Document:

Exhibit 10.1

$325,000,000

REVOLVING CREDIT AGREEMENT

Dated as of
November 3, 2006

among

NBTY, INC.,

as the
Borrower,

The Several Lenders from
Time 

to Time Parties Hereto,

JPMORGAN CHASE BANK, N.A.

as Administrative Agent and Collateral Agent,

BANK
OF AMERICA, N.A.

BNP PARIBAS

CITIBANK, N.A.

and

HSBC BANK USA, NATIONAL ASSOCIATION

as Co-Syndication Agents

 

J.P. MORGAN SECURITIES
INC.,

as Sole Bookrunner and Sole Arranger

Cahill Gordon &
Reindel LLP

80 Pine Street

New York, New York  10005

   
 

 
  

 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
  SECTION 1. DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
   

  	
  1.1.

  	
  Defined Terms

  	
  1

  
	
   

  	
  1.2.

  	
  Other Definitional Provisions

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

  	
  20

  
	
   

  	
   

  
	
   

  	
  2.1.

  	
  Revolving Credit Commitments

  	
  20

  
	
   

  	
  2.2.

  	
  Procedure for Revolving Credit Borrowing

  	
  21

  
	
   

  	
  2.3.

  	
  Repayment of Revolving Credit Loans; Evidence of
  Debt

  	
  21

  
	
   

  	
  2.4.

  	
  Termination, Reduction and Increase of Revolving
  Credit Commitments

  	
  22

  
	
   

  	
  2.5.

  	
  Swing Line Commitment

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. LETTERS OF CREDIT

  	
  26

  
	
   

  	
   

  
	
   

  	
  3.1.

  	
  Letters of Credit

  	
  26

  
	
   

  	
  3.2.

  	
  Procedure for Issuance of Letters of Credit

  	
  27

  
	
   

  	
  3.3.

  	
  Participating Interests

  	
  27

  
	
   

  	
  3.4.

  	
  Payments

  	
  28

  
	
   

  	
  3.5.

  	
  Further Assurances

  	
  28

  
	
   

  	
  3.6.

  	
  Obligations Absolute

  	
  28

  
	
   

  	
  3.7.

  	
  Letter of Credit Application

  	
  29

  
	
   

  	
  3.8.

  	
  Purpose of Letters of Credit

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. GENERAL PROVISIONS

  	
  29

  
	
   

  	
   

  
	
   

  	
  4.1.

  	
  Interest Rates and Payment Dates

  	
  29

  
	
   

  	
  4.2.

  	
  Conversion and Continuation Options

  	
  30

  
	
   

  	
  4.3.

  	
  Minimum Amounts of Tranches

  	
  31

  
	
   

  	
  4.4.

  	
  Optional and Mandatory Prepayments

  	
  31

  
	
   

  	
  4.5.

  	
  Commitment Fees; Other Fees

  	
  32

  
	
   

  	
  4.6.

  	
  Computation of Interest and Fees

  	
  33

  
	
   

  	
  4.7.

  	
  Inability to Determine Interest Rate

  	
  33

  
	
   

  	
  4.8.

  	
  Pro Rata Treatment and Payments

  	
  34

  
	
   

  	
  4.9.

  	
  Illegality

  	
  35

  
	
   

  	
  4.10.

  	
  Increased Costs

  	
  36

  
	
   

  	
  4.11.

  	
  Indemnity

  	
  37

  
	
   

  	
  4.12.

  	
  Taxes

  	
  38

  
	
   

  	
  4.13.

  	
  Use of Proceeds

  	
  39

  
	
   

  	
  4.14.

  	
  Change in Lending Office; Replacement of Lender

  	
  40

  
					

 

 i
 

 
  

 

	
  

  	
  4.15.

  	
  Break Funding Payments

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5. REPRESENTATIONS AND WARRANTIES

  	
  41

  
	
   

  	
   

  
	
   

  	
  5.1.

  	
  Financial Condition; Accuracy of Public Information

  	
  41

  
	
   

  	
  5.2.

  	
  No Change

  	
  41

  
	
   

  	
  5.3.

  	
  Corporate Existence; Compliance with Law

  	
  41

  
	
   

  	
  5.4.

  	
  Corporate Power; Authorization; Enforceable
  Obligations

  	
  42

  
	
   

  	
  5.5.

  	
  No Legal Bar

  	
  42

  
	
   

  	
  5.6.

  	
  No Material Litigation

  	
  42

  
	
   

  	
  5.7.

  	
  No Default

  	
  42

  
	
   

  	
  5.8.

  	
  Ownership of Property; Liens

  	
  43

  
	
   

  	
  5.9.

  	
  Intellectual Property

  	
  43

  
	
   

  	
  5.10.

  	
  Taxes

  	
  43

  
	
   

  	
  5.11.

  	
  Federal Regulations

  	
  44

  
	
   

  	
  5.12.

  	
  ERISA

  	
  44

  
	
   

  	
  5.13.

  	
  Investment Company Act; Other Regulations

  	
  44

  
	
   

  	
  5.14.

  	
  Subsidiaries

  	
  44

  
	
   

  	
  5.15.

  	
  Environmental Matters

  	
  44

  
	
   

  	
  5.16.

  	
  Solvency

  	
  45

  
	
   

  	
  5.17.

  	
  Security Documents

  	
  45

  
	
   

  	
  5.18.

  	
  Insurance

  	
  46

  
	
   

  	
  5.19.

  	
  Affiliate Transactions

  	
  46

  
	
   

  	
  5.20.

  	
  Accuracy of Information

  	
  46

  
	
   

  	
  5.21.

  	
  OFAC.

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6. CONDITIONS PRECEDENT

  	
  47

  
	
   

  	
   

  
	
   

  	
  6.1.

  	
  Conditions to Closing Date

  	
  47

  
	
   

  	
  6.2.

  	
  Conditions to Each Extension of Credit

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7. AFFIRMATIVE COVENANTS

  	
  51

  
	
   

  	
   

  
	
   

  	
  7.1.

  	
  Financial Statements

  	
  51

  
	
   

  	
  7.2.

  	
  Certificates; Other Information

  	
  52

  
	
   

  	
  7.3.

  	
  Payment of Obligations

  	
  53

  
	
   

  	
  7.4.

  	
  Maintenance of Existence

  	
  53

  
	
   

  	
  7.5.

  	
  Maintenance of Property; Insurance

  	
  53

  
	
   

  	
  7.6.

  	
  Inspection of Property; Books and Records;
  Discussions

  	
  53

  
	
   

  	
  7.7.

  	
  Notices

  	
  54

  
	
   

  	
  7.8.

  	
  Environmental Laws

  	
  54

  
	
   

  	
  7.9.

  	
  Additional Subsidiaries; Additional Collateral

  	
  55

  
	
   

  	
  7.10.

  	
  Post-Closing Obligations

  	
  56

  
	
   

  	
   

  	
   

  	
   

  

 

 ii
 

 
  

 

	
  SECTION 8. NEGATIVE COVENANTS

  	
  57

  
	
   

  	
   

  
	
   

  	
  8.1.

  	
  Financial Condition Covenants

  	
  57

  
	
   

  	
  8.2.

  	
  Limitation on Indebtedness

  	
  57

  
	
   

  	
  8.3.

  	
  Limitation on Liens

  	
  59

  
	
   

  	
  8.4.

  	
  Limitation on Guarantee Obligations

  	
  60

  
	
   

  	
  8.5.

  	
  Limitation on Fundamental Changes

  	
  61

  
	
   

  	
  8.6.

  	
  Limitation on Sale of Assets

  	
  62

  
	
   

  	
  8.7.

  	
  Limitation on Dividends and Other Restricted
  Payments

  	
  62

  
	
   

  	
  8.8.

  	
  Limitation on Capital Expenditures

  	
  62

  
	
   

  	
  8.9.

  	
  Limitation on Investments, Loans and Advances

  	
  63

  
	
   

  	
  8.10.

  	
  Limitation on Optional Payments and Modifications of
  Debt Instruments

  	
  64

  
	
   

  	
  8.11.

  	
  Limitation on Transactions with Affiliates

  	
  65

  
	
   

  	
  8.12.

  	
  Limitation on Sales and Leasebacks

  	
  65

  
	
   

  	
  8.13.

  	
  Limitation on Changes in Fiscal Year

  	
  65

  
	
   

  	
  8.14.

  	
  Limitation on Negative Pledge Clauses

  	
  65

  
	
   

  	
  8.15.

  	
  Limitation on Lines of Business

  	
  66

  
	
   

  	
  8.16.

  	
  Hedging Agreements

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. EVENTS OF DEFAULT

  	
  66

  
	
   

  	
   

  
	
  SECTION 10. THE AGENTS AND THE ARRANGER

  	
  69

  
	
   

  	
   

  
	
   

  	
  10.1.

  	
  Appointment

  	
  69

  
	
   

  	
  10.2.

  	
  Delegation of Duties

  	
  70

  
	
   

  	
  10.3.

  	
  Exculpatory Provisions

  	
  70

  
	
   

  	
  10.4.

  	
  Reliance by Agents

  	
  70

  
	
   

  	
  10.5.

  	
  Notice of Default

  	
  71

  
	
   

  	
  10.6.

  	
  Non-Reliance on Agents and Other Lenders

  	
  71

  
	
   

  	
  10.7.

  	
  Indemnification

  	
  72

  
	
   

  	
  10.8.

  	
  Agent in Its Individual Capacity

  	
  72

  
	
   

  	
  10.9.

  	
  Successor Agents

  	
  72

  
	
   

  	
  10.10.

  	
  Issuing Lender

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11. MISCELLANEOUS

  	
  73

  
	
   

  	
   

  
	
   

  	
  11.1.

  	
  Amendments and Waivers

  	
  73

  
	
   

  	
  11.2.

  	
  Notices

  	
  74

  
	
   

  	
  11.3.

  	
  No Waiver; Cumulative Remedies

  	
  76

  
	
   

  	
  11.4.

  	
  Survival

  	
  76

  
	
   

  	
  11.5.

  	
  Payment of Expenses and Taxes

  	
  76

  
	
   

  	
  11.6.

  	
  Successors and Assigns; Participation and
  Assignments

  	
  77

  
	
   

  	
  11.7.

  	
  Adjustments; Set-off

  	
  80

  
	
   

  	
  11.8.

  	
  Counterparts

  	
  81

  
	
   

  	
  11.9.

  	
  Severability

  	
  81

  

 

 iii
 

 
  

 

	
  

  	
  11.10.

  	
  Integration

  	
  81

  
	
   

  	
  11.11.

  	
  GOVERNING LAW

  	
  81

  
	
   

  	
  11.12.

  	
  Submission to Jurisdiction; Waivers

  	
  81

  
	
   

  	
  11.13.

  	
  Acknowledgements

  	
  82

  
	
   

  	
  11.14.

  	
  WAIVERS OF JURY TRIAL

  	
  82

  
	
   

  	
  11.15.

  	
  Confidentiality

  	
  82

  
	
   

  	
  11.16.

  	
  Designation of Senior Indebtedness

  	
  83

  
	
   

  	
  11.17.

  	
  USA PATRIOT ACT

  	
  83

  

 

	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
   

  	
  I

  	
  Revolving Commitments; Addresses

  
	
   

  	
  II

  	
  Domestic Subsidiaries; Foreign Subsidiaries

  
	
   

  	
  III

  	
  Existing Letters of Credit

  
	
   

  	
  5.8

  	
  Real Property Owned and Leased

  
	
   

  	
  5.10

  	
  Tax Filings and Payments

  
	
   

  	
  5.18

  	
  Insurance

  
	
   

  	
  7.10

  	
  Accounts

  
	
   

  	
  8.2

  	
  Existing Indebtedness

  
	
   

  	
  8.3

  	
  Existing Liens

  
	
   

  	
  8.4

  	
  Existing Guarantee Obligations

  
	
   

  	
  8.9(e)

  	
  Existing Investments

  
	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
   

  	
  A-1

  	
  Form of Revolving Credit Note

  
	
   

  	
  A-2

  	
  Form of Swing Line Note

  
	
   

  	
  B

  	
  Form of Guarantee and Collateral Agreement

  
	
   

  	
  C

  	
  Form of Swing Line Loan Participation Certificate

  
	
   

  	
  D

  	
  Form of Assignment and Acceptance

  
	
   

  	
  E-1

  	
  Form of Opinion of Milbank, Tweed, Hadley &
  McCloy LLP

  
	
   

  	
  E-2

  	
  Form of Opinion of Irene Fisher, General Counsel to
  the Borrower

  
	
   

  	
  F

  	
  Form of Closing Certificate

  
	
   

  	
  G

  	
  Form of Administrative Questionnaire

  
	
   

  	
  H

  	
  Form of Landlord’s Lien Waiver, Access Agreement and
  Consent

  
	
   

  	
  I

  	
  Form of Revolving Increase Supplement

  

 

 

 iv

CREDIT AGREEMENT, dated as of November 3, 2006 (this “Credit
Agreement”) among NBTY, INC., a Delaware corporation (the “Borrower”),
the several banks and other financial institutions from time to time parties
hereto as lenders (the “Lenders”), JPMORGAN CHASE BANK, N.A., a national
banking association organized and existing under the laws of the United States
of America, as administrative agent and collateral agent for the Lenders
hereunder (in such capacities, the “Administrative Agent” and the “Collateral
Agent,” respectively), and BANK OF AMERICA, N.A., BNP PARIBAS, CITIBANK,
N.A., and HSBC BANK USA, NATIONAL ASSOCIATION, each a national banking
association organized and existing under the laws of the United States of
America, as co-syndication agents for the Lenders hereunder (in such capacity,
each a “Co-Syndication Agent”, and collectively, with the Administrative
Agent and the Collateral Agent, the “Agents”).

W I T N E S S E T H :

WHEREAS, the Borrower is party to that certain credit
agreement dated as of July 24, 2003, as amended and restated on December 19,
2003, as further amended and restated on August 1, 2005, and as amended from
time to time to the date hereof among the Borrower, the several lenders from
time to time party thereto, JPMorgan Chase Bank, N.A. as administrative agent
and collateral agent and Bank of America, N.A. as syndication agent (the “Existing
Credit Agreement”);

WHEREAS, the Borrower desires that the Lenders extend
credit in the form of revolving credit loans in an aggregate principal amount
of up to $325,000,000 on and after the Closing Date (x) for the purpose of
repaying amounts outstanding under, and terminating any commitments and all
other obligations under, the Existing Credit Agreement on the Closing Date (the
“Refinancing”) and paying any fees, commissions and expenses in
connection therewith, (y) for working capital and other general corporate
purposes of the Borrower and its Subsidiaries, and (z) any Acquisitions
consummated after the Closing Date;

WHEREAS, the Lenders are willing to enter into this
Agreement on the terms and conditions hereof;

NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein set forth, the parties hereto agree as follows:

SECTION 1.  DEFINITIONS

1.1.   Defined Terms. 
As used in this Agreement, the following terms shall have the following
meanings:

“ABR Loans”: 
Loans the rate of interest applicable to which is based upon the Alternate
Base Rate.

“Acquisition”: 
any transaction or series of related transactions by which the Borrower
or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any Person, whether through purchase of
assets, merger or otherwise or (b) directly or indirectly acquires (in one
transaction or in a series of related transactions) at least (i) a majority
(in number of votes) of the Capital Stock having ordinary voting power for the
election of directors (or other managers) of any Person or (ii) a majority
of the ownership interests in any Person.

“Administrative Agent”:  as defined in the preamble hereto, and shall
include any successor appointed in accordance with subsection 10.9.

“Administrative Questionnaire”:  an administrative questionnaire substantially
in the form attached hereto as Exhibit G.

“Affiliate”: 
of any Person, (a) any other Person (other than a wholly owned Subsidiary
of such Person) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person or (b) any other Person who is
a director or officer of (i) such Person, (ii) any Subsidiary of such
Person or (iii) any Person described in clause (a) above.  For purposes of this definition, a Person
shall be deemed to be “controlled by” such other Person if such other Person
possesses, directly or indirectly, power either to (A) vote 10% or more of
the securities having ordinary voting power for the election of directors of
such first Person or (B) direct or cause the direction of the management
and policies of such first Person whether by contract or otherwise.

“Agents”: 
as defined in the preamble hereto.

“Aggregate Available Revolving Credit Commitments”:  as at any date of determination with respect
to all Lenders, the Available Revolving Credit Commitments of all Lenders on
such date.

“Aggregate Revolving Credit Commitments”:  the aggregate amount of the Revolving Credit
Commitments of all the Lenders.

“Aggregate Revolving Credit Outstanding”:  as at any date of determination with respect
to any Lender, the sum of (a) the aggregate unpaid principal amount of such
Lender’s Revolving Credit Loans on such date and (b) such Lender’s Revolving
Credit Commitment Percentage of the aggregate Letter of Credit Obligations and
Swing Line Loans on such date.

“Agreement”: 
this Credit Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

“Alternate Base Rate”:  for any day, a rate per  annum
equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of
1%.  Any change in the Alternate Base Rate
due to a change in the Prime

 2
 

Rate or the Federal Funds Effective Rate shall be effective
from and including the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

“Applicable Margin”:  for Revolving Credit Loans and for purposes
of subsection 4.5(a), the rate per  annum set forth under the
relevant column heading below based on the ratio of Consolidated Indebtedness
to Consolidated EBITDA, as most recently determined in accordance with
subsection 7.2(b), for any fiscal quarter of the Borrower:

	
  Relevant Ratio of

  Consolidated Indebtedness

  to Consolidated EBITDA

  	
   

  	
  Applicable Margin

  for Revolving

  Eurodollar Loans

  	
   

  	
  Applicable 

  Margin for 

  Revolving

  ABR Loans

  	
   

  	
  Commitment

  Fee

  
	
  Greater than or
  equal to 2.0x

  	
   

  	
  1.75%

  	
   

  	
  0.75%

  	
   

  	
  0.375%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less than 2.0x
  but greater than or equal to 1.5x

  	
   

  	
  1.50%

  	
   

  	
  0.50%

  	
   

  	
  0.375%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less than 1.5x
  but greater than or equal to 1.0x

  	
   

  	
  1.25%

  	
   

  	
  0.25%

  	
   

  	
  0.25%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less than 1.0x

  	
   

  	
  1.00%

  	
   

  	
  0.00%

  	
   

  	
  0.20%

  

 

Up to and including the date of delivery of financial
statements and related compliance certificate of the Borrower for the first
fiscal quarter ending after the Closing Date in accordance with subsection 7.1,
the Applicable Margin for Revolving Loans shall be 1.00% per  annum
for Eurodollar Loans and 0.00% per  annum for ABR Loans and the commitment
fee shall be 0.20%.

If and in the event the financial statements required
to be delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the
related compliance certificate required to be delivered pursuant to subsection
7.2(b), are delivered on or prior to the date when due (or, in the case of the
fourth quarterly period of each fiscal year of the Borrower, if financial statements
which satisfy the requirements of, and are delivered within the time period
specified in, subsection 7.1(b) and a related compliance certificate which
satisfies the requirements of, and is delivered within the time period
specified in, subsection 7.2(b), with respect to any such quarterly period are
so delivered within such time periods), then the Applicable Margin for
Revolving Credit Loans during the period that commences five  (5) Business Days after the date upon which
such financial statements were due to be delivered shall be the Applicable Margin
as set forth in the relevant column heading above which corresponds with the
compliance certificate calculations delivered pursuant to subsection 7.2(b); provided,
however, that in the event that the financial statements delivered
pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related

 3
 

compliance certificate required to be delivered
pursuant to subsection 7.2(b), are not delivered when due, then:

(a)           if such financial statements and certificate
are delivered after the date such financial statements and certificate were
required to be delivered (without giving effect to any applicable cure period)
and the Applicable Margin increases from that previously in effect as a result
of the delivery of such financial statements, then the Applicable Margin during
the period from the date upon which such financial statements were required to
be delivered (without giving effect to any applicable cure period) until the
date upon which they actually are delivered shall, except as otherwise provided
in clause (c) below, be the Applicable Margin as so increased;

(b)           if such financial statements and
certificate are delivered after the date such financial statements and
certificate were required to be delivered and the Applicable Margin decreases
from that previously in effect as a result of the delivery of such financial
statements, then such decrease in the Applicable Margin shall not become
applicable until the date upon which such financial statements and certificate
actually are delivered; and

(c)           if such financial statements and
certificate are not delivered prior to the expiration of the applicable cure
period, then, effective upon such expiration, for the period from the date upon
which such financial statements and certificate were required to be delivered
(after the expiration of the applicable cure period) until five (5) Business
Days following the date upon which they actually are delivered, the Applicable
Margin in respect of Revolving Credit Loans shall be the highest margins set
forth on the preceding table and in the case of subsection 4.5(a), 0.375% per
annum (it being understood that the foregoing shall not limit the rights
of the Agents and the Lenders set forth in Section 9).

“Approved Fund”: as defined in subsection
11.6(b).

“Arrangement Letter”:  the arrangement letter dated August 31,
2006 among Borrower, JPMorgan Chase and J.P. Morgan Securities Inc.

“Arranger”: 
J.P. Morgan Securities Inc.

“Assignee”: 
as defined in subsection 11.6(b)(iii).

“Assignment and Acceptance”:  an assignment and acceptance agreement substantially
in the form attached hereto as Exhibit D.

“Available Revolving Credit Commitment”:  as at any date of determination with respect
to any Lender, an amount equal to the excess, if any, of (a) the amount of such
Lender’s Revolving Credit Commitment in effect on such date over (b) the
Aggregate Revolving Credit Outstanding of such Lender on such date.

 4
 

“Benefited Lender”:  as defined in subsection 11.7(a).

“Board”: 
the Board of Governors of the Federal Reserve System of the United
States of America (or any successor thereto).

“Borrower”: 
as defined in the preamble hereto.

“Borrowing Date”:  any Business Day specified in a notice
pursuant to subsection 2.2, 2.5(a), 2.7 or 3.2 as a date on which the Borrower
requests the Lenders to make Loans hereunder or issue a Letter of Credit.

“Business”: 
as defined in subsection 5.15(b).

“Business Day”: 
(a) for all purposes other than as covered by clause (b) below, a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close and (b) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (a) and which is also a London Banking Day.

“Capital Expenditures”:  direct or indirect (by way of the acquisition
of securities of a Person or the expenditure of cash or the incurrence of Indebtedness)
expenditures (other than expenditures in connection with Acquisitions permitted
hereunder) in respect of the purchase or other acquisition of fixed or capital
assets.

“Capital Stock”:  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) (collectively, “Underlying Equity Interests”), and any and
all warrants or options to purchase any of the foregoing.  For purposes of subsections 4.4(e) and 8.7
hereof, the term “Capital Stock” shall exclude options and warrants issued
pursuant to employee stock option plans and Underlying Equity Interests issued
upon the exercise thereof.

“Cash Equivalents”:  (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2
by S&P or P-2 by Moody’s, (e) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are 

 5
 

rated at least A by S&P or A by Moody’s (or the
equivalent rating by either such rating agency for such type of securities),
(f) securities with maturities of one year or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying
the requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.

“Class”: 
the classification of loans as Revolving Credit Loans or Swing Line
Loans, each of which categories shall be deemed to be a “Class” of Loans.

“Closing Date”: 
November 3, 2006.

“Code”: 
the Internal Revenue Code of 1986, as amended from time to time.

“Collateral Agent”:  as defined in the preamble hereto, and shall
include any successor appointed in accordance with subsection 10.9.

“Commercial Letters of Credit”:  as defined in subsection 3.1(ii).

“Commitments”: 
the collective reference to the Revolving Credit Commitments and the
Swing Line Commitment.

 “Consolidated
EBITDA”:  for any period of four consecutive
fiscal quarters, the sum of (i) Trailing Consolidated Net Income for such
period excluding the aggregate amount of all non-cash losses reducing
Consolidated Net Income (excluding any non-cash losses that results in an
accrual of a reserve for cash charges in any future period and the reversal
thereof) for such period, (ii) Trailing Consolidated Interest Expense for
such period and (iii) the Trailing amount of taxes, depreciation and
amortization deducted from earnings in determining such Consolidated Net Income.

“Consolidated Indebtedness”:  at a particular date, all Indebtedness of the
Borrower and its Subsidiaries, determined on a consolidated basis.

“Consolidated Interest Coverage Ratio”:  for any period of four consecutive fiscal
quarters, the ratio of (i) Consolidated EBITDA of the Borrower and its
Subsidiaries to (ii) Trailing Consolidated Interest Expense.

“Consolidated Interest Expense”:  for any fiscal period, the amount which
would, in conformity with GAAP, be set forth opposite the caption “interest
expense” (or any like caption) on a consolidated income statement of the
Borrower and its Subsidiaries for such period.

“Consolidated Net Income”:  for any fiscal period, the consolidated net
income (or deficit) of the Borrower and its Subsidiaries for such period (taken
as a cumulative whole),

 6
 

determined on a consolidated basis in accordance with
GAAP; provided that any non-cash extraordinary gains and losses shall be
excluded in determining Consolidated Net Income.

“Consolidated Senior Indebtedness”:  all Indebtedness of the Borrower which is not
by its terms expressly subordinated to the Loans under this Agreement.

“Continuing Directors”:  the directors of the Borrower on the Closing
Date and each other director, if such other director’s nomination for election
to the Board of Directors of the Borrower is recommended by a majority of the
then Continuing Directors.

“Contractual Obligation”:  as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking
to which such Person is a party or by which it or any of its property is bound.

“Co-Syndication Agent”:  as defined in the preamble hereto, and shall
include any successor appointed in accordance with subsection 10.9.

“Default”: 
any of the events specified in Section 9, whether or not any requirement
for the giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.

“Dollars,” “U.S. Dollars” and “$”:  dollars in lawful currency of the United
States of America.

“Domestic Subsidiary”:  any Subsidiary other than a Foreign Subsidiary.

“Environmental Laws”:  the common law and all laws, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, the preservation or reclamation of
natural resources, the management, Release or threatened Release of any
Hazardous Materials or to health and safety matters.

“ERISA”: 
the Employee Retirement Income Security Act of 1974, as amended from
time to time.

“ERISA Affiliate”:  any trade or business (whether or not
incorporated) that, together with the Borrower or any of its Subsidiaries, is
treated as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

“ERISA Event”: 
(a) any “reportable event,” as defined in Section 4043 of ERISA
or the regulations issued thereunder, with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) with
respect to any Plan, failure to satisfy the minimum funding standard (as defined
in Section 412 of the Code or Section 302 of ERISA), whether or 

 7
 

not waived, (c) the failure to make by its due date a
required installment under Section 412(m) of the Code (or Section 430(j) of the
Code, as amended by the Pension Protection Act of 2006) with respect to any
Plan or the failure to make any required contribution to a Multiemployer Plan;
(d) the filing pursuant to Section 412of the Code or of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of
any Plan; (f) the receipt by the Borrower or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; (h) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, “insolvent” or in “reorganization”, within the meaning of Title IV of
ERISA; or (i) the making of any amendment to any Plan which could result in the
imposition of a lien or the posting of a bond or other security.

“Eurodollar Loans”:  Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

“Eurodollar Rate”:  with respect to a Eurodollar Loan for the
relevant Interest Period, an interest rate per  annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate
for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Event of Default”:  any of the events specified in Section 9, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

“Exchange Act”: 
the Securities Exchange Act of 1934, as amended.

“Excluded Taxes”:  with respect to the Administrative Agent, any
Lender, the Issuing Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) any Taxes
imposed by any jurisdiction other than the United States (or any taxing
authority thereof or therein), any jurisdiction in which the Borrower conducts
business or claims an interest deduction with respect to this Agreement or any
other taxing jurisdiction from or through which payments hereunder are made,
(b) income or franchise taxes imposed on (or measured by) its net income
or net profits by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized, in which such recipient conducts
business (other than a business that is deemed to arise solely as a result of
entering into this Agreement, receipt of payments hereunder or enforcement of
its rights hereunder)) or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located,
(c) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (d) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under 

 8
 

subsection 4.14(b)), any withholding tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with subsection
4.12(e), except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to subsection 4.12(a).

“Existing Credit Agreement”:  as defined in the recitals hereto.

“Existing Letter of Credit”:  each letter of credit listed on Schedule III
hereto.

 “Existing
Notes”:  the Borrower’s 7-1/8%
Senior Subordinated Notes due 2015.

“Existing Notes Indenture”:  as defined in subsection 6.1(p).

“Extension of Credit”:  as to any Lender, the making of a Loan by such
Lender and, with respect to any Lender, the issuance of any Letter of Credit.

“Federal Funds Effective Rate”:  for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.

“Fee Property”: 
as defined in subsection 5.8.

“Financial Covenants”: means the financial
covenants set forth in subsection 8.1.

“Financial Officer”: means, with respect to any
Person, the chief financial officer, principal accounting officer, treasurer,
controller or senior vice president, finance of such Person.

“Financing Lease”:  (a) any lease of property, real or personal,
the obligations under which are capitalized on a consolidated balance sheet of
the Borrower and its Subsidiaries and (b) any other such lease to the extent
that the then present value of the minimum rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.

“Foreign Plan”: 
any employee benefit plan, program, policy, arrangement or agreement maintained
or contributed to by, or entered into with, Borrower or any Subsidiary with
respect to employees employed outside the United States.

“Foreign Lender”:  any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United 

 9
 

States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.

“Foreign Subsidiary”:  as to any Person, any Subsidiary of such
Person which is organized under the laws of any jurisdiction outside of the
country of the jurisdiction of organization of such Person.

“GAAP”: 
generally accepted accounting principles in the United States of America
in effect from time to time.

“Gel-Cap Facility”:  the soft gelatin capsule manufacturing
facility located at Cartwright Loop Industrial Park, Church Street, Bayport,
New York.

“Governmental Authority”:  any nation or government, any state, province
or other political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

“Guarantee and Collateral Agreement”:  the Guarantee and Collateral Agreement,
substantially in the form attached hereto as Exhibit B, executed
and delivered by the Borrower and each of its Domestic Subsidiaries, as the
same may be amended, supplemented or otherwise modified.

“Guarantee Obligation”:  as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the “primary obligations”) of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary obligor, (c)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (d) otherwise to assure
or hold harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. 
The amount of any Guarantee Obligation shall be deemed to be an amount
equal to the value as of any date of determination of the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made (unless such Guarantee Obligation shall be
expressly limited to a lesser amount, in which case such lesser amount shall
apply) or, if not stated or determinable, the value as of any date of
determination of the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.

“Hazardous Materials”:  any solid wastes, toxic or hazardous
substances, materials or wastes, defined, listed, classified or regulated as
such in or under any Environmental Laws, 

 10
 

including, without limitation, asbestos, petroleum or
petroleum products (including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls, and urea-formaldehyde insulation, and any other
substance the presence of which may give rise to liability under any Environmental
Law.

 “Hedge
Agreement”:  any interest rate
protection agreement, interest rate swap or other interest rate hedge
arrangement, or currency swap or other currency hedge arrangement (other than
any interest rate cap or other similar agreement or arrangement pursuant to
which the Borrower has no credit exposure), to or under which the Borrower or
any of its Subsidiaries is a party or a beneficiary.

“Hedge Agreement Obligation”:  any obligation of the Borrower under any one
or more Hedge Agreements to make payments to the counterparties thereunder upon
the occurrence of a termination event or similar event thereunder.

“Holland & Barrett”:  Holland & Barrett Holdings Limited.

“Indebtedness”: 
of a Person, at a particular date, the sum (without duplication) at such
date of (a) indebtedness for borrowed money or for the deferred purchase price
of property or services in respect of which such Person is liable as obligor
(other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices of such Person),
(b) indebtedness secured by any Lien on any property or asset owned or held by
such Person regardless of whether the indebtedness secured thereby shall have
been assumed by or is a primary liability of such Person, (c) obligations of
such Person under Financing Leases, (d) the face amount of all letters of
credit issued for the account of or upon the application of such Person and,
without duplication, the unreimbursed amount of all drafts drawn thereunder and
(e) obligations (in the nature of principal or interest) of such Person in
respect of acceptances or similar obligations issued or created for the account
of such Person.

“Indemnified Taxes”:  Taxes other than Excluded Taxes.

 “Intellectual
Property”:  as defined in subsection
5.9.

“Interest Payment Date”:  (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding,
(b) as to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period and (c) as to any Eurodollar Loan
having an Interest Period longer than three months, (i) each day which is
three months after the first day of such Interest Period and (ii) the last
day of such Interest Period.

“Interest Period”:  with respect to any Eurodollar Loan:

(a)           initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six 

 11
 

months (or nine or twelve
months, if available to all Lenders) thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be, given with
respect thereto; and

(b)           thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months (or nine or twelve months, if
acceptable to all Lenders) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three Business
Days prior to the last day of the then current Interest Period with respect
thereto;

provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:

(i)      if any Interest Period
pertaining to a Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day;

(ii)     any Interest Period
applicable to a Eurodollar Loan that would otherwise extend beyond the date
final payment is due on such Loan shall end on such date of final payment; and

(iii)    any Interest Period
pertaining to a Eurodollar Loan that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.

“Issuing Lender”:  JPMorgan Chase or any of its Affiliates, in
its capacity as issuer of the Letters of Credit, and any other Lender which the
Borrower, the Administrative Agent and the Majority Lenders shall have
approved, in its capacity as issuer of the Letters of Credit.

“JPMorgan Chase”:  JPMorgan Chase Bank, N.A.

“Landlord’s Lien Waiver, Access Agreement and
Consent”: a lien waiver, access agreement and consent substantially in the
form attached hereto as Exhibit H.

 “Leased
Property”:  as defined in subsection
5.8.

“Legal Requirement”:  as to (a) any Person, any law, treaty, rule
or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject, and (b) any property, any law, treaty, rule, regulation, requirement,
judgment, 

 12
 

decree or determination of any Governmental Authority
applicable to or binding upon such property or to which such property is
subject.

“Lenders”: 
as defined in the preamble hereto.

“Letter of Credit Applications”:  (a) in the case of Standby Letters of Credit,
a letter of credit application for a Standby Letter of Credit on the standard
form of the applicable Issuing Lender for standby letters of credit, and (b) in
the case of Commercial Letters of Credit, a letter of credit application for a
Commercial Letter of Credit on the standard form of the applicable Issuing
Lender for commercial letters of credit.

“Letter of Credit Obligations”:  at any particular time, all liabilities of
the Borrower with respect to Letters of Credit, whether or not any such
liability is contingent, including (without duplication) the sum of (a) the
aggregate undrawn face amount of all Letters of Credit then outstanding plus
(b) the aggregate amount of all unpaid Reimbursement Obligations at such time.

“Letters of Credit”:  as defined in subsection 3.1(ii).

“LIBO Rate”: 
with respect to any Eurodollar Loan for any Interest Period, the rate appearing
on Page 3750 of the Dow Jones Market Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such page
of such Service, as determined by the Administrative Agent from time to time
for purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as
the rate for Dollar deposits with a maturity comparable to such Interest
Period.  In the event that such rate is
not available at such time for any reason, then the “LIBO Rate” with respect to
such Eurodollar Loan for such Interest Period shall be the rate at which Dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.

“Lien”: 
any mortgage, pledge, hypothecation, assignment, deposit arrangement
(other than a bank or similar deposit account), encumbrance, lien (statutory or
other), or preference, priority or other security interest or similar
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any Financing
Lease having substantially the same economic effect as any of the foregoing,
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing, and, in
the case of securities, a third party’s right to purchase such securities).

 13

 
  

 

“Loan Documents”:  the collective reference to this Agreement,
any Notes, any Revolving Increase Supplements, the Security Documents and any
documents or instruments evidencing or governing the Security Documents.

“Loan Parties”: 
the collective reference to the Borrower and each guarantor or grantor
party to any Security Document.

“Loans”: 
the collective reference to the Revolving Credit Loans and the Swing
Line Loans.

“London Banking Day”:  any day on which banks in London are open for
general banking business, including dealings in foreign currency and exchange.

“Majority Lenders”:  at any time, Lenders, the Total Loan
Percentages of which aggregate more than 50%.

“Material Adverse Effect”:  a material adverse change in the business,
assets, operations, properties, condition (financial or otherwise), contingent
liabilities (including as to products, and whether such liabilities have been
or yet may be asserted), prospects or material agreements of the Borrower and
its Subsidiaries taken as a whole.

“Material Environmental Amount”:  $2,500,000 for a single occurrence and
$10,000,000 in the aggregate at any time outstanding.

“Material Foreign Subsidiary”:  any Foreign Subsidiary accounting for 5% or
more of the assets or revenues (computed for the most recent fiscal year) of
the Borrower and its consolidated Subsidiaries, taken as a whole.

“Moody’s”: 
Moody’s Investors Service, Inc. or any successor thereto.

“Multiemployer Plan”:  a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

“Notes”: 
the collective reference to the Revolving Credit Notes and the Swing
Line Notes.

“Obligations”:  collectively, the unpaid principal of and
interest on the Loans, the Reimbursement Obligations and all other obligations
and liabilities of the Borrower to any Agent, the Issuing Lender and the
Lenders under or in connection with this Agreement, the other Loan Documents
and any Hedge Agreement with any Lender or any Affiliate of a Lender (including
in each case, without limitation, interest accruing at the then applicable rate
provided in this Agreement or any other applicable Loan Document or Hedge
Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement or any other applicable Loan Document
or Hedge Agreement after the filing of any petition in bank-

 

 14
  
 

 
  

 

ruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, the Notes, the Letters of Credit, the Letter
of Credit Applications, the other Loan Documents or any Hedge Agreement with a
Lender or any Affiliate of a Lender or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Agents or to the Lenders).

“Other Taxes”: 
any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.

“Participants”: 
as defined in subsection 11.6(c).

“Participating Interest”:  with respect to any Letter of Credit (a) in
the case of the Issuing Lender, its interest in such Letter of Credit and any
Letter of Credit Application relating thereto after giving effect to the
granting of any participating interests therein pursuant hereto and (b) in the
case of each Participating Lender, its undivided participating interest in such
Letter of Credit and any Letter of Credit Application relating thereto.

“Participating Lender”:  any Lender (other than the Issuing Lender)
with respect to its Participating Interest in a Letter of Credit.

“Patriot Act”: 
as defined in subsection 11.17.

“PBGC”: 
the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A of Title IV of ERISA or any successor thereto.

“Person”: 
an individual, partnership, corporation, business trust, joint stock
company, limited liability company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

“Plan”: 
any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA, and in respect of which the Borrower, any of
its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined
in Section 3(5) of ERISA.

“Pledged Stock”:  as defined in the Guarantee and Collateral
Agreement or any other Security Document.

 

 15
  
 

 
  

 

“Pledgee”: 
as defined in subsection 11.15.

“Prime Rate”: 
the rate of interest per  annum publicly announced from
time to time by JPMorgan Chase as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.

“Pro Forma Balance Sheet”:  as defined in subsection 5.1(b).

“Properties”: 
as defined in subsection 5.15(a).

 “Refinancing”:
as defined in the recitals hereto.

“Refinancing Indebtedness”:  Indebtedness that refinances, renews, extends,
replaces, defeases or refunds, in whole or in part, any Indebtedness of the
Borrower or any of its Subsidiaries; provided that

(i) other than in
the case of Refinancing Indebtedness refinancing the Existing Notes or any
Refinancing Indebtedness in respect thereof (the aggregate amount of which
Refinancing Indebtedness (whether in respect of the Existing Notes or any Refinancing
Indebtedness in respect thereof) will not be limited by this Agreement), any
such Refinancing Indebtedness is in an aggregate principal amount not greater
than the aggregate principal amount of the Indebtedness being renewed or
refinanced, plus the amount of any premiums required to be paid thereon
and reasonable fees and expenses associated therewith;

(ii) in the case
of Refinancing Indebtedness refinancing the Existing Notes or any Refinancing
Indebtedness in respect thereof, the subordination terms applicable to such
Refinancing Indebtedness are in all material respects substantially identical
to, or less favorable to the holders of such Refinancing Indebtedness than,
those applicable to the Existing Notes (provided that this provision
shall not apply to any secured Indebtedness incurred pursuant to the proviso in
subsection 8.10(a) and such Indebtedness shall be deemed “Refinancing
Indebtedness” for all purposes hereunder);

(iii) any such
Refinancing Indebtedness has a later or equal final maturity and longer or
equal weighted average life than the Indebtedness being renewed or refinanced.

“Refunded Swing Line Loans”:  as defined in subsection 2.5(b).

“Register”: 
as defined in subsection 11.6(b).

“Reimbursement
Obligation”:  the obligation of the
Borrower to reimburse the Issuing Lender in accordance with the terms of this
Agreement and the related Letter of Credit Application for any payment made by
the Issuing Lender under any Letter of Credit.

 

 16
  
 

 
  

 

“Related Parties”:  with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.

“Release”: 
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
escaping, leaking, dumping, disposing, spreading, depositing or dispersing of
any Hazardous Materials in, unto or onto the environment.

“Requirement of Law”:  as to (a) any Person, the certificate of
incorporation and by-laws or the partnership or limited partnership agreement
or other organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, and (b) any property, any law, treaty, rule, regulation, requirement,
judgment, decree or determination of any Governmental Authority applicable to
or binding upon such property or to which such property is subject, including,
without limitation, any Environmental Laws.

“Responsible Officer”:  with respect to any Loan Party, the chief
executive officer, the president, any Financial Officer, any vice president,
the treasurer or the assistant treasurer of such Loan Party.

“Restricted Payments”:  as defined in subsection 8.7.

“Revolving Credit Commitment”:  as to any Lender at any time, its obligation
to make Revolving Credit Loans, issue or participate in Letters of Credit
issued for the account of the Borrower and/or make or participate in Swing Line
Loans to the Borrower in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender’s name in Schedule I
hereto under the heading “Revolving Credit Commitment,” or the amount set forth
in the initial Revolving Increase Supplement executed and delivered by such
Lender, the Borrower and the Administrative Agent, as such amount may be
changed from time to time pursuant to subsection 2.4 and the other applicable
provisions hereof.

“Revolving Credit Commitment Percentage”:  as to any Lender at any time, the percentage
which such Lender’s Revolving Credit Commitment then constitutes of the Aggregate
Revolving Credit Commitments (or, if the Revolving Credit Commitments have
terminated or expired at such time, the percentage which (a) the Aggregate
Revolving Credit Outstanding of such Lender at such time then constitutes of
(b) the Aggregate Revolving Credit Outstanding of all Lenders at such time).

“Revolving Credit Commitment Period”:  the period from and including the Closing
Date to but not including the Revolving Credit Termination Date, or such earlier
date on which the Revolving Credit Commitments shall terminate as provided
herein.

“Revolving
Credit Loan”:  as defined in
subsection 2.1(a).

 

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“Revolving Credit Note”:  as defined in subsection 2.3(e).

“Revolving Credit Termination Date”:  November 3, 2011.

“Revolving Increase Supplement”: means an
increase supplement in substantially the form of Exhibit I.

“S&P”: 
Standard & Poor’s Ratings Services or any successor thereto.

“Security Documents”:  the collective reference to the Guarantee and
Collateral Agreement and each other pledge agreement, security document or
similar agreement that may be delivered to the Administrative Agent as
collateral security for any or all of the Obligations, in each case as amended,
supplemented or otherwise modified from time to time.

“Solvent”: 
with respect to any Person on a particular date, that on such date, (a)
the fair value of the property of such Person is greater than the total amount
of liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and mature, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, (d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person’s property
would constitute an unreasonably small amount of capital and (e) such
Person is able to pay its debts as they become due and payable.

“Standby Letters of Credit”:  as defined in subsection 3.1(i).

“Statutory Reserve Rate”:  a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Eurodollar Rate, for eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“Subordinated Debt”:  $188,442,812 in aggregate principal amount of
Existing Notes.

“Subsidiary”:  as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or

 

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such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation, partnership or other entity
are at the time owned, or the management of which is otherwise controlled,
directly or indirectly, through one or more intermediaries, or both, by such
Person (exclusive of any Affiliate in which such Person has a minority
ownership interest).  Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

“Swing Line Commitment”:  the Swing Line Lender’s obligation to make
Swing Line Loans pursuant to subsection 2.5.

“Swing Line Lender”:  JPMorgan Chase, in its capacity as lender of
the Swing Line Loans.

“Swing Line Loan Participation Certificate”:  a certificate in substantially the form
attached hereto as Exhibit C, as the same may be amended,
supplemented or otherwise modified from time to time.

“Swing Line Loans”:  as defined in subsection 2.5(a).

“Swing Line Note”:  as defined in subsection 2.3(e).

“Taxes”: 
any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

“Total Loan Percentage”:  as to any Lender at any time, the percentage
which such Lender’s Revolving Credit Commitment (or, if the Revolving Credit
Commitments have terminated or expired at such time, the Aggregate Revolving
Credit Outstanding of such Lender) at such time constitutes (ii) the
Aggregate Revolving Credit Commitments (or, if the Revolving Credit Commitments
have terminated or expired at such time, the Aggregate Revolving Credit
Outstanding of all Lenders) for all Lenders at such time.

“Trailing”: 
with respect to the determination of any financial results for any period,
the applicable financial result for the four fiscal quarters ended on such
date.

“Tranche”: 
the collective reference to Eurodollar Loans the then current Interest
Periods with respect to which begin on the same date and end on the same later
date (whether or not such Loans shall originally have been made on the same
day).

“Transactions”: 
the Extensions of Credit made hereunder on the Closing Date, the
Refinancing and the payment of fees, commissions and expenses in connection
therewith.

“Transferee”: 
as defined in subsection 11.15.

“Type”:  as to any Loan, its nature as an ABR Loan or
a Eurodollar Loan.

 

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“Withdrawal Liability”:  liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

1.2.          Other
Definitional Provisions.

(a)           Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the Notes, the other Loan Documents or any certificate
or other document made or delivered pursuant hereto.

(b)           As
used herein and in the Notes and any other Loan Document, and any certificate
or other document made or delivered pursuant hereto or thereto, accounting
terms relating to the Borrower and its Subsidiaries not defined in subsection
1.1 and accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP; provided
that, if the Borrower notifies the Administrative Agent that the Borrower requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

(c)           The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, subsection, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

(d)           The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS

2.1.          Revolving
Credit Commitments.

(a)           Subject
to the terms and conditions hereof, each Lender with a Revolving Credit
Commitment severally agrees to make revolving credit loans (each, a “Revolving
Credit Loan”) in U.S. Dollars to the Borrower from time to time during the
Revolving Credit Commitment Period so long as after giving effect thereto
(i) the Available Revolving Credit Commitment of each Lender with a
Revolving Credit Commitment is greater than or equal to zero and (ii) the
Aggregate Revolving Credit Outstanding of all Lenders does not exceed the Aggregate
Revolving Credit Commitments.  During the
Revolving Credit Commitment Period the Borrower may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit

 

 20
  
 

 
  

 

Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.

(b)           The
Revolving Credit Loans may from time to time be (i) Eurodollar Loans,
(ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 4.2, provided that no Revolving Credit Loan shall be
made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.

2.2.          Procedure
for Revolving Credit Borrowing. The Borrower may borrow under the Revolving
Credit Commitments during the Revolving Credit Commitment Period on any Business
Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 11:00 A.M., (New York City time) at least (a) three Business Days
prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans, or (b) one
Business Day prior to the requested Borrowing Date, otherwise), specifying in
each case (i) the amount to be borrowed, (ii) the requested Borrowing
Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans
or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of such Type of Loan and the length of
the initial Interest Periods therefor. 
Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (A) in the case of ABR Loans, $1,000,000 or a whole multiple
of $1,000,000 in excess thereof (or, if the then Aggregate Available Revolving
Credit Commitments are less than $1,000,000, such lesser amount) and
(B) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$5,000,000 in excess thereof.  Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof not later than 9:00 A.M., New York
City time, on the requested Borrowing Date. 
Not later than 12:00 Noon, New York City time, on each requested
Borrowing Date each Lender shall make an amount equal to its Revolving Credit
Commitment Percentage of the principal amount of the Revolving Credit Loans
requested to be made on such Borrowing Date available to the Administrative
Agent at its office specified in subsection 11.2 in U.S. Dollars and in
immediately available funds.  The Administrative
Agent shall on such date credit the account of the Borrower on the books of
such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.

2.3.          Repayment
of Revolving Credit Loans; Evidence of Debt.

(a)           The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving
Credit Loan of such Lender (whether made before or after the termination or
expiration of the Revolving Credit Commitments) on the Revolving Credit
Termination Date and on such other dates and in such other amounts as may be
required from time to time pursuant to this Agreement.  The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the

 

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Revolving Credit Loans from time to time outstanding
until payment thereof in full at the rates per annum, and on the dates, set
forth in subsection 4.1.

(b)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing indebtedness of the Borrower to such Lender resulting from
each Revolving Credit Loan of such Lender from time to time, including the
amounts of principal and interest payable thereon and paid to such Lender from
time to time under this Agreement.

(c)           The
Administrative Agent shall maintain the Register pursuant to subsection
11.6(b), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Revolving Credit Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder in respect of the Revolving Credit Loans and
(iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower in respect of the Revolving Credit Loans and each
Lender’s share thereof.

(d)           The
entries made in the Register and the accounts of each Lender maintained
pursuant to subsection 2.3(b) shall, to the extent permitted by applicable law,
be prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of
any Lender to maintain such account or the Administrative Agent to maintain the
Register, or any error therein, shall not in any manner affect the obligation
of the Borrower to repay (with applicable interest) the Revolving Credit Loans
made to the Borrower by such Lender in accordance with the terms of this Agreement.

(e)           The
Borrower agrees that it will, upon the request of any Lender, execute and
deliver to such Lender (i) a promissory note of the Borrower evidencing
the Revolving Credit Loans of such Lender, substantially in the form attached
hereto as Exhibit A-1 with appropriate insertions as to date
and principal amount (each, a “Revolving Credit Note”), and/or
(ii) a promissory note of the Borrower evidencing the Swing Line Loans of
such Lender, substantially in the form attached hereto as Exhibit A-2
with appropriate insertions as to date and principal amount (each, a “Swing
Line Note”); provided that any Revolving Credit Note or Swing Line
Note previously delivered to such Lender (or any predecessor thereof) has been
returned to the Borrower and marked cancelled or an affidavit of lost or
destroyed Note (in form acceptable to the Borrower) is executed and delivered
by such requesting Lender in lieu of such Note.

2.4.          Termination,
Reduction and Increase of Revolving Credit Commitments.

(a)           The Borrower shall
have the right, upon not less than three Business Days’ notice to the
Administrative Agent (which shall promptly notify each Lender thereof), to terminate
the Revolving Credit Commitments or, from time to time, to reduce the amount of
the Revolving Credit Commitments; provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any prepayments
of the Revolving Credit Loans made on the effective date thereof, the Available
Revolving Credit Commitment of any Lender would not be

 

 22
  
 

 
  

 

greater than or equal to zero.  Any such permitted reduction shall be in an
amount equal to $2,500,000 or a whole multiple of $1,000,000 in excess thereof
and shall reduce permanently the Revolving Credit Commitments then in effect.

(b)           The
Borrower may at any time and from time to time, at its sole cost, expense and
effort, request any one or more of the Lenders, an Affiliate of a Lender or an
Approved Fund of a Lender to increase its Revolving Credit Commitment or to
provide a new Revolving Credit Commitment, as the case may be (the decision to
be within the sole and absolute discretion of such Lender, Affiliate or
Approved Fund), or any other Person reasonably satisfactory to the
Administrative Agent and each Issuing Lender to provide a new Revolving Credit
Commitment, by submitting a Revolving Increase Supplement duly executed by the
Borrower and each such Lender, Affiliate, Approved Fund or other Person, as the
case may be, to the Administrative Agent. 
If such Revolving Increase Supplement is in all respects reasonably
satisfactory to the Administrative Agent, the Administrative Agent shall
execute such Revolving Increase Supplement and deliver a copy thereof to the
Borrower and each such Lender, Affiliate, Approved Fund or other Person, as the
case may be.  Upon execution and delivery
of such Revolving Increase Supplement by the Administrative Agent, (i) in the
case of each such Lender, such Lender’s Revolving Credit Commitment shall be
increased to the amount set forth in such Revolving Increase Supplement,
(ii) in the case of each such Affiliate, Approved Fund or other Person,
such Affiliate, Approved Fund or other Person shall thereupon become a party
hereto and shall for all purposes of the Loan Documents be deemed a “Lender”
having a Revolving Credit Commitment as set forth in such Revolving Increase
Supplement, and (iii) in each case, the Revolving Credit Commitment of
such Lender, Affiliate, Approved Fund or such other Person, as the case may be,
shall be as set forth in the applicable Revolving Increase Supplement; provided,
however, that:

I.                 immediately
after giving effect thereto, the sum of all increases in the aggregate
Revolving Credit Commitments shall not exceed $150,000,000;

II.             each such increase shall be in an amount
not less than $25,000,000 or such amount plus an integral multiple of
$5,000,000;

III.         the Revolving Credit Commitments shall not be
increased on more than three occasions;

IV.         if Revolving Credit Loans
would be outstanding immediately after giving effect to each such increase,
then simultaneously with such increase (1) each such Lender, each such
Affiliate, Approved Fund or other Person and each other Lender shall be deemed
to have entered into a master assignment and acceptance agreement, in form and
substance substantially similar to Exhibit D, pursuant to which
each such other Lender shall have assigned to each such Lender and each such
Affiliate, Approved Fund or other Person a portion of its Revolving Credit
Loans necessary to reflect proportionately the Revolving Credit Commitments as
adjusted in accordance with this subsection (b), and (2) in con-

 

 23
  
 

 
  

 

nection with such assignment, each such Lender and each such Affiliate,
Approved Fund or other Person shall pay to the Administrative Agent, for the account
of the other Lenders, such amount as shall be necessary to appropriately
reflect the assignment to it of Revolving Credit Loans, and in connection with
such master assignment each such other Lender may treat the assignment of
Eurodollar Loans as a prepayment of such Eurodollar Loans for purposes of
Section 4.15;

V.             each such Affiliate, Approved Fund or
other Person shall have delivered to the Administrative Agent and the Borrower
all forms, if any, that are required to be delivered by such Affiliate,
Approved Fund or other Person pursuant to Section 4.12; and

VI.         the Borrower shall have delivered to the
Administrative Agent for further distribution to each Lender a certificate of a
Financial Officer demonstrating compliance on a pro forma basis with the
Financial Covenants through the Revolving Credit Termination Date and the
Administrative Agent shall have received such customary certificates, legal
opinions and other items as it shall reasonably request in connection with such
increase.

2.5.          Swing
Line Commitment.

(a)           Subject
to the terms and conditions hereof, the Swing Line Lender agrees to make swing
line loans (individually, a “Swing Line Loan”; collectively, the “Swing
Line Loans”) to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed $20,000,000; provided that the Swing Line Lender shall not
make any Swing Line Loan if, after giving effect thereto, the sum of the Swing
Line Loans, the Revolving Credit Loans and the Letter of Credit Obligations (in
each case after giving effect to the Loans requested to be made and the Letters
of Credit requested to be issued on such date) exceeds the Aggregate Revolving
Credit Commitments.  During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, prepaying the Swing Line Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.  All Swing Line Loans shall be made as ABR
Loans and shall not be entitled to be converted into Eurodollar Loans.  The Borrower shall give the Swing Line Lender
irrevocable notice (which notice must be received by the Swing Line Lender
prior to 12:00 Noon, New York City time) on the requested Borrowing Date
specifying the amount of the requested Swing Line Loan which shall be in a
minimum amount of $100,000 or a whole multiple of $100,000 in excess
thereof.  The proceeds of the Swing Line
Loan will be made available by the Swing Line Lender to the Borrower at the
Houston office of the Swing Line Lender set forth in subsection 11.2, or at
such other address the Swing Line Lender shall designate in writing to the
Borrower from time to time in accordance with subsection 11.2, by
3:00 P.M., New York City time, on the Borrowing Date by crediting the
account of the Borrower at such office with such proceeds.  The Borrower may at any time and from time to
time prepay

 

 24
  
 

 
  

 

the Swing Line Loans, in whole or in part,
without premium or penalty, by notifying the Swing Line Lender prior to 12:00
Noon, New York City time, on any Business Day of the date and amount of prepayment.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein.  Partial prepayments shall be in
an aggregate principal amount of $100,000 or a whole multiple of $100,000 in
excess thereof.

(b)           The
Swing Line Lender, at any time in its sole and absolute discretion, may, on
behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender
to act on its behalf) request each Lender, including the Swing Line Lender, to
make a Revolving Credit Loan which is an ABR Loan in an amount equal to such
Lender’s Revolving Credit Commitment Percentage of the amount of the Swing Line
Loans outstanding on the date such notice is given (the “Refunded Swing Line
Loans”).  Unless any of the events
described in paragraph (h) of Section 9 shall have occurred with respect to the
Borrower (in which event the procedures of paragraph (d) of this subsection 2.5
shall apply), each Lender shall make the proceeds of such Revolving Credit Loan
available to the Administrative Agent for the account of the Swing Line Lender
at the office of the Administrative Agent specified in subsection 11.2 prior to
12:00 Noon (New York City time) in funds immediately available on the Business
Day next succeeding the date such notice is given.  The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the Refunded Swing Line Loans.  Effective on the day such Revolving Credit
Loans are made, the portion of the Swing Line Loans so paid shall no longer be
outstanding as Swing Line Loans, shall no longer be due under any Swing Line
Note and shall be due as the respective Revolving Credit Loans made by the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages.  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the Swing Line Lender the then unpaid principal amount of each Swing Line Loan
of the Swing Line Lender on the Revolving Credit Termination Date (to the
extent such Swing Line Loan has not previously been repaid in full with the proceeds
of Revolving Credit Loans).

(c)           Notwithstanding
anything herein to the contrary, the Swing Line Lender shall not be obligated
to make any Swing Line Loans if the conditions set forth in subsection 6.2 have
not been satisfied in respect thereof.

(d)           If
prior to the making of a Revolving Credit Loan pursuant to paragraph (b) of
this subsection 2.5 one of the events described in paragraph (h) of Section 9
shall have occurred and be continuing with respect to the Borrower, each Lender
with a Revolving Credit Commitment will, on the date such Revolving Credit Loan
was to have been made pursuant to the notice in this subsection 2.5, purchase
an undivided participating interest in the Refunded Swing Line Loans in an
amount equal to (i) its Revolving Credit Commitment Percentage times
(ii) the Refunded Swing Line Loans. 
Each Lender will immediately transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation, and upon receipt
thereof the Swing Line Lender will deliver to such Lender a Swing Line Loan
Participation Certificate dated the date of receipt of such funds and in such
amount.

 25
  

 

 

(e)           Whenever,
at any time after any Lender has purchased a participating interest in a Swing
Line Loan, the Swing Line Lender receives any payment on account thereof, the
Swing Line Lender will distribute to such Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s participating interest
was outstanding and funded); provided, however, that in the event
that such payment received by the Swing Line Lender is required to be returned,
such Lender will return to the Swing Line Lender any portion thereof previously
distributed by the Swing Line Lender to it.

(f)            Each
Lender’s obligation to make the Loans referred to in subsection 2.5(b) and to
purchase participating interests pursuant to subsection 2.5(d) shall be
absolute, irrevocable and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or the
Borrower may have against the Swing Line Lender, the Borrower or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower or any other Loan Party; (iv) any
breach of this Agreement or any other Loan Document by the Borrower or any of
its Subsidiaries or any other Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.

SECTION 3.  LETTERS OF CREDIT

3.1.          Letters
of Credit.  Subject to the terms and
conditions of this Agreement, the Issuing Lender agrees, on behalf of the
Lenders, and in reliance on the agreement of the Lenders set forth in subsection
3.3, to issue for the account of the Borrower letters of credit in an aggregate
face amount, together with any unpaid Reimbursement Obligations, not to exceed
$25,000,000 at any time outstanding, as follows:

(i)      standby letters of credit
(collectively, the “Standby Letters of Credit”) in a form reasonably
satisfactory to the Issuing Lender and in favor of such beneficiaries as the
Borrower shall specify from time to time (which shall be reasonably
satisfactory to the Issuing Lender); and

(ii)     commercial letters of
credit in the form of the Issuing Lender’s standard commercial letters of
credit (“Commercial Letters of Credit”) in favor of sellers of goods or
services to the Borrower or its Subsidiaries (the Standby Letters of Credit and
Commercial Letters of Credit being referred to collectively as the “Letters
of Credit”, it being understood that Existing Letters of Credit shall be
deemed to be “Letters of Credit” for all purposes under the Loan Documents);

provided
that on the date of the issuance of any Letter of Credit, and after giving
effect to such issuance, the Aggregate Revolving Credit Outstanding of all
Lenders does not exceed the Aggregate Revolving Credit Commitments at such
time.  Each Standby Letter of Credit
shall (i) have an expiry date no later than one year from the date of
issuance thereof or, if earlier, five Business

 

 27
 

 

 

Days prior to the Revolving Credit Termination Date,
(ii) be denominated in U.S. Dollars and (iii) be in a minimum face
amount of $100,000.  Each Commercial
Letter of Credit shall (i) provide for the payment of sight drafts when
presented for honor thereunder, or of time drafts, in each case in accordance
with the terms thereof and when accompanied by the documents described or when
such documents are presented, as the case may be, (ii) be denominated in
U.S. Dollars and (iii) have an expiry date no later than six months from
the date of issuance thereof or, if earlier, five Business Days prior to the
Revolving Credit Termination Date.  Upon
the issuance of any Letter of Credit, the Administrative Agent shall promptly
notify each Lender thereof.

3.2.          Procedure
for Issuance of Letters of Credit. 
The Borrower may from time to time request, upon at least three Business
Days’ notice, the Issuing Lender to issue a Letter of Credit by delivering to
the Issuing Lender at its address specified in subsection 11.2 a Letter of
Credit Application, completed to the reasonable satisfaction of such Issuing
Lender, together with such other certificates, documents and other papers and
information as such Issuing Lender may reasonably request.  Upon receipt of any Letter of Credit
Application, the Issuing Lender will process such Letter of Credit Application,
and the other certificates, documents and other papers delivered in connection
therewith, in accordance with its customary procedures and shall promptly issue
such Letter of Credit (but in no event earlier than three Business Days after receipt
by the Issuing Lender of the Letter of Credit Application relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof and by
furnishing a copy thereof to the Borrower. 
Prior to the issuance of any Letter of Credit, the Issuing Lender will
confirm with the Administrative Agent that the issuance of such Letter of Credit
is permitted pursuant to Section 3 and subsection 6.2.  Additionally, the Issuing Lender and the
Borrower shall inform the Administrative Agent of any modifications made to
outstanding Letters of Credit, of any payments made with respect to such Letters
of Credit, and of any other information regarding such Letters of Credit as may
be reasonably requested by the Administrative Agent, in each case pursuant to
procedures established by the Administrative Agent.

3.3.          Participating
Interests.  Effective as of the date
of the issuance of each Letter of Credit (in the case of a Letter of Credit
issued after the date hereof), the Issuing Lender agrees to allot, and does
allot, to each other Lender with a Revolving Credit Commitment, and each such
Lender severally and irrevocably agrees to take and does take, a Participating
Interest in such Letter of Credit and the related Letter of Credit Application
in a percentage equal to such Lender’s Revolving Credit Commitment Percentage.  On the date that any Participating Lender
becomes a party to this Agreement in accordance with subsection 11.6,
Participating Interests in any outstanding Letter of Credit held by the Lender
from which such Participating Lender acquired its interest hereunder shall be
proportionately reallocated between such Participating Lender and such
transferor Lender.  Each Participating
Lender hereby agrees that its obligation to participate in each Letter of
Credit issued in accordance with the terms hereof and to pay or to reimburse
the Issuing Lender in respect of such Letter of Credit for its participating
share of the drafts drawn thereunder shall be irrevocable and unconditional; provided
that no Participating Lender shall be liable for the payment of any amount
under subsection 3.4(b) resulting solely from the Issuing Lender’s gross
negligence or willful misconduct.

 

 28
 

 

 

3.4.          Payments.

(a)           The
Borrower agrees (i) to reimburse the Administrative Agent for the account
of the Issuing Lender, forthwith upon its demand and otherwise in accordance with
the terms of the Letter of Credit Application, if any, relating thereto, for
any payment made by the Issuing Lender under any Letter of Credit and
(ii) to pay to the Administrative Agent for the account of such Issuing
Lender, interest on any unreimbursed portion of any such payment from the date
of such payment until reimbursement in full thereof at a fluctuating rate per
annum equal to the rate then borne by Revolving Credit Loans that are
ABR Loans pursuant to subsection 4.1(b) plus 2% per  annum.

(b)           In
the event that the Issuing Lender makes a payment under any Letter of Credit
and is not reimbursed in full therefor, forthwith upon demand of the Issuing
Lender, and otherwise in accordance with the terms hereof or of the Letter of
Credit Application, if any, relating to such Letter of Credit, the Issuing
Lender will promptly through the Administrative Agent notify each Participating
Lender that acquired its Participating Interest in such Letter of Credit from
the Issuing Lender or pursuant to an assignment as provided in subsection
11.6(c).  No later than (x) the close of
business on the date such notice is given if such notice is given by 12:00 Noon
(New York City time) on the date such notice is received or (y) 12:00 Noon (New
York City time) on the following Business Day if such notice is not received by
12:00 Noon (New York City time), each such Participating Lender will transfer
to the Administrative Agent, for the account of the Issuing Lender, in
immediately available funds, an amount equal to such Participating Lender’s pro
rata share of the unreimbursed portion of such payment.

(c)           Whenever,
at any time, after the Issuing Lender has made payment under a Letter of Credit
and has received from any Participating Lender such Participating Lender’s pro
rata share of the unreimbursed portion of such payment, the Issuing
Lender receives any reimbursement on account of such unreimbursed portion or
any payment of interest on account thereof, the Issuing Lender will distribute
to the Administrative Agent, for the account of such Participating Lender, its pro
rata share thereof; provided, however, that in the event
that the receipt by the Issuing Lender of such reimbursement or such payment of
interest (as the case may be) is required to be returned, such Participating
Lender will promptly return to the Administrative Agent, for the account of the
Issuing Lender, any portion thereof previously distributed by the Issuing
Lender to it.

3.5.          Further
Assurances.  The Borrower hereby
agrees, from time to time, to do and perform any and all acts and to execute
any and all further instruments reasonably requested by the Issuing Lender more
fully to effect the purposes of this Agreement and the issuance of the Letters
of Credit issued hereunder.

3.6.          Obligations
Absolute.  The payment obligations of
the Borrower and each Participating Lender under subsection 3.4 shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:

 

 29
 

 

 

(a)           the
existence of any claim, set-off, defense or other right which the Borrower may
have at any time against any beneficiary, or any transferee, of any Letter of
Credit (or any Persons for whom any such beneficiary or any such transferee may
be acting), the Issuing Lender or any Participating Lender, or any other
Person, whether in connection with this Agreement, the transactions
contemplated herein, or any unrelated transaction;

(b)           any
statement or any other document presented under any Letter of Credit opened for
its account proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

(c)           payment
by the Issuing Lender under any Letter of Credit against presentation of a
draft or certificate which does not comply with the terms of such Letter of
Credit, except payment resulting solely from the gross negligence or willful
misconduct of the Issuing Lender; or

(d)           any
other circumstances or happening whatsoever, whether or not similar to any of
the foregoing, except circumstances or happenings resulting from the gross negligence
or willful misconduct of the Issuing Lender.

3.7.          Letter
of Credit Application.  To the extent
not inconsistent with the terms of this Agreement (in which case the provisions
of this Agreement shall prevail), provisions of any Letter of Credit
Application related to any Letter of Credit are supplemental to, and not in
derogation of, any rights and remedies of the Issuing Lender and the Participating
Lenders under this Section 3 and applicable law.  The Borrower acknowledges and agrees that all
rights of the Issuing Lender under any Letter of Credit Application shall inure
to the benefit of each Participating Lender to the extent of its Revolving
Credit Commitment Percentage as fully as if such Participating Lender was a
party to such Letter of Credit Application.

3.8.          Purpose
of Letters of Credit.  Each Standby
Letter of Credit shall be used by the Borrower solely (a) to provide credit
support for borrowings by the Borrower or its Subsidiaries, or (b) for other
working capital purposes of the Borrower and Subsidiaries in the ordinary
course of business.  Each Commercial
Letter of Credit will be used by the Borrower and Subsidiaries solely to
provide the primary means of payment in connection with the purchase of goods
or services by the Borrower and its Subsidiaries in the ordinary course of business.

SECTION 4.  GENERAL PROVISIONS

4.1.          Interest
Rates and Payment Dates.

(a)           Each
Eurodollar Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per  annum equal to the Eurodollar
Rate determined for such Interest Period plus the Applicable Margin.

 

 30
 

 

 

(b)           Each
ABR Loan shall bear interest for each day on which it is outstanding at a rate per
annum equal to the Alternate Base Rate for such day plus the Applicable
Margin.

(c)           If
all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such amount shall bear interest for each day after
the due date until such amount is paid in full at a rate per  annum
equal to (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection plus
2% per  annum or (y) in the case of any such overdue interest, fee
or other amount, the rate described in paragraph (b) of this subsection plus 2%
per  annum.  If any Event of
Default described in subsections 9(c) (with respect to subsection 8.1 only),
(f), (h) or (j) shall occur and be continuing, and the Majority Lenders shall
give notice to the Borrower that this sentence shall apply, then, until such
Event of Default shall be cured or waived or such notice shall be withdrawn,
the outstanding principal amount of all Loans shall bear interest at 2% per
annum above the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this subsection 4.1 (other than the first
sentence of this paragraph (c)).

(d)           Interest
shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to paragraph (c) of this subsection 4.1 shall be
payable from time to time on demand.

4.2.          Conversion
and Continuation Options.

(a)           The
Borrower may elect from time to time to convert outstanding Eurodollar Loans
(in whole or in part) to ABR Loans by giving the Administrative Agent at least
two Business Days’ prior irrevocable notice of such election, provided
that any such conversion of Eurodollar Loans may only be made on the last day
of an Interest Period with respect thereto. 
The Borrower may elect from time to time to convert outstanding ABR
Loans (in whole or in part) to Eurodollar Loans by giving the Administrative
Agent at least three Business Days’ prior irrevocable notice of such
election.  Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor.  Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.  All or any part of outstanding
Eurodollar Loans and ABR Loans may be converted as provided herein, provided
that (i) no ABR Loan may be converted into a Eurodollar Loan when any
Default or Event of Default has occurred and is continuing and the
Administrative Agent or Lenders holding the majority of the outstanding principal
amount of Loans of such Type have determined that such conversion is not
appropriate, (ii) any such conversion may only be made if, after giving
effect thereto, subsection 4.3 shall not have been violated, and (iii) no
ABR Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Revolving Credit Termination Date.

(b)           Any
Eurodollar Loans may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving notice to
the Administrative Agent of the length of the next Interest Period to be
applicable to such Loans determined

 

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in accordance with the applicable provisions
of the term “Interest Period” set forth in subsection 1.1, provided that
no Eurodollar Loan may be continued as such (i) when any Default or Event
of Default has occurred and is continuing and the Administrative Agent or
Lenders holding the majority of the outstanding principal amount of Loans of
such Class have determined that such continuation is not appropriate,
(ii) if, after giving effect thereto, subsection 4.3 would be contravened
or (iii) after the date that is one month prior to the Revolving Credit
Termination Date; and provided, further, that if the Borrower
shall fail to give such notice or if such continuation is not permitted
pursuant to the preceding proviso, such Eurodollar Loans shall, subject to the
preceding proviso, be automatically continued as such, with the length of the
next Interest Period to be 30 days.  Upon
receipt of any notice pursuant to this subsection 4.2(b), the Administrative
Agent shall promptly notify each Lender thereof.

4.3.          Minimum
Amounts of Tranches.  All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, (i) the aggregate
principal amount of the Eurodollar Loans comprising each Tranche shall be equal
to $5,000,000 or a whole multiple of $5,000,000 in excess thereof and
(ii) there shall not be more than (ten) 10 Tranches at any one time outstanding.

4.4.          Optional
and Mandatory Prepayments.

(a)           The
Borrower may at any time and from time to time prepay Revolving Credit Loans,
in whole or in part, upon at least three Business Days’ irrevocable notice to
the Administrative Agent (in the case of Eurodollar Loans) and at least one
Business Day’s irrevocable notice to the Administrative Agent (in the case of
ABR Loans), specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, in
each case if a combination thereof, the amount allocable to each.  Upon the receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein.  Partial prepayments of the
Loans shall be in an aggregate principal amount of $2,500,000 or a whole
multiple of $1,000,000 in excess thereof.

(b)           If,
at any time during the Revolving Credit Commitment Period, for any reason the
Aggregate Revolving Credit Outstanding of all Lenders exceeds the Aggregate Revolving
Credit Commitments then in effect, or the Aggregate Revolving Credit
Outstanding of any Lender exceeds the Revolving Credit Commitment of such
Lender then in effect, the Borrower shall, without notice or demand,
immediately prepay the Revolving Credit Loans in an aggregate principal amount
at least sufficient to eliminate any such excess.

(c)           Each
prepayment of Loans pursuant to this subsection 4.4 shall be accompanied by
accrued and unpaid interest on the amount prepaid to the date of prepayment and
any amounts payable under subsection 4.11 or 4.15 in connection with such
prepayment.

 

 32
 

 

 

(d)           The
Revolving Credit Loans shall be prepaid and the Letters of Credit shall be cash
collateralized or replaced to the extent such Extensions of Credit at any time
exceed the amount of the Revolving Credit Commitments.

4.5.          Commitment
Fees; Other Fees.

(a)           The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender (other than any Lender which has defaulted in its obligation to fund a
Loan under this Agreement), a commitment fee for the period from and including
the Closing Date to but excluding the Revolving Credit Termination Date (or
such earlier date on which the Revolving Credit Commitments shall terminate as
provided herein) computed at the rate per  annum set forth in the
definition of “Applicable Margin” under the heading “Commitment Fee” on the
average daily Available Revolving Credit Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last
Business Day of each calendar quarter and on the Revolving Credit Termination
Date or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first such date to occur after
the date hereof.

(b)           The
Borrower shall pay (without duplication of any other fee payable under this
subsection 4.5) to each Agent any and all fees separately agreed to by the
Borrower and such Agents.

(c)           In
lieu of any letter of credit commissions and fees provided for in any Letter of
Credit Application relating to a Standby Letter of Credit (other than any
standard issuance, amendment and negotiation fees), the Borrower will pay the
Administrative Agent, (i) for the account of the Issuing Lender, a
non-refundable fronting fee equal to 0.25 of 1% per  annum and
(ii) for the account of the Issuing Lender (with respect to its
Participating Interest) and the Participating Lenders, a non-refundable Standby
Letter of Credit fee equal to the Applicable Margin in respect of Eurodollar
Revolving Credit Loans, in each case on the amount available to be drawn under
such Standby Letter of Credit.  Such fees
shall be payable quarterly in arrears on the last Business Day of each calendar
quarter, and shall be calculated on the average daily amount available to be
drawn under the Standby Letters of Credit.

(d)           In
lieu of any letter of credit commissions and fees provided for in any Letter of
Credit Application relating to a Commercial Letter of Credit (other than any
standard issuance, amendment and negotiation fees), the Borrower will pay the
Administrative Agent, (i) for the account of the Issuing Lender, a
non-refundable fronting fee equal to 1/16 of 1% of the amount of such
Commercial Letter of Credit, (ii) for the account of the Issuing Lender
(with respect to its Participating Interest) and the Participating Lenders, a
non-refundable Commercial Letter of Credit fee equal to 1/4 of 1% of the amount
of such Letter of Credit.  Such fees
shall be payable to the Administrative Agent on the date of issuance and shall
be distributed by the Administrative Agent to the Issuing Lender or the Participating
Lenders, as applicable, promptly thereafter and (iii) for the account of
the Administrative Agent, the normal and customary Letter of Credit application
and processing fees.

 

 33

 
  

 

(e)           The Borrower agrees
to pay the Issuing Lender for its own account the customary administration,
amendment, transfer and negotiation fees charged by the Issuing Lender in connection
with its issuance and administration of Letters of Credit.

4.6.          Computation of
Interest and Fees.

(a)           Interest and fees
shall be calculated on the basis of a 360-day year for the actual days elapsed
(including the first day but excluding the last day); provided that
interest calculated at the Alternate Base Rate (based on the Prime Rate
included therein) shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed (including the first
day but excluding the last day).  The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a Eurodollar Rate.  Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate shall become effective as of
the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in the Alternate Base Rate.

(b)           Each determination
of an interest rate by the Administrative Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower and the Lenders
in the absence of manifest error.  The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing in reasonable detail the calculations used by the
Administrative Agent in determining any interest rate pursuant to subsection
4.1.

4.7.          Inability to
Determine Interest Rate.  If prior to the
first day of any Interest Period:

(a)           the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

(b)           the
Administrative Agent has received notice from the Majority Lenders that the
Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Eurodollar Loans during such Interest Period,

the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter.  If such notice
is given (i) any Eurodollar Loans requested to be made on the first day of
such Interest Period shall be made as ABR Loans in U.S. Dollars, (ii) any
Revolving Credit Loans that were to have been converted on the first day of
such Interest Period to or continued as Eurodollar Loans shall be converted to
or continued as ABR Loans and (iii) any outstanding Eurodollar Loans shall
be converted on the last day of such Interest Period to ABR Loans.  Until such notice has been withdrawn by the
Administrative 

 33
 

 
  

Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert ABR Loans
to Eurodollar Loans.

4.8.          Pro Rata
Treatment and Payments.

(a)           (i) Each borrowing
of Revolving Credit Loans by the Borrower from the Lenders hereunder shall be
made pro  rata according to the Revolving Credit Commitment Percentages
of the Lenders in effect on the date of such borrowing.

(ii)           Each
payment by the Borrower on account of any commitment fee or letter of credit
fee hereunder shall be allocated by the Administrative Agent among the Lenders
in accordance with the respective amounts which such Lenders are entitled to
receive pursuant to subsection 4.5.

(iii)          Any
reduction of the Revolving Credit Commitments of the Lenders shall be allocated
by the Administrative Agent among the Lenders pro  rata according
to the Revolving Credit Commitment Percentages of the Lenders on the date of
such reduction.

(iv)          Each
payment by the Borrower on account of principal or interest shall be allocated
by the Administrative Agent pro  rata according to the respective
amounts thereof then due and owing to each Lender.

(v)           All
payments (including prepayments) to be made by the Borrower in respect of
Revolving Credit Loans hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set-off or counterclaim and shall be
made prior to 12:00 Noon, New York City time, on the due date thereof to
the Administrative Agent, for the account of the Lenders entitled thereto, at
the Administrative Agent’s office specified in subsection 11.2, in U.S. Dollars
and in immediately available funds.  The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received.

(vi)          If
any payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, the maturity of such payment
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.  If any
payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next succeeding
Business Day (and, with respect to payments of principal, interest thereon
shall be payable at the then applicable rate during such extension) unless the
result of such extension would be to extend such payment into another calendar
month, in which event such payment shall be made on the immediately preceding
Business Day.

(b)           Unless the
Administrative Agent shall have been notified in writing by any Lender prior to
a Borrowing Date that such Lender will not make the amount that would

 34
 

 
  

constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount.  If such amount is not made
available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on demand,
such amount with interest thereon at a rate per  annum equal to
the daily average Federal Funds Effective Rate for the period until such Lender
makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is
not made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Borrower shall repay such Lender’s
share of such borrowing (together with interest thereon from the date such
amount was made available to the Borrower at the rate per  annum
applicable to ABR Loans hereunder to the Administrative Agent not later than
three Business Days after receipt of written notice from the Administrative
Agent specifying such Lender’s share of such borrowing that was not made
available to such Administrative Agent, and the Borrower shall have the right
to pursue any remedies against such Lender for its failure to make its portion
of such borrowing available.

(c)           Unless the
Administrative Agent shall have been notified in writing by the Borrower prior
to a date on which a payment is due from the Borrower hereunder that the Borrower
will not make such payment available to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such amount
available to the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Lenders a
corresponding amount.  If such amount is
not made available to the Administrative Agent by the required time on the due
date therefor, each applicable Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate per  annum
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative
Agent.  A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.

4.9.          Illegality.  Notwithstanding any other provision herein,
if the adoption of or any change in any Legal Requirement or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith be cancelled
until such time as it shall no longer be unlawful for such Lender to make or
maintain the affected Loans and (b) such Lender’s Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on
the respective last days of the then current Interest Periods with respect to
such Eurodollar Loans or within such earlier period as may be required by
law.  If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of

 35
 

 
  

the then current Interest Period with respect thereto, the Borrower
shall pay to such Lender such amounts, if any, as may be required pursuant to
subsection 4.11.

4.10.        Increased Costs.

(a)           In the event that
the adoption of or any change in any Legal Requirement (or in the
interpretation or application thereof) or compliance by any Lender with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority:

(i)      does or shall subject any Lender to any
tax of any kind whatsoever with respect to this Agreement, any Note, any Loans
made by it or any Letter of Credit, or change the basis of taxation of payments
to such Lender of principal, fees, interest or any other amount payable
hereunder (except for (i) changes in the rate  of tax on the overall net income or profits
of such Lender, (ii) any tax to the extent that the Borrower is or would
be required to pay an additional amount with respect to such tax under subsection 4.12
or (iii) any tax with respect to which the Borrower would not be required
to pay an additional amount under subsection 4.12 because payment of such
additional amount with respect to such tax would be specifically excluded
thereunder);

(ii)     does or shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Lender which are not otherwise included in the
determination of the Eurodollar Rate; or

(iii)    does or shall impose on such Lender any
other condition affecting this Agreement or the Loans made by any Lender or any
Letter of Credit participation therein;

and the result of any of the foregoing is to increase
the cost to such Lender, by any amount which such Lender deems to be material,
of making, renewing, maintaining or participating in advances or extensions of
credit or to reduce any amount receivable hereunder, in each case in respect of
its Loans or Letters of Credit which it issues or in which it holds Participating
Interests, then, in any such case, the Borrower shall promptly pay such Lender,
upon receipt of its demand setting forth in reasonable detail, any additional
amounts necessary to compensate such Lender for such additional cost or reduced
amount receivable, together with interest on each such amount from the date two
Business Days after the date demanded until payment in full thereof at the
Alternate Base Rate.  A certificate as to
any additional amounts payable pursuant to the foregoing sentence submitted by
such Lender, through the Administrative Agent, to the Borrower shall be conclusive
in the absence of manifest error.  This
covenant shall survive the termination of this Agreement and payment of all
amounts outstanding hereunder for a period of one year.

(b)           In the event that
any Lender shall have determined that the adoption of any law, rule, regulation
or guideline regarding capital adequacy (or any change therein or in the

 36
 

 
  

interpretation or application
thereof) or compliance by any Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority, including,
without limitation, the issuance of any final rule, regulation or guideline,
does or shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder to
a level below that which such Lender or such corporation could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender’s or such corporation’s policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender or such
corporation for such reduction.  A
certificate as to any additional amounts payable pursuant to this subsection
4.10(b), submitted by a Lender to the Borrower, shall be conclusive in the absence
of manifest error.  The provisions of
this subsection 4.10(b) shall survive the termination of this Agreement and the
payment of all amounts outstanding hereunder.

(c)           Any request by any
Lender for compensation under this subsection 4.10 shall be accompanied by a
certificate of a duly authorized officer of such Lender setting for such
information and calculations supporting such request as such Lender shall
customarily provide in similar situations.

(d)           Failure or delay on
the part of any Lender to demand compensation pursuant to this subsection 4.10
shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this subsection 4.10 for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the circumstance giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor; provided,
further, that, if the circumstance giving rise to such increased costs
or reductions is retroactive in effect, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.

4.11.        Indemnity.  Without duplication of the provisions of
subsection 4.15, the Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in payment when due of
the principal amount of or interest on any Loans of such Lender, (b) default by
the Borrower in making a borrowing, continuation or conversion after the
Borrower has given a notice of borrowing, a notice of continuation or a notice
of conversion in accordance with this Agreement, (c) default by the Borrower in
making any prepayment after the Borrower has given a notice in accordance with
this Agreement or (d) the making of a prepayment, continuation or conversion of
a Eurodollar Loan on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, in each case, any such loss or
expense arising from the reemployment of funds obtained by it to maintain its
Eurodollar Loans hereunder or from fees payable to terminate the deposits from
which such funds were obtained, but

 37
 

 
  

excluding, in each case, lost profit. 
A certificate as to any amounts payable pursuant to this subsection
4.11, submitted by a Lender to the Borrower, shall be conclusive in the absence
of manifest error.  This covenant shall
survive termination of this Agreement and payment of all amounts outstanding
hereunder.

4.12.        Taxes.

(a)           Any and all payments
by or on account of any obligation of the Borrower hereunder shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this subsection) the Administrative
Agent, Lender or Issuing Lender (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

(b)           In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

(c)           The Borrower shall
indemnify the Administrative Agent, each Lender and the Issuing Lender, within
10 days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent, such Lender or the
Issuing Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this subsection) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as
to the amount of such payment or liability delivered to the Borrower by a
Lender or the Issuing Lender, or by the Administrative Agent on its own behalf
or on behalf of a Lender or the Issuing Lender, shall be conclusive absent
manifest error.

(d)           As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e)           Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without with-

 38
 

 
  

holding or at a reduced rate. 
Without limiting the foregoing, at the request of the Borrower each
Foreign Lender, on or prior to the date on which such Foreign Lender becomes a
Lender hereunder (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent), shall deliver to the Borrower and the
Administrative Agent either (i) two duly completed copies of either
(x) Internal Revenue Service Form W-8BEN claiming eligibility of the
Foreign Lender for benefits of an income tax treaty to which the United States
is a party, or (y) Internal Revenue Service Form W-8ECI, or in either case an
applicable successor form; (ii) in the case of a Foreign Lender that is not
legally entitled to deliver any form listed in clause (e)(i), (x) a certificate
to the effect that such Foreign Lender is not (A) a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of
the Code, or (C) a controlled foreign corporation receiving interest from
a related person within the meaning of Section 881(c)(3)(C) of the Code
and (y) two duly completed copies of Internal Revenue Service Form W-8BEN
or applicable successor form or (iii) any other form prescribed by law
reasonably satisfactory to the Borrower and the Administrative Agent entitling
each Lender to a complete exemption from or reduction in withholding tax.

(f)            If the Administrative Agent or a Lender
determines, in its reasonable discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
subsection 4.12, it shall pay over such refund to the Borrower as determined in
good faith by the Administrative Agent or such Lender in its sole discretion
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this subsection 4.12 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided
that the Borrower, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to the Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
the Administrative Agent or such Lender in the event the Administrative Agent
or such Lender is required to repay such refund to such Governmental Authority.
This subsection 4.12 shall not be construed to require the Administrative Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

4.13.        Use of Proceeds.  The proceeds of the Loans shall be used to
fund the Refinancing and the other Transactions on the Closing Date and
thereafter for the general working capital and general corporate purposes of
the Borrower and its Subsidiaries, or for any Acquisitions consummated after
the Closing Date.  The Letters of Credit
shall be used for the purposes set forth in subsection 3.8.

 39
 

 
  

4.14.        Change in Lending Office; Replacement
of Lender.

(a)           Each Lender agrees
that if it makes any demand for payment under subsection 4.10 or 4.12, or
if any adoption or change of the type described in subsection 4.9 shall
occur with respect to it, it will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates if such
designation or assignment would reduce or obviate the need for the Borrower to
make payments under subsection 4.10 or 4.12, or would eliminate or reduce
the effect of any adoption or change described in subsection 4.9.

(b)           If any Lender
requests any payment under subsection 4.10 or 4.12, the Borrower shall
have the right to replace such Lender with one or more replacement lenders,
each of which shall be reasonably acceptable to the Administrative Agent; provided
that (i) the Borrower shall repay (or the replacement lender shall
purchase) all Loans and other amounts owing hereunder to such replaced Lender
prior to the date of replacement, (ii) until such time as such replacement
shall be consummated, the Borrower shall pay additional amounts (if any)
required pursuant to subsection 4.10 or 4.12 for the period prior to
replacement and (iii) any such replacement shall not be deemed to be a
waiver of any rights which the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.

4.15.        Break Funding
Payments.  In the event of
(a) the payment of any principal of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto (including, without
limitation, as a result of an Event of Default), (b) the conversion of any
Eurodollar other than on the last day of an Interest Period applicable thereto,
or (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan
on the date specified in any notice delivered pursuant hereto, then, in any
such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event.  Such
loss, cost or expense to any Lender shall be the amount determined by such
Lender to be the excess, if any, of (i) the amount of interest that would
have accrued on the principal amount of such Loan had such event not occurred,
at the Eurodollar Rate that would have been applicable to such Loan (excluding,
for the avoidance of doubt, any Applicable Margin), for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Loan) over (ii) the
amount of interest that would accrue on such principal amount for such period
at the interest rate such Lender would bid were it to bid, at the commencement
of such period, for dollar deposits of a comparable amount and period from
other banks in the eurodollar market.  A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this subsection 4.15 shall be delivered to
the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

 40
 

 
  

SECTION 5.  REPRESENTATIONS AND WARRANTIES

To induce the Lenders to enter into this Agreement and
to make the Loans, and to induce the Issuing Lender to issue Letters of Credit,
the Borrower hereby represents and warrants to each Agent and to each Lender
that:

5.1.          Financial
Condition; Accuracy of Public Information.

(a)           During the period
from September 30, 2005 to and including the date hereof, there has been
no sale, transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase
or other acquisition of any business or property (including any capital stock
of any other Person) material in relation to the consolidated financial
condition of the Borrower and its consolidated Subsidiaries at September 30,
2005, other than (i) the closure of the “Vitamin World” stores, (ii) the sale
of inventory in the ordinary course of business and (iii) as disclosed in its
filing with the U.S. Securities and Exchange Commission pursuant to the
Exchange Act on Form 8-K made on October 3, 2006.

(b)           The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at June 30, 2006 prepared on a pro forma basis giving effect to the Transactions,
(the “Pro Forma Balance Sheet”), copies of which have heretofore been
furnished to each Lender, have been prepared in good faith based upon
assumptions believed by the Borrower to be reasonable.

(c)           The financial
projections of the Borrower and its Subsidiaries described in subsection
6.1(l), copies of which have been furnished to each Lender, have been prepared
in good faith based upon assumptions believed by the Borrower to be reasonable.

5.2.          No Change.  Since September 30, 2005, there has been no
development or event which has had or would reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Borrower’s filing with the
U.S. Securities and Exchange Commission pursuant to the Exchange Act on Form
10-Q made on August 8, 2006.

5.3.          Corporate
Existence; Compliance with Law.  Each
Loan Party and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the power and authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign entity and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification except to the extent that the failure to be so qualified in any
such jurisdiction could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 41
 

 
  

5.4.          Corporate Power; Authorization;
Enforceable Obligations.  Each Loan
Party has the power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow and obtain
other extensions of credit hereunder and has taken all necessary action to
authorize the borrowings and other extensions of credit hereunder on the terms
and conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party.  The Borrower has the power and authority, and
the legal right, to make, deliver and perform the Transactions.  No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required as a condition precedent to the borrowings or other
extensions of credit hereunder or the execution, delivery, performance,
validity or enforceability of the Loan Documents.  This Agreement has been, and each other Loan
Document to which it is a party will be, duly executed and delivered on behalf
of each Loan Party that is a party hereto or thereto.  This Agreement constitutes, and each other
Loan Document to which it is a party constitutes, a legal, valid and binding
obligation of each Loan Party that is a party hereto or thereto, enforceable
against such Loan Party in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.

5.5.          No Legal Bar.  The execution, delivery and performance by
the Borrower of the Loan Documents, the borrowings and other extensions of
credit hereunder and the use of the proceeds thereof and the consummation of
the Transactions will not (a) violate any Requirement of Law or Contractual
Obligation of any Loan Party or of any of its Subsidiaries except (other than
with respect to Security Documents or the organizational and governing documents
of such Loan Party or Subsidiaries), as would not, in the aggregate, reasonably
be expected to result in a Material Adverse Effect, or (b) result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation (other than those Liens created by the Loan Documents).

5.6.          No Material
Litigation.  Except as disclosed in
filings with the Securities and Exchange Commission under the headings “Litigation”
or “Legal Proceedings” or similar headings, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Loan Parties, threatened by or against any Loan Party
or any of its Subsidiaries or against any of its or their respective properties
or revenues (a) with respect to any of the Loan Documents and the other
transactions contemplated hereby or thereby, or (b) which would reasonably be
expected to have a Material Adverse Effect.

5.7.          No Default.  No Loan Party or any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse
Effect.  No Default or Event of Default
(under and as defined in the indenture governing the Existing Notes) has
occurred and is continuing.  No Default
or Event of Default has occurred and is continuing.

 

 42

5.8.          Ownership of
Property; Liens.  Each of the Loan Parties and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, except to the extent that the failure to
have such title would not have a Material Adverse Effect.  None of such property is subject to any Lien
except as permitted by subsection 8.3. 
With respect to real property or interests in real property, as of the
Closing Date, the Borrower or its Subsidiaries have (i) fee title to all
of the real property listed on Schedule 5.8 under the heading “Fee Properties”
(each, a “Fee Property”), and (ii) good and valid title to the
leasehold estates in all of the real property leased by it and listed on Schedule
5.8 under the heading “Leased Properties” (each, a “Leased Property”),
in each case free and clear of all mortgages, liens, security interests, easements,
covenants, rights-of-way and other similar restrictions of any nature
whatsoever, except (A) Liens permitted pursuant to subsection 8.3,
(B) as to Leased Property, the terms and provisions of the respective
lease therefor and any matters affecting the fee title and any estate superior
to the leasehold estate related thereto, and (C) title or lease defects,
or leases or subleases granted to others, which are not material to the Fee
Properties or the Leased Properties, as the case may be, taken as a whole.  The Fee Properties constitute, as of the
Closing Date, substantially all of the real property owned in fee by the
Borrower and its Subsidiaries.

5.9.          Intellectual
Property.  Each Loan Party, and each of its Subsidiaries, owns,
or is licensed to use or otherwise has the right to use, all trademarks, trade
names, copyrights, patents, domain names, trade secrets and other proprietary
information that it uses in the conduct of its business as currently conducted
except for those for which the failure to own or license which would not
reasonably be expected to have a Material Adverse Effect (the “Intellectual
Property”).  To the knowledge of each
Loan Party, no claim has been asserted and is pending or is threatened to be
asserted by any Person challenging or questioning the use of any material Intellectual
Property or the validity or enforceability of any such Intellectual Property
which would reasonably be expected to have a Material Adverse Effect, nor does
any Loan Party know of any valid basis for any such claim.  The use of such Intellectual Property by each
Loan Party and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.

5.10.        Taxes.  Except
as disclosed in Schedule 5.10, each Loan Party, and each of its
Subsidiaries, has filed or caused to be filed all material tax returns which
are required to be filed (and each such tax return is true and correct in all
material respects) and has paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of such
Loan Party or its Subsidiaries, as the case may be), and no tax Lien has been
filed, and, to the knowledge of the Loan Parties, no claim is being asserted,
with respect to any such tax, fee or other charge, in each case other than to
the 

 43
 

extent that any such failure to act or existence of claim would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.

5.11.        Federal
Regulations.  No part of the proceeds
of any Loans, and no Letter of Credit, will be used for “purchasing” or “carrying”
any “margin stock” within the respective meanings of each of the quoted terms
under Regulation U of the Board as now and from time to time hereafter in
effect.  If requested by any Lender or
the Administrative Agent, the Borrower will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in
said Regulation U, as the case may be.

5.12         ERISA.

(i)      No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably expected to occur,
would reasonably be expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of such Plan by more than $10,000,000, and
the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of
the assets of all such underfunded Plans by more than $10,000,000.

(ii)     Except as would not
reasonably be expected to result in a Material Adverse Effect, (i) each Foreign
Plan has been maintained in compliance with its terms and with the requirements
of any and all applicable laws, statutes, rules, regulations and orders and has
been maintained, where required, in good standing with applicable regulatory
authorities, and (ii) neither the Borrower nor any Subsidiary have incurred any
obligation in connection with the termination of or withdrawal from any Foreign
Plan.

5.13.        Investment Company
Act; Other Regulations.  The Borrower
is not an “investment company,” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as
amended.  The Borrower is not subject to
regulation under any Federal or State statute or regulation (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.

5.14.        Subsidiaries.  Schedule II sets forth all
Subsidiaries of the Borrower as of the Closing Date.

5.15.        Environmental
Matters.  Except to the extent that
all of the following, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect:

 44
 

 

(a)           The
facilities and properties owned, leased or operated by each Loan Party or any
of its Subsidiaries (the “Properties”) do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute a violation
of, or (ii) could reasonably be expected to give rise to liability under,
any Environmental Law.

(b)           The
Properties and all operations at the Properties are in compliance in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any Environmental
Law with respect to the Properties or the business operated by any Loan Party
or any of its Subsidiaries (the “Business”) which could materially
interfere with the continued operation of the Properties.

(c)           Neither
any Loan Party nor any of its Subsidiaries has received any written notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding any Environmental Laws with regard to any of the Properties or the
Business, nor does any Loan Party have knowledge that any such notice will be
received or is being threatened.

(d)           No
Hazardous Materials have been transported or disposed of from the Properties in
violation of, or in a manner or to a location which could reasonably be expected
to give rise to liability under, any Environmental Law, nor have any Hazardous
Materials been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental Law.

(e)           No
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of any Loan Party, threatened, under any Environmental Law to
which any Loan Party or any Subsidiary thereof is or will be named as a party
with respect to the Properties or the Business, nor are there any decrees,
orders or agreements which impose obligations, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.

(f)            There
has been no release or threat of release of Hazardous Materials at, under or
from the Properties, or arising from or related to the operations of any Loan
Party or any Subsidiary thereof in connection with the Properties or otherwise
in connection with the Business, in violation of or in amounts or in a manner
that could reasonably be expected to give rise to liability under Environmental
Laws.

5.16.        Solvency.  Each Loan Party is, and after giving effect
to the consummation of any Acquisition and to the incurrence of all
Indebtedness and obligations being incurred in connection herewith and
therewith will be, Solvent.

5.17.        Security Documents.  The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid 

 45
 

and enforceable security interest in the Collateral described, and as defined,
therein and proceeds thereof, and, after taking the actions described in Schedule 3
thereto, the Liens created under the Guarantee and Collateral Agreement shall
at all times constitute fully perfected Liens on, and security interests in,
all right, title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement) intended to be secured thereby, in each case prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by subsection 8.3.

5.18.        Insurance.  Schedule 5.18 sets forth a true,
complete and correct summary description of all material insurance maintained
by each Loan Party.  Such insurance is in
full force and effect and all premiums have been duly paid.  Each Loan Party has insurance through insurers
it reasonably believes to be of recognized financial responsibility covering
its properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks as it reasonably believes are adequate to protect it and its
Subsidiaries and their respective businesses; and neither the Borrower nor any
of its Subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance.

5.19.        Affiliate
Transactions.  All Contractual
Obligations between the Borrower and any of its Subsidiaries on the one hand,
and their respective Affiliates, on the other hand, are disclosed in the Borrower’s
most recent proxy statement filed on Form 14A with the Securities and
Exchange Commission to the extent required under its regulations.

5.20.        Accuracy of
Information.  No statement or
information contained in this Agreement, any other Loan Document or any other
document, certificate or statement furnished in writing to the Administrative
Agent or the Lenders or any of them (including, without limitation, filings
made by the Borrower under the Exchange Act and the regulations promulgated
thereunder), by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents, taken
as a whole together with all other information provided in this Agreement, the
other Loan Documents or any other such document, certificate or statement,
contained as of the date such statement, information, document or certificate
was so furnished any untrue statement of any fact material to the interests of
the Administrative Agent or any Lender, or omitted to state a fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading in any respect
material to the interests of the Administrative Agent or any Lender; provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed by the Borrower to be reasonable at the time.  There is no fact known to any Loan Party that
would reasonably be expected to have a Material Adverse Effect that has not
been expressly disclosed herein, in the other Loan Documents, in the Borrower’s
filing with the U.S. Securities and Exchange Commission pursuant to the
Exchange Act on Form 10-Q made on August 8, 2006, or in such other documents,
certificates and statements furnished to the Administrative Agent and the

 46
 

Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.

5.21.        OFAC.  Neither any Loan Party, nor any Subsidiary of
any Loan Party, nor any Affiliate of any Loan Party, is (a) named on the list
of Specially Designated Nationals or Blocked Persons maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control available at
http://www.treas.gov/offices/eotffe/ofac/sdn/index.html, or (b)(i) an agency of
the government of a country, (ii) an organization controlled by a country, or
(iii) a Person resident in a country that is subject to a sanctions program
identified on the list maintained by the U.S. Department of the Treasury’s
Office of Foreign Assets Control and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program maybe be applicable to such
agency, organization or Person, and the proceeds from the credit extensions
made pursuant to this Agreement will not be used to fund any operations in,
finance any investments or activities in, or make any payments to, any such
country or Person.

SECTION 6.  CONDITIONS PRECEDENT

6.1           Conditions to
Closing Date.  The Closing Date shall
occur on the date of satisfaction of the following conditions precedent:

(a)           Loan
Documents.  The Administrative Agent
shall have received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart or a conformed copy for
each Lender, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of each party thereto, with a counterpart
or a conformed copy for each Lender and (iii) signed Revolving Notes for
the account of each Lender that shall so request, executed and delivered by a
duly authorized officer of the Borrower.

(b)           Refinancing.  The Refinancing shall have been consummated
in full to the satisfaction of the Lenders with all liens in favor of the
existing lenders being unconditionally released; the Administrative Agent shall
have received a “pay-off” letter in form and substance reasonably satisfactory
to the Administrative Agent with respect to all debt being refinanced in the
Refinancing; and the Administrative Agent shall have received from any person
holding any Lien securing any such debt, such Uniform Commercial Code
termination statements, mortgage releases, releases of assignments of leases
and rents, releases of security interests in Intellectual Property and other
instruments, in each case in proper form for recording, as the Administrative
Agent shall have reasonably requested to release and terminate of record the
Liens securing such debt.

(c)           Closing
Certificate.  The Administrative
Agent shall have received, with a copy for each Lender, a certificate of the
Borrower and the other Loan Parties, dated the Closing Date, substantially in
the form attached hereto as Exhibit F, with appropriate insertions
and attachments satisfactory in form and substance to the Administrative Agent,

 47
 

executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the Borrower or the
relevant Loan Party.

(d)           Corporate
Proceedings of the Borrower.  The
Administrative Agent shall have received, with a counterpart for each Lender, a
copy of the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower authorizing
(i) the execution, delivery and performance of this Agreement,
(ii) the borrowings contemplated hereunder, and (iii) the
Transactions, certified by the Secretary or an Assistant Secretary of the
Borrower as of the Closing Date, which certificate shall be in form and
substance satisfactory to the Administrative Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or rescinded.

(e)           Borrower
Incumbency Certificate.  The
Administrative Agent shall have received, with a counterpart for each Lender, a
certificate of the Borrower, dated the Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any Loan Document
satisfactory in form and substance to the Administrative Agent, executed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Borrower.

(f)            Corporate
Proceedings of Subsidiaries.  The
Administrative Agent shall have received, with a counterpart for each Lender, a
copy of the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of each Subsidiary of the
Borrower which is a party to a Loan Document authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, certified
by the Secretary or an Assistant Secretary of each such Subsidiary as of the
Closing Date, which certificate shall be in form and substance satisfactory to
the Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.

(g)           Subsidiary
Incumbency Certificates.  The
Administrative Agent shall have received, with a counterpart for each Lender, a
certificate of each Domestic Subsidiary of the Borrower which is a party to a
Loan Document, dated the Closing Date, as to the incumbency and signature of
the officers of such Subsidiary, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of each such Subsidiary.

(h)           Corporate
Documents.  The Administrative Agent
shall have received, with a counterpart for each Lender, true and complete
copies of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.

(i)            Fees.  The Arranger, each Agent and the Lenders
shall have received all invoiced fees, costs, expenses and compensation
required to be paid on the Closing Date (including reasonable fees,
disbursements and other charges of legal counsel to the Arranger and the
Lenders and expenses of appraisers, consultants and other advisors to the Ar-

 48
 

ranger and the Lenders and who have been
approved by the Borrower).

(j)            Legal
Opinions.  The Administrative Agent
shall have received, with a counterpart for each Lender, (i) the executed
legal opinion of Milbank, Tweed, Hadley & McCloy LLP, special counsel to
the Borrower and the other Loan Parties, substantially in the form attached
hereto as Exhibit E-1 and (ii) the executed legal opinion of
Irene Fisher, General Counsel of the Borrower and the other Loan Parties,
substantially in the form attached hereto as Exhibit E-2.

(k)           Financial
Statements.  The Administrative Agent
shall have received, with a copy for each Lender, and each Lender shall have
reviewed, and shall be satisfied with the financial statements set forth in
subsection 5.1(b).  The Pro Forma Balance
Sheet shall be consistent in all material respects with the sources and uses
described in the Arrangement Letter and the financial projections provided to
the Lenders described in paragraph (l) below.

(l)            Projections.  The Administrative Agent shall have received,
with a copy for the Arranger, projected balance sheets and related statements
of income and cash flows (including any and all supporting schedules and
assumptions) of the Borrower and its Subsidiaries after giving effect to the
Transactions on an annual basis for three years, commencing with the fiscal
year ending September 30, 2006.

(m)          Actions
to Perfect Liens.  The Administrative
Agent shall have received evidence in form and substance satisfactory to it
that all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on form
UCC-1 necessary or, in the opinion of the Administrative Agent, desirable
to perfect the Liens created by the Security Documents shall have been completed.

(n)           Lien
Searches.  The Administrative Agent
shall have received the results of a recent search by a Person satisfactory to
the Administrative Agent of the Uniform Commercial Code filings which may have
been filed with respect to personal property of each Loan Party and each
patent, trademark or copyright recorded with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, and such
search shall reveal no material liens on any of the assets of such Loan Party
except for liens permitted by the Loan Documents.

(o)           Consents,
Licenses and Approvals.  All
governmental and material third party approvals necessary in connection with
the execution, delivery and performance of the Loan Documents shall have been
obtained and be in full force and effect.

(p)           Designated
Senior Indebtedness.  (i) The
Indebtedness under this Agreement shall be designated by the Borrower as “Designated
Senior Indebtedness” pursuant to, and as defined under, the Indenture, dated as
of September 23, 2005, among the Bor-

 49
 

rower, as issuer, and The Bank of New York,
as trustee, relating to the Existing Notes (the “Existing Notes Indenture”),
and (ii) the Administrative Agent shall have received a certificate of the
Borrower executed by the Secretary of the Borrower satisfactory to the Administrative
Agent reaffirming such designation.

(q)           Adequate
Working Capital.  The Lenders shall
be satisfied that the Borrower and its Subsidiaries will have adequate working
capital and capital expenditure funds and availability immediately after the
Closing Date after giving effect to the Transactions.

(r)            Litigation.  There shall be no litigation or
administrative proceeding or proposed or pending regulatory changes in law or
regulations applicable to the Borrower or its Subsidiaries, that would
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on the ability of the parties to consummate the Transactions.

(s)           Indebtedness.  Immediately after giving effect to the
Transactions, the Borrower and its Subsidiaries shall not have outstanding
Indebtedness for borrowed money or preferred stock other than (v) Indebtedness
under the Loan Documents, (w) the Existing Notes, (x) Indebtedness
permitted hereunder, (y) other Indebtedness for borrowed money, not to exceed
$30,000,000 and (z) as set forth on Schedule 8.2.

(t)            Documentation.  The Lenders have received such other legal
opinions, corporate documents and other instruments and/or certificates as they
may reasonably request.

(u)           Material
Adverse Change.  Since September 30,
2005, there has been no development or event which has had or would reasonably
be expected to have a Material Adverse Effect, except as disclosed in the
Borrower’s filing with the U.S. Securities and Exchange Commission pursuant to
the Exchange Act on Form 10-Q made on August 8, 2006.

(v)           Execution
by Lenders.  This Agreement shall
have been executed and delivered by each Lender hereunder.

6.2.          Conditions to
Each Extension of Credit.  The
agreement of each Lender to make any Extension of Credit (including, without limitation,
pursuant to subsection 2.4(b)) requested to be made by it on any date
(including, without limitation, the Closing Date), is subject to the receipt of
a notice of request for a Revolving Credit Loan or a Swing Line Loan, as applicable,
and the satisfaction of the following conditions precedent as of the date such
Extension of Credit is requested to be made:

(a)           Representations
and Warranties.  Each of the
representations and warranties made by each of the Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on and
as of such date as if made on and as of such

 50
 

date, other than any such representations and
warranties that, by their terms, refer to a specific date other than such date,
in which case as of such specific date.

(b)           No
Default.  No Default or Event of
Default shall have occurred and be continuing on such date or immediately after
giving effect to the Extension of Credit requested to be made on such date.

Each request by the Borrower for an Extension of
Credit to be made to the Borrower hereunder shall constitute a representation
and warranty by the Borrower as of the date of such Extension of Credit that
the conditions contained in this subsection 6.2 have been satisfied.

SECTION 7.  AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the
Commitments (or any of them) remain in effect, any Loan or Reimbursement Obligation
remains outstanding and unpaid or any other amount is owing to any Lender or
the Administrative Agent hereunder or under any other Loan Document, the
Borrower shall and shall cause each of its Subsidiaries to:

7.1.          Financial
Statements.  Furnish to each Lender:

(a)           as
soon as available, but in any event within 90 days (or such earlier date on
which the Borrower is required to file a Form 10-K under the Exchange Act)
after the end of each fiscal year of the Borrower, copies of the consolidated
and consolidating balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the figures as of the
end of and for the previous year, reported on without a “going concern” or like
qualification, assumption or exception, or qualification arising out of the
scope of the audit, by PricewaterhouseCoopers LLP or other independent
certified public accountants of nationally recognized standing; and

(b)           as
soon as available, but in any event not later than 45 days (or such earlier
date on which the Borrower is required to file a Form 10-Q under the Exchange
Act) after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated and consolidating balance
sheets of the Borrower and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated and consolidating statements of
income and retained earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the
end of such quarter, setting forth in each case in comparative form the figures
as of the end of and for the corresponding period in the previous year,
certified by a Responsible Officer of the Borrower as being fairly stated in
all material respects (subject to normal year-end audit adjustments).

 51
 

 

All such financial statements shall be complete and
correct in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except that interim statements may exclude detailed
footnote disclosure in accordance with standard practice).  For purposes of this subsection 7.1,
information posted on Intralinks shall be deemed distributed to all Lenders.

7.2.          Certificates;
Other Information.  Furnish to each
Lender:

(a)           concurrently
with the delivery of the financial statements referred to in subsection 7.1(a),
a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;

(b)           concurrently
with the delivery of the financial statements referred to in subsections 7.1(a)
and 7.1(b), a certificate of a Responsible Officer of the Borrower stating
that, to the best of such officer’s knowledge, each Loan Party during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate; and in the case of financial statements referred
to in subsections 7.1(a) and 7.1(b), including calculations and information
demonstrating in reasonable detail compliance with the requirements of subsection
8.1 and determining the Applicable Margins;

(c)           not
later than 90 days following the end of each fiscal year of the Borrower, a
copy of the projections by the Borrower of the operating budget of the Borrower
and its Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer of the Borrower to the
effect that such projections have been prepared on the basis of assumptions
believed by the Borrower to be reasonable at the time and that such officer has
no reason to believe they are incorrect or misleading in any material respect;

(d)           within
five Business Days after the same are filed, copies of all financial statements
and reports which the Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;

(e)           concurrently
with the delivery of the financial statements referred to in subsections 7.1(a)
and 7.1(b), to the extent not included in the financial statements and reports
referred to in subsection 7.2(d), a management narrative report explaining all
significant variances from forecasts, projections and previous results and all
significant current developments in staffing, marketing, sales and operations;
and

 52
 

 

(f)            promptly,
such additional financial and other information as any Lender may from time to
time reasonably request.

Documents
required to be delivered pursuant to Sections 7.1 and 7.2 may be delivered by
posting such documents electronically with notice of such posting to the
Administrative Agent and if so posted, shall be deemed to have been delivered
on the date on which such documents are posted on the Borrower’s behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent).

7.3.          Payment of
Obligations.  Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all its obligations of whatever nature (including taxes),
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.

7.4           Maintenance of
Existence.  Preserve, renew and keep
in full force and effect its corporate existence and take all reasonable action
to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to
subsection 8.5; and comply with all Contractual Obligations and Requirements of
Law except to the extent that failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.

7.5           Maintenance of
Property; Insurance.  Keep all
property material to the conduct of the business of the Borrower and its
Subsidiaries, taken as a whole, in good working order and condition; maintain
with financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to each
Lender, upon written request, full information as to the insurance carried.

7.6.          Inspection of
Property; Books and Records; Discussions. 
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and,
upon prior written notice, permit representatives of any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records during normal business hours and as often as may reasonably be desired
and to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries and, in the presence of an officer of the Borrower,
with its independent certified public accountants.

 

 53

 
  

7.7.          Notices.  Promptly give notice to the Administrative
Agent (who shall promptly notify each Lender) of:

(a)           the
occurrence of any Default or Event of Default;

(b)           any
(i) default or event of default under any Contractual Obligation of the
Borrower or any of its Subsidiaries or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, which in either case, if not cured
or if adversely determined, as the case may be, would reasonably be expected to
have a Material Adverse Effect;

(c)           any
litigation or proceeding (including without limitation any notice of violation,
alleged violation, liability or potential liability under any Environmental
Law)  that is filed or commenced (in each
case after the Closing Date) affecting the Borrower or any of its Subsidiaries
in which the amount claimed by the plaintiff is $5,000,000 or more and not
covered by insurance;

(d)           any
ERISA Event, that alone or together with any other ERISA Events that have
occurred, would reasonably be expected to result in a liability of the Borrower
and its Subsidiaries in an amount exceeding $5,000,000 (as soon as possible and
in any event within 30 days after any Loan Party knows or has reason to know
thereof); and

(e)           any
development or event which has had or would reasonably be expected to have a
Material Adverse Effect.

Each notice pursuant to this subsection shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower proposes to take with respect thereto.

7.8.          Environmental
Laws.

(a)           Comply with, and
ensure compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply in all respects with and maintain, and
ensure that all tenants and subtenants obtain and comply in all respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that
any failures could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect or to result in the payment of a Material Environmental
Amount.

(b)           Conduct and complete
all investigations, studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good 

 

 54
 

 
  

faith by appropriate proceedings and the pendency of such proceedings
could not be reasonably expected to have a Material Adverse Effect.

7.9.          Additional
Subsidiaries; Additional Collateral.

(a)           With respect to any
Domestic Subsidiary created or acquired after the Closing Date by the Borrower,
promptly cause such Subsidiary to become a party to the Guarantee and
Collateral Agreement, deliver to the Administrative Agent the certificates
representing the Capital Stock of such Subsidiary, together with undated stock
powers, executed in blank, securing the Obligations as described in the
Guarantee and Collateral Agreement and covering the types of assets covered by
the Guarantee and Collateral Agreement, take all required actions to perfect
the security interests created by the Guarantee and Collateral Agreement in the
assets of such Subsidiary and if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the preceding matters,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.

(b)           With respect to each
direct Material Foreign Subsidiary of the Borrower or of any Domestic
Subsidiary acquired or formed after the Closing Date or a Foreign Subsidiary
that otherwise becomes a direct Material Foreign Subsidiary after the Closing
Date (or with respect to such other direct Foreign Subsidiaries as, together
with all direct Material Foreign Subsidiaries, constitute 80% or more of the
assets or revenues (computed for the most recent fiscal year) of the Foreign
Subsidiaries, taken as a whole), promptly after the acquisition or formation
thereof or such other Foreign Subsidiary becoming a direct Material Foreign
Subsidiary, execute and deliver and cause each such Foreign Subsidiary to
execute and deliver to the Administrative Agent, in form and substance
reasonably satisfactory to the Administrative Agent, such documents and instruments
(including, without limitation, pledge agreements) and take such action
(including, without limitation, the delivery of stock certificates and
instruments) as the Administrative Agent may reasonably request in order to
grant to the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for the Obligations, a first priority perfected security
interest in 65% of the voting Capital Stock and 100% of the non-voting Capital
Stock of, or equivalent ownership interests in, such direct Foreign Subsidiary,
along with any warrants, options, or other rights to acquire the same, in all
cases to the extent legally permissible and practicable and deliver to the
Administrative Agent such legal opinions as it shall reasonably request with
respect thereto.  For purposes of this
subsection 7.9(b), “direct” means directly held by the Borrower or any Domestic
Subsidiary.

(c)           If requested by the
Administrative Agent, grant in favor of the Administrative Agent, for the
benefit of the Lenders, Liens on any other assets other than real property
(owned or leased) hereafter acquired by the Borrower or any Domestic Subsidiary
and on previously encumbered assets which become unencumbered, to the extent
such Liens are then permissible under applicable law and pursuant to any agreements
to which the Borrower or its Subsidiaries are a party, pursuant to
documentation in form and substance reasonably satisfactory to the Administrative
Agent.

 

 55
 

 
  

(d)           In connection with
any Acquisition, to the extent not otherwise provided for in this subsection
7.9, take all action necessary to assure that security interests and Liens for
the benefit of the Lenders are granted and perfected in all material assets
acquired in such Acquisition (including assets of Subsidiaries acquired in such
Acquisition), subject in each case to Liens permitted under subsection 8.3.

7.10.        Post-Closing
Obligations

(a)           As expeditiously as
possible, but in no event later than 30 days after the Closing Date (which date
may be extended in the sole discretion of the Administrative Agent), execute
and deliver Control Agreements (as defined in the Guarantee and Collateral
Agreement) with respect to the accounts set forth on Schedule 7.10;

(b)           Use commercially
reasonable efforts to execute and deliver as expeditiously as possible to the
Administrative Agent for the benefit of the Lenders a Landlord’s Lien Waiver,
Access Agreement and Consent with respect to each Leased Property set forth on Schedule
5.8;

(c)           As expeditiously as
possible, but in no event later than 15 days after the Closing Date (which date
may be extended in the sole discretion of the Administrative Agent), use
commercially reasonable efforts to deliver to the Administrative Agent for the
benefit of the Lenders an endorsement naming the Administrative Agent as additional
insured under its liability insurance policies;

(d)           As expeditiously as
possible, but in no event later than 60 days after the Closing Date (which date
may be extended in the sole discretion of the Administrative Agent), use
commercially reasonable efforts to deliver to the Administrative Agent for the
benefit of the Lenders evidence of filing of all releases of any liens on the
Patents and Trademarks of any Loan Parties filed by Congress Financial
Corporation (Western) or any of its Affiliates with the United States Patent
and Trademark Office;

(e)           As expeditiously as
possible, but in no event later than 15 days after the Closing Date (which date
may be extended in the sole discretion of the Administrative Agent), deliver to
the Administrative Agent for the benefit of the Lenders an original stock
certificate or certificates, accompanied by an original instrument of transfer
and a stock power undated and endorsed in blank, representing 100% of the
direct or indirect interests of any Loan Party in Arco Pharmaceuticals, Inc.;

(f)            As expeditiously as
possible, but in no event later than 3 Business Days after the Closing Date
(which date may be extended in the sole discretion of the Administrative
Agent), deliver to the Administrative Agent for the benefit of the Lenders an
original stock certificate or certificates, accompanied by an original
instrument of transfer and a stock power undated and endorsed in blank,
representing 100% of the direct or indirect interests of any Loan Party in The
Ester C Company; and

 

 56
 

 
  

(g)           As expeditiously as
possible, but in no event later than 15 days after the Closing Date (which date
may be extended in the sole discretion of the Administrative Agent), deliver to
the Administrative Agent for the benefit of the Lenders a long form and a
bring-down good standing certificate for Vitamin World (VI), Inc. issued by the
office of the Secretary of State of the United States Virgin Islands, or any
other appropriate issuing office in such territory.

SECTION 8.  NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the
Commitments (or any of them) remain in effect, any Loan or Reimbursement Obligation
remains outstanding and unpaid or any other amount is due and payable to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
the Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:

8.1.          Financial
Condition Covenants.

(a)           Maintenance of
Consolidated Interest Coverage Ratio. 
Permit at the end of each fiscal quarter of the Borrower a Consolidated
Interest Coverage Ratio of less than 5.00x.

(b)           Maintenance of
Consolidated Indebtedness to Consolidated EBITDA Ratio.  Permit at any time the ratio of
(i) Consolidated Indebtedness to (ii) Consolidated EBITDA for the four
fiscal quarters most recently ended on or prior to such date, to be greater
than 2.50 to 1.0.

(c)           Maintenance of
Consolidated Senior Indebtedness to Consolidated EBITDA Ratio.  Permit at any time the ratio of
(i) Consolidated Senior Indebtedness to (ii) Consolidated EBITDA for
the four fiscal quarters most recently ended on or prior to such date, to be
greater than 1.50 to 1.0.

8.2.          Limitation on
Indebtedness.  Create, incur, assume
or suffer to exist any Indebtedness, except:

(a)           Indebtedness
of the Borrower or any Subsidiary under this Agreement or any other Loan
Document;

(b)           existing
Indebtedness of the Borrower and its Subsidiaries listed on Schedule 8.2
and any Refinancing Indebtedness in respect thereof;

(c)           Indebtedness
of the Borrower to any Subsidiary of the Borrower and of any Domestic
Subsidiary to the Borrower or to any other Subsidiary of the Borrower, provided
that such indebtedness is evidenced by a promissory note that is pledged to the
Administrative Agent in accordance with the Guarantee and Collateral Agreement;

 

 57
 

 
  

(d)           Indebtedness
under sale and leaseback transactions permitted by subsection 8.12;

(e)           Indebtedness
of the Borrower under Hedge Agreements entered into solely to hedge interest
rate exposure and not for speculative purposes;

(f)            Indebtedness
of the Borrower or any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including obligations
under Financing Leases and any Indebtedness assumed in connection with the acquisition
of any such assets or secured by a Lien on any such assets prior to the acquisition
thereof which Lien was not created in contemplation of such acquisition and on
any extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that
(A) such Indebtedness is incurred prior to or within 120 days after such
acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of Indebtedness permitted by this
paragraph (f), and the aggregate amount of sale-leaseback transactions
permitted under subsection 8.12 theretofore consummated, shall not exceed
$25,000,000 at any time outstanding;

(g)           Indebtedness
of any Person that becomes a Subsidiary after the date hereof; provided
that (A) such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary and (B) the aggregate principal amount of
Indebtedness permitted by this paragraph (g) shall not exceed $10,000,000 at
any time outstanding;

(h)           Indebtedness
of any Foreign Subsidiaries, in addition to Indebtedness permitted by paragraph
(i), in an aggregate amount not in excess of $25,000,000 at any time outstanding;

(i)            Indebtedness
of any Foreign Subsidiary to the Borrower or any other Subsidiary; provided
that (A) the aggregate principal amount of Indebtedness of Holland &
Barrett to the Borrower and the Domestic Subsidiaries, taken together with
guarantees of obligations of Holland & Barrett permitted under subsection
8.4(h) and investments in Holland & Barrett permitted under subsection
8.9(d), shall not exceed $35,000,000 at any time outstanding, and (B) the
aggregate principal amount of Indebtedness of Foreign Subsidiaries other than
Holland & Barrett to the Borrower and the Domestic Subsidiaries, taken
together with guarantees of obligations of Foreign Subsidiaries other than
Holland & Barrett permitted under subsection 8.4(g) and investments in
Foreign Subsidiaries other than Holland & Barrett permitted under
subsection 8.9(d), shall not exceed $20,000,000 at any time outstanding;

(j)            Refinancing
Indebtedness incurred in order to refinance in whole or in part the Obligations;
and

 

 58
 

 
  

(k)           other
unsecured Indebtedness in an aggregate principal amount not exceed $30,000,000
at any time outstanding.

8.3.          Limitation on
Liens.  Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except for:

(a)           Liens
for taxes not yet due or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of such Person in conformity with GAAP (or, in the case
of Foreign Subsidiaries, generally accepted accounting principles in effect
from time to time in their respective jurisdictions of incorporation);

(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good faith by appropriate
proceedings;

(c)           pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation;

(d)           deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

(e)           easements,
zoning restrictions, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which do not secure any monetary
obligations and do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of such Person;

(f)            Liens
(i) existing as of the Closing Date and listed on Schedule 8.3 and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof, and (ii) previously identified in writing
to the Administrative Agent, arrangements for the release of which satisfactory
to the Administrative Agent have been made;

(g)           Liens
securing Indebtedness of the Borrower permitted by subsection 8.2(f) incurred
to finance the acquisition of fixed or capital assets (whether pursuant to a
loan, a Financing Lease or otherwise), provided that (i) such Liens
shall be created substantially simultaneously with the acquisition of such
fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (iii) the
amount of Indebtedness secured thereby is not increased and 

 

 59
 

 
  

(iv) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property at the time it was acquired;

(h)           Liens
on current assets of any Foreign Subsidiary securing Indebtedness of such
Foreign Subsidiary permitted under subsection 8.2(h);

(i)            Liens
on current assets of any Foreign Subsidiary securing Indebtedness of such
Foreign Subsidiary permitted under subsection 8.2(i);

(j)            Liens
(not otherwise permitted hereunder) which secure obligations in aggregate
amount at any time outstanding not exceeding (as to the Borrower and all Subsidiaries),
and on property with an aggregate value not exceeding, $10,000,000;

(k)           Liens
created pursuant to the Security Documents;

(l)            Liens
securing Indebtedness permitted by subsection 8.2(g) to the extent such Lien is
secured at the time that such Person becomes a Subsidiary and was not incurred
in contemplation thereof;

(m)          judgment
Liens in respect of  judgments that do
not, in the aggregate, constitute an Event of Default under clause (j) of
Section 9;

(n)           Liens
on Indebtedness incurred pursuant to the proviso of subsection 8.10(a);

(o)           Liens
in favor of the lender on cash deposited to collateralize the promissory note
dated September 22, 2006 between JPMorgan Chase Bank, N.A., London Branch, as
lender, and Good ‘N’ Natural Limited, as borrower, and guaranteed by NBTY, Inc.
in an amount not to exceed £9,575,000; and

(p)           Liens
(not otherwise permitted hereunder) upon assets which are not subject to the
Lien of the Security Documents which secure obligations in an aggregate amount
at any time outstanding not to exceed $30,000,000.

8.4.          Limitation on
Guarantee Obligations.  Create,
incur, assume or suffer to exist any Guarantee Obligation except:

(a)           (x) Guarantee
Obligations in existence on the date hereof and listed on Schedule 8.4,
(y) Guarantee Obligations in respect of any Refinancing Indebtedness of
the Indebtedness to which such Guarantee Obligations listed on Schedule 8.4
relate and (z) Guarantee Obligations in respect of any Refinancing
Indebtedness of the Existing Notes by Subsidiaries that are party to the
Guarantee and Collateral Agreement so long as such Guarantee Obligations are
subordinated to the obligations of each Subsidiary under 

 

 60
 

 
  

the Guarantee and Collateral Agreement to the
same extent as the Refinancing Indebtedness of the Borrower referred to in this
clause (z) is subordinated to the Obligations;

(b)           Guarantee
Obligations incurred after the date hereof in an aggregate amount not to exceed
$10,000,000 at any one time outstanding;

(c)           Guarantee
Obligations incurred by any Foreign Subsidiary after the date hereof in an
aggregate amount not to exceed $25,000,000 at any one time outstanding;

(d)           guarantees
made in the ordinary course of its business by the Borrower of obligations of
any of its Domestic Subsidiaries, which obligations are otherwise permitted
under this Agreement;

(e)           the
guarantee by the Domestic Subsidiaries under the Guarantee and Collateral
Agreement;

(f)            guarantees
of any Foreign Subsidiary of the obligations of any other Foreign Subsidiary;

(g)           guarantees
by the Borrower of obligations of Foreign Subsidiaries other than Holland &
Barrett; provided that the aggregate amount of such guarantees, taken together
with Indebtedness of Foreign Subsidiaries other than Holland & Barrett
permitted under subsection 8.2(i) and investments in Foreign Subsidiaries other
than Holland & Barrett permitted under subsection 8.9(d), shall not exceed
$20,000,000 at any time outstanding; and

(h)           guarantees
by the Borrower of obligations of Holland & Barrett; provided that
the aggregate amount of such guarantees, taken together with Indebtedness of Holland
& Barrett permitted under subsection 8.2(i) and investments in Holland
& Barrett permitted under subsection 8.9(d), shall not exceed $35,000,000 at
any time outstanding.

8.5.          Limitation on
Fundamental Changes.  Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, except:

(a)           any
Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that if a Domestic Subsidiary is
a party to such transaction, such Domestic Subsidiary shall be the continuing
or surviving corporation);

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(b)           any
wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any
or all of its assets (upon voluntary liquidation or otherwise) to the Borrower
or any other wholly owned Domestic Subsidiary of the Borrower; and

(c)           any
Subsidiary may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and its Subsidiaries, taken as a whole, and is not materially disadvantageous
to the Lenders.

8.6.          Limitation on Sale
of Assets.  Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary’s Capital Stock to any Person other
than the Borrower or any wholly owned Domestic Subsidiary, except:

(a)           the
sale or other disposition of obsolete or worn out property in the ordinary
course of business;

(b)           the
sale of inventory in the ordinary course of business;

(c)           as
permitted by subsection 8.5(b) or (c); and

(d)           the
sale or other disposition of any other property at fair market value for
consideration not in excess of $35,000,000 in the aggregate in any fiscal year.

8.7.          Limitation on
Dividends and Other Restricted Payments. 
Declare or pay any dividend (other than dividends payable solely in its
common stock) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary thereof (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called “Restricted
Payments”) except (a) as permitted by subsections 8.5 or 8.9, (b) any
Subsidiary may pay dividends to the Borrower or any other Subsidiary, (c) the
Borrower or any Subsidiary may make Restricted Payments pursuant to and in
accordance with customary stock option plans or other customary benefit plans
for management or employees of the Borrower and its Subsidiaries, and (d)
notwithstanding anything to the contrary in subsection 8.9, the Borrower may
repurchase, and/or pay dividends in respect of, Capital Stock of the Borrower
in an amount not to exceed $250,000,000 in the aggregate prior to the Revolving
Termination Date.

8.8.          Limitation on
Capital Expenditures.  Make any
Capital Expenditure except for Capital Expenditures by the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $75,000,000 in
the aggregate during any fiscal year of the Borrower; provided, 

 62
 

 
  

however, that (x) if the aggregate amount of Capital
Expenditures made in any fiscal year shall be less than the maximum amount of
Capital Expenditures permitted under this subsection 8.8 for such fiscal year
(before giving effect to any carryover), then an amount of such shortfall not exceeding
50% of such maximum amount may be added to the amount of Capital Expenditures
permitted under this subsection 8.8 for the immediately succeeding (but not any
other) fiscal year, and (y) in determining whether any amount is available
for carryover, the amount expended in any fiscal year shall first be deemed to
be from the amount allocated to such fiscal year (before giving effect to any
carryover).

8.9.          Limitation on
Investments, Loans and Advances. 
Make any advance, loan, extension of credit or capital contribution to,
or purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in, any Person,
except:

(a)           extensions
of trade credit in the ordinary course of business;

(b)           investments
in Cash Equivalents;

(c)           loans
and advances to employees of the Borrower or its Subsidiaries for travel,
entertainment and relocation expenses in the ordinary course of business in an
aggregate amount for the Borrower and its Subsidiaries not to exceed $1,000,000
at any one time outstanding;

(d)           investments
by the Borrower or its Subsidiaries in any wholly owned Subsidiary of the
Borrower which has complied with the conditions set forth in subsection 7.9(a)
or any wholly owned Foreign Subsidiary which has complied with the conditions
set forth in subsection 7.9(b); provided that (A) the aggregate amount
of all such advances, loans, investments, transfers or guarantees by the
Borrower and the Domestic Subsidiaries made to or on behalf of Holland &
Barrett, taken together with loans to Holland & Barrett permitted under
subsection 8.2(i) and guarantees of obligations of Holland & Barrett
permitted under subsection 8.4(h), shall not exceed $35,000,000 at any time
outstanding, and (B) the aggregate amount of all such advances, loans,
investments, transfers or guarantees by the Borrowers and the Domestic
Subsidiaries made to or on behalf of the Foreign Subsidiaries other than
Holland & Barrett, taken together with loans to Foreign Subsidiaries other
than Holland & Barrett permitted under subsection 8.2(i) and guarantees of
obligations of Foreign Subsidiaries other than Holland & Barrett permitted
under subsection 8.4(g), shall not exceed $20,000,000 at any time outstanding.

(e)           investments
by the Borrower and its Subsidiaries existing on the Closing Date and set forth
on Schedule 8.9(e);

(f)            other
Acquisitions; provided that (i) such Acquisitions permitted
pursuant to this paragraph (f) shall be nonhostile acquisitions and
(ii) investments constituting Acquisitions of entities that become
Subsidiary Guarantors shall be permitted if the ratio of 

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Consolidated Indebtedness to Consolidated
EBITDA (calculated after giving pro forma effect to the borrowings to be made
on the date of such Acquisition and to any change in Consolidated EBITDA and
any increase in Consolidated Indebtedness immediately resulting from the
consummation of any acquisition or disposition permitted by this Agreement
concurrently with such borrowings) is less than or equal to 2.25 to 1.0;

(g)           Acquisitions
of entities that become Foreign Subsidiaries; provided that (i) such
Acquisitions permitted pursuant to this paragraph (g) shall be nonhostile
acquisitions, (ii) the aggregate amount of investments (whether cash,
securities or other consideration) constituting Acquisitions of entities that
become Foreign Subsidiaries permitted pursuant to this paragraph (g) from and
after the Closing Date shall not exceed in the aggregate the sum of
$150,000,000 and (iii) the ratio of Consolidated Indebtedness to Consolidated
EBITDA (calculated after giving pro forma effect to the borrowings to be made
on the date of any such Acquisition and to any change in Consolidated EBITDA
and any increase in Consolidated Indebtedness immediately resulting from the
consummation of any acquisition or disposition permitted by this Agreement
concurrently with such borrowings) is less than or equal to 2.25 to 1.0; and

(h)           additional
investments not to exceed $30,000,000 in the aggregate while this Agreement is
outstanding.

8.10.        Limitation on
Optional Payments and Modifications of Debt Instruments.

(a)           Make any optional
payment or prepayment on or redemption or purchase of any Indebtedness in
excess of $50,000,000 per fiscal year (other than in respect of (i) the
Loans, (ii) the Existing Notes and (iii) any Refinancing Indebtedness
in respect of the Existing Notes, to the extent such payment, prepayment,
redemption or purchase under the foregoing clauses (ii) and (iii) is
financed with Refinancing Indebtedness); provided that
notwithstanding clause (ii) of the definition of Refinancing Indebtedness,
the Borrower or any Subsidiary may prepay Subordinated Debt with the proceeds
of the Loans or an incurrence of senior secured debt or senior unsecured notes
if the ratio of Consolidated Indebtedness to Consolidated EBITDA (calculated
after giving pro forma effect to the borrowings to be made on the date of such
incurrence and to any change in Consolidated EBITDA and any increase in
Consolidated Indebtedness resulting from the consummation of any acquisition or
disposition permitted by this Agreement concurrently with such borrowings) is
less than or equal to 2.25 to 1.0,

(b)           amend, modify or
change, or consent or agree to any amendment, modification or change to, any of
the terms of any Indebtedness (excluding the Loans) (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), or

(c)           amend, modify or
change the subordination provisions of any Subordinated Debt or any Refinancing
Indebtedness in respect thereof; provided that notwithstanding 

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clause
(ii) of the definition of Refinancing Indebtedness, the Borrower or any
Subsidiary may prepay Subordinated Debt with the proceeds of the Loans or an
incurrence of senior secured debt or senior unsecured notes if the ratio of
Consolidated Indebtedness to Consolidated EBITDA (calculated after giving pro
forma effect to the borrowings to be made on the date of such incurrence and to
any change in Consolidated EBITDA and any increase in Consolidated Indebtedness
resulting from the consummation of any acquisition or disposition permitted by
this Agreement concurrently with such borrowings) is less than or equal to 2.25
to 1.0.

8.11.        Limitation on
Transactions with Affiliates.  Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement and
(b) upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary, as the case may be, than it would obtain in a comparable arm’s
length transaction with a Person which is not an Affiliate.

8.12.        Limitation on
Sales and Leasebacks.  Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the security
of such property or rental obligations of the Borrower or such Subsidiary; provided
that such sale leaseback transactions in an amount of, together with the
aggregate principal amount of Indebtedness permitted under subsection 8.2(f)
then outstanding, up to $20,000,000 in the aggregate while this Agreement is in
effect may be consummated by the Borrower; provided that the Borrower
will not mortgage any existing Fee Property or Leased Property (including,
without limitation, the Gel-Cap Facility) other than any mortgage to which such
Fee Property or Leased Property is subject on the Closing Date (or any other
mortgage in respect thereof so long as the related Indebtedness constitutes
Refinancing Indebtedness).

8.13.        Limitation on
Changes in Fiscal Year.  Permit the
fiscal year of the Borrower to end on a day other than September 30.

8.14.        Limitation on
Negative Pledge Clauses.  Enter into
with any Person any agreement, other than (a) this Agreement and the other
Loan Documents, (b) the Subordinated Debt and any Refinancing Indebtedness
in respect thereof (so long as such Refinancing Indebtedness addresses
prohibitions or limitations of the nature described below in a manner not less
favorable to the Lenders, taken as a whole, than the treatment thereof in the
Subordinated Debt) and (c) any industrial revenue bonds, purchase money
mortgages or Financing Leases permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby), which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired; provided
that the foregoing shall not apply to (i) restrictions and conditions imposed
by law, (ii) customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary permitted hereunder pending such sale, 

 65
 

 
  

 

provided such restrictions or conditions apply only to the Subsidiary
that is to be sold, (iii) restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted hereunder if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(iv) customary provisions in leases and other contracts restricting the assignment
thereof.

8.15.        Limitation on
Lines of Business.  Enter into any
business, either directly or through any Subsidiary, except for the nutritional
supplements and healthfood businesses and business reasonably related thereto.

8.16.        Hedging Agreements.  Enter into any Hedging Agreement, except
(a) Hedging Agreements entered into to hedge or mitigate risks to which
the Borrower or any Subsidiary has actual exposure (other than those in respect
of Capital Stock of the Borrower or any of its Subsidiaries) and (b) Hedging
Agreements entered into in order to effectively cap, collar or exchange
interest rates (from fixed to floating rates, from one floating rate to another
floating rate or otherwise) with respect to any interest-bearing liability or
investment of the Borrower or any Subsidiary.

SECTION 9. 
EVENTS OF DEFAULT

Upon the occurrence of
any of the following events:

(a)           The
Borrower shall fail to pay (i) any principal of any Loans or any Reimbursement
Obligations when due (whether at the stated maturity, by acceleration or otherwise)
in accordance with the terms thereof or hereof or (ii) any interest on any
Loans, or any fee or other amount payable hereunder, within five days after any
such interest, fee or other amount becomes due in accordance with the terms
hereof; or

(b)           Any
representation or warranty made or deemed made by the Borrower or any other
Loan Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any time under
or in connection with this Agreement or any other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made or furnished; or

(c)           The
Borrower or any other Loan Party shall default in the observance or performance
of any covenant contained in Section 8 hereof or in any negative covenant
contained in any Security Document to which it is a party; or

(d)           The
Borrower or any other Loan Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan Document
other than as provided in (a) through (c) above, and such default shall
continue unremedied for a period of the greater of (x) 30 days, and (y) 60 days
(if the Borrower or such Loan Party is diligently pursuing a remedy of such default)
after the earlier to occur 

 66
 

 
  

 

of (A) actual knowledge of such default by a
Responsible Officer of the Borrower and (B) notice from the Administrative
Agent to the Borrower; or

(e)           Any
Loan Document shall cease, for any reason, to be in full force and effect, or
the Borrower or any other Loan Party shall so assert; or any security interest
created by any of the Security Documents in a material portion of the
Collateral (as defined in the Guarantee and Collateral Agreement) shall cease
to be enforceable and of the same effect and priority purported to be created
thereby and, in each case, shall remain unremedied for a period of 10 days; or

(f)            The subordination provisions contained in any instrument
pursuant to which any Subordinated Debt or Refinancing Indebtedness in respect
thereof was created or in any instrument evidencing the same shall, so long as
such Subordinated Debt or Refinancing Indebtedness shall be outstanding, cease,
for any reason, to be in full force and effect or enforceable in accordance
with its terms; or

(g)           The
Borrower or any of its Subsidiaries shall (i) default in any payment of
principal of or interest on any Indebtedness (other than Indebtedness under
this Agreement), in the payment of any Guarantee Obligation or in the payment
of any Hedge Agreement Obligation, where, in any case or in the aggregate, the
principal amount thereof then outstanding exceeds $5,000,000, beyond the period
of grace, if any, provided in the instrument or agreement under which such Indebtedness,
Guarantee Obligation or Hedge Agreement Obligation was created; or
(ii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness, Guarantee Obligation or Hedge
Agreement Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause, or
to permit the holder or holders of such Indebtedness or Hedge Agreement
Obligation or, beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee Obligation
to become payable; or

(h)           (i) The
Borrower, any Domestic Subsidiary or any Material Foreign Subsidiary shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its assets,
or the Borrower, any Domestic Subsidiary or any Material Foreign Subsidiary
shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Bor-

 67
 

 
  

 

rower, any Domestic Subsidiary or any
Material Foreign Subsidiary any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower, any Domestic Subsidiary or any
Material Foreign Subsidiary any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Borrower, any Domestic Subsidiary or any Material Foreign
Subsidiary shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower, any Domestic Subsidiary or
any Material Foreign Subsidiary shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or

(i)            An
ERISA Event shall have occurred that, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$5,000,000; or

(j)            One
or more judgments or decrees shall be entered against the Borrower or any of
its Subsidiaries involving in the aggregate a liability (not paid by insurance
or otherwise fully covered by insurance or paid by a third-party indemnitor) of
$5,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or

(k)           (i) Any
Person or “group” (within the meaning of Section 13(d) or 15(d) of the Exchange
Act), other than any Person or group beneficially owning 10% or more of the
Capital Stock of the Borrower on the date hereof (A) shall have acquired,
combined with previous holdings, beneficial ownership of 25% or more of any
outstanding class of capital stock of the Borrower having ordinary voting power
in the election of directors or (B) shall obtain the power (whether or not
exercised) to elect a majority of the Borrower’s directors or (ii) the
Board of Directors of the Borrower shall not consist of a majority of
Continuing Directors;

then, and in any such event, (A) if such event is
an Event of Default specified in clause (i) or (ii) of paragraph (h)
above with respect to the Borrower or if such event is an Event of Default
specified in clause (g) above resulting from the acceleration of the
Subordinated Debt automatically the Commitments shall immediately terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all Reimbursement
Obligations, regardless of whether or not such Reimbursement Obligations are
then due and payable) shall immediately become due and payable, and (B) if
such event is any other Event of Default, any of the following actions may be
taken:  (i) with the consent of the
Majority Lenders, the Administrative Agent may, or upon the direction of the
Majority Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; (ii) with the consent of the Majority Lend-

 68
 

 
  

 

ers, the Administrative Agent may, or upon the
direction of the Majority Lenders, the Administrative Agent shall, by notice of
default to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement  (including, without limitation, all
Reimbursement Obligations, regardless of whether or not such Reimbursement
Obligations are then due and payable) to be due and payable forthwith,
whereupon the same shall immediately become due and payable and (iii) with
the consent of the Majority Lenders the Administrative Agent may, and upon the
direction of the Majority Lenders, the Administrative Agent shall, exercise any
and all remedies and other rights provided pursuant to this Agreement and/or
the other Loan Documents.

With respect to all Letters of Credit with respect to
which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Borrower shall at such
time deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit.  The Borrower hereby grants to
the Administrative Agent, for the benefit of the Issuing Lender and the
Participating Lenders, a security interest in such cash collateral to secure
all obligations of the Borrower under this Agreement and the other Loan
Documents.  Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the payment of drafts
drawn under such Letters of Credit, 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 of the Borrower hereunder and under
the Notes.  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 of the Borrower
hereunder and under the Notes shall have been paid in full, the balance, if
any, in such cash collateral account shall be returned to the Borrower.  The Borrower shall execute and deliver to the
Administrative Agent, for the account of the Issuing Lender and the
Participating Lenders, such further documents and instruments as the Administrative
Agent may request to evidence the creation and perfection of the within security
interest in such cash collateral account.

Except as expressly provided above in this Section 9,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.

SECTION 10. 
THE AGENTS AND THE ARRANGER

10.1.        Appointment.  Each Lender hereby irrevocably designates and
appoints JPMorgan Chase as the Administrative Agent and as the Collateral Agent
of such Lender under this Agreement and the other Loan Documents, and each
Lender irrevocably authorizes each of the Administrative Agent and the
Collateral Agent, in such respective capacities, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent and the Collateral Agent, as the case may be, by the terms
of this Agreement and the other 

 69
 

 
  

 

Loan Documents, together with such other powers as are reasonably
incidental thereto.  Each Lender hereby
irrevocably designates and appoints Bank of America, N.A., BNP Paribas, Citibank,
N.A. and HSBC Bank USA, National Association as the Co-Syndication Agents of
such Lender under this Agreement and the other Loan Documents, and each Lender
irrevocably authorizes the Co-Syndication Agents, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are expressly
delegated to the Co-Syndication Agents by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto.  Notwithstanding any
provision to the contrary elsewhere in this Agreement, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.

10.2.        Delegation of
Duties.  Each Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

10.3.        Exculpatory
Provisions.  No Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person’s own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for
in, or received by such Agent under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder.  No Agent shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower.

10.4.        Reliance by Agents.  Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by such Agent with reasonable care.  Each Agent may deem and treat the Person
whose name is recorded in the Register pursuant to the terms hereof as the
owner thereof for all purposes unless a written 

 70
 

 
  

 

notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. 
Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders (or, to the extent
provided in subsection 11.1, all of the Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  Each
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Majority Lenders (or, to the extent provided in subsection 11.1,
all of the Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.

10.5.        Notice of Default.  No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
the Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default” (and, in the case of the
Collateral Agent and the Co-Syndication Agents, shall have received notice
thereof as described in the following sentence).  In the event that the Administrative Agent receives
such a notice, the Administrative Agent shall give notice thereof to the other
Agents and Lenders.  The Administrative
Agent shall take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Majority Lenders; provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

10.6.        Non-Reliance on
Agents and Other Lenders.  Each Lender
expressly acknowledges that no Agent or any Agent’s officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of the Borrower, shall be deemed to constitute any representation
or warranty by any Agent to any Lender. 
Each Lender represents to each Agent that it has, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other condition and
creditworthiness of the Borrower and into the Transactions, and made its own
decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Agents, the Arranger or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower. 
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent, the Collateral Agent or
the Co-Syndication Agents hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit 

 71
 

 
  

 

or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the Borrower
which may come into the possession of such Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

10.7.        Indemnification.  The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Total Loan Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Total Loan Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against such Agent in any way relating to or arising
out of the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Agent’s gross negligence
or willful misconduct.  The agreements in
this subsection 10.7 shall survive the payment of the Loans and all other
amounts payable hereunder.

10.8.        Agent in Its
Individual Capacity.  The entity
which is an Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
entity which is such Agent were not such Agent hereunder and under the other
Loan Documents.  With respect to the
Loans made by it, such entity shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include the entity which is such Agent in its individual capacity.

10.9.        Successor Agents.  Any Agent may resign as Agent upon 45 days’
notice to the Lenders.  If any Agent
shall resign as Agent under this Agreement and the other Loan Documents, then
the Majority Lenders shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall be approved by the Borrower (except
during the occurrence and continuation of an Event of Default), such approval
not to be unreasonably withheld, whereupon such successor agent shall succeed
to the rights, powers and duties of such Agent, and the term “Administrative
Agent,” “Collateral Agent” or “Co-Syndication Agent,” as the case may be, shall
mean such successor agent effective upon such appointment and approval, and the
former Agent’s rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Loans.  After any retiring Agent’s resignation as
Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.

 72

 
  

 

10.10.      Issuing Lender.  Each Lender hereby acknowledges that the
provisions of this Section 10 shall apply to the Issuing Lender, in its
capacity as issuer of any Letter of Credit, in the same manner as such
provisions are expressly stated to apply to the Agents.

SECTION 11.  MISCELLANEOUS

11.1.        Amendments and
Waivers.  Except as provided in
subsection 2.4(b) with respect to a new Revolving Credit Commitment, neither
this Agreement nor any other Loan Document, nor any terms hereof or thereof,
may be amended, supplemented, waived or modified except in accordance with the
provisions of this subsection 11.1.  The
Majority Lenders may, or, with the written consent of the Majority Lenders, the
Administrative Agent may, from time to time, (i) enter into with the applicable
Loan Parties written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights or obligations
of the Lenders or of the Borrower or of any other Loan Party hereunder or
thereunder or (ii) waive at the Borrower’s request, on such terms and
conditions as the Majority Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or modification
shall:

(i)      increase the Commitment of any Lender
without the written consent of such Lender,

(ii)     reduce the principal amount of any Loan or
Reimbursement Obligation or reduce the rate of interest thereon or require any
Lender to offer Interest Periods of longer than six months without regard to availability,
or reduce any fees payable hereunder, without the written consent of each
Lender affected thereby,

(iii)    postpone the scheduled date of payment of
the principal amount of any Loan or Reimbursement Obligation, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,

(iv)    change subsection 4.8 or 2.4(b) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender affected thereby,

(v)     release the Guarantee and Collateral
Agreement or all or substantially all of the Collateral under, and as defined
in, the Security Documents or any Guarantor under, and as defined in, the
Guarantee and Collateral Agreement, without the written consent of each Lender,

 73
 

 
  

 

(vi)    change any of the provisions of this
subsection 11.1 or the definition of “Majority Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender, or

(vii)   amend or waive any provisions of this
Agreement or any other Loan Document for purposes of determining whether the
conditions precedent set forth in subsection 6.2 to the making of any Revolving
Credit Loan have been satisfied without the written consent of the Lenders
holding a majority in interest of the Aggregate Revolving Credit Commitments.

In addition to the foregoing, (x) no such
amendment, supplement or modification shall amend, modify or otherwise affect
the rights or duties of any Agent, the Issuing Bank or the Swing Line Lender
hereunder without the prior written consent of such Agent, the Issuing Bank or
the Swing Line Lender, as the case may be, and (y) no such amendment,
supplement, modification or waiver shall amend, modify or otherwise affect
subsection 8.1 at a time when a Default or Event of Default shall have occurred
and be continuing unless the Lenders holding a majority in interest of the
Aggregate Revolving Credit Commitments shall have consented in writing to such
amendment, modification or waiver.  Any
waiver and any amendment, supplement or modification pursuant to this
subsection 11.1 shall apply to each of the Lenders and shall be binding upon
the Borrower, the applicable other Loan Parties, the Lenders, the Agents and
all future holders of the Loans and the Reimbursement Obligations.  In the case of any waiver, the Borrower, the
Lenders and the Agents shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

11.2.        Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Issuing Lender and the Administrative
Agent, and as set forth in Schedule I in the case of the other parties hereto,
or to such other address as may be hereafter notified in writing by the respective
parties hereto:

	
                     The Borrower:

  	
   

  	
  c/o NBTY, Inc.

  
	
   

  	
   

  	
  90 Orville Drive

  
	
   

  	
   

  	
  Bohemia, New
  York 11716-2510

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
  Fax:
  (631) 567-7148

  

 

 74
 

 
  

 

	
  The Administrative

  	
   

  	
   

  
	
  Agent, the
  Collateral

  	
   

  	
   

  
	
  Agent, the
  Issuing

  	
   

  	
   

  
	
  Lender or Swing
  Line

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  395 North
  Service Road

  
	
   

  	
   

  	
  Melville, New
  York 11747

  
	
   

  	
   

  	
  Attention:
  Stephen Zajac

  
	
   

  	
   

  	
  Fax:
  (631) 755-5184

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  Loan and Agency
  Services Group

  
	
   

  	
   

  	
  10 S. Dearborn,
  Floor 19

  
	
   

  	
   

  	
  Chicago, IL
  60603-2003

  
	
   

  	
   

  	
  Attention: Mi Y.
  Kim

  
	
   

  	
   

  	
  Fax: (312)
  385-7098

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Cahill Gordon & Reindel LLP

  
	
   

  	
   

  	
  80 Pine Street

  
	
   

  	
   

  	
  New York, New
  York 10005

  
	
   

  	
   

  	
  Attention:
  Michael A. Becker, Esq. and Ann Makich, Esq.

  
	
   

  	
   

  	
  Fax:
  (212) 269-5420

  
	
   

  	
   

  	
   

  
	
  The
  Co-Syndication Agents:

  	
   

  	
  Bank of America, N.A.

  
	
   

  	
   

  	
  600 Peachtree
  St. 6th Floor

  
	
   

  	
   

  	
  GA1-006-06-10

  
	
   

  	
   

  	
  Atlanta, GA
  30318-2265

  
	
   

  	
   

  	
  Attention:
  William O. Tucker

  
	
   

  	
   

  	
  Fax: (404)
  607-4040

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BNP Paribas

  
	
   

  	
   

  	
  787 Seventh
  Avenue

  
	
   

  	
   

  	
  New York, NY
  10019

  
	
   

  	
   

  	
  Attention: Duane
  Helkowski

  
	
   

  	
   

  	
  Fax: (212)
  841-3830

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Citibank, N.A.

  
	
   

  	
   

  	
  730 Veterans
  Memorial Highway

  
	
   

  	
   

  	
  Hauppauge, NY
  11788

  
	
   

  	
   

  	
  Attention:
  Stephen Kelly

  
	
   

  	
   

  	
  Fax: (631)
  265-4888

  

 

 75
 

 
  

 

	
  

  	
   

  	
  HSBC Bank USA,
  National Association

  
	
   

  	
   

  	
  534 Broadhollow
  Road

  
	
   

  	
   

  	
  Melville, NY
  11747

  
	
   

  	
   

  	
  Attention: Gary
  Sarro

  
	
   

  	
   

  	
  Fax: (631)
  752-4396

  

 

provided that any notice, request or
demand to or upon any Agent, the Issuing Lender or the Lenders pursuant to
subsection 2.2, 2.4, 2.5, 2.7, 3.2 or 4.2 shall not be effective until received.

11.3.        No
Waiver; Cumulative Remedies.  No
failure to exercise and no delay in exercising, on the part of any Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

11.4.        Survival.  All representations and warranties made
hereunder, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder
until all obligations hereunder and under the other Loan Documents have been
paid in full and the Commitments hereunder have been terminated.  The agreements in subsection 4.12 shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder until the expiration of the applicable statute
of limitations for such taxes.

11.5.        Payment
of Expenses and Taxes.  The Borrower
agrees (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation, syndication and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation
and administration of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of New
York counsel to the Administrative Agent, (b) to pay or reimburse each Lender
and any Agent for all its costs and expenses incurred during the continuance of
any Default or Event of Default in connection with the enforcement or preservation
of any rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
to each Lender and of counsel to the Agents, (c) to pay, indemnify, and hold
harmless each Lender and the Agent from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, Other Taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other 

 76
 

 
  

 

documents, and (d) to pay, indemnify, and
hold harmless each Lender and the Administrative Agent from and against any and
all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and related documents or the use of
the proceeds of the Loans, including, without limitation, any of the foregoing
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries
or any of the Properties (all the foregoing in this clause (d), collectively,
the “indemnified liabilities”), provided that the Borrower shall
have no obligation hereunder to the Administrative Agent or any Lender with
respect to indemnified liabilities solely arising from the gross negligence or
willful misconduct of the Agents or any such Lender, as the case may be.  The agreements in this subsection shall
survive the termination of this Agreement and the repayment of the Loans and
all other amounts payable hereunder.

11.6.        Successors and
Assigns; Participation and Assignments.

(a)           This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Lenders, the
Agents and their respective successors and assigns permitted hereby (including
any Affiliate of the Issuing Lender that issues any Letter of Credit), except
that (i) the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
subsection 11.6.  Nothing in this
Agreement, express or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Lender that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of
this subsection 11.6) and, to the extent expressly contemplated hereby, the
Related Parties of each of the Agents, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           (i)   Subject to the conditions set forth in
clause (ii) below, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld, delayed or conditioned)
of:

(A)          the Borrower, provided that no
consent of the Borrower shall be required at any time for an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, or for any assignment to
any assignee prior to completion of primary syndication of the Loans and
Commitments hereunder (as determined by JPMorgan Chase in its sole discretion)
or if a Default or Event of Default has occurred and is continuing; and

(B)           the Administrative Agent, provided
that no consent of the Administrative Agent shall be required for an assignment
of any Revolving Credit Commitment to an 

 77
 

 
  

 

assignee that
is a Lender with a Revolving Credit Commitment immediately prior to giving
effect to such assignment or an Affiliate of such Lender.

(ii)     Assignments shall be
subject to the following additional conditions:

(A)          except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment or Loans of any Class, the amount
of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 or unless each of the Borrower and the Administrative
Agent otherwise consents, provided that no such consent of the Borrower
shall be required prior to completion of primary syndication of the Loans and
Commitments hereunder (as determined by JPMorgan Chase in its sole discretion)
or if a Default or Event of Default has occurred and is continuing;

(B)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement, provided that this clause shall
not be construed to prohibit the assignment of a proportionate part of all the
assigning Lender’s rights and obligations in respect of one Class of
Commitments or Loans;

(C)           the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, provided that
only one such fee shall be payable in the event of simultaneous assignments by
a Lender to or from two or more Approved Funds; and

(D)          the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent a completed Administrative
Questionnaire.

For purposes of the minimum assignment sizes set forth
in subsection 11.6(b)(ii)(A), simultaneous assignments to Approved Funds under
common management by a Lender shall be aggregated, provided that any such
individual assignment shall not be less than $500,000.  For the purposes of this
subsection 11.6(b), the term “Approved Fund” has the following meaning:

“Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

(iii)    Subject to acceptance and
recording thereof pursuant to paragraph (b)(iv) of this subsection, from
and after the effective date specified in each Assignment and 

 78
 

 
  

 

Assumption the assignee thereunder (“Assignee”)
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection 11.6 shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this subsection.

(iv)    The Administrative Agent,
acting for this purpose as an agent of the Borrower, shall maintain at one of
its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and Letter of Credit
disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrower, the Agents, the
Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

(v)     Upon its receipt of a duly
completed Assignment and Assumption executed by an assigning Lender and an
Assignee, the Assignee’s completed Administrative Questionnaire (unless the
Assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this subsection and any written consent to
such assignment required by paragraph (b) of this subsection, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. 
No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

(c)           (i)  Any Lender may, without the consent of the
Borrower, the Administrative Agent, the Issuing Bank or the Swing Line Lender,
sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such 

 79
 

 
  

 

Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in clauses (ii), (iii) and
(v) of subsection 11.1 that affects such Participant.  Subject to paragraph (c)(ii) of this
subsection, the Borrower agrees that each Participant shall be entitled to the
benefits of subsections 4.10, 4.11 and 4.12 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this subsection.  To the extent permitted
by law, each Participant also shall be entitled to the benefits of subsection 11.7
as though it were a Lender, provided that
such Participant agrees to be subject to subsection 4.8 as though it were
a Lender.

(ii)           A
Participant shall not be entitled to receive any greater payment under
subsections 4.10 or 4.12 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of subsection 4.12 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with subsection 4.12(e) as though
it were a Lender.

(d)           Any Lender may at
any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this subsection shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

11.7.        Adjustments;
Set-off.

(a)           If any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of its Loans
owing to it by the Borrower, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in clause (h) of Section 9 or
otherwise, except for payments pursuant to the operation of subsections 4.14(b)
or 11.6), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender’s Loans
owing to it by the Borrower, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender’s Loan owing to it by the Borrower, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefited Lender to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Lenders; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.

(b)           In addition to any
rights and remedies of the Lenders provided by law, each Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount 

 80
 

 
  

 

becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise) to set off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or owing
by such Lender or any branch or agency thereof to or for the credit or the account
of the Borrower.  Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and application.

11.8.        Counterparts.  This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signed
by all the parties shall be delivered to the Borrower and the Administrative
Agent.

11.9.        Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

11.10.      Integration.  This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Borrower, any Agent or any
Lender relative to the subject matter hereof or thereof not expressly set forth
or referred to herein or in the other Loan Documents.

11.11.      GOVERNING LAW.  THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

11.12.      Submission to
Jurisdiction; Waivers.  The Borrower
hereby irrevocably and unconditionally:

(i)      submits for itself and its property in any
legal action or proceeding relating to this Agreement or any other Loan
Document to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;

(ii)     consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such 

 81
 

 
  

 

action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

(iii)    agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the Borrower at its address set forth in subsection 11.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto; and

(iv)    agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.

11.13.      Acknowledgements.  The Borrower hereby acknowledges that:

(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;

(b)           none
of the Administrative Agent or any Lender has any fiduciary relationship with
or duty to the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the
Administrative Agents and the Lenders, on the one hand, and the Borrower, on
the other hand, in connection herewith or therewith is solely that of debtor
and creditor; and

(c)           no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Borrower and the Lenders.

11.14.      WAIVERS OF JURY TRIAL.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.

11.15.      Confidentiality.  Each Agent and Lender and the Issuing Lender
agrees to take normal and reasonable precautions to maintain the
confidentiality of information provided to it by the Borrower or any Subsidiary
in connection with this Agreement (and, if delivered after the date of this
Agreement, designated in writing as confidential); provided, however,
that any such Person may disclose such information (a) at the request of
any regulatory authority having supervisory jurisdiction over it or in
connection with an examination of such Person by any such authority or the
request of any rating agency requiring access to a Lender’s portfolio, (b) pursuant
to subpoena or other court process, (c) when required to do so in accordance
with the provisions of any applicable law, (d) at the direction of any other
Governmental Authority, (e) to such Person’s Affiliates, independent auditors
and other professional advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of 

 82
 

 
  

 

such information and instructed to keep such information confidential),
(f) which has become generally available to the public, other than as a result
of a disclosure by such Person or agent of such Person or a disclosure known to
such Person or agent of such Person to have been made by any person or entity
to which such Person or agent has delivered such confidential information, (g)
which becomes available to such Person from a source other than the Borrower or
any Subsidiary (provided that such source is not known to such Person to
be bound by a duty of confidentiality to the Borrower or any Subsidiary), (h)
subject to an agreement containing provisions substantially the same as those
of this subsection 11.15, to any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and
its obligations or (i) to any Participant or Assignee or potential Participant
or Assignee (each, a “Transferee”) or any pledgee (or prospective
pledgee) (each, a “Pledgee”) of any Lender that is a Person (other than
a natural person) that is engaged in making, purchasing, holding or investing
in bank loans and similar extensions of credit in the ordinary course of its
business; provided that such Transferee or Pledgee agrees in writing to comply
with the provisions of this subsection 11.15.

11.16.      Designation of
Senior Indebtedness.  The
Indebtedness of the Borrower under this Agreement shall constitute “Designated
Senior Indebtedness” pursuant to, for all purposes of, and under and as defined
in, the Existing Notes Indenture.

11.17.      USA PATRIOT ACT.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Patriot Act.

 83

 
  

 

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

	
  

  	
   

  	
  NBTY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-1
  
 

 
  

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  as
  Administrative Agent and Collateral Agent

  
	
   

  	
  and as a Lender,
  and as Swing Line Lender, and

  
	
   

  	
  as Issuing
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-2
  
 

 
  

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as
  Co-Syndication Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-3
  
 

 
  

 

	
   

  	
  BNP PARIBAS,

  
	
   

  	
  as
  Co-Syndication Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-4
  
 

 
  

 

	
   

  	
  CITIBANK, N.A.,

  
	
   

  	
  as Co-Syndication
  Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-5
  
 

 
  

 

	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Co-Syndication Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 S-6
  
 

 
  

 

	
   

  	
  Accepted and Agreed:

  
	
   

  	
  [LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 S-7Exhibit
10.2

GUARANTEE AND
COLLATERAL AGREEMENT

made by

NBTY, INC.

and the other
Grantors party hereto

in favor of

JPMORGAN CHASE
BANK, N.A.,

as Administrative Agent

Dated as of
November 3, 2006

 

   
 

 

 

TABLE OF CONTENTS

	
   

   	
    

   	
    

   	
    

   	
   Page

   
	
  SECTION 1. DEFINED TERMS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other Definitional Provisions

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. GUARANTEE

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Guarantee

  	
   

  	
  5

  
	
  2.2

  	
   

  	
  Right of Contribution

  	
   

  	
  6

  
	
  2.3

  	
   

  	
  No Subrogation

  	
   

  	
  6

  
	
  2.4

  	
   

  	
  Amendments, etc. with respect to the Borrower
  Obligations

  	
   

  	
  7

  
	
  2.5

  	
   

  	
  Guarantee Absolute, Irrevocable and Unconditional

  	
   

  	
  7

  
	
  2.6

  	
   

  	
  Reinstatement

  	
   

  	
  8

  
	
  2.7

  	
   

  	
  Payment

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. GRANT OF SECURITY INTEREST

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND WARRANTIES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Representations in Credit Agreement

  	
   

  	
  9

  
	
  4.2

  	
   

  	
  Title; No Other Liens

  	
   

  	
  9

  
	
  4.3

  	
   

  	
  Perfected First Priority Lien

  	
   

  	
  10

  
	
  4.4

  	
   

  	
  Chief Executive Office

  	
   

  	
  10

  
	
  4.5

  	
   

  	
  Inventory and Equipment

  	
   

  	
  10

  
	
  4.6

  	
   

  	
  Farm Products

  	
   

  	
  10

  
	
  4.7

  	
   

  	
  Pledged Securities

  	
   

  	
  10

  
	
  4.8

  	
   

  	
  Receivables

  	
   

  	
  11

  
	
  4.9

  	
   

  	
  Intellectual Property

  	
   

  	
  11

  
	
  4.10

  	
   

  	
  Deposit Accounts; Security Accounts; Commodity
  Accounts

  	
   

  	
  11

  
	
  4.11

  	
   

  	
  Commercial Tort Claims

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5. COVENANTS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Covenants in Credit Agreement

  	
   

  	
  12

  
	
  5.2

  	
   

  	
  Delivery of Instruments and Chattel Paper

  	
   

  	
  12

  
	
  5.3

  	
   

  	
  Maintenance of Insurance

  	
   

  	
  12

  
	
  5.4

  	
   

  	
  Payment of Obligations

  	
   

  	
  12

  
	
  5.5

  	
   

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
   

  	
  13

  
	
  5.6

  	
   

  	
  Changes in Jurisdiction of Organization, Locations,
  Name, etc

  	
   

  	
  13

  
	
  5.7

  	
   

  	
  Notices

  	
   

  	
  13

  
	
  5.8

  	
   

  	
  Pledged Securities

  	
   

  	
  14

  
	
  5.9

  	
   

  	
  Receivables

  	
   

  	
  15

  
	
  5.10

  	
   

  	
  Intellectual Property

  	
   

  	
  15

  
	
  5.11

  	
   

  	
  Jurisdiction of Organization

  	
   

  	
  16

  
	
  5.12

  	
   

  	
  Commercial Tort Claims

  	
   

  	
  16

  
	
  5.13

  	
   

  	
  Additional Accounts

  	
   

  	
  17

  
							

 

 -i-
 

 

 

	
  

  	
   

  	
  Page

  
	
  SECTION 6. REMEDIAL PROVISIONS

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Certain Matters Relating to Receivables

  	
   

  	
  17

  
	
  6.2

  	
   

  	
  Communications with Obligors; Grantors Remain Liable

  	
   

  	
  17

  
	
  6.3

  	
   

  	
  Pledged Stock

  	
   

  	
  18

  
	
  6.4

  	
   

  	
  Proceeds To Be Turned Over to Administrative Agent

  	
   

  	
  19

  
	
  6.5

  	
   

  	
  Application of Proceeds

  	
   

  	
  19

  
	
  6.6

  	
   

  	
  Code and Other Remedies

  	
   

  	
  20

  
	
  6.7

  	
   

  	
  Private Sales

  	
   

  	
  20

  
	
  6.8

  	
   

  	
  Deficiency

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7. THE ADMINISTRATIVE AGENT

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Administrative Agent’s Appointment as
  Attorney-in-Fact, etc

  	
   

  	
  21

  
	
  7.2

  	
   

  	
  Duty of Administrative Agent

  	
   

  	
  23

  
	
  7.3

  	
   

  	
  Execution of Financing Statement

  	
   

  	
  23

  
	
  7.4

  	
   

  	
  Authority of Administrative Agent

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8. MISCELLANEOUS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Amendments in Writing

  	
   

  	
  23

  
	
  8.2

  	
   

  	
  Notices

  	
   

  	
  24

  
	
  8.3

  	
   

  	
  No Waiver by Course of Conduct; Cumulative Remedies

  	
   

  	
  24

  
	
  8.4

  	
   

  	
  Enforcement Expenses; Indemnification

  	
   

  	
  24

  
	
  8.5

  	
   

  	
  Successors and Assigns

  	
   

  	
  24

  
	
  8.6

  	
   

  	
  Set-Off

  	
   

  	
  25

  
	
  8.7

  	
   

  	
  Counterparts

  	
   

  	
  25

  
	
  8.8

  	
   

  	
  Severability

  	
   

  	
  25

  
	
  8.9

  	
   

  	
  Section Headings

  	
   

  	
  25

  
	
  8.10

  	
   

  	
  Integration

  	
   

  	
  25

  
	
  8.11

  	
   

  	
  GOVERNING LAW

  	
   

  	
  25

  
	
  8.12

  	
   

  	
  Submission to Jurisdiction; Waivers

  	
   

  	
  25

  
	
  8.13

  	
   

  	
  Acknowledgements

  	
   

  	
  26

  
	
  8.14

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  26

  
	
  8.15

  	
   

  	
  Additional Grantors

  	
   

  	
  26

  
	
  8.16

  	
   

  	
  Releases

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 -ii-
 

 

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  Notice Addresses of Guarantors

  
	
  Schedule 2

  	
   

  	
  Description of Pledged Securities

  
	
  Schedule 3

  	
   

  	
  Filings and Other Actions Required to Perfect
  Security Interests

  
	
  Schedule 4

  	
   

  	
  Jurisdictions of Organization; Identification
  Numbers and Locations of Chief Executive Offices

  
	
  Schedule 5

  	
   

  	
  Locations of Inventory and Equipment

  
	
  Schedule 6

  	
   

  	
  Copyrights and Copyright Licenses; Patents and
  Patent Licenses; Trademark and Trademark Licenses

  
	
  Schedule 7

  	
   

  	
  Existing Prior Liens

  
	
  Schedule 8

  	
   

  	
  Commercial Tort Claims

  
	
  Schedule 9

  	
   

  	
  Deposit Accounts; Securities Accounts; Commodities
  Accounts

  
	
   

  	
   

  	
   

  
	
  ANNEXES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex 1

  	
   

  	
  Form of Assumption Agreement

  
	
  Annex 2

  	
   

  	
  Issuer’s Acknowledgement

  

 

 -iii-

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of
November 3, 2006, made by each of the signatories hereto other than the
Administrative Agent (together with any other entity that may become a party
hereto as a Grantor as provided herein, the “Grantors”), in favor of
JPMORGAN CHASE BANK, N.A. as Administrative Agent (in such capacity, the “Administrative
Agent”) for the banks and other financial institutions (the “Lenders”)
from time to time party to the Credit Agreement, dated as of November 3, 2006
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among NBTY, INC., a Delaware corporation (the “Borrower”),
Bank of America, N.A., BNP Paribas, Citibank, N.A., and HSBC Bank USA, National
Association, as Co-Syndication Agents (in such capacity, collectively the “Co-Syndication
Agents”), the Lenders and JPMORGAN CHASE BANK, N.A. as Collateral Agent and
as the Administrative Agent.

W I T N E S S E T H
:

WHEREAS, pursuant to the Credit Agreement, the Lenders
have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;

WHEREAS, the Borrower is a member of an affiliated
group of companies that includes each other Grantor,

WHEREAS, the proceeds of the extensions of credit
under the Credit Agreement will be used in part to enable the Borrower to make
valuable transfers to one or more of the other Grantors in connection with the
operation of their respective businesses;

WHEREAS, the Borrower and the other Grantors are
engaged in related businesses, and each Grantor will derive substantial direct
and indirect benefit from the making of the extensions of credit under the
Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation
of the Lenders to make their respective extensions of credit to the Borrower
under the Credit Agreement that the Grantors shall have executed and delivered
this Agreement to the Administrative Agent for the ratable benefit of the
Lenders;

NOW, THEREFORE, in consideration of the premises and
to induce the Agents and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the
Borrower under the Credit Agreement, each Grantor hereby agrees with the
Administrative Agent, for the ratable benefit of the Lenders as follows:

SECTION 1.  DEFINED TERMS

1.1        Definitions.  (a) 
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement,
and the following terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined:  Account, Certificated Security,
Chattel Paper, Commercial Tort Claim, Commodity Account, Document, Equipment,
Farm Product, General Intangibles, Instrument, Inventory, Letter of Credit
Right, Proceeds, Securities Account and Supporting Obligations.

(b)           The following terms
shall have the following meanings:

 

 

“Agreement”: 
this Guarantee and Collateral Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

“Borrower Obligations”:  the collective reference to the unpaid
principal of and interest on the Loans, the Reimbursement Obligations and all
other obligations and liabilities of the Borrower (including, without limitation,
interest accruing at the then applicable rate provided in the Credit Agreement
after the maturity of such Loans and Reimbursement Obligations and interest
accruing at the then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to any Agent or any Lender (or, in the case of any Hedge Agreement or Cash
Management Obligations referred to below, any Affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection with,
the Credit Agreement, this Agreement, the other Loan Documents, any Letter of
Credit, any Hedge Agreement (including any guarantees of the Borrower of any
Hedge Agreements made by any Grantor) or Cash Management Obligation entered
into by the Borrower with any Lender (or any Affiliate of any Lender) or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by such Borrower pursuant to the terms of any of
the foregoing agreements).

“Cash Management Obligation”:  any obligation of the Borrower or any of its
Subsidiaries in respect of overdrafts and related liabilities owed to any
Lender (or any Affiliate of a Lender) that arise from treasury, depositary or
cash management services including in connection with any automated clearing
house transfers of funds or any similar transactions.

“Collateral”: 
as defined in Section 3.

“Collateral Account”:  any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.

“Control Agreement”: shall mean an agreement in
form and substance reasonably acceptable to the Administrative Agent sufficient
to establish the Administrative Agent’s control (within the meaning of the
applicable Uniform Commercial Code as in effect in the applicable jurisdiction)
over any applicable Investment Property (including, without limitation, any
Securities Account or Commodities Account) or Deposit Account, for the benefit of the Administrative Agent
and the benefit of the Secured Parties.

“Copyrights”: 
(i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished (including, without
limitation, those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.

“Copyright Licenses”:  any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, 

 2
 

 

 

without limitation, the grant of rights to
manufacture, distribute, exploit and sell materials derived from any Copyright,
to the extent (after giving effect to the provisions of 9-408(a) of the New
York UCC and similar provisions of a Uniform Commercial Code of any other
applicable jurisdiction) the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and interest in such Copyright
License is not prohibited by such Copyright License without the consent of any
other party thereto, would not give any other party to such Copyright License
the right to terminate its obligations thereunder, or is permitted with consent
if all necessary consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the foregoing shall
not be deemed to obligate such Grantor to obtain such consents); provided
that the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in any
money or other amounts due or to become due under any such Copyright License.

“Deposit Account”:  the “deposit accounts” as such term is
defined in Section 9-102(a)(29) of the New York UCC listed on Schedule
9 hereto under the heading “Deposit Accounts” or required to be disclosed
to the Administrative Agent pursuant to Section 5.13 hereof.

“Guarantor Obligation”:  with respect to any Guarantor, the collective
reference to (i) the Borrower Obligations and (ii) all obligations and liabilities
of such Guarantor which may arise under or in connection with this Agreement or
any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).

“Guarantors”: 
the collective reference to each Grantor other than the Borrower.

“Intellectual Property”:  the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

“Intercompany Note”:  any promissory note evidencing loans made by
any Grantor to the Borrower or any of its Subsidiaries (other than the
promissory note dated May 12, 2003, evidencing the  loan made by the Borrower to Holland &
Barrett Europe Limited in the amount of ₤200,000,000 and any Refinancing
Indebtedness in respect thereof permitted by the Credit Agreement).

“Investment Property”: the collective reference
to all “investment property” as such term is defined in Section 9-102(a)(49) of
the New York UCC (other than Capital Stock of a Foreign Subsidiary which is not
required to be pledged to the Administrative Agent pursuant to the terms of
this Agreement and the Credit Agreement).

“Issuers”: 
the collective reference to each issuer of any Pledged Security.

“material”: as the context may reasonably
permit or require, material in relation to the Borrower and its Subsidiaries,
taken as a whole.

 3
 

 

 

“New York UCC”: 
the Uniform Commercial Code as from time to time in effect in the State
of New York.

“Obligation”: 
(i) in the case of the Borrower, its Borrower Obligations, and (ii) in
the case of each Guarantor, its Guarantor Obligations.

“Patent”: 
(i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all
goodwill associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, and (iii) all rights to
obtain any reissues or extensions of the foregoing.

“Patent License”:  all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to in Schedule 6, to
the extent (after giving effect to the provisions of 9-408(a) of the New York
UCC and similar provisions of a Uniform Commercial Code of any other applicable
jurisdiction) the grant by such Grantor of a security interest pursuant to this
Agreement in its right, title and interest in such Patent License is not
prohibited by such Patent License without the consent of any other party
thereto, would not give any other party to such Patent License the right to
terminate its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the other
parties thereto (it being understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided that the
foregoing limitation shall not affect, limit, restrict or impair the grant by
such Grantor of a security interest pursuant to this Agreement in any money or
other amounts due or to become due under any such Patent License.

“Pledged Note”: 
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory notes
issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business and other than the promissory note dated May 12,
2003, evidencing the loan made by the Borrower to Holland & Barrett Europe
Limited in the amount of ₤200,000,000 and any Refinancing Indebtedness in
respect thereof permitted by the Credit Agreement.).

“Pledged Securities”:  the collective reference to the Pledged Notes
and the Pledged Stock.

“Pledged Stock”:  the shares of Capital Stock listed on Schedule
2 together with any other shares, stock certificates, options or rights of
any nature whatsoever pledged pursuant to subsection 7.9 of the Credit
Agreement.

“Receivable”: 
any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and
whether or not it has been earned by performance (including, without
limitation, any Account).

“Secured Parties”:  as defined in Section 2.1

 4
 

 

 

“Securities Act”:  the Securities Act of 1933, as amended.

“Trademarks”: 
(i) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos and other
source or business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Schedule
6, and (ii) the right to obtain all renewals thereof.

“Trademark License”:  any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
6, to the extent (after giving effect to the provisions of 9-408(a) of the
New York UCC and similar provisions of a Uniform Commercial Code of any other
applicable jurisdiction) the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and interest in such Trademark
License is not prohibited by such Trademark License without the consent of any
other party thereto, would not give any other party to such Trademark License
the right to terminate its obligations thereunder, or is permitted with consent
if all necessary consents to such grant of a security interest have been
obtained from the other parties thereto (it being understood that the foregoing
shall not be deemed to obligate such Grantor to obtain such consents); provided
that the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in any
money or other amounts due or to become due under any such Trademark License.

“Vehicles”: 
all cars, trucks, trailers, construction and earth moving equipment and
other vehicles covered by a certificate of title law of any state.

Other Definitional Provisions.  (a) 
The words “hereof,” “herein,” “hereto” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.

(b)           The meanings given
to terms defined herein shall be equally applicable to both the singular and
plural forms of such terms.

(c)           Where the context
requires, terms relating to the Collateral or any part thereof, when used in
relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant
part thereof.

SECTION 2.  GUARANTEE

2.1        Guarantee.  (a) 
Each of the Guarantors hereby, jointly and severally, absolutely,
unconditionally and irrevocably, guarantees to the Administrative Agent, for
the benefit of the Lenders and, in the case of any Hedge Agreement or Cash
Management Obligations, between the Borrower and any Affiliate of a Lender,
such Affiliate of a Lender and any person that was a lender or an Affiliate of
a lender at the time it entered into a Hedge Agreement or a Cash Management
Obligation (any such person, lender or Affiliate of a lender, together with the
Agents and the Lenders, the “Secured Parties”) and their 

 5
 

 

 

respective successors, indorsees, transferees and assigns, the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Borrower Obligations.

(b)           Anything herein or
in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents shall
in no event exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of debtors (after
giving effect to the right of contribution established in Section 2.2).

(c)           Each Guarantor
agrees that the Borrower Obligations may at any time and from time to time
exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of the Administrative Agent or any other Secured Party hereunder.

(d)           Subject to
reinstatement as provided in Section 2.6, the guarantee contained in this
Section 2 shall remain in full force and effect until all the Borrower
Obligations and the obligations of each Guarantor under the guarantee contained
in this Section 2 shall have been satisfied by payment in full, no Letter of
Credit shall be outstanding and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from the Borrower Obligations.

(e)           No payment made by
the Borrower, any of the Guarantors, any other guarantor or any other Person or
received or collected by the Administrative Agent or any other Secured Party
from the Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of
the Borrower Obligations or any payment received or collected from such
Guarantor in respect of the Borrower Obligations), remain liable for the
Borrower Obligations up to the maximum liability of such Guarantor hereunder
until (subject to reinstatement as provided in Section 2.6) all Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated.

2.2        Right
of Contribution.  Each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2 shall in
no respect limit the obligations and liabilities of any Guarantor to the
Secured Parties, and each Guarantor shall remain liable to the Secured Parties
for the full amount guaranteed by such Guarantor hereunder.

2.3        No
Subrogation.  Notwithstanding any
payment made by any Guarantor hereunder or any set-off or application of funds
of any Guarantor by any Secured Party, no Guarantor shall be entitled to be
subrogated to any of the rights of any Secured Party against the Borrower or
any other Guarantor or any collateral security or guarantee or right of offset
held by the Administrative Agent or any other Secured Party for the payment of
the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments 

 6
 

 

 

made by such Guarantor hereunder, until all Borrower Obligations are
paid in full, no Letter of Credit shall be outstanding and the Commitments are
terminated.  If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Secured Parties, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor,
be turned over to the Administrative Agent in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
required), to be applied against the Borrower Obligations, whether matured or
unmatured, as provided by Section 6.5 hereof.

2.4        Amendments,
etc. with respect to the Borrower Obligations.  Each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand
for payment of any of the Borrower Obligations made by any Secured Party may be
rescinded by the Administrative Agent or such Secured Party and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any other Secured Party, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Administrative Agent (or the Majority Lenders or all Lenders, as
the case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or
any other Secured Party for the payment of the Borrower Obligations may be
sold, exchanged, waived, surrendered or released.  Neither the Administrative Agent nor any
other Secured Party shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Borrower Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.

2.5        Guarantee
Absolute, Irrevocable and Unconditional. 
Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Borrower Obligations and notice of or proof
of reliance any Secured Party upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2.  Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Borrower Obligations.  Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute, irrevocable and unconditional guarantee of
payment without regard to (a) the validity or enforceability of the Credit
Agreement or any other Loan Document, any of the Borrower Obligations or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by any Secured Party, (b) any
defense, set-off or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the Borrower or any
other Person against any Secured Party, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or such
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Borrower Obligations, or of such
Guarantor under the guarantee contained in this Section 2, in bankruptcy or in
any other instance 

 7
 

 

 

(other than payment or performance in full).  When making any demand hereunder or otherwise
pursuing its rights and remedies hereunder against any Guarantor, the Administrative
Agent or any other Secured Party may, but shall be under no obligation to, make
a similar demand on or otherwise pursue such rights and remedies as it may have
against the Borrower, any other Guarantor or any other Person or against any
collateral security or guarantee for the Borrower Obligations or any right of
offset with respect thereto, and any failure by the Administrative Agent or any
other Secured Party to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Borrower, any other Guarantor or
any other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Borrower, any
other Guarantor or any other Person or any such collateral security, guarantee
or right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent
or any other Secured Party against any Guarantor.  For the purposes hereof “demand” shall include
the commencement and continuance of any legal proceedings.

2.6        Reinstatement.  The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or any Guarantor, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any Guarantor or any substantial part of
its property, or otherwise, all as though such payments had not been made.

2.7        Payment.  Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars pursuant to the Credit Agreement at the relevant
payment office specified in the Credit Agreement.

SECTION 3.  GRANT OF SECURITY INTEREST

Each Grantor hereby assigns and transfers to the
Administrative Agent, for the benefit of the Secured Parties, and hereby grants
to the Administrative Agent, for the benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of such
Grantor’s Obligations:

(a)           all
Accounts;

(b)           all
Chattel Paper;

(c)           all
Commercial Tort Claims, in which any Grantor has rights, in excess of
$1,000,000, including all Commercial Tort Claims listed on Schedule 8 hereto
(as such Schedule may be amended and/or supplemented from time to time);

(d)           all
Deposit Accounts;

(e)           all
Documents;

 8
 

 

 

(f)            all
Equipment;

(g)           all
General Intangibles;

(h)           all
Instruments;

(i)            all
Intellectual Property;

(j)            all
Inventory;

(k)           all
Investment Property;

(l)            all
Letter of Credit Rights;

(m)          all
Pledged Securities;

(n)           all
books and records pertaining to the Collateral;

(o)           to
the extent not otherwise included, all Proceeds, Supporting Obligations and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.

SECTION 4.  REPRESENTATIONS AND WARRANTIES

To induce the Agents and the Lenders to enter into the
Credit Agreement and to induce the Lenders and the other Secured Parties to
make their respective extensions of credit to the Borrower thereunder, each
Grantor hereby represents and warrants to the Administrative Agent and each
Lender that:

4.1        Representations in Credit Agreement.  In the case of each Guarantor, the representations
and warranties set forth in Section 5 of the Credit Agreement as they relate to
such Guarantor or to the Loan Documents to which such Guarantor is a party,
each of which is hereby incorporated herein by reference, are true and correct,
and each Agent and each Lender shall be entitled to rely on each of them as if
they were fully set forth herein; provided that each reference in each
such representation and warranty to the Borrower’s knowledge shall, for the
purposes of this Section 4.1, be deemed to be a reference to such Guarantor’s
knowledge.

4.2        Title; No Other Liens. 
Except for the security interest granted to the Administrative Agent for
the benefit of the Secured Parties pursuant to this Agreement and the other
Liens permitted to exist on the Collateral by the Credit Agreement, such
Grantor owns each item of the Collateral free and clear of any and all Liens or
claims of others.  No financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except (a) such as have been filed in
favor of the Administrative Agent, for the benefit of the Secured Parties,
pursuant to this Agreement, (b) as are permitted by the Credit Agreement, (c)
as filed in favor of the Administrative Agent pursuant to the Existing Credit
Agreement for the ratable benefit of the lenders (and certain of their
affiliates) thereunder (and arrangements for the release of which have been
made to the satisfaction of the Administrative Agent), or (d) as previously
identified in writing to the Administrative

 9
 

 

 

Agent, arrangements for the release of which
satisfactory to the Administrative Agent have been made.

4.3        Perfected First Priority Lien.  The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified
on Schedule 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent
in completed and (to the extent required) duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of the
Administrative Agent, for its benefit and the benefit of the Secured Parties, as
collateral security for such Grantor’s Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to
all other Liens on the Collateral in existence on the date hereof except for
(i) unrecorded Liens permitted by the Credit Agreement which have priority over
the Liens on the Collateral by operation of law, (ii) Liens described on Schedule
7, and (ii) Liens previously identified in writing to the Administrative
Agent, arrangements for the release of which satisfactory to the Administrative
Agent have been made, and except to the extent that filings outside the United
States might be required to perfect such security interest in non-U.S.
intellectual property.

4.4        Chief Executive Office.  On the date hereof, such Grantor’s
jurisdiction of organization, identification number from such jurisdiction of
organization (if any) and the location of such Grantor’s chief executive office
or principal place of business are specified on Schedule 4.

4.5        Inventory and Equipment.  On the date hereof, the Inventory and the
Equipment (other than mobile goods) are kept at the locations listed on Schedule
5.

4.6        Farm Products. 
None of the Collateral constitutes, or is the Proceeds of, Farm
Products.

4.7        Pledged Securities. 
(a)  The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer owned by such Grantor,
except that the shares of Pledged Stock of any Issuer which is a Foreign
Subsidiary constitute no more than 65% of all the issued and outstanding
Capital Stock of such Issuer and no shares of any Issuer that are owned by a
Foreign Subsidiary shall constitute Pledged Stock.

(b)           All
the shares of the Pledged Stock have been duly and validly issued and, to the
extent the same are shares of Capital Stock of a corporation, are fully paid
and nonassessable.

(c)           Each
of the Pledged Notes that is an Intercompany Note constitutes the legal, valid
and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.  No obligor with respect to any such Pledged
Note has any defense or counterclaim with respect to such Pledged Note or any
payment thereunder.  All Pledged Notes
with a principal amount in excess of $100,000 are listed on Schedule 2.

 10
 

 

 

(d)           Such
Grantor is the record and beneficial owner of, and has good and marketable
title to, the Pledged Securities pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement.

4.8        Receivables. 
(a)  No amount payable to such
Grantor under or in connection with any material Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Administrative
Agent.

(b)           Receivables
in respect of which a Governmental Authority is the obligor do not constitute
more than 5%, in face amount, of all Receivables.

(c)           The
amounts represented by such Grantor to the Lenders from time to time as owing
to such Grantor in respect of the Receivables will at such times be accurate in
all material respects.

4.9        Intellectual Property. 
(a)  Schedule 6 lists all
material Intellectual Property owned by such Grantor in its own name on the
date hereof and all applications to register any such Intellectual Property.

(b)           On
the date hereof, all material Intellectual Property, and to the best of Grantor’s
knowledge, all other Intellectual Property, is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe the intellectual
property rights of any other Person.

(c)           Except as set forth
in Schedule 6, on the date hereof, none of the material Intellectual
Property, and to the best of Grantor’s knowledge, none of the other
Intellectual Property, is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.

(d)           No holding, decision
or judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of, or such Grantor’s rights in, any
Intellectual Property in any respect that could reasonably be expected to have
a Material Adverse Effect.

(e)           No action or
proceeding is pending, or, to the knowledge of such Grantor, threatened, on the
date hereof (i) seeking to limit, cancel or question the validity of any
material Intellectual Property or such Grantor’s ownership therein, or to the
best of Grantor’s knowledge, any other Intellectual Property or such Grantor’s
ownership interest therein, or (ii) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.

4.10      Deposit
Accounts; Security Accounts; Commodity Accounts.  Schedule 9 lists all (i) deposit
accounts that are owned by such Grantor in its own name on the date hereof (as
such term is defined in Section 9-102(a)(29) of the New York UCC) (a) that
have had an average daily balance in excess of $500,000, or such other amount
to be agreed by the Borrower and the Administrative Agent, for twelve months
prior to the date hereof and (b) in which the amounts held therein are not
transferred to another Deposit Account listed on Schedule 9 at the end of each
Business Day and (ii) all Securities Accounts or Commodities Accounts
maintained by such Grantor.

4.11      Commercial
Tort Claims.  Schedule 8 lists
all Commercial Tort Claims in which any Grantor has any rights in excess of
$1,000,000.

 11

 

SECTION 5.  COVENANTS

Each Grantor covenants and agrees with the
Administrative Agent and the other Secured Parties that, from and after the
date of this Agreement until the Obligations shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have
terminated:

5.1        Covenants
in Credit Agreement.  In the case of
each Guarantor, such Guarantor shall comply with and perform each covenant set
forth in the Credit Agreement applicable thereto as if such Guarantor were a
party to the Credit Agreement.

5.2        Delivery
of Instruments and Chattel Paper.  If
any amount payable under or in connection with any of the Collateral in excess
of $1,000,000 shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security (unless such
Certificated Security is in a Securities Account subject to a Control
Agreement) or Chattel Paper shall be immediately delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.

5.3        Maintenance
of Insurance.  (a)  Such Grantor will maintain, with financially
sound and reputable companies, insurance policies (i) insuring the Inventory,
Equipment and Vehicles against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
(ii) insuring such Grantor, the Administrative Agent and the Lenders against
liability for personal injury and property damage relating to such Inventory,
Equipment and Vehicles, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the Administrative Agent and
the Lenders.

(b)           All such insurance
shall (i) provide that no cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least 30 days after
receipt by the Administrative Agent of written notice thereof, (ii) name the
Administrative Agent as insured party or additional loss payee, (iii) if
reasonably requested by the Administrative Agent, include a breach of warranty
clause and (iv) be reasonably satisfactory in all other respects to the Administrative
Agent.

(c)           The Borrower shall
deliver to the Administrative Agent and the Lenders a report of a reputable
insurance broker with respect to such insurance during the month of February in
each calendar year and such supplemental reports with respect thereto as the
Administrative Agent may from time to time reasonably request.

5.4        Payment
of Obligations.  Such Grantor will
pay and discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of income or
profits therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect
to the Collateral, except that no such charge need be paid if the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been provided
on the books of such Grantor and such proceedings could not reasonably be
expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any interest therein.

 

 12
 

 

5.5           Maintenance of Perfected Security
Interest; Further Documentation.  (a)  Such Grantor
shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in Section 4.3
and shall defend such security interest against the claims and demands of all
Persons whomsoever.

(b)           Such Grantor will
furnish to the Administrative Agent and the Lenders from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.

(c)           At any time and from
time to time, upon the written request of the Administrative Agent, and at the
sole expense of such Grantor, such Grantor will promptly and duly execute and
deliver, and have recorded, such further instruments and documents and take
such further actions as the Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation,
(i) filing of any financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby and (ii) in the case of
Investment Property, Pledged Securities, Deposit Accounts and any other
relevant Collateral, taking any actions necessary to enable the Administrative
Agent to obtain “control” (within the meaning of the applicable Uniform
Commercial Code) with respect thereto, provided that each Grantor (A) shall
deliver to the Administrative Agent a Control Agreement with respect to each
Deposit Account, Securities Account and Commodity Account listed on Schedule
7.10 to the Credit Agreement within the time period set forth in Section
7.10 of the Credit Agreement and (B) shall not maintain any assets in any new
Deposit Account, Securities Account or Commodity Account unless it has
delivered to the Administrative Agent a Control Agreement with respect to such
new Deposit Account, Securities Account or Commodity Account.

5.6        Changes
in Jurisdiction of Organization, Locations, Name, etc.  Such Grantor will not, except upon 15 days’
prior written notice to the Administrative Agent and delivery to the Administrative
Agent of all additional executed financing statements and other documents (in
each case executed to the extent required) reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein:

(i)      change its jurisdiction of organization,
or if such Grantor does not have a jurisdiction of organization for purposes of
the New York UCC, the location of its chief executive office or principal place
of business from that referred to in Section 4.4; or

(ii)     change its name, identity or corporate
structure to such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would become misleading.

5.7        Notices.  Such Grantor will advise the Administrative
Agent and the Lenders promptly, in reasonable detail, of:

(a)           any
Lien (other than security interests created hereby or Liens permitted under the
Credit Agreement) on any of the Collateral which would adversely affect the
ability of the Administrative Agent to exercise any of its remedies hereunder;
and

 

 13
 

 

(b)           the
occurrence of any other event which could reasonably be expected to have a
material adverse effect on the aggregate value of the Collateral or on the
security interests created hereby.

5.8        Pledged
Securities.  (a)  If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof such Grantor shall accept the same as the agent of
the Administrative Agent and the other Secured Parties, hold the same in trust
for the Administrative Agent and the other Secured Parties and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations, provided
that the foregoing shall not require any Grantor to so deliver any such Capital
Stock of any Issuer which is a Foreign Subsidiary if, as a result thereof, the
Capital Stock of such Foreign Subsidiary pledged hereunder would exceed 65% of
all Capital Stock of such Foreign Subsidiary. 
Any sums paid upon or in respect of the Pledged Securities upon the
liquidation or dissolution of any Issuer shall be paid over to the Administrative
Agent to be held by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to
the Pledged Securities pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations.  If any
sums of money or property so paid or distributed in respect of the Pledged Securities
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Secured Parties, segregated from other funds of such
Grantor, as additional collateral security for the Obligations.

(b)           Without the prior
written consent of the Administrative Agent (not to be unreasonably withheld or
delayed), such Grantor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of any nature
or to issue any other securities convertible into or granting the right to
purchase or exchange for any stock or other equity securities of any nature of
any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Securities or Proceeds thereof
(except pursuant to a transaction expressly permitted by the Credit Agreement),
(iii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Pledged Securities or Proceeds
thereof, or any interest therein, except for the security interests created by
this Agreement and Liens permitted by the Credit Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor
or the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.

(c)           In the case of each
Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the
terms of this Agreement relating to the Pledged Securities issued by it and
will comply with such terms insofar as such terms are applicable to it, (ii) it
will notify the Administrative Agent promptly in writing of the occurrence of
any of the events described in Section 5.8(a) with respect to the 

 

 14
 

 

Pledged Securities issued by it and (iii) the terms of Section 6.3(c)
shall apply to it, mutatis  mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) with respect to the Pledged
Securities issued by it.

(d)           Such Grantor
hereby agrees that if any Issuer of Pledged Stock is organized in a
jurisdiction which does not permit the use of certificates to evidence equity
ownership, or if any of the Pledged Stock is at any time not evidenced by
certificates of ownership, then such applicable Grantor shall, to the
extent permitted by applicable law, record such pledge on the equityholder register
or the books of the issuer, cause the issuer to execute and deliver to
the Administrative Agent an acknowledgment of the pledge of such Pledged
Stock substantially in the form of Annex 2 annexed
hereto, execute any customary pledge forms or other documents necessary or
appropriate to complete the pledge and give the Administrative Agent the
right to transfer such Pledged Stock under the terms hereof.

5.9        Receivables.  (a) 
Other than in the ordinary course of business consistent with its past
practice, such Grantor will not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable or (v) amend, supplement or modify any Receivable in any manner
that could adversely affect the value thereof.

(b)           Such Grantor will
deliver to the Administrative Agent a copy of each material demand, notice or
document received by it that questions or calls into doubt the validity or enforceability
of more than 5% of the aggregate amount of the then outstanding Receivables of
the Borrower and its Subsidiaries.

5.10      Intellectual
Property.  (a)  Such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain as
in the past the quality of products and services offered under such Trademark,
(iii) use such Trademark with any appropriate notice of registration and all
other notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Administrative Agent, for the ratable benefit of the
Secured Parties, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby such Trademark
may become invalidated or impaired in any way.

(b)           Such Grantor (either
itself or through licensees) will not do any act, or omit to do any act,
whereby any material Patent may become forfeited, abandoned or dedicated to the
public.

(c)           Such Grantor (either
itself or through licensees) (i) will employ each material Copyright and (ii)
will not (and will not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any material portion of such
Copyrights may become invalidated or otherwise impaired.  Such Grantor will not (either itself or
through licensees) do any act whereby any material portion of such Copyrights
may fall into the public domain.

 

 15
 

 

(d)           Such Grantor (either
itself or through licensees) will not do any act
that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.

(e)           Such Grantor will
notify the Administrative Agent and the Lenders immediately if it knows, or has
reason to know, that any application or registration relating to any material
Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property
or such Grantor’s right to register the same or to own and maintain the same.

(f)            Whenever such
Grantor, either by itself or through any agent, employee, licensee or designee,
shall file an application for the registration of any Intellectual Property
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any State of the United States, such
Grantor shall report such filing to the Administrative Agent within five
Business Days after the last day of the fiscal quarter in which such filing
occurs.  Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the security interest
of the Administrative Agent and the other Secured Parties in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.

(g)           Such Grantor will
take all reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any State of the
United States, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of material Intellectual
Property, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.

(h)           In the event that
any material Intellectual Property is infringed, misappropriated or diluted by
a third party, such Grantor shall (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Administrative Agent after it learns
thereof and sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.

5.11      Jurisdiction
of Organization.  At the Administrative
Agent’s request, each Grantor will provide its jurisdiction of organization,
identification number from the jurisdiction of organization (if any), and the
location of such Grantor’s chief executive office or sole place of
business.  In addition, the
Administrative Agent may request, and such Grantor shall provide upon such
request, a certified charter, certificate of incorporation, or other
organizational document and long form good standing certificate from each Grantor.

5.12      Commercial
Tort Claims.  Such Grantor will
advise the Administrative Agent of such Grantor’s interest in any Commercial
Tort Claim in an amount in excess of $1,000,000 in which such Grantor believes
it has rights, and such Grantor shall promptly provide the Administrative Agent

 

 16
 

 

with an updated Schedule 8 or a supplement to Schedule 8
(which, in each case shall become a part hereof) describing such Commercial
Tort Claim or such information with respect thereto as the Administrative Agent
may reasonably request in order to attach and perfect a security interest
therein in accordance with applicable law.

5.13      Additional
Accounts.  Such Grantor will advise
the Administrative Agent of the creation of any new (i) deposit account (as
such term is defined in Section 9-102(a)(29) of the New York UCC) which
(a) has had an average daily balance in excess of $500,000 for the four most
recent fiscal quarters for which financial information is available (measured
at the end of each fiscal quarter) and (b) in which the amounts held therein are
not transferred to a Deposit Account listed on Schedule 9 at the end of each
Business Day (any such deposit account will be a “Deposit Account” with respect
to the definition of such term heron), (ii) Securities Account or (iii)
Commodity Account, and such Grantor shall promptly provide the Administrative
Agent with an updated Schedule 9 describing such deposit account,
Securities Account or Commodities Account, as the case may be or such
information with respect thereto as the Administrative Agent may reasonably request.

SECTION 6.  REMEDIAL PROVISIONS

6.1        Certain
Matters Relating to Receivables. 
(a)  The Administrative Agent
shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications.  At any time and from time to time (but not
more frequently than once per fiscal quarter), upon the Administrative Agent’s
request and at the expense of the relevant Grantor, such Grantor shall cause
independent public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Receivables.

(b)           The Administrative
Agent hereby authorizes each Grantor to collect such Grantor’s Receivables and
the Administrative Agent may curtail or terminate said authority at any time
and only at any time after the occurrence and during the continuance of an
Event of Default.  If required by the
Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by any Grantor, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Administrative Agent if required, in a Collateral Account
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the
Lenders only as provided in Section 6.5, and (ii) until so turned over, shall
be held by such Grantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Grantor. 
Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.

(c)           At the
Administrative Agent’s request, at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall deliver to the Administrative
Agent all original and other documents evidencing, and relating to, the agreements
and transactions which gave rise to the Receivables, including, without
limitation, all original orders, invoices and shipping receipts.

6.2        Communications
with Obligors; Grantors Remain Liable. 
(a)  The Administrative Agent in
its own name or in the name of others may at any time after the occurrence and
during the con-

 

 17
 

 

tinuance of an Event of Default communicate with obligors under the
Receivables to verify with them to the Administrative Agent’s satisfaction the
existence, amount and terms of any Receivables.

(b)           Upon the request of
the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Receivables that the Receivables have been assigned to the Administrative Agent
for the ratable benefit of the Lenders and that payments in respect thereof
shall be made directly to the Administrative Agent.

(c)           Anything herein to
the contrary notwithstanding, each Grantor shall remain liable under each of
the Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. 
Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of any Grantor under or pursuant to any Receivable (or
any agreement giving rise thereto), to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

6.3        Pledged
Stock.  (a)  Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in the Credit Agreement, and to exercise all
voting and corporate rights with respect to the Investment Property; provided,
however, that no vote shall be cast or corporate right exercised or other
action taken which would materially impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.

(b)           If an Event of
Default shall occur and be continuing and the Administrative Agent shall give
notice of its intent to exercise such rights to the relevant Grantor or
Grantors, (i) the Administrative Agent shall have the right to receive any and
all cash dividends, payments or other Proceeds paid in respect of the Pledged
Securities and make application thereof to the Obligations in such order as the
Credit Agreement shall prescribe, and (ii) any or all of the Pledged Securities
shall be registered in the name of the Administrative Agent or its nominee, and
the Administrative Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and 

 

 18
 

 

conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do
so or delay in so doing.

(c)           Each Grantor hereby
authorizes and instructs each Issuer of any Pledged Securities pledged by such
Grantor hereunder to comply with any instruction received by it from the Administrative
Agent in writing that (i) states that an Event of Default has occurred and is
continuing and (ii) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying.

6.4        Proceeds
To Be Turned Over to Administrative Agent. 
In addition to the rights of the Administrative Agent and the Lenders
specified in Section 6.1 with respect to payments of Receivables, if an Event
of Default shall occur and be continuing, and the Administrative Agent has so
requested, all Proceeds received by any Grantor in respect of Collateral
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Grantor, and shall, forthwith upon receipt by such Grantor,
be turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required).  All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Administrative
Agent in a Collateral Account (or by such Grantor in trust for the
Administrative Agent and the Lenders) shall continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 6.5.

6.5        Application
of Proceeds.  At such intervals as
may be agreed upon by the Borrower and the Administrative Agent, or, if an
Event of Default shall have occurred and be continuing, at any time at the
Administrative Agent’s election, the Administrative Agent may apply all or any
part of Proceeds held in any Collateral Account in payment of the Obligations:

(a)           first, to the payment of the costs and expenses of
such collection, sale or other realization, including out-of-pocket costs and
expenses of the Administrative Agent and the fees and expenses of its agents
and counsel, and all expenses incurred and advances made by the Administrative
Agent in connection therewith; and

(b)           next, to the payment in full of the Obligations, in
each case equally and ratably in accordance with the respective amounts thereof
then due and owing or as the Lenders holding the same may otherwise agree,

and any part of such funds
which are not required to be applied in payment of the Obligations in accordance
with the foregoing provisions and which Administrative Agent deems not required
as collateral security for the Obligations shall be paid over from time to time
by the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same.  Any
balance of such Proceeds remaining after the Obligations shall have been paid
in full, no Letters of Credit shall be outstanding and the Commitments shall
have terminated shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive the same.

 

 19
 

 

6.6        Code and Other Remedies.  If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to
the Obligations, all rights and remedies of a secured parry under the New York
UCC or any other applicable law.  Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, protests,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit
risk.  The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the
Administrative Agent’s request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Administrative Agent shall apply the proceeds
of any action taken by it pursuant to this Section 6.6, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys’ fees
and disbursements, to the payment in whole or in part of the Obligations, in
the manner set forth in paragraphs (a) and (b) of Section 6.5, and only
after such application and after the payment by the Administrative Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-615(a)(3) of the New York UCC, need the Administrative Agent account
for the surplus, if any, to any Grantor. 
To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder.  If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 Business Days before such sale or
other disposition.

6.7        Private
Sales.  (a)  Each Grantor recognizes that the Administrative
Agent may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof.  Each Grantor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. 
The Administrative Agent shall be under no obligation to delay a sale of
any of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act,
or under applicable state securities laws, even if such Issuer would agree to
do so.

 20

 

 

(b)           Each Grantor agrees
to use its best efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the Pledged Stock
pursuant to this Section 6.7 valid and binding and in compliance with any and
all other applicable Requirements of Law. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the
Administrative Agent and the other Secured Parties, that the Administrative
Agent and the other Secured Parties have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 6.7 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred and is continuing under the Credit Agreement.

6.8        Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.

SECTION 7.  THE ADMINISTRATIVE AGENT

7.1        Administrative
Agent’s Appointment as Attorney-in-Fact, etc.  (a) 
Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:

(i)      in the name of such Grantor or its own
name, or otherwise, take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity or otherwise
reasonably deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or with respect to
any other Collateral whenever payable;

(ii)     in the case of any Intellectual Property,
execute and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may reasonably request to
evidence the Administrative Agent’s and the other Secured Parties’ security interest
in such Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;

(iii)    pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;

 21
 

 

 

(iv)    execute, in connection with any sale
provided for in Section 6.6 or 6.7, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral; and

(v)     (i) direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (ii) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral; (iii)
sign and indorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (iv)
commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (v) defend
any suit, action or proceeding brought against such Grantor with respect to any
Collateral; (vi) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as
the Administrative Agent may deem appropriate; (vii) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), throughout the world for such term or
terms, on such conditions, and in such manner, as the Administrative Agent
shall in its sole discretion determine; and (viii) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative Agent’s
option and such Grantor’s expense, at any time, or from time to time, all acts
and things which the Administrative Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and the Administrative Agent’s
and the other Secured Parties’ security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor might
do.

Anything in this Section 7.1(a) to the contrary
notwithstanding, the Administrative Agent agrees that it will not exercise any
rights under the power of attorney provided for in this Section 7.1(a) unless
an Event of Default shall have occurred and be continuing.

(b)           If any Grantor fails
to perform or comply with any of its agreements contained herein, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.

(c)           The expenses of the
Administrative Agent incurred in connection with actions undertaken as provided
in this Section 7.1, together with interest thereon at a rate per annum equal
to the rate per annum at which interest would then be payable on past due
Revolving Credit Loans that are ABR Loans under the Credit Agreement, from the
date of payment by the Administrative Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Administrative Agent
on demand.

(d)           Each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof.  All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.

 22
 

 

7.2           Duty of Administrative Agent.  The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. 
Neither the Administrative Agent, any Lender nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof, except in each
case as regards the disposition of any Collateral permitted under the Credit
Agreement.  The powers conferred on the
Administrative Agent and the Lenders hereunder are solely to protect the
Administrative Agent’s and the Lenders’ interests in the Collateral and shall
not impose any duty upon the Administrative Agent or any Lender to exercise any
such powers.  The Administrative Agent
and the Lenders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.

 

7.3        Execution of Financing Statement.  Pursuant to applicable law, each Grantor
authorizes the Administrative Agent to file or record financing statements and
other filing or recording documents or instruments with respect to the Collateral
without the signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement.  Each Grantor authorizes the Administrative
Agent to use the collateral description of “all assets, whether now owned or
hereafter acquired” in any such financing statements.  A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.

7.4        Authority
of Administrative Agent.  Each
Grantor acknowledges that the rights and responsibilities of the Administrative
Agent under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.

SECTION 8.  MISCELLANEOUS

8.1        Amendments
in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by each affected Grantor and
the Administrative Agent (acting with the required consent, if any, of the Lenders
as provided in the Credit Agreement), provided that any provision of
this Agreement imposing obligations on any Grantor may be waived by the
Administrative Agent in a written instrument executed by the Administrative
Agent (acting with the required consent, if any, of the Lenders as provided in
the Credit Agreement) of the Credit Agreement, subject to the terms of the
Credit Agreement.

 23
 

 

8.2        Notices.  All notices, requests and demands to or upon
the Administrative Agent or any Grantor hereunder shall be effected in the
manner provided for in subsection 11.2 of the Credit Agreement; provided
that any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 1.

8.3        No Waiver by Course of Conduct;
Cumulative Remedies.  Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default.  No failure
to exercise, nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof.  No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Administrative Agent or any
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or
such Lender would otherwise have on any future occasion.  The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.

8.4        Enforcement Expenses; Indemnification.  (a) 
Each Guarantor agrees to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement and the other Loan
Documents to which such Guarantor is a party, including, without limitation,
the fees and disbursements of counsel to each Lender and of counsel to the
Administrative Agent.

(b)           Each
Guarantor agrees to pay, and to save the Administrative Agent and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other similar taxes
which may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Agreement to the extent the Borrower would be required to do so pursuant to
subsection 11.5 of the Credit Agreement.

(c)           Each
Guarantor agrees to pay, and to save the Administrative Agent and the other
Secured Parties harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to subsection 11.5 of the Credit
Agreement.

(d)           The
agreements in this Section 8.4 shall survive termination of the Loan Documents
and repayment of the Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.

8.5        Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the other Secured Parties and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any
of its rights or obligations under this Agreement without the prior written
consent of each Lender.

 24
 

 

8.6        Set-Off.  Each Grantor hereby irrevocably authorizes
the Administrative Agent and each Lender at any time and from time to time
while an Event of Default shall have occurred and be continuing, without notice
to such Grantor or any other Grantor, any such notice being expressly waived by
each Grantor, to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by the Administrative Agent or such Lender to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
the Administrative Agent or such Lender may elect, against and on account of
the obligations and liabilities of such Grantor to the Administrative Agent or
such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured.  The Administrative Agent and
each Lender shall notify such Grantor promptly of any such set-off and the
application made by the Administrative Agent or such Lender of the proceeds
thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. 
The rights of the Administrative Agent and each Lender under this
Section 8.6 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or such
Lender may have.

8.7        Counterparts. 
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

8.8        Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

8.9        Section Headings. 
The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.

8.10      Integration.  This
Agreement and the other Loan Documents represent the entire agreement of the
Grantors, the Administrative Agent and the other Secured Parties with respect
to the subject matter hereof and thereof; and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Secured Party relative to subject matter hereof and thereof not expressly set
forth or referred to herein or in the other Loan Documents.

8.11      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

8.12      Submission to Jurisdiction; Waivers.  Each Grantor hereby irrevocably and
unconditionally:

 25
 

 

 

(a)           submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

(b)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

(c)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section 8.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;

(d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and

(e)           waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section 8.12 any
consequential damages.

8.13      Acknowledgements.  Each Grantor hereby acknowledges that:

(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;

(b)           neither
the Administrative Agent nor any other Secured Party has any fiduciary relationship
with or duty to any Grantor arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Grantors,
on the one hand, and the Administrative Agent and other Secured Parties, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor, and

(c)           no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Grantors and the Secured Parties.

8.14      WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO  HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

8.15      Additional Grantors. 
Each Subsidiary of the Borrower that is required to become a party to
this Agreement pursuant to subsection 7.9 of the Credit Agreement shall become
a Grantor for all purposes of this Agreement upon execution and delivery by
such Subsidiary of an Assumption Agreement in the form of Annex 1
hereto.

 26
 

 

 

8.16      Releases. 
(a)  At such time as the Loans,
the Reimbursement Obligations and the other Obligations shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby,
and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to the
Grantors.  At the request and sole
expense of any Grantor following any such termination, the Administrative Agent
shall deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

(b)           If any of the Collateral
shall be sold, transferred or otherwise disposed of by any Grantor in a
transaction permitted by the Credit Agreement, then the Administrative Agent,
at the request and sole expense of such Grantor, shall execute and deliver to
such Grantor all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral.  At the request and sole expense of the
Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of, or such Subsidiary
Guarantor shall be liquidated or dissolved, in each case in a transaction
permitted by the Credit Agreement, provided that the Borrower shall have
delivered to the Administrative Agent, at least ten Business Days prior to the
date of the proposed release, a written request for release identifying the
relevant Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.

[Signature Page Follows]

 

 27

 

IN WITNESS WHEREOF, each of the undersigned has caused
this Agreement to be duly executed and delivered as of the date first above
written.

	
  

  	
   

  	
   

  	
  NBTY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 S-1
 

 

 

	
   

  	
  AMERICAN HEALTH, INC.,

  
	
   

  	
  ARCO PHARMACEUTICALS, INC.,

  
	
   

  	
  ARTHRITIS RESEARCH CORP.,

  
	
   

  	
  BIOSMART DIRECT SALES, LLC,

  
	
   

  	
  DE TUINEN LTD.,

  
	
   

  	
  DIABETES AMERICAN RESEARCH CORP.,

  
	
   

  	
  DYNAMIC ESSENTIALS (DE), INC.,

  
	
   

  	
  EUROLEAN RESEARCH, LLC,

  
	
   

  	
  FOOD SYSTEMS, INC.

  
	
   

  	
  GOOD N’ NATURAL MANUFACTURING CORP.,

  
	
   

  	
  HEALTHWATCHERS (DE), INC.,

  
	
   

  	
  HOLLAND & BARRETT LTD.,

  
	
   

  	
  MET-RX NUTRITION, INC.,

  
	
   

  	
  MET-RX SUBSTRATE TECHNOLOGY, INC.,

  
	
   

  	
  MET-RX USA, INC.,

  
	
   

  	
  NABARCO ADVERTISING ASSOCIATES, INC.,

  
	
   

  	
  NATURAL WEALTH NUTRITION CORPORATION,

  
	
   

  	
  NATURE’S BOUNTY INC.,

  
	
   

  	
  NATURE’S BOUNTY MANUFACTURING CORP.,

  
	
   

  	
  NATURE’S BOUNTY, INC.,

  
	
   

  	
  NATURESMART, LLC,

  
	
   

  	
  NBTY AVIATION, LLC,

  
	
   

  	
  NBTY CAH COMPANY,

  
	
   

  	
  NBTY CAM COMPANY,

  
	
   

  	
  NBTY CANADA ACQUISITION, INC.,

  
	
   

  	
  NBTY CHINA HOLDINGS, INC.,

  
	
   

  	
  NBTY CHINA, INC.,

  
	
   

  	
  NBTY DISTRIBUTION, INC.,

  
	
   

  	
  NBTY FLIGHT SERVICES, LLC,

  
	
   

  	
  NBTY GLOBAL, INC.

  
	
   

  	
  NBTY MANUFACTURING, LLC,

  
	
   

  	
  NBTY PAH, LLC,

  
	
   

  	
  NBTY TRANSPORTATION, INC.,

  
	
   

  	
  NBTY UKRAINE 1, LLC,

  
	
   

  	
  NBTY UKRAINE 2, LLC,

  
	
   

  	
  NBTY UKRAINE, INC.,

  
	
   

  	
  NUTRITION HEADQUARTERS (DE), INC.,

  
	
   

  	
  OMNI VITAMIN AND NUTRITION CORP.,

  
	
   

  	
  PHYSIOLOGICS, LLC,

  
	
   

  	
  PRECISION ENGINEERED LIMITED (USA),

  
	
   

  	
  PURITAN’S PRIDE, INC.,

  
	
   

  	
  PURITAN’S PRIDE OF JAPAN,

  
	
   

  	
  REXALL SUNDOWN, INC.,

  
	
   

  	
  REXALL US DELAWARE, INC.,

  
	
   

  	
  REXALL, INC.,

  
	
   

  	
  RICHARDSON LABS, INC.,

  
	
   

  	
  RXSD, INC.,

  
	
   

  	
  SOLGAR HOLDINGS, INC.,

  
	
   

  	
  SOLGAR MEXICO HOLDINGS, LLC,

  
	
   

  	
  SOLGAR, INC.,

  
	
   

  	
  SUNDOWN, INC.,

  
	
   

  	
  THE ESTER C COMPANY,

  
	
   

  	
  THE
  NON-IRRADIATED HERBAL MANUFACTURERS

  GROUP, LLC,

  
	
   

  	
  UNITED STATES NUTRITION, INC.,

  
	
   

  	
  UNITED VITAMIN MANUFACTURING CORP.,

  
	
   

  	
  VITAMIN WORLD (BOCA), LLC,

  
	
   

  	
  VITAMIN WORLD (VI), INC.

  
	
   

  	
  VITAMIN WORLD OF GUAM, LLC,

  
	
   

  	
  VITAMIN WORLD ONLINE, INC.,

  

 

 S-2
 

 

 

	
  

  	
  VITAMIN WORLD OUTLET STORES, INC.,

  
	
   

  	
  VITAMIN WORLD, INC.,

  
	
   

  	
  WORLDWIDE SPORT NUTRITIONAL SUPPLEMENTS, INC.,

  
	
   

  	
   

  

 

	
  

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 S-3

 

ANNEX 1

[FORM OF
ASSUMPTION AGREEMENT]

ASSUMPTION AGREEMENT, dated as of
[                           ].
made by [                    
                                          ],
a [         ] corporation (the “Additional
Grantor”), in favor of JPMorgan Chase Bank, N.A. as administrative agent
(in such capacity, the “Administrative Agent”), for the banks and other
financial institutions (the “Lenders”) parties to the Credit Agreement
referred to below.  Unless otherwise
indicated, all capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.

W I T N E S S E T H :

WHEREAS, NBTY, Inc. (the “Borrower”), the
Lenders, JPMorgan Chase Bank, N.A. as Administrative Agent and Collateral
Agent, and Bank of America, N.A., BNP Paribas, Citibank, N.A., and HSBC Bank
USA, National Association, as Co-Syndication Agents, have entered into a Credit
Agreement, dated as of November 3, 2006 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”);

WHEREAS, in connection with the Credit Agreement, the
Borrower and certain of its Subsidiaries (other than the Additional Grantor)
have entered into the Guarantee and Collateral Agreement, dated as of November
3, 2006 (as amended, supplemented or otherwise modified from time to time, the “Guarantee
and Collateral Agreement”) in favor of the Administrative Agent for the
benefit of the Lenders;

WHEREAS, the Credit Agreement requires the Additional
Grantor to become a party to the Guarantee and Collateral Agreement; and

WHEREAS, the Additional Grantor has agreed to execute
and deliver this Assumption Agreement in order to become a party to the
Guarantee and Collateral Agreement;

NOW, THEREFORE, IT IS AGREED:

1.             Guarantee
and Collateral Agreement.  By
executing and delivering this Assumption Agreement, the Additional Grantor, as
provided in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes
a party to the Guarantee and Collateral Agreement as a Grantor thereunder with
the same force and effect as if originally named therein as a Grantor and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. In furtherance of the
foregoing, the Additional Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
benefit of the Secured Parties, a security interest in, all of the Collateral
(as defined in the Guarantee and Collateral Agreement) now owned or at any time
hereafter acquired by the Additional Grantor or in which the Additional Grantor
now has or at any time in the future may acquire any right, title or interest,
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the Additional
Grantor’s Obligations (as defined in the Guarantee and Collateral Agreement). 

 

 

The information set forth in Annexes 2 and 4 [and
[    ]] hereto is hereby added to the information set forth
in Schedules 2 and 4 [and [     ]] to the Guarantee
and Collateral Agreement. The Additional Grantor hereby represents and warrants
that each of the representations and warranties contained in Section 4 of the
Guarantee and Collateral Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.

2.             GOVERNING
LAW.  THIS ASSUMPTION AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.

 

 2

 

IN WITNESS WHEREOF, the
undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.

	
  

  	
  [                                              ]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

ANNEX 2

FORM OF ISSUER’S
ACKNOWLEDGMENT

The undersigned hereby (i) acknowledges receipt of a
copy of that certain Guarantee and Collateral Agreement, dated as of November
3, 2006, made by NBTY, Inc., a Delaware corporation (the “Borrower”) and
the other signatories thereto, other than the Administrative Agent (together
with any entity that may become a party thereto as a Grantor as provided
therein (collectively, with the Borrower, and together with any successors in
such capacities, the “Grantors”), as pledgors, assignors and debtors, in
favor of JPMorgan Chase Bank, N.A., a New York banking corporation, in its
capacity as administrative agent pursuant to the Credit Agreement, as pledgee,
assignee and secured party (in such capacities and together with any successors
in such capacities, the “Administrative Agent”) (and as further amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Guarantee and Collateral Agreement”; capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Guarantee and Collateral Agreement), (ii) agrees promptly to note on its
books the security interests granted to the Administrative Agent in respect of
the Pledged Stock of the undersigned and confirmed under the Guarantee and
Collateral Agreement, (iii) agrees that it will comply with instructions of the
Administrative Agent with respect to such Pledged Stock without further consent
by the applicable Grantor, (iv) agrees to notify the Administrative Agent upon
obtaining knowledge of any interest in favor of any Person in the such Pledged
Stock that is adverse to the interest of the Administrative Agent therein and
(v) waives any right or requirement at any time hereafter to receive a
copy of the Guarantee and Collateral Agreement in connection with the exercise
of voting rights by the Administrative Agent or its nominee.

 

	
  

  	
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  Title:

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