisions of Section 2(f) below. (ii) The term "Purchase Price" shall mean $77,500,000. (c) The Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis at 777 South Figueroa Street, Los Angeles, California 90017, commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as the Buyer and the Sellers may mutually determine (the "Closing Date"). (d) Actions at the Closing. At the Closing, (i) the Company will deliver to the Buyer and the Transitory Subsidiary the various certificates, instruments, and documents referred to in Section 7(a) below, (ii) the Buyer and the Transitory Subsidiary will deliver to the Company the various certificates, instruments, and documents referred to in Section 7(b) below, (iii) the Company and the Transitory Subsidiary will file with the Secretary of State of the State of Delaware a Certificate of Merger (the "Certificate of Merger"), and (iv) the Buyer will cause the Surviving Corporation to deliver the Purchase Price in the manner provided below in Section 2(f). (e) Effect of Merger. (i) General. The Merger shall become effective at the time (the "Effective Time") the Company and the Transitory Subsidiary file the Certificate of Merger with the Secretary of State of the State of Delaware. The Merger shall have the effect set forth in the Delaware General Corporation Law. The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and 4 delivering any document) in the name and on behalf of either the Company or the Transitory Subsidiary in order to carry out and effect the transactions contemplated by this Agreement. (ii) Certificate of Incorporation. The Certificate of Incorporation of the Surviving Corporation shall be amended and restated at and as of the Effective Time to read as did the Certificate of Incorporation of the Transitory Subsidiary immediately prior to the Effective Time (except that the name of the Surviving Corporation will remain unchanged). (iii) Bylaws. The Bylaws of the Surviving Corporation shall be amended and restated at and as of the Effective Time to read as did the Bylaws of the Transitory Subsidiary immediately prior to the Effective Time (except that the name of the Surviving Corporation will remain unchanged.) (iv) Directors and Officers. The directors and officers of the Company shall be the initial directors and officers of the Surviving Corporation at and as of the Effective Time (retaining their respective positions and terms of office). Nothing contained in the preceding sentence shall prohibit or limit the right of the Buyer to replace any of such directors and officers upon consummation of the transactions contemplated hereby. (v) Conversion of Shares. At and as of the Effective Time, (A) each Common Share shall be converted into the right to receive an amount equal to a portion of the Purchase Price set forth on the Schedule of the Purchase Price Allocation attached hereto, (B) each Preferred Share designated as "Senior Preferred" shall be converted into the right to receive an amount equal to a portion of the Purchase Price set forth on the Schedule of the Purchase Price Allocation attached hereto, and (C) each Preferred Share designated as "Junior Preferred" shall be converted into the right to receive an amount equal to a portion of the Purchase Price set forth on the Schedule of the Purchase Price Allocation attached hereto (such amounts referred to in clauses (A), (B) and (C) above are referred to herein as the "Merger Consideration"). No Share shall be deemed to be outstanding or to have any rights other than those set forth above in this Section 2(e)(v) after the Effective Time. (vi) Conversion of Capital Stock of the Transitory Subsidiary. At and as of the Effective Time, each share of Common Stock, $.01 par value per share, of the Transitory Subsidiary shall be converted into one share of Common Stock, $.01 par value per share, of the Surviving Corporation. (f) Procedure for Payment. As of the Effective Time, the Buyer will make full payment of the Merger Consideration to the holders of all of the outstanding Shares in accordance with the Schedule of the Purchase Price Allocation against the surrender of the Shares of such holders. (g) Closing of Transfer Records. After the close of business on the Closing Date, transfers of Shares outstanding prior to the Effective Time shall not be made on the stock transfer books of the Surviving Corporation. 3. Representations and Warranties Concerning the Buyer and the Transitory Subsidiary. Each of the Buyer and the Transitory Subsidiary represents and warrants to the Company and the Sellers that the statements contained in this Section 3 are correct and complete as of the date of this Agreement. (a) Organization . Each of the Buyer and the Transitory Subsidiary is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. (b) Authorization of Transaction. Each of the Buyer and the Transitory Subsidiary has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations 5 hereunder. This Agreement constitutes the valid and legally binding obligation of each of the Buyer and the Transitory Subsidiary, enforceable against the Buyer and the Transitory Subsidiary in accordance with its terms and conditions. Neither the Buyer nor the Transitory Subsidiary need give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement, other than those required under Hart-Scott-Rodino Act. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either the Buyer or the Transitory Subsidiary is subject or any provision of their charter or bylaws. (d) Brokers' Fees. Neither the Buyer nor the Transitory Subsidiary has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which any of the Company and its Subsidiaries or any Seller could become liable or obligated. (e) Financing. At the Closing, the Buyer shall have sufficient cash, available lines of credit or other sources of immediately available funds to enable it to pay at the Closing to the holders of all outstanding Shares at the Closing the Purchase Price and pay any other amounts to be paid by it hereunder. 4. Representations and Warranties Concerning the Company and Its Subsidiaries. Each of the Sellers, jointly but not severally, represents and warrants to the Buyer and the Transitory Subsidiary that the statements contained in this Section 4 are correct and complete as of the date of this Agreement to his or its Knowledge (except that such statements in Section 4(a), Section 4(b), and Section 4(d) are not qualified by such Knowledge), except as set forth in the disclosure schedule attached hereto (the "Disclosure Schedule"). (a) Organization, Qualification, and Corporate Power. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Each of the Company and its Subsidiaries is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect. Each of the Company and its Subsidiaries has full corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. (b) Capitalization. The entire authorized capital stock of the Company consists of (i) 20,000,000 Common Shares, of which (A) 10,000,000 shares have been designated "Series A," of which 900,000 shares are issued and outstanding as of the date of this Agreement, and (B) 10,000,000 shares have been designated "Series B," of which 75,000 shares are issued and outstanding as of the date of this Agreement, and (ii) 100,000 Preferred Shares, of which (A) 50,000 shares have been designated "Senior Preferred," of which 21,400.9433 shares are issued and outstanding as of the date of this Agreement, and (B) 50,000 shares have been designated "Junior Preferred," of which 1,000 shares are issued and outstanding as of the date of this Agreement. All of the issued and outstanding Shares have been duly authorized, are validly issued, fully paid, and nonassessable, are held of record by the respective stockholders as set forth in Section 4(b) of the Disclosure Schedule, and are free and clear of any and all Security Interests or other restrictions or limitations whatsoever. None of the issued and outstanding Shares were issued in violation of (i) any preemptive or other rights of any person to acquire securities of the Company, or (ii) any applicable federal or state securities laws, and the rules and regulations promulgated thereunder. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will 6 (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which any of the Company and its Subsidiaries is subject, (ii) violate any provision of the charter or bylaws of any of the Company and its Subsidiaries or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which any of the Company and its Subsidiaries is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets), except, in the case of each of clauses (i) and (iii) above, where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Security Interest would not have a Material Adverse Effect or materially affect the ability of the Parties to consummate the transactions contemplated by this Agreement. None of the Company and its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement, other than those required under Hart-Scott-Rodino Act and except where the failure to give notice, to file, or to obtain any authorization, consent, or approval would not have a Material Adverse Effect or materially affect the ability of the Parties to consummate the transactions contemplated by this Agreement. (d) Brokers' Fees. None of the Company and its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement, other than such liability or obligation to Lazard Freres & Co. LLC and Donaldson, Lufkin & Jenrette or their Affiliates. (e) Title to Tangible Assets. The Company and its Subsidiaries have good title to, or a valid leasehold interest in, the tangible assets they use regularly in the conduct of their businesses, free and clear of all Security Interests. (f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth for each Subsidiary of the Company (i) its name and jurisdiction of incorporation, together with each jurisdiction in which it is required to be qualified to do business, except where the lack of such qualification would not have a Material Adverse Effect, (ii) the number of shares of authorized capital stock of each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder, and (iv) the number of shares of its capital stock held in treasury. All of the issued and outstanding shares of capital stock of each Subsidiary of the Company have been duly authorized and are validly issued, free of preemptive rights, fully paid, and nonassessable. One of the Company or its Subsidiaries holds of record and owns beneficially all of the outstanding shares of each Subsidiary of the Company, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require any Subsidiary to issue, sell, or otherwise cause to become outstanding any of its capital stock. (g) Financial Statements. Attached to Section 4(g) of the Disclosure Schedule are the following financial statements (collectively the "Financial Statements"): (i) audited consolidated balance sheet and statement of income, changes in stockholders' equity, and cash flow as of and for the fiscal year ended December 31, 1998 (the "Most Recent Fiscal Year End") for the Company and its Subsidiaries; and (ii) unaudited consolidated balance sheet and statement of income, changes in stockholders' equity, and cash flow (the "Most Recent Financial Statements") as of and for the ten months ended October 31, 1999 for the Company and its Subsidiaries. The Financial Statements (including the notes thereto) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly the financial condition of the Company and its Subsidiaries as of such dates and the results of operations of the Company and its Subsidiaries for such periods; provided, however, that the Most Recent Financial Statements lack footnotes and other 7 presentation items and are subject to normal year-end adjustments in accordance with the Ordinary Course of Business consistent with past practice, none of which will, either individually or in the aggregate, have a Material Adverse Effect. (h) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal Year End, there has not been any Material Adverse Effect, and neither the Company nor any of its Subsidiaries has since that date: (i) sold, leased, transferred, or assigned any asset outside of the Ordinary Course of Business; (ii) made any expenditure outside the Ordinary Course of Business; (iii) made any capital investment in, or any material loan to, any other Person outside the Ordinary Course of Business; (iv) amended or authorized the amendment of its charter or bylaws; (v) issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock; (vi) declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; (vii) made any loan or advance to any Person outside the Ordinary Course of Business; (viii) entered into any transaction with, any of its directors, officers, employees or stockholders outside the Ordinary Course of Business; (ix) entered into any employment contract or collective bargaining agreement or modified the terms of any existing such contract or agreement; (x) granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business; (xi) adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan); (xii) made any other change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business; or (xiii) committed to any of the foregoing. (i) Undisclosed Liabilities. None of the Company and its Subsidiaries has any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes) of the type which should be reflected in balance sheets prepared in accordance with GAAP, except for (i) liabilities set forth on the balance sheet for the Most Recent Fiscal Year End and in any notes thereto and (ii) liabilities which have arisen after the Most Recent Fiscal Year End in the Ordinary Course of Business or in connection with the transactions contemplated hereby. 8 (j) Legal Compliance. (i) Each of the Company and its Subsidiaries has complied in all material respects with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and (ii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply. (k) Tax Matters. (i) Each of the Company and its Subsidiaries has filed all Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing. (ii) There is no material dispute or claim pending or threatened concerning any Tax liability of any of the Company and its Subsidiaries. (iii) Section 4(k) of the Disclosure Schedule lists all income Tax Returns filed with respect to any of the Company and its Subsidiaries for taxable periods ended on or after December 31, 1996, indicates those income Tax Returns that have been audited, and indicates those income Tax Returns that currently are the subject of audit. The Company has delivered to the Buyer correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by any of the Company and its Subsidiaries since December 31, 1996. (iv) None of the Company and its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (l) Real Property. (i) The Company and its Subsidiaries own no real property other than tenant improvements. (ii) Section 4(l)(ii) of the Disclosure Schedule lists and describes briefly all real property leased or subleased to any of the Company and its Subsidiaries. The Company has delivered to the Buyer correct and complete copies of the leases and subleases listed in Section 4(l)(ii) of the Disclosure Schedule. Each lease and sublease listed in Section 4(l)(ii) of the Disclosure Schedule is legal, valid, binding, enforceable, and in full force and effect. (m) Intellectual Property. (i) Section 4(m)(i) of the Disclosure Schedule identifies each material foreign and domestic patent or registration which has been issued to any of the Company and its Subsidiaries with respect to any of its Intellectual Property, identifies each pending material foreign and domestic patent application or application for registration which any of the Company and its Subsidiaries has made with respect to any of its Intellectual Property, and identifies each material license, agreement, or other permission which any of the Company and its Subsidiaries has granted to any third party with respect to any of its Intellectual Property. To the extent that any item identified in Section 4(m)(i) of the Disclosure Schedule has been registered with, filed in or issued by, any governmental authority, such registrations, filings or issuances were duly made and remain in full force and effect. Section 4(m)(i) of the Disclosure Schedule also identifies each material trade name, material unregistered trademark or service mark or material copyright used by any of the Company and its Subsidiaries in connection with any of their businesses. The Intellectual Property 9 identified on Section 4(m)(i) of the Disclosure Schedule has not been licensed, sub-licensed or assigned by the Company and its Subsidiaries to any third party other than the Buyer pursuant to this Agreement. The Company and its Subsidiaries possess all right, title, and interest in and to or have the right to use each item of Intellectual Property identified in Section 4(m)(i) of the Disclosure Schedule and shall as of the Closing Date possess all right, title and interest in such Intellectual Property, free and clear of any Security Interest, license, or other restriction, except where the failure to possess such right, title and interest as such would not have a Material Adverse Effect. In addition, there have been no claims received by the Company and its Subsidiaries asserting the invalidity, misuse or unenforceability of the Intellectual Property identified on Section 4(m)(i) of the Disclosure Schedule and no grounds for any such claims exist. (ii) Section 4(m)(ii) of the Disclosure Schedule identifies each license, sublicense, agreement, or permission pursuant to which the Company or any of its Subsidiaries uses the Intellectual Property of any third party. Each license, sublicense, agreement, or permission identified in Section 4(m)(ii) of the Disclosure Schedule is legal, valid, binding, enforceable, and in full force and effect, except where the illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness would not have a Material Adverse Effect. (iii) Neither the operation of the Company's and each Subsidiary's business nor the Intellectual Property identified in Section 4(m)(i) and Section 4(m)(ii) of the Disclosure Schedule and which is material to the operations of the Company and its Subsidiaries has interfered with, infringed upon, misappropriated, or violated any Intellectual Property rights of third parties, and none of the Sellers or directors or officers of the Company or its Subsidiaries has ever received any claim, charge or complaint alleging any such interference, infringements, misappropriation, or violation (including any claim that any of the Company and its Subsidiaries must license or refrain from using any Intellectual Property rights of any third party), except for such infringements, misappropriations, or violations that would not have a Material Adverse Effect. No third party has interfered with, infringed upon, misappropriated, or violated any Intellectual Property rights identified in Section 4(m)(i) and Section 4(m)(ii) of the Disclosure Schedule, except for such infringements, misappropriations, or violations that would not have a Material Adverse Effect. (iv) The Intellectual Property identified in Section 4(m)(i) and Section 4(m)(ii) of the Disclosure Schedule is sufficient and includes all the Intellectual Property necessary for the Company and its Subsidiaries to conduct their businesses as presently being conducted. (v) There has not been any failure to act by the Company and its Subsidiaries during the prosecution or registration of, or any proceeding relating to, any of the Intellectual Property identified in Section 4(m)(i) or Section 4(m)(ii) of the Disclosure Schedule that could render invalid or unenforceable, or negate the right to the issuance of any such Intellectual Property. (vi) To the extent that any of the Intellectual Property identified in Section 4(m)(i) or Section 4(m)(ii) of the Disclosure Schedule constitutes proprietary or confidential information, the Company and its Subsidiaries have adequately safeguarded such information from disclosure. (vii) Under the specific written terms of any Intellectual Property or agreements with respect to Intellectual Property identified in Section 4(m)(i) and Section 4(m)(ii) of the Disclosure Schedule, no consent is necessary to consummate the reverse triangular merger contemplated by this Agreement or assign such agreements. (n) Tangible Assets. The buildings, machinery, equipment, and other tangible assets that the Company and its Subsidiaries own and lease include all tangible assets necessary for the Company and its Subsidiaries to conduct their businesses as presently conducted, are suitable for the purposes for which they are presently used, are free from material defects (patent and latent), have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear), and are free and clear of all Security Interests. 10 (o) Inventory. The inventory of the Company and its Subsidiaries consists of raw materials and supplies, manufactured and processed parts, work in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured or manufactured, subject to a reserve for inventory in accordance with GAAP and the past custom and practice of the Company and its Subsidiaries, and is free and clear of all Security Interests. (p) Contracts. Section 4(p) of the Disclosure Schedule lists all written contracts and other written agreements to which any of the Company and its Subsidiaries is a party the performance of which involves consideration in excess of $100,000 in any twelve-month period and are not cancellable by the Company or any of its Subsidiaries, as the case may be, on less than ninety days notice without penalty to the Company or its Subsidiaries (the "Contracts"). The Company has delivered to the Buyer a correct and complete copy of each such Contract listed in Section 4(p) of the Disclosure Schedule. With respect to each such Contract: (A) the Contract is legal, valid, binding, enforceable, and in full force and effect in all material respects; (B) neither the Company nor any of its Subsidiaries is in material breach or default thereof; (C) no event has occurred which with notice or lapse of time would constitute a material breach or default, or permit termination, modification or acceleration, under the Contract; and (D) no consent is necessary by the terms of the Contract to consummate the reverse triangular merger contemplated by this Agreement in order to provide the Buyer with the benefit of such Contract. (q) Notes and Accounts Receivable. All notes and accounts receivable of the Company and its Subsidiaries are reflected properly on their books and records in accordance with GAAP, are valid receivables, are current and collectible in accordance with their terms, subject to a reserve for bad debts in accordance with the past custom and practice of the Company and its Subsidiaries. (r) Insurance. Section 4(r) of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) with respect to which any of the Company and its Subsidiaries is a party, a named insured, or otherwise the beneficiary of coverage: (i) the name, address, and telephone number of the agent; (ii) the name of the insurer, the name of the policyholder, and the name of each covered insured; (iii) the policy number and the period of coverage; and (iv) the scope and amount of coverage. All such policies are in full force and effect with all premiums due thereupon paid. (s) Litigation. Section 4(s) of the Disclosure Schedule sets forth each instance in which any of the Company and its Subsidiaries (i) is subject to any outstanding, threatened injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any pending, threatened action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction. (t) Employees. None of the Company and its Subsidiaries is a party to or bound by any collective bargaining agreement, nor has any of them experienced any strike or material grievance, material claim of unfair labor practices, or other collective bargaining dispute within the past three years. There is no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of any of the Company and its Subsidiaries. 11 (u) Employee Benefits. (i) Section 4(u) of the Disclosure Schedule lists each Employee Benefit Plan that any of the Company and its Subsidiaries maintains or to which any of the Company and its Subsidiaries contributes. (ii) Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all respects with the applicable requirements of ERISA, the Code, and other applicable laws, except where the failure to comply would not have a Material Adverse Effect. (iii) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each such Employee Benefit Plan which is an Employee Pension Benefit Plan. (iv) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Code Section 401(a) or will file within the remedial amendment period for such favorable determination letter. (v) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan has no funding deficiencies. (vi) The Company has delivered to the Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent Form 5500 Annual Report, and all related trust agreements, insurance contracts, and other funding agreements which implement each such Employee Benefit Plan. (v) Environmental Matters. (i) The Company and its Subsidiaries are in compliance with Environmental Requirements, except for such noncompliance as would not have a Material Adverse Effect. (ii) The Company and its Subsidiaries have not received any notice regarding any material violation of Environmental Requirements, or any material liabilities under Environmental Requirements, the subject of which would have a Material Adverse Effect. (iii) This Section 4(v) contains the sole and exclusive representations and warranties of the Sellers with respect to any environmental, health, or safety matters, including, without limitation, any arising under any Environmental Requirements. (w) Certain Business Relationships With the Company and Its Subsidiaries. None of the Sellers and their Affiliates has been involved in any business arrangement or relationship with any of the Company and its Subsidiaries within the past 12 months, and none of the Sellers and their Affiliates owns any asset, tangible or intangible, which is used in the business of any of the Company and its Subsidiaries. (x) Suppliers and Customers. The Company and its Subsidiaries maintain good relations with all their material suppliers and material customers as well as with governments, partners, financing sources, and other parties with whom the Company and its Subsidiaries have relations, and no such party has canceled, terminated or made any threat to the Company and its Subsidiaries to cancel or otherwise terminate its relationship with the Company and its Subsidiaries or to materially decrease its services or supplies to the Company and its Subsidiaries or its direct or indirect purchase or usage of the products or services of the Company and its Subsidiaries. 12 (y) Products and Services. (i) Section 4(y) of the Disclosure Schedule sets forth (A) a list of all products of the Company and its Subsidiaries which at any time have been recalled, withdrawn, suspended, or seized by the Company and its Subsidiaries, whether voluntarily or otherwise, including the date recalled, withdrawn, suspended, or seized and (B) a brief description of all completed or pending proceedings seeking the recall, withdrawal, suspension, or seizure of any product of the Company and its Subsidiaries. (ii) There exists no set of facts which would reasonably be expected to furnish a basis for the recall, withdrawal, suspension, or seizure of any product registration, product license, repair or overhaul license, manufacturing license, wholesale dealers license, export license, or other license, approval, or consent of any governmental or regulatory authority with respect to the Company and its Subsidiaries or any of the products of the Company and its Subsidiaries. (z) Regulatory Compliance. The Company and its Subsidiaries have received approval of all registrations, applications, licenses, requests for exemptions, permits, and other regulatory authorizations necessary for the conduct of the business of the Company and its Subsidiaries as they are now conducted with the United States Food and Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer Products Safety Commission ("CPSC"), and the United States Department of Agriculture ("USDA"), as applicable, except for such registrations, applications, licenses, requests for exemptions, permits, and other regulatory authorizations of which the failure to so obtain would not have a Material Adverse Effect. The Company and its Subsidiaries are in compliance in all respects with all such registrations, applications, licenses, requests for exemptions, permits, and other regulatory authorizations, and all applicable FDA, FTC, CPSC, USDA, federal, state and local rules and regulations, except where the failure to so comply would not have a Material Adverse Effect. (aa) Year 2000 Compliance. The Company and its Subsidiaries have reviewed the areas within their business and operations which could be adversely affected by, and have developed a program to address on a timely basis, the "Year 2000 Problem" (that is, the risk that computer applications used by the Company and its Subsidiaries may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date on or after December 31, 1999) and have made related appropriate inquiry of all their material suppliers and vendors. Based on such review and program, the Company believes that the "Year 2000 Problem" will not have a Material Adverse Effect. (bb) Absence of Certain Business Practices. None of the Company, any of its Subsidiaries, nor any Seller nor any other affiliate or agent of the Company, nor any other Person acting on behalf of or associated with the Company, acting alone or together has (i) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier or employee or agent of any customer or supplier or (ii) directly or indirectly, given or agreed to give any money, gift or similar benefit to any customer, supplier or employee or agent of any customer or supplier, or other Person who was, is or may be in a position to help or hinder the business of the Company (or assist the Company in connection with any actual or proposed transaction) which (A) may subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (B) if not given in the past, may have had a Material Adverse Effect or (C) if not continued in the future, would result in a Material Adverse Effect. 5 Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) General. Each of the Parties will use his or its commercially reasonable efforts to take all action and to do all things necessary, proper, or 13 advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7 below). (b) Notices and Consents. Each of the Company and its Subsidiaries will give any notices to third parties, and each of the Company and its Subsidiaries will use its commercially reasonable efforts to obtain any third party consents, that the Buyer reasonably may request in connection with the matters referred to in Section 4(c) and Section 4(p)above. Each of the Parties will give any notices to, make any filings with, and use its commercially reasonable efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Section 3(b) and Section 4(c) above. Without limiting the generality of the foregoing, each of the Parties will file any Notification and Report Forms and related material that he or it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act, will use his or its reasonable best efforts to obtain a waiver from the applicable waiting period, and will make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith. Buyer and the Company shall share equally the filing fees for any filings required under the Hart-Scott-Rodino Act. (c) Operation of BusineSection The Company shall provide daily "flash reports" in accordance with the Company's current practice and custom to Buyer. Except as otherwise contemplated herein, the Company and its Subsidiaries shall conduct their businesses in the Ordinary Course of BusineSection Without limiting the generality of the foregoing and except as otherwise contemplated in this section, the Company and its Subsidiaries will not engage in any practice, take any action, or enter into any transaction of the sort described in Section 4(h) above; provided, however, that the Company and its Subsidiaries may take the actions necessary to issue Preferred Shares to certain Sellers as consideration for the payment of certain litigation expenses of the Company by such Sellers under an agreement with such Sellers as identified on Section 4(b) of the Disclosure Schedule; provided, further, that the Company and its Subsidiaries may engage in any such practice, take any action, or enter into any transactions of the sort described in Section 4(h) with the written consent of the Buyer (and the Buyer hereby agrees to respond within 5 business days to the Company and its Subsidiaries' written request to engage in any such practice, take any action, or enter into any such transaction), which consent may be withheld in Buyer's sole discretion. In addition, except as otherwise contemplated in this section, without the prior written consent of Buyer (and the Buyer hereby agrees to respond within 5 business days to the Company and its Subsidiaries' written request to engage in any such practice, take any action, or enter into any such transaction), which consent may be withheld in Buyer's sole discretion, the Company shall not: (i) merge into or with or consolidate with, any other corporation or acquire the business or assets of any Person; (ii) purchase any securities of any person; (iii) create, incur, assume, guarantee or otherwise become liable or obligated with respect to any indebtedness, or make any loan or advance to, or any investment in, any Person, except in each case in the Ordinary Course of Business; (iv) make any change in any existing election, or make any new election, with respect to any Tax law in any jurisdiction which election could have an effect on the Tax treatment of the Company or the Company's business operations; (v) enter into, amend or terminate any contract or agreement to which any of the Company or its Subsidiaries is a party the performance of which involves consideration in excess of $15,000 (or $50,000 if the Closing has not occurred by January 15) or the duration of which is greater than one year, except for purchase orders entered into in the Ordinary Course of Business; 14 (vi) settle any material claim or litigation, or file any material motions, orders, briefs or settlement agreements in any proceeding before any governmental authority or any arbitrator, other than in connection with those matters described in sections I, II, III and IV of Section 4(s) of the Disclosure Schedule (provided, however, to the extent there is a monetary settlement of any of the matters described in sections I, II, III and IV of Section 4(s) of the Disclosure Schedule prior to the Closing, there shall be a reduction in the Purchase Price by the amount of any such settlement); (vii) adopt any Employee Benefit Plan, or grant any increase in the compensation payable or to become payable to directors or officers (including, without limitation, any such increase pursuant to any bonus, profit-sharing or other plan or commitment); (viii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or other property) with respect to its capital stock; (ix) apply any of its assets to the direct or indirect payment, prepayment, discharge, satisfaction or reduction of any amount payable, directly or indirectly, to or for the benefit of any Seller or any other affiliate of the Company (except for salary and benefits as currently in effect and except in accordance with existing agreements and arrangements which have been disclosed to the other parties hereto in writing), other than in connection with sales of the Company's products to Club MET-Rx; (x) enter into any transaction or make any commitment which could result in any of the representations, warranties or covenants of the Company and/or Sellers set forth herein not being true and correct in all material respects after the occurrence of such transaction or event; (xi) amend it charter or bylaws; (xii) issue any capital stock or other securities, or grant, or enter into any agreement to grant, any options, convertible rights, other rights, warrants, calls or agreements relating to its securities, other than in connection with the issuances of Preferred Shares to certain Sellers as consideration for the payment of certain litigation expenses of the Company by such Sellers under an agreement with such Sellers as identified on Section 4(b) of the Disclosure Schedule; (xiii) pay out any amounts to any participants under the Company's stock appreciation program; or (xiv) commit to do any of the foregoing. (d) Full AcceSection The Company and its Subsidiaries will permit representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Company and its Subsidiaries, to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to each of the Company and its Subsidiaries. The Buyer will treat and hold as such any Confidential Information it receives from any of the Sellers, the Company, and its Subsidiaries in the course of the reviews contemplated by this Section 5(d), will not use any of the Confidential Information except in connection with the transactions contemplated hereby and, if this Agreement is terminated for any reason whatsoever, will return to the Company and its Subsidiaries or destroy all tangible embodiments (and all copies) of the Confidential Information which are in its possession, all in accordance with the provisions of that certain confidentiality agreement between Buyer and the Company, dated as of May 25, 1999. (e) Notice of Developments. (i) The Company or Sellers may elect at any time to notify the Buyer of any development causing a breach of any of the representations 15 and warranties in Section 4 above. No disclosure by the Company or Sellers pursuant to this Section 5(e)(i), however, shall be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation or breach of warranty. (ii) Buyer may elect at any time to notify the Company and the Sellers of any development causing a breach of any of the representations and warranties in Section 3 above. No disclosure by the Buyer pursuant to this Section 5(e)(ii), however, shall be deemed to amend or supplement Annex I or to prevent or cure any misrepresentation or breach of warranty. (f) Exclusivity. None of the Sellers will (and the Sellers will not cause or permit any of the Company and its Subsidiaries to) solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to the acquisition of all or substantially all of the capital stock or assets of any of the Company and its Subsidiaries (including any acquisition structured as a merger, consolidation, or share exchange). Each of the Sellers acknowledges and agrees that the Buyer would be damaged irreparably in the event this Section 5(f) is breached. Accordingly, notwithstanding anything herein to the contrary, each of the Sellers agrees that the Buyer shall be entitled to an injunction or injunctions to prevent breaches of and specifically enforce this Section 5(f). (g) Amendment of Certain Agreements. Each of the Parties hereto acknowledge and agree that (i) certain letter agreements relating to the employment of Darrell Askey and Ron Jones shall be amended in connection with the Closing, pursuant to which each such Person shall be issued a certain number of Common Shares and be entitled to such Person's portion of the Purchase Price set forth on the Schedule of the Purchase Price Allocation, (ii) the Company's stock appreciation program shall be amended and terminated in connection with the Closing, pursuant to which the Company shall pay, and the Sellers shall reimburse the Company for, the aggregate amounts (other than applicable payroll taxes except Medicare taxes) required thereunder to be paid to the participants in such program as set forth in Section 7(a)(ix) below, (iii) the management agreement between Mason Sundown, LLC and the Company shall be terminated in connection with the Closing, (iv) the stock purchase and indemnification agreement dated as of November 30, 1998, as amended, among Dr. A. Scott Connelly, Leonard P. Moskovits, Jerrold J. Pellizzon and the Subsidiaries shall be amended in connection with the Closing to remove the Subsidiaries as parties thereto and (v) a certain shareholders agreement among the Sellers and the Company shall be terminated in connection with the Closing. 6 Post-Closing Covenants. (a) General. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party. The Sellers acknowledge and agree that from and after the Closing the Buyer will be entitled to possession of all documents, books, records (including tax records), agreements, and financial data of any sort relating to the Company and its Subsidiaries. (b) Covenant Not to Compete. (i) Each of Dr. A. Scott Connelly and Leonard P. Moskovits and each of TSG2 Management, LLC and TSG3 Management, LLC on behalf of itself and each investment fund of which it (or its Affiliate) serves as the general partner or managing member (including TSG2 L.P. and TSG3 L.P.) hereby covenants and agrees that such Person, without the prior written consent of Buyer, shall not for a period of one year (three years with respect to Dr. A. Scott Connelly) from and after the Closing Date, directly or indirectly, for itself or for any other person, firm, corporation, partnership, association, or other entity, employ or attempt to employ any employee of the Company or Buyer or any of Buyer's Affiliates until at least six months after the date such employee was not employed by the Company or the Buyer or any of Buyer's Affiliates, as the case may be. 16 (ii) Each of Dr. A. Scott Connelly, Leonard P. Moskovits and Jerrold J. Pellizzon hereby covenants and agrees that such Person, without the prior written consent of the Buyer, shall not for a period of three years, one year and one year, respectively, from and after the Closing Date: (A) directly or indirectly acquire or own in any manner any interest in any person, firm, partnership, corporation, association, or other entity which engages in any facet of the business of the Company as of the Closing Date or as planned or budgeted for as of the Closing Date (the "Business") or which competes in any way with the business of Buyer or any of its Subsidiaries or Affiliates as of the Closing Date, anywhere in the United States (the "Territory"), or (B) be employed by or serve as an employee, agent, officer, director of, or as a consultant to, any person, firm, partnership, corporation, association, or other entity which engages in any facet of the Business or which competes in any way with the business of Buyer or any of its Subsidiaries or Affiliates as of the Closing Date within the Territory. The ownership or control of up to one percent of the outstanding voting securities or securities of any class of a company with a class of securities registered under the Securities Exchange Act of 1934, as amended, shall not be deemed a violation of this Section 6(b)(ii). (iii) Each of TSG2 Management, LLC and TSG3 Management, LLC on behalf of itself and each investment fund of which it (or its Affiliate) serves as the general partner or managing member (including TSG2 L.P. and TSG3 L.P.) hereby covenants and agrees that such Person, without the prior written consent of the Buyer, shall not for a period of one year from and after the Closing Date: (A) directly or indirectly acquire or own in any manner any interest in any entity listed on Section 6(b) of the Disclosure Schedule, or (B) be employed by or serve as an employee, agent, officer, director of, or as a consultant to, any entity listed on Section 6(b) of the Disclosure Schedule. The ownership or control of up to one percent of the outstanding voting securities or securities of any class of a company with a class of securities registered under the Securities Exchange Act of 1934, as amended, shall not be deemed a violation of this Section 6(b)(iii). (iv) Nothing in this Section 6(b) shall be construed as limiting or restricting (A) the ability to sell, in part or in whole, any portfolio company of any investment fund of which either TSG2 Management, LLC or TSG3 Management, LLC (or another entity having the same members as TSG2 Management, LLC or TSG3 Management, LLC) serves as the general partner or managing member to any of the entities listed on Section 6(b) of the Disclosure Schedule, whether for cash or non-cash consideration (including, without limitation, equity securities of any such entity listed on Section 6(b) of the Disclosure Schedule) or (B) the ability of any member, partner or officer of either TSG2 Management, LLC or TSG3 Management, LLC (or another entity having the same members as TSG2 Management, LLC or TSG3 Management, LLC) to serve as a director, officer or consultant to any such entity listed on Section 6(b) of the Disclosure Schedule in connection with any such sale to such entity. (v) Nothing in this Section 6(b) shall be construed as limiting or restricting the ability of Dr. A. Scott Connelly from engaging in any public speaking or writing (including speaking or writing about health and nutrition issues), so long as the same is not specifically designed to promote competing products or competing companies, or in medical practice or research. (c) Employee Bonuses. In connection with the Closing, with respect to employees of the Company and its Subsidiaries, the Company shall pay at Closing, and to the extent not paid at Closing, Buyer shall pay, or cause the Company to pay, such bonuses of such employees which are accrued on the Financial Statements of the Company and its Subsidiaries in accordance with the terms of such bonus arrangements in an aggregate amount not to exceed $900,100 pursuant to the schedule of such bonus arrangements previously delivered to Buyer. 17 7 Conditions to Obligation to Close. (a) Conditions to Obligation of the Buyer and the Transitory Subsidiary. The obligation of each of the Buyer and the Transitory Subsidiary to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 3(a) and Section 4 above shall be true and correct in all material respects at and as of the Closing Date; (ii) the Company and the Sellers shall have performed and complied with all of their covenants hereunder in all material respects through the Closing; (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (iv) the Company and the Sellers shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in Section 7(a)(i)-(iii) is satisfied in all respects; (v) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and the Parties, the Company, and its Subsidiaries shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3(b) and Section 4(c) above; (vi) the Buyer shall have received the resignations of (a) each director of the Company and its Subsidiaries (as a director) and (b) each officer of the Company and its Subsidiaries (as an officer) who Buyer requests resign in a writing delivered at least five (5) business days prior to the Closing, such resignations to be delivered at and effective only upon the Closing (with the understanding that such resignations shall not be deemed a breach of any employment arrangement or fiduciary duty by any party); (vii) the Buyer shall have received from counsel to the Company and the Sellers an opinion addressed to the Buyer and dated as of the Closing Date, in a form to be reasonably agreed to by counsels for the respective Parties; (viii) Dr. A. Scott Connelly shall have executed the employment agreement in form and substance as set forth in Exhibit A attached hereto, providing for the continued employment of Dr. A. Scott Connelly with the Buyer and the right of the Buyer to utilize, for commercial purposes, his image, likeness, persona, and voice; (ix) simultaneously in connection with the Closing, the Company shall pay, and the Sellers shall reimburse the Company for, the aggregate amounts (other than applicable payroll taxes except Medicare taxes) required under the Company's stock appreciation program to be paid to the participants in such program upon the consummation of the transactions contemplated hereby (of which certain amounts shall be subject to hold-back pursuant to a certain agreement among the Sellers and such participants relating to the indemnification obligations of the Sellers pursuant to this Agreement) and such stock appreciation program shall be terminated without any liability to the Buyer; (x) there shall not have been any material adverse change in the business, financial condition, operations, assets or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, a decrease in net sales in an amount up to $3,000,000 in each of December 1999 and January 2000 compared to the projected net sales for each such month as previously provided in 18 writing to the Buyer shall not be considered to constitute such a material adverse change; and (xi) all actions to be taken by the Company and the Sellers in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer and the Transitory Subsidiary. The Buyer and the Transitory Subsidiary may waive any condition specified in this Section 7(a) if they execute a writing so stating at or prior to the Closing. (b) Conditions to Obligation of the Company and the Sellers. The obligation of each of the Company and the Sellers to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 3(b) above shall be true and correct in all material respects at and as of the Closing Date; (ii) the Buyer and the Transitory Subsidiary shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (iv) the Buyer and the Transitory Subsidiary shall have delivered to the Company and the Sellers a certificate to the effect that each of the conditions specified above in Section 7(b)(i)-(iii) is satisfied in all respects; (v) all applicable waiting periods (and any extensions thereof) under the Hart-Scott- Rodino Act shall have expired or otherwise been terminated and the Parties, the Company, and its Subsidiaries shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3(b) and Section 4(c) above; (vi) the Company and the Sellers shall have received from counsel to the Buyer and the Transitory Subsidiary an opinion addressed to the Sellers and dated as of the Closing Date, in a form to be reasonably agreed to by counsels for the respective Parties; (vii) concurrently with the Closing, Buyer shall pay the Indebtedness of the Company (including amounts required to be paid to the lenders in connection with the prepayment of such Indebtedness); (viii) Buyer shall have executed the employment agreement in form and substance as set forth in Exhibit B attached hereto, providing for the continued employment of Dr. A. Scott Connelly with the Buyer and the right of the Buyer to utilize, for commercial purposes, his image, likeness, persona, and voice; and (ix) all actions to be taken by the Buyer and the Transitory Subsidiary in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Company and the Sellers. The Company and the Sellers may waive any condition specified in this Section 7(b) if they execute a writing so stating at or prior to the Closing. 19 8. Remedies for Breaches of this Agreement. (a) Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive the Closing hereunder and continue in full force and effect for a period of one year thereafter; provided, however, to the extent that a claim arises under the representations and warranties contained herein that the Company has an unreserved Tax obligation based on a claim that any Subsidiary's S corporation election was invalid or had been terminated prior to January 5, 1999 ("S Tax Claim"), then as to the representation and warranty concerning Taxes as they relate to such S Tax Claim, the survival period shall be the applicable statute of limitations for such S Tax Claim. (b) Indemnification Obligations of All Sellers for Benefit of the Buyer. In the event the Sellers breach any of their representations, warranties, and covenants contained herein (other than the representation and warranty concerning Taxes as they relate to any S Tax Claim) within the applicable survival period pursuant to Section 8(a) above, provided that the Buyer makes a written claim for indemnification against the Sellers pursuant to Section 11(g) below within such survival period, then each of the Sellers shall indemnify the Buyer from and against his or its Allocable Portion of any Adverse Consequences the Buyer shall incur through and after the date of the claim for indemnification caused proximately by such breach. (c) Indemnification Obligations of Dr. A. Scott Connelly. (x) For matters disclosed under sections I, II, III and IV of Section 4(s) of the Disclosure Schedule and any other actions arising from the same facts and circumstances (including, without limitation, any claim of the Company or its Subsidiaries against Fireman's Fund or any other insurer) (the "Foundation Litigation"), provided that the Buyer makes a written claim for indemnification against Dr. A. Scott Connelly pursuant to Section 11(g) below, then Dr. A. Scott Connelly shall indemnify the Buyer from and against any Adverse Consequences the Buyer shall incur caused by the Foundation Litigation. Notwithstanding anything in this Agreement to the contrary, Dr. A. Scott Connelly shall be entitled to control the Foundation Litigation (including the right to bring or defend any action, prosecute or appeal any action and/or settle any action) and shall bear all expenses in connection therewith. The Buyer and the Company and its Subsidiaries shall cooperate with Dr. A. Scott Connelly in handling such Foundation Litigation. In the event that the Company or any of its Subsidiaries recovers any amounts in such Foundation Litigation (including, without limitation, settlement amounts, judgments for damages, insurance proceeds, reimbursement of legal fees and costs, etc.) (the "Recovered Monies"), all such amounts shall be promptly distributed to Dr. A. Scott Connelly and Buyer and Company and its Subsidiaries shall not be entitled to any portion of the Recovered Monies. Each of the Parties hereto (including, without limitation, Buyer and Company and its Subsidiaries) agree that Krane & Smith, current counsel for the Company and its Subsidiaries on the Foundation Litigation and counsel for Dr. A. Scott Connelly, may continue to represent the Company and its Subsidiaries in the Foundation Litigation and further acknowledge and agree to be bound by all of the terms of that certain Krane and Smith waiver of conflict letter dated November 25, 1998. The Buyer agrees to execute a similar letter at the Closing. The indemnification obligations under this Section 8(c)(i) shall survive the Closing indefinitely. (xi) Pursuant to Section 8(c)(i) above, in the event that Dr. A. Scott Connelly pays or indemnifies the Company for any amount of a judgment or settlement in any of the Foundation Litigation in favor of the Met-Rx Foundation (the "Foundation") and the judgment or settlement requires that the Foundation use all or a portion of the amounts which Dr. A. Scott Connelly pays to perform (through accredited research facilities chosen by or reasonably acceptable to the Company) (a) research on the efficacy of Company's products or (b) other research 20 requested or approved by the Company, the Company shall repay Dr. A. Scott Connelly (as such money is used by the Foundation for such research) the amounts spent by the Foundation on such research. By way of example, if (a) the Company is required to pay $300,000 to the Foundation, (b) Dr. A. Scott Connelly pays such amount under the indemnification obligations of Dr. A. Scott Connelly under Section 8(c)(i) above and (c) the Foundation uses $250,000 to pay for research on Company's products, then Dr. A. Scott Connelly would be entitled to a repayment from the Company of $250,000 at the time the Foundation pays for the research. (xii) In the event there is a breach of the representation and warranty concerning Taxes as they relate to any S Tax Claim within the applicable survival period pursuant to Section 8(a) above, provided that the Buyer makes a written claim for indemnification against Dr. A. Scott Connelly pursuant to Section 11(g) below within such survival period, then Dr. A. Scott Connelly shall indemnify the Buyer from and against any Adverse Consequences the Buyer shall incur through and after the date of the claim for indemnification caused proximately by such breach. (d) Limitations on Indemnification (xiii) None of the Sellers shall have any obligation to indemnify the Buyer from and against any Adverse Consequences pursuant to Section 8(b) above, until the Buyer has incurred Adverse Consequences by reason of all such breaches in excess of a $1,000,000 aggregate threshold, at which point each of the Sellers will be obligated to indemnify the Buyer from and against his or its Allocable Portion of such Adverse Consequences relating back to the first dollar. (xiv) Dr. A. Scott Connelly shall have no obligation to indemnify the Buyer from and against any Adverse Consequences pursuant to Section 8(c)(i) above, until the Buyer has incurred Adverse Consequences by reason of such Foundation Litigation in excess of a $250,000 aggregate deductible, at which point Dr. A. Scott Connelly will be obligated to indemnify the Buyer from and against all such Adverse Consequences in excess of $250,000. (xv) To the extent the Buyer may have a claim for indemnification pursuant to the provisions of Section 8(b) above for any breach of any representation set forth in Section 4(o) or Section 4(q), the Buyer shall not be entitled to any indemnification under Section 8(b) above until the Buyer gives credit for the amount of any excess reserves for inventory and bad debts on the balance sheet as of December 31, 1999 prepared by the Sellers and reasonably approved by the Buyer in connection with the Closing (such credit to be given by reducing dollar for dollar the amount of any Adverse Consequences resulting from a breach of any representation set forth in Section 4(o) or Section 4(q) by the aggregate amount of any and all excess reserves for inventory and bad debts set forth on such balance sheet). (xvi) The aggregate amount of all the Sellers' liability under Section 8(b) above and Section 8(c)(iii) above shall not exceed $5,400,000 and the maximum liability under Section 8(b) above for any particular Seller shall be such Seller's Allocable Portion of $5,400,000. (xvii) Notwithstanding the foregoing provisions of this Section 8(d), the $1,000,000 threshold and $5,400,000 "cap" limitations on indemnification obligations set forth in Section 8(d)(i) above and Section 8(d)(iv) above, respectively, shall not apply to any failure to comply with the agreements set forth in Section 5(g) above and Section 7(a)(ix) above. (e) Indemnification Provisions for Benefit of the Sellers. In the event the Buyer breaches any of its representations, warranties, and covenants contained herein within the applicable survival period pursuant to Section 8(a) above, provided that any of the Sellers makes a written claim for indemnification against the Buyer pursuant to Section 11(g) below within such survival period, then the Buyer agrees to indemnify each of the Sellers from and against the entirety of any Adverse Consequences the Seller shall incur through and after the date of the claim for indemnification caused proximately by the breach. (f) Matters Involving Third Parties. 21 (i) If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Section 8, then the Indemnified Party shall promptly (and in any event within five business days after receiving notice of the Third Party Claim) notify each Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. (ii) Any Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third Party Claim with counsel of his or its choice reasonably satisfactory to the Indemnified Party; provided, however, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed settlement involves only the payment of money damages, does not impose an injunction or other equitable relief upon the Indemnified Party, does not impose any restrictions on the operation of the Company and its Subsidiaries and, together with any other judgment or settlement the Indemnifying Party has consented to or entered into pursuant to this Section 8, does not in the aggregate exceed $5,400,000; provided, further, in the event an Indemnifying Party assumes the defense of the Third Party Claim as provided above, the Indemnified Party may (a) retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim and (b) assume complete control and thereafter conduct the defense of the Third Party Claim once the Indemnifying Party has no further indemnification obligations hereunder. (iii) Unless and until an Indemnifying Party assumes the defense of the Third Party Claim as provided in Section 8(f)(ii) above, however, the Indemnified Party may defend against the Third Party Claim in any manner he or it reasonably may deem appropriate. (iv) Unless and until an Indemnifying Party assumes the defense of the Third Party Claim as provided in Section 8(f)(ii) above, in no event will the Indemnified Party consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of each of Dr. A. Scott Connelly, TSG2 L.P. and TSG3 L.P. (not to be withheld unreasonably). (g) Determination of Adverse Consequences. The Parties shall make appropriate adjustments for tax benefits and insurance recovery in determining Adverse Consequences for purposes of this Section 8. All indemnification payments under this Section 8 shall be deemed adjustments to the Purchase Price. (h) Exclusive Remedy. The Buyer and the Sellers acknowledge and agree that after the Closing the foregoing indemnification provisions in this Section 8 shall be the exclusive remedy of the Buyer and the Sellers with respect to the Company and its Subsidiaries. 9. Tax Matters. (a) Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other similar taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by Sellers when due, and Sellers will, at their own expense, file all necessary tax returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other taxes and fees, and, if required by applicable law, Buyer will, and will cause its affiliates to, join in the execution of any such tax returns and other documentation. (b) Myosystems Deduction Deferral. To the extent of the net tax benefit resulting from any requirement by the California Franchise Tax Board to amortize 22 over a longer period of years and defer the allowable tax deduction in connection with a certain buy-out by the Company of a distribution agreement relating to Myosystems, the Buyer shall pay to Dr. A. Scott Connelly such amount in each year the Company and its Subsidiaries take such a tax deduction. Notwithstanding anything herein to the contrary, if as a result of a determination under the audit of such issue that the Company must defer such deductions, the Company owes additional Taxes, Dr. A. Scott Connelly shall be liable for reimbursing such amounts to the Company (offset by any payment owing to Dr. A. Scott Connelly under this Section 9(b)). Dr. A. Scott Connelly shall be liable for all costs and expenses in connection with such an audit. 10. Termination. (a) Termination of Agreement. Certain of the Parties may terminate this Agreement as provided below: (v) the Parties may terminate this Agreement by mutual written consent at any time prior to the Closing; (vi) the Buyer and the Transitory Subsidiary may terminate this Agreement by giving written notice to the Company and the Sellers at any time prior to the Closing (a) (i) in the event any of the Company or the Sellers have breached any material representation, warranty, or covenant contained in this Agreement in any material respect, (ii) the Buyer has become aware of the breach and has notified the Sellers within 5 days of becoming aware of such breach of Buyers' intent to terminate the Agreement unless such breach is cured within 30 days of such notice, and (iii) the breach has continued without cure for such 30-day period, or (b) if the Closing shall not have occurred on or before January 31, 2000, by reason of the failure of any condition precedent under Section 7(a) hereof (unless the failure results primarily from the Buyer or the Transitory Subsidiary breaching any representation, warranty, or covenant contained in this Agreement); provided, however, if the Closing shall not have occurred on or before January 31, 2000 by reason of failure to comply with the requirements of the Hart-Scott-Rodino Act or due to a "second request" being made by the Justice Department and the applicable waiting periods thereunder have not expired (so long as the initial and "second request" filings required thereunder were filed within 7 days of the date hereof and the date of the "second request," respectively), the Buyer and the Transitory may not terminate this Agreement under clause (b) above until February 28, 2000; and (vii) the Company and the Sellers may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing (a) (i) in the event any of the Buyer or the Transitory Subsidiary have breached any material representation, warranty, or covenant contained in this Agreement in any material respect, (ii) the Company or the Sellers have become aware of the breach and have notified the Buyer within 5 days of becoming aware of such breach of the Company and the Sellers' intent to terminate the Agreement unless such breach is cured within 30 days of such notice, and (iii) the breach has continued without cure for such 30-day period, or (b) if the Closing shall not have occurred on or before January 31, 2000, by reason of the failure of any condition precedent under Section 7(b) hereof (unless the failure results primarily from any of the Company or the Sellers themselves breaching any representation, warranty, or covenant contained in this Agreement); provided, however, if the Closing shall not have occurred on or before January 31, 2000 by reason of failure to comply with the requirements of the Hart-Scott-Rodino Act or due to a "second request" being made by the Justice Department and the applicable waiting periods thereunder have not expired (so long as the initial and "second request" filings required thereunder were filed within 7 days of the date hereof and the date of the "second request," respectively), the Company and the Sellers may not terminate this Agreement under clause (b) above until February 28, 2000. (b) Effect of Termination. If any Party terminates this Agreement pursuant to Section 10(a) above, all rights and obligations of the Parties 23 hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided, however, that the confidentiality provisions contained in Section 5(d) and the confidentiality agreement referred to in Section 5(d) above shall survive termination. 11. Miscellaneous. (a) Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the other Parties hereto; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable best efforts to advise the other Parties prior to making the disclosure). (b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (c) Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. (d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of the Buyer and the Sellers. (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. (f) Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (g) Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:
If to the Company A. Scott Connelly, M.D. or the Sellers: c/o Krane & Smith 16255 Ventura Boulevard Encino, California 91436 Attention: Samuel Krane, Esq. Facsimile: (818) 382-4001 TSG2 L.P. TSG3 L.P. c/o The Shansby Group 250 Montgomery Street, Suite 1100 San Francisco, California 94104 Attention: Charles H. Esserman Facsimile: (415) 421-5120 With respect to any other Seller, to the address and/or facsimile number 24 set forth beside the name of such Seller on the Schedule of Sellers. Copy to: Kirkland & Ellis 777 South Figueroa Street Los Angeles, California 90017 Attention: Eva H. Davis, Esq. Facsimile: (213) 680-8500 If to the Buyer: Rexall Sundown, Inc. 6111 Broken Sound Parkway, N.W. Boca Raton, Florida 33487 Attention: Geary Cotton, Chief Financial Officer Facsimile: (561) 999-4747 Copy to: Rexall Sundown, Inc. 6111 Broken Sound Parkway, N.W. Boca Raton, Florida 33487 Attention: Richard Werber, General Counsel Facsimile: (561) 991-4729 and a copy to: Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Attention: Paul Berkowitz, Esq. Facsimile: (305) 579-0717
Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. (h) Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Parties hereto. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (k) Expenses. Except as otherwise provided herein, each of the Buyer, the Transitory Subsidiary, the Company, and the Company's Subsidiaries will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. The 25 Company will also bear all of the Sellers' costs and expenses (including all of their legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby (other than any Tax imposed on the Sellers on any gain resulting from the sale of the Shares hereunder) and there shall be no reduction in the Purchase Price as a result of such bearing of such costs and expenses. Notwithstanding anything herein to the contrary, (i) the Company and its Subsidiaries (and not the Sellers) shall bear any fees payable to Lazard Freres & Co. LLC and its Affiliates with respect to the transactions contemplated by this Agreement (pursuant to a certain engagement letter dated as of July 28, 1999) and there shall be no reduction in the Purchase Price due to such liability and (ii) TSG2 L.P. and TSG3 L.P. (and not the Company and its Subsidiaries and the other Sellers) shall bear any fees payable to Donaldson, Lufkin & Jenrette and its Affiliates with respect to the transactions contemplated by this Agreement. (l) Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. (m) Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE RELATED AGREEMENTS OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS Section 11(M)(III) HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A TRIAL (WITHOUT JURY) BY THE COURT. (n) Indemnification of Directors and Officers; Insurance. (viii) The Buyer shall cause the Company and its Subsidiaries to not, amend, repeal or otherwise modify the provisions with respect to indemnification set forth in the charter and the bylaws of the Company and its Subsidiaries as in effect on the day prior to the Closing Date, in any manner that would adversely affect the rights thereunder of individuals who on or prior to the Closing Date were directors, officers, employees or agents of the Company and its Subsidiaries, unless such modification is required by law (and then only to the minimum extent required by law). (ix) The Buyer shall, at its own expense, purchase and maintain in effect not less than five years from the Closing Date, policies of directors' and officers' liability and fiduciary insurance, on terms with respect to coverage and amount substantially consistent with the Company's current directors' and officers' liability and insurance, pursuant to which the Company's current directors and officers will be insured with respect to claims arising from the facts or events occurring on or prior to the Closing Date; provided, however, 26 in no event shall the Buyer be required to pay premiums per annum in an amount exceeding 120% of the current annual premiums under the Company's current directors' and officers' liability insurance; provided, further, in the event such premiums would exceed such 120% threshold in any effective year of this obligation, Buyer (a) shall afford the Sellers the opportunity to contribute the balance of the cost of such insurance exceeding such 120% threshold amount and (b) if the Sellers decline to make such contribution, shall, at its own expense, purchase and maintain such policies of directors' and officers' liability and fiduciary insurance obtainable for such 120% threshold amount. (o) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. REXALL SUNDOWN, INC. By: /s/ Damon DeSantis ---------------------- Name: Damon DeSantis Title: President RSM ACQUISITION CORP. By: /s/ Damon DeSantis ---------------------- Name: Damon DeSantis Title: President TSG2 L.P., by its general partner TSG2 Management, LLC By: /s/ Charles H. Esserman --------------------------- Name: Charles H. Esserman Title: Managing Member TSG3 L.P., by its general partner TSG3 Management, LLC By: /s/ Charles H. Esserman --------------------------- Name: Charles H. Esserman Title: Managing Member Connelly (1999) Limited Partnership, by its general partner Connelly (1999) Company Inc. By: /s/ Samuel Krane -------------------- Name: Samuel Krane Title: Assistant Secretary 27 A. Scott Connelly, M.D. /s/ A. Scott Connelly, M.D. --------------------------- Leonard P. Moskovits /s/ Leonard P. Moskovits ------------------------ Jerrold J. Pellizzon /s/ Jerrold J. Pellizzon ------------------------ Darrell Askey /s/ Darrell Askey ----------------- Ron Jones /s/ Ron Jones ------------- MET-Rx NUTRITION, INC. By: /s/ A. Scott Connelly, M.D. ------------------------------- Name: A. Scott Connelly, M.D. Title: Chief Technical Officer Only for the purpose of acknowledging and agreeing to Section 6(b) of this Agreement: TSG2 Management, LLC By: /s/ Charles H. Esserman - --------------------------- Name: Charles H. Esserman Title: Managing Member TSG3 Management, LLC By: /s/ Charles H. Esserman - --------------------------- Name: Charles H. Esserman Title: Managing Member 28 EX-10.1 3 CREDIT AGREEMENT CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of January 7, 2000 (the "Agreement"), is made by and among REXALL SUNDOWN, INC., a Florida corporation having its principal place of business in Boca Raton, Florida (the "Borrower"), BANK OF AMERICA, N.A., a national banking association organized and existing under the laws of the United States, in its capacity as a Lender ("Bank of America"), and each other financial institution executing and delivering a signature page hereto and each other financial institution which may hereafter execute and deliver an instrument of assignment with respect to this Agreement pursuant to Section 12.1 (hereinafter such financial institutions may be referred to individually as a "Lender" or collectively as the "Lenders"), and BANK OF AMERICA, N.A., a national banking association organized and existing under the laws of the United States, in its capacity as agent for the Lenders (in such capacity, and together with any successor agent appointed in accordance with the terms of Section 11.7, the "Administrative Agent"); W I T N E S S E T H: WHEREAS, the Borrower has requested that the Lenders make available to the Borrower revolving credit facilities of up to $150,000,000, consisting of (a) a $25,000,000 364 day revolving credit facility (the "364 Day Facility") and (b) a $125,000,000 three year revolving credit facility (the "Three Year Facility"), which shall include a letter of credit facility of up to $5,000,000 for the issuance of standby and commercial letters of credit and a swing line facility of up to $5,000,000, the proceeds of which revolving credit facilities are to be used as provided in Section 2.2 hereof; and WHEREAS, the Lenders are willing to make such revolving credit, letter of credit and swing line facilities available to the Borrower upon the terms and conditions set forth herein; NOW, THEREFORE, the Borrower, the Lenders and the Administrative Agent hereby agree as follows: ARTICLE I Definitions and Terms 1.1. Definitions. For the purposes of this Agreement, in addition to the definitions set forth above, the following terms shall have the respective meanings set forth below: "Acquired Company" means MET-Rx Nutrition, Inc., a Delaware corporation. "Acquisition" means the acquisition of (i) a controlling equity interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person. "Advance" means a borrowing under either of the Revolving Credit Facilities, consisting of a Base Rate Loan or a Eurodollar Rate Loan. "Affiliate" means any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is 1 under common control with the Borrower; or (ii) which beneficially owns or holds 5% or more of any class of the outstanding voting stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of the Borrower; or 5% or more of any class of the outstanding voting stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by the Borrower. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting stock, by contract or otherwise. "Applicable Commitment Fee" means that percent per annum set forth below, which shall be based upon the Consolidated Leverage Ratio for the Four-Quarter Period most recently ended as specified below:
Applicable Commitment Fee ------------------------- Three Year Tier Consolidated Leverage Ratio 364 Day Facility Facility ---- --------------------------- ---------------- -------- I Less than or equal to .75 to 1.00 .175% .225% II Less than or equal to 1.25 to 1.00 but greater than .75 to 1.00 .225% .275% III Less than or equal to 1.75 to 1.00 but greater than 1.25 to 1.00 .275% .325% IV Greater than 1.75 to 1.00 .325% .375%
The Applicable Commitment Fee shall be established at the end of each fiscal quarter of the Borrower (each, a "Determination Date"). Any change in the Applicable Commitment Fee following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Administrative Agent pursuant to Section 8.1(a)(ii) or Section 8.1(b)(ii), subject to review and approval of such computations by the Administrative Agent and shall be effective commencing on the fifth Business Day following the date such certificate is received until the fifth Business Day following the date on which a new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if the Borrower shall fail to deliver any such certificate within the time period required by Section 8.1, then the Applicable Commitment Fee shall be Tier IV from the date such certificate was due until the fifth Business Day following the date the appropriate certificate is so delivered. From the Closing Date to the fifth Business Day following the date of delivery of the certificate required for the fiscal quarter ending May 31, 2000, the Applicable Commitment Fee shall be not less than Tier II. "Applicable Commitment Percentage" means, for each Lender at any time, a fraction (i) with respect to the Three Year Facility (including the Swing Line) and the Letter of Credit Facility, the numerator of which shall be such Lender's Three Year Commitment and the denominator of which shall be the Total Three Year Commitment and (ii) with respect to the 364 Day Facility, the numerator of which shall be such Lender's 364 Day Commitment and the denominator of which shall be the Total 364 Day Commitment, which Applicable Commitment Percentage for each Lender as of the Closing Date is as set forth in Exhibit A; provided that the Applicable Commitment Percentage of each Lender shall be increased or decreased to reflect any assignments to or by such Lender effected in accordance with Section 12.1 or to reflect any 2 change in the Total 364 Day Commitment and the Total Three Year Commitment, including such changes in accordance with Sections 2.5 and 2.6. "Applicable Lending Office" means, for each Lender and for each Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such Lender) designated for such Type of Loan on the signature pages hereof or such other office of such Lender (or an affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower by written notice in accordance with the terms hereof as the office by which its Loans of such Type are to be made and maintained. "Applicable Margin" for Eurodollar Rate Loans means that percent per annum set forth below, which shall be based upon the Consolidated Leverage Ratio for the Four-Quarter Period most recently ended as specified below: Applicable Tier Consolidated Leverage Ratio Margin ---- --------------------------- ------ I Less than or equal to .75 to 1.00 .875% II Less than or equal to 1.25 to 1.00 but greater than .75 to 1.00 1.125% III Less than or equal to 1.75 to 1.00 but greater than 1.25 to 1.00 1.375% IV Greater than 1.75 to 1.00 1.625% The Applicable Margin shall be established at the end of each fiscal quarter of the Borrower (each, a "Determination Date"). Any change in the Applicable Margin following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Administrative Agent pursuant to Section 8.1(a)(ii) or Section 8.1(b)(ii), subject to review and approval of such computations by the Administrative Agent, and shall be effective commencing on the fifth Business Day following the date such certificate is received until the fifth Business Day following the date on which a new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if the Borrower shall fail to deliver any such certificate within the time period required by Section 8.1, then the Applicable Margin for Eurodollar Rate Loans shall be Tier IV from the date such certificate was due until the fifth Business Day following the date the appropriate certificate is so delivered. From the Closing Date to the fifth Business Day following the date of delivery of the certificate required for the fiscal quarter ending May 31, 2000, the Applicable Margin for Eurodollar Rate Loans shall be not less than Tier II. "Applications and Agreements for Letters of Credit" means, collectively, the Applications and Agreements for Letters of Credit, or similar documentation, executed by the Borrower from time to time and delivered to the Issuing Bank to support the issuance of Letters of Credit. "Assignment and Acceptance" shall mean an Assignment and Acceptance in the form of Exhibit B (with blanks appropriately filled in) delivered to the Administrative Agent in connection with an assignment of a Lender's interest under this Agreement pursuant to Section 12.1. 3 "Authorized Representative" means any of the President or any Vice President, the Controller or the Director of Finance and Treasury of the Borrower or, with respect to financial matters, the chief financial officer of the Borrower, or any other Person expressly designated by the Board of Directors of the Borrower (or the appropriate committee thereof) as an Authorized Representative of the Borrower, as set forth from time to time in a certificate in the form of Exhibit C. "Bank of America" means Bank of America, N.A. "BAS" means Banc of America Securities LLC and its successors. "Base Rate" means, for any day, the rate per annum equal to the higher of (i) the Federal Funds Rate for such day plus one-half of one percent (0.5%) and (ii) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate. "Base Rate Loan" means a Loan for which the rate of interest is determined by reference to the Base Rate. "Base Rate Refunding Loan" means a Base Rate Loan or Swing Line Loan made under the Three Year Facility either to (i) satisfy Reimbursement Obligations arising from a drawing under a Letter of Credit or (ii) pay Bank of America in respect of Swing Line Outstandings. "Board" means the Board of Governors of the Federal Reserve System (or any successor body). "Borrower's Account" means a demand deposit account number 3890123977 or any successor account with the Administrative Agent, which may be maintained at one or more offices of the Administrative Agent or an agent of the Administrative Agent. "Borrowing Notice" means the notice delivered by an Authorized Representative in connection with an Advance under either of the Revolving Credit Facilities or a Swing Line Loan, in the forms of Exhibits D-1 and D-2, respectively. "Business Day" means, (i) except as expressly provided in clause (ii), any day which is not a Saturday, Sunday or a day on which banks in the States of New York. Florida and North Carolina are authorized or obligated by law, executive order or governmental decree to be closed and, (ii) with respect to the selection, funding, interest rate, payment, and Interest Period of any Eurodollar Rate Loan, any day which is a Business Day, as described above, and on which the relevant international financial markets are open for the transaction of business contemplated by this Agreement in London, England, New York, New York and Charlotte, North Carolina. "Capital Leases" means all leases which have been or should be capitalized in accordance with GAAP as in effect from time to time including Statement No. 13 of the Financial Accounting Standards Board and any successor thereof. "Change of Control" means, at any time: (i) any "person" or "group" (each as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than the DeSantis Group either (A) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act ), directly or indirectly, of Voting Securities of the Borrower (or securities convertible into or exchangeable for such Voting Securities) representing 30% or more of the combined voting 4 power of all Voting Securities of the Borrower (on a fully diluted basis) or (B) otherwise has the ability, directly or indirectly, to elect a majority of the board of directors of the Borrower; (ii) during any period of up to 12 consecutive months, commencing on the Closing Date, individuals who at the beginning of such 12-month period were directors of the Borrower shall cease for any reason (other than the death, disability or retirement of an officer of the Borrower that is serving as a director at such time so long as another officer of the Borrower replaces such Person as a director) to constitute a majority of the board of directors of the Borrower; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence on the management or policies of the Borrower. "Closing Date" means the date as of which this Agreement is executed by the Borrower, the Lenders and the Administrative Agent and on which the conditions set forth in Section 6.1 have been satisfied. "Code" means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. "Consistent Basis" in reference to the application of GAAP means the accounting principles observed in the period referred to are comparable in all material respects to those applied in the preparation of the audited financial statements of the Borrower referred to as of the Closing Date in Section 7.6(a). "Consolidated EBITDA" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without duplication, (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income, (iv) amortization, and (v) depreciation, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; provided, however, that with respect to an Acquisition that is accounted for as a "purchase" (including the MET-Rx Nutrition, Inc. Acquisition), for the four Four-Quarter Periods ending next following the date of such Acquisition, Consolidated EBITDA shall include the results of operations of the Person or assets so acquired, which amounts shall be determined on a historical pro forma basis as if such Acquisition had been consummated as a "pooling of interests". "Consolidated Indebtedness" means all Indebtedness of the Borrower and its Subsidiaries, all determined on a consolidated basis. "Consolidated Interest Expense" means, with respect to any period of computation thereof, the gross interest expense of the Borrower and its Subsidiaries, including without limitation (i) the current amortized portion of debt discounts to the extent included in gross interest expense, (ii) the current amortized portion of all fees (including fees payable in respect of any Rate Hedging Obligation) payable in connection with the incurrence of Indebtedness to the extent included in gross interest expense and (iii) the portion of any payments made in connection with Capital Leases allocable to interest expense, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; provided, however, in the case of the occurrence of an Acquisition, there shall be included in Consolidated Interest Expense for the first four consecutive fiscal quarters ending after the date of such Acquisition an amount which shall be determined by multiplying that portion of the Cost of Acquisition which represents 5 Indebtedness (net of Indebtedness paid with proceeds of Indebtedness incurred to fund such Cost of Acquisition), whether incurred, assumed or acquired, times the interest rate applicable to such Indebtedness which is in effect on the date of determination and then multiplying the result by a fraction the numerator of which is 365 minus the actual number of days that have elapsed from and after the date of such Acquisition and the denominator of which is 365. "Consolidated Interest Coverage Ratio" means, as of the date of computation thereof, the ratio of (i) Consolidated EBITDA for the Four-Quarter Period ending on (or most recently ended prior to) such date to (ii) Consolidated Interest Expense for the Four-Quarter Period ending on (or most recently ended prior to) such date. "Consolidated Leverage Ratio"? means, as of the date of computation thereof, the ratio of (i) Consolidated Indebtedness (determined as at such date) to (ii) Consolidated EBITDA for the Four-Quarter Period ending on (or most recently ended prior to) such date. "Consolidated Net Income" means, for any period of computation thereof, the gross revenues from operations of the Borrower and its Subsidiaries (including payments received by the Borrower and its Subsidiaries of (i) interest income, and (ii) dividends and distributions made in the ordinary course of their businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of the Borrower and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; but excluding as income: (i) net gains on the sale, conversion or other disposition of capital assets, (ii) net gains on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Borrower or its Subsidiaries, (iii) net gains on the collection of proceeds of life insurance policies, (iv) any write-up of any asset, and (v) any other net gain or credit of an extraordinary nature as determined in accordance with GAAP applied on a Consistent Basis. "Consolidated Total Assets" means, as of any date on which the amount thereof is to be determined, the net book value of all assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Contingent Obligation" means, as to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, guaranty, letter of credit or other obligation (each a "primary obligation") of another Person (the "primary obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise acquire any such primary obligation or any property constituting direct or indirect security therefor, or (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor in respect of any such primary obligation or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of such primary obligor, or (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor thereof to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof. "Continue", "Continuation", and "Continued" shall refer to the continuation pursuant to Section 4.2 hereof of a Eurodollar Rate Loan of one Type as a Eurodollar Rate Loan of the same Type from one Interest Period to the next Interest Period. 6 "Convert", "Conversion", and "Converted" shall refer to a conversion pursuant to Section 4.2 of one Type of Loan into another Type of Loan. "Cost of Acquisition" means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (i) the value of the capital stock, warrants or options to acquire capital stock of Borrower or any Subsidiary to be transferred in connection therewith, (ii) the amount of any cash and fair market value of other property (excluding property described in clause (i) and the unpaid principal amount of any debt instrument) given as consideration, (iii) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Indebtedness incurred, assumed or acquired by the Borrower or any Subsidiary in connection with such Acquisition, (iv) all additional purchase price amounts in the form of earnouts and other contingent obligations that should be recorded on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of covenants not to compete, consulting agreements that should be recorded on financial statements of the Borrower and its Subsidiaries in accordance with GAAP, and other affiliated contracts in connection with such Acquisition, (vi) the aggregate fair market value of all other consideration given by the Borrower or any Subsidiary in connection with such Acquisition, and (vii) out of pocket transaction costs for the services and expenses of attorneys, accountants and other consultants incurred in effecting such transaction, and other similar transaction costs so incurred. For purposes of determining the Cost of Acquisition for any transaction, (A) the capital stock of the Borrower shall be valued (I) in the case of capital stock that is then designated as a national market system security by the National Association of Securities Dealers, Inc. ("NASDAQ") or is listed on a national securities exchange, the average of the last reported bid and ask quotations or the last prices reported thereon, and (II) with respect to any other shares of capital stock, as determined by the Board of Directors of the Borrower and, if requested by the Administrative Agent, determined to be a reasonable valuation by the independent public accountants referred to in Section 8.1(a), (B) the capital stock of any Subsidiary shall be valued as determined by the Board of Directors of such Subsidiary and, if requested by the Administrative Agent, determined to be a reasonable valuation by the independent public accountants referred to in Section 8.1(a), and (C) with respect to any Acquisition accomplished pursuant to the exercise of options or warrants or the conversion of securities, the Cost of Acquisition shall include both the cost of acquiring such option, warrant or convertible security as well as the cost of exercise or conversion. "Credit Parties" means, collectively, the Borrower and each Guarantor. "Default" means any event or condition which, with the giving or receipt of notice or lapse of time or both, would constitute an Event of Default hereunder. "Default Rate" means (i) with respect to each Eurodollar Rate Loan, until the end of the Interest Period applicable thereto, a rate of two percent (2%) above the Eurodollar Rate applicable to such Loan, and thereafter at a rate of interest per annum which shall be two percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans, Swing Line Loans, Reimbursement Obligations, fees, and other amounts payable in respect of Obligations or (except as otherwise expressly provided therein) the obligations of any other Credit Party under any of the other Loan Documents, a rate of interest per annum which shall be two percent (2%) above the Base Rate and (iii) in any case, the maximum rate permitted by applicable law, if lower. "DeSantis Group" means, individually or collectively, Carl DeSantis, Damon DeSantis, Dean DeSantis, Sylvia DeSantis and CDD Partners, Ltd., a Texas limited partnership. "Dollars" and the symbol "$" means dollars constituting legal tender for the payment of public and private debts in the United States of America. 7 "Domestic Subsidiary" means any Subsidiary of the Borrower organized under the laws of the United States of America, any state or territory thereof or the District of Columbia. "Eligible Assignee" means (i) a Lender, (ii) an affiliate of a Lender, and (iii) any other Person approved by the Administrative Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 12.1, the Borrower, such approval not to be unreasonably withheld or delayed by the Borrower and such approval to be deemed given by the Borrower (in the absence of notice to the contrary, effective upon receipt) within two Business Days after notice of such proposed assignment has been provided by the assigning Lender to the Borrower; provided, however, that neither the Borrower nor an affiliate of the Borrower shall qualify as an Eligible Assignee, and provided, further, that the incurrence of any increased costs under Article IV, other than Section 4.6(e), shall be a basis for not approving such Person. "Eligible Securities" means the following obligations and any other obligations previously approved in writing by the Administrative Agent: (a) Government Securities; (b) obligations of any corporation organized under the laws of any state of the United States of America or under the laws of any other nation, payable in the United States of America, expressed to mature not later than 92 days following the date of issuance thereof and rated in an investment grade rating category by S&P and Moody's; (c) interest bearing demand or time deposits issued by any Lender or certificates of deposit maturing within one year from the date of issuance thereof and issued by a bank or trust company organized under the laws of the United States or of any state thereof having capital surplus and undivided profits aggregating at least $400,000,000 and being rated "A" or better by S&P or "A" or better by Moody's; (d) Repurchase Agreements; (e) Municipal Obligations; (f) Pre-Refunded Municipal Obligations; (g) shares of mutual funds which invest in obligations described in paragraphs (a) through (f) above, the shares of which mutual funds are at all times rated "AAA" by S&P; (h) tax-exempt or taxable adjustable rate preferred stock issued by a Person having a rating of its long term unsecured debt of "A" or better by S&P or "A-2" or better by Moody's; and (i) asset-backed remarketed certificates of participation representing a fractional undivided interest in the assets of a trust, which certificates are rated at least "A-1" by S&P and "P-1" by Moody's. "Employee Benefit Plan" means (i) any employee benefit plan, including any Pension Plan, within the meaning of Section 3(3) of ERISA which (A) is maintained for employees of the Borrower or any of its ERISA Affiliates, or any Subsidiary or is assumed by the Borrower or any of its ERISA Affiliates, or any Subsidiary in connection with any Acquisition or (B) has at any time been maintained for the employees of the Borrower, any current or former ERISA Affiliate, or any Subsidiary and (ii) any plan, arrangement, understanding or scheme maintained by the Borrower or any Subsidiary that provides retirement, deferred 8 compensation, employee or retiree medical or life insurance, severance benefits or any other benefit covering any employee or former employee and which is administered under any Foreign Benefit Law or regulated by any Governmental Authority other than the United States of America. "Environmental Laws" means any federal, state or local statute, law, ordinance, code, rule, regulation, order, decree, permit or license regulating, relating to, or imposing liability or standards of conduct concerning, any environmental matters or conditions, environmental protection or conservation, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended; the Superfund Amendments and Reauthorization Act of 1986, as amended; the Resource Conservation and Recovery Act, as amended; the Toxic Substances Control Act, as amended; the Clean Air Act, as amended; the Clean Water Act, as amended; together with all regulations promulgated thereunder, and any other "Superfund" or "Superlien" law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder. "ERISA Affiliate", as applied to the Borrower, means any Person or trade or business which is a member of a group which is under common control with the Borrower, who together with the Borrower, is treated as a single employer within the meaning of Section 414(b) and (c) of the Code. "Eurodollar Rate Loan" means a Loan for which the rate of interest is determined by reference to the Eurodollar Rate. "Eurodollar Rate" means the interest rate per annum calculated according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable ---------------------- Rate 1- Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as such in Section 10.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. "Existing Indebtedness" means the indebtedness of the Acquired Company listed on Schedule 1.1. "Facility Guaranty" means each Guaranty Agreement between one or more Guarantors and the Administrative Agent for the benefit of the Administrative Agent and the Lenders, delivered as of the Closing Date and otherwise pursuant to Section 8.20, as the same may be amended, modified or supplemented. "Facility Termination Date" means such date as all of the following shall have occurred: (a) the Borrower shall have permanently terminated both of the Revolving Credit Facilities and the Swing Line by payment in full of all Revolving Credit Outstandings and Letter of Credit Outstandings and Swing Line Outstandings, together with all accrued and unpaid interest thereon, except for the undrawn portion of Letters of Credit as have been fully cash collateralized in a manner consistent with the terms of Section 10.1(B), (b) all Swap Agreements shall have been terminated, expired or cash collateralized, (c) all Revolving Credit Commitments and Letter of Credit Commitments shall have terminated or expired and (d) the Borrower shall have fully, finally and irrevocably paid and satisfied in full all Obligations 9 (other than Obligations consisting of continuing indemnities and other contingent Obligations of the Borrower or any Guarantor that may be owing to the Lenders pursuant to the Loan Documents and expressly survive termination of this Agreement). "FASB 133 Adjustments" means entries on or adjustments to any balance sheet or statement of income in respect of derivatives or hedging instruments as required or permitted by Statement of Financial Accounting Standards No. 133. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent (in its individual capacity) on such day on such transactions as determined by the Administrative Agent. "Fiscal Year" means the twelve month fiscal period of the Borrower and its Subsidiaries commencing on September 1 of each calendar year and ending on August 31 of next succeeding calendar year. "Foreign Benefit Law" means any applicable statute, law, ordinance, code, rule, regulation, order or decree of any foreign nation or any province, state, territory, protectorate or other political subdivision thereof regulating, relating to, or imposing liability or standards of conduct concerning, any Employee Benefit Plan. "Four-Quarter Period" means a period of four full consecutive fiscal quarters of the Borrower and its Subsidiaries, taken together as one accounting period. "GAAP" or "Generally Accepted Accounting Principles" means generally accepted accounting principles, being those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, or which have other substantial authoritative support and are applicable in the circumstances as of the date of a report. "Government Securities" means direct obligations of, or obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by, the United States of America. "Governmental Authority" shall mean any Federal, state, municipal, national or other governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government. "Guarantors" means, at any date, Domestic Subsidiaries, other than any Receivables Subsidiaries, who are required to be parties to a Facility Guaranty at such date. "Hazardous Material" means and includes any pollutant, contaminant, or hazardous, toxic or dangerous waste, substance or material (including without limitation petroleum products, asbestos-containing materials and lead), the generation, handling, storage, transportation, disposal, treatment, release, discharge or emission of which is subject to any Environmental Law. 10 "Historical Financial Statements" means the consolidated balance sheets and related consolidated statements of income and cash flows for the Acquired Company and its subsidiaries for the fiscal years ended December 31, 1997 and 1998, audited by independent public accountants of recognized standing and prepared in accordance with GAAP, and the unaudited consolidated balance sheet and related consolidated statements of income and cash flows for the Acquired Company and its subsidiaries for the 10-month period ended October 31, 1999, prepared in accordance with GAAP. "Historical Pro Forma Financial Statements" means the unaudited historical pro forma balance sheet and a statement of income and cash flow prepared on a combined basis of the Borrower and its Subsidiaries (giving pro forma effect to the MET-Rx Nutrition, Inc. Acquisition for the Fiscal Year ended August 31, 1999. "Indebtedness" means as to any Person, without duplication, (a) all Indebtedness for Money Borrowed of such Person, (b) all Rate Hedging Obligations of such Person, (c) all indebtedness secured by any Lien on any property or asset owned or held by such Person regardless or whether the indebtedness secured thereby shall have been assumed by such Person or is non-recourse to the credit of such Person, and (d) all Contingent Obligations of such Person. "Indebtedness for Money Borrowed" means with respect to any Person, without duplication, all indebtedness in respect of money borrowed, including without limitation, all obligations under Capital Leases, the deferred purchase price of any property or services, the aggregate face amount of all surety bonds, letters of credit, and bankers' acceptances, and (without duplication) all payment and reimbursement obligations in respect thereof whether or not matured, evidenced by a promissory note, bond, debenture or similar written obligation for the payment of money (including reimbursement agreements and conditional sales or similar title retention agreements), other than trade payables and accrued expenses incurred in the ordinary course of busineSection "Interbank Offered Rate" means, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate per annum (rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Interbank Offered Rate" shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period, provided, however; if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). "Interest Period" means, for each Eurodollar Rate Loan, a period commencing on the date such Eurodollar Rate Loan is made or Converted or Continued and ending, at the Borrower's option, on the date one, two, three or six months thereafter as notified to the Administrative Agent by the Authorized Representative in accordance with the terms hereof; provided that, (i) if an Interest Period for a Eurodollar Rate Loan would end on a day which is not a Business Day, such Interest Period shall be extended to the next Business Day (unless such extension would cause the applicable Interest Period to end in the succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); and 11 (ii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month. "Interest Rate Selection Notice" means the written notice delivered by an Authorized Representative in connection with the election of a subsequent Interest Period for any Eurodollar Rate Loan or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit E. "Issuing Bank" means Bank of America as issuer of Letters of Credit under Article III. "LC Account Agreement" means the LC Account Agreement dated as of the date hereof between the Borrower and the Administrative Agent, as amended, modified or supplemented from time to time. "Letter of Credit" means a standby or commercial letter of credit issued by the Issuing Bank pursuant to Article III hereof for the account of the Borrower in favor of a Person advancing credit or securing an obligation on behalf of the Borrower. "Letter of Credit Commitment" means, with respect to each Lender, the obligation of such Lender to acquire Participations in respect of Letters of Credit and Reimbursement Obligations up to an aggregate amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Letter of Credit Commitment as the same may be increased or decreased from time to time pursuant to this Agreement. "Letter of Credit Facility" means the facility described in Article III hereof providing for the issuance by the Issuing Bank for the account of the Borrower of Letters of Credit in an aggregate stated amount at any time outstanding not exceeding the Total Letter of Credit Commitment minus outstanding Reimbursement Obligations. "Letter of Credit Outstandings" means, as of any date of determination, the aggregate amount available to be drawn under all Letters of Credit plus Reimbursement Obligations then outstanding. "Lien" means any interest in property securing any obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purposes of this Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, financing lease, or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes. "Loans" means, collectively, the Swing Line Loan and the Revolving Loans. "Loan Documents" means this Agreement, the Notes, the Facility Guaranties, the LC Account Agreement, the Applications and Agreements for Letter of Credit, and all other instruments and documents heretofore or hereafter executed or delivered to or in favor of any Lender (including the Issuing Bank) or the Administrative Agent in connection with the Loans made and transactions contemplated under this Agreement, as the same may be amended, supplemented or replaced from the time to time. 12 "Material Adverse Effect" means a material adverse effect on (i) the business, properties, operations, prospects or condition, financial or otherwise, of Borrower and its Subsidiaries, taken as a whole, (ii) the ability of any Credit Party to pay or perform its respective obligations, liabilities and indebtedness under the Loan Documents as such payment or performance becomes due in accordance with the terms thereof, (iii) the consummation of the MET-RX Nutrition, Inc. Acquisition substantially simultaneously with the initial Advance or (iv) the rights, powers and remedies of the Administrative Agent or any Lender under any Loan Document or the validity, legality or enforceability thereof. "Maximum Available Amount" means (A) with respect to the 364 Day Facility, (i) as of the Closing Date, $19,166,666.67, and (ii) at any time thereafter, the sum of $19,166,666.67 and the aggregate amount of each increase in the Maximum Available Amount expressly provided for in Section 2.5 as effected by assignments by Bank of America of any portion of its 364 Day Commitment pursuant to an Assignment and Acceptance in accordance with Section 12.1 at any time during which Bank of America shall hold 364 Day Notes in a stated amount in excess of $19,166,666.67 and (B) with respect to the Three Year Facility, (i) as of the Closing Date, $95,833,333.33, and (ii) at any time thereafter, the sum of $95,833,333.33 and the aggregate amount of each increase in the Maximum Available Amount expressly provided for in Section 2.5 as effected by assignments by Bank of America of any portion of its Three Year Commitment pursuant to an Assignment and Acceptance in accordance with Section 12.1 at any time during which Bank of America shall hold Three Year Notes in a stated amount in excess of $95,833,333.33; provided, however, that the Maximum Available Amount with respect to the 364 Day Facility shall at no time exceed the Total 364 Day Commitment and the Maximum Amount Available with respect to the Three Year Facility shall at no time exceed the Total Three Year Commitment. "MET-Rx Nutrition, Inc. Acquisition" means the acquisition by the Borrower of all of the capital stock of MET-Rx Nutrition, Inc. in accordance with the Purchase Agreement. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, contributions or has made, or been obligated to make, contributions within the preceding six (6) Fiscal Years. "Municipal Obligations" means general obligations issued by, and supported by the full taxing authority of, any state of the United States of America or of any municipal corporation or other public body organized under the laws of any such state which are rated in the highest investment rating category by both S&P and Moody's. "Notes" means, collectively, the Three Year Notes, the 364 Day Notes and the Swing Line Note . "Obligations" means the obligations, liabilities and Indebtedness of the Borrower with respect to (i) the principal and interest on the Loans as evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in respect of the Letters of Credit, (iii) all liabilities of Borrower to any Lender (or any affiliate of any Lender) which arise under a Swap Agreement, and (iv) the payment and performance of all other obligations, liabilities and Indebtedness of the Borrower to the Lenders (including the Issuing Bank), the Administrative Agent or BAS hereunder, under any one or more of the other Loan Documents or with respect to the Loans. "Operating Documents" means with respect to any corporation, limited liability company, partnership, limited partnership, limited 13 liability partnership or other legally authorized incorporated or unincorporated entity, the bylaws, operating agreement, partnership agreement, limited partnership agreement or other applicable documents relating to the operation, governance or management of such entity. "Organizational Action" means with respect to any corporation, limited liability company, partnership, limited partnership, limited liability partnership or other legally authorized incorporated or unincorporated entity, any corporate, organizational or partnership action (including any required shareholder, member or partner action), or other similar official action, as applicable, taken by such entity. "Organizational Documents" means with respect to any corporation, limited liability company, partnership, limited partnership, limited liability partnership or other legally authorized incorporated or unincorporated entity, the articles of incorporation, certificate of incorporation, articles of organization, certificate of limited partnership or other applicable organizational or charter documents relating to the creation of such entity. "Outstandings" means, collectively, at any date, the Letter of Credit Outstandings, Swing Line Outstandings and Revolving Credit Outstandings on such date. "Participation" means, (i) with respect to any Lender (other than the Issuing Bank) and a Letter of Credit, the extension of credit represented by the participation of such Lender hereunder in the liability of the Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in accordance with the terms hereof and (ii) with respect to any Lender (other than Bank of America) and a Swing Line Loan, the extension of credit represented by the participation of such Lender hereunder in the liability of Bank of America in respect of a Swing Line Loan made by Bank of America in accordance with the terms hereof. "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Pension Plan" means any employee pension benefit plan within the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (i) is maintained for employees of the Borrower or any of its ERISA Affiliates or is assumed by the Borrower or any of its ERISA Affiliates in connection with any Acquisition or (ii) has at any time been maintained for the employees of the Borrower or any current or former ERISA Affiliate. "Permitted Receivables Securitization" means nonrecourse sales and assignments of accounts receivable of the Borrower and its Subsidiaries to one or more special purpose entities (which sales and assignments constitute "true sales" under Statement of Financial Accounting Standards No. 125), in connection with the issuance of obligations by such special purpose entities (which may or may not be a Receivables Subsidiary) secured by such accounts, the proceeds of the issuance of which obligations shall be made available to the Borrower at such rates of advance, and the obligations issued by such special purpose entities shall be in such amount or amounts, bear such rate or rates of interest, and be subject to such customary terms and conditions, all as shall be reasonably acceptable to the Administrative Agent; provided, however, that the maximum principal amount which may be advanced at any time pursuant to the Permitted Receivables Securitization shall not exceed $30,000,000. "Person" means an individual, partnership, corporation, limited liability company, limited liability partnership, trust, unincorporated organization, association, joint venture or a government or agency or political subdivision thereof. "Pre-Refunded Municipal Obligations" means obligations of any state of the United States of America or of any municipal corporation 14 or other public body organized under the laws of any such state which are rated, based on the escrow, in the highest investment rating category by both S&P and Moody's and which have been irrevocably called for redemption and advance refunded through the deposit in escrow of Government Securities or other debt securities which are (i) not callable at the option of the issuer thereof prior to maturity, (ii) irrevocably pledged solely to the payment of all principal and interest on such obligations as the same becomes due and (iii) in a principal amount and bear such rate or rates of interest as shall be sufficient to pay in full all principal of, interest, and premium, if any, on such obligations as the same becomes due as verified by a nationally recognized firm of certified public accountants. "Prime Rate" means the per annum rate of interest established from time to time by Bank of America as its prime rate, which rate may not be the lowest rate of interest charged by Bank of America to its customers. "Principal Office" means the principal office of Bank of America, presently located at 101 North Tryon Street, 15th Floor, NC1 001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services, or such other office and address located within the United States as the Administrative Agent may from time to time designate. "Purchase Agreement" means that certain Merger Purchase Agreement dated as of December 10, 1999 by and among the Borrower, RSM Acquisition Corp., MET-Rx Nutrition, Inc. and all the Stockholders of MET-Rx Nutrition, Inc. (including all exhibits and schedules thereto), providing for the acquisition of the capital stock of MET-Rx Nutrition, Inc. for a purchase price not in excess of $108,000,000 (consisting of approximately $77,500,000 for the acquisition of such capital stock and approximately $30,500,000 for the prepayment of Existing Indebtedness) in the form previously furnished to the Administrative Agent, with only such amendments or modifications thereto as shall be consented to in writing by the Administrative Agent, which consent shall not be unreasonably withheld. "Rate Hedging Obligations" means, without duplication, any and all obligations of the Borrower or any Subsidiary (net of offsetting assets, if any), whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, Dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts, warrants and those commonly known as interest rate "swap" agreements; (ii) all other "derivative instruments" as defined in FASB 133 and which are subject to the reporting requirements of FASB 133; and (iii) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. "Receivables Subsidiary" means any Subsidiary that is created solely for the purpose of purchasing accounts receivable of the Borrower and its Subsidiaries in connection with a Permitted Receivables Securitization. "Regulation D" means Regulation D of the Board as the same may be amended or supplemented from time to time. "Reimbursement Obligation" shall mean at any time, the obligation of the Borrower with respect to any Letter of Credit to reimburse the Issuing Bank and the Lenders to the extent of their respective Participations (including by the receipt by the Issuing Bank of proceeds of Loans pursuant to Section 2.1(d)(iii)) for amounts theretofore paid by the Issuing Bank pursuant to a drawing under such Letter of Credit. 15 "Repurchase Agreement" means a repurchase agreement entered into with any financial institution whose debt obligations or commercial paper are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's. "Required Lenders" means, as of any date, Lenders on such date having Credit Exposures (as defined below) aggregating (i) if there shall be fewer than three (3) Lenders, 100% of the aggregate Credit Exposures of all Lenders on such date, and (ii) if there shall be three (3) or more Lenders, more than 50% of the aggregate "Credit Exposures" of all the Lenders on such date. For purposes of the preceding sentence, the amount of the "Credit Exposure" of each Lender shall be equal at all times (a) other than following the occurrence and during the continuance of an Event of Default, to the sum of its Revolving Credit Commitment, and (b) following the occurrence and during the continuance of an Event of Default, to the sum of (i) the aggregate principal amount of such Lender's Applicable Commitment Percentage of Revolving Credit Outstandings plus (ii) the amount of such Lender's Applicable Commitment Percentage of Letter of Credit Outstandings and Swing Line Outstandings; provided that, for the purpose of this definition only, (A) if any Lender shall have failed to fund its Applicable Commitment Percentage of any Advance, then the Revolving Credit Commitment of such Lender shall be deemed reduced by the amount it so failed to fund for so long as such failure shall continue and such Lender's Credit Exposure attributable to such failure shall be deemed held by any Lender making more than its Applicable Commitment Percentage of such Advance to the extent it covers such failure, (B) if any Lender shall have failed to pay to the Issuing Bank upon demand its Applicable Commitment Percentage of any drawing under any Letter of Credit resulting in an outstanding Reimbursement Obligation (whether by funding its Participation therein or otherwise), such Lender's Credit Exposure attributable to all Letter of Credit Outstandings shall be deemed to be held by the Issuing Bank until such Lender shall pay such deficiency amount to the Issuing Bank together with interest thereon as provided in Section 4.9 and (C) if any Lender shall have failed to pay to Bank of America on demand its Applicable Commitment Percentage of any Swing Line Loan (whether by funding its Participation therein or otherwise), such Lender's Credit Exposure attributable to all Swing Line Outstandings shall be deemed to be held by Bank of America until such Lender shall pay such deficiency amount to Bank of America together with interest thereon as provided in Section 4.9. "Reserve Requirement" means, at any time, the maximum rate at which reserves (including, without limitation, any marginal, special, supplemental, or emergency reserves) are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement. "Restricted Payment" means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Borrower or any Subsidiary Securities of its Subsidiaries (other than those payable or distributable solely to the Borrower or a Subsidiary) now or hereafter outstanding, except a dividend payable solely in shares of a class of stock to the holders of that class; (b) any redemption, conversion, exchange, retirement or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Borrower or any of its Subsidiaries (other than those payable or distributable solely to the Borrower or a Subsidiary) now or hereafter outstanding; (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, 16 options or other rights to acquire shares of any class of stock of Borrower or any Subsidiary Securities of its Subsidiaries now or hereafter outstanding; and (d) any issuance and sale of Subsidiary Securities of any Subsidiary of the Borrower (or any option, warrant or right to acquire such stock) other than to the Borrower. "Revolving Credit Commitment" means, with respect to each Lender, the obligation of such Lender to make Revolving Loans to the Borrower up to an aggregate principal amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Three Year Commitment or the Total 364 Day Commitment, as the case may be. "Revolving Credit Facilities" means the facilities described in Sections 2.1(a) and (b) hereof providing for Loans to the Borrower by the Lenders in the aggregate principal amount of the Total Revolving Credit Commitment. "Revolving Credit Outstandings" means, as of any date of determination, the aggregate principal amount of all Revolving Loans then outstanding. "Revolving Loan" means any borrowing pursuant to an Advance under either of the Revolving Credit Facilities in accordance with Section 2.1. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. "Solvent" means, when used with respect to any Person, that at the time of determination: (i) the fair value of its assets (both at fair valuation and at present fair saleable value on an orderly basis) is in excess of the total amount of its liabilities, including Contingent Obligations; and (ii) it is then able and expects to be able to pay its debts as they mature; and (iii) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. "Stated Three Year Termination Date" means January 6, 2003. "Subsidiary" means any corporation or other entity in which more than 50% of its outstanding Voting Securities or more than 50% of all equity interests is owned directly or indirectly by the Borrower and/or by one or more of the Borrower's Subsidiaries. "Swap Agreement" means one or more agreements between the Borrower and any Lender (or any affiliates of a Lender) with respect to Indebtedness evidenced by any or all of the Notes, on terms mutually acceptable to Borrower and such Person and approved by the Required Lenders, which agreements create Rate Hedging Obligations. "Swing Line" means the revolving line of credit established by Bank of America in favor of the Borrower pursuant to Section 2.4. "Swing Line Loans" means loans made by Bank of America to the Borrower pursuant to Section 2.4. "Swing Line Note" means the promissory note of the Borrower evidencing the Swing Line executed and delivered to Bank of America as provided in Section 2.3(c) substantially in the form of Exhibit F-3. 17 "Swing Line Outstandings" means, as of any date of determination, the aggregate principal amount of all Swing Line Loans then outstanding. "Termination Event" means: (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (unless the notice requirement has been waived by applicable regulation); or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4062(e) of ERISA; or (iii) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the PBGC; or (v) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA; or (x) any event or condition with respect to any Employee Benefit Plan which is regulated by any Foreign Benefit Law that results in the termination of such Employee Benefit Plan or the revocation of such Employee Benefit Plan's authority to operate under the applicable Foreign Benefit Law. "364 Day Commitment" means, with respect to each Lender, the obligation of such Lender to make Advances to the Borrower up to an aggregate principal amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the 364 Day Facility. "364 Day Facility" means the revolving credit facility providing for Loans of up to the Total 364 Day Commitment to the Borrower described in Section 2.1(a). "364 Day Extension Date" means January 5, 2001 and each date thereafter, if any, to which the 364 Day Termination Date has been extended pursuant to Section 2.6, but in no event later than the Three Year Termination Date. "364 Day Loan" means a Loan or Advance made to the Borrower pursuant to the 364 Day Facility. "364 Day Notes" means, collectively, the promissory notes of the Borrower evidencing Loans executed and delivered to the Lenders as provided in Section 2.3(a) hereof substantially in the form attached hereto as Exhibit F-1, with appropriate insertions as to amounts, dates and names of Lenders. "364 Day Outstandings" means the aggregate outstanding principal amount of all 364 Day Loans. "364 Day Termination Date" means the earlier of (i) the 364 Day Extension Date or (ii) the date of termination of Lenders' obligations pursuant to Section 10.1 upon the occurrence of an Event of Default, or (iii) such date as the Borrower may voluntarily permanently terminate the 364 Day Facility by payment in full of all 364 Day Outstandings and interest thereon, or (iv) the occurrence of the Three Year Termination Date. 18 "Three Year Commitment" means, with respect to each Lender, the obligation of such Lender to make Advances to the Borrower up to an aggregate principal amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Three Year Commitment. "Three Year Facility" means the revolving credit facility providing for loans of up to the Total Three Year Commitment to the Borrower described in Section 2.1(b). "Three Year Loan" means a Loan or Advance made to the Borrower pursuant to the Three Year Facility. "Three Year Notes" means, collectively, the promissory notes of the Borrower evidencing Three Year Loans executed and delivered to the Lenders as provided in Section 2.3(b) hereof substantially in the form attached hereto as Exhibit F-2, with appropriate insertions as to amounts, dates and names of Lenders. "Three Year Outstandings" means the sum of (i) all outstanding Three Year Loans, (ii) Letter of Credit Outstandings, and (iii) Swing Line Outstandings, all as at the date of determination. "Three Year Termination Date" means (i) the Stated Three Year Termination Date or (ii) such earlier date of termination of Lenders' obligations pursuant to Section 10.1 upon the occurrence of an Event of Default or (iii) such date as the Borrower may voluntarily permanently terminate the Three Year Facility (including the Swing Line Facility) by payment in full of all outstanding Three Year Loans (including the discharge of all Obligations to the Lenders and Bank of America with respect to Letters of Credit, Participations and Swing Line Loans. "Total Letter of Credit Commitment" means an amount not to exceed $5,000,000. "Total Revolving Credit Commitment" means the sum of Total 364 Day Commitment and the Total Three Year Commitment. "Total 364 Day Commitment" means, on any date, a principal amount equal to the Maximum Available Amount for the 364 Day Facility on such date; provided, however, that the Total 364 Day Commitment shall not exceed $25,000,000 and shall be reduced from time to time in accordance with Section 2.1(f). "Total Three Year Commitment" means, on any date, a principal amount equal to the Maximum Available Amount for the Three Year Facility on such date; provided, however, that the Total Three Year Commitment shall not exceed $125,000,000, and shall be reduced from time to time in accordance with Section 2.1(f). "Transaction Documents" means collectively, the Purchase Agreement and all other documents and instruments delivered in connection therewith and with the consummation of the MET-Rx Nutrition, Inc. Acquisition. "Type" shall mean any type of Loan (i.e., a Base Rate Loan or a Eurodollar Rate Loan). "Voting Securities" means shares of capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 19 "Year 2000 Compliant" means all computer applications (including those affected by information received from its suppliers and vendors) that are material to the Borrower's or any of its Subsidiaries' business and operations are able to perform properly date-sensitive functions involving all dates on and after January 1, 2000. 1.2. Rules of Interpretation. (a) All accounting terms not specifically defined herein shall have the meanings assigned to such terms and shall be interpreted in accordance with GAAP applied on a Consistent Basis. (b) Each term defined in Articles 1, 8 or 9 of the Florida Uniform Commercial Code shall have the meaning given therein unless otherwise defined herein, except to the extent that the Uniform Commercial Code of another jurisdiction is controlling, in which case such terms shall have the meaning given in the Uniform Commercial Code of the applicable jurisdiction. (c) The headings, subheadings and table of contents used herein or in any other Loan Document are solely for convenience of reference and shall not constitute a part of any such document or affect the meaning, construction or effect of any provision thereof. (d) Except as otherwise expressly provided, references in any Loan Document to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules are references to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules in or to such Loan Document. (e) All definitions set forth herein or in any other Loan Document shall apply to the singular as well as the plural form of such defined term, and all references to the masculine gender shall include reference to the feminine or neuter gender, and vice versa, as the context may require. (f) When used herein or in any other Loan Document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof. (g) References to "including" means including without limiting the generality of any description preceding such term, and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. (h) Except as otherwise expressly provided, all dates and times of day specified herein shall refer to such dates and times at Charlotte, North Carolina. (i) Whenever interest rates or fees are established in whole or in part by reference to a numerical percentage expressed as "___%", such arithmetic expression shall be interpreted in accordance with the convention that 1% = 100 basis points. (j) Each of the parties to the Loan Documents and their counsel have reviewed and revised, or requested (or had the opportunity to request) revisions to, the Loan Documents, and any rule of construction that ambiguities are to be resolved against the drafting party shall be inapplicable in the construing and interpretation of the Loan Documents and all exhibits, schedules and appendices thereto. 20 (k) Any reference to an officer of the Borrower or any other Person by reference to the title of such officer shall be deemed to refer to each other officer of such Person, however titled, exercising the same or substantially similar functions. (l) All references to any agreement or document as amended, modified or supplemented, or words of similar effect, shall mean such document or agreement, as the case may be, as amended, modified or supplemented from time to time only as and to the extent permitted therein and in the Loan Documents. 1.3. Accounting Principles. If any change after the Closing Date in GAAP as in effect on the Closing Date shall result in a change in any calculation required to determine compliance with any provision contained in this Agreement, the Borrower and the Lenders shall negotiate in good faith to amend such provision in a manner to reflect such change such that the determination of compliance with such provision shall yield the same substantive result as would have obtained prior to such change in GAAP. Until such an amendment is entered into, covenants shall be calculated in accordance with GAAP as in effect immediately preceding such change. ARTICLE II The Credit Facilities 2.1. Revolving Loans. (a) 364 Day Facility. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Advances to the Borrower, from time to time from the Closing Date until the 364 Day Termination Date on a pro rata basis as to the total borrowing requested by the Borrower under the 364 Day Facility on any day determined by its Applicable Commitment Percentage with respect to the 364 Day Facility up to but not exceeding the 364 Day Commitment of such Lender, provided, however, that the Lenders will not be required and shall have no obligation to make any Advance (i) so long as a Default or an Event of Default has occurred and is continuing or (ii) if the Administrative Agent, in accordance with the terms of this Agreement, has accelerated the maturity of the Notes as a result of an Event of Default; provided further, however, that immediately after giving effect to each Advance, the 364 Day Outstandings shall not exceed the Total 364 Day Commitment. Within such limits, the Borrower may borrow, repay and reborrow hereunder, on a Business Day from the Closing Date until, but (as to borrowings and reborrowings) not including, the 364 Day Termination Date; provided, however, that (x) no Eurodollar Loan shall be made which has an Interest Period that extends beyond the 364 Day Termination Date and (y) each Eurodollar Loan may, subject to the provisions of Section 4.2, be repaid only on the last day of the Interest Period with respect thereto unless such payment is accompanied by the additional payment, if any, required by Section 5.5. The Borrower agrees that if at any time the 364 Day Outstandings shall exceed the Total 364 Day Commitment, the Borrower shall immediately reduce the outstanding principal amount of the 364 Day Loans such that, as a result of such reduction, the 364 Day Outstandings shall not exceed the Total 364 Day Commitment. (b) Three Year Facility. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Advances to the Borrower under the Three Year Facility from time to time from the Closing Date until the Three Year Termination Date on a pro rata basis as to the total borrowing requested by the Borrower on any day determined by such Lender's Applicable Commitment Percentage with respect to the Three Year Facility up to but not exceeding the Three Year Commitment of such Lender, provided, however, that the Lenders will not be required and shall have no obligation to make any such Advance (i) so long as a Default or an Event of Default has occurred 21 and is continuing or (ii) if the Administrative Agent has accelerated the maturity of any of the Notes as a result of an Event of Default; provided further, however, that immediately after giving effect to each such Advance, the amount of Three Year Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings shall not exceed the Total Three Year Commitment. Within such limits and subject to the other terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow under the Three Year Facility on a Business Day from the Closing Date until, but (as to borrowings and reborrowings) not including, the Three Year Termination Date; provided, however, that (x) no Eurodollar Loan shall be made which has an Interest Period that extends beyond the Three Year Termination Date and (y) each Eurodollar Loan may, subject to the provisions of Section 4.2, be repaid only on the last day of the Interest Period with respect thereto unless such payment is accompanied by the additional payment, if any, required by Section 5.5. The Borrower agrees that if at any time the Three Year Outstandings shall exceed the Total Three Year Commitment, the Borrower shall immediately reduce the outstanding principal amount of the Three Year Loans such that, as a result of such reduction, the Three Year Outstandings shall not exceed the Total Three Year Commitment. (c) Amounts. (i) Except as otherwise permitted by the Lender from time to time, the amount of 364 Day Outstandings shall not exceed at any time the 364 Day Commitment, and in the event there shall be outstanding any such excess, the Borrower shall immediately make such payments and prepayments as shall be necessary to comply with the restriction. Each Advance under the 364 Day Facility shall be in an amount of at least $2,500,000, and, if greater than $2,500,000, an integral multiple of $500,000, or an amount equal to the then entire remaining amount available under the 364 Day Facility. (ii) Except as otherwise permitted by the Lenders from time to time, the amount of Three Year Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings shall not exceed at any time the Total Three Year Commitment, and, in the event there shall be outstanding any such excess, the Borrower shall immediately make such payments and prepayments as shall be necessary to comply with this restriction. At no time shall the outstanding principal amount of Swing Line Loans exceed $5,000,000. Each Advance under the Three Year Facility, other than Base Rate Refunding Loans, shall be in an amount of at least $2,500,000, and, if greater than $2,500,000, an integral multiple of $500,000, or an amount equal to the then entire remaining amount available under the Three Year Facility. (d) Advances. (i) An Authorized Representative shall give the Administrative Agent (1) at least three (3) Business Days' irrevocable telephonic notice of each Eurodollar Rate Loan (whether representing an additional borrowing or the Continuation of a borrowing hereunder or the Conversion of a borrowing hereunder from a Base Rate Loan to a Eurodollar Rate Loan) prior to 11:30 A.M. and (2) irrevocable telephonic notice of each Base Rate Loan (other than Base Rate Refunding Loans to the extent the same are effected without notice pursuant to Section 2.1(d)(iii) and whether representing an additional borrowing hereunder or the Conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans) prior to 11:30 A.M. on the day of such proposed Revolving Loan. Each such notice shall be effective upon receipt by the Administrative Agent, shall specify the amount of the borrowing, the Revolving Credit Facility under which it is requested, the Type of Revolving Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan, the Interest Period to be used in the computation of interest. The Authorized Representative shall provide the Administrative Agent written confirmation of each such telephonic notice in the form of a Borrowing Notice in the form of Exhibit D-1 or Interest Rate Selection Notice (as applicable) with appropriate insertions but failure to provide such confirmation shall not affect the validity of such telephonic notice. Notice of receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case may be, together with the amount of each Lender's portion of an Advance requested thereunder, shall be provided by the Administrative Agent to each Lender by telefacsimile transmission with reasonable promptness, but (provided 22 the Administrative Agent shall have received such notice by 11:30 A.M.) not later than 1:00 P.M. on the same day as the Administrative Agent's receipt of such notice. (ii) Not later than 2:00 P.M. on the date specified for each borrowing under this Section 2.1, each Lender shall, pursuant to the terms and subject to the conditions of this Agreement, make the amount of the Advance or Advances to be made by it on such day available by wire transfer to the Administrative Agent in the amount of its pro rata share, determined according to such Lender's Applicable Commitment Percentage of the Revolving Loan or Revolving Loans to be made on such day. Such wire transfer shall be directed to the Administrative Agent at the Principal Office and shall be in the form of Dollars constituting immediately available funds. The amount so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to the Borrower by delivery of the proceeds thereof to the Borrower's Account or otherwise as shall be directed in the applicable Borrowing Notice by the Authorized Representative and reasonably acceptable to the Administrative Agent. (iii) Notwithstanding the foregoing, if a drawing is made under any Letter of Credit, such drawing is honored by the Issuing Bank, and the Borrower shall not immediately fully reimburse the Issuing Bank in respect of such drawing from other funds available to the Borrower, (A) provided that the conditions to making a Revolving Loan as herein provided shall then be satisfied, the Reimbursement Obligation arising from such drawing shall be paid to the Issuing Bank by the Administrative Agent without the requirement of notice to or from the Borrower from immediately available funds which shall be advanced as a Base Rate Refunding Loan to the Administrative Agent at its Principal Office by each Lender under the Three Year Facility in an amount equal to such Lender's Applicable Commitment Percentage of such Reimbursement Obligation, and (B) if the conditions to making a Revolving Loan as herein provided shall not then be satisfied, each of the Lenders shall fund by payment to the Administrative Agent (for the benefit of the Issuing Bank) at its Principal Office in immediately available funds the purchase from the Issuing Bank of their respective Participations in the related Reimbursement Obligation based on their respective Applicable Commitment Percentages of the Total Letter of Credit Commitment. If a drawing is presented under any Letter of Credit in accordance with the terms thereof and the Borrower shall not immediately reimburse the Issuing Bank in respect thereof, then notice of such drawing or payment shall be provided promptly by the Issuing Bank to the Administrative Agent and the Administrative Agent shall provide notice to each Lender by telephone or telefacsimile transmission. If notice to the Lenders of a drawing under any Letter of Credit is given by the Administrative Agent at or before 12:00 noon on any Business Day, each Lender shall either make a Base Rate Refunding Loan or fund the purchase of its Participation as specified above in the amount of such Lender's Applicable Commitment Percentage of such drawing or payment and shall pay such amount to the Administrative Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds before 2:30 P.M. on the same Business Day. If such notice to the Lenders is given by the Administrative Agent after 12:00 noon on any Business Day, each Lender shall either make such Base Rate Refunding Loan or fund such purchase before 12:00 noon on the next following Business Day. (e) Repayment of Revolving Loans. The principal amount of each 364 Day Loan and each Three Year Loan shall be due and payable to the Administrative Agent for the benefit of each Lender in full on the 364 Day Termination Date, in the case of 364 Day Loans, and on the Three Year Termination Date, in the case of Three Year Loans, or earlier as specifically provided herein. The principal amount of any Revolving Loan may be prepaid in whole or in part on any Business Day, upon (A) at least three (3) Business Days' irrevocable telephonic notice in the case of each Revolving Loan that is a Eurodollar Rate Loan from an Authorized Representative (effective upon receipt) to the Administrative Agent prior to 11:30 A.M. and (B) irrevocable telephonic notice in the case of each Revolving Loan that is a Base Rate Loan from 23 an Authorized Representative (effective upon receipt) to the Administrative Agent prior to 10:30 A.M. on the day of such proposed repayment. The Authorized Representative shall provide the Administrative Agent written confirmation of each such telephonic notice but failure to provide such confirmation shall not effect the validity of such telephonic notice. All prepayments of 364 Day Loans made by the Borrower shall be in the amount of $2,500,000 or such greater amount which is an integral multiple of $500,000, or the amount equal to all 364 Day Outstandings, or such other amount as necessary to comply with Section 2.1(c). All prepayments of Three Year Loans made by the Borrower shall be in the amount of $2,500,000 or such greater amount which is an integral multiple of $500,000, or the amount equal to all Three Year Outstandings, or such other amount as necessary to comply with Section 2.1(c). All prepayments of Revolving Loans shall be applied first to the payment of Three Year Outstandings and second to the payment of 364 Day Outstandings. (f) Reductions. The Borrower shall, by notice from an Authorized Representative, have the right from time to time but not more frequently than once each calendar month, upon not less than three (3) Business Days' written notice to the Administrative Agent, effective upon receipt, to reduce either the Total 364 Day Commitment or the Total Three Year Commitment, or both; provided, however, that any prepayments of Revolving Loans as a result of such reductions shall be used first to reduce the Three Year Facility and second to reduce the 364 Day Facility. The Administrative Agent shall give each Lender, within one (1) Business Day of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed in writing), of such reduction. Each such reduction shall be in the aggregate amount of $1,000,000 or such greater amount which is in an integral multiple of $1,000,000, or the remaining Total 364 Day Commitment or Total Three Year Commitment, as the case may be, and shall permanently reduce the Total 364 Day Commitment or Total Three Year Commitment, as the case may be. Each reduction of the Total 364 Day Commitment shall be accompanied by payment of the 364 Day Loans to the extent that the principal amount of 364 Day Loans exceeds the Total 364 Day Commitment after giving effect to such reduction, together with accrued and unpaid interest on the amount prepaid. Each reduction of the Total Three Year Commitment shall be accompanied by payment of Three Year Loans to the extent the Three Year Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings exceeds the Total Three Year Commitment after giving effect to such reduction, together with accrued and unpaid interest on the amounts prepaid. 2.2. Use of Proceeds. The proceeds of the Loans made pursuant to the Revolving Credit Facility hereunder shall be used by the Borrower (i) to pay the approximately $108,000,000 purchase price for MET-Rx Nutrition, Inc. Acquisition (consisting of approximately $77,500,000 for the acquisition of the capital stock of the Acquired Company and approximately $30,500,000 for the prepayment of Existing Indebtedness) pursuant to the Transaction Documents, (ii) to pay fees and expenses incurred by the Borrower in connection with the MET-Rx Nutrition, Inc. Acquisition and (iii) for general working capital needs and other corporate purposes, including the making of Acquisitions and Capital Expenditures permitted hereunder. 2.3. Notes. (a) 364 Day Notes. 364 Day Loans made by each Lender shall be evidenced by the 364 Day Note payable to the order of such Lender in the respective amount of its Applicable Commitment Percentage of the Total 364 Day Commitment, which 364 Day Note shall be dated the Closing Date or a later date pursuant to an Assignment and Acceptance and shall be duly completed, executed and delivered by the Borrower. (b) Three Year Notes. Three Year Loans made by each Lender shall be evidenced by the Three Year Note payable to the order of such Lender in the respective amount of its Applicable Commitment Percentage of the Total Three Year Commitment, which Three Year Note shall be 24 dated the Closing Date or a later date pursuant to an Assignment and Acceptance and shall be duly completed, executed and delivered by the Borrower. (c) Swing Line Note. The Swing Line Outstandings shall be evidenced by a separate Swing Line Note payable to the order of the Bank of America in the amount of the Swing Line, which Note shall be dated the Closing Date and shall be duly completed, executed and delivered by the Borrower. 2.4. Swing Line. (a) Notwithstanding any other provision of this Agreement to the contrary, in order to administer the Three Year Facility in an efficient manner and to minimize the transfer of funds between the Administrative Agent and the Lenders, Bank of America shall make available Swing Line Loans to the Borrower prior to the Three Year Termination Date. Bank of America shall not be obligated to make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of Bank of America the Borrower is not in compliance with all the conditions to the making of Revolving Loans set forth in this Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing Line Outstandings exceed $5,000,000, or (iii) if after giving effect to such Swing Line Loan, the sum of the Swing Line Outstandings, Three Year Outstandings and Letter of Credit Outstandings exceeds the Total Three Year Commitment. The Company may, subject to the conditions set forth in the preceding sentence, borrow, repay and reborrow under this Section 2.4. Unless notified to the contrary by Bank of America, borrowings under the Swing Line shall be made in the minimum amount of $100,000 or, if greater, in amounts which are integral multiples of $100,000, or in the amount necessary to effect a Base Rate Refunding Loan, upon written request by telefacsimile transmission, effective upon receipt, by an Authorized Representative of the Borrower made to Bank of America not later than 12:30 P.M. on the Business Day of the requested borrowing. Each such Borrowing Notice shall specify the amount of the borrowing and the date of borrowing, and shall be in the form of Exhibit D-2, with appropriate insertions. Unless notified to the contrary by Bank of America, each repayment of a Swing Line Loan shall be in an amount which is an integral multiple of $100,000 or the aggregate amount of all Swing Line Outstandings. (b) The interest payable on Swing Line Loans is solely for the account of Bank of America. Swing Line Loans shall bear interest solely at the Base Rate. Swing Line Loans shall accrue interest (including interest at the Default Rate on certain conditions), and all accrued and unpaid interest on Swing Line Loans shall be payable, on the dates and in the manner provided in Sections 4.3 with respect to interest on Base Rate Loans. (c) Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from Bank of America a Participation therein in an amount equal to that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon demand made by Bank of America, each Lender shall, according to its Applicable Commitment Percentage of such Swing Line Loan, promptly provide to Bank of America its purchase price therefor in an amount equal to its Participation therein. Any Advance made by a Lender pursuant to demand of Bank of America of the purchase price of its Participation shall when made be deemed to be (i) provided that the conditions to making Revolving Loans shall be satisfied, a Base Rate Refunding Loan under Section 2.1(b), and (ii) in all other cases, the funding by each Lender of the purchase price of its Participation in such Swing Line Loan. The obligation of each Lender to so provide its purchase price to Bank of America shall be absolute and unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. The Borrower, at its option and subject to the terms hereof, may request an Advance pursuant to Section 2.1(b) in an amount sufficient to repay Swing Line Outstandings on any date and the Administrative Agent shall provide from the proceeds of such Advance to Bank of America the amount necessary to repay such Swing Line 25 Outstandings (which Bank of America shall then apply to such repayment) and credit any balance of the Advance in immediately available funds in the manner directed by the Borrower pursuant to Section 2.1(d)(ii). The proceeds of such Advances shall be paid to Bank of America for application to the Swing Line Outstandings and the Lenders shall then be deemed to have made Loans in the amount of such Advances. The Swing Line shall continue in effect until the Three Year Termination Date, at which time all Swing Line Outstandings and accrued interest thereon shall be due and payable in full. 2.5. Facility Increase. The Borrower has requested that BAS use its best efforts to arrange for additional commitments in order to increase the Maximum Available Amount with respect to the Revolving Credit Facilities from $115,000,000 to $150,000,000 and in order to facilitate such increase Bank of America and the Borrower have established the Total Revolving Credit Commitment at $150,000,000 (consisting of a Maximum Available Amount with respect to the 364 Day Facility of $25,000,000 and with respect to the Three Year Facility of $125,000,000). In the event that there shall be additional Persons which shall elect to become Lenders hereunder, Bank of America and the Borrower agree as follows: (a) The first $75,000,000 of additional commitments shall be applied to reduce the Revolving Credit Commitment of Bank of America on a pro rata basis between its 364 Day Commitment and its Three Year Commitment; (b) the next $35,000,000 of additional commitments shall be used to increase the Maximum Available Amount to $150,000,000 (consisting of a Maximum Available Amount with respect to the 364 Day Facility of $25,000,000 and a Maximum Available Amount with respect to the Three Year Facility of $125,000,000); (c) any additional commitments originated by BAS in excess of $110,000,000 may be used to further reduce the Revolving Credit Commitment of Bank of America. The addition of Lenders shall be accomplished by assignments made by Bank of America pursuant to Section 12.1 hereof. 2.6. 364 Day Facility Extension. (a) With the consent of the Lenders (the "Consenting Lenders") having sixty-six and two-thirds percent (66-2/3%) or more of the aggregate Credit Exposures of all Lenders (any Lender not so consenting being referred to as a "Non-Consenting Lender"), at each 364 Day Extension Date the Borrower can elect to extend the 364 Day Termination Date for an additional period of 364 days commencing on such 364 Day Extension Date; provided, however, that in no event shall the 364 Day Termination Date be extended beyond the Three Year Termination Date. (b) The Borrower shall notify the Lenders of its request for such an extension by delivering to the Administrative Agent notice of such request signed by an Authorized Representative not more than seventy-five (75) days nor less than forty-five (45) days prior to the applicable 364 Day Extension Date. Notice of receipt of such request shall be provided by the Administrative Agent to the Lenders. The Administrative Agent shall notify the Borrower in writing not later than thirty (30) days nor more than forty-five (45) days prior to the applicable 364 Day Extension Date of the decision of the Lenders. Failure by any Lender to respond to a request for an extension shall constitute a refusal of such Lender to give its consent to such extension. Failure by the Administrative Agent to give such notice to the Borrower as a result of not receiving the consent of Lenders having sixty-six and two-thirds percent (66-2/3%) or more of the aggregate Credit Exposures of all Lenders to such extension shall constitute refusal by the Lenders to extend the 364 Day Termination Date. 26 (c) If less than all of the Lenders consent to any such request which has been approved pursuant to subsection (a) of this Section 2.6, the Borrower shall arrange not less than fifteen (15) days prior to the 364 Day Termination Date (the "Replacement Lender Date") for one or more Consenting Lenders, or for one or more other banks or financial institutions complying with the requirements set forth in Section 12.1 and constituting an Eligible Assignee (any of the foregoing referred to as an "Assuming Lender"), as of the 364 Day Extension Date to effect an assignment of all of the 364 Day Commitment of one or more Non-Consenting Lenders for a purchase price equal to the aggregate principal balance of 364 Day Loans then owing to the Non-Consenting Lender, plus accrued interest and fees owing to the Non-Consenting Lender, as well as any amounts payable under Section 5.5. The Borrower shall deliver written notice to the Administrative Agent and each Consenting Lender of such arrangement with any Assuming Lender not less than fifteen (15) days prior to the 364 Day Termination Date. (d) On each 364 Day Extension Date, each Assuming Lender shall become a Lender for all purposes under this Agreement and the other Loan Documents without any further acknowledgment by or the consent of the other Lenders; provided, however, that the Administrative Agent shall have received not less than ten (10) days prior to such 364 Day Extension Date an Assignment and Acceptance, effective as of such 364 Day Extension Date, from each Assuming Lender duly executed by such Assuming Lender and the applicable Non-Consenting Lender with respect to the 364 Day Facility. The Total 364 Day Commitment on the 364 Day Extension Date shall be equal to the sum, without duplication, of the 364 Day Commitments of each Assuming Lender and each Consenting Lender. (e) If on any 364 Day Extension Date the Borrower has not so elected to extend the 364 Day Termination Date then in effect, or if Consenting Lenders with sufficient Credit Exposures have not consented to such extension, or if the Borrower shall not have satisfied requirements of clause (c) of this Section 2.6 with respect to Non-Consenting Lenders, then as of such 364 Day Termination Date, (i) the Total 364 Day Commitment shall be reduced to zero, and (ii) all 364 Day Outstandings shall be due and payable in full. ARTICLE III Letters of Credit 3.1. Letters of Credit. The Issuing Bank agrees, subject to the terms and conditions of this Agreement, upon request of the Borrower to issue from time to time for the account of the Borrower Letters of Credit upon delivery to the Issuing Bank of an Application and Agreement for Letter of Credit relating thereto in form and content acceptable to the Issuing Bank; provided, that (i) the Issuing Bank shall not be obligated to issue (or renew) any Letter of Credit if it has been notified by the Administrative Agent or has actual knowledge that a Default or Event of Default has occurred and is continuing, (ii) the Letter of Credit Outstandings shall not exceed the Total Letter of Credit Commitment and (iii) no Letter of Credit shall be issued (or renewed) if, after giving effect thereto, Letter of Credit Outstandings plus Three Year Outstandings plus Swing Line Outstandings shall exceed the Total Three Year Commitment. No Letter of Credit shall have an expiry date (including all rights of the Borrower or any beneficiary named in such Letter of Credit to require renewal) or payment date occurring later than the earlier to occur of one year after the date of its issuance or the seventh Business Day prior to the Stated Three Year Termination Date. 3.2. Reimbursement and Participations. (a) The Borrower hereby unconditionally agrees to pay to the Issuing Bank immediately on demand at the Principal Office all amounts required to pay all drafts drawn or purporting to be drawn under the Letters of Credit and all reasonable expenses incurred by the Issuing 27 Bank in connection with the Letters of Credit, and in any event and without demand to place in possession of the Issuing Bank (which shall include Advances under the Three Year Facility if permitted by Section 2.1 and Swing Line Loans if permitted by Section 2.4) sufficient funds to pay all debts and liabilities arising under any Letter of Credit. The Issuing Bank agrees to give the Borrower prompt notice of any request for a draw under a Letter of Credit. The Issuing Bank may charge any account the Borrower may have with it for any and all amounts the Issuing Bank pays under a Letter of Credit, plus charges and reasonable expenses as from time to time agreed to by the Issuing Bank and the Borrower; provided that to the extent permitted by Section 2.1(d)(iii) and Section 2.4, amounts shall be paid pursuant to Advances under the Three Year Facility or, if the Borrower shall elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank interest on any Reimbursement Obligations not paid when due hereunder at the Default Rate. (b) In accordance with the provisions of Section 2.1(d), the Issuing Bank shall notify the Administrative Agent of any drawing under any Letter of Credit promptly following the receipt by the Issuing Bank of such drawing. (c) Each Lender (other than the Issuing Bank) shall automatically acquire on the date of issuance thereof, a Participation in the liability of the Issuing Bank in respect of each Letter of Credit in an amount equal to such Lender's Applicable Commitment Percentage of such liability, and to the extent that the Borrower is obligated to pay the Issuing Bank under Section 3.2(a), each Lender (other than the Issuing Bank) thereby shall absolutely, unconditionally and irrevocably assume, and shall be unconditionally obligated to pay to the Issuing Bank, its Applicable Commitment Percentage of the liability of the Issuing Bank under such Letter of Credit in the manner and with the effect provided in Section 2.1(d)(iii). (d) Simultaneously with the making of each payment by a Lender to the Issuing Bank pursuant to Section 2.1(d)(iii)(B), such Lender shall, automatically and without any further action on the part of the Issuing Bank or such Lender, acquire a Participation in an amount equal to such payment (excluding the portion thereof constituting interest accrued prior to the date the Lender made its payment) in the related Reimbursement Obligation of the Borrower. Each Lender's obligation to make payment to the Administrative Agent for the account of the Issuing Bank pursuant to Section 2.1(d)(iii) and Section 3.2(c), and the right of the Issuing Bank to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and shall be made without any offset, abatement, withholding or reduction whatsoever. In the event the Lenders have purchased Participations in any Reimbursement Obligation as set forth above, then at any time payment (in fully collected, immediately available funds) of such Reimbursement Obligation, in whole or in part, is received by the Issuing Bank from the Borrower, the Issuing Bank shall promptly pay to each Lender an amount equal to its Applicable Commitment Percentage of such payment from the Borrower. (e) Promptly following the end of each calendar quarter, the Issuing Bank shall deliver to the Administrative Agent a notice describing the aggregate undrawn amount of all Letters of Credit at the end of such quarter. Upon the request of any Lender from time to time, the Issuing Bank shall deliver to the Administrative Agent, and the Administrative Agent shall deliver to such Lender, any other information reasonably requested by such Lender with respect to each Letter of Credit outstanding. (f) The issuance by the Issuing Bank of each Letter of Credit shall, in addition to the conditions precedent set forth in Article VI, be subject to the conditions that such Letter of Credit be in such form and contain such terms as shall be reasonably satisfactory to the Issuing Bank consistent with the then current practices and procedures of the Issuing Bank with respect to similar letters of credit, and the 28 Borrower shall have executed and delivered such other instruments and agreements relating to such Letters of Credit as the Issuing Bank shall have reasonably requested consistent with such practices and procedures and shall not be in conflict with any of the express terms herein contained. All Letters of Credit shall be issued pursuant to and subject to the Uniform Customs and Practice for Documentary Credits, 1993 revision, International Chamber of Commerce Publication No. 500 or, if the Issuing Bank shall elect by express reference in an affected Letter of Credit, the International Chamber of Commerce International Standby Practices commonly referred to as "ISP98", or any subsequent amendment or revision of either thereof. (g) The Borrower agrees that the Issuing Bank may, in its sole discretion, accept or pay, as complying with the terms of any Letter of Credit, any drafts or other documents otherwise in order which may be signed or issued by an administrator, executor, trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, liquidator, receiver, attorney in fact or other legal representative of a party who is authorized under such Letter of Credit to draw or issue any drafts or other documents. (h) Without limiting the generality of the provisions of Section 12.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing Bank, each other Lender and the Administrative Agent from and against any and all claims and damages, losses, liabilities, reasonable costs and expenses which the Issuing Bank, such other Lender or the Administrative Agent may incur (or which may be claimed against the Issuing Bank, such other Lender or the Administrative Agent) by any Person by reason of or in connection with the issuance or transfer of or payment or failure to pay under any Letter of Credit; provided that the Borrower shall not be required to indemnify the Issuing Bank, any other Lender or the Administrative Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, (i) caused by the willful misconduct or gross negligence of the party to be indemnified or (ii) caused by the failure of the Issuing Bank to pay under any Letter of Credit after the presentation to it of a request for payment strictly complying with the terms and conditions of such Letter of Credit, unless such payment is prohibited by any law, regulation, court order or decree. The indemnification and hold harmless provisions of this Section 3.2(h) shall survive repayment of the Obligations, occurrence of the Facility Termination Date and expiration or termination of this Agreement. (i) Without limiting Borrower's rights as set forth in Section 3.2(h), the obligation of the Borrower to immediately reimburse the Issuing Bank for drawings made under Letters of Credit and the Issuing Bank's right to receive such payment shall be absolute, unconditional and irrevocable, and such obligations of the Borrower shall be performed strictly in accordance with the terms of this Agreement and such Letters of Credit and the related Application and Agreement for any Letter of Credit, under all circumstances whatsoever, including the following circumstances: (i) any lack of validity or enforceability of the Letter of Credit, the obligation supported by the Letter of Credit or any other agreement or instrument relating thereto (collectively, the "Related LC Documents"); (ii) any amendment or waiver of or any consent to or departure from all or any of the Related LC Documents; (iii) the existence of any claim, setoff, defense (other than the defense of payment in accordance with the terms of this Agreement) or other rights which the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), the Administrative Agent, the Lenders or any other Person, whether in connection with the Loan Documents, the Related LC Documents or any unrelated transaction; 29 (iv) any breach of contract or other dispute between the Borrower and any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom such beneficiary or any such transferee may be acting), the Administrative Agent, the Lenders or any other Person; (v) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (vi) any delay, extension of time, renewal, compromise or other indulgence or modification granted or agreed to by the Administrative Agent, with or without notice to or approval by the Borrower in respect of any of Borrower's Obligations under this Agreement; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. ARTICLE IV Eurodollar Funding, Fees, and Payment Conventions 4.1. Interest Rate Options. Eurodollar Rate Loans and Base Rate Loans may be outstanding at the same time and, so long as no Default or Event of Default shall have occurred and be continuing, the Borrower shall have the option to elect the Type of Loan and the duration of the initial and any subsequent Interest Periods and to Convert Revolving Loans in accordance with Sections 2.1(d)(i) and 4.2, as applicable; provided, however, (a) there shall not be outstanding at any one time Eurodollar Rate Loans having more than six (6) different Interest Periods, (b) each Eurodollar Rate Loan (including each Conversion into and each Continuation as a Eurodollar Rate Loan) shall be in an amount of $2,500,000 or, if greater than $2,500,000, an integral multiple of $500,000, and (c) no Eurodollar Rate Loan shall have an Interest Period that extends beyond the 364 Day Termination Date in the case of a 364 Day Loan or the Stated Three Year Termination Date in the case of a Three Year Loan. If the Administrative Agent does not receive a Borrowing Notice or an Interest Rate Selection Notice giving notice of election of the duration of an Interest Period or of Conversion of any Loan to or Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by Sections 2.1(d)(i) and 4.2, as applicable, the Borrower shall be deemed to have elected to obtain or Convert such Loan to (or Continue such Loan as) a Base Rate Loan until the Borrower notifies the Administrative Agent in accordance with Section 4.2. The Borrower shall not be entitled to elect to Continue any Loan as or Convert any Loan into a Eurodollar Rate Loan if a Default or Event of Default shall have occurred and be continuing. 4.2. Conversions and Elections of Subsequent Interest Periods. Subject to the limitations set forth in the definition of "Interest Period" and in Section 4.1 and Article V, the Borrower may: (a) upon delivery of telephonic notice to the Administrative Agent (which shall be irrevocable) on or before 10:30 A.M. on any Business Day, Convert any Eurodollar Rate Loan to a Base Rate Loan on the last day of the Interest Period for such Eurodollar Rate Loan; and (b) provided that no Default or Event of Default shall have occurred and be continuing, upon delivery of telephonic notice to the Administrative Agent (which shall be irrevocable) on or before 10:30 A.M. three (3) Business Days' prior to the date of such Conversion or Continuation: 30 (i) elect a subsequent Interest Period for any Eurodollar Rate Loan to begin on the last day of the then current Interest Period for such Eurodollar Rate Loan; or (ii) Convert any Base Rate Loan to a Eurodollar Rate Loan on any Business Day. Each such notice shall be effective upon receipt by the Administrative Agent, shall specify the amount of the Eurodollar Rate Loan affected, the Revolving Credit Facility under which such Revolving Loans is or is to be outstanding and, if a Continuation as or Conversion into a Eurodollar Rate Loan, the Interest Period to be used in the computation of interest. The Authorized Representative shall provide the Administrative Agent written confirmation of each such telephonic notice in the form of a Borrowing Notice or Interest Rate Selection Notice (as applicable) with appropriate insertions but failure to provide such confirmation shall not affect the validity of such telephonic notice. Notice of receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case may be, shall be provided by the Administrative Agent to each Lender by telefacsimile transmission with reasonable promptness, but (provided the Administrative Agent shall have received such notice by 10:30 A.M.) not later than 3:00 P.M. on the same day as the Administrative Agent's receipt of such notice. All such Continuations or Conversions of Loans shall be effected pro rata based on the Applicable Commitment Percentages of the Lenders for the Revolving Credit Facility under which such Loans are outstanding. 4.3. Payment of Interest. The Borrower shall pay interest on the outstanding and unpaid principal amount of each Revolving Loan, commencing on the first date of such Revolving Loan until such Revolving Loan shall be repaid, at the applicable Base Rate or Eurodollar Rate as designated by the Borrower in the related Borrowing Notice or Interest Rate Selection Notice or as otherwise provided hereunder. Interest on each Revolving Loan shall be paid on the earlier of (a) in the case of any Base Rate Loan, quarterly in arrears of the last Business Day of each March, June, September and December, commencing on March 31, 2000, until the 364 Day Termination Date or the Three Year Termination Date, as applicable, at which date the entire principal amount of and all accrued interest on the 364 Day Loans or Three Year Loans, as applicable, shall be paid in full, (b) in the case of any Eurodollar Rate Loan, on last day of the applicable Interest Period for such Eurodollar Rate Loan and if such Interest Period extends for more than three (3) months, at intervals of three (3) months after the first day of such Interest Period, and (c) upon payment in full of the related Revolving Loan; provided, however, that if any Event of Default shall occur and be continuing, all amounts outstanding hereunder shall bear interest thereafter until paid in full at the Default Rate. 4.4. Prepayments of Eurodollar Rate Loans. Whenever any payment of principal shall be made in respect of any Loan hereunder, whether at maturity, on acceleration, by optional or mandatory prepayment or as otherwise required or permitted hereunder, with the effect that any Eurodollar Rate Loan shall be prepaid in whole or in part prior to the last day of the Interest Period applicable to such Eurodollar Rate Loan, such payment of principal shall be accompanied by the additional payment, if any, required by Section 5.5. 4.5. Manner of Payment. (a) Each payment of principal (including any prepayment) and payment of interest and fees, and any other amount required to be paid by or on behalf of the Borrower to the Lenders, the Issuing Bank, the Administrative Agent, or Bank of America with respect to any Loan, Letter of Credit, Reimbursement Obligation, or Swing Line Loan, shall be made to the Administrative Agent at the Principal Office in Dollars in immediately available funds without condition or deduction or for any setoff, recoupment, deduction or counterclaim on or before 12:30 P.M. on the date such payment is due. Upon the request of the Borrower, the Administrative Agent may, but shall not be obligated to, debit the amount of such payment from any one or more ordinary deposit accounts of the Borrower with the Administrative Agent. 31 (b) Any payment made by or on behalf of the Borrower that is not made both in Dollars in immediately available funds and prior to 12:30 P.M. on the date such payment is to be made shall constitute a non-conforming payment. Any such non-conforming payment shall not be deemed to be received until the later of (i) the time such funds become available funds and (ii) the next Business Day. Any non-conforming payment may constitute or become a Default or Event of Default as otherwise provided herein. Interest shall continue to accrue at the Default Rate on any principal or fees as to which no payment or a non-conforming payment is made from the date such amount was due and payable until the later of (i) the date such funds become available funds or (ii) the next Business Day. (c) In the event that any payment hereunder or under any of the Notes becomes due and payable on a day other than a Business Day, then such due date shall be extended to the next succeeding Business Day unless provided otherwise under the definition of "Interest Period"; provided, however, that interest shall continue to accrue during the period of any such extension; and provided further, however, that in no event shall any such due date be extended beyond the Three Year Termination Date. 4.6. Fees. (a) Commitment Fee. For the period beginning on the Closing Date and ending on the Three Year Termination Date, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of the Lenders based on their relevant Applicable Commitment Percentages, commitment fees with respect to the 364 Day Facility and with respect to the Three Year Facility equal to the relevant Applicable Commitment Fee multiplied by (i) with respect to the 364 Day Facility, the average daily amount by which the Total 364 Day Commitment exceeds the 364 Day Outstandings and (ii) with respect to the Three Year Facility, the average daily amount by which the Total Three Year Commitment exceeds the sum of (A) Three Year Outstandings without giving effect to Swing Line Outstandings plus (B) Letter of Credit Outstandings. Such fees shall be due in arrears on the last Business Day of each March, June, September and December, commencing March 31, 2000 to and on the 364 Day Termination Date and on the Three Year Termination Date, as applicable. Notwithstanding the foregoing, so long as any Lender fails to make available any portion of its Revolving Credit Commitment when requested, such Lender shall not be entitled to receive payment of its pro rata share of such fee until such Lender shall make available such portion. (b) Letter of Credit Facility Fees. The Borrower shall pay to the Administrative Agent, for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages for the Three Year Facility, a fee on the aggregate amount available to be drawn on each outstanding Letter of Credit at a rate equal to the Applicable Margin for Eurodollar Rate Loans. Such fees shall be due with respect to each Letter of Credit quarterly in arrears on the last day of each March, June, September and December, the first such payment to be made on the first such date occurring after the date of issuance of a Letter of Credit. (c) Letter of Credit Fronting and Administrative Fees. From and after the date on which there is more than one Lender, the Borrower shall pay to the Issuing Bank a fronting fee of one-eighth of one percent per annum (.125%) on the aggregate amount available to be drawn on each outstanding Letter of Credit, such fee to be payable quarterly in arrears with respect to each Letter of Credit on the dates established in Section 4.6(b) for the payment of Letter of Credit facility fees with respect to such Letter of Credit. The Borrower shall also pay to the Issuing Bank such administrative fee and other fees, if any, in connection with the Letters of Credit in such amounts and at such times as the Issuing Bank and the Borrower shall agree from time to time. 32 (d) Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for the Administrative Agent's individual account, an annual Administrative Agent's fee, such fee to be payable in such amounts and at such dates as from time to time agreed to by the Borrower and Administrative Agent in writing. (e) Syndication Costs and Fees. The Borrower agrees to pay to the Administrative Agent, for the benefit of the Lenders, any breakage costs, charges or fees incurred with respect to Eurodollar Rate Loans made by the Lenders during the 180-day period following the Closing Date in connection with the syndication of the Revolving Credit Facilities by BAS after the Closing Date as contemplated in Section 2.5. The Borrower acknowledges and agrees that during such period the incurrence of such costs will not be a basis for withholding consent as to a proposed lender as an Eligible Assignee. 4.7. Pro Rata Payments. Except as otherwise specified herein, (a) each payment on account of the principal of and interest on Loans, the fees described in Section 4.6(a) and (b), and Swing Line Loans and Reimbursement Obligations as to which the Lenders have funded their respective Participations which remain outstanding, shall be made to the Administrative Agent for the account of the Lenders pro rata based on their relevant Applicable Commitment Percentages, and (b) the Administrative Agent will promptly distribute to the Lenders in immediately available funds payments received in fully collected, immediately available funds from the Borrower. 4.8. Computation of Rates and Fees. Except as may be otherwise expressly provided, all interest rates (including the Base Rate, each Eurodollar Rate, and the Default Rate) and fees shall be computed on the basis of a year of 360 days and calculated for actual days elapsed. 4.9. Deficiency Advances; Failure to Purchase Participations. No Lender shall be responsible for any default of any other Lender in respect to such other Lender's obligation to make any Loan or Advance hereunder or to fund its purchase of any Participation hereunder nor shall the 364 Day Commitment or Three Year Commitment or Letter of Credit Commitment of any Lender hereunder be increased as a result of such default of any other Lender. Without limiting the generality of the foregoing or the provisions of Section 4.10, in the event any Lender shall fail to advance funds to the Borrower as herein provided, the Administrative Agent may in its discretion, but shall not be obligated to, advance under the applicable Note in its favor as a Lender all or any portion of such amount or amounts (each, a "deficiency advance") and shall thereafter be entitled to payments of principal of and interest on such deficiency advance in the same manner and at the same interest rate or rates to which such other Lender would have been entitled had it made such Advance under its Note; provided that, (i) such defaulting Lender shall not be entitled to receive payments of principal, interest or fees with respect to such deficiency advance until such deficiency advance (together with interest thereon as provided in clause (ii)) shall be paid by such Lender and (ii) upon payment to the Administrative Agent from such other Lender of the entire outstanding amount of each such deficiency advance, together with accrued and unpaid interest thereon, from the most recent date or dates interest was paid to the Administrative Agent by the Borrower on each Loan comprising the deficiency advance at the Federal Funds Rate, then such payment shall be credited against the applicable Note of the Administrative Agent in full payment of such deficiency advance and the Borrower shall be deemed to have borrowed the amount of such deficiency advance from such other Lender as of the most recent date or dates, as the case may be, upon which any payments of interest were made by the Borrower thereon. In the event any Lender shall fail to fund its purchase of a Participation after notice from the Issuing Bank or Bank of America as the Swing Line lender, as applicable, such Lender shall pay to the Issuing Bank or Bank of America as the Swing Line lender, as applicable, such amount on demand, together with interest on the amount so due from the date of such notice at the Federal Funds Rate on the date such purchase price is received by the Issuing Bank or Bank of America as the Swing Line lender, as applicable. 4.10. Intraday Funding. Without limiting the provisions of Section 4.9, unless the Borrower or any Lender has notified the Administrative Agent not later than 12:00 Noon of the Business Day before the date any payment (including 33 in the case of Lenders any Advance) to be made by it is due, that it does not intend to remit such payment, the Administrative Agent may, in its discretion, assume that the Borrower or each Lender, as the case may be, has timely remitted such payment in the manner required hereunder and may, in its discretion and in reliance thereon, make available such payment (or portion thereof) to the Person entitled thereto as otherwise provided herein. If such payment was not in fact remitted to the Administrative Agent in the manner required hereunder, then: (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the amount of such assumed payment made available to such Lender, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent at the Federal Funds Rate; and (ii) if any Lender failed to make such payment, the Administrative Agent shall be entitled to recover such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent promptly shall notify the Borrower, and the Borrower shall promptly pay such corresponding amount to the Administrative Agent in immediately available funds upon receipt of such demand. The Administrative Agent also shall be entitled to recover interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, (A) from such Lender at a rate per annum equal to the daily Federal Funds Rate or (B) from the Borrower, at a rate per annum equal to the interest rate applicable to the Loan which includes such corresponding amount. Until the Administrative Agent shall recover such corresponding amount together with interest thereon, such corresponding amount shall constitute a deficiency advance within the meaning of Section 4.9. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. ARTICLE V Change in Circumstances 5.1. Increased Cost and Reduced Return. (a) If, after the date hereof, the adoption of any applicable law, rule, or regulation, or any change in any applicable law, rule, or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such governmental authority, central bank, or comparable agency: (i) shall subject such Lender (or its Applicable Lending Office) to any tax, duty, or other charge with respect to any Eurodollar Rate Loans, its Note, or its obligation to make Eurodollar Rate Loans, or change the basis of taxation of any amounts payable to such Lender (or its Applicable Lending Office) under this Agreement or its Note in respect of any Eurodollar Rate Loans (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office); (ii) shall impose, modify, or deem applicable any reserve, special deposit, assessment, or similar requirement (other than the Reserve Requirement utilized in the determination of the Eurodollar Rate) relating to any 34 extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (or its Applicable Lending Office), including the Revolving Credit Commitment of such Lender hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) or on the London interbank market any other condition affecting this Agreement or its Note or any of such extensions of credit or liabilities or commitments; and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, Converting into, Continuing, or maintaining any Loans or to reduce any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or its Note with respect to any Eurodollar Rate Loans, then the Borrower shall pay to such Lender on demand such amount or amounts as will compensate such Lender for such increased cost or reduction. If any Lender requests compensation by the Borrower under this Section 5.1(a), the Borrower may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender to make or Continue Loans of the Type with respect to which such compensation is requested, or to Convert Loans of any other Type into Loans of such Type, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 5.4 shall be applicable); provided that such suspension shall not affect the right of such Lender to receive the compensation so requested. (b) If, after the date hereof, any Lender shall have determined that the adoption of any applicable law, rule, or regulation regarding capital adequacy or any change therein or in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) Each Lender shall promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section 5.1 and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming compensation under this Section 5.1 shall furnish to the Borrower and the Administrative Agent a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error and the basis therefore. In determining such amount, such Lender may use any reasonable averaging and attribution methods. 5.2. Limitation on Types of Loans. If on or prior to the first day of any Interest Period for any Eurodollar Rate Loan: (a) the Administrative Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or 35 (b) the Required Lenders determine (which determination shall be conclusive) and notify the Administrative Agent that the Eurodollar Rate will not adequately and fairly reflect the cost to the Lenders of funding Eurodollar Rate Loans for such Interest Period; then the Administrative Agent shall give the Borrower prompt notice thereof specifying the relevant Type of Loans and the relevant amounts or periods, and so long as such condition remains in effect, the Lenders shall be under no obligation to make additional Loans of such Type, Continue Loans of such Type, or to Convert Loans of any other Type into Loans of such Type and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Loans of the affected Type, either prepay such Loans or Convert such Loans into another Type of Loan in accordance with the terms of this Agreement. 5.3. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such Lender shall promptly notify the Borrower thereof and such Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans into Eurodollar Rate Loans shall be suspended until such time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in which case the provisions of Section 5.4 shall be applicable). 5.4. Treatment of Affected Loans. If the obligation of any Lender to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other Type into, Loans of a particular Type shall be suspended pursuant to Section 5.1 or 5.3 hereof (Loans of such Type being herein called "Affected Loans" and such Type being herein called the "Affected Type"), such Lender's Affected Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for Affected Loans (or, in the case of a Conversion required by Section 5.3 hereof, on such earlier date as such Lender may specify to the Borrower with a copy to the Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 5.1 or 5.3 hereof that gave rise to such Conversion no longer exist: (a) to the extent that such Lender's Affected Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender's Affected Loans shall be applied instead to its Base Rate Loans; and (b) all Loans that would otherwise be made or Continued by such Lender as Loans of the Affected Type shall be made or Continued instead as Base Rate Loans, and all Loans of such Lender that would otherwise be Converted into Loans of the Affected Type shall be Converted instead into (or shall remain as) Base Rate Loans. If such Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the Conversion of such Lender's Affected Loans pursuant to this Section 5.4 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Loans of the Affected Type made by other Lenders are outstanding, such Lender's Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Loans of the Affected Type, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding Loans of the Affected Type and by such Lender are held pro rata (as to principal amounts, Types, and Interest Periods) in accordance with their respective Revolving Credit Commitments. 5.5. Compensation. Upon the request of any Lender, the Borrower shall pay to such Lender such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost, or expense (including loss of anticipated profits) incurred by it as a result of: (a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 10.1) on a date other than the last day of the Interest Period for such Loan; or 36 (b) any failure by the Borrower for any reason (including, without limitation, the failure of any condition precedent specified in Article VI to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate Loan on the date for such borrowing, Conversion, Continuation, or prepayment specified in the relevant notice of borrowing, prepayment, Continuation, or Conversion under this Agreement. 5.6. Taxes. (a) Any and all payments by the Borrower to or for the account of any Lender or the Administrative Agent hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or the Administrative Agent (as the case may be) is organized or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to any Lender or the Administrative Agent, (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 5.6) such Lender or the Administrative Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, and (iv) the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 12.2, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) The Borrower agrees to indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 5.6) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto. (d) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Borrower or the Administrative Agent (but only so long as such Lender remains lawfully able to do so), shall provide the Borrower and the Administrative Agent with (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 (including Form W-8BEN or W-8EC1) or W-9, as appropriate, or any successor form prescribed by the Internal Revenue Service, and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is 37 entitled to an exemption from or a reduced rate of tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) For any period with respect to which a Lender has failed to provide the Borrower and the Administrative Agent with the appropriate form pursuant to Section 5.6(d) (unless such failure is due to a change in treaty, law, or regulation occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 5.6(a) or 5.6(b) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) If the Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this Section 5.6, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (g) Within thirty (30) days after the date of any payment of Taxes, the Borrower shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing such payment. (h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 5.6 shall survive the termination of the Revolving Credit Commitments and the payment in full of the Notes and the Facility Termination Date. ARTICLE VI Conditions to Making Loans and Issuing Letters of Credit 6.1. Conditions of Initial Advance. The obligation of the Lenders to make the initial Advance under the Revolving Credit Facilities, and of the Issuing Bank to issue any Letter of Credit, and of Bank of America to make any Swing Line Loan, is subject to the conditions precedent that: (a) the Administrative Agent shall have received on the Closing Date, in form and substance satisfactory to the Administrative Agent and Lenders, the following: (i) executed originals of each of this Agreement, the Notes, the initial Facility Guaranties of all Domestic Subsidiaries, other than any Receivables Subsidiaries, existing on the Closing Date including the Acquired Company and its subsidiaries, the LC Account Agreement, the other Loan Documents, together with all schedules and exhibits thereto; (ii) the favorable written opinion or opinions with respect to the Loan Documents and the transactions contemplated thereby of special counsel to the Credit Parties dated the Closing Date, addressed to the Administrative Agent and the Lenders and satisfactory to Smith Helms Mulliss & Moore, L.L.P., special counsel to the Administrative Agent, substantially in the form of Exhibit G; (iii) resolutions of the boards of directors or other appropriate governing body (or of the appropriate committee 38 thereof) of each Credit Party certified by its secretary or assistant secretary as of the Closing Date, approving and adopting the Loan Documents to be executed by such Person, and authorizing the execution and delivery thereof; (iv) specimen signatures of officers or other appropriate representatives executing the Loan Documents on behalf of each of the Credit Parties, certified by the secretary or assistant secretary of such Credit Party; (v) the Organizational Documents of each of the Credit Parties certified as of a recent date by the Secretary of State of its state of organization; (vi) Operating Documents of each of the Credit Parties certified as of the Closing Date as true and correct by its secretary or assistant secretary; (vii) certificates issued as of a recent date by the Secretaries of State of the respective jurisdictions of formation of each of the Credit Parties as to the due existence and good standing of such Person; (viii) appropriate certificates of qualification to do business, good standing and, where appropriate, authority to conduct business under assumed name, issued in respect of each of the Credit Parties as of a recent date by the Secretary of State or comparable official of each jurisdiction in which the failure to be qualified to do business or authorized so to conduct business could have a Material Adverse Effect; (ix) notice of appointment of the initial Authorized Representative(s); (x) certificate of an Authorized Representative dated the Closing Date demonstrating compliance with the financial covenants contained in Sections 9.1(a) and (b) as of the end of the fiscal quarter most recently ended prior to the Closing Date and based on the Historical Pro Forma Financial Statements, substantially in the form of Exhibit H; (xi) the Historical Financial Statements and Historical Pro Forma Financial Statements and all other financial statements and projections referred to in Section 7.6(a); (xii) the executed Purchase Agreement, certified by the secretary or assistant secretary of the Borrower and evidence of the consummation of the MET-Rx Nutrition, Inc. Acquisition in compliance with applicable law and regulatory approvals (including Hart-Scott Rodino clearance, if required); (xiii) the corporate capital and ownership structure (including articles of incorporation and bylaws), shareholder agreements and management of the Borrower and its Subsidiaries (after giving effect to the MET-Rx Nutrition, Inc. Acquisition) shall be satisfactory to the Administrative Agent; (xiv) evidence of all insurance required by the Loan Documents; (xv) evidence of the payment in full of the Existing Debt; (xvi) an initial Borrowing Notice, if any, and, if elected by the Borrower, Interest Rate Selection Notice; (xvii) evidence that all fees payable by the Borrower on the Closing Date to the Administrative Agent, BAS and the Lenders have been paid in full; 39 (xviii) evidence that the certificate of merger has been filed with the Secretary of State of Delaware as to the merger of RSM Acquisition Corp. with and into MET-Rx Nutrition, Inc.; and (xix) such other documents, instruments, certificates and opinions as the Administrative Agent or any Lender may reasonably request on or prior to the Closing Date in connection with the consummation of the transactions contemplated hereby; and (b) In the good faith judgment of the Administrative Agent and the Lenders: (i) there shall not have occurred or become known to the Administrative Agent or the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Borrower and its Subsidiaries or the Acquired Company and its Subsidiaries delivered to the Administrative Agent prior to the Closing Date that has had or could reasonably be expected to result in a Material Adverse Effect; (ii) no litigation, action, suit, investigation or other arbitral, administrative or judicial proceeding shall be pending or threatened which could reasonably be likely to result in a Material Adverse Effect; and (iii) the Credit Parties and the Acquired Company, as applicable, shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby and by the Transaction Documents without the occurrence of any default under, conflict with or violation of (A) any applicable law, rule, regulation, order or decree of any Governmental Authority or arbitral authority or (B) any agreement, document or instrument to which any of the Credit Parties is a party or by which any of them or their properties is bound. 6.2. Conditions of Revolving Loans and Letter of Credit. The obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to issue (or renew) Letters of Credit and Bank of America to make Swing Line Loans, hereunder on or subsequent to the Closing Date are subject to the satisfaction of the following conditions: (a) the Administrative Agent or, in the case of Swing Line Loans, Bank of America shall have received a Borrowing Notice if required by Article II; (b) the representations and warranties of the Credit Parties set forth in Article VII and in each of the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance, Swing Line Loan or Letter of Credit issuance or renewal, with the same effect as though such representations and warranties had been made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date and except that the financial statements referred to in Section 7.6(a) shall be deemed (solely for the purpose of the representation and warranty contained in such Section 7.6(a) but not for the purpose of any cross reference to such Section 7.6(a) or to the financial statements described therein contained in any other provision of Section 7.6 or elsewhere in Article VII) to be those financial statements most recently delivered to the Administrative Agent and the Lenders pursuant to Section 8.1 from the date financial statements are delivered to the Administrative Agent and the Lenders in accordance with such Section; (c) in the case of the issuance of a Letter of Credit, the Borrower shall have executed and delivered to the Issuing Bank an 40 Application and Agreement for Letter of Credit in form and content acceptable to the Issuing Bank together with such other instruments and documents as it shall request; (d) at the time of (and after giving effect to) each Advance, Swing Line Loan or the issuance of a Letter of Credit, no Default or Event of Default specified in Article X shall have occurred and be continuing; and (e) immediately after giving effect to: (i) a 364 Day Loan, the aggregate principal balance of all outstanding 364 Day Loans for each Lender shall not exceed such Lender's 364 Day Commitment; (ii) a 364 Day Loan, the 364 Day Outstandings shall not exceed the Total 364 Day Commitment; (iii) a Three Year Loan, the aggregate principal balance of all outstanding Three Year Loans for each Lender shall not exceed such Lender's Three Year Commitment; (iv) a Letter of Credit or renewal thereof, the aggregate principal balance of all outstanding Participations in Letters of Credit and Reimbursement Obligations (or in the case of the Issuing Bank, its remaining interest after deduction of all Participations in Letters of Credit and Reimbursement Obligations of other Lenders) for each Lender and in the aggregate shall not exceed, respectively, (X) such Lender's Letter of Credit Commitment or (Y) the Total Letter of Credit Commitment; (v) a Swing Line Loan, the Swing Line Outstandings shall not exceed $5,000,000; and (vi) a Three Year Loan, Swing Line Loan or a Letter of Credit or renewal thereof, the sum of Letter of Credit Outstandings plus Three Year Outstandings plus Swing Line Outstandings shall not exceed the Total Three Year Commitment. ARTICLE VII Representations and Warranties The Borrower represents and warrants with respect to itself and to its Subsidiaries and giving effect to the MET-Rx Nutrition, Inc. Acquisition (which representations and warranties shall survive the delivery of the documents mentioned herein and the making of Loans), that: 7.1. Organization and Authority. (a) The Borrower and each Subsidiary is a corporation duly organized and validly existing under the laws of the jurisdiction of its formation; (b) The Borrower and each Subsidiary (x) has the requisite power and authority to own its properties and assets and to carry on its business as now being conducted and as contemplated in the Loan Documents, and (y) is qualified to do business in every jurisdiction in which failure so to qualify would have a Material Adverse Effect; 41 (c) The Borrower has the power and authority to execute, deliver and perform this Agreement and the Notes, and to borrow hereunder, and to execute, deliver and perform each of the other Loan Documents to which it is a party; (d) Each Credit Party (other than the Borrower) has the power and authority to execute, deliver and perform the Facility Guaranty and each of the other Loan Documents to which it is a party; (e) Each Credit Party has the power and authority to execute, deliver and perform the Transaction Documents to which it is a party and when executed and delivered, the Purchase Agreement will be the legal, valid and binding obligation of each Credit Party; and (f) When executed and delivered, each of the Loan Documents to which any Credit Party is a party will be the legal, valid and binding obligation or agreement, as the case may be, of such Credit Party, enforceable against such Credit Party in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity). 7.2. Loan Documents and Transaction Documents. The execution, delivery and performance by each Credit Party of each of the Loan Documents and Transaction Documents to which it is a party: (a) have been duly authorized by all requisite Organizational Action of such Credit Party required for the lawful execution, delivery and performance thereof; (b) do not violate any provisions of (i) any applicable law, rule or regulation, (ii) any judgment, writ, order, determination, decree or arbitral award of any Governmental Authority or arbitral authority binding on such Credit Party or its properties, or (iii) the Organizational Documents or Operating Documents of such Credit Party; (c) does not and will not be in conflict with, result in a breach of or constitute an event of default, or an event which, with notice or lapse of time or both, would constitute an event of default, under any contract, indenture, agreement or other instrument or document to which such Credit Party is a party, or by which the properties or assets of such Credit Party are bound; and (d) does not and will not result in the creation or imposition of any Lien upon any of the properties or assets of such Credit Party. 7.3. Solvency. Each Credit Party is Solvent after giving effect to the MET-Rx Nutrition, Inc. Acquisition and the other transactions contemplated by the Loan Documents. 7.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries other than those Persons listed as Subsidiaries in Schedule 7.4 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 8.20; Schedule 7.4 states as of the date hereof the organizational form of each entity, the authorized and issued capitalization of each Subsidiary listed thereon, the number of shares or other equity interests of each class of capital stock or interest issued and outstanding of each such Subsidiary and the number and/or percentage of outstanding shares or other equity interest (including options, warrants and other rights to acquire any interest) of each such class of capital stock or other equity interest owned by Borrower or by any such Subsidiary; the outstanding shares or other equity interests of each such Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable; and Borrower and each such Subsidiary owns beneficially and of record all the shares and other interests it is listed as owning in Schedule 7.4, free and clear of any Lien. 42 7.5. Ownership Interests. Borrower owns no interest in any Person other than the Persons listed in Schedule 7.4, equity investments in Persons not constituting Subsidiaries permitted under Section 9.6 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 8.20. 7.6. Financial Condition. (a) The Borrower has heretofore furnished to each Lender (i) the Historical Financial Statements, (ii) an audited consolidated balance sheet of the Borrower and its Subsidiaries as at August 31, 1997, 1998 and 1999 and the notes thereto and the related consolidated statements of income, stockholders' equity and cash flows for the Fiscal Years then ended as examined and certified by PriceWaterhouseCoopers LLP, (iii) unaudited consolidated interim financial statements of the Borrower and its Subsidiaries consisting of a consolidated balance sheet and related consolidated statements of income, stockholders' equity and cash flows, in each case without notes, for and as of the end of the three-month period ending November 30, 1999, and (iv) the Historical Pro Forma Financial Statements. Except as set forth therein, such financial statements (including the notes thereto) present fairly the financial condition of the Acquired Company and its subsidiaries and the Borrower and its Subsidiaries as of the end of the fiscal periods covered thereby and results of their operations and the changes in its stockholders' equity for the periods then ended, all in conformity with GAAP applied on a Consistent Basis, subject however, in the case of unaudited interim statements to year end audit adjustments; (b) since the later of (i) the date of the audited financial statements delivered pursuant to Section 7.6(a) hereof or (ii) the date of the audited financial statements most recently delivered pursuant to Section 8.1(a) hereof, there has been no material adverse change in the condition, financial or otherwise, of the Borrower or any of its Subsidiaries or the Acquired Company and its subsidiaries or in the businesses, properties, performance, prospects or operations of the Borrower or its Subsidiaries and of the Acquired Company or its subsidiaries, nor have such businesses or properties been materially adversely affected as a result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo or act of God; and (c) except as set forth in the financial statements referred to in Section 7.6(a) or in Schedule 7.6 or permitted by Section 9.4, neither the Borrower nor any Subsidiary nor the Acquired Company nor any of its subsidiaries has incurred, other than in the ordinary course of business, any material Indebtedness, Contingent Obligation or other commitment or liability which remains outstanding or unsatisfied. 7.7. Title to Properties. The Borrower and each of its Subsidiaries has good title to all its real and personal properties, subject to no transfer restrictions or Liens of any kind, except for the transfer restrictions and Liens described in Schedule 7.7 and Liens permitted by Section 9.3. 7.8. Taxes. Except as set forth in Schedule 7.8, the Borrower and each of its Subsidiaries has filed or caused to be filed all federal, state and local tax returns which are required to be filed by it and, except for taxes and assessments being contested in good faith by appropriate proceedings diligently conducted and against which reserves reflected in the financial statements described in Section 7.6(a) or Sections 8.1(a) or (b) and satisfactory to the Borrower's independent certified public accountants have been established, have paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due. 7.9. Other Agreements. Neither the Borrower nor any Subsidiary is (a) a party to or subject to any judgment, order, decree, agreement, lease or instrument, or subject to other restrictions, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect; or 43 (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which such Credit Party is a party, which default has, or if not remedied within any applicable grace period could reasonably be likely to have, a Material Adverse Effect. 7.10. Litigation. Except as set forth in Schedule 7.10, there is no action, suit, investigation or proceeding at law or in equity or by or before any governmental instrumentality or agency or arbitral body pending, or, to the knowledge of the Borrower, threatened by or against the Borrower or any Subsidiary or affecting the Borrower or any Subsidiary or any properties or rights of the Borrower or any Subsidiary, which could reasonably be likely to have a Material Adverse Effect. 7.11. Margin Stock. The proceeds of the borrowings made hereunder will be used by the Borrower only for the purposes expressly authorized herein. None of such proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute any of the Loans under this Agreement a "purpose credit" within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 221) of the Board. Neither the Borrower nor any agent acting in its behalf has taken or will take any action which might cause this Agreement or any of the documents or instruments delivered pursuant hereto to violate any regulation of the Board or to violate the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or any state securities laws, in each case as in effect on the date hereof. 7.12. Investment Company. No Credit Party is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the proceeds of the Loans and repayment thereof by the Borrower and the performance by the Borrower and the other Credit Parties of the transactions contemplated by the Loan Documents will not violate any provision of said Act, or any rule, regulation or order issued by the Securities and Exchange Commission thereunder, in each case as in effect on the date hereof. 7.13. Patents, Etc. Except for where the failure to own or to have the use thereof would not have a Material Adverse Effect, the Borrower and each other Credit Party owns or has the right to use, under valid license agreements or otherwise, all material patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights necessary to or used in the conduct of its businesses as now conducted and as contemplated by the Loan Documents, without known conflict with any patent, license, franchise, trademark, trade secret, trade name, copyright, other proprietary right of any other Person. 7.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan Document or certificate or document executed and delivered by or on behalf of the Borrower or any other Credit Party in accordance with or pursuant to any Loan Document nor (b) any statement, representation, or warranty provided to the Administrative Agent in connection with the negotiation or preparation of the Loan Documents contains any misrepresentation or untrue statement of material fact or omits to state a material fact necessary, in light of the circumstance under which it was made, in order to make any such warranty, representation or statement contained therein not misleading. 7.15. No Consents, Etc. Neither the respective businesses or properties of the Credit Parties or any Subsidiary, nor any relationship among the Credit Parties or any Subsidiary and any other Person, nor any circumstance in connection with the execution, delivery and performance of the Loan Documents and the transactions contemplated thereby, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority or any other Person on the part of any Credit Party as a condition to the execution, delivery and performance of, or consummation of the transactions contemplated by the Loan Documents, which, if not obtained or effected, would be reasonably likely to have a Material Adverse Effect, or if 44 so, such consent, approval, authorization, filing, registration or qualification has been duly obtained or effected, as the case may be. 7.16. Employee Benefit Plans. (a) The Borrower and each ERISA Affiliate is in compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder and in compliance with all Foreign Benefit Laws with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined or the Borrower or its Subsidiaries is in the process of obtaining a determination by the Internal Revenue Service to be so qualified, each trust related to such plan has been determined to be exempt under Section 501(a) of the Code, and each Employee Benefit Plan subject to any Foreign Benefit Law has received the required approvals by any Governmental Authority regulating such Employee Benefit Plan. No material liability has been incurred by the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan; (b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in a nonexempt prohibited transaction described in Section 4975 of the Code or Section 406 of ERISA affecting any of the Employee Benefit Plans or the trusts created thereunder which could subject any such Employee Benefit Plan or trust to a material tax or penalty on prohibited transactions imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding deficiency with respect to any Employee Benefit Plan, whether or not waived, or any other liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (iii) failed to make a required contribution or payment to a Multiemployer Plan, (iv) failed to make a required installment or other required payment under Section 412 of the Code, Section 302 of ERISA or the terms of such Employee Benefit Plan, or (v) failed to make a required contribution or payment, or otherwise failed to operate in compliance with any Foreign Benefit Law regulating any Employee Benefit Plan; (c) No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan or Multiemployer Plan, and neither the Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal liability with respect to any Multiemployer Plan; (d) The present value of all vested accrued benefits under each Employee Benefit Plan which is subject to Title IV of ERISA, or the funding of which is regulated by any Foreign Benefit Law did not, as of the most recent valuation date for each such plan, exceed the then current value of the assets of such Employee Benefit Plan allocable to such benefits; (e) To the best of the Borrower's knowledge, each Employee Benefit Plan which is subject to Title IV of ERISA or the funding of which is regulated by any Foreign Benefit Law, maintained by the Borrower or any ERISA Affiliate, has been administered in accordance with its terms in all material respects and is in compliance in all material respects with all applicable requirements of ERISA, applicable Foreign Benefit Law and other applicable laws, regulations and rules; (f) The consummation of the Loans and the issuance of the Letters of Credit provided for herein will not involve any prohibited transaction under ERISA which is not subject to a statutory or administrative exemption; and (g) No material proceeding, claim, lawsuit and/or investigation exists or, to the best knowledge of the Borrower after due inquiry, is threatened concerning or involving any Employee Benefit Plan; 45 7.17. No Default. As of the date hereof, there does not exist any Default or Event of Default hereunder. 7.18. Environmental Laws. Except as listed on Schedule 7.18, the Borrower and each Subsidiary is in compliance with all applicable Environmental Laws and has been issued and currently maintains all required federal, state and local permits, licenses, certificates and approvals. Except as listed on Schedule 7.18, neither the Borrower nor any Subsidiary has been notified of any pending or threatened action, suit, proceeding or investigation, and neither the Borrower nor any Subsidiary is aware of any facts, which (a) calls into question, or could reasonably be expected to call into question, compliance by the Borrower or any Subsidiary with any Environmental Laws, (b) seeks, or could reasonably be expected to form the basis of a meritorious proceeding, to suspend, revoke or terminate any license, permit or approval necessary for the operation of the Borrower's or any Subsidiary's business or facilities or for the generation, handling, storage, treatment or disposal of any Hazardous Materials, or (c) seeks to cause, or could reasonably be expected to form the basis of a meritorious proceeding to cause, any property of the Borrower or any Subsidiary to be subject to any restrictions on ownership, use, occupancy or transferability under any Environmental Law, except where such facts and related circumstances could not reasonably be expected to result in a Material Adverse Effect. 7.19. Employment Matters. (a) None of the employees of the Borrower or any Subsidiary is subject to any collective bargaining agreement and there are no strikes, work stoppages, election or decertification petitions or proceedings, unfair labor charges, equal opportunity proceedings, or other material labor/employee related controversies or proceedings pending or, to the best knowledge of the Borrower, threatened against the Borrower or any Subsidiary or between the Borrower or any Subsidiary and any of its employees, other than employee grievances arising in the ordinary course of business which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and (b) Except to the extent a failure to maintain compliance would not have a Material Adverse Effect, the Borrower and each Subsidiary is in compliance in all respects with all applicable laws, rules and regulations pertaining to labor or employment matters, including without limitation those pertaining to wages, hours, occupational safety and taxation and there is neither pending or threatened any litigation, administrative proceeding nor, to the knowledge of the Borrower, any investigation, in respect of such matters which, if decided adversely, could reasonably be likely, individually or in the aggregate, to have a Material Adverse Effect. 7.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or has engaged in any course of conduct that could subject any of their respective properties to any Lien, seizure or other forfeiture under any criminal law, racketeer influenced and corrupt organizations law, civil or criminal, or other similar laws. 7.21. Year 2000 Compliance. The Borrower and its Subsidiaries are Year 2000 Compliant. ARTICLE VIII Affirmative Covenants Until the Facility Termination Date, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and where applicable will cause each Subsidiary to: 46 8.1. Financial Reports, Etc. (a) As soon as practical and in any event within 90 days after the end of each Fiscal Year of the Borrower, deliver or cause to be delivered to the Administrative Agent and each Lender (i) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and the related consolidated statements of income, stockholders' equity and cash flows, and the respective notes thereto, for such Fiscal Year, setting comparative financial statements for the preceding Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis and containing, with respect to the consolidated financial statements, opinions of PriceWaterhouseCoopers LLP, or other such independent certified public accountants selected by the Borrower and approved by the Administrative Agent (which approval shall not be unreasonably withheld), which are unqualified as to the scope of the audit performed and as to the "going concern" status of the Borrower and without any exception not acceptable to the Lenders, and (ii) a certificate of an Authorized Representative demonstrating compliance with Sections 9.1(a) and (b), which certificate shall be in the form of Exhibit H; (b) as soon as practical and in any event within 45 days after the end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year), deliver to the Administrative Agent and each Lender (i) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income, stockholders' equity and cash flows for such fiscal quarter and for the period from the beginning of the then current Fiscal Year through the end of such reporting period, and accompanied by a certificate of an Authorized Representative to the effect that such financial statements present fairly the financial position of the Borrower and its Subsidiaries as of the end of such fiscal period and the results of their operations and the changes in their financial position for such fiscal period, in conformity with the standards set forth in Section 7.6(a) with respect to interim financial statements, and (ii) a certificate of an Authorized Representative containing computations for such quarter comparable to that required pursuant to Section 8.1(a)(ii); (c) together with each delivery of the financial statements required by Section 8.1(a)(i), deliver to the Administrative Agent and each Lender a letter from the Borrower's accountants specified in Section 8.1(a)(i) stating that in performing the audit necessary to render an opinion on the financial statements delivered under Section 8.1(a)(i), they obtained no knowledge of any Default or Event of Default by the Borrower in the fulfillment of the terms and provisions of this Agreement insofar as they relate to financial matters (which at the date of such statement remains uncured); or if the accountants have obtained knowledge of such Default or Event of Default, a statement specifying the nature and period of existence thereof; (d) promptly upon their becoming available to the Borrower, the Borrower shall deliver to the Administrative Agent and each Lender a copy of (i) all regular or special reports or effective registration statements which Borrower or any Subsidiary shall file with the Securities and Exchange Commission (or any successor thereto) or any securities exchange other than registration statements on Form S-8, (ii) any proxy statement distributed by the Borrower or any Subsidiary to its shareholders, bondholders or the financial community in general, and (iii) any management letter or other report submitted to the Borrower or any Subsidiary by independent accountants in connection with any annual, interim or other audit of the Borrower or any Subsidiary; and (e) not later than the thirty (30) days following the beginning of each Fiscal Year, deliver to the Administrative Agent and each Lender a capital and operating expense budget and consolidated financial projections for the Borrower and its Subsidiaries for such Fiscal Year, prepared in accordance with GAAP applied on a Consistent Basis; (f) promptly, from time to time, deliver or cause to be delivered to the Administrative Agent and each Lender such other information regarding Borrower's and any Subsidiary's operations, business affairs and financial condition as the Administrative Agent or such Lender may reasonably request; 47 The Administrative Agent and the Lenders are hereby authorized to deliver a copy of any such financial or other information delivered hereunder to the Lenders (or any affiliate of any Lender) or to the Administrative Agent, to any Governmental Authority having jurisdiction over the Administrative Agent or any of the Lenders pursuant to any written request therefor or in the ordinary course of examination of loan files, or to any other Person who shall acquire or consider the assignment of, or acquisition of any participation interest in, any Obligation permitted by this Agreement. 8.2. Maintain Properties. Maintain all properties necessary to its operations in good working order and condition, make all needed repairs, replacements and renewals to such properties, and maintain free from Liens all trademarks, trade names, patents, copyrights, trade secrets, know-how, and other intellectual property and proprietary information (or adequate licenses thereto), in each case as are reasonably necessary to conduct its business as currently conducted or as contemplated hereby, all in accordance with customary and prudent business practices except where the failure to do so would not be reasonably expected to have a Material Adverse Effect. 8.3. Existence, Qualification, Etc. Except as otherwise expressly permitted under Section 9.8, do or cause to be done all things necessary to preserve and keep in full force and effect its existence and all material rights and franchises, and maintain its license or qualification to do business as a foreign corporation and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary except where the failure to so qualify would not have a Material Adverse Effect. 8.4. Regulations and Taxes. Comply in all material respects with or contest in good faith all statutes and governmental regulations and pay all taxes, assessments, governmental charges, claims for labor, supplies, rent and any other obligation which, if unpaid, would become a Lien against any of its properties except liabilities being contested in good faith by appropriate proceedings diligently conducted and against which adequate reserves have been established unless and until any Lien resulting therefrom attaches to any of its property and becomes subject to execution against such property. 8.5. Insurance. (a) Keep all of its insurable properties adequately insured at all times with responsible insurance carriers against loss or damage by fire and other hazards to the extent and in the manner as are customarily insured against by similar businesses owning such properties similarly situated, (b) maintain general public liability insurance at all times with responsible insurance carriers against liability on account of damage to persons and property and (c) maintain insurance under all applicable workers' compensation laws (or in the alternative, maintain required reserves if self-insured for workers' compensation purposes) and against loss by reason by business interruption such policies of insurance to have such limits, deductibles, exclusions, co-insurance and other provisions providing no less coverages than that specified in Schedule 8.5, such insurance policies to be in form reasonably satisfactory to the Administrative Agent. Each of the policies of insurance described in this Section 8.5 shall provide that the insurer shall give the Administrative Agent not less than thirty (30) days' prior written notice before any such policy shall be terminated, lapse or be altered in any manner. 8.6. True Books. Keep true books of record and account in which full, true and correct entries will be made of all of its dealings and transactions, and set up on its books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes, assessments, charges, levies and claims and with respect to its business in general, and include such reserves in interim as well as year-end financial statements. 8.7. Year 2000 Compliance. The Borrower will promptly notify the Administrative Agent and the Lenders in the event the Borrower discovers or determines that any computer application (including those affected by information received from its suppliers and vendors) that is material to its or any of its Subsidiaries' business and operations is not Year 2000 Compliant, except to the extent that such failure could not reasonably be expected to have a Material Adverse Effect. 48 8.8. Right of Inspection. Permit any Person designated by any Lender or the Administrative Agent to visit and inspect any of the properties, corporate books and financial reports of the Borrower or any Subsidiary and to discuss its affairs, finances and accounts with its principal officers and independent certified public accountants, all at reasonable times, at reasonable intervals and with reasonable prior notice. 8.9. Observe all Laws. Conform to and duly observe all laws, rules and regulations and all other valid requirements of any Governmental Authority with respect to the conduct of its business if the failure to observe such laws, rules, regulations and other requirements could reasonably be expected to have a Material Adverse Effect. 8.10. Governmental Licenses. Obtain and maintain all licenses, permits, certifications and approvals of all applicable Governmental Authorities as are required for the conduct of its business as currently conducted and as contemplated by the Loan Documents if the failure to obtain and maintain such licenses, permits, certifications and approvals could reasonably be expected to have a Material Adverse Effect. 8.11. Covenants Extending to Other Persons. Cause each of its Subsidiaries to do with respect to itself, its business and its assets, each of the things required of the Borrower in Sections 8.2 through 8.11, and 8.20 inclusive. 8.12. Officer's Knowledge of Default. Upon any officer of the Borrower obtaining knowledge of any Default or Event of Default hereunder or under any other obligation of the Borrower or any Subsidiary or other Credit Party to any Lender, or any event, development or occurrence which could reasonably be expected to have a Material Adverse Effect, cause such officer or an Authorized Representative to promptly notify the Administrative Agent of the nature thereof, the period of existence thereof, and what action the Borrower or such Subsidiary or other Credit Party proposes to take with respect thereto. 8.13. Suits or Other Proceedings. Upon any officer of the Borrower obtaining knowledge of any litigation or other proceedings being instituted against the Borrower or any Subsidiary or other Credit Party, or any attachment, levy, execution or other process being instituted against any assets of the Borrower or any Subsidiary or other Credit Party, making a claim or claims in an aggregate amount greater than $5,000,000 not otherwise covered by insurance, deliver to the Administrative Agent within seven (7) Business Days written notice thereof stating the nature and status of such litigation, dispute, proceeding, levy, execution or other proceSection 8.14. Notice of Environmental Complaint or Condition. Promptly provide to the Administrative Agent true, accurate and complete copies of any and all notices, complaints, orders, directives, claims or citations received by the Borrower or any Subsidiary relating to any (a) violation or alleged violation by the Borrower or any Subsidiary of any applicable Environmental Law; (b) release or threatened release by the Borrower or any Subsidiary, or by any Person handling, transporting or disposing of any Hazardous Material on behalf of the Borrower or any Subsidiary, or at any facility or property owned or leased or operated by the Borrower or any Subsidiary, of any Hazardous Material, except where occurring legally pursuant to a permit or license; or (c) liability or alleged liability of the Borrower or any Subsidiary for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials. 8.15. Environmental Compliance. If the Borrower or any Subsidiary shall receive any letter, notice, complaint, order, directive, claim or citation alleging that the Borrower or any Subsidiary has violated any Environmental Law, has released any Hazardous Material, or is liable for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials, the Borrower and any Subsidiary shall, within the time period permitted and to the extent required by the applicable Environmental Law or the Governmental 49 Authority responsible for enforcing such Environmental Law, remove or remedy, or cause the applicable Subsidiary to remove or remedy, such violation or release or satisfy such liability. 8.16. Indemnification. Without limiting the generality of Section 12.9, the Borrower hereby agrees to indemnify and hold the Administrative Agent and the Lenders and any affiliate of any Lender party to a Swap Agreement, and their respective officers, directors, employees and agents, harmless from and against any and all claims, losses, penalties, liabilities, damages and expenses (including assessment and cleanup costs and reasonable attorneys', consultants' or other expert fees, expenses and disbursements) arising directly or indirectly from, out of or by reason of (a) the violation of any Environmental Law by the Borrower or any Subsidiary or with respect to any property owned, operated or leased by the Borrower or any Subsidiary or (b) the handling, storage, transportation, treatment, emission, release, discharge or disposal of any Hazardous Materials by or on behalf of the Borrower or any Subsidiary, or on or with respect to property owned or leased or operated by the Borrower or any Subsidiary. The provisions of this Section 8.16 shall survive repayment of the Obligations and the Facility Termination Date and expiration or termination of this Agreement. 8.17. Further Assurances. At the Borrower's cost and expense, upon request of the Administrative Agent, duly execute and deliver or cause to be duly executed and delivered, to the Administrative Agent such further instruments, documents, certificates, financing and continuation statements, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of this Agreement and the other Loan Documents. 8.18. Employee Benefit Plans. (a) With reasonable promptness, and in any event within thirty (30) days thereof, give notice to the Administrative Agent of (a) the establishment of any new Pension Plan (which notice shall include a copy of such plan), (b) the commencement of contributions to any Employee Benefit Plan to which the Borrower or any of its ERISA Affiliates was not previously contributing, (c) any material increase in the benefits of any existing Employee Benefit Plan, (d) each funding waiver request filed with respect to any Pension Plan and all communications received or sent by the Borrower or any ERISA Affiliate with respect to such request and (e) the failure of the Borrower or any ERISA Affiliate to make a required installment or payment under Section 302 of ERISA or Section 412 of the Code (in the case of Employee Benefit Plans regulated by the Code or ERISA) or under any Foreign Benefit Law (in the case of Employee Benefit Plans regulated by any Foreign Benefit Law) by the due date; (b) Promptly and in any event within fifteen (15) days of becoming aware of the occurrence or forthcoming occurrence of any (a) Termination Event or (b) nonexempt "prohibited transaction," as such term is defined in Section 406 of ERISA or Section 4975 of the Code, in connection with any Employee Benefit Plan or any trust created thereunder, deliver to the Administrative Agent a notice specifying the nature thereof, what action the Borrower or any ERISA Affiliate has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (c) With reasonable promptness but in any event within fifteen (15) days for purposes of clauses (a), (b) and (c), deliver to the Administrative Agent copies of (a) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code, (b) all notices received by the Borrower or any ERISA Affiliate of the PBGC's or any Governmental Authority's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (c) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate with the Internal Revenue Service 50 with respect to each Employee Benefit Plan and (d) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA. The Borrower will notify the Administrative Agent in writing within five (5) Business Days of the Borrower or any ERISA Affiliate obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA. 8.19. Continued Operations. Continue at all times to conduct its business and engage principally in the same line or lines of business substantially as heretofore conducted. 8.20. New Subsidiaries. Within thirty (30) days of the acquisition or creation of any Domestic Subsidiary, other than a Receivables Subsidiary, cause to be delivered to the Administrative Agent each of the following: (a) a Facility Guaranty executed by such Domestic Subsidiary substantially in the form of Exhibit I; (b) an opinion of counsel to such Domestic Subsidiary dated as of the date of delivery of the Facility Guaranty described in this Section 8.20 and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative Agent (which opinion may include assumptions and qualifications of similar effect to those contained in the opinions of counsel delivered pursuant to Section 6.1(a)), to the effect that: (i) such Domestic Subsidiary is duly organized, validly existing and in good standing in the jurisdiction of its formation, has the requisite power and authority to own its properties and conduct its business as then owned and then conducted and proposed to be conducted and to execute, deliver and perform the Facility Guaranty described in this Section 8.20, and is duly qualified to transact business and is in good standing as a foreign corporation or partnership in each other jurisdiction in which the character of the properties owned or leased, or the business carried on by it, requires such qualification and the failure to be so qualified would reasonably be likely to result in a Material Adverse Effect; (ii) the execution, delivery and performance of the Facility Guaranty described in this Section 8.20 have been duly authorized by all requisite corporate or partnership action (including any required shareholder or partner approval), such agreement has been duly executed and delivered and constitutes the valid and binding agreement of such Domestic Subsidiary, enforceable against such Subsidiary in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity); and (c) current copies of the Organizational Documents and Operating Documents of such Domestic Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the Board of Directors, partners, or appropriate committees thereof (and, if required by such Organizational Documents, Operating Documents or applicable law, of the shareholders, members or partners) of such Domestic Subsidiary authorizing the actions and the execution and delivery of documents described in this Section 8.20. 51 ARTICLE IX Negative Covenants Until the Facility Termination Date, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, nor will it permit any Subsidiary to: 9.1. Financial Covenants (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage at any time to be greater than 2.00 to 1.00. (b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio as of the end of any Four-Quarter Period to be less than 4.00 to 1.00. 9.2. Acquisitions. Enter into any agreement, contract, binding commitment or other arrangement providing for any Acquisition, or take any action to solicit the tender of securities or proxies in respect thereof in order to effect any Acquisition, unless (i) the Person to be (or whose assets are to be) acquired does not oppose such Acquisition and the line or lines of business of the Person to be acquired are substantially the same as one or more line or lines of business conducted by the Borrower and its Subsidiaries, (ii) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such Acquisition and, if the Cost of Acquisition is in excess of $25,000,000, the Borrower shall have furnished to the Administrative Agent (A) pro forma historical financial statements as of the end of the most recently completed Fiscal Year of the Borrower and most recent interim fiscal quarter, if applicable giving effect to such Acquisition and (B) a certificate in the form of Exhibit H prepared on a historical pro forma basis as of the most recent date for which financial statements have been furnished pursuant to Section 7.6(a) or Section 8.1(a) or (b) giving effect to such Acquisition, which certificate shall demonstrate that no Default or Event of Default would exist immediately after giving effect thereto, (iii) the Person acquired shall be a wholly-owned Domestic Subsidiary, or be merged into the Borrower or a wholly-owned Domestic Subsidiary, immediately upon consummation of the Acquisition (or if assets are being acquired, the acquiror shall be the Borrower or a wholly-owned Domestic Subsidiary), and (iv) if the Cost of Acquisition shall exceed $75,000,000, the Required Lenders shall consent to such Acquisition in their discretion. 9.3. Liens. Incur, create or permit to exist any Lien, charge or other encumbrance of any nature whatsoever with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary, other than (a) Liens existing as of the date hereof as set forth in Schedule 7.7; (b) Liens imposed by law for taxes, assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP and which Liens are not yet subject to execution against the property to which such Lien attaches; (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law or created in the ordinary course of business and in existence less than 90 days from the date of creation thereof for amounts not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with 52 GAAP and which Liens are not yet subject to execution against the property to which such Lien attaches; (d) Liens incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (e) easements (including reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, reservations, encroachments, variations and zoning and other restrictions, charges or encumbrances (whether or not recorded), which do not interfere materially with the ordinary conduct of the business of the Borrower or any Subsidiary and which do not materially detract from the value of the property to which they attach or materially impair the use thereof to the Borrower or any Subsidiary; (f) purchase money Liens to secure Indebtedness permitted under Section 9.4(d) and incurred to purchase fixed assets, provided such Indebtedness represents not less than 75% of the purchase price of such assets as of the date of purchase thereof and no property other than the assets so purchased secures such Indebtedness; (g) Liens arising in connection with Capital Leases permitted under Section 9.4(e); provided that no such Lien shall extend to any Collateral or to any other property other than the assets subject to such Capital Leases; and (h) Liens in connection with a Permitted Receivables Securitization. 9.4. IndebtedneSection Incur, create, assume or permit to exist any Indebtedness, howsoever evidenced, except: (a) Indebtedness existing as of the Closing Date as set forth in Schedule 7.6; provided, except as provided in clause (h) of this Section 9.4, none of the instruments and agreements evidencing or governing such Indebtedness shall be amended, modified or supplemented after the Closing Date to change any terms of subordination, repayment or rights of enforcement, conversion, put, exchange or other rights from such terms and rights as in effect on the Closing Date; (b) Indebtedness owing to the Administrative Agent or any Lender in connection with this Agreement, any Note or other Loan Document; (c) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (d) purchase money Indebtedness described in Section 9.3(f) not to exceed an aggregate outstanding principal amount at any time of $10,000,000; (e) Indebtedness arising under Capital Leases not to exceed an aggregate outstanding amount at any time of $10,000,000; (f) unsecured intercompany Indebtedness for loans and advances made by the Borrower or any Guarantor to the Borrower or any Guarantor; 53 (g) additional unsecured Indebtedness for Money Borrowed not otherwise covered by clauses (a) through (f) above, provided that the aggregate outstanding principal amount of all such other Indebtedness permitted under this clause (g) shall in no event exceed $50,000,000 at any time; (h) Indebtedness extending the maturity of, or renewing, refunding or refinancing, in whole or in part, Indebtedness incurred under clause (a) of this Section 9.4, provided that the terms of any such extension, renewal, refunding or refinancing Indebtedness (and of any agreement or instrument entered into in connection therewith) are no less favorable to the Administrative Agent and the Lenders than the terms of the Indebtedness as in effect prior to such action, and provided further that (1) the aggregate principal amount of or interest rate or rates and fees payable on such extended, renewed, refunded or refinanced Indebtedness shall not be increased by such action, (2) the group of direct or contingent obligors on such Indebtedness shall not be expanded as a result of any such action, and (3) immediately before and immediately after giving effect to any such extension, renewal, refunding or refinancing, no Default or Event of Default shall have occurred and be continuing; (i) Rate Hedging Obligations to the extent permitted under Section 9.16; and (j) Intercompany Indebtedness permitted under Section 9.6(g). 9.5 Transfer of Assets. Sell, lease, transfer or otherwise dispose of any assets of Borrower or any Subsidiary other than (a) dispositions of inventory in the ordinary course of business, (b) dispositions of property that is substantially worn, damaged, obsolete or, in the judgment of the Borrower, no longer best used or useful in its business or that of any Subsidiary, (c) transfers of assets necessary to give effect to merger or consolidation transactions permitted by Section 9.7, (d) the disposition of Eligible Securities in the ordinary course of management of the investment portfolio of the Borrower and its Subsidiaries, (e) sales of assets during the term of this Agreement not exceeding 20% of Consolidated Total Assets as determined at the time of any such sale, and (f) sales of accounts receivable in connection with any Permitted Receivables Securitization. 9.6. Investments. Purchase, own, invest in or otherwise acquire, directly or indirectly, any stock or other securities, or make or permit to exist any interest whatsoever in any other Person or permit to exist any loans or advances to any Person, except that Borrower may maintain investments or invest in: (a) securities of any Person acquired in an Acquisition permitted hereunder; (b) Eligible Securities; (c) loans and investments existing as of the date hereof and as set forth in Schedule 7.4; (d) accounts receivable arising and trade credit granted in the ordinary course of business and any securities received in satisfaction or partial satisfaction thereof in connection with accounts of financially troubled Persons to the extent reasonably necessary in order to prevent or limit loss; (e) investments in Subsidiaries which are Guarantors; (f) loans between the Borrower and the Guarantors described in Section 9.4(f); (g) loans and advances to Subsidiaries who are not Guarantors provided the aggregate outstanding principal amount of such loans and advances shall not at any time exceed $15,000,000, not including such 54 existing loans and advances as shown on Schedule 7.4 hereto; and (h) other loans, advances and investments in an aggregate principal amount at any time outstanding not to exceed $5,000,000. 9.7. Merger or Consolidation. (a) Consolidate with or merge into any other Person, or (b) permit any other Person to merge into it, or (c) sell, transfer or lease or otherwise dispose of all or a substantial part of its assets (other than sales permitted under Section 9.5(a), (b) and (d)); provided, however, (i) any Subsidiary of the Borrower may merge or transfer all or substantially all of its assets into or consolidate with the Borrower or any wholly-owned Domestic Subsidiary of the Borrower, and (ii) any other Person may merge into or consolidate with the Borrower or any wholly-owned Domestic Subsidiary and any Subsidiary may merge into or consolidate with any other Person in order to consummate an Acquisition permitted by Section 9.2, provided further, that any resulting or surviving entity shall execute and deliver such agreements and other documents, including a Facility Guaranty, and take such other action as the Administrative Agent may require to evidence or confirm its express assumption of the obligations and liabilities of its predecessor entities under the Loan Documents. 9.8. Restricted Payments. Make any Restricted Payment or apply or set apart any of their assets therefor or agree to do any of the foregoing; provided, however, the Borrower may, if immediately prior to and immediately after giving effect to any of the following payments no Default or Event of Default shall exist or occur and be continuing, make purchases in arms length transactions of its common stock, provided the payments made in connection with such purchases do not exceed the sum of (a) $75,000,000 and (b) 25% of its Consolidated Net Income for each Fiscal Year ending after the Closing Date (on a cumulative basis), in the aggregate during the term of this Agreement; provided, further, however, that at no time shall the aggregate book value of all treasury stock of the Borrower exceed 20% of Consolidated Total Assets. 9.9. Transactions with Affiliates. Other than transactions permitted under Sections 9.6 and 9.7, enter into any transaction after the Closing Date, including, without limitation, the purchase, sale, lease or exchange of property, real or personal, or the rendering of any service, with any Affiliate of the Borrower, except (a) that such Persons may render services to the Borrower or its Subsidiaries for compensation at the same rates generally paid by Persons engaged in the same or similar businesses for the same or similar services, (b) that the Borrower or any Subsidiary may render services to such Persons for compensation at the same rates generally charged by the Borrower or such Subsidiary and (c) in either case in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's) business consistent with past practice of the Borrower and its Subsidiaries and upon fair and reasonable terms no less favorable to the Borrower (or any Subsidiary) than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate. 9.10. Compliance with ERISA, the Code and Foreign Benefit Laws. With respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan: (a) permit the occurrence of any Termination Event which would result in a liability on the part of the Borrower or any ERISA Affiliate to the PBGC or to any Governmental Authority; or (b) permit the present value of all benefit liabilities under all Pension Plans to exceed the current value of the assets of such Pension Plans allocable to such benefit liabilities; or (c) permit any accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code) with respect to any Pension Plan, whether or not waived; or 55 (d) fail to make any contribution or payment to any Multiemployer Plan which the Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; or (e) engage, or permit any Borrower or any ERISA Affiliate to engage, in any prohibited transaction under Section 406 of ERISA or Sections 4975 of the Code for which a civil penalty pursuant to Section 502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be imposed; or (f) permit the establishment of any Employee Benefit Plan providing post-retirement welfare benefits or establish or amend any Employee Benefit Plan which establishment or amendment could result in liability to the Borrower or any ERISA Affiliate or increase the obligation of the Borrower or any ERISA Affiliate to a Multiemployer Plan; or (g) fail, or permit the Borrower or any ERISA Affiliate to fail, to establish, maintain and operate each Employee Benefit Plan in compliance in all material respects with the provisions of ERISA, the Code, all applicable Foreign Benefit Laws and all other applicable laws and the regulations and interpretations thereof. 9.11. Fiscal Year. Change its Fiscal Year. 9.12. Dissolution, Etc. Wind up, liquidate or dissolve (voluntarily or involuntarily) or commence or suffer any proceedings seeking any such winding up, liquidation or dissolution, except in connection with a merger or consolidation permitted pursuant to Section 9.7. 9.13. Limitations on Sales and Leasebacks. Enter into any arrangement or arrangements with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property, whether now owned or hereafter acquired in a single transaction or series of related transactions, which has been or is to be sold or transferred by the Borrower or any Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or any Subsidiary; provided, however, so long as no Default or Event of Default has occurred and is continuing or would exist as a result of such a transaction, the Borrower and its Subsidiaries shall be permitted to enter into sale and leaseback transactions so long as (i) the aggregate net cash proceeds received for all such sales or dispositions does not exceed $25,000,000 during the term of this Agreement and (ii) the purchase price for each such sale and leaseback is no less than the fair market value of the applicable asset at the time of sale. 9.14. Change in Control. Cause, suffer or permit to exist or occur any Change of Control. 9.15. Negative Pledge Clauses. Enter into or cause, suffer or permit to exist any agreement with any Person other than the Administrative Agent and the Lenders pursuant to this Agreement or any other Loan Documents which prohibits or limits the ability of any of the Borrower or any Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, provided that the Borrower and any Subsidiary may enter into such an agreement in connection with, and that applies only to, property acquired with the proceeds of purchase money Indebtedness permitted hereunder and a Receivables Subsidiary may enter into such an agreement. 9.16. Rate Hedging Obligations. Incur any Rate Hedging Obligations or enter into any agreements, arrangements, devices or instruments relating to Rate Hedging Obligations, except (i) pursuant to Swap Agreements in an aggregate notional amount not to exceed at any time 50% of the Total Revolving Credit Commitment, and (ii) Rate Hedging Obligations incurred to limit risks of currency or interest rate fluctuations to which the Borrower and its Subsidiaries are otherwise subject by virtue of the operation of their respective businesses, and not for speculative purposes. 56 ARTICLE X Events of Default and Acceleration 10.1. Events of Default. If any one or more of the following events (herein called "Events of Default") shall occur for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Authority), that is to say: (a) if default shall be made in the due and punctual payment of the principal of any Loan, Reimbursement Obligation or other Obligation, when and as the same shall be due and payable whether pursuant to any provision of Article II or Article III or Article IV, at maturity, by acceleration or otherwise; or (b) if default shall be made in the due and punctual payment of any amount of interest on any Loan, Reimbursement Obligation or other Obligation or of any fees or other amounts payable to any of the Lenders or the Administrative Agent within three (3) days of the date on which the same shall be due and payable; or (c) if default shall be made in the performance or observance of any covenant set forth in Section 8.8, 8.12, 8.13, 8.20 or Article IX; (d) if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in this Agreement or the Notes (other than as described in clauses (a), (b) or (c) above) and such default shall continue for thirty (30) or more days after the earlier of receipt of notice of such default by the Authorized Representative from the Administrative Agent or an officer of the Borrower becomes aware of such default, or if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in any of the other Loan Documents (beyond any applicable grace period, if any, contained therein) or in any instrument or document evidencing or creating any obligation, guaranty, or Lien in favor of the Administrative Agent or any of the Lenders or delivered to the Administrative Agent or any of the Lenders in connection with or pursuant to this Agreement or any of the Obligations, or if any Loan Document ceases to be in full force and effect (other than as expressly provided for hereunder or thereunder or with the express written consent of the Administrative Agent), or if without the written consent of the Lenders, this Agreement or any other Loan Document or Transaction Document shall be disaffirmed or shall terminate, be terminable or be terminated or become void or unenforceable for any reason whatsoever (other than as expressly provided for hereunder or thereunder or with the express written consent of the Administrative Agent); or (e) if there shall occur (i) a default, which is not waived, in the payment of any principal, interest, premium or other amount with respect to any Indebtedness (other than the Loans and other Obligations) of the Borrower or any Subsidiary in an amount not less than $5,000,000 in the aggregate outstanding, or (ii) a default, which is not waived, in the performance, observance or fulfillment of any term or covenant contained in any agreement or instrument under or pursuant to which any such Indebtedness may have been issued, created, assumed, guaranteed or secured by the Borrower or any Subsidiary, or (iii) any other event of default as specified in any agreement or instrument under or pursuant to which any such Indebtedness may have been issued, created, assumed, guaranteed or secured by the Borrower or any Subsidiary, and such default or event of default shall continue for more than the period of grace, if any, therein specified, or such 57 default or event of default shall permit the holder of any such Indebtedness (or any agent or trustee acting on behalf of one or more holders) to accelerate the maturity thereof; or (f) if any representation, warranty or other statement of fact contained in any Loan Document or in any writing, certificate, report or statement at any time furnished to the Administrative Agent or any Lender by or on behalf of the Borrower or any other Credit Party pursuant to or in connection with any Loan Document, or otherwise, shall be false or misleading in any material respect when given; or (g) if the Borrower or any Subsidiary or other Credit Party shall be unable to pay its debts generally as they become due; file a petition to take advantage of any insolvency statute; make an assignment for the benefit of its creditors; commence a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or any substantial part of its property; file a petition or answer seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute; or (h) if a court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of the Borrower or any Subsidiary or other Credit Party or of the whole or any substantial part of its properties and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days, or approve a petition filed against the Borrower or any Subsidiary seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, which petition is not dismissed within sixty (60) days; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of the Borrower or any Subsidiary or other Credit Party or of the whole or any substantial part of its properties, which control is not relinquished within sixty (60) days; or if there is commenced against the Borrower or any Subsidiary or other Credit Party any proceeding or petition seeking reorganization, arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state which proceeding or petition remains undismissed for a period of sixty (60) days; or if the Borrower or any Subsidiary or other Credit Party takes any action to indicate its consent to or approval of any such proceeding or petition; or (i) if (i) one or more judgments or orders where the amount not covered by insurance (or the amount as to which the insurer denies liability) is in excess of $500,000 is rendered against the Borrower or any Subsidiary, or (ii) there is any attachment, injunction or execution against any of the Borrower's or Subsidiaries' properties for any amount in excess of $500,000 in the aggregate; and such judgment, attachment, injunction or execution remains unpaid, unstayed, undischarged, unbonded or undismissed for a period of thirty (30) days; or (j) if the Borrower or any Subsidiary shall, other than in the ordinary course of business (as determined by past practices), suspend all or any part of its operations material to the conduct of the business of the Borrower or such Subsidiary for a period of more than 60 days; or (k) if the Borrower or any Subsidiary shall breach any of the material terms or conditions of any agreement under which any Rate Hedging Obligation permitted hereby is created and such breach shall continue beyond any grace period, if any, relating thereto pursuant to the terms of such agreement, or if the Borrower or any Subsidiary shall disaffirm or seek to disaffirm any such agreement or any of its obligations thereunder; or (l) if there shall occur and not be waived an Event of Default as defined in any of the other Loan Documents; 58 then, and in any such event and at any time thereafter, if such Event of Default or any other Event of Default shall have not been waived or cured, (A) either or both of the following actions may be taken: (i) the Administrative Agent may, and at the direction of the Required Lenders shall, declare any obligation of the Lenders and the Issuing Bank to make further Revolving Loans and Swing Line Loans or to issue additional Letters of Credit terminated, whereupon the obligation of each Lender to make further Revolving Loans, of Bank of America to make further Swing Line Loans, and of the Issuing Bank to issue additional Letters of Credit, hereunder shall terminate immediately, and (ii) the Administrative Agent shall at the direction of the Required Lenders, at their option, declare by notice to the Borrower any or all of the Obligations to be immediately due and payable, and the same, including all interest accrued thereon and all other obligations of the Borrower to the Administrative Agent and the Lenders, shall forthwith become immediately due and payable without presentment, demand, protest, notice or other formality of any kind, all of which are hereby expressly waived, anything contained herein or in any instrument evidencing the Obligations to the contrary notwithstanding; provided, however, that notwithstanding the above, if there shall occur an Event of Default under clause (g) or (h) above that is continuing, then the obligation of the Lenders to make Revolving Loans, of Bank of America to make Swing Line Loans, and of the Issuing Bank to issue Letters of Credit hereunder shall automatically terminate and any and all of the Obligations shall be immediately due and payable without the necessity of any action by the Administrative Agent or the Required Lenders or notice to the Administrative Agent or the Lenders; (B) The Borrower shall, upon demand of the Administrative Agent or the Required Lenders, deposit cash with the Administrative Agent in an amount equal to the amount of any Letter of Credit Outstandings, as collateral security for the repayment of any future drawings or payments under such Letters of Credit, and such amounts shall be held by the Administrative Agent pursuant to the terms of the LC Account Agreement; and (C) the Administrative Agent and each of the Lenders shall have all of the rights and remedies available under the Loan Documents or under any applicable law. 10.2. Administrative Agent to Act. In case any one or more Events of Default shall occur and not have been waived or cured, subject to the provisions of Article XI, the Administrative Agent may, and at the direction of the Required Lenders shall, proceed to protect and enforce their rights and remedies contained herein or in any other Loan Document, or as may be otherwise available at law or in equity. 10.3. Cumulative Rights No right or remedy herein conferred upon the Lenders or the Administrative Agent is intended to be exclusive of any other rights or remedies contained herein or in any other Loan Document, and every such right or remedy shall be cumulative and shall be in addition to every other such right or remedy contained herein and therein or now or hereafter existing at law or in equity or by statute, or otherwise. 10.4. No Waiver. No course of dealing between the Borrower and any Lender or the Administrative Agent or any failure or delay on the part of any Lender or the Administrative Agent in exercising any rights or remedies under any Loan Document or otherwise available to it shall operate as a waiver of any rights or remedies and no single or partial exercise of any rights or remedies shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or of the same right or remedy on a future occasion. 10.5. Allocation of Proceeds. If an Event of Default has occurred and not been waived or cured, and the maturity of the Notes has been accelerated pursuant to Article X hereof, all payments received by the Administrative Agent 59 hereunder, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder, shall be applied by the Administrative Agent in the following order: (a) amounts due to the Lenders and the Issuing Bank pursuant to Sections 4.6(a), 4.6(b), 4.6(c), and 12.5; (b) amounts due to the Administrative Agent pursuant to Section 4.6(d); (c) payments of interest on Loans, Swing Line Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders (with amounts payable in respect of Swing Line Outstandings being included in such calculation and paid to Bank of America); (d) payments of principal of Loans, Swing Line Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders (with amounts payable in respect of Swing Line Outstandings being included in such calculation and paid to Bank of America); (e) payments of cash amounts to the Administrative Agent in respect of outstanding Letters of Credit pursuant to Section 10.1(B); (f) amounts due to the Issuing Bank, the Administrative Agent and the Lenders pursuant to Sections 3.2(h), 8.16 and 12.9; (g) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; (h) amounts due to any of the Lenders or their affiliates in respect of Obligations consisting of liabilities under any Swap Agreement with any of the Lenders or their affiliates on a pro rata basis according to the amounts owed; and (i) any surplus remaining after application as provided for herein, to the Borrower or otherwise as may be required by applicable law. ARTICLE XI The Administrative Agent 11.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to act as its agent under this Agreement and the other Loan Documents with such powers and discretion as are specifically delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent (which term as used in this sentence and in Section 11.5 and the first sentence of Section 11.6 hereof shall include its affiliates and its own and its affiliates' officers, directors, employees, and agents): (a) shall not have any duties or responsibilities except those expressly set forth in this Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recital, statement, representation, or warranty (whether written or oral) made in or in connection with any Loan Document or any certificate or other document referred to or provided for in, or received by any of them under, any Loan Document, or for the value, validity, effectiveness, genuineness, enforceability, or sufficiency of any Loan Document, or any other document referred to or provided for therein or for any 60 failure by any Credit Party or any other Person to perform any of its obligations thereunder; (c) shall not be responsible for or have any duty to ascertain, inquire into, or verify the performance or observance of any covenants or agreements by any Credit Party or the satisfaction of any condition or to inspect the property (including the books and records) of any Credit Party or any of its Subsidiaries or affiliates; (d) shall not be required to initiate or conduct any litigation or collection proceedings under any Loan Document; and (e) shall not be responsible for any action taken or omitted to be taken by it under or in connection with any Loan Document, except for its own gross negligence or willful misconduct. The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. 11.2. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon any certification, notice, instrument, writing, or other communication (including, without limitation, any thereof by telephone or telefacsimile) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (including counsel for any Credit Party), independent accountants, and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until the Administrative Agent receives and accepts an Assignment and Acceptance executed in accordance with Section 12.1 hereof. As to any matters not expressly provided for by this Agreement, the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding on all of the Lenders; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to any Loan Document or applicable law or unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking any such action. 11.3. Defaults. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Administrative Agent has received written notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a "Notice of Default". In the event that the Administrative Agent receives such a notice of the occurrence of a Default or Event of Default, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall (subject to Section 11.2 hereof) take such action with respect to such Default or Event of Default as shall reasonably be directed by the Required Lenders, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Lenders. 11.4. Rights as Lender. With respect to its Revolving Credit Commitment and the Loans made by it and Letters of Credit issued by it, Bank of America (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. Bank of America (and any successor acting as Administrative Agent) and its affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, make investments in, provide services to, and generally engage in any kind of lending, trust, or other business with any Credit Party or any of 61 its Subsidiaries or affiliates as if it were not acting as Administrative Agent, and Bank of America (and any successor acting as Administrative Agent) and its affiliates may accept fees and other consideration from any Credit Party or any of its Subsidiaries or affiliates for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. 11.5. Indemnification. The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed under Section 12.9 hereof, but without limiting the obligations of the Borrower under such Section) ratably in accordance with their respective Revolving Credit Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys' fees), or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent (including by any Lender) in any way relating to or arising out of any Loan Document or the transactions contemplated thereby or any action taken or omitted by the Administrative Agent under any Loan Document; provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs or expenses payable by the Borrower under Section 12.5, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower. The agreements contained in this Section 11.5 shall survive payment in full of the Loans and all other amounts payable under this Agreement. 11.6. Non-Reliance on Administrative Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Credit Parties and their Subsidiaries and decision to enter into this Agreement and 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 deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under the Loan Documents. Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition, or business of any Credit Party or any of its Subsidiaries or affiliates that may come into the possession of the Administrative Agent or any of its affiliates. 11.7. Resignation of Administrative Agent. The Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders and, so long as no Default or Event of Default exists hereunder, with the approval of the Borrower, which approval shall not be unreasonably withheld, shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a commercial bank organized under the laws of the United States of America having combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor, such successor shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article XI shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. 11.8. Sole Lender. Notwithstanding anything to the contrary contained herein, until there shall be two or more Lenders, all references to the Administrative Agent herein and in the other Loan Documents shall be deemed to refer to Bank of America as Lender. 62 ARTICLE XII Miscellaneous 12.1. Assignments and Participations. (a) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans, its Notes, and its Revolving Credit Commitment); provided, however, that (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or an assignment of all of a Lender's rights and obligations under this Agreement and except for the assignments by Bank of America in connection with the initial syndication of the Revolving Credit Facilities, any such partial assignment shall be in an amount at least equal to $5,000,000 or an integral multiple of $1,000,000 in excess thereof; (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all of its rights and obligations under this Agreement and its Notes (except as a result of the operation of Section 2.6 whereby a Lender may assign its 364 Day Commitment but not its Three Year Commitment) (except that any assignment by Bank of America shall not include its rights, benefits or duties as the Issuing Bank or as the provider of Swing Line Loans); and (iv) the parties to such assignment shall execute and deliver to the Administrative Agent for its acceptance an Assignment and Acceptance in the form of Exhibit B hereto, together with any Notes subject to such assignment and a processing fee of $3,500. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section, the assignor, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with Section 5.6. (b) The Administrative Agent shall maintain at its address referred to in Section 12.2 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Revolving Credit Commitment of, and principal amount of the Revolving Loans owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (c) Upon its receipt of an Assignment and Acceptance executed by the parties thereto, together with any Note subject to such assignment and payment of the processing fee, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in 63 substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the parties thereto. (d) Each Lender may sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Revolving Credit Commitment or its Loans); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the yield protection provisions contained in Article V and the right of set-off contained in Section 12.3, and (iv) the Borrower shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to its Loans and its Notes and to approve any amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Notes, or extending its Revolving Credit Commitment). (e) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge all or any portion of its Loans and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (f) Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants). (g) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and permitted assigns of such party and all covenants, provisions and agreements by or on behalf of the Borrower which are contained in the Loan Documents shall inure to the benefit of the successors and permitted assigns of the Administrative Agent, the Lenders, or any of them. The Borrower may not assign or otherwise transfer to any other Person any right, power, benefit, or privilege (or any interest therein) conferred hereunder or under any of the other Loan Documents, or delegate (by assumption or otherwise) to any other Person any duty, obligation, or liability arising hereunder or under any of the other Loan Documents, and any such purported assignment, delegation or other transfer shall be void. 12.2. Notices. Any notice shall be conclusively deemed to have been received by any party hereto and be effective (i) on the day on which delivered (including hand delivery by commercial courier service) to such party (against receipt therefor), (ii) on the date of transmission to such party, in the case of notice by telefacsimile (where the proper transmission of such notice is either acknowledged by the recipient or electronically confirmed by the transmitting device), or (iii) on the fifth Business Day after the day on which mailed to such party, if sent prepaid by certified or registered mail, return receipt requested, in each case delivered, transmitted or mailed, as the case may be, to the address or telefacsimile number, as appropriate, set forth below or such other address or number as such party shall specify by notice hereunder: (a) if to the Borrower: Rexall Sundown, Inc. 6111 Broken Sound Parkway, N.W. 64 Boca Raton, Florida 33487 Attn: Vice President and Chief Financial Officer Telephone: (561) 999-1500 Telefacsimile: (561) 999-4175 with a copy to: Rexall Sundown, Inc. 6111 Broken Sound Parkway, N.W. Boca Raton, Florida 33487 Attn: Vice President and General Counsel Telephone: (561) 999-1008 Telefacsimile: (561) 999-4729 (b) if to the Administrative Agent: Bank of America, N.A. 101 North Tryon Street, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telephone: (704) 386-2881 Telefacsimile: (704) 386-9923 with a copy to: Bank of America, N.A. FL7-950-14-02 100 Southeast 2nd Street, 14th Floor Miami, Florida 33131 Attention: Richard M. Starke Telephone: (305) 533-2418 Telefacsimile: (305) 533-2437 (c) if to the Lenders: At the addresses set forth on the signature pages hereof and on the signature page of each Assignment and Acceptance; (d) if to any other Credit Party, at the address set forth on the signature page of the Facility Guaranty executed by such Credit Party, as the case may be. 12.3. Right of Set-off; Adjustments. (a) Upon the occurrence and during the continuance of any Event of Default, 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 indebtedness at any time owing by such Lender (or any of its affiliates) to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the Note held by such Lender, irrespective of whether such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender; 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 under this Section 12.3 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender may have. 65 (b) If any Lender (a "benefited Lender") shall at any time receive any payment of all or part of the Loans owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans owing to it, or interest thereon, such benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loans owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that any Lender so purchasing a participation from a Lender pursuant to this Section 12.3 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Person were the direct creditor of the Borrower in the amount of such participation. 12.4. Survival. All covenants, agreements, representations and warranties made herein shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit and the execution and delivery to the Lenders of this Agreement and the Notes and shall continue in full force and effect so long as any of Obligations remain outstanding or any Lender has any Revolving Credit Commitment hereunder or the Borrower has continuing obligations hereunder unless otherwise provided herein. 12.5. Expenses. The Borrower agrees to pay on demand all reasonable costs and expenses of the Administrative Agent in connection with the syndication, preparation, execution, delivery, administration, modification, and amendment of this Agreement, the other Loan Documents, and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under the Loan Documents. The Borrower further agrees to pay on demand all costs and expenses of the Administrative Agent and the Lenders, if any (including, without limitation, reasonable attorneys' fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of the Loan Documents and the other documents to be delivered hereunder. 12.6. Amendments and Waivers. Any provision of this Agreement or any other Loan Document may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower or other applicable Credit Party party to such Loan Document and either the Required Lenders or (as to Loan Documents other than the Credit Agreement) the Administrative Agent on behalf of the Required Lenders (and, if Article XI or the rights or duties of the Administrative Agent are affected thereby, by the Administrative Agent); provided that no such amendment or waiver shall, unless signed by all the Lenders, (i) increase the Revolving Credit Commitments of the Lenders or the Total Revolving Credit Commitment except as provided in Section 2.5, (ii) reduce the principal of or rate of interest on any Revolving Loan or any fees or other amounts payable hereunder, (iii) postpone any date fixed for the payment of any scheduled installment of principal of or interest on any Loan or any fees or other amounts payable hereunder or for termination of any Revolving Credit Commitment except as provided in Section 2.6, or (iv) change the percentage of the Revolving Credit Commitment or of the unpaid principal amount of the Notes, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Section 12.6 or any other provision of this Agreement or (v) release any Guarantor except as expressly contemplated in the Loan Documents; and provided, further, that no such amendment or waiver that affects the rights, privileges or obligations of Bank of America as provider of Swing Line Loans, shall be effective unless signed in writing by Bank of America or that affects the rights, privileges or obligations of the Issuing Bank as issuer of Letters of Credit, shall be effective unless signed in writing by the Issuing Bank. 66 No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances, except as otherwise expressly provided herein. No delay or omission on any Lender's or the Administrative Agent's part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default. 12.7. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such fully-executed counterpart. Signatures on communications and other documents may be transmitted by facsimile only with the consent of the Administrative Agent in its sole and absolute discretion in each instance. The effectiveness of any such signatures accepted by the Administrative Agent shall, subject to applicable law, have the same force and effect as manual signatures and shall be binding on all parties. The Administrative Agent may also require that any such signature be confirmed by a manually-signed hardcopy thereof. Each party hereto hereby adopts as an original executed signature page each signature page hereafter furnished by such party to the Administrative Agent (or an agent of the Administrative Agent) bearing (with the consent of the Administrative Agent) a facsimile signature by or on behalf of such party. Nothing contained in this Section shall limit the provisions of Section 11.2. 12.8. Termination. The termination of this Agreement shall not affect any rights of the Borrower, the Lenders or the Administrative Agent or any obligation of the Borrower, the Lenders or the Administrative Agent, arising prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into or rights created or obligations incurred prior to such termination have been fully disposed of, concluded or liquidated and the Obligations arising prior to or after such termination have been irrevocably paid in full. The rights granted to the Administrative Agent for the benefit of the Lenders under the Loan Documents shall continue in full force and effect, notwithstanding the termination of this Agreement, until all of the Obligations have been paid in full after the termination hereof (other than Obligations in the nature of continuing indemnities or expense reimbursement obligations not yet due and payable, which shall continue) or the Borrower has furnished the Lenders and the Administrative Agent with an indemnification satisfactory to the Administrative Agent and each Lender with respect thereto. Notwithstanding the foregoing, if after receipt of any payment of all or any part of the Obligations, any Lender is for any reason compelled to surrender such payment to any Person because such payment is determined to be void or voidable as a preference, impermissible setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full force and the Borrower shall be liable to, and shall indemnify and hold the Administrative Agent or such Lender harmless for, the amount of such payment surrendered until the Administrative Agent or such Lender shall have been finally and irrevocably paid in full. The provisions of the foregoing sentence shall be and remain effective notwithstanding any contrary action which may have been taken by the Administrative Agent or the Lenders in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Administrative Agent or the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. 12.9. Indemnification; Limitation of Liability. (a) The Borrower agrees to indemnify and hold harmless the Administrative Agent and each Lender and each of their affiliates and their respective officers, directors, employees, agents, and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation relating to litigation, litigation, or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Loans, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 12.9 applies, such indemnity 67 shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to it, any of its Subsidiaries, any Guarantor, or any security holders or creditors thereof arising out of, related to or in connection with the transactions contemplated herein, except to the extent that such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have directly resulted from such Indemnified Party's gross negligence or willful misconduct. The Borrower agrees not to assert any claim against the Administrative Agent, any Lender, any of their affiliates, or any of their respective directors, officers, employees, attorneys, agents, and advisers, on any theory of liability, for special, indirect, consequential, or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Loans. (b) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 12.9 shall survive the payment in full of the Loans and all other amounts payable under this Agreement. 12.10. Severability. If any provision of this Agreement or the other Loan Documents shall be determined to be illegal or invalid as to one or more of the parties hereto, then such provision shall remain in effect with respect to all parties, if any, as to whom such provision is neither illegal nor invalid, and in any event all other provisions hereof shall remain effective and binding on the parties hereto. 12.11. Entire Agreement. This Agreement, together with the other Loan Documents, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all previous proposals, negotiations, representations, commitments and other communications between or among the parties, both oral and written, with respect thereto (except that those provisions (if any) which by the express terms of the commitment letter dated as of December 10, 1999, executed by Bank of America and BAS and accepted by the Borrower, survive the closing of the Revolving Credit Facilities and Letter of Credit Facility, shall survive and continue in effect). 12.12. Agreement Controls. In the event that any term of any of the Loan Documents other than this Agreement conflicts with any express term of this Agreement, the terms and provisions of this Agreement shall control to the extent of such conflict. 12.13. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged under any of the Notes, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate (as such term is defined below). If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as defined below), the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, the Borrower shall pay to the Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of the Lenders and the Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to the Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the maximum lawful interest rate, if any, that at any time or from time to time 68 may be contracted for, charged, or received under the laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. 12.14. Payments. All principal, interest, and other amounts to be paid by the Borrower under this Agreement and the other Loan Documents shall be paid to the Administrative Agent at the Principal Office in Dollars and in immediately available funds, without setoff, recoupment, deduction or counterclaim. Subject to the definition of "Interest Period" herein, whenever any payment under this Agreement or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time in such case shall be included in the computation of interest and fees, as applicable, and as the case may be. 12.15. Confidentiality. The Administrative Agent and each Lender (each, a "Lending Party") agrees to keep confidential any information furnished or made available to it by the Borrower pursuant to this Agreement; provided that nothing herein shall prevent any Lending Party from disclosing such information (a) to any other Lending Party or any affiliate of any Lending Party, or any officer, director, employee, agent, or advisor of any Lending Party or affiliate of any Lending Party, (b) to any other Person if reasonably incidental to the administration of the Revolving Credit Facilities provided herein, (c) as required by any law, rule, or regulation, (d) upon the order of any court or administrative agency, (e) upon the request or demand of any regulatory agency or authority, (f) that is or becomes available to the public or that is or becomes available to any Lending Party other than as a result of a disclosure by any Lending Party prohibited by this Agreement or through disclosure by any other Person whom the Administrative Agent or such Lender has reason to believe disclosed such information in violation or contrary to the confidentiality requirements or policies of the Borrower or a Subsidiary, (g) in connection with any litigation to which such Lending Party or any of its affiliates may be a party, (h) to the extent necessary in connection with the exercise of any remedy under this Agreement or any other Loan Document, and (i) subject to provisions substantially similar to those contained in this Section 12.15, to any actual or proposed participant or assignee. 12.16. Governing Law; Waiver of Jury Trial. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. (b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF PALM BEACH, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. (c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR 69 CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA. (d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW. (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING. (f) THE BORROWER HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM. [Signatures on following pages] 70 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written. REXALL SUNDOWN, INC. WITNESS: /s/ Rebecca Chaffin By: /s/ Richard P. Goudis ----------------------- ------------------------------ Name: Richard P. Goudis /s/ R. Malloy McKeithen Title: Vice President of Finance ----------------------- BANK OF AMERICA, N.A., as Administrative Agent for the Lenders By: /s/ Richard M. Starke ------------------------- Name: Richard M. Starke Title: Managing Director BANK OF AMERICA, N.A. By: /s/ Richard M. Starke ------------------------- Name: Richard M. Starke Title: Managing Director Lending Office for Base Rate Loans: Bank of America, N.A. 101 North Tryon Street, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telephone: (704) 386-2881 Telefacsimile:(704) 386-9923 Wire Transfer Instructions: Bank of America, N.A. ABA# 053000196 Account No.: 3890123977 Reference: Rexall Sundown, Inc. Attention: Agency Services Lending Office for Eurodollar Rate Loans: Bank of America, N.A. 101 North Tryon Street, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telephone: (704) 386-2881 Telefacsimile: (704) 386-9923 Wire Transfer Instructions: Bank of America, N.A. ABA# 053000196 Account No.: 3890123977 Reference: Rexall Sundown, Inc. Attention: Agency Services 71 EX-10.2 4 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT is entered into as of January 7, 2000 by and between MET-RX NUTRITION, INC., a Delaware corporation (the "Company"), and A. SCOTT CONNELLY, M.D. (the "Employee"). R E C I T A L S The Company desires to employ the Employee, and the Employee desires to be employed by the Company, in accordance with the provisions contained in this Employment Agreement (the "Agreement"). NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements of each of the Company and the Employee contained in this Agreement, each of the Company and the Employee agrees as follows: I. EMPLOYMENT 1.1 Employment. The Company employs the Employee and the Employee accepts such employment. Subject to the direction of the Board of Directors of the Company, the Employee shall serve as the Chief Technical Officer of the Company. The Employee shall have such responsibilities, perform such duties and exercise such power and authority as are inherent in, or incident to, the office of the Chief Technical Officer of the Company, which are coordinating and planning research for the Company's products and acting as a spokesperson for the Company's products in accordance with the Company's public relations plans. It is understood that the Employee shall have no management or administrative duties, except with respect to employment decisions relating to the Company's research and development and clinical sciences department in accordance with the Company's budget, and the Employee shall have reasonable flexibility with respect to the method, hours, location and any travel in connection with the performance of his duties hereunder. The Employee shall devote his full business time and attention and his best efforts to the performance of his duties as an employee of the Company. 1.2 Permitted Business Activities. Without limiting the generality of the provisions of Section 6.1 hereof, during the term of this Agreement, the Employee will not engage in any other business activities for any direct or indirect remuneration without the prior written consent of the Company; provided, however, that subject to the prior written consent of the Company, the Employee may act as a director of any profit or nonprofit corporation if such activity is not inconsistent with the business of the Company; provided, further, that Employee may engage in passive personal investment activities not inconsistent with the provisions of Section 6.1 hereof; provided, further, that Employee may devote a minimal amount of time to (i) the operation of the Club MET-Rx (which includes a Cafe MET-Rx on its premises located at 140b East 17th Street, Costa Mesa, CA, provided, however, that if the club located at such premises is destroyed or condemned or the Employee is required to relocate the club because of the termination of the applicable lease, then one replacement club in Orange County, California that is substantially similar in size and appearance may be operated by the Employee in lieu of the current club), and (ii) the manufacture of the portable blender or mixer bearing the Cafe MET-Rx trademark, provided that the sale of such blenders shall be made through the Company as the exclusive distributor therefor. 1.3 Termination of Old Agreement. The Executive Employment Agreement effective January 1, 1999 by and between the Employee, the Company, MET-Rx Substrate Technology, Inc. and MET-Rx, USA, Inc. shall terminate on the date hereof be of no further force and effect, except with respect to the provision of Section 5 thereof which shall continue in full force and effect 1 II. TERM 2.1 Term. Subject to the provisions of Article V hereof, the term of this Agreement shall be for a period of five (5) years commencing on January 7, 2000 and terminating on January 6, 2005 (the "Term"). Notwithstanding anything hereinto the contrary, the Employee shall have the right to terminate the Agreement on not less than sixty (60) days prior written notice to the Company effective on or after January 7, 2003. III. COMPENSATION 3.1 Salary. In payment for the obligations to be performed by the Employee during the Term, the Company shall pay to the Employee (subject to any applicable payroll and/or taxes required to be withheld) annual compensation ("Annual Compensation") equal to (i) a salary of Two Hundred Fifty Thousand Dollars ($250,000.00) in cash for the year commencing January 7, 2000; (ii) a salary of Five Hundred Thousand Dollars ($500,000.00) in cash per year for each of the years commencing January 7, 2001 and January 7, 2002; and (iii) a salary of Six Hundred Fifty Thousand Dollars ($650,000.00) in cash for each of the years commencing January 7, 2003 and January 7, 2004. 3.2 Payment of Salary. Payments of salary shall be made to the Employee in installments from time to time on the same dates that payments of salary are generally made to all employees of the Company. 3.3 Incentive Compensation. The Company shall pay the Employee an incentive compensation bonus in an amount up to thirty-seven and one-half percent (37-1/2%) of the Employee's Annual Compensation for each of the Company's fiscal years during the Term hereof based upon such criteria as are mutually determined by the Company and the Employee; provided, however, the incentive compensation bonus for the first two fiscal years hereunder shall be in an amount up to seventy-five percent (75%) of the Employee's Annual Compensation up to a maximum of Three Hundred Seventy-Five Thousand Dollars ($375,000.00) in the aggregate. 3.4 Stock Options. Concurrently hereunder, the Company is issuing the Employee stock options pursuant to the 1993 Stock Incentive Plan of Rexall Sundown, Inc., a Florida corporation ("Rexall"). If such options are cancelled because Rexall's shareholders do not approve the amendment to such Plan at Rexall's February 2000 annual shareholder meeting or at another shareholder meeting on or before June 30, 2000, the Employee's Annual Compensation shall increase by One Hundred Fifty Thousand Dollars ($150,000.00) per year. IV. CERTAIN FRINGE BENEFITS 4.1 Generally. The Employee shall be entitled to reimbursement for reasonable business expenses incurred in connection with his employment including customer entertainment. The Company will also provide the Employee with a credit card for business travel and entertainment and all of Employee's air travel as an employee of the Company or its affiliates will be first claSection The Employee shall further be entitled to receive such benefits and to participate in such benefit plans as are generally provided from time to time by the Company to its senior executives; provided, however, that nothing contained in this Section 4.1 shall be construed to obligate the Company to provide any specific benefits to its senior executives or employees generally. Notwithstanding the foregoing, the Employee shall be entitled to the following benefits: (a) the Company shall maintain, for the Employee's benefit, a membership in the Pacific Club and shall pay the monthly dues and assessments thereon and all reasonable business expenses of the Employee's business meals and entertainment at such club. At the conclusion of the Employee's employment with the Company, at the Employee's option, the Company shall transfer the membership in the Pacific Club to the Employee at the Company's original cost; 2 (b) the Company shall reimburse the Employee for a full executive physical examination on an annual basis through the University of California at Irvine or another provider of the Employee's choice at a cost not to exceed $3,000 per year; (c) the Company shall reimburse the Employee for costs of estate, tax, and financial planning to an amount not exceeding $3,000 per year; and (d) during the Term hereof, the Company will provide the Employee with the Company's products, which shall also include all products produced by any subsidiary of the Company, for his personal use at no charge and after the termination of this Agreement for any reason, the Employee shall be entitled to purchase the Company's products, which shall also include all products produced by any subsidiary of the Company, for his personal use at a cost equal to 63% of the standard list price of such products. 4.2 Vacations. The Employee shall be entitled to four (4) weeks vacation time on an annual basis. 4.3 No Relocation Required. The Employee shall not be required to relocate outside Orange County, California in the performance of his duties without his prior written consent, which consent may be withheld in the Employee's sole discretion. In addition, during the three (3) year period commencing on the date hereof, the Company will not close the Company's research and development and clinical sciences department or relocate it outside Orange County, California without the Employee's prior written consent, which may be withheld in the Employee's sole discretion. 4.4 Term Life Insurance Policy. The Employee will be reimbursed for the premiums paid by the Employee in order to obtain a term life insurance policy with up to a $5,000,000 benefit; provided, however, that the Company shall not be required to pay aggregate premiums for any year in excess of $10,000. The Company acknowledges that if the Company is no longer required to reimburse the Employee for such premiums, the Employee shall be entitled, at his option and at his sole expense, to continue to maintain such term life insurance policy, subject to the provisions thereof. V. TERMINATION OF EMPLOYMENT 5.1 Certain Definitions. The following terms shall have the following respective meanings when utilized in this Agreement: (a) "Acquisition of Control" shall mean: (i) any person (including a Group), without the approval of a majority of the Incumbent Directors, becoming the Beneficial Owner of, or acquiring the power to direct the exercise of voting power with respect to, directly or indirectly, securities which represent thirty percent (30%) or more of the combined voting power of Rexall's outstanding securities thereafter, whether or not some portion of such securities was owned by such person (or by any member of such Group) prior thereto; provided, however, that this provision shall not apply to acquisitions by a director, executive officer or their affiliates if such person had such status on January 7, 2000; or (ii) the Incumbent Directors cease at any time to constitute a majority of the Board of Directors, whether of (A) Rexall or (B) after any cash tender offer or exchange offer, merger, consolidation or other business combination, recapitalization of Rexall, sale, liquidation or dissolution (or adoption of a plan for liquidation or dissolution), or any combination of any or all of the foregoing transactions, including but not limited to a series of such transactions, any successor to Rexall; provided, however, an Acquisition of Control shall not be deemed to have occurred with respect to the Employee if the action of the Employee was voluntary and would 3 have been sufficient, without the action of others, to constitute an Acquisition of Control. (b) "Beneficial Owner" shall have the meaning provided in Section 607.0901(1)(e) of the Florida Statutes. (c) "Cause" shall mean any action by the Employee or any inaction by the Employee which constitutes: (i) fraud, embezzlement, misappropriation, dishonesty or breach of trust; (ii) a felony of moral turpitude; (iii) material breach or violation of any or all of the covenants, agreements and obligations of the Employee set forth in this Agreement, other than as the result of the Employee's death or Disability; (iv) a willful or knowing failure or refusal by the Employee to perform any or all of his material duties and responsibilities as an officer of the Company, other than as the result of the Employee's death or Disability; or (v) gross negligence by the Employee in the performance of any or all of his material duties and responsibilities as an officer of the Company, other than as the result of the Employee's death or Disability; ;provided, however, that if the basis for any termination of the Employee's employment by the Company as set forth in the Termination Notice delivered by the Company to the Employee is any or all of the definitions of Cause set forth in Section 5.1(c)(iii), Section 5.1(c)(iv) or Section 5.1(c)(v) of this Agreement, then, in such event, the Employee shall have thirty (30) days from and after the date of his receipt of such Termination Notice to cure the action or inaction specified therein to the reasonable satisfaction of the Company and if the Employee is in good faith actively attempting to cure such action or inaction, such thirty (30) day period shall be extended for an additional maximum thirty (30) day period. (d) "Disability" shall mean any mental or physical illness, condition, disability or incapacity which prevents the Employee from reasonably discharging his duties and responsibilities as an officer of the Company. If any disagreement or dispute shall arise between the Company and the Employee as to whether the Employee suffers from any Disability, then, in any such event, the Employee shall submit to the physical or mental examination of a physician licensed under the laws of the State of California, who shall be mutually selected by the Company and the Employee, and such physician shall make the determination of whether the Employee suffers from any Disability. In the absence of fraud or bad faith, the determination of such physician shall be final and binding upon each of the Company and the Employee. The entire cost of any such examination, which shall take place in Los Angeles or Orange County, California shall be borne solely by the Company. (e) "Group" shall mean any combination of persons knowingly participating in a joint activity or interdependent consciously parallel action toward a common goal, whether or not pursuant to an express contract; provided, however, that actions taken by a director of the Company acting as such shall not alone constitute membership in a Group. (f) "Incumbent Director" shall mean any director of Rexall serving at January 7, 2000 or one elected thereafter if nominated or approved by at least two-thirds of the then Incumbent Directors. 4 (g) "Protracted Disability" shall mean any Disability which prevents the Employee from reasonably discharging his duties and responsibilities as an officer of the Company for a period of six (6) consecutive months. (h) "Termination Date" shall mean a specific date not less than ten (10) nor more than thirty (30) days from and after the date of any Termination Notice upon which the Employee's employment by the Company shall be terminated in accordance with the provisions of this Agreement. (i) "Termination Notice" shall mean a written notice which (i) sets forth the specific provision of this Agreement relied upon to terminate the Employee's employment by the Company, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide the basis for the termination of the Employee's employment by the Company pursuant to the specific provision of this Agreement relied upon therein and (iii) sets forth a Termination Date. 5.2 Termination of Employment. (a) Notwithstanding the provisions of Article II hereof, this Agreement (i) shall be automatically terminated upon the death of the Employee pursuant to the provisions of Section 5.3 hereof, (ii) may be terminated at any time by the Company pursuant to the provisions of Section 5.4 or 5.5 hereof and (iii) may be terminated by the Employee pursuant to the provisions of Section 5.6 hereof. (b) If either the Company or the Employee shall desire to terminate the Employee's employment by the Company pursuant to any of the provisions of Sections 5.4, 5.5 or 5.6 hereof, then the party causing any such termination shall give to the other party a Termination Notice. (c) If this Agreement shall be terminated pursuant to any of the provisions of this Article V, the Company shall be discharged from all of its obligations to the Employee hereunder upon its payment to the Employee of the required amount set forth in the section of this Article V pursuant to which such termination shall occur. 5.3 Death of Employee. If at any time during the Term the Employee shall die, then the employment of the Employee by the Company shall automatically terminate on the date of the Employee's death. In such event, not more than thirty (30) days from and after the date of the Employee's death, the Company shall pay to the Employee's estate or heirs, as the case may be, an amount in cash equal to the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) determined as of the date of the Employee's death. 5.4 Disability of Employee. (a) If at any time during the Term the Employee shall suffer any Disability, then the Company shall be obligated to continue to pay in the ordinary and normal course of its business to the Employee or his legal representatives, as the case may be, the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) from the date that the Employee shall first suffer any such Disability to the date that the Employee's employment by the Company shall be terminated pursuant to any of the provisions of this Agreement. (b) If the Employee shall suffer any Protracted Disability during the Term, then the Company may terminate this Agreement. In such event, in addition to any other benefits which may have been provided by the Company to the Employee or his legal representatives, as the case may be, pursuant to the provisions of Section 5.4(a) hereof, not later than thirty (30) days after the Termination Date specified in the Termination Notice, the Company shall pay to the Employee or his legal representatives, as the case may be, an amount in cash equal to the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) determined as of the Termination Date. Subsequent to such Termination Date, the Employee or his legal representatives, as the case may be, shall also be entitled to receive any 5 benefits which may be payable under any disability insurance policy or disability plan provided by the Company. 5.5 Termination of Employment by Company. (a) The Company may terminate this Agreement at any time with Cause. In such event, the Company shall be obligated to continue to pay in the ordinary and normal course of its business to the Employee his Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) until the Termination Date. (b) The Company may terminate this Agreement at any time without Cause. If the Company shall terminate the employment of the Employee by the Company without Cause, and not pursuant to any other provision of this Agreement, the Company shall continue to pay to the Employee the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) for a period of three (3) years from the date of termination if such termination takes place prior to January 7, 2002 and if such termination takes place on or after January 7, 2002, the Company shall continue to pay the Employee the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) for the balance of the Term hereof; provided, however, in no event shall such payments be made for less than eighteen (18) months as long as the non-competition provisions of Section 6.1 hereof remain in full force and effect. 5.6 Change in Control. Notwithstanding any other provisions of Sections 5.1 through 5.5 hereof, if (i) there is an Acquisition of Control and, (ii) at any time within three (3) months prior to such Acquisition of Control or at any time within one (1) year thereafter, either (A) the Employee for any reason terminates his employment with the Company, or (B) the Employee's employment is terminated without Cause, then the Employee shall have the option, but not the obligation, of being paid in cash an amount equal to one (1) times his Annual Compensation for the then current fiscal year of the Company (amounts due under this Section 5.6 are referred to as the "Payment"). If the Employee opts to receive the Payment under this Section 5.6, whether his employment is terminated by the Company or by himself, the provisions of Section 6.1(b) hereof shall be of no further force or effect. Subject to the provisions of Section 5.8 hereof, the Payment shall be made not later than three (3) months after the Employee gives notice to the Company in the form of a Termination Notice of his election under this Section 5.6. 5.7 Sale of the Company. Notwithstanding anything to the contrary herein, (i) if there is a sale of all or substantially all of the outstanding stock of the Company to a third party not affiliated with the Company or a sale of all or substantially all of the assets of the Company to a third party not affiliated with the Company and (ii) at any time within three (3) months prior to such sale or at any time within one (1) year thereafter, either (A) the Employee for any reason terminates his employment with the Company, or (B) the Employee's employment is terminated without Cause, then the Employee shall have the option, but not the obligation, of being paid in cash an amount equal to his Annual Compensation for the period of the applicable non-competition term pursuant to Section 6.1(b) hereof. Subject to the provisions of Section 5.8 hereof, the Payment shall be made not later than three (3) months after the Employee gives notice to the Company in the form of a Termination Notice of his election under this Section 5.7. 5.8 Payments. Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in this Agreement, together with any other payments which the Employee has the right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code), the payments pursuant to this Agreement shall be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed in Section 4999 of the Internal Revenue Code; provided, however, that the Employee shall have the absolute discretion to direct the Company to pay any amount which shall be payable to him pursuant to Section 5.6 hereof in such equal annual installments as the Employee may direct, with the first such installment payable when such amount would otherwise have been payable; and further provided that the Employee shall have the absolute discretion to allocate any reductions required by this Section 5.8 from amounts 6 due him under Section 5.6 hereof. The Company shall be obligated to comply with any directions given to it by the Employee pursuant to the preceding sentence. If any senior executive with Rexall enters into a provision more favorable than that contained in this Section 5.8 with respect to the potential tax consequences of a "parachute payment," then, at the Employee's election, this Section 5.8 shall be amended to provide for the terms and conditions of such provision. VI. CERTAIN RESTRICTIONS ON THE EMPLOYEE; ASSIGNMENT OF RIGHTS 6.1 Certain Restrictions. The Employee covenants and agrees with the Company as follows: (a) He shall not at any time, directly and indirectly, for himself or any other person, firm, corporation, partnership, association or other entity which competes in any manner with the Company or any of its subsidiaries or affiliates in the United States of America or its territories or possessions (collectively, the "Territory"), attempt to employ, employ or enter into any contractual arrangement for employment with, any employee or former employee of the Company or any of its subsidiaries or affiliates, unless such former employee shall not have been employed by the Company or any of its subsidiaries or affiliates for a period of at least one (1) year. (b) He shall not, during the term of this Agreement, and for a period the longer of (i) three (3) years from the date hereof, or (ii) eighteen (18) months from and after the date of termination of this Agreement, directly or indirectly, (A) acquire or own in any manner any interest in, or loan any amount to, any person, firm, partnership, corporation, association or other entity which competes in any manner with the Company or any of its subsidiaries or affiliates in the Territory, (B) be employed by or serve as an employee, agent, officer, director of, or as a consultant to, any person, firm, partnership, corporation, association or other entity, other than the Company and its subsidiaries and affiliates, which competes in any manner with any of the Company or its subsidiaries or affiliates in the Territory, or (C) compete in any manner with the Company or its subsidiaries or affiliates in the Territory. The foregoing provisions of this Section 6.1(b) shall not prevent the Employee from acquiring or owning not more than five percent (5%) of the equity securities of any entity whose securities are listed for trading on a national securities exchange or are regularly traded in the over-the-counter securities market. (c) He shall not at any time disclose, directly or indirectly, to any person, firm, corporation, partnership, association or other entity, any confidential information relating to the Company or any of its subsidiaries or affiliates, including, without limitation, any information concerning the financial condition, assets, personnel, procedures, techniques, products, customers, sources of leads and methods of obtaining new business or the methods generally of doing and operating the respective businesses of the Company and its subsidiaries and affiliates, trade secrets, product ideas, processes, techniques, formulas, know-how, marketing plans and strategies, except to the extent that such information is (i) at the time of the disclosure, use or dealing is generally available to the public by publication or otherwise through no breach of any obligation herein occasioned by any act or omission on the part of the Employee; (ii) the Employee can show was in his possession prior to disclosure by him and was not acquired directly or indirectly from the Company; (iii) now or in the future is independently made available to the recipient by or through a third party as a matter of right and without restrictions; or (iv) a matter of public knowledge or is required to be disclosed by law or judicial or administrative proceSection (d) He shall return all Company documents to the Company upon the termination of his employment by the Company. 6.2 Injunction. It is recognized and acknowledged by each of the Company and the Employee that a breach or violation by the Employee of any or all of his covenants and agreements contained in Section 6.1 hereof will cause irreparable harm and damage to the Company and its subsidiaries and affiliates in a monetary amount which would be virtually impossible to ascertain. As a result, the Employee recognizes and acknowledges that the Company and its subsidiaries and affiliates shall be entitled to a temporary restraining order and/or injunction from any court of competent jurisdiction enjoining and 7 restraining any breach or violation by the Employee and/or his affiliates, employees, associates, partners or agents, either directly or indirectly, of any or all of the Employee's covenants and agreements contained in Section 6.1 hereof. Such right to a temporary restraining order and/or injunction shall be cumulative and in addition to whatever other rights or remedies the Company and its subsidiaries and affiliates may possess hereunder, at law or in equity. Nothing contained in this Agreement shall be construed to prevent the Company and its subsidiaries and affiliates from seeking and recovering from the Employee damages suffered by any or all of them as a result of any breach or violation by the Employee and/or his affiliates, employees, associates, partners or agents of any or all of the Employee's covenants and agreements contained in this Agreement. 6.3 Reduction in Scope. In the event that any of the covenants and agreements of the Employee contained in Section 6.1 hereof shall be held invalid or unenforceable by a court of competent jurisdiction because of its duration or geographic area, then, in any such event, such covenant or agreement shall be reduced by such court in duration or geographical area or both to such extent as to make it valid and enforceable in the jurisdiction where such court is located, and in all other respects it shall remain in full force and effect. 6.4 Assignment of Rights. The Employee will promptly and fully disclose all Company Property (as hereinafter defined) to the Company. The Employee hereby assigns and agrees to assign to the Company his full right, title, and interest to all Company Property. The Employee agrees to execute any and all applications for domestic and foreign patents copyrights, or other proprietary rights and do such other acts (including, among others, the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Company Property to the Company and to permit the Company to enforce any patents, copyrights, or other proprietary rights in the Company Property. The Employee will not charge the Company for his time spent in complying with these obligations. All copyrightable works that the Employee creates that are Company Property shall be considered "works made for hire." Any assignments of Company Property required pursuant to this Section 6.4 shall be the sole expense of the Company; provided, however, that the Company will reimburse the Employee for any reasonable out-of-pocket expenses incurred by the Employee that would have been incurred by the Company (but for the failure of the Employee to make an earlier assignment to the Company) to develop such Company Property and/or to obtain any patents or other governmental registrations. If the Employee is required by the Company to perform any substantial services under this Section 6.4 following the termination of his employment, then to the extent that the number of days that the Employee is required to perform such services is greater than 30 days, then the Employee shall be entitled to reasonable compensation for the services provided on any days other than such 30 days. For the purposes of this Agreement, "Company Property" means developments, methods of doing business, compositions, works, concepts, and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed, or reduced to writing or practice by the Employee (whether alone or with other, and whether or not during normal business hours or on or off the Company's premises) during the Employee's employment by the Company that relate to either the services provided by, business of, or any prospective activity of, the Company known to the Employee as a result of his employment. VII. INDEMNIFICATION 7.1 Indemnification. The Company shall, to the maximum extent permitted by law, indemnify and hold the Employee harmless from and against any expenses, including, reasonable attorney's fees, judgments, fines, settlements and other amount actually and reasonably incurred in connection with any proceeding arising out of, or related to, the Employee's employment with, or services for, the Company after the date hereof. The Company shall advance to the Employee any expenses, including attorneys' fee and costs of settlement, incurred in defending any such proceeding to the maximum extent permitted by law. Notwithstanding any provision in this Agreement to the contrary, the provisions of this Section 7.1 shall survive any termination of this Agreement. In addition, the parties hereto agree that Krane & Smith may continue to represent both the Employee in his dealings with the Company and the Company involving third parties (including existing matters and new matters) as the Board of 8 Directors of the Company may determine, notwithstanding any actual or potential conflicts of interest by and between the Company and the Employee. In connection therewith, the Company and its shareholders shall execute and deliver a conflict of interest letter in the form of Exhibit A attached hereto. VIII. MISCELLANEOUS 8.1 Prevailing Party. If any litigation shall arise between the Company and the Employee based, in whole or in part, upon this Agreement or any or all of the provisions contained herein, the prevailing party in any such litigation shall be entitled to recover from the non-prevailing party, and shall be awarded by a court of competent jurisdiction, any and all reasonable fees and disbursements of trial and appellate counsel paid, incurred or suffered by such prevailing party as the result of, arising from, or in connection with, any such litigation. 8.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without application of any conflicts of laws principles. All disputes, suits, civil actions or other proceedings arising out of, in connection with or with respect to this Agreement, the subject matter hereof, the performance or non-performance of (i) any obligation under the Employment Agreement (ii) any of the transactions contemplated hereby, (iii) Employee's employment by the Company, or (iv) the guaranty described in Section 8.10 hereof (a "Suit") shall be resolved in the California Superior Court for Orange County California in an action conducted in accordance with the provisions of the Alternative Dispute Resolution Method set forth on Exhibit "A" hereto. Notwithstanding anything to the contrary in this Agreement, this provision shall survive any termination of this Agreement. Each of the parties hereto and Rexall hereby irrevocably submits to the jurisdiction and venue of such court for the purposes of any Suit. Each of the parties hereto and Rexall hereby waive and agree not to assert by way of motion, as a defense or otherwise in any such Suit, any claim that it is not subject to the jurisdiction of the above court, that such Suit is brought in an inconvenient forum, or that the venue of such Suit is improper. In any such litigation, the parties hereto and Rexall each consent to service of process by any means authorized by California or Federal law or as otherwise agreed in writing between the parties. 8.3 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Employee with respect to the subject matter hereof and supersedes all prior negotiations, agreements, understandings and arrangements, both oral and written, between the Company and the Employee with respect to such subject matter. This Agreement may not be modified in any way, except by a written instrument executed by each of the Company and the Employee. 8.4 Notices. Any and all notices required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by a recognized overnight carrier such as Federal Express or when deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, as follows: If to the Company: Met-Rx Nutrition, Inc. 6111 Broken Sound Parkway, N.W. Boca Raton, FL 33487 Attn: Richard Werber, Vice President and General Counsel Telecopy: 561-999-4729 9 If to the Employee: 17861 Von Karmen Avenue Irvine, California 92614 with a copy to: Krane & Smith 16255 Ventura Boulevard Encino, CA 91436 Attn: Samuel Krane, Esq. Telecopy: 818-382-4001 or to such other address as either party may from time to time give written notice of to the other. 8.5 Benefits; Binding Effect. This Agreement shall be for the benefit of, and shall be binding upon, each of the Company and the Employee and their respective heirs, personal representatives, legal representatives, successors and assigns. 8.6 Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part hereof, all of which are inserted conditionally on their being valid in law. Except as is otherwise provided in Section 6.3 hereof, if any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid by a court of competent jurisdiction, then, in any such event, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. 8.7 Waivers. The waiver by either party of a breach or violation of any term or provision of this Agreement by the other party shall not operate nor be construed as a waiver of any subsequent breach or violation of any provision of this Agreement nor of any other right or remedy. 8.8 Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of any or all of the provisions of this Agreement. 8.9 Counterparts. This Agreement may be executed in any number of counterparts and by the separate parties hereto in separate counterparts, each of which shall be deemed to constitute an original and all of which shall be deemed to be the one and the same instrument. 8.10 Guaranty Rexall will guaranty the obligations of the Company herewith pursuant to the terms of the Guaranty attached hereto as Exhibit B. IN WITNESS WHEREOF, each of the parties has executed and delivered this Agreement as of the date first above written. MET-RX NUTRITION, INC. By: /s/ Richard P. Goudis ------------------------- Name: Richard P. Goudis Title: V.P. Finance REXALL SUNDOWN, INC., as to Sections 8.2 and 8.10 hereof only 10 By: /s/ Damon DeSantis ---------------------- Name: Damon DeSantis, Title: President and CEO /s/ A. Scott Connelly, M.D -------------------------- A. SCOTT CONNELLY, M.D. 11 EX-99.1 5 PRESS RELEASE DATED JANUARY 10, 2000. AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD: - -------------- --------------------------------- Investors: General Information: Donna Conners Karen Griffiths Press: Analyst Information: Carol Walters Vanessa Schwartz (561)241-9400 (212)661-8030 FOR IMMEDIATE RELEASE REXALL SUNDOWN COMPLETES PURCHASE OF MET-Rx NUTRITION, INC. Boca Raton, FL - January 10, 2000 - Rexall Sundown, Inc. (Nasdaq: RXSD) today announced that it has completed its previously announced $108 million acquisition of MET-Rx Nutrition, Inc., a leader in the sports nutrition and bar categories. The transaction is expected to be slightly accretive to Rexall Sundown's earnings in the current fiscal year ending August 31, 2000 and was financed by a revolving line of credit. Based in Irvine, California, MET-Rx is recognized for its leading, national branded sports nutrition supplements including MET-Rx(R) powdered protein drink mixes, MET-Rx Protein Plus(TM), Source One(TM) and MET-Rx Natural Krunch food bars and other sports nutrition supplements. Damon DeSantis, Rexall Sundown's President and Chief Executive Officer commented, "We are pleased to finalize this acquisition which is consistent with our goal to further strengthen Rexall Sundown's leadership position in the nutrition industry through diversification in product categories, delivery forms and distribution channels. Specifically, this strategy includes entry into the fast-growing functional foods and bar segments, as well as the sports nutrition sector of the busineSection MET-Rx is one of the most widely respected companies in these arenas and we are proud to have its management and employee team become an integral part of the Rexall Sundown corporate family." Dr. A. Scott Connelly, Chairman and Chief Technical officer of MET-Rx added, "The partnership forged by this merger creates a strong, strategic alliance that offers great opportunity to leverage our resources and accelerate distribution and expansion in all channels of trade." The principal shareholders of MET-Rx were Dr. Connelly and affiliates of the Shansby Group, a San Francisco-based private equity partnership. Rexall Sundown, Inc. (Nasdaq: RXSD) develops, manufactures, markets and sells vitamins, herbals, nutritional supplements and other consumer health products. Visit the Company's website at www.rexallsundown.com. This Press Release may contain "forward-looking statements" as such term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, which represents the Company's interpretation or beliefs. These forward-looking statements, by their nature, involve substantial risks and uncertainties, certain of which may be beyond the Company's control and actual results may differ materially depending on a variety of important factors including uncertainties related to acquisitions, government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, reliance on independent distributors of Rexall Showcase International, competition and other factors described in the Company's filings with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----