Exhibit 10.1
 
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
September 27, 2005
among
MATRIXX INITIATIVES, INC. AND ZICAM, LLC,
as Borrowers,
and
COMERICA BANK,
as Bank
$4,000,000
 

 

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TABLE OF CONTENTS

                      Page  
ARTICLE I
  DEFINITIONS AND INTERPRETATIONS     1  
 
           
1.1
  Definitions     1  
1.2
  Accounting Terms and Determinations     13  
1.3
  Computation of Time Periods     13  
1.4
  Construction     13  
1.5
  Exhibits and Schedules     13  
1.6
  No Presumption Against Any Party     14  
1.7
  Independence of Provisions     14  
 
           
ARTICLE II
  TERMS OF THE CREDIT     14  
 
           
2.1
  Revolving Loans     14  
2.2
  Reserved     14  
2.3
  Reserved     14  
2.4
  Interest Rates; Payments of Interest     14  
2.5
  Notice of Borrowing Requirements     15  
2.6
  Reserved     16  
2.7
  Reserved     16  
2.8
  Reserved     16  
2.9
  Reserved     16  
2.10
  Increased Risk-Based Capital Cost     16  
2.11
  Note; Statements of Obligations     16  
2.12
  Holidays     17  
2.13
  Time and Place of Payments     17  
2.14
  Fees     17  
2.15
  Termination of Agreement     18  
 
           
ARTICLE III
  LETTERS OF CREDIT     18  
 
           
3.1
  Letters of Credit     18  
3.2
  Procedure for Issuance of Letters of Credit     19  
3.3
  Fees, Commissions and Other Charges     19  
3.4
  Reimbursement Obligations     19  
3.5
  Obligations Absolute     20  
3.6
  Letter of Credit Payments     20  
3.7
  Outstanding Letters of Credit Following Event of Default     21  
3.8
  Letter of Credit Applications     21  
 
           
ARTICLE IV
  CONDITIONS PRECEDENT     21  
 
           
4.1
  Conditions to Initial Loans or Letter of Credit     21  
4.2
  Conditions to all Loans and Letters of Credit     23  
 
           
ARTICLE V
  REPRESENTATIONS AND WARRANTIES     23  
 
           
5.1
  Legal Status     23  
5.2
  No Violation; Compliance     23  

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TABLE OF CONTENTS
(Cont’d)

                      Page  
5.3
  Authorization; Enforceability     23  
5.4
  Approvals; Consents     24  
5.5
  Liens     24  
5.6
  Debt     24  
5.7
  Litigation     24  
5.8
  No Default     24  
5.9
  Subsidiaries     24  
5.10
  Taxes     24  
5.11
  Correctness of Financial Statements     25  
5.12
  ERISA     25  
5.13
  Other Obligations     25  
5.14
  Public Utility Holding Company Act     25  
5.15
  Investment Company Act     25  
5.16
  Patents, Trademarks, Copyrights, and Intellectual Property, etc     25  
5.17
  Environmental Condition     26  
5.18
  Solvency     26  
 
           
ARTICLE VI
  AFFIRMATIVE COVENANTS     26  
 
           
6.1
  Punctual Payments     26  
6.2
  Books and Records     26  
6.3
  Financial Statements     27  
6.4
  Existence; Preservation of Licenses; Compliance with Law     28  
6.5
  Insurance     28  
6.6
  Assets     29  
6.7
  Taxes and Other Liabilities     29  
6.8
  Notice to Bank     29  
6.9
  Employee Benefits     29  
6.10
  Further Assurances     30  
6.11
  Bank Accounts     30  
6.12
  Environment     30  
6.13
  Additional collateral     31  
6.14
  Guarantors     31  
 
           
ARTICLE VII
  NEGATIVE COVENANTS     31  
 
           
7.1
  Use of Funds; Margin Regulation     31  
7.2
  Debt     32  
7.3
  Liens     32  
7.4
  Merger, Consolidation, Transfer of Assets     32  
7.5
  Leases     32  
7.6
  Sales and Leasebacks     32  
7.7
  Asset Sales     32  
7.8
  Investments     32  

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TABLE OF CONTENTS
(Cont’d)

                      Page  
7.9
  Character of Business     32  
7.10
  Distributions     33  
7.11
  Guaranty     33  
7.12
  Intentionally Omitted     33  
7.13
  Transactions with Affiliates     33  
7.14
  Stock Issuance     34  
7.15
  Financial Condition     34  
7.16
  Transactions Under ERISA     34  
 
           
ARTICLE VIII
  EVENTS OF DEFAULT AND REMEDIES     35  
 
           
8.1
  Events of Default     35  
8.2
  Remedies     37  
8.3
  Appointment of Receiver or Trustee     37  
8.4
  Remedies Cumulative     37  
 
           
ARTICLE IX
  TAXES     38  
 
           
9.1
  Taxes on Payments     38  
9.2
  Indemnification For Taxes     38  
9.3
  Evidence of Payment     38  
 
           
ARTICLE X
  MISCELLANEOUS     39  
 
           
10.1
  Notices     39  
10.2
  No Waivers     39  
10.3
  Expenses; Documentary Taxes; Indemnification     39  
10.4
  Amendments and Waivers     40  
10.5
  Successors and Assigns; Participations; Disclosure     40  
10.6
  Confidentiality     41  
10.7
  Counterparts; Effectiveness; Integration     42  
10.8
  Severability     42  
10.9
  Knowledge     42  
10.10
  Additional Waivers     42  
10.11
  Destruction Of Borrowers’ Documents     43  
10.12
  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER     43  
10.13
  No Novation     44  
 
           
ARTICLE XI
  JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT     44  
 
           
11.1
  Joint and Several Liability     44  
11.2
  Primary Obligation; Waiver of Marshalling     44  
11.3
  Financial Condition of Borrowers     45  
11.4
  Continuing Liability     45  
11.5
  Additional Waivers     45  
11.6
  Settlement or Releases     47  

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TABLE OF CONTENTS
(Cont’d)

                      Page  
11.7
  No Election     47  
11.8
  Indefeasible Payment     47  
11.9
  Single Loan Account     48  
11.10
  Apportionment of Proceeds of Loans     48  
11.11
  Parent as Agent for Borrowers     48  

Exhibit and Schedules
Exhibit 2.5(b) Form of Notice of Borrowing
Exhibit 6.3(b) Form of Compliance Certificate
Schedule 5.6 Permitted Debt
Schedule 5.7 Litigation
Schedule 5.9 Subsidiaries
Schedule 5.12 Employee Benefit Plan

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AMENDED AND RESTATED CREDIT AGREEMENT
          This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 27,
2005, is entered into among Matrixx Initiatives, Inc., a Delaware corporation
(“Parent”), and Zicam, LLC, an Arizona limited liability company (“Zicam”)
(Parent and Zicam are sometimes individually referred to herein as a “Borrower”
and collectively referred to herein as “Borrowers”) and Bank.
          A. Gum Tech International, Inc., a Utah corporation (“Gum Tech”), and
Gel Tech, L.L.C., an Arizona limited liability company (“Gel Tech”), and
Comerica Bank–California, a California banking corporation (“CBC”), previously
entered into that certain Credit Agreement, dated as of May 29, 2002 (as amended
to date, the “Prior Agreement”).
          B. Gum Tech has merged with and into Parent and Parent is the
surviving entity, and Gel Tech has changed its name to Zicam.
          C. CBC has merged with and into Bank, and Bank is the surviving
entity.
          D. Borrowers and Bank desire to amend and restate the Prior Agreement
in its entirety in accordance with the terms and conditions of this Agreement.
          The parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
     1.1 Definitions. The following terms, as used herein, shall have the
following meanings:
          “Administrative Borrower” has the meaning given to such term in
Section 11.11.
          “Affiliate” means any Person (i) that, directly or indirectly,
controls, is controlled by or is under common control with any Borrower or any
Subsidiary; (ii) which directly or indirectly beneficially owns or controls
fifteen percent (15%) or more of any class of voting stock of any Borrower or
any Subsidiary; or (iii) fifteen percent (15%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by any Borrower or
any Subsidiary. For purposes of the foregoing, control (including controlled by
and under common control with) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
          “Agreement” means this Amended and Restated Credit Agreement, as may
be further amended or restated from time to time in accordance with its terms.
          “Applicable Percentage” means, (i) with respect to Letters of Credit
for which

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Borrower has pledged to Bank cash collateral in an amount equal to 100% of the
face amount of such Letter of Credit, one half of one percent (0.5%), and
(ii) in all other cases, two percent (2%).
          “Asset” means any interest of a Person in any kind of property or
asset, whether real, personal, or mixed real and personal, and whether tangible
or intangible.
          “Asset Sale” means any sale, transfer or other disposition of any
Borrower’s or any Subsidiary’s businesses or Asset(s) now owned or hereafter
acquired, including shares of stock and indebtedness of any Subsidiary,
receivables and leasehold interests.
          “Bank” means Comerica Bank, a Michigan banking corporation.
          “Bankruptcy Code” means The Bankruptcy Reform Act of 1978 (Pub. L.
No. 95-598; 11 U.S.C.), as amended or supplemented from time to time, or any
successor statute, and any and all rules and regulations issued or promulgated
in connection therewith.
          “Base Lending Rate” means the variable per annum rate equal to the
Base Rate plus the Base Lending Rate Margin.
          “Base Lending Rate Margin” means one quarter of one percentage point
(25 basis points).
          “Base Rate” means the variable rate of interest announced by Bank at
its corporate headquarters as its base rate and which serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto. The Base Rate is determined by Bank from time to time as a
means of pricing credit extensions to some customers and is neither directly
tied to some external rate of interest or index nor necessarily the lowest rate
of interest charged by Bank at any given time for any particular class of
customers or credit extensions.
          “Borrowers’ Account” means Borrowers’ general deposit account number
1892269760 maintained with Bank.
          “Borrowing” means a borrowing of Revolving Loans from Bank pursuant to
the terms and conditions hereof.
          “Business Day” means any day other than a Saturday, a Sunday, or a day
on which commercial banks in the City of Phoenix, Arizona are authorized or
required by law or executive order or decree to close.
          “Capital Expenditures” means expenditures made in cash, or financed
with long term debt, by any Person for the acquisition of any fixed Assets or
improvements, replacements, substitutions, or additions thereto that have a
useful life of more than one (1) year, including the direct or indirect
acquisition of such Assets by way of increased product or service charges,
offset items, or otherwise, and the principal portion of payments with respect
to Capital Lease Obligations, calculated in accordance with GAAP.

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          “Capital Lease” means any lease of an Asset by a Person as lessee
which would, in conformity with GAAP, be required to be accounted for as an
Asset and corresponding liability on the balance sheet of that Person.
          “Capital Lease Obligations” of a Person means the amount of the
obligations of such Person under all Capital Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
          “Cash Secured Letter(s) of Credit” means (i) Letter of Credit Number
591516 issued by Bank for the Account of Zicam, with the face amount of
$5,000,000 and an expiry date of July 2, 2006, and (ii) any other Letter of
Credit that is secured by cash collateral in an amount not less than 100% of the
face amount of such Letter of Credit.
          “Change of Control” means the time at which (i) any Person (including
a Person’s Affiliates and associates) or group (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than the
Shareholders of any Borrower on the Closing Date) becomes the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of a
percentage (based on voting power, in the event different classes of stock shall
have different voting powers) of the voting stock of any Borrower equal to at
least twenty-five percent (25%), or such Person or group shall otherwise obtain
the power to control the election of the Board of Directors of any Borrower,
(ii) there shall be consummated any consolidation or merger of any Borrower
pursuant to which such Borrower’s common stock (or other capital stock) would be
converted into cash, securities or other property, other than a merger or
consolidation of such Borrower in which the holders of such common stock (or
other capital stock) immediately prior to the merger have the same proportionate
ownership, directly or indirectly, of common stock of the surviving corporation
immediately after the merger as they had of such Borrower’s common stock
immediately prior to such merger, or (iii) all or substantially all of any
Borrower’s Assets shall be sold, leased, conveyed or otherwise disposed of as an
entirety or substantially as an entirety to any Person (including an Affiliate
or associate of such Borrower) in one or a series of transactions.
          “Closing Date” means the date when all of the conditions set forth in
Section 4.1 have been fulfilled to the satisfaction of Bank and its counsel.
          “Collateral Access Agreement” has the meaning given to such term in
the Security Agreement.
          “Compliance Certificate” means a certificate of compliance to be
delivered quarterly in accordance with Section 6.3(b), substantially in the form
of Exhibit 6.3(b).
          “Consolidated EBITDA” means, with respect to any period, the sum of
(without duplication) (i) Consolidated Net Income for such period (excluding
extraordinary gains and losses); (ii) Consolidated Interest Expense during such
period; (iii) accrued federal and state income taxes payable by each Borrower
and the Subsidiaries during such period which are included in the determination
of Consolidated Net Income; and (iv) each Borrower’s and the Subsidiaries’
consolidated depreciation and amortization during such period; in each case

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calculated in accordance with GAAP.
          “Consolidated Interest Expense” means, with respect to any period, the
current interest accrued during such period in accordance with GAAP on the
aggregate amount of each Borrower’s and the Subsidiaries’ consolidated Debt,
including the interest portion of each Borrower’s and the Subsidiaries’
consolidated Capital Lease Obligations.
          “Consolidated Net Income” means, with respect to any period, the
consolidated net income of Borrowers and the Subsidiaries after all federal,
state and local income taxes reflected on Borrowers’ Financial Statement for
such period, calculated in accordance with GAAP.
          “Consolidated Tangible Net Worth” means, as of any date of
determination, the result of (a) Borrowers’ consolidated total stockholder’s
equity, minus (b) the sum of (i) all Intangible Assets of Borrowers, and
(ii) all amounts due to Borrowers from Affiliates.
          “Current Liabilities” means, as of the date of determination,
Borrowers’ consolidated liabilities coming due within one year (including the
principal amount of outstanding Revolving Loans and all amounts due to
Borrower’s shareholders, officers and Affiliates), calculated in accordance with
GAAP.
          “Debt” means, as of the date of determination, the sum, but without
duplication, of any and all of a Person’s: (i) indebtedness heretofore or
hereafter created, issued, incurred or assumed by such Person (directly or
indirectly) for or in respect of money borrowed; (ii) Capital Lease Obligations
and Synthetic Lease Obligations; (iii) obligations evidenced by bonds,
debentures, notes, or other similar instruments; (iv) obligations for the
deferred purchase price of property or services (including trade obligations
except accounts payable to trade creditors for goods or services which are not
aged more than 90 days from the billing date and current operating liabilities
(other than for borrowed money) which are not more than 90 days past due, in
each case incurred in the ordinary course of business, as presently conducted,
and paid within the specified time, unless contested in good faith in
appropriate proceedings (if applicable)); (v) current liabilities in respect of
unfunded vested benefits under any Plan; (vi) obligations under letters of
credit; (vii) obligations under acceptance facilities; (viii) Guaranteed Debt;
(ix) obligations secured by any Lien on any Asset of such Person, whether or not
such obligations have been assumed; and (x) Swaps.
          “Distributions” means dividends or distributions of earnings made by a
Person to its shareholders, partners or members, as the case may be.
          “Dollars” or “$” means lawful currency of the United States of
America.
          “Eligible Assignee” means (a) a commercial finance company or other
asset based lender, having total assets in excess of $1,000,000,000, (b) any
Affiliate of Bank, and (c) if an Event of Default exists, any Person reasonably
acceptable to Bank.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute, and any and all regulations
thereunder.

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          “ERISA Event” means (a) a Reportable Event with respect to a Plan or
Multiemployer Plan, (b) the withdrawal of a member of the ERISA Group from a
Plan during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate
a Plan in a distress termination (as described in Section 4041(c) of ERISA),
(d) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of or the
appointment of a trustee to administer, any Plan or Multiemployer Plan, of
(ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA of a member of the ERISA Group from a
Multiemployer Plan, or (g) providing any security to any Plan under
Section 401(a)(29) of the Internal Revenue Code by a member of the ERISA Group.
          “ERISA Group” means Borrowers and all members of a controlled group of
corporations and all trades or business (whether or not incorporated) under
common control which, together with Borrowers are treated as a single employer
under Section 414 of the Internal Revenue Code.
          “Event of Default” has the meaning set forth in Section 8.1.
          “Expenses” means (i) all expenses of Bank paid or incurred in
connection with their due diligence and investigation of Borrower, including
appraisal, filing, recording, documentation, publication and search fees and
other such expenses, and all attorneys’ fees and expenses (including reasonable
attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy
Code) incurred in connection with the structuring, negotiation, drafting,
preparation, execution and delivery of this Agreement, the Loan Documents, and
any and all other documents, instruments and agreements entered into in
connection herewith; (ii) all expenses of Bank, including reasonable attorneys’
fees and expenses (including reasonable attorneys’ fees incurred pursuant to
proceedings arising under the Bankruptcy Code) paid or incurred in connection
with the negotiation, preparation, execution and delivery of any waiver,
forbearance, consent, amendment or addition to this Agreement or any Loan
Document, or the termination hereof and thereof; (iii) all costs or expenses
paid or advanced by Bank which are required to be paid by Borrowers under this
Agreement or the Loan Documents, including taxes and insurance premiums of every
nature and kind of Bank; and (iv) if an Event of Default occurs, all expenses
paid or incurred by Bank, including attorneys’ fees and expenses (including
attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy
Code), costs of collection, suit, arbitration, judicial reference and other
enforcement proceedings, and any other out-of-pocket expenses incurred in
connection therewith or resulting therefrom, whether or not suit is brought, or
in connection with any refinancing or restructuring of the Obligations and the
liabilities of Borrowers under this Agreement, any of the Loan Documents, or any
other document, instrument or agreement entered into in connection herewith in
the nature of a workout. Notwithstanding the foregoing, any and all attorneys’
fees and expenses incurred by Bank in the event of any litigation solely between
Borrowers (or either of them), on the one hand, and Bank, on the other hand,
shall not constitute “Expenses” if and only if Borrowers are, or such Borrower
is, finally judicially determined by be the prevailing party in such litigation.

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          “Fees” means the Late Payment Fee and the Letter of Credit Fees.
          “Financial Statement(s)” means, with respect to any accounting period
of any Person, statements of income and statements of cash flows of such Person
for such period, and balance sheets of such Person as of the end of such period,
setting forth, in the case of the statements of income and cash flows,
comparative form figures for the corresponding period in the preceding fiscal
year or, if such period is a full fiscal year, corresponding figures from the
preceding annual audit, all prepared in reasonable detail and in accordance with
GAAP, subject to year-end adjustments in the case of monthly and/or quarterly
Financial Statements. Financial Statement(s) shall include the schedules thereto
and annual Financial Statements shall also include the footnotes thereto.
          “GAAP” means generally accepted accounting principles in the United
States of America, consistently applied, which are in effect as of the date of
this Agreement. If any changes in accounting principles from those in effect on
the date hereof are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions by or are otherwise required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to equitably reflect such changes, with the desired result that the
criteria for evaluating financial condition and results of operations of
Borrower and the Subsidiaries shall be the same after such changes as if such
changes had not been made.
          “Governing Documents” means the certificate or articles of
incorporation, by-laws, articles or certificate of organization, operating
agreement, or other organizational or governing documents of any Person.
          “Governmental Authority” means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority or subdivision thereof, domestic
or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
          “Guaranteed Debt” of any Person means, without duplication, all Debt
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement or
endorsement, (i) to pay or purchase such Debt or to advance or supply funds for
the payment or purchase of such Debt, or (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, or (iii) contingent obligations to purchase,
to provide funds for payment, or to supply funds to or in any other manner
invest in another Person (including any agreement to pay for property or
services irrespective to whether or not such property is received or such
services are rendered), or (iv) otherwise to assure a creditor against loss.
          “Guaranties” and “Guaranty” means, individually or collectively as the
context

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requires, each certain Continuing Guaranty executed by a Guarantor in favor of
Bank.
          “Guarantor(s)” means, individually or collectively as the context
requires, all Subsidiaries, and every other Person who now or hereafter executes
a Guaranty in favor of Bank with respect to the Obligations.
          “Hazardous Materials” means all or any of the following:
(a) substances that are defined or listed in, or otherwise classified pursuant
to, any applicable laws or regulations as hazardous substances, hazardous
materials, hazardous wastes, toxic substances, or any other formulation intended
to define, list, or classify substances by reason of deleterious properties such
as ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or EP toxicity or are otherwise regulated for the protection of
persons, property or the environment; (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas, or geothermal resources; (c) any
substances that meet the characteristics of hazardous waste or substances, or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty (50) parts per million.
          “Indemnified Person(s)” has the meaning given to such term in
Section 10.3(c).
          “Insolvency Proceeding” means any proceeding commenced by or against
any Person, under any provision of the Bankruptcy Code, or under any other
bankruptcy or insolvency law, including, but not limited to, assignments for the
benefit of creditors, formal or informal moratoriums, compositions, or
extensions with some or all creditors.
          “Intangible Assets” means, with respect to any Person, that portion of
the book value of all of such Person’s assets that would be treated as
intangibles under GAAP.
          “Intellectual Property Security Agreement” means each certain
Intellectual Property Security Agreement now or hereafter entered into between a
Borrower, on the one hand, and Bank, on the other hand.
          “Interest Coverage Ratio” means as of the last day of each fiscal
quarter, for the four fiscal quarter period ending on such day, the ratio of:
(i) Consolidated EBITDA for such period less Distributions declared by Parent in
such period; to (ii) the Consolidated Interest Expense for such period.
          “Interest Payment Date” means: the first day of each and every month,
and the Revolving Loans Maturity Date.
          “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute, and any and all regulations
thereunder.
          “ISP” means the International Standby Practices (1998 version), and
any subsequent versions or revisions approved by a Congress of the International
Chamber of Commerce Publication 590 and adhered to by Bank.

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          “Knowledge” has the meaning given to such term in Section 10.9.
          “Late Payment Fee” has the meaning given to such term in
Section 2.14(b).
          “Lending Office” means Bank’s office located at its address set forth
on the signature pages hereof, or such other office of Bank as it may hereafter
designate as its Lending Office by notice to Administrative Borrower.
          “Letter(s) of Credit” means any standby letter(s) of credit issued by
Bank, pursuant to Section 3.1.
          “Letter of Credit Application” means Bank’s standard form of Letter of
Credit Application.
          “Letter of Credit Fee” has the meaning given to such term in
Section 3.3(a).
          “Letter of Credit Sublimit” means Four Million Dollars ($4,000,000).
          “Letter of Credit Usage” means, on any date of determination, the
aggregate maximum amounts available to be drawn under all outstanding Letters of
Credit, without regard to whether any conditions to drawing could then be met.
          “Leverage Ratio” means, as of the date of determination, the ratio of
(i) Borrowers’ consolidated total liabilities, calculated in accordance with
GAAP; to (ii) Consolidated Tangible Net Worth.
          “Lien” means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement or other preferential
arrangement, charge or encumbrance (including, any conditional sale or other
title retention agreement, or finance lease) of any kind.
          “Loan Document(s)” means each of the following documents, instruments,
and agreements individually or collectively, as the context requires:
               (i) the Note;
               (ii) the Security Agreement; (iii) the Letter of Credit
Applications; (iv) the Guaranties;
               (v) the Membership Interest Pledge Agreement;
               (vi) the Intellectual Property Security Agreements; and
               (vii) such other documents, instruments, and agreements
(including intellectual property security agreements, control agreements,
financing statements and fixture

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filings) as Bank may reasonably request in connection with the transactions
contemplated hereunder or to perfect or protect the liens and security interests
granted to Bank in connection herewith.
          “Loans” means the Revolving Loans (each, a “Loan”).
          “Material Adverse Effect” means a material adverse effect on (i) the
business, Assets, condition (financial or otherwise), results of operations, or
prospects of any Borrower, any Subsidiary, or any Guarantor; (ii) the ability of
any Borrower to perform its obligations under this Agreement and the Loan
Documents to which it is a party (including, without limitation, repayment of
the Obligations as they come due), or the ability of any Guarantor to perform
its obligations under the Loan Documents to which it is a party, (iii) the
validity or enforceability of this Agreement, the Loan Documents, or the rights
or remedies of Bank hereunder and thereunder, (iv) the value of the Assets
assigned or pledged to Bank as collateral, or (v) the priority of Bank’s Liens
with respect to the Assets assigned or pledged thereto as collateral.
          “Membership Interest Pledge Agreement” means that certain Security
Agreement and Collateral Assignment of Membership Interests, dated as of even
date herewith, between Parent and Bank with respect to the Ownership Interests
in Zicam.
          “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA or Section 3(37) of ERISA to which any member of the
ERISA Group has contributed, or was obligated to contribute, within the
preceding six plan years (while a member of such ERISA Group) including for
these purposes any Person which ceased to be a member of the ERISA Group during
such six year period.
          “Note” means, the Secured Promissory Note, dated as of even date
herewith, executed by Borrowers to the order of Bank, in the principal amount of
Four Million Dollars ($4,000,000).
          “Notice of Borrowing” means an irrevocable notice from a Borrower to
Bank of such Borrower’s request for a Borrowing pursuant to the terms of
Section 2.5, substantially in the form of Exhibit 2.5(b).
          “Notice of Conversion or Continuation” means a written notice given
pursuant to the terms of Section 2.6(b), substantially in the form of
Exhibit 2.6(b).
          “Obligations” means any and all indebtedness, liabilities, and
obligations of Borrower owing to Bank and to its successors and assigns,
previously, now, or hereafter incurred, and howsoever evidenced, whether direct
or indirect, absolute or contingent, joint or several, liquidated or
unliquidated, voluntary or involuntary, due or not due, legal or equitable,
whether incurred before, during, or after any Insolvency Proceeding and whether
recovery thereof is or becomes barred by a statute of limitations or is or
becomes otherwise unenforceable or unallowable as claims in any Insolvency
Proceeding, together with all interest thereupon (including interest under
Section 2.4(b) and including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued during the pendency of an Insolvency
Proceeding.

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The Obligations shall include, without limiting the generality of the foregoing,
all principal and interest owing under the Loans, all Reimbursement Obligations,
all Expenses, the Fees, any other fees and expenses due hereunder and under the
Loan Documents (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued during the pendency of an Insolvency
Proceeding), and all other indebtedness evidenced by this Agreement and/or the
Loan Documents.
          “Operating Lease” means any lease of an Asset by a Person which, in
conformity with GAAP, is not a Capital Lease.
          “Ownership Interests” means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
          “Participant” has the meaning set forth in Section 10.5(d).
          “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
          “Permitted Debt” means (i) Debt owing to Bank in accordance with the
terms of this Agreement and the Loan Documents, (ii) Debt listed on
Schedule 5.6, (iii) Debt up to a maximum aggregate amount of Five Hundred
Thousand Dollars ($500,000) outstanding at any one time incurred in the ordinary
course of business and secured by Purchase Money Liens, and (iv) Operating
Leases to the extent permitted by this Agreement.
          “Permitted Liens” means (i) Liens for current taxes, assessments or
other governmental charges which are not delinquent or remain payable without
any penalty, or are being contested in good faith by appropriate proceedings,
provided that, if delinquent, adequate reserves have been set aside with respect
thereto as required by GAAP and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture; (ii) Liens in favor of Bank, in
accordance with the Loan Documents, (iii) statutory Liens, such as inchoate
mechanics’, inchoate materialmen’s, landlord’s, warehousemen’s, and carriers’
liens, and other similar liens, other than those described in clause (i) above,
arising in the ordinary course of business with respect to obligations which are
not delinquent or are being contested in good faith by appropriate proceedings,
provided that, if delinquent, adequate reserves have been set aside with respect
thereto as required by GAAP and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture; (iv) Liens relating to Capital Lease
Obligations permitted hereunder and Liens securing any leases permitted in
Section 7.5, (v) judgment Liens that do not constitute an Event of Default under
Section 8.1(i), and (vi) Liens, if they constitute such, of any true lease and
consignment UCC filings permitted hereunder, and (vii) Purchase Money Liens
securing Debt described in clause (iii) of the definition of “Permitted Debt”
hereinabove.
          “Person” means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,

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business trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions thereof.
          “Plan” means an employee benefit plan as defined in Section 3(3) of
ERISA in which any personnel of any member of the ERISA Group participate or
from which any such personnel may derive a benefit or with respect to which any
member of the ERISA Group may incur liability, excluding any Multiemployer Plan,
but including any plan either established or maintained by any member of the
ERISA Group or to which such Person contributes under the laws of any foreign
country.
          “Prior Agreement” has the meaning given to such term in Recital A.
          “Purchase Money Lien” means a Lien on any item of equipment of a
Borrower; provided that (i) such Lien attaches only to that Asset and (ii) the
purchase-money obligation secured by such item of equipment does not exceed one
hundred percent (100%) of the purchase price of such item of equipment.
          “Quick Ratio” means, as of the date of determination, the ratio of
(i) Borrowers’ accounts receivable plus Borrowers’ unrestricted cash on hand and
unrestricted marketable securities, to (ii) Current Liabilities.
          “Regulation D” means Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended or supplemented from
time to time.
          “Reimbursement Obligations” means the obligations of Borrowers to
reimburse Bank pursuant to Section 3.4 for amounts drawn under Letters of
Credit.
          “Reportable Event” means any of the events described in Section
4043(c) of ERISA other than a Reportable Event as to which the provision of
30 days notice to the PBGC is waived under applicable regulations.
          “Responsible Officer” means either the Chief Executive Officer or
Chief Financial Officer of a Person, or such other officer, employee, or agent
of such Person designated by a Responsible Officer in a writing delivered to
Bank.
          “Retiree Health Plan” means an employee welfare benefit plan within
the meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
          “Revolving Credit Commitment” means Four Million Dollars ($4,000,000).
          “Revolving Loans” has the meaning given to such term in Section 2.1.
          “Revolving Loans Maturity Date” means July 2, 2007.
          “SEC” means United States Securities and Exchange Commission.

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          “Security Agreement” means that certain Security Agreement, dated as
of even date herewith, among Borrowers and Bank.
          “Shareholder” means a shareholder of any Borrower.
          “Solvent” means, with respect to any Person on the date any
determination thereof is to be made, that on such date: (a) the present fair
valuation of the Assets of such Person is greater than such Person’s probable
liability in respect of existing debts; (b) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person’s ability to pay
as such debts mature; and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, which
would leave such Person with Assets remaining which would constitute
unreasonably small capital after giving effect to the nature of the particular
business or transaction. For purposes of this definition (i) the fair valuation
of any property or assets means the amount realizable within a reasonable time,
either through collection or sale of such Assets at their regular market value,
which is the amount obtainable by a capable and diligent Person from an
interested buyer willing to purchase such property or assets within a reasonable
time under ordinary circumstances; and (ii) the term debts includes any payment
obligation, whether or not reduced to judgment, equitable or legal, matured or
unmatured, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, absolute, fixed or contingent.
          “Stock Pledge Agreement” means each certain Security Agreement-Stock
Pledge now or hereafter entered into between a Borrower and Bank.
          “Subsidiary” means any corporation, limited liability company,
partnership, trust or other entity (whether now existing or hereafter organized
or acquired) of which any Borrower or one or more Subsidiaries of any Borrower
at the time owns or controls directly or indirectly more than 50% of the shares
of stock or partnership or other ownership interest having general voting power
under ordinary circumstances to elect a majority of the board of directors,
managers or trustees or otherwise exercising control of such corporation,
limited liability company, partnership, trust or other entity (irrespective of
whether at the time stock or any other form of ownership of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
          “Swaps” means payment obligations with respect to interest rate swaps,
currency swaps and similar obligations obligating a Person to make payments,
whether periodically or upon the happening of a contingency. For the purposes of
this Agreement, the amount of the obligation under any Swap shall be the amount
determined, in respect thereof as of the end of the then most recently ended
fiscal quarter of Borrowers, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to each party thereto or if any such agreement provides for the
simultaneous payment of amounts by and to each party, then in each such case,
the amount of such obligation shall be the net amount so determined.

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          “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
          “Taxes” has the meaning set forth in Section 9.1.
          “Transferee” has the meaning set forth in Section 10.5(e).
          “UCC” means the Arizona Uniform Commercial Code, as amended or
supplemented from time to time.
          “Uniform Customs” means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
          “Unmatured Event of Default” means any condition or event which with
the giving of notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
     1.2 Accounting Terms and Determinations. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP.
     1.3 Computation of Time Periods. In this Agreement, with respect to the
computation of periods of time from a specified date to a later specified date,
the word from means from and including and the words to and until each mean to
but excluding. Periods of days referred to in this Agreement shall be counted in
calendar days unless otherwise stated.
     1.4 Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, references to any gender include any other gender, the part
includes the whole, the term including is not limiting, and the term or has,
except where otherwise indicated, the inclusive meaning represented by the
phrase and/or. References in this Agreement to determination by Bank include
good faith estimates by Bank (in the case of quantitative determinations), and
good faith beliefs by Bank (in the case of qualitative determinations). The
words hereof, herein, hereby, hereunder, and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection, clause, exhibit and schedule references
are to this Agreement, unless otherwise specified. Any reference in this
Agreement or any of the Loan Documents to this Agreement or any of the Loan
Documents includes any and all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.
     1.5 Exhibits and Schedules. All of the exhibits and schedules attached
hereto shall be deemed incorporated herein by reference.

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     1.6 No Presumption Against Any Party. Neither this Agreement, any of the
Loan Documents, any other document, agreement, or instrument entered into in
connection herewith, nor any uncertainty or ambiguity herein or therein shall be
construed or resolved using any presumption against any party hereto, whether
under any rule of construction or otherwise. On the contrary, this Agreement,
the Loan Documents, and the other documents, instruments, and agreements entered
into in connection herewith have been reviewed by each of the parties and their
counsel and shall be construed and interpreted according to the ordinary
meanings of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
     1.7 Independence of Provisions. All agreements and covenants hereunder,
under the Loan Documents, and the other documents, instruments, and agreements
entered into in connection herewith shall be given independent effect such that
if a particular action or condition is prohibited by the terms of any such
agreement or covenant, the fact that such action or condition would be permitted
within the limitations of another agreement or covenant shall not be construed
as allowing such action to be taken or condition to exist.
ARTICLE II
TERMS OF THE CREDIT
     2.1 Revolving Loans. Provided that no Event of Default or Unmatured Event
of Default has occurred and is continuing, and subject to the other terms and
conditions hereof, Bank agrees to make revolving loans (“Revolving Loans”) to
Borrowers, upon notice in accordance with Section 2.5(b), from the Closing Date
up to but not including the Revolving Loans Maturity Date, the proceeds of which
shall be used only for the purposes allowed in Section 7.1(a), subject to the
following conditions and limitations:
          (a) the principal amount of Revolving Loans outstanding after giving
effect to any proposed Borrowing plus the Letter of Credit Usage on such date
shall not exceed the Revolving Credit Commitment; and
          (b) Borrowers shall not be permitted to borrow, and Bank shall not be
obligated to make, any Revolving Loans to Borrowers, unless and until all of the
conditions for a Borrowing set forth in Section 4.2 have been met to the
satisfaction of Bank in its sole and absolute discretion, exercised in a
commercially reasonable way.
Borrowers may repay and, subject to the terms and conditions hereof, reborrow
Revolving Loans. All such repayments shall be without penalty or premium. On the
Revolving Loans Maturity Date, Borrowers shall pay to Bank the entire unpaid
principal balance of the Revolving Loans together with all accrued but unpaid
interest thereon.
     2.2 Reserved.
     2.3 Reserved.
     2.4 Interest Rates; Payments of Interest.

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          (a) Interest Rate Options. Subject to the terms and conditions hereof,
all Revolving Loans, or portions thereof, shall bear interest at the Base
Lending Rate.
          (b) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, in addition to and not in substitution of any of Bank’s other
rights and remedies with respect to such Event of Default, at the option of Bank
the entire unpaid principal balance of the Loans shall bear interest at the
otherwise applicable rate plus three hundred (300) basis points. In addition,
interest, Expenses, the Fees, and other amounts due hereunder not paid when due
shall bear interest at the Base Lending Rate plus three hundred (300) basis
points until such overdue payment is paid in full.
          (c) Computation of Interest. All computations of interest shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed. In the event that the Base Rate announced is, from time to
time, changed, adjustment in the rate of interest payable hereunder on all Loans
shall be made as of 12:01 a.m. (Phoenix, Arizona time) on the effective date of
the change in the Base Rate. Interest shall accrue from the Closing Date to the
date of repayment of the Loans in accordance with the provisions of this
Agreement; provided, however, if a Loan is repaid on the same day on which it is
made, then one (1) day’s interest shall be paid on that Loan. Any and all
interest not paid when due shall thereafter be deemed to be a Revolving Loan
made under Section 2.1 and shall bear interest thereafter as provided for in
Section 2.4(b).
          (d) Maximum Interest Rate. In no event shall the interest rate and
other charges hereunder exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Bank has
received interest and other charges hereunder in excess of the highest rate
applicable hereto, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations, other than interest, in the
inverse order of maturity, and the provisions hereof shall be deemed amended to
provide for the highest permissible rate. If there are no Obligations
outstanding, Bank shall refund to Borrowers such excess.
          (e) Payments of Interest. All accrued but unpaid interest on the
Loans, calculated in accordance with this Section 2.4, shall be due and payable,
in arrears, on each and every Interest Payment Date.
     2.5 Notice of Borrowing Requirements.
          (a) Each Borrowing shall be made on a Business Day.
          (b) Each Borrowing shall be made upon telephonic notice given by a
Responsible Officer of Administrative Borrower, followed by a Notice of
Borrowing, given by facsimile or personal service, delivered to Bank at the
address set forth in the Notice of Borrowing. Bank shall be given such notice no
later than 11:00 a.m., Phoenix, Arizona time, one (1) Business Day prior to the
day on which such Borrowing is to be made, and such notice shall state the
amount thereof (subject to the provisions of Section 2.1).

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          (c) Bank shall not incur any liability to Borrowers in acting upon any
telephonic notice which Bank believes in good faith to have been given by a
Responsible Officer of Administrative Borrower, or for otherwise acting in good
faith under this Section 2.5, and in making any Loans pursuant to telephonic
notice.
          (d) So long as all of the conditions for a Borrowing of a Loan set
forth herein have been satisfied, Bank shall credit the proceeds of such Loan on
the applicable Borrowing date into Borrowers’ Account.
     2.6 Reserved.
     2.7 Reserved.
     2.8 Reserved.
     2.9 Reserved.
     2.10 Increased Risk-Based Capital Cost. If the amount of capital required
or expected to be maintained by Bank or any Person directly or indirectly owning
or controlling Bank (each a “Control Person”), shall be affected by:
          (a) the introduction or phasing in of any law, rule or regulation
after the date hereof;
          (b) any change after the date hereof in the interpretation of any
existing law, rule or regulation by any central bank or United States or foreign
governmental authority charged with the administration thereof; or
          (c) compliance by Bank or such Control Person with any directive,
guideline or request from any central bank or United States or foreign
governmental authority (whether or not having the force of law) promulgated or
made after the date hereof, and Bank shall have reasonably determined that such
introduction, phasing in, change or compliance shall have had or will thereafter
have the effect of reducing (x) the rate of return on Bank’s or such Control
Person’s capital, or (y) the asset value to Bank or such Control Person of the
Loans made or maintained by Bank, in either case to a level below that which
Bank or such Control Person could have achieved or would thereafter be able to
achieve but for such introduction, phasing in, change or compliance (after
taking into account Bank’s or such Control Person’s policies regarding capital),
in either case by an amount which Bank in its reasonable judgment deems
material, then, on demand by Bank, Borrowers shall pay to Bank or such Control
Person such additional amount or amounts as shall be sufficient to compensate
Bank or such Control Person, as the case may be, for such reduction.
     2.11 Note; Statements of Obligations. The Loans and Borrowers’ obligation
to repay the same shall be evidenced by the Note, this Agreement and the books
and records of Bank. Bank shall render monthly statements of the Loans to
Borrowers, including statements of all principal and interest owing on the
Loans, and all Fees and Expenses owing, and such statements shall be presumed to
be correct and accurate and constitute an account stated between Borrower

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and Bank’s unless, within thirty (30) days after receipt thereof by
Administrative Borrower, Administrative Borrower delivers to Bank, at the
address specified in Section 10.1, written objection thereof specifying the
error or errors, if any, contained in any such statement.
     2.12 Holidays. Any principal or interest in respect of the Loans which
would otherwise become due on a day other than a Business Day, shall instead
become due on the next succeeding Business Day and such adjustment shall be
reflected in the computation of interest; provided, however, that in the event
that such due date shall, subsequent to the specification thereof by Bank, for
any reason no longer constitute a Business Day, Bank may change such specified
due date in accordance with this Section 2.12.
     2.13 Time and Place of Payments.
          (a) All payments due hereunder shall be made available to Bank in
immediately available Dollars, not later than 12:00 p.m., Phoenix, Arizona time,
on the day of payment, to the following address or such other address as Bank
may from time to time specify by notice to Administrative Borrower:
Comerica Bank
Phelps Dodge Tower
1 North Central Avenue, Suite 1000
Phoenix, AZ 85004-4469
Attention: William J. Kirschner
          (b) Borrowers hereby authorize Bank to charge Borrowers’ Account, or
any other demand deposit account maintained by any Borrower with Bank, for the
amount of any payment due or past due hereunder or under any Loan Document, for
the full amount thereof. Should there be insufficient funds in any such demand
deposit account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable in cash by Borrowers.
          (c) In addition, Borrowers hereby authorizes Bank at its option,
without prior notice to Borrowers, to advance a Revolving Loan for any payment
due or past due hereunder, including principal and interest owing on the Loans,
the Fees and all Expenses, and to pay the proceeds of such Revolving Loan to
Bank for application toward such due or past due payment.
     2.14 Fees.
          (a) No upfront closing fee shall be due in connection with this
Agreement.
          (b) If any payment due hereunder, whether for principal, interest, or
otherwise, is not paid on or before the tenth (10th) day after the date such
payment is due, in addition to and not in substitution of any of Bank’s other
rights and remedies with respect to such nonpayment, Borrowers shall pay to Bank
a late payment fee (the “Late Payment Fee”) equal to five percent (5%) of the
amount of such overdue payment. The Late Payment Fee shall be due and payable on
the eleventh (11th) day after the due date of the overdue payment with respect
thereto.

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     2.15 Termination of Agreement. Administrative Borrower may terminate this
Agreement at any time by written notice to Bank in accordance with Section 10.1
and payment in full in cash of the Obligations, and the cancellation and return
of all outstanding Letters of Credit. Notwithstanding any such termination,
Bank’s rights and remedies hereunder and under the Loan Documents, and Bank’s
security interest in all of its collateral, shall continue in full force and
effect until the Obligations have been paid in full in cash, and all of Bank’s
obligations hereunder and under any Letters of Credit have terminated.
ARTICLE III
LETTERS OF CREDIT
     3.1 Letters of Credit.
          (a) Provided that no Event of Default or Unmatured Event of Default is
continuing and subject to the other terms and conditions hereof, Bank agrees to
issue letters of credit (“Letters of Credit”) for the account of Borrowers in
such form as may be approved from time to time by Bank, subject to the following
limitations; provided that Cash Secured Letters of Credit shall be exempt from
the following limitations:
               (i) The face amount of the Letter of Credit requested if and when
issued must not cause the sum of the aggregate principal amount outstanding of
all Revolving Loans plus the Letter of Credit Usage to exceed the Revolving
Credit Commitment;
               (ii) The face amount of the Letter of Credit requested if and
when issued must not cause the Letter of Credit Usage to exceed the Letter of
Credit Sublimit;
               (iii) The Letter of Credit may not have an expiry date or draw
period which extends beyond the date which is thirty (30) days prior to the
Revolving Loans Maturity Date; and
               (iv) The conditions specified in Section 4.2 shall have been
satisfied on the date of issuance of such Letter of Credit.
          (b) Each Letter of Credit shall (i) be denominated in Dollars, and
(ii) be a standby letter of credit issued to support obligations of a Borrower,
contingent or otherwise, to finance the working capital and business needs of
such Borrower in the ordinary course of business.
          (c) Each Letter of Credit shall be subject to the Uniform Customs or
the ISP, as determined by Bank, in its sole discretion, and, to the extent not
inconsistent therewith, the laws of the State of Arizona.
          (d) The Bank shall not at any time be obligated to issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Bank to
exceed any limits imposed by its organizational or governing documents or by any
applicable law, rule, regulation or treaty

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or determination of an arbitrator or a court or other governmental authority to
which Bank is subject.
     3.2 Procedure for Issuance of Letters of Credit. Any Borrower may request
that the Bank issue a Letter of Credit at any time prior to the date which is
thirty (30) days prior to the Revolving Loans Maturity Date by delivering to the
Bank a Letter of Credit Application at its address for notices specified herein
a Letter of Credit Application therefor, completed to the satisfaction of the
Bank, together with such other certificates, documents and other papers and
information as the Bank may request. Upon receipt of any Letter of Credit
Application, the Bank will process such Letter of Credit Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Bank be required to issue any Letter of Credit earlier than three (3) Business
Days after its receipt of the Letter of Credit Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Bank and such Borrower. The Bank shall furnish
a copy of such Letter of Credit to such Borrower promptly following the issuance
thereof.
     3.3 Fees, Commissions and Other Charges.
          (a) Borrowers shall pay to Bank a fee in an amount equal to the face
amount of each and every Letter of Credit times the Applicable Percentage (the
“Letter of Credit Fee”). The Letter of Credit Fee shall be due and payable upon
issuance of the applicable Letter of Credit and again on each anniversary
thereof.
          (b) In addition to the foregoing, Borrowers shall pay or reimburse the
Bank for such normal and customary costs and expenses as are reasonably incurred
or charged by the Bank in issuing, effecting payment under, amending or
otherwise administering any Letter of Credit.
     3.4 Reimbursement Obligations.
          (a) Borrowers agree to reimburse the Bank on the same Business Day on
which a draft is presented under any Letter of Credit and paid by the Bank,
provided that the Bank provides notice to Administrative Borrower prior to
11:00 a.m., Phoenix, Arizona time, on such Business Day and otherwise Borrowers
will reimburse the Bank on the next succeeding Business Day; provided, further,
that the failure to provide such notice shall not affect Borrowers’ absolute and
unconditional obligation to reimburse the Bank when required hereunder for any
draft paid under any Letter of Credit. The Bank shall provide notice to Borrower
on such Business Day as a draft is presented and paid by the Bank indicating the
amount of (i) such draft so paid and (ii) any taxes, fees, charges or other
costs or expenses incurred by the Bank in connection with such payment. Each
such payment shall be made to the Bank at its address specified on the signature
pages hereof in lawful money of the United States of America and in immediately
available funds.

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          (b) Interest shall be payable on any and all amounts remaining unpaid
by Borrowers under this Section from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Revolving Loans that are
(i) in the case of the first day on which such amounts become payable (except
where such amounts become payable by reason of the acceleration thereof), Loans
which were not then overdue and (ii) in all cases to which clause (i) is not
applicable, Loans which were then overdue.
          (c) Each drawing under any Letter of Credit shall constitute a request
by Borrowers to Bank for a Borrowing of a Revolving Loan. The date of such
drawing shall be deemed the date on which such Borrowing is made.
     3.5 Obligations Absolute.
          (a) Borrowers’ obligations under this Article III shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which any Borrower may have or have
had against the Bank or any beneficiary of a Letter of Credit.
          (b) Borrowers also agree with the Bank that Borrowers’ Reimbursement
Obligations under Section 3.4 shall not be affected by, among other things,
(i) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (ii) any dispute between or among any Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of any Borrower against the
beneficiary of such Letter of Credit or any such transferee.
          (c) Bank shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Bank’s gross negligence or willful misconduct.
          (d) Borrowers agree that any action taken or omitted by the Bank under
or in connection with any Letter of Credit or the related drafts or documents,
if done in the absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the UCC, shall be binding on
Borrowers and shall not result in any liability of the Bank to Borrowers.
     3.6 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the responsibility of the Bank to Borrowers in
connection with such draft shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
In determining whether to pay under any Letter of Credit, only the Bank shall be
responsible for determining that the documents and certificates required to be
delivered under the Letter of Credit have been delivered and that they comply on
their face with the requirements of such Letter of Credit.

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     3.7 Outstanding Letters of Credit Following Event of Default. With respect
to all Letters of Credit outstanding upon the occurrence of an Event of Default,
Borrowers shall either replace such Letters of Credit, whereupon such Letters of
Credit shall be canceled, with letters of credit issued by another issuer
acceptable to the beneficiary of such Letter of Credit, or provide the Bank, as
security for such Letters of Credit, with a cash collateral deposit in an amount
equal to one hundred percent (100%) of the Letter of Credit Usage for so long as
such Letters of Credit remain outstanding during the continuance of such
Unmatured Event of Default or Event of Default. Borrowers hereby grant to Bank a
security interest in such cash collateral to secure all Obligations of Borrowers
under this Agreement and the other Loan Documents. Amounts held in such cash
collateral account shall be applied by Bank to the payment of drafts drawn under
such Letters of Credit and the payment of customary costs and expenses charged
or incurred by the Bank in connection therewith, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other Obligations. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other Obligations shall have been
paid in full in cash, and the obligations of Bank hereunder have terminated the
balance, if any, in such cash collateral account shall be returned to Borrowers.
Borrowers shall execute and deliver to Bank such further documents and
instruments as Bank may request to evidence the creation and perfection of the
within security interest in such cash collateral account.
     3.8 Letter of Credit Applications. In the event of any conflict between the
terms of this Article III and the terms of any Letter of Credit Application, the
terms of such Letter of Credit Application shall govern and control any such
conflict.
ARTICLE IV
CONDITIONS PRECEDENT
     4.1 Conditions to Initial Loans or Letter of Credit. Bank’s obligation to
make the initial Loans and/or to issue the initial Letter of Credit is subject
to and contingent upon the fulfillment of each of the following conditions to
the satisfaction of Bank and its counsel:
          (a) receipt by Bank of this Agreement and each of the Loan Documents,
all duly executed by Borrowers and/or the other Persons party thereto,
acknowledged where required, and in form and substance satisfactory to Bank in
its sole and absolute discretion;
          (b) with respect to each Borrower, receipt by Bank of a Certificate of
the Secretary of such Borrower, dated as of the Closing Date, certifying (i) the
incumbency and signatures of the Responsible Officers of such Borrower who are
executing this Agreement and the Loan Documents on behalf of such Borrower;
(ii) the By-Laws of such Borrower and all amendments thereto as being true and
correct and in full force and effect; and (iii) the resolutions of the Board of
Directors of such Borrower as being true and correct and in full force and
effect, authorizing the execution and delivery of this Agreement and the Loan
Documents, and authorizing the transactions contemplated hereunder and
thereunder, and authorizing the Responsible Officers of such Borrower to execute
the same on behalf of such Borrower;

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          (c) receipt by Bank of (i) Parent’s Certificate of Incorporation and
all amendments thereto, certified by the Delaware Secretary of State and dated a
recent date prior to the Closing Date, and (ii) Zicam’s Articles of Organization
and all amendments thereto, certified by the Arizona Secretary of State and
dated a recent date prior to the Closing Date;
          (d) receipt by Bank of a certificate of status and good standing for
each Borrower, dated a recent date prior to the Closing Date, showing that such
Borrower is in good standing under the laws of the States of Delaware in the
case of Parent, and Arizona in the case of Zicam;
          (e) receipt by Bank of certificates of foreign qualification and good
standing for Parent, dated a recent date prior to the Closing Date, showing that
Parent is in good standing under the laws of the State of Arizona;
          (f) receipt by Bank of a certificate signed by the President and Chief
Financial Officer of each Borrower, dated as of the Closing Date, certifying
that (i) both immediately before and immediately after giving effect to the
transactions contemplated by this Agreement and the Loan Documents, such
Borrower is and will be Solvent; (ii) to the best of their knowledge after due
and diligent inquiry, the representations and warranties of such Borrower
contained in this Agreement and the Loan Documents are true and correct, and
(iii) to the best of their knowledge after due and diligent inquiry, both
immediately before and immediately after giving effect to the transactions
contemplated by this Agreement and the Loan Documents, no Event of Default or
Unmatured Event of Default is continuing or shall occur;
          (g) receipt by Bank of Uniform Commercial Code and other public record
searches with respect to Borrowers and each Guarantor, in each case satisfactory
to Bank in its sole and absolute discretion;
          (h) receipt by Bank of the original certificates, if any, evidencing
one hundred percent (100%) of the issued and outstanding Ownership Interests of
Zicam, together with undated stock powers with respect thereto, duly executed in
blank, and in form and substance satisfactory to Bank;
          (i) receipt by Bank of all Expenses owing on the Closing Date;
          (j) no Material Adverse Effect shall have occurred, as determined by
Bank in its sole and absolute discretion;
          (k) receipt by Bank of copies of insurance binders or insurance
certificates evidencing Borrowers’ having caused to be obtained insurance in
accordance with Section 6.5, including the Bank’s loss payee endorsements
required by such Section;
          (l) receipt by Bank of such other documents, instruments and
agreements as Bank may reasonably request in connection with the transactions
contemplated hereunder or to perfect or protect the liens and security interests
granted to Bank in connection herewith; and
          (m) the Closing Date shall have occurred on or before ___, 2005.

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     4.2 Conditions to all Loans and Letters of Credit. Bank’s obligation
hereunder to make any Loans to Borrowers (including the initial Loans), and/or
to issue any Letters of Credit (including the initial Letter of Credit), is
further subject to and contingent upon the fulfillment of each of the following
conditions to the satisfaction of Bank:
          (a) (i) in the case of a Borrowing, receipt by Bank of a Notice of
Borrowing as required by Section 2.5(b), and (ii) in the case of a Letter of
Credit, receipt by Bank of a Letter of Credit Application and the other papers
and information required under Section 3.2;
          (b) the fact that, immediately before and after such Borrowing or
issuance of Letter of Credit, as the case may be, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing; and
          (c) the fact that the representations and warranties of Borrowers
contained in this Agreement shall be true on and as of the date of such
Borrowing, or issuance of Letter of Credit, as the case may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
          In order to induce Bank to enter into this Agreement and to make Loans
and/or issue any Letters of Credit, each Borrower represents and warrants to
Bank that on the Closing Date and on the date of each Borrowing or issuance of a
Letter of Credit:
     5.1 Legal Status. Parent is a corporation duly organized and existing under
the laws of the State of Delaware. Zicam is a limited liability company duly
organized and existing under the laws of the State of Arizona. Each Borrower and
each Subsidiary has the power and authority to own its own Assets and to
transact the business in which it is engaged, and is properly licensed,
qualified to do business and in good standing in every jurisdiction in which it
is doing business where failure to so qualify could have a Material Adverse
Effect.
     5.2 No Violation; Compliance. The execution, delivery and performance of
this Agreement and the Loan Documents to which each Borrower is a party are
within such Borrower’s powers, are not in conflict with the terms of the
Governing Documents of such Borrower, and do not result in a breach of or
constitute a default under any contract, obligation, indenture or other
instrument to which such Borrower is a party or by which such Borrower is bound
or affected, which breach or default could reasonably be expected to have a
Material Adverse Effect. There is no law, rule or regulation (including
Regulations T, U and X of the Federal Reserve Board), nor is there any judgment,
decree or order of any court or Governmental Authority binding on any Borrower
which would be contravened by the execution, delivery, performance or
enforcement of this Agreement and the Loan Documents to which any Borrower is a
party.
     5.3 Authorization; Enforceability. Each Borrower has taken all corporate or
limited liability company, as applicable, action necessary to authorize the
execution and delivery of this Agreement and the Loan Documents to which such
Borrower is a party, and the consummation

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of the transactions contemplated hereby and thereby. Upon their execution and
delivery in accordance with the terms hereof, this Agreement, and the Loan
Documents to which each Borrower is a party will constitute legal, valid and
binding agreements and obligations of such Borrower enforceable against such
Borrower in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, and similar laws and equitable principles
affecting the enforcement of creditors’ rights generally.
     5.4 Approvals; Consents. No approval, consent, exemption or other action
by, or notice to or filing with, any Governmental Authority is necessary in
connection with the execution, delivery, performance or enforcement of this
Agreement or the Loan Documents. All requisite Governmental Authorities and
third parties have approved or consented to the transactions contemplated by
this Agreement and Loan Documents, and all applicable waiting periods have
expired and there is no governmental or judicial action, actual or threatened,
that has or could have a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the transactions contemplated by this
Agreement and Loan Documents.
     5.5 Liens. Each Borrower and each of the Subsidiaries has good and
marketable title to, or valid leasehold interests in, all of its Assets, free
and clear of all Liens or rights of others, except for Permitted Liens.
     5.6 Debt. Each Borrower and each of the Subsidiaries has no Debt other than
Permitted Debt.
     5.7 Litigation. Except as set forth in Schedule 5.7, or otherwise disclosed
to Bank in writing from time to time, there are no suits, proceedings, claims or
disputes pending or, to the Knowledge of Borrowers, threatened, against or
affecting any Borrower or any of Borrower’s Assets, or any Subsidiary or any of
such Subsidiary’s Assets, which are not fully covered by applicable insurance
and as to which no reservation of rights has been taken by the insurer
thereunder.
     5.8 No Default. No Event of Default or Unmatured Event of Default has
occurred and is continuing or would result from the incurring of obligations by
any Borrower or any Subsidiary under this Agreement or the Loan Documents.
     5.9 Subsidiaries. Set forth in Schedule 5.9, or otherwise disclosed to Bank
in writing from time to time, is a complete and accurate list of the
Subsidiaries, showing the jurisdiction of incorporation of each and showing the
percentage of each Borrower’s ownership of the Ownership Interests of each
Subsidiary. All of the outstanding Ownership Interests of each Subsidiary have
been validly issued, are fully paid and nonassessable, and are owned by
Borrowers free and clear of all Liens except Permitted Liens.
     5.10 Taxes. Each Borrower has filed or caused to be filed all returns and
reports which are required to be filed by any jurisdiction, and ha paid or made
provision for the payment of all taxes, assessments, fees or other governmental
charges imposed upon its properties, income or franchises, as to which failure
to file or pay would reasonably be likely to have a Material

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Adverse Effect, except such assessments or taxes, if any, which are being
contested in good faith by appropriate proceedings and reserves as required by
GAAP have been established.
     5.11 Correctness of Financial Statements. Borrowers’ audited Financial
Statement as of its fiscal year ended December 31, 2004, and internally-prepared
Financial Statements for the six months ended June 30, 2005, and all other
information and data furnished by Borrowers to Bank in connection therewith, are
complete and correct in all material respects and accurately and fairly present
the financial condition and results of operations of Borrowers and the
Subsidiaries as of their respective dates. Any forecasts of future financial
performance delivered by Borrowers to Bank have been made in good faith and are
based on reasonable assumptions and investigations by Borrowers. Said Financial
Statements have been prepared in accordance with GAAP. Since the date of such
Financial Statements, there has been no change in any Borrower’s or the
Subsidiaries’ financial condition or results of operations sufficient to have a
Material Adverse Effect. Borrowers and the Subsidiaries have no contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate, except as disclosed in such statements,
information and data.
     5.12 ERISA. Neither any Borrower nor any member of the ERISA Group
maintains or contributes to any Plan or Multiemployer Plan, other than those
listed on Schedule 5.12. Each Borrower and each member of the ERISA Group have
satisfied the minimum funding standards of ERISA and the Internal Revenue Code
with respect to each Plan and Multiemployer Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Effect. None of Borrowers, any member of the ERISA Group, or,
to the Knowledge of the Borrowers any fiduciary of any Plan is subject to any
direct or indirect liability with respect to any Plan (other than to make
regularly scheduled required contributions and to pay Plan benefits in the
normal course) under any applicable law, treaty, rule, regulation, or agreement.
Neither Borrowers nor any member of the ERISA Group is required to provide
security to any Plan under Section 401(a)(29) of the Internal Revenue Code. Each
Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under GAAP.
     5.13 Other Obligations. Neither any Borrower nor any Subsidiary is in
default on any (i) Debt or (ii) any other lease, commitment, contract,
instrument or obligation which is material to the operation of its business.
     5.14 Public Utility Holding Company Act. No Borrower is a holding company,
or an affiliate of a holding company or a subsidiary company of a holding
company, within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
     5.15 Investment Company Act. No Borrower is an investment company, or a
company controlled by an investment company, within the meaning of the
Investment Company Act of 1940, as amended.
     5.16 Patents, Trademarks, Copyrights, and Intellectual Property, etc. Each
Borrower and each Subsidiary has all necessary patents, patent rights, licenses,
trademarks, trademark

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rights, trade names, trade name rights, copyrights, permits, and franchises in
order for it to conduct its business and to operate its Assets, without known
conflict with the rights of third Persons, and all of same are valid and
subsisting. The consummation of the transactions contemplated by this Agreement
will not alter or impair any of such rights of any Borrower or any Subsidiary.
Each Borrower and each Subsidiary has not been charged or, to the best of
Borrowers’ Knowledge after due inquiry, threatened to be charged with any
infringement or, after due inquiry, infringed on any, unexpired trademark,
trademark registration, trade name, patent, copyright, copyright registration,
or other proprietary right of any Person.
     5.17 Environmental Condition. (i) None of any Borrower’s or any
Subsidiary’s Assets has ever been used by any Borrower or such Subsidiary or, to
Borrowers’ Knowledge, by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials;
(ii) none of any Borrower’s or any Subsidiary’s Assets has ever been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site, or a candidate for closure pursuant to any
environmental protection statute; (iii) no Lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned or operated by any Borrower or any Subsidiary; and (iv) neither
Borrower nor any Subsidiary has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by any Borrower or any
Subsidiary resulting in the releasing or disposing of Hazardous Materials into
the environment.
     5.18 Solvency. Each Borrower and each Subsidiary is Solvent. No transfer of
property is being made by any Borrower or any Subsidiary and no obligation is
being incurred by any Borrower or any Subsidiary in connection with the
transactions contemplated by this Agreement or the Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Borrower any Subsidiary.
ARTICLE VI
AFFIRMATIVE COVENANTS
          Each Borrower covenants and agrees that from the Closing Date and
thereafter until the indefeasible payment, performance and satisfaction in full
of the Obligations, all of Bank’s obligations hereunder have been terminated and
no Letters of Credit are outstanding, such Borrower shall:
     6.1 Punctual Payments. Punctually pay the interest and principal on the
Loans, the Fees and all Expenses and any other fees and liabilities due under
this Agreement and the Loan Documents at the times and place and in the manner
specified in this Agreement or the Loan Documents.
     6.2 Books and Records. Maintain, and cause each of the Subsidiaries to
maintain, adequate books and records in accordance with GAAP, and permit any
officer, employee or agent of Bank, at any time and from time to time, upon one
Business Day’s advance notice (unless an Event of Default has occurred and is
continuing, in which case no notice shall be

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required), to inspect, audit (at a maximum of once per year unless an Event of
Default has occurred and is continuing in which case there shall be no limit of
the number of audits), and examine such books and records, and to make copies of
the same.
     6.3 Financial Statements. Deliver to Bank the following, all in form and
detail satisfactory to Bank and in such number of copies as Bank may reasonably
request:
          (a) as soon as available but not later than forty-five (45) days after
the end of each fiscal quarter of Parent, a consolidated internally prepared
Financial Statement for Borrowers and the Subsidiaries which shall include
Borrowers’ and the Subsidiaries’ consolidating and consolidated balance sheet as
of the close of such period, and Borrowers’ and the Subsidiaries’ consolidated
statement of income and retained earnings and statement of cash flow for such
period and year to date, certified by the Chief Financial Officer of
Administrative Borrower, to the best of his or her knowledge after due and
diligent inquiry, as being complete and correct and fairly presenting in all
material respects Borrowers’ and its Subsidiaries’ financial condition and
results of operations for such period;
          (b) as soon as available but not later than forty-five (45) days after
the end of each fiscal quarter of Parent, a Compliance Certificate from the
Chief Financial Officer of Administrative Borrower, stating, among other things,
that he or she has reviewed the provisions of this Agreement and the Loan
Documents and that, to the best of his or her knowledge after due and diligent
inquiry there exists no Event of Default or Unmatured Event of Default, and
containing the calculations and other details necessary to demonstrate
compliance with Section 7.15;
          (c) as soon as available but not later than sixty (60) days after the
end of each fiscal year, an annual operating budget for the following fiscal
year;
          (d) as soon as available but not later than ninety (90) days after the
end of each fiscal year of Parent, a complete copy of Borrowers’ and the
Subsidiaries’ consolidated audited Financial Statement, which shall include at
least Borrowers’ and the Subsidiaries’ balance sheet as of the close of such
fiscal year, and Borrowers’ and the Subsidiaries’ statement of income and
retained earnings and statement of cash flow for such fiscal year, certified by
a certified public accountant selected by Borrower and satisfactory to Bank,
which certificate shall not be qualified;
          (e) promptly upon receipt by any Borrower, copies of any and all
reports and management letters submitted to a Borrower or any Subsidiary by any
certified public accountant in connection with any examination of any Borrower’s
or any Subsidiary’s financial records made by such accountant;
          (f) from time to time, operating statistics, operating plans and any
other information as Bank may reasonably request, promptly upon such request;
and
          (g) promptly after the sending or filing thereof, Parent will deliver
to Bank copies of all regular and periodic reports which Parent shall file with
the SEC or any national securities exchange, other than ownership filings.

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     6.4 Existence; Preservation of Licenses; Compliance with Law. Subject to
Section 7.4, preserve and maintain, and cause each Subsidiary to preserve and
maintain, its corporate existence and good standing in the state of its
organization, qualify and remain qualified, and cause each Subsidiary to qualify
and remain qualified, as a foreign corporation in every jurisdiction where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect; and preserve, and cause each of the Subsidiaries to preserve,
all of its licenses, permits, governmental approvals, rights, privileges and
franchises required for its operations; unless the failure to preserve any such
licenses, permits, approvals, rights privileges and franchises would not be
reasonably be expected to have a Material Adverse Effect and comply, and cause
each of the Subsidiaries to comply, with the provisions of its Governing
Documents; and comply, and cause each of the Subsidiaries to comply, with the
requirements of all applicable laws, rules, regulations, orders of any
Governmental Authority having authority or jurisdiction over it, except for such
laws, rules and regulations where the failure to so comply could would not be
reasonably be likely to have a Material Adverse Effect, and comply, and cause
each of the Subsidiaries to comply, with all requirements for the maintenance of
its business, insurance, licenses, permits, governmental approvals, rights,
privileges and franchises unless the failure to so comply would not reasonably
be likely to have a Material Adverse Effect.
     6.5 Insurance.
          (a) Maintain, at Borrowers’ expense, insurance respecting its Assets
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrowers also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Bank. Borrowers shall deliver copies
of all such policies to Bank with a satisfactory lender’s loss payable
endorsement naming Bank as sole loss payee or, in the case of equipment or real
estate which is subject to a Purchase Money Lien, an additional insured, and
shall contain a waiver of warranties. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days’
prior written notice to Bank in the event of cancellation of the policy for any
reason whatsoever, and the insurer’s agreement that any loss payable thereunder
shall be payable notwithstanding any act or negligence of any Borrower or Bank
which might, absent such agreement, result in a forfeiture of all or a part of
such insurance payment.
          (b) Original policies or certificates thereof satisfactory to Bank
evidencing such insurance shall be delivered to Bank at least 30 days prior to
the expiration of the existing or preceding policies. Administrative Borrower
shall give Bank prompt notice of any loss covered by such insurance. Bank shall
have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Bank to be applied at the option of Bank either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to Bank for

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application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction. Borrowers shall,
concurrently with the annual Financial Statements required to be delivered by
Borrowers pursuant to Section 6.3(d), deliver to Bank, as Bank may request,
copies of certificates describing all insurance of Borrowers and the
Subsidiaries then in effect.
     6.6 Assets. Maintain, keep and preserve, and cause each Subsidiary to
maintain, keep and preserve, all of its Assets (tangible or intangible) which
are necessary to its business in good repair and condition, and from time to
time make necessary repairs, renewals and replacements thereto so that such
Assets shall be fully and efficiently preserved and maintained.
     6.7 Taxes and Other Liabilities. Pay and discharge when due, and cause each
Subsidiary to pay and discharge when due, any and all assessments and taxes,
both real or personal and including federal and state income taxes, except any
such assessment being contested in good faith by appropriate proceedings and as
to which appropriate accruals and reserves have been established in accordance
with GAAP, and any and all other Permitted Debt.
     6.8 Notice to Bank. Promptly, upon any Borrower acquiring Knowledge
thereof, give written notice to Bank of:
          (a) all litigation affecting any Borrower or any Subsidiary where the
amount in controversy is in excess of Fifty Thousand Dollars ($50,000);
          (b) any dispute which may exist between any Borrower or any
Subsidiary, on the one hand, and any Governmental Authority, on the other;
          (c) any labor controversy resulting in or threatening to result in a
strike against any Borrower or any Subsidiary;
          (d) any proposal by any Governmental Authority to acquire the Assets
or business of any Borrower or any Subsidiary, or to compete with any Borrower
or any Subsidiary;
          (e) any reportable event under Section 4043(c)(5), (6) or (13) of
ERISA with respect to any Plan, any decision to terminate or withdraw from a
Plan, any finding made with respect to a Plan under Section 4041(c) or (e) of
ERISA, the commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA, or any material increase in the actuarial present value
of unfunded vested benefits under all Plans over the preceding year;
          (f) any Event of Default or Unmatured Event of Default; and
          (g) any other matter which has resulted or could reasonably be
expected to result in a Material Adverse Effect.
     6.9 Employee Benefits.

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          (a) (i) Promptly, and in any event within ten (10) Business Days after
any Borrower obtains Knowledge that an ERISA Event has occurred that reasonably
could be expected to result in a Material Adverse Effect, deliver or cause to be
delivered a written statement of the Chief Financial Officer of Administrative
Borrower describing such ERISA Event and any action that is being taken with
respect thereto by Borrowers or member of the ERISA Group, and any action taken
or threatened by the Internal Revenue Service, Department of Labor, or PBGC.
Each Borrower shall promptly and in any event within three (3) Business Days
after the filing thereof with the Internal Revenue Service, deliver or cause to
be delivered a copy of each funding waiver request filed with respect to any
Plan and all communications received by any Borrower or, to the knowledge of any
Borrower, any member of the ERISA Group with respect to such request; and
(iii) promptly and in any event within three (3) Business Days after receipt by
Borrowers or, to the Knowledge of Borrowers, any member of the ERISA Group, of
the PBGC’s intention to terminate a Plan or to have a trustee appointed to
administer a Plan, copies of each such notice.
          (b) Cause to be delivered to Bank, upon Bank’s request, each of the
following: (i) a copy of each Plan (or, where any such plan is not in writing,
complete description thereof) (and if applicable, related trust agreements of
other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of any Borrower or its
Subsidiaries; (ii) the most recent determination letter issued by the IRS with
respect to each Plan; (iii) for the three (3) most recent Plan years, annual
reports on Form 5500 Series required to be filed with any governmental agency
for each Plan; (iv) all actuarial reports prepared for the last three (3) Plan
years for each Plan; (v) a listing of all Multiemployer Plans, with the
aggregate amount of the most recent annual contributions required to be made by
any Borrower or any member of the ERISA Group to each such plan and copies of
the collective bargaining agreements requiring such contributions; (vi) any
information that has been provided to any Borrower or any member of the ERISA
Group regarding withdrawal liability under any Multiemployer Plan; and (vii) the
aggregate amount of the most recent annual payments made to former employees of
Borrowers under any Retiree Health Plan.
     6.10 Further Assurances. Execute and deliver, or cause to be executed and
delivered, upon the request of Bank and at Borrowers’ expense, such additional
documents, instruments and agreements as Bank may reasonably determine to be
necessary or advisable to carry out the provisions of this Agreement and the
Loan Documents, and the transactions and actions contemplated hereunder and
thereunder.
     6.11 Bank Accounts. Maintain, and cause each Subsidiary to maintain, its
cash on hand and cash equivalent investments in deposit accounts at Bank or any
of its Subsidiaries.
     6.12 Environment. Be and remain, and cause each Subsidiary and each
operator of any of any Borrower’s or any Subsidiary’s Assets to be and remain,
in compliance with the provisions of all federal, state and local environmental,
health and safety laws, codes and ordinances, and all rules and regulations
issued thereunder where the failure to comply would reasonably be expected to
have a Material Adverse Effect; notify Bank promptly of any notice of a
hazardous discharge or environmental complaint received from any Governmental
Authority or

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any other Person; notify Bank promptly of any hazardous discharge from or
affecting its premises; promptly contain and remove the same, in compliance with
all applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit Bank to inspect the premises, to conduct tests thereon, and to
inspect all books, correspondence, and records pertaining thereto; and at Bank’s
request, and at Borrowers’ expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form and content to Bank, and
such other and further assurances reasonably satisfactory to Bank that the
condition has been corrected.
     6.13 Additional collateral. With respect to any Assets (or any interest
therein) acquired after the Closing Date by any Borrower or any Subsidiary that
are of a type covered by the Lien created by any of the Loan Documents but which
are not so subject, promptly (and in any event within thirty (30) days after the
acquisition thereof): (i) execute and deliver, or cause such Subsidiary to
execute and deliver, to Bank such amendments to the relevant Loan Documents or
such other documents as Bank shall deem necessary or advisable to grant to Bank
a Lien on such Assets (or such interest therein), (ii) take all actions, or
cause such Subsidiary to take all actions, necessary or advisable to cause such
Lien to be duly perfected in accordance with all applicable law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by Bank, (iii) if requested by Bank, deliver to Bank legal
opinions relating to the matters described in the immediately preceding clauses
(i) and (ii), which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to Bank, and (iv) if requested by Bank, deliver to Bank
evidence of insurance as required by Section 6.5.
     6.14 Guarantors. Cause each and every now existing and hereafter acquired
or formed Subsidiary to execute and deliver to Bank a Guaranty and security
agreement, in form and substance satisfactory to Bank.
ARTICLE VII
NEGATIVE COVENANTS
          Each Borrower further covenants and agrees that from the Closing Date
and thereafter until the indefeasible payment, performance and satisfaction in
full of the Obligations, all of Bank’s, obligations hereunder have been
terminated and no Letters of Credit are outstanding, such Borrower shall not:
     7.1 Use of Funds; Margin Regulation.
          (a) Use any proceeds of the Revolving Loans for any purpose other than
(i) to refinance the Prior Agreement on the Closing Date; and (ii) for working
capital or general corporate purposes; or
          (b) Use any portion of the proceeds of the Loans in any manner which
might cause the Loans, the application of the proceeds thereof, or the
transactions contemplated by this Agreement to violate Regulation T, U, or X of
the Board of Governors of the Federal Reserve System, or any other regulation of
such board, or to violate the Securities and Exchange Act of 1934, as amended or
supplemented.

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     7.2 Debt. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Debt except
Permitted Debt.
     7.3 Liens. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Lien (including the
lien of an attachment, judgment or execution) on any of its Assets, whether now
owned or hereafter acquired, except Permitted Liens; or sign or file, or permit
any Subsidiary to sign or file, under the UCC as adopted in any jurisdiction, a
financing statement which names any Borrower or any Subsidiary as a debtor,
except with respect to Permitted Liens, or sign, or permit any Subsidiary to
sign, any security agreement authorizing any secured party thereunder to file
such a financing statement, except with respect to Permitted Liens.
     7.4 Merger, Consolidation, Transfer of Assets. Wind up, liquidate or
dissolve, reorganize, reincorporate, merge or consolidate with or into any other
Person, or acquire all or substantially all of the Assets or the business of any
other Person, or permit any Subsidiary to do so; provided, however, upon prior
written notice to Bank, any Subsidiary may merge into or consolidate with or
transfer Assets to any Borrower or any other Subsidiary.
     7.5 Leases. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any obligation as a
lessee for the rental or hire of any real or personal property, other than
(i) leases that have been or should be capitalized in accordance with GAAP and
(ii) leases (other than Capital Leases) that do not in the aggregate require
payments (including taxes, insurance, maintenance, and similar expenses which
any Borrower or any Subsidiary is required to pay under the terms of any lease)
in excess of One Hundred Thousand Dollars ($100,000) on a consolidated basis for
Borrowers and the Subsidiaries in any fiscal year of Borrowers.
     7.6 Sales and Leasebacks. Sell, transfer, or otherwise dispose of, or
permit any Subsidiary to sell, transfer, or otherwise dispose of, any real or
personal property to any Person, and thereafter directly or indirectly leaseback
the same or similar property.
     7.7 Asset Sales. Conduct any Asset Sale, or permit any Subsidiary to do so,
other than (i) sales of inventory in the ordinary course of business, and
(ii) dispositions of obsolete, worn or nonfunctional equipment.
     7.8 Investments. Make, or permit any Subsidiary to make, any loans or
advances to, or any investment in, any Person other than another Borrower or a
Guarantor that has executed and delivered a security agreement in form and
substance satisfactory to Bank; or acquire, or permit any Subsidiary to acquire,
any Ownership Interests, Assets, obligations, or other securities of, make any
contribution to, or otherwise acquire any interest in, any Person; or acquire or
form or permit any Subsidiary to acquire or form, any new Subsidiary; or
participate, or permit any Subsidiary to participate, as a partner or joint
venturer with any other Person.
     7.9 Character of Business. Engage in any business activities or operations
substantially different from or unrelated to its present business activities and
operations, or permit any Subsidiary to do so.

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     7.10 Distributions.
          (a) Except as otherwise permitted by Sections 7.10(b) and 7.10(c),
declare or pay any Distributions; or purchase, redeem, retire, or otherwise
acquire for value any of its Ownership Interests now or hereafter outstanding;
or make any distribution of Assets to its shareholders, whether in cash, Assets,
or in obligations of any Borrower; or allocate or otherwise set apart any sum
for the payment of any Distribution on, or for the purchase, redemption or
retirement of, any of its Ownership Interests; or make any other distribution by
reduction of capital or otherwise in respect of any of its Ownership Interests;
or permit any Subsidiary to purchase or otherwise acquire for value any
Ownership Interests of any Borrower or any other Subsidiary.
          (b) Notwithstanding the terms of Section 7.10(a), any Borrower other
than Parent may declare and pay Distributions to its parent.
          (c) Notwithstanding the provisions of Section 7.10(a), Parent may
declare and pay Distributions to its Shareholders, provided that as of the date
of any such Distributions no Event of Default then exists or would result from
the payment of such Distributions.
          (d) Nothing in this Section 7.10 will be deemed to prohibit any
Borrower from issuing shares of its Ownership Interests upon the exercise of
cash-less options.
     7.11 Guaranty. Assume, guaranty, endorse (other than checks and drafts
received by a Borrower in the ordinary course of business so long as an Event of
Default has not occurred), or otherwise be or become directly or contingently
responsible or liable, or permit any Subsidiary to assume, guaranty, endorse
(other than checks and drafts received by such Subsidiary in the ordinary course
of business), or otherwise be or become directly or contingently responsible or
liable (including, through any agreement to purchase any obligation, stock,
Assets, goods, or services or to supply or advance any funds, Assets, goods, or
services, or any agreement to maintain or cause such Person to maintain, a
minimum working capital or net worth, or otherwise to assure the creditors of
any Person against loss) for the obligations of any other Person; provided that
either Borrower may take any such actions with respect to the obligations of any
other Borrower or any Subsidiary; or pledge or hypothecate, or permit any
Subsidiary to pledge or hypothecate, any of its Assets as security for any
liabilities or obligations of any other Person.
     7.12 Intentionally Omitted.
     7.13 Transactions with Affiliates. Enter into any transaction, including
borrowing or lending and the purchase, sale, or exchange of property or the
rendering of any service (including management services), with any Affiliate, or
permit any Subsidiary to enter into any transaction, including borrowing or
lending and the purchase, sale, or exchange of property or the rendering of any
service (including management services), with any Affiliate, other than in the
ordinary course of and pursuant to the reasonable requirements of such
Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no
less favorable to such Borrower or such

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Subsidiary than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate.
     7.14 Stock Issuance. Permit Zicam or any other Subsidiary to issue any
additional Ownership Interests.
     7.15 Financial Condition. Permit or suffer:
          (a) the Interest Coverage Ratio, tested as at the end of each fiscal
quarter of Parent, at any time to be less than 1.50:1.0.
          (b) the Leverage Ratio, tested as at the end of each fiscal quarter of
Parent, at any time to exceed 1.00:1.0.
          (c) the Quick Ratio, tested as at the end of each fiscal quarter of
Parent, at any time to be less than 1.50:1.0.
          (d) Consolidated Net Income to be less than zero ($0) (i) for any
period consisting of two consecutive fiscal quarters of Parent, or (ii) at the
end of each fiscal year of Parent.
     7.16 Transactions Under ERISA. Directly or indirectly:
          (a) engage, or permit any member of the ERISA Group to engage, in any
prohibited transaction which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the Internal Revenue
Code for which a statutory or class exemption is not available or a private
exemption has not been previously obtained from the Department of Labor;
          (b) permit to exist with respect to any Plan any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Internal Revenue
Code), whether or not waived;
          (c) fail, or permit any member of the ERISA Group to fail, to pay
timely required contributions or installments due with respect to any waived
funding deficiency to any Plan;
          (d) terminate, or permit any member of the ERISA Group to terminate,
any Plan where such event would result in any liability of any Borrower or any
member of ERISA Group under Title IV of ERISA;
          (e) fail, or permit any member of the ERISA Group to fail, to make any
required contribution or payment to any Multiemployer Plan;
          (f) fail, or permit any member of the ERISA Group to fail, to pay to a
Plan or Multiemployer Plan any required installment or any other payment
required under Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment;

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          (g) amend, or permit any member of the ERISA Group to amend, a Plan
resulting in an increase in current liability for the plan year such that either
of any Borrower or any member of the ERISA Group is required to provide security
to such Plan under Section 401(a)(29) of the Internal Revenue Code;
          (h) withdraw, or permit any member of the ERISA Group to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA; or
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of any Borrower, any of the
Subsidiaries or any member of the ERISA Group in excess of One Hundred Thousand
Dollars ($100,000).
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
     8.1 Events of Default. The occurrence of any one or more of the following
events, acts or occurrences shall constitute an event of default (an “Event of
Default”) hereunder:
          (a) Borrowers fail to pay when due any payment of principal or
interest due on the Loans, the Fees, any Expenses, or any other amount payable
hereunder or under any Loan Document;
          (b) Borrowers fail to observe or perform any of the covenants and
agreements set forth in Section 6.2 or 6.3, Article VII;
          (c) Borrowers or any Guarantor fail to observe or perform any covenant
or agreement set forth in this Agreement or the Loan Documents (other than those
covenants and agreements described in Sections 8.1(a) and 8.1(b)), and such
failure continues for thirty (30) days after the earlier to occur of
(i) Borrowers obtaining Knowledge of such failure or (ii) Bank’s dispatch of
notice to Borrowers of such failure;
          (d) Any representation, warranty or certification made by any Borrower
or any Guarantor or any officer or employee of any Borrower or any Guarantor in
this Agreement or any Loan Document, in any certificate, financial statement or
other document delivered pursuant to this Agreement or any Loan Document proves
to have been misleading or untrue in any material respect when made or if any
such representation, warranty or certification is withdrawn;
          (e) Any Borrower or any Guarantor fails to pay when due any payment in
respect of its Debt (other than under this Agreement);
          (f) Any event or condition occurs that: (i) results in the
acceleration of the maturity of any of any Borrower’s or any Guarantor’s Debt;
or (ii) permits (or, with the giving of notice or lapse of time or both, would
permit) the holder or holders of such Debt or any Person acting on behalf of
such holder or holders to accelerate the maturity thereof;

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          (g) Any Borrower or any Guarantor commences a voluntary Insolvency
Proceeding seeking liquidation, reorganization or other relief with respect to
itself or its Debt or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it or any substantial part
of its property, or consents to any such relief or to the appointment of or
taking possession by any such official in an involuntary Insolvency Proceeding
or fails generally to pay its Debt as it becomes due, or takes any action to
authorize any of the foregoing;
          (h) An involuntary Insolvency Proceeding is commenced against any
Borrower or any Guarantor seeking liquidation, reorganization or other relief
with respect to it or its Debt or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and any of the following events occur: (i) the
petition commencing the Insolvency Proceeding is not timely controverted;
(ii) the petition commencing the Insolvency Proceeding is not dismissed within
forty-five (45) calendar days of the date of the filing thereof; (iii) an
interim trustee is appointed to take possession of all or a substantial portion
of the Assets of, or to operate all or any substantial portion of the business
of, Borrower or such Guarantor; or (iv) an order for relief shall have been
issued or entered therein;
          (i) Any Borrower or any Guarantor suffers (i) one or more judgments in
the aggregate $250,000 over applicable insurance coverage or (ii) one or more
writs, warrants of attachment, or similar process;
          (j) A judgment creditor obtains possession of any of the Assets valued
in the aggregate in excess of $50,000 of Borrower or any Guarantor by any means,
including levy, distraint, replevin, or self-help;
          (k) Any order, judgment or decree is entered decreeing the dissolution
of any Borrower or any Guarantor, or any Guarantor dies;
          (l) Any Borrower or any Guarantor is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;
          (m) A notice of lien, levy or assessment is filed of record with
respect to any or all of any Borrower’s or any Guarantor’s Assets by any
Governmental Authority, or any taxes or debts owing at any time hereafter to any
Governmental Authority becomes a Lien, whether inchoate or otherwise, upon any
or all of any Borrower’s or any Guarantor’s Assets and the same is not paid on
the payment date thereof;
          (n) If any Borrower’s or any Guarantor’s records are prepared and kept
by an outside computer service bureau on the Closing Date or during the term of
this Agreement such an agreement with an outside service bureau is entered into,
and at any time thereafter, without first obtaining the written consent of Bank,
such Borrower or Guarantor terminates, modifies, amends or changes its
contractual relationship with said computer service bureau or said computer
service bureau fails to provide Bank with any requested information or financial
data pertaining to Bank’s collateral after being instructed by Bank or Borrower,
such Borrower’s or Guarantor’s financial condition or the results of such
Borrower’s or Guarantor’s operations;

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          (o) Any reportable event, which Bank determines constitutes grounds
for the termination of any Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan, shall have occurred and be continuing thirty (30) days after written
notice of such determination shall have been given to Administrative Borrower by
Bank, or any such Plan shall be terminated within the meaning of Title IV of
ERISA, or a trustee shall be appointed by the appropriate United States District
Court to administer any such Plan, or the PBGC shall institute proceedings to
terminate any Plan and in case of any event described in this Section 8.1(p),
the aggregate amount of Borrowers’ liability to the PBGC under Sections 4062,
4063 or 4064 of ERISA shall exceed five percent (5%) of the Consolidated
Tangible Net Worth;
          (p) Any Change of Control occurs without Bank’s prior written consent,
which will not be unreasonably withheld;
          (q) Any of the Loan Documents fails to be in full force and effect for
any reason, or Bank fails to have a perfected, first priority Lien in and upon
all of the collateral assigned or pledged to Bank thereunder, or a breach,
default or an event of default occurs under any Loan Document; or
          (r) Any other Material Adverse Effect occurs.
     8.2 Remedies. Upon the occurrence of any Event of Default described in
Section 8.1(g) or 8.1(h), Bank’s obligation hereunder to make Loans to Borrowers
and/or Bank’s obligation to issue Letters of Credit shall immediately terminate
and the Obligations shall become immediately due and payable without any
election or action on the part of Bank, without presentment, demand, protest or
notice of any kind, all of which each Borrower hereby expressly waives. Upon the
occurrence and continuance of any other Event of Default, either or both of the
following actions may be taken: (i) Bank may without notice of its election and
without demand, immediately terminate the Revolving Credit Commitment whereupon
Bank’s obligation to make Loans to Borrowers and/or to issue Letters of Credit
shall immediately cease; and (ii) Bank may, without notice of its election and
without demand, declare the Obligations to be due and payable, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which each Borrower hereby
expressly waives.
     8.3 Appointment of Receiver or Trustee. Borrowers hereby irrevocably agree
that Bank, has the right under this Agreement, upon the occurrence of an Event
of Default, to seek the appointment of a receiver, trustee or similar official
over Borrowers to effect the transactions contemplated by this Agreement, and
that Bank is entitled to seek such relief. Borrowers hereby irrevocably agree
not to object to such appointment on any grounds.
     8.4 Remedies Cumulative. The rights and remedies of Bank herein and in the
Loan Documents are cumulative, and are not exclusive of any other rights,
powers, privileges, or remedies, now or hereafter existing, at law, in equity or
otherwise.

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ARTICLE IX
TAXES
     9.1 Taxes on Payments. All payments in respect of the Obligations shall be
made free and clear of and without any deduction or withholding for or on
account of any present and future taxes, levies, imposts, deductions, charges,
withholdings, assessments or governmental charges, and all liabilities with
respect thereto, imposed by the United States of America, any foreign
government, or any political subdivision or taxing authority thereof or therein,
excluding any taxes imposed on Bank under the Internal Revenue Code or similar
state and local laws and determined by such Bank’s net income, and any franchise
taxes imposed on Bank by any state (or any political subdivision thereof) (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings,
assessments, charges and liabilities being hereinafter referred to as “Taxes”).
If any Taxes are imposed and required by law to be deducted or withheld from any
amount payable to Bank, then Borrowers shall (i) increase the amount of such
payment so that Bank will receive a net amount (after deduction of all Taxes)
equal to the amount due hereunder, and (ii) pay such Taxes to the appropriate
taxing authority for the account of Bank prior to the date on which penalties
attach thereto or interest accrues thereon; provided, however, if any such
penalties or interest shall become due, Borrowers shall make prompt payment
thereof to the appropriate taxing authority.
     9.2 Indemnification For Taxes. Borrowers shall indemnify Bank for the full
amount of Taxes (including penalties, interest, expenses and Taxes arising from
or with respect to any indemnification payment) arising therefrom or with
respect thereto, whether or not the Taxes were correctly or legally asserted.
This indemnification shall be made on demand. If Borrowers make a payment under
Section 9.1 or this Section 9.2 for account of Bank and Bank reasonably
determines that it has received or been granted a credit against or relief or
remission for, or repayment of, any Tax paid or payable by it in respect of or
calculated with reference to the deduction or withholding giving rise to such
payment, Bank shall, to the extent that it can do so without prejudice to the
retention of the amount of such credit, relief, remission or repayment, pay to
Borrower such amount as Bank shall have reasonably determined to be attributable
to such deduction or withholding. The amount paid by Bank to Borrowers pursuant
to the immediately preceding sentence shall not exceed: (x) in the case of a
refund of cash, the amount of cash refunded to Bank with respect to such Tax; or
(y) in the case of a refund taking the form of a credit against Tax, the
economic benefit to Bank with respect to the amount received as credit with
respect to such Tax. Borrowers further agree promptly to return to Bank the
amount of any credit or refund actually paid to Borrowers by Bank if Bank is
required to repay it.
     9.3 Evidence of Payment. Within thirty (30) days after the date of payment
of any Taxes, Borrower shall furnish to Bank the original or a certified copy of
a receipt evidencing payment thereof. If no Taxes are payable in respect of any
payment due hereunder or under the Notes, Borrowers shall furnish to Bank a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to Bank, in either case stating that such payment is exempt from or
not subject to Taxes.

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ARTICLE X
MISCELLANEOUS
     10.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party at its address or facsimile number set
forth on the signature pages hereof or such other address or facsimile number as
such party may hereafter specify by notice to the other party in accordance with
this Section 10.1. Each such notice, request or other communication shall be
deemed given on the second (2nd) business day after mailing; provided that
actual notice, however and from whomever given or received, shall always be
effective on receipt; provided further that notices to Bank pursuant to
Article II and Article III shall not be effective until received by a
Responsible Officer of Bank; provided further that notices sent by Bank in
connection with Bank’s exercise of its enforcement rights against any of its
collateral shall be deemed given when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by facsimile.
     10.2 No Waivers. No failure or delay by Bank in exercising any right, power
or privilege hereunder or under any Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
     10.3 Expenses; Documentary Taxes; Indemnification.
          (a) Borrowers shall pay all Expenses within ten calendar days of
Bank’s demand; provided that if an Event of Default has occurred and is
continuing Borrowers shall pay all Expenses upon demand.
          (b) Borrowers shall pay all and indemnify Bank against any and all
transfer taxes, documentary taxes, assessments, or charges made by any
Governmental Authority and imposed by reason of the execution and delivery of
this Agreement, any of the Loan Documents, or any other document, instrument or
agreement entered into in connection herewith.
          (c) Each Borrower shall and hereby agrees to indemnify, protect,
defend and hold harmless Bank and their respective directors, officers, agents,
employees and attorneys (collectively, the “Indemnified Persons” and
individually, an “Indemnified Person”) from and against (i) any and all losses,
claims, damages, liabilities, deficiencies, judgments, costs and expenses
(including reasonable attorneys’ fees and attorneys’ fees incurred pursuant to
proceedings arising under the Bankruptcy Code) incurred by any Indemnified
Person (except to the extent that it is finally judicially determined to have
resulted from the gross negligence or willful misconduct of any Indemnified
Person) arising out of or by reason of any litigations, investigations, claims
or proceedings (whether administrative, judicial or otherwise), including
discovery, whether or not Bank is designated a party thereto, which arise out of
or are in any way related to (1) this Agreement, the Loan Documents or the
transactions contemplated hereby or thereby, (2) any actual or proposed use by
Borrowers of the proceeds of the Loans, or (3) Bank’s entering into this
Agreement, the Loan Documents or any other agreements and documents

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relating hereto; (ii) any such losses, claims, damages, liabilities,
deficiencies, judgments, costs and expenses arising out of or by reason of the
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence on, under or about any Borrower’s operations or
property or property leased by any Borrower of any material, substance or waste
which is or becomes designated as Hazardous Materials (except to the extent that
it is finally judicially determined to have resulted from the gross negligence
or willful misconduct of any Indemnified Person); and (iii) any such losses,
claims, damages, liabilities, deficiencies, judgments, costs and expenses
incurred in connection with any remedial or other action taken by any Borrower
or Bank in connection with compliance by any Borrower with any federal, state or
local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines (except to the extent that it is finally
judicially determined to have resulted from the gross negligence or willful
misconduct of any Indemnified Person). If and to the extent that the obligations
of Borrowers hereunder are unenforceable for any reason, Borrowers hereby agree
to make the maximum contribution to the payment and satisfaction of such
obligations to Bank which is permissible under applicable law.
          (d) Borrowers’ obligations under this Section 10.3 and under
Section 9.2 shall survive any termination of this Agreement and the Loan
Documents and the payment in full of the Obligations, and are in addition to,
and not in substitution of, any other of its obligations set forth in this
Agreement.
     10.4 Amendments and Waivers. Neither this Agreement nor any Loan Document,
nor any terms hereof or thereof may be amended, supplemented or modified except
in accordance with the provisions of this Section 10.4. Bank may from time to
time, (a) enter into with Borrowers or any other Person written amendments,
supplements or modifications hereto and to the Loan Documents or (b) waive, on
such terms and conditions as Bank may specify in such instrument, any of the
requirements of this Agreement or the Loan Documents or any Event Default or
Unmatured Event of Default and its consequences, if, but only if, such
amendment, supplement, modification or waiver is in writing and is signed by the
party asserted to be bound thereby, and then such amendment, supplement,
modification or waiver shall be effective only in the specific instance and for
the specific purpose for which given. Any such waiver and any such amendment,
supplement or modification shall be binding upon Borrower, Bank and all future
holders of the Loans. In the case of any waiver, Borrower and Bank shall be
restored to their former positions and rights hereunder and under the Loan
Documents, and any Event of Default or Unmatured Event of Default waived shall
be deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Event of Default or Unmatured Event of Default or impair any
right consequent thereon.
     10.5 Successors and Assigns; Participations; Disclosure.
          (a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
Borrowers may not assign or transfer any of their rights or obligations under
this Agreement without the prior written consent of Bank and any such prohibited
assignment or transfer by Borrowers shall be void.

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          (b) Bank may make, carry or transfer the Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of Bank or
to any Federal Reserve Bank, all without Borrowers’ consent.
          (c) Bank may, at its own expense, assign to one or more Eligible
Assignees all or a portion of its rights (including voting rights) and
obligations under this Agreement and the Loan Documents. In the event of any
such assignment by Bank pursuant to this Section 10.5(c), Bank’s obligations
under this Agreement arising after the effective date of such assignment shall
be released and concurrently therewith, transferred to and assumed by Bank’s
assignee to the extent provided for in the document evidencing such assignment,
and Bank shall give prompt notice of such assignment to Borrowers. The
provisions of this Section 10.5 relate only to absolute assignments (whether or
not arising as the result of foreclosure of a security interest) and that such
provisions do not prohibit assignments creating security interests, including,
without limitation, any pledge or assignment by Bank of any Loan or the Notes to
any Federal Reserve Bank in accordance with applicable law.
          (d) Bank may at any time sell to one or more banks or other financial
institutions (each a “Participant”) participating interests in the Loans, the
Letters of Credit and in any other interest of Bank hereunder. In the event of
any such sale by Bank of a participating interest to a Participant, Bank’s
obligations under this Agreement shall remain unchanged, Bank shall remain
solely responsible for the performance thereof, and Borrowers shall continue to
deal solely and directly with Bank in connection with Bank’s rights and
obligations under this Agreement. Each Borrower agrees that each Participant
shall, to the extent provided in its participation agreement, be entitled to the
benefits of Article IX with respect to its participating interest.
          (e) Each Borrower authorizes Bank to disclose to any assignee under
Section 10.5(c) or any Participant (either, a “Transferee”) and any prospective
Transferee any and all financial information in Bank’s possession concerning
Borrowers which has been delivered to Bank by Borrowers pursuant to this
Agreement or which has been delivered to Bank by Borrowers in connection with
Bank’s credit evaluation prior to entering into this Agreement; provided that
such Transferee or prospective Transferee has first agreed to be bound by the
provisions of Section 10.6.
     10.6 Confidentiality. Bank agrees to keep confidential any information
relating to Borrowers and the Subsidiaries previously delivered or delivered
from time to time by Borrower hereunder; provided that nothing herein shall
prevent Bank from disclosing such information: (a) to any Affiliate of Bank or
any actual or potential Transferee that agrees to be bound by this Section 10.6,
(b) upon order, subpoena, or other process of any court or administrative
agency, (c) upon the request or demand of any regulatory agency or authority
having jurisdiction over Bank, (d) which has been publicly disclosed (other than
by Bank or any Transferee unless such disclosure was otherwise permitted
hereunder), (e) which has been obtained from any Person that is not a party
hereto or an Affiliate of any such party, (f) in connection with the exercise of
any remedy, or the resolution of any dispute, hereunder or under any Loan
Document, (g) to the legal counsel or certified public accountants for Bank or
(h) as otherwise permitted by Administrative Borrower or as expressly
contemplated by this Agreement.

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     10.7 Counterparts; Effectiveness; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall be effective when executed by each of the parties hereto.
This Agreement and the Loan Documents constitute the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
     10.8 Severability. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity or enforceability of any other of its provisions. If one or
more provisions hereof shall be declared invalid or unenforceable, the remaining
provisions shall remain in full force and effect and shall be construed in the
broadest possible manner to effectuate the purposes hereof.
     10.9 Knowledge. For purposes of this Agreement, an individual will be
deemed to have knowledge of a particular fact or other matter if: (a) such
individual is actually aware of such fact or other matter; or (b) a prudent
individual would reasonably be expected to discover or otherwise become aware of
such fact or other matter. Each Borrower will be deemed to have knowledge of a
particular fact or other matter if the chief executive officer, chief operating
officer, chief financial officer, controller, treasurer, president, senior vice
president or other such officer of such Borrower has, or at any time had,
knowledge of such fact or other matter. Parent will be deemed to have knowledge
of a partial fact or other matter if any other Borrower has knowledge of such
fact or other matter.
     10.10 Additional Waivers.
          (a) Each Borrower agrees that checks and other instruments received by
Bank in payment or on account of the Obligations constitute only conditional
payment until such items are actually paid to Bank and each Borrower waives the
right to direct the application of any and all payments at any time or times
hereafter received by Bank on account of the Obligations, and each Borrower
agrees that Bank shall have the continuing exclusive right to apply and reapply
such payments in any manner as Bank may deem advisable, notwithstanding any
entry by Bank upon its books.
          (b) Each Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, documents, instruments, chattel paper,
and guarantees at any time held by Bank on which such Borrower may in any way be
liable.
          (c) Bank shall not in any way or manner be liable or responsible for
(a) the safekeeping of any collateral; (b) any loss or damage thereto occurring
or arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency or other person whomsoever. All risk of loss, damage or
destruction of any collateral shall be borne by Borrowers.

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          (d) Each Borrower waives the right and the right to assert a
confidential relationship, if any, it may have with any accountant, accounting
firm and/or service bureau or consultant in connection with any information
requested by Bank pursuant to or in accordance with this Agreement, and agrees
that Bank may contact directly any such accountants, accounting firm and/or
service bureau or consultant in order to obtain such information.
     10.11 Destruction Of Borrowers’ Documents. Any documents, schedules,
invoices or other papers delivered to Bank may be destroyed or otherwise
disposed of by Bank six (6) months after they are delivered to or received by
Bank, unless Administrative Borrower requests, in writing, the return of the
said documents, schedules, invoices or other papers and makes arrangements, at
Borrowers’ expense, for their return.
     10.12 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ARIZONA, WITHOUT REGARD FOR PRINCIPLES OF
CONFLICTS OF LAWS.
          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
MARICOPA, STATE OF ARIZONA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT BANK’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. BORROWERS AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 10.12.
          (c) THE BORROWERS AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE BORROWERS AND BANK
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY

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TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
     10.13 No Novation. Borrowers and Bank hereby agree that, effective upon the
satisfaction or waiver in writing by Bank of all conditions precedent set forth
in Section 4.1, (a) this Agreement shall amend, restate and supercede in its
entirety the Prior Agreement and (b) those other Loan Documents that amend and
restate any of the original Loan Documents shall amend, restate and supercede
such other original Loan Documents. Nothing herein contained shall be construed
as a substitution or novation of the obligations of Borrowers outstanding under
the Prior Agreement or instruments securing the same, which obligations shall
remain in full force and effect, except to the extent that the terms thereof are
modified hereby or by instruments executed concurrently herewith. Nothing
expressed or implied in this Agreement shall be construed as a release or other
discharge of any Borrower or any guarantor from any of its obligations or
liabilities under the Prior Agreement or any of the other original Loan
Documents except to the extent that the terms thereof are modified hereby or by
instruments executed concurrently herewith. Each Borrower each hereby
(i) confirms and agrees that each Loan Document to which it is a party is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that on and after the Closing Date all
references in any such Loan Document to “the Loan Agreement”, “thereto”,
“thereof”, “thereunder” or words of like import referring to the Prior Agreement
shall mean the Prior Agreement as amended and restated by this Agreement; and
(ii) confirms and agrees that to the extent that the Prior Agreement or any Loan
Document executed in connection therewith purports to assign or pledge to Bank,
a security interest in or lien on, any collateral as security for the
Obligations of any Borrower from time to time existing in respect of the Prior
Agreement, such pledge, assignment or grant of the security interest or lien is
hereby ratified and confirmed in all respects and shall remain effective as of
the first date it became effective.
ARTICLE XI
JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT
     11.1 Joint and Several Liability. Each Borrower agrees that it is jointly
and severally, directly and primarily liable to Bank for payment, performance
and satisfaction in full of the Obligations and that such liability is
independent of the duties, obligations, and liabilities of the other Borrower.
Bank may bring a separate action or actions on each, any, or all of the
Obligations against any Borrower, whether action is brought against the other
Borrowers or whether the other Borrowers are joined in such action. In the event
that any Borrower fails to make any payment of any obligation on or before the
due date thereof, the other Borrowers immediately shall cause such payment to be
made or each of such obligations to be made or each of such Obligations to be
performed, kept, observed, or fulfilled.
     11.2 Primary Obligation; Waiver of Marshalling. This Agreement and the Loan
Documents to which Borrowers are a party are a primary and original obligation
of each Borrower, are not the creation of a surety relationship, and are an
absolute, unconditional, and continuing promise of payment and performance which
shall remain in full force and effect

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without respect to future changes in conditions, including any change of law or
any invalidity or irregularity with respect to this Agreement or the Loan
Documents to which Borrowers are a party. Each Borrower agrees that its
liability under this Agreement and the Loan Documents which Borrowers are a
party shall be immediate and shall not be contingent upon the exercise or
enforcement by Bank of whatever remedies they may have against the other
Borrowers, or the enforcement of any lien or realization upon any security Bank
may at any time possess. Each Borrower consents and agrees that Bank shall be
under no obligation to marshal any assets of any Borrower against or in payment
of any or all of the Obligations.
     11.3 Financial Condition of Borrowers. Each Borrower acknowledges that it
is presently informed as to the financial condition of the other Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower hereby covenants
that it will continue to keep informed as to the financial condition of the
other Borrowers, the status of the other Borrowers and of all circumstances
which bear upon the risk of nonpayment. Absent a written request from any
Borrower to Bank for information, each Borrower hereby waives any and all rights
it may have to require Bank to disclose to such Borrower any information which
Bank may now or hereafter acquire concerning the condition or circumstances of
the other Borrowers.
     11.4 Continuing Liability. The liability of each Borrower under this
Agreement and the Loan Documents to which Borrowers are a party includes
Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Obligations after prior Obligations have
been satisfied in whole or in part. To the maximum extent permitted by law, each
Borrower hereby waives any right to revoke its liability under this Agreement
and Loan Documents as to future indebtedness.
     11.5 Additional Waivers. Each Borrower absolutely, unconditionally,
knowingly, and expressly waives:
          (a) (1) notice of acceptance hereof; (2) notice of any Loans or other
financial accommodations made or extended under this Agreement and the Loan
Documents to which Borrowers are a party or the creation or existence of any
Obligations; (3) notice of the amount of the Obligations, subject, however, to
each Borrower’s right to make inquiry of Bank to ascertain the amount of the
Obligations at any reasonable time; (4) notice of any adverse change in the
financial condition of the other Borrowers or of any other fact that might
increase such Borrower’s risk hereunder; (5) notice of presentment for payment,
demand, protest, and notice thereof as to any instruments among the Loan
Documents to which Borrowers are a party; and (6) all other notices (except if
such notice is specifically required to be given to Borrowers hereunder or under
the Loan Documents to which Borrowers are a party) and demands to which such
Borrower might otherwise be entitled.
          (b) its right, under Sections 12-1641 and 12-1646 of Arizona Revised
Statutes (“A.R.S.”), or otherwise, to require Bank to institute suit against, or
to exhaust any rights and remedies which Bank has or may have against, the other
Borrowers or any third party, or against

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any collateral for the Obligations provided by the other Borrowers, or any third
party. Each Borrower further waives any defense arising by reason of any
disability or other defense (other than the defense that the Obligations shall
have been fully and finally performed and indefeasibly paid) of the other
Borrowers or by reason of the cessation from any cause whatsoever of the
liability of the other Borrowers in respect thereof.
          (c) (1) any rights to assert against Bank any defense (legal and
equitable), set-off, counterclaim, or claim which such Borrower may now or at
any time hereafter have against the other Borrowers or any other party liable to
Bank; (2) any defense, set-off, counterclaim, or claim, of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Obligations or any security
therefor; (3) any defense such Borrower has to performance hereunder, and any
right such Borrower has to be exonerated arising by reason of: the impairment or
suspension of Bank’s rights or remedies against the other Borrowers; the
alteration by Bank of the Obligations; any discharge of the other Borrowers’
obligations to Bank by operation of law as a result of Bank’s intervention or
omission; or the acceptance by Bank of anything in partial satisfaction of the
Obligations; and (4) the benefit of any statute of limitations affecting such
Borrower’s liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable to
the Obligations shall similarly operate to defer or delay the operation of such
statute of limitations applicable to such Borrower’s liability hereunder.
          (d) To the extent allowed by law, each Borrower absolutely,
unconditionally, knowingly, and expressly waives any defense arising by reason
of or deriving from (i) any claim or defense based upon an election of remedies
by Bank including any defense based upon an election of remedies by Bank under
the provisions of any law of Arizona or any other jurisdiction; or (ii) any
election by Bank under Section 1111(b) of the Bankruptcy Code to limit the
amount of, or any collateral securing, its claim against the Borrowers.
          (e) To the extent allowed by law, each Borrower waives all rights and
defenses arising out of an election of remedies by the creditor, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed such Borrower’s rights of
subrogation and reimbursement against the other Borrowers.
          (f) To the extent allowed by law, each Borrower waives all rights and
defenses that such Borrower may have because the Obligations are secured by real
property. This means, among other things: (1) Bank may collect from such
Borrower without first foreclosing on any real or personal property collateral
pledged by the other Borrowers; and (2) if Bank forecloses on any real property
collateral pledged by the other Borrowers: (A) the amount of the Obligations may
be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price; and
(B) Bank may collect from such Borrower even if Bank, by foreclosing on the real
property collateral, has destroyed any right such Borrower may have to collect
from the other Borrowers. This is an unconditional and irrevocable waiver of any
rights and defenses each Borrower may have because the Obligations are secured
by real property.

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          (g) To the extent allowed by law, each Borrower hereby absolutely,
unconditionally, knowingly, and expressly waives: (i) any right of subrogation
such Borrower has or may have as against the other Borrowers with respect to the
Obligations; (ii) any right to proceed against the other Borrowers or any other
Person, now or hereafter, for contribution, indemnity, reimbursement, or any
other suretyship rights and claims, whether direct or indirect, liquidated or
contingent, whether arising under express or implied contract or by operation of
law, which such Borrower may now have or hereafter have as against the other
Borrowers with respect to the Obligations; and (iii) any right to proceed or
seek recourse against or with respect to any property or asset of the other
Borrowers.
          (h) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, EACH BORROWER HEREBY ABSOLUTELY,
KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY
AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER A.R.S. §§
12-1641 AND 12-1646.
     11.6 Settlement or Releases. Each Borrower consents and agrees that without
notice to or by such Borrower, and without affecting or impairing the liability
of such Borrower hereunder, Bank may, by action or inaction:
          (a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce this Agreement and the Loan Documents, or any part thereof, with respect
to the other Borrowers or any Guarantor;
          (b) release the other Borrowers or any Guarantor or grant other
indulgences to the other Borrowers or any Guarantor in respect thereof;
          (c) amend or modify in any manner and at any time (or from time to
time) this Agreement or any of the Loan Documents; or
          (d) release or substitute any Guarantor, if any, of the Obligations,
or enforce, exchange, release, or waive any security for the Obligations or any
other guaranty of the Obligations, or any portion thereof.
     11.7 No Election. Bank shall have the right to seek recourse against each
Borrower to the fullest extent provided for herein, and no election by Bank to
proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of Bank’s right to proceed in any other
form of action or proceeding or against other parties unless Bank has expressly
waived such right in writing. Specifically, but without limiting the generality
of the foregoing, no action or proceeding by Bank under this Agreement and the
Loan Documents shall serve to diminish the liability of any Borrower under this
Agreement and the Loan Documents to which Borrowers are a party except to the
extent that Bank finally and unconditionally shall have realized indefeasible
payment by such action or proceeding.
     11.8 Indefeasible Payment. The Obligations shall not be considered
indefeasibly paid unless and until all payments to Bank are no longer subject to
any right on the part of any Person,

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including any Borrower, any Borrower as a debtor in possession, or any trustee
(whether appointed pursuant to the Bankruptcy Code, or otherwise) of any
Borrower’s Assets to invalidate or set aside such payments or to seek to recoup
the amount of such payments or any portion thereof, or to declare same to be
fraudulent or preferential. Upon such full and final performance and
indefeasible payment of the Obligations, Bank shall have no obligation
whatsoever to transfer or assign its interest in this Agreement and the Loan
Documents to any Borrower. In the event that, for any reason, any portion of
such payments to Bank is set aside or restored, whether voluntarily or
involuntarily, after the making thereof, then the obligation intended to be
satisfied thereby shall be revived and continued in full force and effect as if
said payment or payments had not been made, and any Borrower shall be liable for
the full amount Bank is required to repay plus any and all costs and expenses
(including attorneys’ fees and attorneys’ fees incurred in proceedings brought
under the Bankruptcy Code) paid by Bank in connection therewith.
     11.9 Single Loan Account. At the request of Borrowers to facilitate and
expedite the administration and accounting processes and procedures of the Loans
and Borrowings, Bank have agreed, in lieu of maintaining separate loan accounts
on Bank’s books in the name of each of the Borrowers, that Bank may maintain a
single loan account under the name of all Borrowers (the “Loan Account”). All
Loans shall be made jointly and severally to Borrowers and shall be charged to
the Loan Account, together with all interest and other charges as permitted
under and pursuant to this Agreement. The Loan Account shall be credited with
all repayments of Obligations received by Bank, on behalf of Borrowers, from
either Borrower pursuant to the terms of this Agreement.
     11.10 Apportionment of Proceeds of Loans. Each Borrower expressly agrees
and acknowledges that Bank shall have no responsibility to inquire into the
correctness of the apportionment or allocation of or any disposition by any of
Borrowers of (a) the Loans or any Borrowings, or (b) any of the expenses and
other items charged to the Loan Account pursuant to this Agreement. The Loans
and all such Borrowings and such expenses and other item shall be made for the
collective, joint, and several account of Borrowers and shall be charged to the
Loan Account.
     11.11 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the “Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Bank shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Bank with all
notices with respect to Loans and Letters of Credit obtained for the benefit of
any Borrower and all other notices and instructions under this Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to obtain Loans and Letters of Credit and to exercise such other powers
as are reasonably incidental thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loans and collateral of
Borrowers in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to Borrowers in order to utilize the collective borrowing
powers of Borrowers in the most efficient and economical manner and at their
request, and that Bank shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or

48

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indirectly, from the handling of the Loans and the collateral in a combined
fashion since the successful operation of each Borrower is dependent on the
continued successful performance of the integrated group. To induce Bank to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify Bank and hold Bank harmless against any and all liability,
expense, loss or claim of damage or injury, made against Bank by any Borrower or
by any third party whosoever, arising from or incurred by reason of (a) the
handling of the Loans and collateral of Borrowers as provided in this
Section 11.11, (b) Bank’s relying on any instructions of the Administrative
Borrower, or (c) any other action taken by Bank hereunder or under the other
Loan Documents, except that Borrowers will have no liability to Bank under this
Section 11.11 with respect to any liability that has been finally determined by
a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of Bank.
* * *
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* * *

49

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

                  MATRIXX INITIATIVES, INC.    
 
           
 
  By:   /s/ William Hemelt    
 
           
 
  Name:   William Hemelt    
 
  Title:   Executive Vice President, CFO, Treasurer    
 
                Address for notices:    
 
                Matrixx Initiatives, Inc.         4742 N. 24th Street, Suite 455
        Phoenix, AZ 85016         Attn: William Hemelt         Telephone:
(602) 385-8888         Facsimile:  (602) 385-8850    
 
           
 
  ZICAM,   LLC    
 
           
 
  By:   /s/ William Hemelt    
 
           
 
  Name:   William Hemelt    
 
  Title:   Manager    
 
                Address for notices:    
 
                Zicam, LLC         4742 N. 24th Street, Suite 455        
Phoenix, AZ 85016         Attn: William Hemelt         Telephone: (602) 385-8888
        Facsimile:  (602) 385-8850    

S-1
Amended and Restated Credit Agreement

 

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                  COMERICA BANK    
 
           
 
  By:        
 
                Name: William J. Kirschner         Title: Assistant Vice
President    
 
                Address for notices and Lending Office:    
 
                Comerica Bank         Phelps Dodge Tower         1 North Central
Avenue, Suite 1000         Phoenix, AZ 85004-4469         Attn: William J.
Kirschner         Telephone: (602) 417-1110         Facsimile:  (602) 417-1190  
 

S-2
Amended and Restated Credit Agreement