-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EZi+U1GKhpwg6gskMGV3DE3jn5DBKgcE5LkXbzyGH5Yd8jCsNqX84TwCGJDFHdjS WctLC/YTIWglhcI8zpi/ZA== 0001007507-98-000022.txt : 19980901 0001007507-98-000022.hdr.sgml : 19980901 ACCESSION NUMBER: 0001007507-98-000022 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980831 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORRISON HEALTH CARE INC CENTRAL INDEX KEY: 0001007507 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 631155966 STATE OF INCORPORATION: GA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-14194 FILM NUMBER: 98701831 BUSINESS ADDRESS: STREET 1: 1955 LAKE PARK DR SE STREET 2: STE 400 CITY: SMYRNA STATE: GA ZIP: 30080-8855 BUSINESS PHONE: 7704373300 MAIL ADDRESS: STREET 1: 1955 LAKE PARK DR SE STREET 2: STE 400 CITY: SMYRNA STATE: GA ZIP: 30080-8855 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) X Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 (No Fee Required) For the fiscal year ended May 31, 1998 OR Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 (No Fee Required) For the transition period from to Commission file number 1-14194 MORRISON HEALTH CARE, INC. (Exact name of Registrant as specified in charter) GEORGIA 63-1155966 (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) 1955 Lake Park Drive, Suite 400, Smyrna, GA 30080-8855 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (770) 437-3300 Securities Registered Pursuant to Section 12(b) of The Act: Name of each exchange Title of each class on which registered ------------------- ------------------- $0.01 par value Common Stock New YorkStock Exchange Rights to Purchase Series A Participative New York Stock Exchange Preferred Stock Securities Registered Pursuant to Section 12(g) of The Act: None (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ X ] The aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing sale price of Common Stock on August 14, 1998 as reported on the New York Stock Exchange, was approximately $215,874,329. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of shares of the Registrant's common stock outstanding at August 14, 1998 was 12,084,408. Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998 are incorporated by reference into Parts I and II. Portions of the Registrant's definitive proxy statement dated August 31, 1998 are incorporated by reference into Part III. INDEX PART I Page Number Item 1. Business.............................................. 3-6 Item 2. Properties............................................ 6 Item 3. Legal Proceedings..................................... 6 Item 4. Submission of Matters to a Vote of Security Holders... 7 Executive Officers of the Company..................... 7-8 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters................... 9 Item 6. Selected Financial Data....................... 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 9 Item 7A. Quantitative and Qualitative Disclosures About Market Risk................................... 9 Item 8. Financial Statements and Supplementary Data... 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 9 PART III Item 10. Directors and Executive Officers of the Company. 10 Item 11. Executive Compensation........................ 10 Item 12. Security Ownership of Certain Beneficial Owners and Management................................ 10 Item 13. Certain Relationships and Related Transactions........ 10 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................................... 11-14 PART I ITEM 1. BUSINESS. General Morrison Health Care, Inc., a Georgia corporation (the"Company" or "MHCI"), became an independent, publicly owned company in March 1996 as a result of the distribution (the "Distribution") by Morrison Restaurants Inc., a Delaware corporation ("MRI"), to its shareholders of all the issued and outstanding shares of common stock of the Company. As a result of the Distribution, MRI's shareholders received one share of Company common stock for every three shares of MRI held. MHCI is the largest independent company focused exclusively on providing food and nutrition services to health care facilities. Its clients include acute care hospitals, health systems, nursing homes and retirement facilities. The Company's mission is to be the leading provider of food and nutrition services to the health care industry, fully committed to maximizing quality and value in everything the Company does for its clients, customers, team members and shareowners. With contracts in 33 states and Washington D.C., MHCI is one of the leading providers of food and nutrition services to hospitals, senior living facilities and other health care facilities across North America. The Company's health care foodservice operations originated in the early 1950s. The Company has expanded through its own marketing and sales force and by acquiring other foodservice businesses. In August 1994, the Company sold certain of its education, business and industry ("B&I") contracts and assets and closed the remaining B&I accounts. This divestiture left the Company with only health care contracts and allowed the Company to concentrate its capital and management team in the health care and senior living industry, which Management believes have a better opportunity for growth and profitability. The Company believes the senior living market is the fastest growing segment of the health care industry, due to changing demographics and lifestyles and the number of retirement facilities being constructed. The Company has emphasized its commitment to provide food and nutrition services to the senior living market by acquiring two companies in the field: Drake Management Services, Inc. in January 1998 which services the Southwest and Spectra Services, Inc. in March 1998 which services the Mid-west. Believeing that this market is under-penetrated and rapidly expanding, the Company plans for future growth in the senior living market to result from acquisitions and internal deveopment. Operations The Company operates the food and nutrition services departments of hospitals and other health care facilities. These departments typically include retail outlets for staff and visitors and patient food and nutrition services. MHCI health care accounts range in size from 100 bed specialty hospitals to facilities with over 2,100 beds. Senior living accounts range in size from 100 residents to 750 residents. The Company has operations in 33 states and Washington, D.C. Approximately 68% of the accounts are in hospitals, while over 24% of the accounts are in senior living facilities. The Company provides its clients with the flexibility to adjust programs, staffing and service plans to meet the changing needs of the industry. MHCI has capitalized on its retail heritage of operating restaurants to bring a retail-oriented mentality to health care and senior living clients. MHCI offers its clients programs designed to reduce costs and increasecustomer (patients and staff) satisfaction. To better serve its clients and provide them with specialized expertise, MHCI's staff is organized into regional teams. Teams may include a regional vice president, regional director of operations, regional director of nutrition services, regional director of culinary, human resources director, support services coordinator and a director of business development, each of whom is dedicated to sharing the best industry practices and performance improvement ideas. The regional teams are supported by a corporate staff that includes nutrition services, marketing, sales, vending, human resources, legal, finance, layout and design and culinary services. MHCI offers its services pursuant to two general types of contracts:(i) profit and loss (or guaranteed cost) contracts, where MHCI assumes the risk of profit or loss for the foodservice operation and (ii) management fee contracts, where the client reimburses MHCI for all or nearly all costs incurred in providing the services contracted plus a negotiated management fee for supervising the client's food and nutrition services operations. In addition, some management fee contracts include incentives and penalties, pursuant to which MHCI manages the client's food and nutrition operations on a management fee basis, with the amount of the management fee determined in whole or in part by the achievement of predetermined goals. Approximately 69% of MHCI's accounts are operated pursuant to management fee contracts. Management fee contracts with incentives and penalties are becoming more popular. The majority of MHCI's contracts were awarded through bidding processes. In addition, MHCI operates "branded concept" restaurants such as Pizza Hutr and Taco Bellr on client premises. These branded concepts accounts are operated pursuant to license arrangements with the appropriate restaurant company. Currently, MHCI has 13 license arrangements with nationally and regionally recognized restaurant companies. The Company has created a new program to develop advanced food preparation and delivery systems. These systems are designed to increase customer satisfaction by enhancing production consistencies while generating significant cost reductions and providing quality services for health care facilities nationwide. MHCI markets its services nationwide through its business development directors. Each business development director focuses on potential clients in a specific territory pursuant to a marketing plan. The business development directors, along with a vice president of sales and marketing, also market MHCI's services to large national health care accounts. In addition, MHCI personnel market to existing clients to expand its foodservice responsibilities and increase sales of existing services to complement the facility's foodservices department. The Company is planning to continue its expansion into the senior living market through internal growth and development as well as through key acquisitions. Research and Development The Company does not engage in any material research and development activities. Numerous studies are made, however, on a continuing basis, to improve menus, equipment and methods of operations. Raw Materials Raw materials essential to the operation of the Company's business are obtained principally through national food distributors. The Company uses short-term purchase commitment contracts to stabilize the potentially volatile pricing associated with certain commodities. Because of the relatively short storage life of inventories, limited storage facilities at customer locations, MHCI's requirements for freshness and the numerous sources of goods, a minimum amount of inventory is maintained at customer locations. If necessary, all essential food, beverage and operational products are available and can be obtained from alternative suppliers in all cities where the Company operates. The Company has entered into a purchasing arrangement with Ruby Tuesday, Inc. ("RTI"), successor to MRI's casual dining business and Morrison Fresh Cooking, Inc. ("MFCI"), which held the family dining assets of MRI and was spun off, along with the Company, in the Distribution, to maintain the volume purchasing bargaining position enjoyed by the Company prior to the Distribution. Trademarks of the Company The Company has registered certain trademarks and service marks with the United States Patent and Trademark Office including the Pro-Health Dining trademark.The Company believes that this and other related marks are important to its business. Registrations of the Company's trademarks expire from 2000 to 2009, unless renewed. Seasonality The Company's revenues are not seasonal to any significant degree. Working Capital Practices Cash provided by operations, along with borrowings under the Company's revolving lines of credit, are used to pay dividends, invest in new units and renovate existing units. Additional information concerning the working capital of the Company is incorporated herein by reference to information presented within the "Liquidity and Capital Resources" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's 1998 Annual Report to Shareholders. Customer Dependence No material part of the business of the Company is dependent upon a single customer, or a very few customers, the loss of any one of which would have a material adverse effect on the Company. Government Contracts There is no material portion of the Company's business that is subject to renegotiation of profits or termination of contracts or sub-contracts at the election of the Government. Competition The health care food and nutrition services business is highly competitive. The Company competes with national and regional food contract companies that offer the same type of services as the Company. Management believes that competition in health care food and nutrition services is based on pricing, quality of services and reputation. Management believes that it compares favorably with its competition in these areas. Government Compliance The Company is subject to various regulations at both the state and local levels for items such as sanitation, health and fire safety, all of which could affect the operation of existing accounts. The Company's business is also subject to various other regulations at the federal level such as fair labor standards and occupational safety and health regulations. Compliance with these regulations has not had, and is not expected to have, a material adverse effect on the Company's operations. Environmental Compliance Compliance with federal, state and local laws and regulations which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, is not expected to have a material effect upon the capital expenditures, earnings or competitive position of the Company. Personnel The Company employs approximately 4,300 full-time and part-time employees. The Company believes that working conditions are favorable and employee compensation is comparable with its competition. ITEM 2. PROPERTIES. MHCI professionally manages foodservice departments on client-owned properties and, therefore, does not own any significant amounts of property. Vending services on client-owned facilities complement the foodservice program. Under the terms of certain contracts, MHCI is required to make rent payments to its clients. The corporate headquarters are located in approximately 15,000 square feet of a leased building in a suburb of Atlanta, Georgia. The headquarters' lease term ends in 2001 with remaining average annual lease payments of approximately $278,000. The Company also has administrative offices in a leased building in Mobile, Alabama. This office has a lease term ending in 2001 with remaining average annual lease payments of approximately $108,000. In addition, there are nine regional offices across the United States, each of which is generally less than 1,500 square feet, with total average annual lease payments of less than $145,000. During the fiscal year, MHCI constructed of two advanced food preparation facilities. The first facility, located in Tampa, Florida, provides for about 5,000 square feet of light industrial space with a lease term ending in 2002 and average annual lease payments of about $29,000. The second facility, located in Baltimore, Maryland, includes approximately 15,000 square feet of light industrial and regional office space and has average annual lease payments of about $98,000. Facilities and equipment are repaired and maintained to assure their adequacy, productive capacity and utilization. ITEM 3. LEGAL PROCEEDINGS. The Company is presently, and from time to time, subject to pending claims and suits arising in the ordinary course of its business. In the opinion of Management, the ultimate resolution of these pending legal proceedings will not have a material adverse effect on the Company's operations or consolidated financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. Executive Officers of the Company Executive officers of the Company are appointed by and serve at the discretion of the Company's Board of Directors. Information regarding the Company's executive officers as of August 14, 1998 is provided below. Name Age Position with the Company G. A. Davenport 44 President, Chief Executive Officer and Director K. W. Engwall 50 Senior Vice President, Finance and Assistant Secretary J. E. Fountain 47 Vice President, General Counsel and Secretary J. D. Underhill 53 Senior Vice President, Operations G. L. Gaddy 45 Senior Vice President, Sales and Marketing F. G. Michels 60 Senior Vice President, Support Services R. C. Roberson 54 Divisional Vice President Glenn A. Davenport has been President and Chief Executive Officer of the Company since the Distribution in March 1996. He was President of the Health Care Division of MRI's Morrison Group from November 1993 until the Distribution in March 1996. Prior thereto, he served as Senior Vice President, Hospitality Group of MRI from February 1990 through November 1993 and in various other capacities since joining MRI in November 1973. K. Wyatt Engwall has been Senior Vice President, Finance and Assistant Secretary of the Company since the Distribution in March 1996. Prior thereto, he was Vice President, Controller of MRI's Ruby Tuesday Group from January 1994 until March 1996. He served as Vice President of Financial Planning of MRI from January 1993 through January 1994, Vice President and Controller of MRI's Contract Dining Division from October 1991 through January 1993 and as Controller of MRI's former Morrison's Management Services (Contract Dining) Division from October 1986 through October 1991. Mr. Engwall joined MRI in 1983 as a Financial Systems Analyst. John E. Fountain has been Vice President, General Counsel and Secretary of the Company since the Distribution in March 1996. He was Vice President, Legal of MRI's Morrison Group from August 1994 until March 1996. He served as Senior Attorney of MRI from December 1991 through August 1994. Prior thereto, he served as Staff Attorney of MRI from October 1978 through December 1991. Jerry D. Underhill has been Senior Vice President, Operations of the Company since the Distribution in March 1996. He was Senior Vice President of Retail Development of the Health Care Division of MRI's Morrison Group from September 1995 until March 1996. Prior thereto, he was Senior Vice President of Development of the Family Dining Division of MRI's Morrison Group from March 1993 to September 1995. Mr. Underhill was President of Mid-Continent Restaurants (currently known as Bravo Restaurants) from July 1988 to March 1993. Gary L. Gaddy has been Senior Vice President, Sales and Marketing of the Company since March 1998. Prior thereto, he was Vice President of Health Systems for the Company since July 1997. Mr. Gaddy was Vice President of Sales and Marketing for EmCare, Inc., an emergency medicine contract management company from January 1995 to July 1997. He was Vice President/General Manager of Business Development for HMSS Management, Inc., a home infusion company, from August 1990 to December 1994. Mr. Gaddy has over 20 years of sales and marketingexperience in the healthcare industry. Frances G. Michels has been Senior Vice President, Support Services of the Company since the Distribution in March 1996. She was Senior Vice President of Support Services of the Health Care Division of MRI's Morrison Group from January 1996 until March 1996. Prior thereto, she served MRI's Health Care Division in various capacities, including as Vice President of Nutrition Services from December 1984 through January 1996, Area Manager for Operations and Nutrition Services from January 1982 through December 1984, Consulting Dietitian for the Health Care Division from June 1974 through January 1982, Foodservice Director from July 1973 through June 1974, and Chief Therapeutic Dietitian from June 1970 through July 1973. Richard C. Roberson has been a Division Vice President of the Company since October 1997. He was a Regional Vice President of the Company since the Distribution in March 1996. Prior thereto, he served MRI's Health Care Division in various capacities, including as a Regional Vice President, District Manager and Foodservice Director. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS. Certain information required by this item is incorporated herein by reference to information contained under the caption "Common Stock Market Prices and Dividends" of the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998. The Company intends to continue to pay dividends in the future. ITEM 6. SELECTED FINANCIAL DATA. The information contained under the caption "Selected Financial Data" of the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998 is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998 is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following consolidated financial statements and the related report of the Company's independent auditors contained in the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998, are incorporated herein by reference: Consolidated Statements of Income - Fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996. Consolidated Balance Sheets - As of May 31, 1998 and May 31, 1997. Consolidated Statements of Stockholders' Equity - Fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996. Consolidated Statements of Cash Flows - Fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996. Notes to Consolidated Financial Statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. (a) The information regarding directors of the Company is incorporated herein by reference to the information set forth in the table captioned "Director and Director Nominee Information" under "Election of Directors" in the definitive proxy statement of the Registrant dated August 31, 1998, relating to the Registrant's annual meeting of shareholders to be held on September 29, 1998. (b) Pursuant to Form 10-K General Instruction G(3), the information regarding executive officers of the Company has been included in Part I of this Report under the caption "Executive Officers of the Company." ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item 11 is incorporated herein by reference to the information set forth under the captions "Executive Compensation" and "Election of Directors - Directors' Fees and Attendance" in the definitive proxy statement of the Registrant dated August 31, 1998 relating to the Registrant`s annual meeting of shareholders to be held on September 29, 1998. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this Item 12 is incorporated herein by reference to the information set forth in the table captioned "Beneficial Ownership of Common Stock" under "Election of Directors" in the definitive proxy statement of the Registrant dated August 31, 1998, relating to the Registrant's annual meeting of shareholders to be held on September 29, 1998. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are incorporated by reference into or are filed as part of this report: 1. Financial Statements: The following consolidated financial statements and the independent auditors' report thereon, included in the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 1998, a copy of which is contained in the exhibits to this report, are incorporated herein by reference: Page Reference in paper version of Annual Report to Shareholders Consolidated Statements of Income for the fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996...................18 Consolidated Balance Sheets as of May 31, 1998 and May 31, 1997...................19 Consolidated Statements of Stockholders' Equity for the fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996...................21 Consolidated Statements of Cash Flows for the fiscal years ended May 31, 1998, May 31, 1997 and June 1, 1996...................20 Notes to Consolidated Financial Statements......22 - 31 Report of Independent Auditors..................32 Page Reference in Form 10-K 2. Financial statement schedules: Schedule II - Valuation and Qualifying Accounts for the fiscal years ended May 31, 1998 and May 31, 1997......................17 Financial statement schedules other than those shown above are omitted because they are either not required or the required information is shown in the financial statements or notes thereto. 3. Exhibits The following exhibits are filed as part of this report: MORRISON HEALTH CARE, INC. LIST OF EXHIBITS Exhibit Number Description 3.1 Amended and Restated Articles of Incorporation of Morrison Health Care, Inc.* 3.2 Bylaws, as amended, of Morrison Health Care, Inc.** 4.1 Specimen Common Stock Certificate.+ 4.2 Amended and Restated Articles of Incorporation of Morrison Health Care, Inc. (see Exhibit 3.1 hereto). 4.3 Bylaws, as amended, of Morrison Health Care, Inc. (see Exhibit 3.2 hereto). 4.4 Form of Rights Agreement between Morrison Health Care, Inc. and AmSouth Bank of Alabama, as Rights Agent.+ 4.5 Form of Rights Certificate (attached as Exhibit B to the Rights Agreement filed as Exhibit 4.4 hereto). 4.6 Form of First Amendment to Rights Agreement 10.1 Form of Distribution Agreement among Morrison Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc.* 10.2 Form of Amended and Restated Tax Allocation and Indemnification Agreement among Morrison Restaurants Inc., Custom Management Corporation of Pennsylvania, Custom Management Corporation, John C. Metz & Associates, Inc., Morrison International, Inc., Morrison Custom Management Corporation of Pennsylvania, Morrison Fresh Cooking, Inc., Ruby Tuesday, Inc., a Delaware corporation, Ruby Tuesday (Georgia), Inc., a Georgia corporation, Galaxy Management, Inc., Manask Food Service, Inc., Morrison of New Jersey, Inc., Tias, Inc. and Morrison Health Care, Inc.* 10.3 Form of Agreement Respecting Employee BenefitMatters among Morrison Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc.+ 10.4 Form of License Agreement between Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc.* 10.5 Form of License Agreement between Ruby Tuesday, Inc. and Morrison Health Care, Inc.* 10.6 Form of Amended and Restated Operating Agreement of MRT Purchasing, LLC among Morrison Restaurants Inc., Ruby Tuesday, Inc., Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc.* 10.7*** Form of Morrison Health Care, Inc. 1996 Stock Incentive Plan.+ 10.8*** Form of Morrison Health Care, Inc. Stock Incentive and Deferred Compensation Plan for Directors.+ 10.9*** Form of 1996 Non-Executive Stock Incentive Plan.+ 10.10*** Form of Morrison Health Care, Inc. Executive Supplemental Pension Plan.+ 10.11*** Form of Morrison Health Care, Inc. Management Retirement Plan.+ 10.12*** Form of Morrison Health Care, Inc. Salary Deferral Plan together with related form of Trust Agreement.+ 10.13*** Form of Morrison Health Care, Inc. Deferred Compensation Plan and related form of Trust Agreement.+ 10.14*** Form of Morrison Health Care, Inc. Executive Group Life and Executive Accidental Death and Dismemberment Plan.+ 10.15*** Form of Morrison Health Care, Inc. Executive Life Insurance Plan.+ 10.16 Form of Indemnification Agreement to be entered into with executive officers and directors.* 10.17*** Form of Change of Control Agreement to be entered into with executive officers.+ 10.18 Non-Qualified Stock Option Agreement between Morrison Restaurants Inc.and Eugene E. Bishop.+ 10.19 Non-Qualified Stock Option Agreement between Morrison Restaurants Inc. and Samuel E. Beall, III.+ 10.20 Form of Second Amendment to Credit Agreement dated June 14, 1997.++ 10.21** Form of First Amendment to the Morrison Health Care, Inc. Executive Supplemental Pension Plan.++ 10.22*** Form of First Amendment to the Morrison Health Care,Inc. Management Retirement Plan.++ 10.23*** Form of First Amendment to the Morrison Health Care, Inc.Salary Deferral Plan.++ 10.24*** Form of Second Amendment to the Morrison Health Care, Inc. Salary Deferral Plan.++ 10.25*** Form of First Amendment to the Morrison Health Care, Inc. Deferred Compensation Plan.++ 10.26*** Form of Second Amendment to the Morrison Health Care, Inc. Deferred Compensation Plan.++ 10.27*** Form of Morrison Health Care, Inc. Salary Deferral Plan together with related form of Amended Trust Agreement.+ 10.28*** Form of Morrison Health Care, Inc. Deferred Compensation Plan and related form of Amended Trust Agreement.+ 10.29*** Form of First Amendment to the 1996 Executive Stock Incentive Plan. 10.30*** Form of First Amendment to the 1996 Non-Executive Stock Incentive Plan. 10.31*** Form of Second Amendment to the 1996 Executive Stock Incentive Plan. 10.32*** Form of Second Amendment to the 199 Non-Executive Stock Incentive Plan. 10.33*** Form of Third Amendment to the. Morrison Health Care, Inc. Salary Deferral Plan. 10.34 Stock Purchase Agreement of Drake Management Services, Inc. 10.35 Asset Purchase Agreement of Spectra Services, Inc. 10.36 Form of Amended and Restated Credit Agreement 11 Statement regarding computation of per share earnings. 13 Annual Report to Shareholders for the fiscal year ended May 31, 1998 (Only portions specifically incorporated by reference in the Form 10K are incorporated herewith.) 21.1 List of subsidiaries of Morrison Health Care, Inc. 23 Consent of Independent Auditors. 27 Financial Data Schedule. * Incorporated by reference to Exhibit of the same number in the Registrant's Registration Statement on Form 10 filed with the Commission on February 8, 1996. ** Incorporated by reference to Exhibit of the same number in the Registrant's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998. *** Denotes a management contract or compensatory plan or arrangement. + Incorporated by reference to Exhibit of the same number in the Registrant's amendment to Registration Statement on Form 10/A filed with the Commission on February 29, 1996. ++ Incorporated by reference to Exhibit of the same number in the Registrant's Annual report on Form 10-K for the fiscal year ended May 31, 1997. (b) Reports on Form 8-K There were no reports filed on Form 8-K during the most recent fiscal quarter. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MORRISON HEALTH CARE, INC. Date 08/28/98 By:/s/ Glenn A. Davenport Glenn A. Davenport President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Date 08/28/98 By:/s/ Glenn A. Davenport Glenn A. Davenport President, Chief Executive Officer and Director Date 08/28/98 By:/s/ K. Wyatt Engwall K. Wyatt Engwall Senior Vice President, Finance and Assistant Secretary (Principal Accounting Officer) Date 08/28/98 By:/s/ John. B. McKinnon John B. McKinnon Chairman of the Board Date 08/28/98 By:/s/ Claire L. Arnold Claire L. Arnold Director Date 08/28/98 By:/s/ E. Eugene Bishop E. Eugene Bishop Director Date 08/28/98 By:/s/ Fred L. Brown Fred L. Brown Director Date 08/28/98 By:/s/ Arthur R. Outlaw, Jr. Arthur R. Outlaw, Jr. Director Date 08/28/98 By:/s/ Dr. Benjamin F. Payton Dr. Benjamin F. Payton Director Morrison Health Care, Inc. Schedule II - VALUATION AND QUALIFYING ACCOUNTS For the Periods Ended May 31, 1998 and May 31, 1997 (Dollars in Thousands) Column A Column B Column C Column D (A) Column E Additions Balance at Charged to Charged Balance at Beginning Costs and to other End of of Period Expenses Accounts Deductions Period
Year ended May 31, 1998: Trade receivables: Allowance for doubtful accounts $ 744 $ 0 $ 196 $ 53 $ 887 Year ended May 31, 1997: Trade receivables: Allowance for doubtful accounts $1,122 $ 0 $ 0 $ 378 $ 744 Year ended June 1, 1996: Trade receivables: Allowance for doubtful accounts $1,641 $ 0 $ 0 $519 $ 1,122
Notes: (A) Write-off of trade receivables determined to be uncollectible against the allowance for doubtful accounts. EXHIBIT 4.6 AMENDMENT NUMBER 1 TO RIGHTS AGREEMENT This Amendment, made this 29th day of May, 1998 between Morrison Health Care, Inc., a Georgia corporation (the "Company"), and SunTrust Bank, Atlanta ("SunTrust"), amends that certain Rights Agreement between the Company and AmSouth Bank of Alabama ("AmSouth"), dated as of March 2, 1996 (the "Rights Agreement"). W I T N E S S E T H WHEREAS, pursuant to Section 21 of the Rights Agreement, the Company has removed AmSouth as Rights Agent under the Rights Agreement, effective as of June 1, 1998 (the "Effective Date"); and WHEREAS, the Company desires to appoint SunTrust, and SunTrust desires to serve as, Successor Rights Agent under the Rights Agreement, effective as of the Effective Date. NOW, THEREFORE, in consideration of the premises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Appointment of Successor Rights Agent. The Company hereby appoints SunTrust to serve as the Successor Rights Agent under the Rights Agreement, to be effective as of the Effective Date, and SunTrust hereby accepts such appointment. 2. Amendment of Rights Agreement. The Rights Agreement is hereby amended effective as of the Effective Date such that all references to the "Rights Agent" under the Rights Agreement shall refer to SunTrust rather than AmSouth. 3. Undertakings. Each of the parties hereto agrees to take any and all actions necessary to cause SunTrust to serve as Rights Agent under the Rights Agreement, including, without limitation, the Company sending notice, prior to the Effective Date, to AmSouth and each transfer agent of the Company's stock that SunTrust has been appointed Successor Rights Agent under the Rights Agreement. 4. Continuation of Rights Agreement. Except as explicitly amended above, the Rights Agreement shall continue in full force and effect. IN WITNESS WHEREOF, the undersigned have executed and delivered this Amendment as of the date first above writen. MORRISON HEALTH CARE, INC. By:/s/John E. Fountain Title:Vice President and General Counsel SUNTRUST BANK, ATLANTA By:/s/ Sue Hampton Title:Assistant Vice President EXHIBIT 10.27 MORRISON HEALTH CARE, INC. SALARY DEFERRAL PLAN TRUST AGREEMENT THIS AGREEMENT has been made as of the 30th day of September, 1997, between Morrison Health Care, Inc. (the "Company") and Merrill Lynch Trust Company of (Florida)(the "Trustee") with respect to a trust (the "Trust") forming part of the Morrison Health Care, Inc. Salary Deferral Plan (the "Plan"). WHEREAS, the Plan qualifies both as an "employee stock ownership plan" ("ESOP") within the meaning of section 4975(e)(7) of the Internal Revenue Code of 1986 (the "Code") and as a cash or deferred profit sharing plan under sections 401(a) and 401(k) of the Code; and WHEREAS, in order to effectuate the purposes of the Plan, the Company hereby establishes this Trust, designed to meet the applicable requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and WHEREAS, it is a principal purpose of the Trust to maintain assets in the form of and invest in stock of the Company ("Company Stock") qualifying as "employer securities" within the meaning of section 409(1) of the Code and section 407(d)(5) of ERISA; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Company and the Trustee do hereby covenant and agree as follows: SECTION I THE TRUST 1.1 Establishment of the Trust. The Company hereby establishes with the Trustee the Trust, which shall be known as the Morrison Health Care, Inc. Salary Deferral Plan Trust, for the purposes of holding and administering the Trust Fund in accordance with this Agreement. Except as provided in section 4.4 and 4.5 below, nothing contained in the Plan, either expressly or by implication, shall impose any additional powers, duties or responsibilities upon the Trustee. The Trustee shall not be responsible for the administration of the Plan. The "Trust Fund" shall at any time mean all property of every kind then held by the Trustee pursuant to this Trust Agreement, including the contributions of cash or Company Stock made to the Trust by the Company or any employer participating in the Plan (an "Employer"), any property into which such contributions may from time to time be converted, and any appreciation therein or income thereon less any depreciation therein, any losses thereon and any distributions payments therefrom. Except as otherwise provided herein, title to the assets of the Trust Fund shall at all times be vested in the Trustee, subject to the right of the Trustee to hold title in bearer form or in the name of a nominee, and the interests of others in the Trust Fund shall only be the right to have such assets received, held, invested, administered and distributed in accordance with the provisions of the Trust. 1.2 Appointment of Trustee. The Company represents that all necessary action has been taken for the appointment of the Trustee as trustee of the Trust and that the Trust Agreement constitutes a legal, valid and binding obligation of the Company. The Trustee accepts its appointment as trustee of the Trust. 1.3 Status of Trust. The Trust is intended to be a qualified trust under section 401(a) of the Code and exempt from taxation pursuant to section 501(a) of the Code. 1.4 Exclusive Purpose. Notwithstanding anything to the contrary in this Agreement, or in any amendment thereto, except as otherwise provided under ERISA, the Named Fiduciaries (as defined in Section 2.1) and the Trustee, as a directed trustee shall discharge their respective duties with respect to the Trust Fund for, and the Trust Fund shall be used solely for and not diverted from, the exclusive purpose of providing benefits for Plan participants and their beneficiaries and defraying reasonable expenses of administering the Plan. Notwithstanding the preceding sentence, however, contributions may be returned by the Trustee at the direction of a Named Fiduciary if the Named Fiduciary certifies in writing to the Trustee that one or more of the following circumstances exist. (a) if a contribution is made by the Company by reason of a mistake of fact, the contribution or the value thereof, if less, may be returned within one year after it was paid to the Trustee; (b) if a contribution is conditioned upon its deductibility under section 404 of the Code, to the extent the deduction is disallowed by the Internal Revenue Service, the contribution or the value thereof, if less, may be returned to the Company within one year after the disallowance; or (c) if a contribution is conditioned upon initial qualification of the Plan, as amended, under sections 401, 409 and 4975(e)(7) of the Code, the contribution or the value thereof, if less, may be returned to the Company within one year after such qualification has been denied. 1.5 Receipt of Contributions and Transfers of Assets. The Trustee shall receive in cash or Company Stock all contributions paid or delivered to it which are allocable under the Plan and to the Trust and all transfers paid or delivered under the Plan to the Trust from a predecessor trustee or another trust (including a trust forming part of another plan qualified under section 401(a) of the Code), provided that the Trustee shall not be obligated to receive any such contribution or transfer unless prior thereto or coincident therewith, as the Trustee may specify, the Trustee has received such reconciliation, allocation, investment or other information concerning, or such direction, instruction or representation with respect to, the contribution or transfer or the source thereof as the Trustee may reasonably require. The Trustee shall have no duty or authority to (a) require any contributions or transfers to be made under the Plan or to the Trustee, (b) compute any amount to be contributed or transferred under the Plan to the Trustee, or (c) determine whether amounts received by the Trustee comply with the Plan. 1.6 Directed Trustee. The Trustee shall hold the Trust Fund, without distinction between principal and income, as a nondiscretionary trustee pursuant to the terms of this Trust Agreement. Assets of the Trust may, absent direction from the Named Investment Fiduciary (as defined in Section 2.1) to the contrary, be held in an account maintained with an affiliate of the Trustee. Except as required by ERISA, the Trustee shall invest the Trust Fund as directed by the Named Investment Fiduciary, as defined herein, an Investment Manager, as defined herein, or a Plan participant or beneficiary, as the case may be, and the Trustee shall have no discretionary control over, nor any other discretion regarding, the investment or reinvestment of any asset of the Trust Fund. SECTION II NAMED FIDUCIARIES 2.1 Named Administrative and Investment Fiduciaries. For purposes of this Trust Agreement, the term "Named Administrative Fiduciary" refers to the person or persons named or provided for under the Plan as responsible for the administration and operation of the Plan, and the term "Named Investment Fiduciary" refers to the person or persons provided for under the Plan as responsible for the investment and management of Plan assets to the extent provided for in this Trust Agreement (together, the "Named Fiduciaries"). The Named Administrative Fiduciary and the Named Investment Fiduciary may be the same person or persons. If no such person or persons is named or provided for under the Plan, or if so named or provided for but not then serving, the Company shall be the Named Administrative Fiduciary or the Named Investment Fiduciary or both, as the case may be. 2.2 Identification of Named Fiduciaries and Designees. The Named Administrative Fiduciary and the Named Investment Fiduciary under the Plan shall each be identified to the Trustee in writing by the Company, and specimen signatures of each, or of each member thereof, as appropriate, shall be provided to the Trustee by the Company. The Company shall promptly give written notice to the Trustee of a change in the identity either of the Named Administrative Fiduciary or the Named Investment Fiduciary, or any member thereof, as appropriate, and until such notice is received by the Trustee, the Trustee shall be fully protected in assuming that the identity of the Named Administrative Fiduciary or Named Investment Fiduciary, and the members thereof, as appropriate, is unchanged. Each person authorized in accordance with the Plan to give a direction to the Trustee on behalf of the Named Administrative Fiduciary or the Named Investment Fiduciary shall be identified to the Trustee by written notice from the Company or the Named Administrative Fiduciary or the Named Investment Fiduciary, as the case may be, and such notice shall contain a specimen of the signature. The Trustee shall be entitled to rely upon each such written notice as evidence of the identity and authority of the persons appointed until a written cancellation of the appointment, or the written appointment of a successor, is received by the Trustee from the Company, the Named Administrative Fiduciary or the Named Investment Fiduciary, as the case may be. 2.3 Named Fiduciary's Directions. Directions from or on behalf of the Named Fiduciaries or their designees shall be communicated to the Trustee or the Trustee's designee only in accordance with procedures acceptable to the Trustee and the Named Administrative Fiduciary. Neither the Trustee nor the Trustee's designee shall be empowered to implement any such directions except in accordance with procedures acceptable to the Trustee and the Named Administrative Fiduciary. The Trustee shall have no liability for following any such directions or failing to act in the absence of any such directions. The Trustee shall have no liability for the acts or omissions of any person making or failing to make any direction under the Plan or this Trust Agreement nor any duty or obligation to review any such direction, act or omission, SECTION III POWERS OF TRUSTEE 3.1 Nondiscretionary Investment Powers. At the direction of the Named Administrative Fiduciary or the Named Investment Fiduciary or such other person authorized hereunder to direct such action, and in accordance with the direction of such person, the Trustee, or the Trustee's designee or a broker/dealer as referred to in section 4.3, is authorized and empowered: (a) to invest and reinvest the Trust Fund, together with the income therefrom, in common stock, preferred stock, convertible preferred stock, bonds, debentures, convertible debentures and bonds, mortgages, notes, commercial paper and other evidences of indebtedness (including those issued by the Trustee), shares of mutual funds (which funds may be sponsored, managed or offered by an affiliate of the Trustee), guaranteed investment contracts, bank investment contracts, other securities, polices of life insurance, annuity contracts, options, options to buy or sell securities or other assets, and all other property of any type (personal, real or mixed, and tangible or intangible); (b) to deposit or invest all or any part of the assets of the Trust in savings accounts or certificates of deposit or other deposits in a bank or savings and loan association or other depository institution, including the Trustee or any of its affiliates; provided that, with respect to such deposits with the Trustee or an affiliate, the deposits bear a reasonable interest rate; (c) to hold, manage, improve, repair and control all property, real or personal, forming part of the Trust Fund; to sell, convey, transfer, exchange, partition, lease for any term, even extending beyond the duration of this Trust, and otherwise dispose of the same from time to time; (d) to have, subject to sections 4.4 and 4.5 below, respecting securities, all the rights, powers and privileges of an owner, including the power to give proxies, pay assessments and other sums deemed by the Trustee necessary for the protection of the Trust Fund; to vote, subject to sections 4.4 and 4,5 below, any corporate stock either in person or by proxy, with or without power of substitution, for any purpose; to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations, and in connection therewith to deposit securities with or transfer title to any protective or other committee; to exercise or sell stock subscriptions or conversion rights; and, regardless of any limitation elsewhere in this instrument relative to Investments by the Trustee to accept and retain as an investment any securities or other property received through the exercise of any of the foregoing powers; (e) to hold in cash such portion of the Trust Fund which it is directed to so hold pending investments, or payment of expenses, or the distribution of benefits; (f) to take such actions as may be necessary or desirable to protect the Trust from loss due to the default on mortgages held in the Trust, including the appointment of agents or trustees in such other jurisdictions as may seem desirable, to transfer property to such agents or trustees, to grant to such agents such powers as are necessary or desirable to protect the Trust Fund, to direct such agent or trustee, or to delegate such power to direct, and to remove such agent or trustee; (g) to settle, compromise or abandon all claims and demands in favor of or against the Trust Fund; (h) to invest in any common or collective trust fund maintained by the Trustee or its affiliate; (i) to exercise all of the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under the laws of the state in which the Trustee is incorporated, so that the powers conferred upon the Trustee herein shall not be in limitation of any authority conferred by law, but shall be in addition thereto; (j) to borrow money from any source and to execute promissory notes, mortgages or other obligations and to pledge or mortgage any trust assets as security, subject to applicable requirements of the Code and ERISA; (k) to compromise, compound, and settle any debt or obligation owing to or from it as Trustee; to reduce or increase the rate of interest on, extend or otherwise modify, foreclose upon default, or otherwise enforce any such obligation; and (l) to maintain accounts at, execute transactions through, and lend on an adequately secured basis stocks, bonds or other securities to, any brokerage or other firm, including any firm which is an affiliate of the Trustee; and (m) subject to Section 5, to borrow from any lender (including the Company or any shareholder of the Company) to acquire shares of Company Stock as authorized by this Agreement. 3.2 Additional Powers of Trustee. To the extent necessary or which it deems appropriate to implement its powers under Section 3.1 or otherwise to fulfill any of its duties and responsibilities as trustee of the Trust Fund, the Trustee shall have the following additional powers and authority: (a) to register securities, or any other property, in its name or in the name of any nominee, including the name of any affiliate or the nominee name designated by any affiliate, with or without indication of the capacity in which property shall be held, or to hold securities in bearer form and to deposit any securities or other property in a depository or clearing corporation; (b) to designate and engage the services of and to delegate powers and responsibilities to, such agents, representatives, advisers, counsel and accountants as the Trustee considers necessary or appropriate, any of whom may be an affiliate of the Trustee or a person who renders services to such an affiliate, and, as a part of its expenses under this Trust Agreement, to pay their reasonable expenses and compensation; (c) to make, execute and deliver, as Trustee, any and all deeds, leases, mortgages, conveyances, waivers, releases or other instruments in writing necessary or for the accomplishment of any of the powers listed in this Trust Agreement; (d) to determine the market value of any securities or other property held by the Trustee in the Trust Fund. and where any securities or other property are determined by the Trustee not to be marketable, to determine their value in accordance with sound practice and standards for evaluating such property, including valuation by an independent appraiser selected by the Trustee, for whose services the Company shall be obligated to pay the fees and expenses; (e) to employ legal counsel, brokers and other advisors, agents or employees to perform services for the Trust Fund or to advise it with respect to its duties and obligations under this Agreement and in connection with the Trust, and to pay from the Trust Fund such compensation as it deems appropriate; and (f) generally to do all other acts which the Trustee deems necessary or appropriate for the protection of the Trust Fund. SECTION IV INVESTMENTS 4.1 Investment in Company Stock. The assets of the ESOP Fund (as defined in the Plan) shall be invested primarily in Company Stock, although up to 100% of the assets of the Trust Fund may be invested in Company Stock. To the extent that Company contributions are made in Company Stock, the Trustee will be expected to retain such Company Stock. To the extent Company contributions or dividends are made in cash and are not used to pay principal or interest on an ESOP Loan (as defined in Section 5) or to pay expenses of the Fund, the Trustee will, at the direction of the Named Investment Fiduciary, acquire Company Stock either from other shareholders or directly from the Company. The Trustee will pay adequate consideration for all Company Stock it acquires (other than a contribution). If, at the time of any purchase, Company Stock is not actively traded on an established securities market, the amount of such consideration will be determined by the Named Fiduciary, however, the Trustee may also make such determination or may retain, on the Company's behalf and at the Company's expense, an independent fiduciary to make such a determination, in either case, on the basis of the advice provided by an independent appraiser selected by the Trustee or independent fiduciary, as applicable, and the Company shall be obligated to pay the fees and expenses of such independent appraiser. If at the time Company Stock is to be purchased, the Company has outstanding more than one class of Stock, the Named Investment Fiduciary shall direct the Trustee as to which class of Stock shall be purchased (which class shall satisfy Code section 409(e)). To the extent consistent with the foregoing, at the direction of a Named Fiduciary, the Fund may hold temporary investments other than Company Stock, may hold such portion of the Fund in such investments as may be required under the investment diversification provisions of the Plan, may hold such portion of the Fund uninvested as a Named Fiduciary directs for making, distributions under the Plan, may invest assets of the Fund in short-term investments bearing a reasonable rate of interest, including, without limitation, any common or collective investment trust (including one established at the institution that serves as Trustee hereunder or any of its affiliates) which provides for the pooling of assets of plans described in section 401(a) of the Code and exempt from tax under section 501(a) of the Code, the terms of which are incorporated by reference, 4.2 Investment Management. The Named Investment Fiduciary shall manage the investment of the Trust Fund except insofar as (a) the Named Investment Fiduciary appoints a person (an "Investment Manager") who meets the requirements of section 3(38) of ERISA to manage Trust assets, or (b) the Plan provides for, and the Named Administrative Fiduciary elects to allow, Plan participant or beneficiary direction of the investment of assets allocable under the Plan to the accounts of such participants and beneficiaries. In situation (a) above, the Company or the Named Investment Fiduciary may appoint one or more Investment Managers, who may be affiliate(s) of the Trustee, to direct the Trustee in the investment of all or a specified portion of the assets of the Trust. The Named Investment Fiduciary shall notify the Trustee in writing before the effective date of the appointment or removal of any Investment Manager. If there is more than one Investment Manager whose appointment is effective under the Plan at any one time, the Trustee shall, upon written instructions from the Company or the Named Investment Fiduciary, establish separate funds for control by each such Investment Manager. The funds shall consist of those Trust assets designated by the Company or the Named Investment Fiduciary. In situation (b) above, a list of the participants and beneficiaries and such information concerning them as the Trustee may specify shall be provided by the Company or the Named Administrative Fiduciary to the Trustee and/or such other person(s) as are necessary for the implementation of the participants' directions in accordance with procedures reasonably acceptable to the Trustee and the Named Administrative Fiduciary. 4.3 Investment Directions. Directions for the investment or reinvestment of Trust Fund assets from the Named Investment Fiduciary, an Investment Manager or a Plan participant or beneficiary, as the case may be, shall, in a manner and in accordance with procedures reasonably acceptable to the Trustee and the Named Administrative Fiduciary, be communicated to and implemented by, as the case may be, the Trustee, the Trustee's designee or, with the Trustee's consent, the broker/dealer designated for the purpose by the Company or the Named Investment Fiduciary. Communication of any such direction to such a designee or broker/dealer shall conclusively be deemed an authorization to the designee or broker/dealer to implement the direction even though coming from a person other than the Trustee. If the Trustee does not receive written directions with respect to any part of the Trust Fund subject to the Named Fiduciaries' direction (including, without limitation, income, sale proceeds, or contributions), the Trustee shall, pending receipt of such directions, be deemed to be directed to hold and invest such amount in short-term securities or other such short- term investments that the Trustee deems appropriate. Except as required by ERISA, the Trustee shall have no duty to determine or inquire into whether any directions received from the Named Fiduciaries in accordance with the terms of this Agreement represent proper and lawful decisions or result in prohibited transactions as defined in section 406 of ERISA. The Trustee shall have no duty to review any investment to be acquired, held or disposed of pursuant to such instructions from the Named Fiduciaries. Except as required by ERISA, the Trustee shall have no liability for following or any other person's following such directions or failing to act in the absence of any such directions. The Trustee shall have no liability for the acts or omissions of any person directing the investment or reinvestment of Trust Fund assets or making or failing to make any direction referred to in section 4.4. Neither shall the Trustee have any duty or obligation to review any such investment or other direction, act or omission or, except upon receipt of a proper direction, to invest or otherwise manage any asset of the Trust which is subject to the control of any such person or to exercise any voting or other right referred to in Section 4.4. 4.4 Voting Rights (a) With respect to Company Stock, each participant (or beneficiary) is, for purposes of this Section 4.4(a), hereby designated a "named fiduciary" (within the meaning of section 403(a)(l) of ERISA) with respect to the shares of Company Stock allocated to his account and shall have the right to direct the Trustee with respect to the vote of the shares of Company Stock allocated to his or her account on each matter brought before any meeting of the stockholders of the Company. Upon timely receipt of such directions from each participant (or beneficiary), the Trustee shall on each such matter vote as directed by the participant (or beneficiary) the number of shares (including fractional shares) of Company Stock allocated to each participant's (or beneficiary's) account, and except as otherwise required by ERISA, the Trustee shall have no discretion in the matter (b) With respect to all Trust Fund assets not described in section 4.4(a) above, including shares of Company Stock not allocated to the accounts of participants or beneficiaries, and, with respect to shares of Company Stock where the Company (or any Employer) does not have a "registration-type class of securities" (as described in Section 409(e)(4) of the Code), for matters that the Plan does not pass through to participants (or beneficiaries), the voting and other rights in Company Stock, securities or other assets held a the Trust shall be exercised by the Trustee solely as directed by the Named Investment Fiduciary, Investment Manager or other person who at the time has the right to direct the investment or reinvestment of the Company Stock, security or other asset involved. (c) The Company or Named Administrative Fiduciary shall establish a procedure reasonably acceptable to the Trustee for the timely dissemination to each person entitled to direct the Trustee or its designee as to voting or other decision called for thereby or referred to therein of all proxy and other materials hearing on the decision and a form requesting confidential directions to the Trustee as to how the Trustee should vote or otherwise decide. In the case of Company Stock, at such time as proxy or other materials bearing thereon are disseminated generally to owners of Company Stock in accordance with applicable law, the Company shall cause a copy of such proxy or other materials to be delivered directly to the Trustee and, thereafter, shall promptly deliver to the Trustee such number of additional copies of the proxy or other materials as the Trustee may request. (d) In the event a Plan participant or beneficiary or an Investment Manager with the right to direct a voting or other decision with respect to any security or other asset held in the Trust does not communicate any decision on the matter to the Trustee or the Trustee's designee by the time prescribed by the Trustee or the Trustee's designee for that purpose, or if the Trustee notifies the Named Investment Fiduciary either that it does not have precise information as to the securities or other assets involved allocated on the applicable record date to the accounts of all participants and beneficiaries, or that time constraints make it unlikely that participant, beneficiary or Investment Manager direction, as the case may be, can be received on a timely basis, the decision shall be the responsibility of the Named Investment Fiduciary and shall be communicated to the Trustee on a timelv basis. In the event the Named Investment Fiduciary with any right or responsibility under the Plan or hereunder to direct a voting or other decision with respect to any security or other asset held in the Trust does not, or is unable in accordance with ERISA, communicate any decision on the matter to the Trustee or the Trustee's designee by the time prescribed by the Trustee for that purpose or to the extent the Trustee determines that the Trustee must exercise discretion with respect to any decision, the Trustee may retain an independent fiduciary, on behalf of the Company, to direct it as to the voting of Company Stock or other assets of the Trust Fund, and the Company shall be obligated to pay the fees and expenses of such fiduciary, including fees of any advisor to the independent fiduciary. Except as required by ERISA, the Trustee shall follow all directions referred to above in this section and shall have no duty to exercise voting or other rights relating to any such Company Stock, security or other asset. 4.5 Tender and Exchange Offers. The provisions of this section 4.5 shall apply in the event of a tender or exchange offer including, but not limited to, a tender offer or exchange offer within the meaning of the Securities Exchange Act of 1934, as from time to time amended and in effect, (hereinafter, a "tender offer") for Company Stock is commenced by a person or persons. The Trustee shall have no discretion or authority to sell, exchange or transfer any of such shares pursuant to such tender offer except to the extent, and only to the extent, provided in this Agreement. Each participant (or beneficiary) is hereby designated a named fiduciary within the meaning of section 403(a)(l) of ERISA with respect to the shares of Company Stock allocated to his account. and shall have the right, to the extent of the number of whole shares of Company Stock allocated to his account, to direct the Trustee as to the manner in which to respond to a tender offer with respect to shares of Company Stock. The Company shall use its best efforts to timely distribute or cause to be distributed to each participant (or beneficiary) such information as will be distributed to stockholders of the Company in connection with any such tender offer. The Trustee shall solicit confidentially from each participant (or beneficiary) the directions described in this section as to whether shares are to be tendered. The Trustee shall respond as instructed by each participant (or beneficiary) with respect to such shares of Company Stock. The instructions received by the Trustee from participants (or beneficiaries) shall be held by the Trustee in confidence and shall not be divulged or released to any person, including the Named Administrative Fiduciary or officers or employees of the Company or any affiliated company. With respect to (1) any shares of Company Stock allocated to a participant or beneficiary's account for which the Trustee has not received timely instructions from the participant (or beneficiary) as to the manner in which to respond to such a tender offer. (2) unallocated shares of Company Stock, and (3) fractional shares of Company Stock allocated to participants' (or beneficiaries') accounts, such shares shall be tendered or exchanged by the Trustee as directed by the Named Investment Fiduciary. If the Named Investment Fiduciary fails, or is unable in accordance with ERISA, to give such direction, or to the extent the Trustee determines that the Trustee must exercise discretion with respect to any decision, the Trustee may retain an independent fiduciary to direct it as to whether to tender or exchange Company Stock, and the Company shall be obligated to pay the fees and expenses of such fiduciary, including fees of any advisor to the fiduciary. SECTION V LEVERAGED ACQUISITIONS OF STOCK The Named Fiduciary may from time to time direct the Trustee to incur indebtedness (including indebtedness to the company) to purchase Company Stock (an "ESOP Loan") on such terms and conditions as the Named Fiduciary shall determine. Any such ESOP Loan shall meet all of the requirements necessary to constitute an "exempt loan" within the meaning of section 4975(d)(3) of the code and Treasury Regulation section 54.4975-7(b)(1)(iii) and shall be used primarily for the benefit of the Plan participants and their beneficiaries. Payments of principal and interest on any such ESOP Loan shall be made by the Trustee (as directed by a Named Fiduciary) only from (1) Company contributions made under the Plan for the purpose of satisfying such ESOP Loan obligation, earnings on such contributions and earnings on shares of Stock acquired with the proceeds of such ESOP Loan, (2) the proceeds of a subsequent ESOP Loan made to repay a prior ESOP Loan, and/or (3) the proceeds of the sale of collateralized shares of Company Stock acquired with the proceeds of such ESOP Loan. In the event of a default under an ESOP Loan, the value of Trust assets transferred to the lender shall not exceed the amount of the default, provided further that if the lender is a "party in interest" within the meaning of ERISA section 3(14), a transfer of Trust assets upon default shall be made only if; and to the extent of, the Trust's failure to meet the ESOP Loan's payment schedule. To the extent that the Trustee determines that the Trustee must exercise discretion with respect to acts contemplated by this Section V, the Trustee may retain an independent fiduciary, on behalf of the Company, to direct it as to those acts, and the Company shall be obligated to pay the fees and expenses of such fiduciary, including fees of any advisor to the fiduciary. SECTION VI PAYMENT OF BENEFITS, TRUSTEE'S COMPENSATION AND EXPENSES 6.1 Payments by Trustee. The Trustee shall pay benefits unde the Plan only when it receives (and in accordance with) written instructions of the Named Administrative Fiduciary, indicating the amount of the payment and the name and address of the recipient. The Trustee shall have no duty to inquire into whether any payment the Named Administrative Fiduciary instructs it to make is consistent with the terms of the Plan or applicable law or otherwise proper. If the Named Administrative Fiduciary advises the Trustee that benefits have become payable respecting a participant's (or beneficiary's) interest in the Trust Fund, but does not instruct the Trustee as to the manner of payment, the Trustee shall hold the participant's (or beneficiary's) interest in the Trust until it receives written instructions from the Named Administrative Fiduciary as to the manner of payment. The Trustee shall not pay benefits from the Trust Fund without such instructions, even though it may be informed from other sources, including, without limitation, a participant (or beneficiary), that benefits are payable under the Plan. The Trustee shall have no responsibility to determine when, to whom, or in what amounts benefits are payable under the Plan, The Trustee may pay any benefit or expense under the Plan by mailing certificates representing shares of Company Stock and/or its check, as the case may be, for the amount thereof to the person designated by the Named Administrative Fiduciary as entitled to receive such payment to such address as may have last been furnished to the Trustee by the Named Administrative Fiduciary. If no such address has been so furnished, benefits or expenses may be mailed by the Trustee to such person in care of the Company. The Trustee is authorized to make any payments directed by court order in any action in which the Trustee is a party or pursuant to a "qualified domestic relations order" under section 414(p) of the Code or pursuant to a court order pertaining to the enforcement of a federal tax levy or the collection by the United States on a judgment resulting from an unpaid tax assessment. The determination of whether a court order constitutes a "qualified domestic relations order" shall be determined by the Named Administrative Fiduciary and the Trustee shall have no authority to make such a determination. Except as may otherwise be required by ERISA, the Trustee is not obligated to defend actions in which the Trustee is named but shall notify the Company or Named Administrative Fiduciary of any such action and may tender defense of the action to the Company, the Named Administrative Fiduciary or the participant or beneficiary whose interest is affected. The Trustee may in its discretion defend any action in which the Trustee is named and any expenses, including reasonable attorneys' fees, incurred by the Trustee in that connection shall be paid or reimbursed from the Trust Fund to the extent permitted under ERISA. 6.2 Disputed Payment. If a dispute arises over the propriety of the Trustee's making any payment from the Trust Fund, the Trustee may withhold the payment until the dispute has been resolved by a court of competent jurisdiction or settled by the parties to the dispute. The Trustee may consult legal counsel and rely upon the advice of counsel. 6.3 Trustee's Compensation and Expenses. Except to the extent specifically provided otherwise herein, the Trustee's compensation for its services under this Trust Agreement shall be paid in accordance with the Trustee's fee schedule currently in effect. Without the written consent of the Company, the Trustee's fee schedule may not be modified more than once every twelve months. Any compensation or expenses incurred by the Trustee in connection with or relating to the performance of its duties under this Trust Agreement or its status as Trustee, including reasonable attorneys' fees shall be paid from the Trust Fund, unless the Company elects to pay any of such compensation and expenses. If the Company does not so elect, such compensation and expenses shall be charged against and withdrawn from the Trust Fund as provided below. The Trustee is authorized to charge the Trust Fund for and withdraw from the Trust Fund, without direction from the Named Administrative Fiduciary or any other person, the amount of any such fees or expenses 30 days after presentation of a statement for such amount to the Company, except to the extent the Company pays such amounts before such date. Trust Fund assets shall be applied to pay such fees and expenses in the following priority by asset category to the extent thereof held at the time of withdrawal in the Trust Fund subfund or account to which the fee or expense is allocated: (i) uninvested cash balances; (ii) shares of any money market fund or funds held in the Trust Fund; and (iii) any other Trust Fund assets. The Trustee is authorized to allocate its fees and expenses among these subfunds or accounts to which the fees or expenses pertain in such manner as the Trustee deems appropriate under the circumstances unless prior to such allocation the Company or the Named Administrative Fiduciary specifies the manner in which the allocation is to be made. The Trustee is also authorized but not required to sell any shares or other assets referred to above to the extent necessary for the purpose. By signing this Trust Agreement, the Company authorizes the Trustee and/or its affiliates to receive payments from certain mutual funds (and/or collective trusts) for which no affiliate of the Trustee acts as investment manager or adviser (or from the principal distributors and/or advisors of those funds or trusts), in connection with the performance of reasonable and necessary services (including recordkeeping, subaccounting, account maintenance. administrative and other shareholder services); provided such payments are properly made in accordance with applicable law. Because different mutual funds (or collective trusts) may be subject to different fee arrangements, the Company should contact the Trustee or its designee to obtain further details on any specific fee arrangements that may be applicable to investments under the Plan, and the Trustee or its designee shall provide such information upon request. 6.4 Other Expenses.The Trustee is authorized upon direction from the Named Administrative Fiduciary or any other person, to withdraw from the Trust Fund and pay any federal, state or local taxes, charges or assessments of any kind levied or assessed against the Trust or assets thereof. Until paid, such taxes shall be a lien against the Trust Fund. The Trustee shall give notice to the Named Administrative Fiduciary of its receipt of a demand for any such taxes, charges or assessments. The Trustee shall not be personally liable for any such taxes, charges or assessments. Expenses incurred by the Company, the Named Administrative Fiduciary, the Named Investment Fiduciary, any Investment Manager or any other persons designated to act on behalf of the Company, the Named Administrative Fiduciary or the Named Investment Fiduciary, including reimbursement for expenses incurred in the performance of their respective duties, may be paid from the Trust Fund upon the written direction to the Trustee by the Named Administrative Fiduciary. SECTION VII LIABILITY AND INDEMNITY 7.1 Trustee's Reliance. Unless the Trustee has actual knowledge to the contrary, the Trustee shall have no duty to inquire whether directions by the Company, the Named Administrative Fiduciary, the Named Investment Fiduciary or any other person conform to the Plan, and the Trustee shall be fully protected in relying on any such direction, communicated in accordance with procedures acceptable to the Trustee and the Named Administrative Fiduciary, from any person who is a proper person to give the direction. The Trustee shall be fully protected in acting upon any instrument, certificate, or paper delivered by the Company, the Named Administrative Fiduciary, any participant or beneficiary (acting as a named fiduciary) and reasonably believed by the Trustee to be genuine and to be signed or presented by the proper person or persons, and the Trustee shall be under no duty to make investigation or inquiry as to any statement contained in any such writing, but may accept the same as conclusive evidence of the truth and accuracy of the statements therein contained. The Trustee shall have no liability to any participant, any beneficiary or any other person for payments made, any failure to make payments, or any discontinuance of payments, on direction of the Named Administrative Fiduciary, the Named Investment Fiduciary or any designee of either of them or for any failure to make payments in the absence of directions from the Named Administrative Fiduciary or any person responsible for or purporting to be responsible for directing the investment of Trust assets. The Trustee shall have no obligation to request proper directions from any person. The Trustee may request instructions from the Named Administrative Fiduciary or the Named Investment Fiduciary and shall have no duty to act or liability for failure to act if such instructions are not forthcoming. The Trustee shall have no responsibility to determine whether the Trust Fund is sufficient to meet the liabilities under the Plan, and shall not be liable for payments or Plan liabilities in excess of the Trust Fund. The Trustee in its corporate capacity shall not be liable for claims of any persons arising under the Plan. 7.2 Advice of Counsel The Trustee may consult with legal counsel with respect to the meaning and construction of this Agreement or its powers, duties and conduct hereunder. Notwithstanding any other provision of this Agreement, the Trustee shall not be required to take any action or refrain from taking any action that violates ERISA, and for this purpose, the determination of whether such action or inaction violates ERISA shall be determined by (a) a written opinion or advice of counsel based upon such counsel's interpretation of any statute or final regulation, or (b) an opinion or order of a court of competent jurisdiction issued to the Plan, the Company or the Trustee. 7.3 Other Fiduciaries. Each fiduciary of the Plan and the Trust shall be solely responsible for its own acts or omissions. The Trustee shall have no duty to question any other Plan fiduciary's performance of fiduciary duties allocated to such other fiduciary pursuant to the Plan. The Trustee shall not be responsible for the breach of responsibility by any other Plan fiduciary except as provided under ERISA. 7.4 Indemnification. The Company hereby indemnifies the Trustee against, and shall hold the Trustee harmless from, any and all loss, claims, liability, and expense, including reasonable attorneys' fees, imposed upon the Trustee or incurred by the Trustee as a result of any acts taken in accordance with the directions from the Named Administrative Fiduciary, Named Investment Fiduciary, Investment Manager or any other person specified herein, or any designee of any such person, or by the failure to act due to a lack of direction from such parties or by reason of the Trustee's execution of its duties with respect to the Trust, including, but not limited to, its holding of assets of the Trust, the Company's obligations in the foregoing regard to be satisfied promptly on request by the Trustee, unless the loss, claim, liability or expense involved resulted from the negligence or willful misconduct of the Trustee. 7.5 Protection of Designees.To the extent that any designee of the Trustee is performing a function of the Trustee under this Trust Agreement, the designee shall have the benefit of all of the applicable limitations on the scope of the Trustee's duties and liabilities, all applicable rights of indemnification granted hereunder to the Trustee and all other applicable protections of any nature afforded to the Trustee, except as provided under ERISA. SECTION VIII ADMINISTRATION 8.1 Records. The Trustee shall maintain books of account and records with respect to the Trust Fund. Except to the extent required by applicable law, the Trustee shall not be required to maintain any separate records or accounts with respect to any participant, and any records or accounts required to be maintained pursuant to the Plan or to comply with ERISA shall be the responsibility of the Named Administrative Fiduciary or its designee. 8.2 Accounting. Within 90 days following the close of each fiscal year of the Plan or the effective date of the removal or resignation of the Trustee, the Trustee shall file with the Named Administrative Fiduciary a written accounting setting forth all transactions since the end of the period covered by the last previous accounting. The accounting shall include a listing of the assets of the Trust showing the value of such assets at the close of the period covered by the accounting. On direction of the Named Administrative Fiduciary, and if previously agreed to by the Trustee, the Trustee shall submit to the Named Administrative Fiduciary interim valuations reports or other information pertaining to the Trust. The Named Administrative Fiduciary may approve the accounting by written approval delivered to the Trustee. Any such affirmative approval shall be binding on the Company, the Named Administrative Fiduciary, the Named Investment Fiduciary and, to the extent permitted by ERISA, all other persons, and such approval shall release and discharge the Trustee from any liability or accountability to the Company and the Named Administrative Fiduciary with respect to the transactions shown or reflected on the account. 8.3 Valuation. The assets of the Trust shall be valued a of each valuation date under the Plan at fair market value as determined by the Trustee based upon such sources of information as it may deem reliable, including, but not limited to, stock market quotations, statistical evaluation services, newspapers of general circulation, financial publications, advice from investment counselors or brokerage firms, or any combination of sources. The Trustee may retain, on the Company's behalf and at the Company's expense, an independent fiduciary to make such a determination, in either case, on the basis of the advice provided by an Independent Appraiser" (as described in section 401(a)(28)(C) of the Code) selected by the Trustee or the independent fiduciary, as applicable, and the reasonable costs incurred in establishing values of the Trust Fund shall be a charge against the Trust Fund, unless paid by the Company. If there is no generally recognized market (as described in section 3(l8)(A) of ERISA) for shares of Company Stock, all valuations of shares of company stock shall be made by an Independent Appraiser in accordance with section 3(l8)(B) of ERISA. If the Department of Labor issues final regulations under ERISA regarding the valuation of securities or other assets for purposes of the reports required by ERISA, the Trustee shall use such valuation methods. SECTION IX RESIGNATION AND REMOVAL OF TRUSTEE 9.1 Manner of Resignation or Removal. The Trustee may resign as Trustee under this Agreement at any time by a written statement delivered to the Company giving notice of such resignation, which shall be effective 60 days after receipt or at such other time as is agreed by the Company and the Trustee. The Trustee may be removed at any time by the Company by an instrument in writing and delivered to the Trustee, which shall be effective 60 days after receipt or at such other time as is agreed between the Company and the Trustee. 9.2 Appointment of Successor. Upon resignation or removal of the Trustee, the Company shall appoint a successor trustee and shall deliver to the Trustee copies of (a) a written instrument executed by the Company appointing such successor, and (b) a written instrument executed by the successor in which it accepts such appointment. Such instruments shall indicate their effective date. 9.3 Settlement of Account. Upon resignation or removal of the Trustee, the Trustee shall have the right to a settlement of its account, which settlement shall be made, at the Trustee's option, either by an agreement of settlement between the Trustee and the Company or by a judicial settlement in an action instituted by the Trustee. The Trustee shall not be obligated to transfer Trust assets until the Trustee is provided written assurance by the Company that all fees and expenses reasonably anticipated will be paid. 9.4 Termination of Responsibility and Liability. Upon settlement of the account and transfer of the Trust Fund to the successor trustee, all rights and privileges under this Trust Agreement shall vest in the successor trustee and all responsibility and liability of the Trustee with respect to the Trust and assets thereof shall, except as otherwise required by ERISA, terminate subject only to the requirement that the Trustee execute all necessary documents to transfer the Trust assets to the successor trustee. SECTION X AMENDMENT AND TERMINATION OF TRUST 10.1 Amendment. The Company reserves the right to amend this Trust Agreement, provided that no amendment of this Trust Agreement or the Plan shall be effective which would (a) cause any assets of the Trust Fund to be used for, or diverted to, purposes other than the exclusive benefit of Plan participants or their beneficiaries other than an amendment permissible under the Code and ERISA, or (b) affect the rights duties, responsibilities, obligations or liabilities of the Trustee without notice to the Trustee and the Trustee's prior written consent. Subject to approval by the legal counsel of the Company, the Company shall amend this Trust Agreement as requested by the Trustee to reflect changes in law which counsel for the Trustee advises the Trustee require such changes. Amendments to the Trust Agreement or a certified copy of the amendments shall be delivered to the Trustee promptly after adoption, and if practicable under the circumstances, any proposed amendment under consideration by the Company shall be communicated to the Trustee to permit the Trustee to review and comment thereon in due course before the Company acts on the proposed amendment. 10.2 Termination. The Trust may be terminated by the Company in accordance with the Plan. Upon such termination, the Trust Fund shall be distributed by the Named Administrative Fiduciary in accordance with the terms of the Plan. SECTION XI MISCELLANEOUS 11.1 Restriction on Alienation. Except as provided in section 6.1 or under section 401(a)(13) of the Code, the interest of any Plan participant or beneficiary in the Trust Fund shall not be subject to the claims of such person's creditors and may not be assigned, sold, transferred, alienated or encumbered. Any attempt to do so shall be void; and the Trustee shall disregard any attempt. Trust assets shall not in any manner be liable for or subject to debts, contracts, liabilities, engagement or tons of any Plan participant or beneficiary, and benefits shall not be considered an asset of any such a person in the event of the person's insolvency or bankruptcy. 11.2 Successors and Assigns. This Agreement shall be binding upon, and the powers granted to the Company and the Trustee, respectively, shall be exercised by the respective successors and assigns of the Company and the Trustee. Any corporation which shall, by merger, consolidate, purchase or otherwise, succeed to substantially all the trust business of the Trustee shall, upon such succession and without any appointment or other action by the Company, be and become successor trustee hereunder, upon notification to the Company. 11.3 Governing Law and Construction. This Trust Agreement and the Trust shall be construed, administered and governed under ERISA and other pertinent federal law, and to the extent that federal law is inapplicable, under the laws of the state in which the Trustee is incorporated. If any provision of this Trust Agreement is susceptible to more than one interpretation, the interpretation to be given is that which is consistent with the Trust being a qualified trust under section 401(a) of the Code. If any provision of this Trust Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall continue to be fully effective to the extent possible under the circumstances. 11.4 Equity Interest. Neither the creation of the Trust nor anything contained in the Trust shall be considered as giving any person any equity interest in the assets, business or affairs or the Company except to the extent that the Trust Fund is invested in Company Stock. 11.5 Refunds to Company. The Trustee shall, upon the written direction of the Named Administrative Fiduciary which shall include a certification that such action is proper under the Plan, ERISA and the Code specifying any relevant sections thereof, return to the Company any amount referred to in section 403(c)(2) of ERISA. 11.6 Authorized Action. Any action to be taken under this Trust Agreement by a company or other person which is: (a) a corporation shall be taken by the board of directors of the corporation or any person or persons duly empowered by the board of directors to take the action involved, (b) a partnership shall be taken by an authorized general partner of the partnership, and (c) a sole proprietorship by the sole proprietor. 11.7 Text of Plan. The Company represents that, prior to the execution of this Trust Agreement by both parties, it delivered to the Trustee's designee the text of the Plan as in effect as of the date of this Trust Agreement. The Company shall deliver to the Trustee promptly after adoption thereof a certified copy of any amendment of the Plan. 11.8 Conflict with Plan. The rights, duties, responsibilities, obligations and liabilities of the Trustee are as set forth in this Trust Agreement, and no provision of the Plan or any other document shall be deemed to affect such rights, duties, responsibilities, obligations and liabilities, except as otherwise provided herein. If there is a conflict between provisions of the Plan and this Trust Agreement with respect to any subject involving the Trustee, including but not limited to the responsibility, authority or powers of the Trustee, the provisions of this Trust Agreement shall be controlling, except as otherwise provided herein. 11.9 Failure to Maintain Qualification. If the Trust fails to qualify as a qualified trust under section 401(a) of the Code, or loses its status as such a qualified trust, the Company shall immediately so notify the Trustee, and the Trustee shall, without further notice or direction, remove the Trust assets from any common or collective trust fund maintained by the Trustee or its affiliate for investments by qualified trusts. 11.10 Gender. As used in this Trust Agreement, the masculine gender shall include the feminine and the neuter genders and the singular shall include the plural and the plural the singular, as the context requires. 11.11 Headings. Headings and subheadings in this Trust Agreement are for convenience of reference only and are not to be considered in the construction of the provisions of the Trust Agreement. 11.12 Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be deemed an original, and these counterparts shall constitute one and the same instrument which may be sufficiently evidenced by any one counterpart. IN WITNESS WHEREOF, the Company and the Trustee have executed this Trust Agreement each by action of a duly authorized person. MERRILL LYNCH TRUST MORRISON HEALTH CARE, INC. COMPANY (FLORIDA) By: /s/ Melanie Madeira By: /s/ K. W. Engwall - ------------------------- ------------------- - ----- Name: Melanie Madeira Name: K. W. Engwall Title: New Account Trust Officer Title: Senior Vice President, Finance EXHIBIT 10.28 TRUST AGREEMENT FOR THE MORRISON HEALTH CARE, INC. DEFERRED COMPENSATION PLAN THIS TRUST AGREEMENT is made this 2nd day of October, 1997, by and among MORRISON HEALTH CARE, INC., a corporation organized under the laws of the State of Georgia (the "Primary Sponsor"), each related corporation or business executing this Trust Agreement (the Primary Sponsor and each related corporation or business being sometimes hereinafter referred to as a "Plan Sponsor"); and MERRILL LYNCH TRUST COMPANY (FLORIDA) (the "Trustee"). W I T N E S S E T H: WHEREAS, the Primary Sponsor maintains the Morrison Health Care, Inc. Deferred Compensation Plan (the "Plan"), which was established by indenture dated March 7, 1996, to provide benefits in the form of deferred compensation to a select group of management or highly compensated employees of the Primary Sponsor or any of its related corporations or businesses; and WHEREAS, the Primary Sponsor, by agreement dated March 7, 1996 established an irrevocable grantor trust (the "Trust"), within the meaning of Section 671 of the Internal Revenue Code of 1986, as amended (the "Code") to assist it and any of its related corporations or businesses in meeting its obligations under the Plan; and WHEREAS, the Primary Sponsor desires to amend and restate the existing trust agreement originally executed by and between Morrison Health Care, Inc. and AmSouth Bank of Alabama, which agreement, as amended, contains the existing terms of the Trust (the "Prior Trust Agreement"); and WHEREAS, the Board of Directors of the Primary Sponsor has authorized the amendment and restatement of the Prior Trust Agreement as embodied herein (the "Trust Agreement"); NOW, THEREFORE, the Primary Sponsor hereby restates the Trust, effective as of October 1, 1997, as follows: SECTION 1. GOVERNING INSTRUMENT The rights, duties, responsibilities, obligations and liabilities of the Trustee are as set forth in this Trust Agreement, and no provision of the Plan or any other document shall affect such rights, duties, responsibilities, obligations and liabilities. In the event of a conflict between the terms and provisions of the Trust Agreement and those of the Plan, the terms and provisions of the Trust Agreement shall govern. However, nothing contained in the Trust Agreement is intended to diminish the amount of benefits required to be paid for the benefit of any participant under the terms of the Plan. SECTION 2. ESTABLISHMENT OF THE FUND The Primary Sponsor has established a fund with the Trustee (the "Fund") to be held and administered in accordance with this Trust. The Fund shall consist of all assets as may be delivered by a Plan Sponsor to the Trustee and reasonably accepted by the Trustee, and shall also include all income accruing thereon, except as otherwise provided in this Trust Agreement. The Trustee shall not be obligated to receive any assets unless prior thereto the Trustee has agreed that such assets are reasonably acceptable to it and the Trustee has received such reconciliation, allocation, investment or other information concerning, or representations with respect to, such assets as the Trustee may reasonably require. SECTION 3. INVESTMENT OF THE FUND (a) Subject to the provisions of Subsections (b) and (c) below and Section 4 hereof, the Trustees shall invest the principal and income of the Fund without distinction between principal and income in securities or in property, real or personal and wherever situated, as the Trustee shall deem advisable, in its sole discretion. Without limiting the foregoing, the Trustee may purchase, acquire, retain, sell, transfer, pledge or encumber common or preferred stocks, including stock of the Primary Sponsor or any affiliate, shares of mutual funds, including mutual funds for which the Trustee is an advisor, trust and participation certificates, bonds and mortgages, other evidences of indebtedness or ownership, annuity contracts and ordinary and term life insurance contracts of life insurance companies, savings accounts or plans, including savings accounts or plans established or to be established by the Trustee, and group trusts or collective investment funds including group trusts or collective investment funds operated by the Trustee. (b) The Fund shall be invested by the Trustee consistent with the overall investment objectives of the Trust as identified by the Primary Sponsor and communicated to the Trustee in writing from time to time and in the absence of such communication, consistent with the objective of preservation of capital (the "Investment Goals"). The Trustee shall incur no liability merely for a failure to achieve the Investment Goals for any period; provided that during any such period the Fund was invested in accordance with applicable fiduciary standards and with a view towards achieving the Investment Goals. (c) The Primary Sponsor may appoint one or more investment managers (the "Investment Managers") which shall be banks, investment advisers registered under the Investment Advisers Act of 1940, or insurance companies, to direct the Trustee as to the investment of all or a portion of the Fund for the exclusive benefit of the participants of the Plan and their beneficiaries. Notwithstanding the foregoing, the Primary Sponsor may appoint the Trustee (or any of its affiliates) as an Investment Manager, if the Trustee (or its affiliate) agrees to such appointment and is otherwise qualified to serve as an Investment Manager and in such instance, the Trustee (or its affiliate) shall have discretion over the investment of the Fund, subject to the provisions of Subsection (b) above. The Primary Sponsor shall notify the Trustee of the appointment of any Investment Manager (other than the Trustee) under this Subsection by delivering to the Trustee (i) an executed copy of an instrument under which the Investment Manager was appointed to act hereunder and setting forth the investment powers of the Investment Manager and (ii) a written instrument executed by the Investment Manager in which it acknowledges that it has agreed to act as such and accepts fiduciary status. Any notice of appointment pursuant to this Subsection shall constitute a representation and warranty by the Primary Sponsor that the Investment Manager is qualified under and has been appointed in accordance with the provisions hereof. Notwithstanding anything herein contained to the contrary, during the term of its appointment, the Investment Manager shall have the sole responsibility for the investment and reinvestment of the portion of the Fund for which it was appointed to act, and, subject to the limitations on the types of appropriate investments set forth in Subsection (b) hereof, shall have full power and responsibility in its discretion to direct the Trustee with respect to the exercise by it of its investment powers, including the voting of shares (except as otherwise provided by Section 13(d) hereof). Pending receipt of instructions from any Investment Manager with respect thereto and subject to any investment guidelines agreed to in writing from time to time pursuant to Subsection (b) hereof, any cash received by the Trustee from time to time shall be invested by the Trustee in a money market mutual fund designated by the Primary Sponsor or the Investment Manager. The Primary Sponsor may terminate its appointment of an Investment Manager at any time and shall in writing notify the Trustee of such termination, and may thereafter appoint a successor Investment Manager in the same manner as provided above in this Subsection. Any successor Investment Manager shall thereafter, until its appointment is terminated, be deemed to be an "Investment Manager" for all purposes of this Agreement. If there shall be more than one Investment Manager, the portion of the Fund to be invested by each Investment Manager shall be held in a separate account and the powers and authority of each Investment Manager shall be divided as set forth in the instruments appointing such Investment Managers. So long as an Investment Manager (other than the Trustee or one of its affiliates) is serving as such, the Trustee shall be under no duty or obligation to review the assets comprising any portion of the Fund managed by the Investment Manager, to make any recommendations with respect to the investment or reinvestment thereof, or to determine whether any direction received from any Investment Manager is proper or within the terms of this Trust Agreement or to monitor the activities of any Investment Manager. (d) The Trustee shall have no liability or responsibility to the Primary Sponsor or any persons claiming any interest in the Fund for acting without question on the direction of, or for failing to act in the absence of any direction from, any Investment Manager, unless the Trustee participated knowingly in, or knowingly undertook to conceal, an act or omission of any Investment Manager constituting a breach of its duties hereunder, knowing such act or omission was a breach of such duties; provided, however, that the Trustee shall not be deemed to have "participated" in a breach by any Investment Manager for the purposes of this undertaking solely as a result of the performance by the Trustee or its officers, employees or agents of any custodial, reporting, recording, and bookkeeping functions with respect to any assets of the Fund managed by any Investment Manager or solely as a result of settling purchase and sale transactions entered into or directed by any Investment Manager, or to have "knowledge" of any such breach solely as a result of the information received by the Trustee or its officers, employees or agents in the normal course in performing such functions or settling such transactions. If the Trustee has actual knowledge of a breach committed by any Investment Manager, it shall promptly notify the Primary Sponsor in writing thereof, and the Trustee, except as required by applicable law, shall thereafter have no responsibility to remedy such breach. (e) In accordance with Section 5 below, the Primary Sponsor may from time to time direct the Trustee in writing as to the specific investments of the Fund and the Trustee shall invest and reinvest the principal and income of the Fund in accordance with such directions. The Trustee shall have no liability or responsibility to the Primary Sponsor or any other person claiming an interest in the Fund for actions taken in accordance with such directions of the Primary Sponsor. SECTION 4. POWERS OF THE TRUSTEE In the administration of the Trust, in addition to any powers or authority of the Trustee under this Trust or which the Trustee may have under applicable law, the Trustee is authorized and empowered to do the following, without advertisement, without order of court and without having to post bond or make any returns or report of its doings to any court: (a) To purchase or subscribe for any securities or property including, without limitation, securities of a Plan Sponsor and real property leased to or used by a Plan Sponsor; (b) To sell, exchange, convey, transfer, or otherwise dispose of any securities or property held by it, by private contract or at public auction, with or without advertising, and no person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity, expediency or propriety of any disposition; (c) Except as provided in Section 13(d) hereof, to vote any stocks, bonds or other securities, including securities of the Plan Sponsor; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to oppose, consent to, or otherwise participate in corporate reorganizations or other changes affecting corporate securities, to delegate discretionary powers, and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to securities or other property held as part of the Fund; (d) To register any investment in its own name or in the name of a nominee, and-to hold any investment in bearer form or through or by a central clearing corporation maintained by institutions active in the national securities markets, but the records of the Trustee shall at all times show that all the investments are part of the Trust; (e) To employ and act through suitable agents, accountants, appraisers, actuaries and attorneys (who may be counsel for the Trustee) and to pay their reasonable expenses and compensation, to consult with counsel (who, without limitation, may be counsel to the Trustee).and shall be protected to the extent the law permits in acting upon the advice of counsel in regard to legal questions, and the Trustee shall periodically review the performance of the persons to whom these duties have been delegated, but the Trustee shall not be liable for relying upon the advice and expertise of any such person to the extent permitted by law, provided the Trustee's decisions in selecting and retaining such person were prudently made; (f) To borrow or raise moneys for the purposes of the Trust in the amounts, and upon the terms and conditions, as the Trustee in its discretion may deem advisable; and for any sums borrowed to issue its promissory note as Trustee, and to secure the repayment thereof by pledging all or any part of the Trust; and no person lending money to the Trustee shall be bound to see to the application of the money lent or to inquire into the validity, expediency or propriety of any borrowing; (g) To make, execute, acknowledge and deliver any documents of transfer and conveyance and any other instruments or agreements that may be necessary or appropriate to carry out the powers of the Trustee under the Trust or incidental thereto; (h) To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust, to commence or defend any suits or legal or administrative proceedings arising, necessary or appropriate in connection with the Trust, the administration and operation thereof or the powers or authority of the Trustee under the Trust, and to represent the Trust in all suits and legal and administrative proceedings; (i) To keep portions of the Trust in cash or cash balances as the Trustee may deem to be in the best interest of the Trust; (j) To register any investment in its own name or in the name of a nominee, and to hold any investment in bearer form or through or by a central clearing corporation maintained by institutions active in the national securities markets, but the records of the Trustee shall at all times show that all the investments are part of the Trust; and (k) Generally, to do all acts and to execute and deliver all instruments as in the judgment of the Trustee may be necessary or desirable to carry out any powers or authority of the Trustee. SECTION 5. INVESTMENT FUNDS (a) The assets of the Fund shall be invested in mutual funds selected, from time to time, by the Primary Sponsor and communicated in writing to the Trustee and in a fund investing primarily in securities of the Primary Sponsor as directed by the Primary Sponsor (each of which is sometimes hereinafter referred to as an "Investment Fund"), which Investment Funds shall have varying investment objectives, as the Primary Sponsor shall determine and communicate in writing to the Trustee. The Primary Sponsor by written direction to the Trustee may eliminate the availability of any Investment Fund; provided that on and after a Change of Control, no Investment Fund in place immediately prior to the Change of Control may be eliminated although the Primary Sponsor may designate additional Investment Funds. (b) Contributions shall be paid to the Trustee within a reasonable period of time after the date that salary deferrals under the Plan otherwise would have been paid to participants in an amount equal to said deferral amounts and any corresponding matching contributions under the Plan shall be paid to the Trustee at the same time. (c) The Trustee shall be responsible for assets actually received by it as Trustee and shall have no duty or authority to compute amounts to be contributed or to review the computation of amounts to be contributed pursuant to this Section. SECTION 6. DUTIES OF THE TRUSTEE (a) Except for records dealing solely with the Trust and its investments and disbursements, which shall be maintained by the Trustee, the Primary Sponsor shall maintain all records contemplated by the Plan. The Trustee shall have no responsibility to determine whether the Fund is sufficient to meet liabilities under the Plan, and shall not be liable for payments or Plan liabilities in excess of the assets held in the Fund. (b) The Primary Sponsor shall furnish to the Trustee, in a form reasonably acceptable to the Trustee, all the information necessary to determine the benefits payable to or with respect to each participant in the Plan, including any benefits payable after a participant's death. The Primary Sponsor shall from time to time, and at least annually, and promptly upon the request of the Trustee furnish updated information to the Trustee. In the event the Primary Sponsor refuses or neglects to provide any updated information as contemplated herein, the Trustee shall rely upon the most recent information furnished to it by the Primary Sponsor; provided, however, that on or after a Change of Control, where the Trustee does not have updated information or in the event the Trustee is aware of a dispute between the Primary Sponsor and any participant or beneficiary as to the amount or timing of benefits payable to the participant or beneficiary, the Trustee shall rely upon a direction from the Designated Accounting Firm (as defined below) to resolve the dispute. For purposes of this Agreement, the term "Designated Accounting Firm" shall mean Ernst & Young LLP or any other accounting firm subsequently communicated in writing to the Trustee; provided, however, that no subsequent designation of an accounting firm shall be given effect by the Trustee if the designation occurs after the effective date of a Change of Control. The Trustee has no responsibility to verify information provided to it by the Primary Sponsor or the Designated Accounting Firm. (c) When, in the opinion of the Primary Sponsor or Designated Accounting Firm, as applicable, a participant's benefits under the Plan have become payable, the Trustee shall be notified by the Primary Sponsor or the Designated Accounting Firm, as applicable. Such notice shall include the amount of such benefits, the terms of payment, the amount of any taxes required to be withheld from such amount, and the name, address and social security number of the recipient. Upon the receipt of a notification, the Trustee shall commence distributions from the Fund in accordance therewith to the person or persons so indicated and shall forward a check to the Primary Sponsor in the amount of the applicable withholdings. (d) The Primary Sponsor shall have full responsibility for the payment of all taxes of any nature levied, assessed or imposed upon the Fund, including the payment of all withholding taxes to the appropriate taxing authority and shall provide the Trustee with such information as necessary to allow it to furnish each participant or beneficiary with the appropriate tax information form evidencing such payment and the amount thereof. (e) Prior to a Change of Control, the Trustee shall have no responsibility for determining whether any participant or beneficiary has died or whether a participant's rights under the terms of the Plan have been forfeited and shall be entitled to rely upon information and direction received from the Primary Sponsor; provided, that on or after a Change of Control, in the event of a dispute or lack of information, the Trustee shall rely on directions received from the Designated Accounting Firm in accordance with Subsection (b) hereof. (f) Nothing provided in this Trust Agreement shall relieve the Primary Sponsor or any Plan Sponsor of its liabilities to pay the benefits provided under the Plan except to the extent such liabilities are met by application of Fund assets. (g) Arbitration is final and binding on the parties. The parties waive their right to seek remedies in court, including the right to jury trial. In that regard, the parties acknowledge the following: (i) pre-arbitration discovery is generally more limited than and different from court proceedings; (ii) the arbitrators' award is not required to include factual findings or legal reasoning and any party's right to appeal or seek modification of rulings by the arbitrators is strictly limited; and (iii) the panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry. The Primary Sponsor agrees that all controversies which may arise between it and the Trustee (or any of its affiliates) with respect to obligations arising under the Trust Agreement, including, but not limited to, those involving any transactions, or the construction, performance, or breach of this Agreement shall be determined by arbitration. Any arbitration under this Agreement shall be conducted only before the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or arbitration facility provided by any other exchange of which any affiliate of the Trustee is a member, the National Association of Securities Dealers, Inc, or the Municipal Securities Rulemaking Board, and in accordance with the arbitration rules then in force. The Primary Sponsor may elect in the first instance whether arbitration shall be conducted before the New York Stock Exchange, Inc., the American Stock Exchange, Inc., other exchange of which any affiliate of the Trustee is a member, the National Association of Securities Dealers, Inc. or the Municipal Securities Rulemaking Board, but if the Primary Sponsor fails to make such election, by registered letter or telegram addressed to Merrill Lynch Trust Companies, Employee Benefit Trust Operations, P.O. Box 30532, New Brunswick, New Jersey 08989- 0532, before the expiration of five days after receipt of a written request from the Trustee to make such election, then the Trustee may make such election. Judgment upon the award of arbitrators may be entered in any court, state or federal, having jurisdiction. No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre- dispute arbitration agreement against any person who has initiated in court a putative class action, who is a member of the putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) the customer is excluded from the class by the court. Such forebearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated herein. SECTION 7. DISTRIBUTIONS FROM THE FUND (a) Consistent with the provisions of Section 9 hereof, the Trustee is authorized to pay from the Fund reasonable expenses of the Trustee, including fees of accountants and legal counsel to the Trust, and the Trustee's compensation. (b) The Trustee shall make any distribution required pursuant to this Trust Agreement by mailing its check or other evidence of payment (less applicable withholdings) to the person to whom such distribution or payment is to be made at such address as was last furnished to the Trustee or, if agreeable to the Trustee and the Primary Sponsor and the affected participant and so directed in a written notice to the Trustee by the Primary Sponsor or affected participants, by crediting the account of such person or by transferring funds to such person's account by bank or wire transfer. The Trustee shall not be required to make any investigation to determine the whereabouts or mailing address of any person. If the person to receive a distribution can not be found, the Trustee shall hold payment or deposit same in a bank (including the Trustee, if a financial institution is serving as such) for the credit of that person without liability for interest thereon. If a check or other evidence of payment of the benefit hereunder has been mailed to the last address of the person furnished the Trustee and is returned unclaimed, the Trustee shall notify the Primary Sponsor and shall discontinue further payments to the payee until it receives instructions from the Primary Sponsor. (c) The Trustee shall not be bound by any instruction, direction or notice unless and until it has been received in writing by the Trustee and may rely upon any instruction, direction or notice of a continuing nature until the Trustee receives a writing which revokes that instruction, direction or notice. The Trustee may without liability assume that any such instruction, direction or notice is genuine unless it has actual knowledge or, after receiving notification of a problem, has reasonably determined that the instruction, direction or notice is not genuine. (d) The Trustee shall not be responsible for the application of any assets held as part of the Fund which have been distributed pursuant to the Plan and the Trust Agreement. SECTION 8. CLAIMS OF CREDITORS (a) The Fund assets shall be treated as general assets of the Plan Sponsor and shall remain subject to claims of the general creditors of the Plan Sponsor under applicable state and federal law. Nothing in the Trust Agreement shall affect the rights of any participant as general creditor of the Plan Sponsor. No participant shall have a preferred claim on or any beneficial ownership in the Fund prior to the time for distribution to the participant under the terms of a Plan or the terms of this Trust Agreement. In the event that the Plan Sponsor becomes insolvent as described in Subsection (c) below, each participant shall be deemed to waive any priority the participant may have under law as an employee with respect to any claim against the Plan Sponsor and the Trust beyond the rights the participant would have as a general creditor of the Plan Sponsor. (b) Except as otherwise provided by Subsection (c) below, no benefit which shall be payable under the Trust to any person shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of the same shall be void. No benefit shall in any manner be subject to the debts, contracts, liabilities, engagements or torts of any person, nor shall it be subject to attachment or legal process for or against any person, except to the extent provided by Subsection C below and as may otherwise be required by law. (c) The board of directors of a Plan Sponsor shall immediately notify the Trustee in writing of the insolvency of the Plan Sponsor. For purposes of this Subsection (c), the term "insolvency" shall mean the inability of the Plan Sponsor to pay its debts as they become due in the usual course of its business or that the liabilities of the Plan Sponsor are in excess of its assets or the Plan Sponsor becomes subject to a proceeding as a debtor under the United States Bankruptcy Code. Upon receipt of the written notice, the Trustee shall suspend all further payments to participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the creditors of the Plan Sponsor in the manner directed by a court of competent jurisdiction. If the Trustee should receive any written allegation of the insolvency of the Plan Sponsor, the Trustee shall suspend payments to participants and hold the assets of the Trust for the benefit of the creditors of the Plan Sponsor and, within a period of sixty (60) days after the receipt of the written allegation, determine whether the Plan Sponsor is insolvent. If the Trustee determines that the Plan Sponsor is solvent, it shall immediately resume payments to the participants or their beneficiaries. In the event that the Trustee has actual knowledge of the insolvency of the Plan Sponsor, the Trustee shall hold the assets of the Trust for the benefit of the creditors of the Plan Sponsor in the manner directed by a court of competent jurisdiction. Unless the Trustee (i) has been notified in writing by the board of directors of a Plan Sponsor of the insolvency of a Plan Sponsor, (ii) has received any written allegation of the insolvency of a Plan Sponsor or (iii) has actual knowledge of the insolvency of a Plan Sponsor, the Trustee shall have no duty to inquire whether a Plan Sponsor is insolvent. SECTION 9. FEES AND EXPENSES The compensation and expenses of the Trustee shall be paid from the assets of the Fund. Expenses of the Trustee shall include the reasonable expenses and compensation of third parties employed by the Trustee pursuant to Section 4(f) hereof. However, the expenses and compensation of the Designated Accounting Firm shall not be payable from the Fund. SECTION 10. ACCOUNTS (a) The Trustee shall keep such records as the Trustee considers necessary for the management of the Trust. The Trustee's books and records of the Fund shall be open to inspection by the Primary Sponsor and Designated Accounting Firm during regular business hours of the Trustee. (b) The Plan Sponsors shall maintain or cause to be maintained accounting records for the Plan sufficient to allow the determination of the portion of the Fund which is allocable to each of the Plan Sponsors. Irrespective of the commingling of assets of the Plan for investment in the Fund, no portion of the Fund which is allocable to any one of the Plan Sponsors shall be used to pay benefits or discharge liabilities or obligations specifically allocable or attributable, respectively, to any other Plan or any other Plan Sponsor. (c) Within ninety (90) days after the close of each calendar year, the date of the removal or resignation of the Trustee, or the termination of the Trust, the Trustee shall render to the Primary Sponsor a written account and report of its management of the Fund covering the period (or relevant portion thereof if the written account and report becomes due on account of the removal or resignation of the Trustee) since the previous such written account and report. The written approval of that accounting and report by the Primary Sponsor or the failure of the Primary Sponsor to notify the Trustee of its disapproval of such accounting within ten (10) months after the end of the relevant period shall be final and binding as to the Trustee's administration of the Trust for the period upon the Primary Sponsor and all persons who have or may thereafter have an interest in the Fund. The Trustee may satisfy its obligation under this Subsection (c) by rendering to the Primary Sponsor monthly statements setting forth the information required by this Subsection separately for the month covered by the statement. SECTION 11. RESIGNATION, REMOVAL AND SUCCESSION (a) The Trustee may resign at any time upon giving sixty (60) days' prior written notice to the Primary Sponsor. (b) The Trustee may be removed by the Primary Sponsor at any time upon giving sixty (60) days' prior written notice to the Trustee; provided, however, that in the event of a Change of Control, the Trustee may thereafter be removed only after securing the written consent of a majority of the participants of the Plan and the designated beneficiaries of deceased participants. (c) Upon the removal or resignation of the Trustee, any successor appointed shall have the same powers and duties as those conferred upon the Trustee under this Trust. Prior to a Change of Control, the appointment of any successor Trustee shall be in the sole discretion of the Primary Sponsor. On or after a Change of Control, any successor Trustee shall be a bank or trust company having assets under management (including assets under management by affiliates) of not less than $1,000,000,000. Upon receipt by the Trustee of a written acceptance of the appointment by the successor Trustee, the Trustee shall transfer to the successor Trustee the assets constituting the Trust; provided, however, the Trustee shall not be required to pay over assets to a successor Trustee unless the Trustee shall be discharged from all liability for any taxes which may be due and owing by the Trust, or unless the successor Trustee, who must be acceptable to the Trustee, indemnifies the Trustee and the Trustee in its sole discretion agrees to accept indemnification. In the event that within ninety (90) days after the removal or resignation of the Trustee the Primary Sponsor shall have failed to appoint a successor Trustee or the Trustee shall not have received a written acceptance from a successor Trustee, then the Trustee may file an appropriate action in a court of competent jurisdiction and transfer to the custody of the court the assets then held by the Trustee constituting the Trust. Upon transfer to a successor Trustee or to the court, as the case may be, the Trustee shall be relieved of all further responsibilities and liabilities in connection with the Trust. The Trustee is authorized, however, to reserve therefrom any assets as it may deem advisable for payment of its fees and expenses in connection with the settlement of its account or otherwise, and any balance of the reserve remaining after the payment of the Trustee's fees and expenses shall be paid over to the successor Trustee or to the court. SECTION 12. AMENDMENT AND TERMINATION (a) Prior to a Change of Control, the Trust Agreement may be amended any time and to any extent by a written instrument executed by the Primary Sponsor, provided, however, that no such amendment shall be effective to the extent that it purports to make the Trust revocable. On or after a Change of Control, this Trust Agreement may be amended any time and to any extent by a written instrument executed by the Primary Sponsor, provided, however, no such amendment shall diminish the authority of the Designated Accounting Firm, diminish the obligation of the Trustee to follow the directions of the Designated Accounting Firm or provide for the elimination of any Investment Fund. In addition, whether before or after a Change of Control, no such amendment shall have the effect of reducing benefits accrued by participants under the Plan, delaying the times at which distributions are made from the Fund to participants and their beneficiaries or allowing a Plan Sponsor or any other person to receive distributions of the assets of the Fund not then permitted under the terms of the Trust Agreement. No amendment that purports to increase the duties or responsibilities of the Trustee or to alter materially the manner in which the Trustee is to discharge any continuing duties or responsibilities shall be given effect without the consent of the Trustee and no other amendment shall be given effect without first providing notice of same to the Trustee. The Trustee and Primary Sponsor may amend the Trust Agreement in any manner not otherwise specifically precluded by this Subsection, including any amendment regarding the removal of an existing Trustee or the appointment of a successor Trustee. (b) Notwithstanding any other provisions of the Trust Agreement to the contrary, the Trust shall terminate and all Fund assets shall be distributed (i) on the complete distribution of the Fund in accordance with the terms and provisions of the Plan; (ii) upon the delivery to the Trustee of a writing terminating the Trust signed by the Primary Sponsor, all participants of the Plan and the designated beneficiaries of deceased participants; or (iii) in the event the Internal Revenue Service makes a final determination that the assets of the Fund constitute compensation currently taxable as income to participants. Any assets remaining in the Fund after satisfaction of all liabilities and expenses of the Plan shall be returned to the Plan Sponsors. SECTION 13. MISCELLANEOUS (a) The Trustee shall under no circumstances be required to recognize any conveyance, transfer, assignment, mortgage, pledge or encumbrance by any participant or any person entitled to receive benefits under the Plan, any part of it, or any interest in it, or to pay any money or thing of value to any creditor or assignee of any participant or person for any cause whatsoever; provided, however, this Subsection (a) does not affect the provisions of Section 8 of the Trust Agreement. (b) The Primary Sponsor hereby agrees to indemnify and hold harmless the Trustee from and against any and all losses, claims, damages, liabilities, costs and expenses, including but not limited to, liability for any judgments or settlements consented to in writing by the Trustee, as applicable, which consents will not be unreasonably withheld, and reasonable attorneys' fees arising out of or in connection with or as a direct or indirect result of its serving, respectively, as the trustee (including but not limited to the Trustee's acts or omissions with respect to (i) the voting of any share of stock held as part of the assets of the Trust; (ii) establishing or maintaining investment funds or effecting investments therein in accordance with the terms and provisions of the Trust; or (iii) the determinations by the Trustee of insolvency or of a Change of Control (including acts or omissions in accordance with the terms and provisions of the Trust following any determination of insolvency or a Change of Control); except those losses, claims, damages, liabilities, costs and expenses, if any, arising out of or in connection with or as a direct or indirect result of the Trustee's gross negligence or willful misconduct. The Trustee shall promptly notify the Primary Sponsor of any claim, action or proceeding for which it may seek indemnity. This indemnity is a continuing obligation and shall be binding on the Primary Sponsor and its successors, whether by merger or otherwise, and assigns. In addition, this indemnity shall survive the resignation or removal of the Trustee, the liquidation of the Trust, or both events. For purposes of this Subsection (b), all references to the Trustee shall be deemed to include a reference to all affiliates of the Trustee and any officer, director or employee of the Trustee or any of its affiliates. (c) As used in this Trust Agreement, the term "Change of Control" means any event that pursuant to the requirements of Article X of the Primary Sponsor's Certificate of Incorporation, as amended from time to time, requires the affirmative vote of the holders of not less than eighty percent (80%) of the Voting Stock (as defined therein); provided, however, that no event shall constitute a Change of Control if approved by the Board of Directors of the Primary Sponsor a majority of whom are "present directors" and "new directors." For purposes of the preceding sentence, "present directors" shall mean individuals who as of the date of this Trust Agreement were members of the Board of Directors of the Primary Sponsor and "new directors" shall mean any director whose election by the Board of Directors of the Primary Sponsor (in the event of vacancy) or whose nomination for election by the Primary Sponsor's stockholders was approved by a vote of at least three-fourths of the directors then still in office who are present directors and new directors; provided that any director elected to the Board of Directors of the Primary Sponsor solely to settle a threatened or actual proxy contest shall in no event be deemed to be a new director. The board of directors of the Primary Sponsor shall immediately notify the Trustee of the occurrence of a Change of Control. Upon receipt of such written notice or in the event the Trustee has actual knowledge that a Change of Control has occurred, the Trustee shall take no action nor facilitate the taking of any action contemplated by the Trust Agreement as being taken prior to a Change of Control if (i) an alternative procedure for taking such action is prescribed on or after a Change of Control, or (ii) any action of the type described is expressly limited to the period prior to a Change of Control. If the Trustee should receive any written allegation to the effect that a Change of Control has occurred, the Trustee shall take no action nor facilitate the taking of any action described: in the immediately preceding sentence until making an independent determination as to whether a Change of Control has occurred. The Trustee shall make this determination within a period of thirty (30) days after the receipt of the written allegation. Following the determination, the Trustee shall discharge its duties under the Trust Agreement in a manner consistent with that determination. (d) The authority and responsibility with regard to the voting of and control over any securities of a Plan Sponsor held in the Trust shall be exercised by the Trustee pursuant to directions in writing provided by the Primary Sponsor or Investment Manager. All other decisions affecting such securities, including, without limitation, decisions to oppose or consent to tender or exchange offers, shall be similarly directed by the Primary Sponsor or the Investment Manager. The Trustee shall take such steps as may be necessary or appropriate to carry out the directions of the Primary Sponsor or Investment Manager, as applicable, given pursuant to this Subsection. (e) Whenever the context requires, words of the masculine gender used herein shall include the feminine and the neuter, and the words used in the singular shall include the plural. (f) Each provision of the Trust Agreement is severable and if any provision is found to be void as against public policy it shall not affect the validity of any other provision hereof. (g) The Trust Agreement shall be binding upon the successors and assigns of each Plan Sponsor and the Trustee. (h) The provisions of the Trust shall be construed according to the laws of the State of Florida and, to the extent applicable, according to the laws of the United States. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the day and year first above written. PRIMARY SPONSOR: MORRISON HEALTH CARE, INC. By: /s/ John E. Fountain ------------------------ - - Title:V.P., Secretary and General Counsel ATTEST: By: /s/ Henry Page --------------------- Title: Director of Finance [CORPORATE SEAL] TRUSTEE: MERRILL LYNCH COMPANY (FLORIDA) By: /s/ Melanie Madeira --------------------- - -------- Title: New Account Trust Officer ATTEST: By: _____________________________ Title:_____________________________ [SEAL] E Exhibit 10.29 FIRST AMENDMENT TO THE MORRISON HEALTH CARE, INC. 1996 STOCK INCENTIVE PLAN THIS FIRST AMENDMENT is made this 26th day of June, 1996, by Morrison Health Care, Inc., a corporation duly organized and existing under the laws of the State of Georgia (hereinafter called the "Company"). W I T N E S S E T H: WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996 Stock Incentive Plan under an indenture which was adopted as of February 23, 1996 (the "Plan"); and WHEREAS, the Company desires to amend the Plan to reflect increases in the number of shares authorized for issuance thereunder and to increase the limit on the number of shares that may be the subject of awards granted to certain executives during any single fiscal year of the Company; and WHEREAS, the Board of Directors of the Company has duly approved and authorized these amendments to the Plan; NOW, THEREFORE, the Company does hereby amend the Plan as follows: 1. By deleting, effective March 26, 1996, the first sentence of Section 2.2 in its entirety and by substituting therefor the following: "Subject to adjustment in accordance with Section 5.2, 750,000 shares of Stock (the `Maximum Plan Shares') are hereby reserved exclusively for issuance pursuant to Stock Incentives." 2. By deleting, effective June 26, 1996, the first sentence of Section 2.2 in its entirety and by substituting therefor the following: "Subject to adjustment in accordance with Section 5.2, 850,000 shares of Stock (the `Maximum Plan Shares') are hereby reserved exclusively for issuance pursuant to Stock Incentives." 3. By deleting, effective March 26, 1996, the number "100,000" where it appears in the last sentence of Section 2.4 and by substituting therefor the number "300,000". 4. Except as specifically amended hereby, the Plan shall remain in full force and effect as prior to the adoption of this First Amendment. 5. Notwithstanding the foregoing, the adoption of this First Amendment is subject to the approval of the stockholders of the Company and in the event that the stockholders of the Company fail to approve such adoption within twelve months of March 26, 1996, the adoption of this First Amendment shall be null and void. IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed on the day and year first above written. MORRISON HEALTH CARE, INC. By: /s/Glenn Davenport Title: President and Chief Executive Officer ATTEST: By: /s/John E. Fountain Title: Secretary (CORPORATE SEAL) EXHIBIT 10.30 FIRST AMENDMENT TO THE MORRISON HEALTH CARE, INC. 1996 NON-EXECUTIVE STOCK INCENTIVE PLAN THIS FIRST AMENDMENT is made as of this 26th day of June, 1996, by Morrison Health Care, Inc., a Georgia corporation (the "Company"). W I T N E S S E T H: WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996 Non-Executive Stock Incentive Plan under an indenture which was adopted as of February 23, 1996 (the "Plan"); and WHEREAS, the Company desires to amend the Plan to reflect increases in the number of shares authorized for issuance thereunder; and WHEREAS, the Board of Directors of the Company has duly approved and authorized these amendments to the Plan; NOW, THEREFORE, the Company does hereby amend the Plan, effective as of the date first set forth above, by deleting the first sentence of Section 2.2 in its entirety and by substituting therefor the following: "Subject to adjustment in accordance with Section 5.2 below, 2,250,000 shares of Stock (the `Maximum Plan Shares') are hereby reserved exclusively for issuance pursuant to Stock Incentives." Except as specifically amended hereby, the Plan shall remain in full force and effect as prior to the adoption of this First Amendment. IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed on the day and year first above written. MORRISON HEALTH CARE, INC. By: /s/ Glenn Davenport [CORPORATE SEAL] Title:President and Chief Executive Officer ATTEST: By: /s/John E. Fountain Title: Secretary EXHIBIT 10.31 SECOND AMENDMENT TO THE MORRISON HEALTH CARE, INC. 1996 STOCK INCENTIVE PLAN THIS SECOND AMENDMENT is made as of this 26th day of June, 1997, by Morrison Health Care, Inc., a corporation duly organized and existing under the laws of the State of Georgia (hereinafter called the "Company"). W I T N E S S E T H: WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996 Stock Incentive Plan under an indenture which was adopted as of February 23, 1996 (the "Plan"); WHEREAS, the Company desires to amend the Plan to reflect an increase in the number of shares authorized for issuance thereunder; and WHEREAS, the Board of Directors of the Company has duly approved and authorized this amendment to the Plan; NOW, THEREFORE, the Company does hereby amend the Plan, effective as of the date first set forth above, as follows: 1. By deleting the first sentence of Section 2.2 in its entirety and by substituting therefor the following: "Subject to adjustment in accordance with Section 5.2, 1,750,000 shares of Stock (the `Maximum Plan Shares') are hereby reserved exclusively for issuance pursuant to Stock Incentives." 2. Except as specifically amended hereby, the Plan shall remain in full force and effect as prior to the adoption of this Second Amendment. 3. Notwithstanding the foregoing, the adoption of this Second Amendment is subject to the approval of the stockholders of the Company and in the event that the stockholders of the Company fail to approve such adoption within twelve months from the date first set forth above, the adoption of this Second Amendment shall be null and void. IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed on the day and year first above written. MORRISON HEALTH CARE, INC. By: /s/ Glenn Davenport ----------------------- Title:President and CEO ATTEST: By: /s/John E. Fountain Title: Secretary (CORPORATE SEAL) EXHIBIT 10.32 SECOND AMENDMENT TO THE MORRISON HEALTH CARE, INC. 1996 NON-EXECUTIVE STOCK INCENTIVE PLAN THIS SECOND AMENDMENT is made as of this 26th day of June, 1997, by Morrison Health Care, Inc., a corporation duly organized and existing under the laws of the State of Georgia (hereinafter called the "Company"). W I T N E S S E T H: WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996 Non-Executive Stock Incentive Plan under an indenture which was adopted as of February 23, 1996 (the "Plan"); WHEREAS, the Company desires to amend the Plan to reflect a decrease in the number of shares authorized for issuance thereunder; and WHEREAS, the Board of Directors of the Company has duly approved and authorized this amendment to the Plan; NOW, THEREFORE, the Company does hereby amend the Plan, effective as of the date first set forth above, as follows: 1. By deleting the first sentence of Section 2.2 in its entirety and by substituting therefor the following: "Subject to adjustment in accordance with Section 5.2, 1,350,000 shares of Stock (the `Maximum Plan Shares') are hereby reserved exclusively for issuance pursuant to Stock Incentives." 2. Except as specifically amended hereby, the Plan shall remain in full force and effect as prior to the adoption of this Second Amendment. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed on the day and year first above written. MORRISON HEALTH CARE, INC. By: /s/ Glenn Davenport ----------------------- Title:President and CEO ATTEST: By: /s/John E. Fountain Title: Secretary (CORPORATE SEAL) Exhibit 10.33 THIRD AMENDMENT TO THE MORRISON HEALTH CARE, INC. SALARY DEFERRAL PLAN THIS THIRD AMENDMENT is made on this 9th day of January, 1998, by MORRISON HEALTH CARE, INC., a corporation duly organized and existing under the laws of the State of Georgia (the "Primary Sponsor"). W I T N E S S E T H: WHEREAS, the Primary Sponsor established by indenture dated March 7, 1996, the Morrison Health Care, Inc. Salary Deferral Plan (the "Plan"); and WHEREAS, the Primary Sponsor requested a determination letter from the Internal Revenue Service as to the qualified status of the Plan which has resulted in some necessary changes to the Plan; NOW, THEREFORE, the Primary Sponsor does hereby amend the Plan, effective as of March 7, 1996, as follows: 1. By substituting the following language for the last sentence of Section 1.31 of the Plan: "Notwithstanding the foregoing, the Primary Sponsor may elect to determine each Highly Compensated Employee using the snapshot day of December 31, in a manner consistent with Section 4 of Revenue Procedure 93-42; provided that, for those Plan Years following December 31, 1996, the Plan Sponsor shall follow the procedures published by the Internal Revenue Service pursuant to Notice 97-45, Section III(1)." 2. By substituting the following language for Section 3.4A of the Plan: "3.4A Qualified Contributions. At the sole discretion of the Primary Sponsor, each Plan Sponsor shall make `Qualified Nonelective Contributions' and/or `Qualified Matching Contributions,' as those terms are defined in Section 1 of Appendix A, in an amount together with any supplement allocations under Plan Sections 4.2(b)(1) or (2) as determined by the Primary Sponsor are necessary to satisfy, as applicable, the testing requirements of Code Section 401(m)(2)(A)." 3. By deleting Paragraph (1) of Section 4.1(b) of the Plan in its entirety and redesignating existing Paragraphs (2) and (3) as new Paragraphs (1) and (2), respectively. 4. By substituting the following language for Plan Section 4.2(b)(3): "(3) any remaining excess, to the Supplemental Account of each Member who is employed by a Plan Sponsor on the last day of the Plan Year in the proportion that the Member's Annual Compensation bears to the Annual Compensation of all Members entitled to an allocation pursuant to this Section 4.2(b)(3)." 5. By substituting the following language for Section 4.4(b) of the Plan: "(b) Any shares of Company Stock which are released from the Loan Suspense Account that are attributable (1) to Plan Sponsor contributions under Plan Section 3.3 and forfeitures; (2) to cash dividends paid on shares of Company Stock allocated to the Loan Suspense Account that are used to make a payment on an Acquisition Loan and (3) to proceeds on the sale of shares of Company Stock held in the Loan Suspense Account that are used to make a payment on an Acquisition Loan (to the extent such proceeds are to be treated as annual additions for purposes of Appendix B in accordance with Section 4.4(e) below) shall be allocated to Company Matching Accounts in accordance with Plan Section 4.2(a). Proceeds on the sale of shares of Company Stock held in the Loan Suspense Account may be used to repay an Acquisition Loan if the transaction, based on all the surrounding facts and circumstances, satisfies the requirements of Treasury Regulations Section 54.4975-7(b)(3)." 6. By adding a new final sentence to Section 5.1(c) as follows: "Payments made with respect to an Acquisition Loan must be made solely from ESOP assets." 7. By substituting the following language for Section 8.4 of the Plan: "8.4 Payment of the Member's Accrued Benefit shall be made as soon as administratively feasible after the Member terminates employment, but in no event later than, unless the Member otherwise elects, the 60th day after the latest of the close of the Plan Year in which the Member terminates his service with the Plan Sponsor; provided, however, if the Member's Accrued Benefit exceeds $3,500 it will not be distributed before the Member's 'required beginning date,' within the meaning of Plan Section 11.3(c), without the Member's consent." 8. By substituting the following language for Section 9.3 of the Plan: "9.3 Payment of the Member's Accrued Benefit shall be made as soon as administratively feasible after the Member terminates employment, but in no event later than, unless the Member otherwise elects, the 60th day after the latest of the close of the Plan Year in which the Member terminates his service with the Plan Sponsor; provided, however, if the Member's Accrued Benefit exceeds $3,500 it will not be distributed before the Member's 'required beginning date,' within the meaning of Plan Section 11.3(c), without the Member's consent." 9. By substituting the following for Appendix A to the Plan "APPENDIX A SPECIAL NONDISCRIMINATION RULES SECTION 1 As used in this Appendix, the following words shall have the following meanings: (a) 'Eligible Member' means a Member who is an Employee during any particular Plan Year. (b) 'Highly Compensated Eligible Member' means any Eligible Member who is a Highly Compensated Employee. (c) 'Matching Contribution' means any contribution made by a Plan Sponsor to a Company Matching Account and any other contribution made to a plan by a Plan Sponsor or an Affiliate on behalf of an Employee on account of a contribution made by an Employee or on account of an Elective Deferral. (d) 'Qualified Matching Contributions' means Matching Contributions which are immediately nonforfeitable when made, and which would be nonforfeitable, regardless of the age or service of the Employee or whether the Employee is employed on a certain date, and which may not be distributed, except upon one of the events described under Code Section 401(k)(2)(B) and the regulations thereunder. (e) 'Qualified Nonelective Contributions' means contributions of the Plan Sponsor or an Affiliate, other than Matching Contributions or Elective Deferrals, which are nonforfeitable when made, and which would be nonforfeitable regardless of the age or service of the Employee or whether the Employee is employed on a certain date, and which may not be distributed, except upon one of the events described under Code Section 401(k)(2)(B) and the regulations thereunder. SECTION 2 In addition to any other limitations set forth in the Plan, for each Plan Year one of the following tests must be satisfied for the Profit Sharing Plan: (a) the actual deferral percentage for the Highly Compensated Eligible Members for the Plan Year must not be more than the actual deferral percentage of all other Eligible Members for the preceding Plan Year multiplied by 1.25; or (b) the excess of the actual deferral percentage for the Highly Compensated Eligible Members for the Plan Year over that of all other Eligible Members for the preceding Plan Year must not be more than two (2) percentage points, and the actual deferral percentage for the Highly Compensated Eligible Members for the Plan Year must not be more than the actual deferral percentage of all other Eligible Members for the preceding Plan Year multiplied by two (2). Notwithstanding the foregoing, the Plan Administrator may utilize any transition rule permitted by Internal Revenue Service 97-2 or otherwise regarding the use of current year data for calculating actual deferral percentages. The 'actual deferral percentage' for the Highly Compensated Eligible Members and all other Eligible Members for a Plan Year is the average in each group of the ratios, calculated separately for each Employee, of the Deferral Amounts contributed by the Plan Sponsor on behalf of an Employee for the Plan Year to the Annual Compensation of the Employee in the Plan Year. In addition, for purposes of calculating the 'actual deferral percentage' as described above, Deferral Amounts of Employees who are not Highly Compensated Employees which are prohibited by Code Section 401(a)(30) shall not be taken into consideration. SECTION 3 If the Deferral Amounts contributed on behalf of any Highly Compensated Eligible Member exceeds the amount permitted under the 'actual deferral percentage' test described in Section 2 of this Appendix A for any given Plan Year, then before the end of the Plan Year following the Plan Year for which the Excess Deferral Amount was contributed, (a) the amount of the Excess Deferral Amount for the Plan Year, as adjusted to reflect income, gain, or loss attributable to it through the date the Excess Deferral Amount is distributed to the Member and reduced by any excess Elective Deferrals as determined pursuant to Plan Section 3.1 previously distributed to the Member for the Member's taxable year ending with or within the Plan Year, may be distributed to the Highly Compensated Eligible Member or (b) to the extent provided in regulations issued by the Secretary of the Treasury, the Plan Administrator may, in its discretion, allow each affected Member to elect, within two and one-half months after the end of the Plan Year for which the Excess Deferral Amount was contributed, to treat the Excess Deferral Amount, unadjusted for earnings, gains, and losses, but as so reduced, as an amount distributed to the Member and then contributed as an after- tax contribution by the Member to the Plan ('recharacterized amounts'). The income allocable to such Excess Deferral Amount shall be determined in a similar manner as described in Plan Section 4.3(a). The portion of the Matching Contributions on which such Excess Deferral Amount was based shall be forfeited upon the distribution of such Excess Deferral Amount. The Excess Deferral Amount to be distributed or recharacterized shall be reduced by Deferral Amounts previously distributed or recharacterized for the taxable year ending in the same Plan Year, and shall also be reduced by Deferral Amounts previously distributed or recharacterized for the Plan Year beginning in such taxable year. For all other purposes under the Plan other than this Appendix A, recharacterized amounts shall continue to be treated as Deferral Amounts. In the event the multiple use of limitations contained in Sections 2(b) and 5(b) of this Appendix, pursuant to Treasury Regulations Section 1.40(m)-2 as promulgated by the Secretary of the Treasury, requires a corrective distribution, such distribution shall be made pursuant to this Section 3, and not Section 6 of Appendix A. The portion of the Matching Contributions on which such Excess Deferral Amount was based shall be forfeited upon the distribution or recharacterization, as the case may be, of such Excess Deferral Amount. For purposes of this Section 3, 'Excess Deferral Amount' means, with respect to a Plan Year, the excess of: (a) the aggregate amount of Deferral Amounts contributed by a Plan Sponsor on behalf of Highly Compensated Eligible Members for the Plan Year, over (b) the maximum amount of Deferral Amounts permitted under Section 2 of this Appendix A for the Plan Year, which shall be determined by reducing the Deferral Amounts contributed on behalf of Highly Compensated Eligible Members in order of the amount of Deferral Amounts beginning with the greatest of such amounts. Distribution of the Excess Deferral Amounts for any Plan Year shall be made to the Highly Compensated Eligible Members on the basis of the respective portions of the Excess Deferral Amount attributable to each Highly Compensated Eligible Member. As to any Highly Compensated Employee who is subject to the family aggregation rules of Subsection (b) of the Plan Section containing the definition of the term 'Highly Compensated Employee,' any distribution of such Highly Compensated Employee's allocable portion of the Excess Deferral Amount for a Plan Year shall be allocated among the family members of such Highly Compensated Employee who are combined to determine the actual deferral percentage in proportion to the Deferral Amounts taken into account under this Section 3. SECTION 4 The Plan Administrator shall have the responsibility of monitoring the Plan's compliance with the limitations of this Appendix A and shall have the power to take all steps it deems necessary or appropriate to ensure compliance, including, without limitation, restricting the amount which Highly Compensated Eligible Members can elect to have contributed pursuant to Plan Section 3.1. Any actions taken by the Plan Administrator pursuant to this Section 4 shall be pursuant to non- discriminatory procedures consistently applied. SECTION 5 In addition to any other limitations set forth in the Plan, Matching Contributions under the Plan and the amount of nondeductible employee contributions under the Plan, for each Plan Year, must each separately satisfy one of the following tests: (a) The contribution percentage for the Highly Compensated Eligible Members for the Plan Year must not exceed 125% of the contribution percentage for all other Eligible Members for the preceding Plan Year; or (b) The contribution percentage for Highly Compensated Eligible Members for the Plan Year must not exceed the lesser of (1) 200% of the contribution percentage for all other Eligible Members for the preceding Plan Year, and (2) the contribution percentage for all other Eligible Members for the preceding Plan Year plus two (2) percentage points. Notwithstanding the foregoing, the Plan Administrator may utilize any transition rule permitted by Internal Revenue Service 97-2 or otherwise regarding the use of current year data for calculating actual contribution percentages. Notwithstanding the foregoing, for purposes of this Section 5, the terms Highly Compensated Eligible Member or Eligible Member shall not include any Member who is not eligible to receive a Matching Contribution under the provisions of the Plan, other than as a result of the Member failing to contribute to the Plan or failing to have an Elective Deferral contributed to the Plan on the Member's behalf. In applying the above tests, the Plan Administrator shall comply with any regulations promulgated by the Secretary of the Treasury which prevent or restrict the use of the test contained in Section 2(b) of this Appendix A and the test contained in Section 5(b) of this Appendix A. The 'contribution percentage' for Highly Compensated Eligible Members and for all other Eligible Members for a Plan Year shall be the average of the ratios, calculated separately for each Member, of (A) to (B), where (A) is, as the case may be, either the amount of Matching Contributions under the Plan (excluding Matching Contributions which are used to satisfy the minimum required contributions to the Accounts of Eligible Members who are not Key Employees pursuant to Section 1 of Appendix C to the Plan) or nondeductible employee contributions made under the Plan for the Eligible Member for the Plan Year, and where (B) is the Annual Compensation of the Eligible Member for the Plan Year. Except to the extent limited by Treasury Regulation Section 1.401(m)-1(b)(5) and any other applicable regulations promulgated by the Secretary of the Treasury, a Plan Sponsor may elect to treat Qualified Nonelective Contributions and/or Qualified Matching Contributions as Matching Contributions for purpose of determining the 'contribution percentage.' SECTION 6 If either (a) the Matching Contributions and, if taken into account under Section 5 of this Appendix A, the Qualified Nonelective Contributions and Qualified Matching Contributions made on behalf of Highly Compensated Eligible Members or (b) nondeductible employee contributions made by Highly Compensated Eligible Employees exceed the amount permitted under the `contribution percentage test' for any given Plan Year, then, before the close of the Plan Year following the Plan Year for which the excess aggregate contributions were made, the amount of the excess aggregate contributions attributable to the Plan for the Plan Year under either Section 6(a) or 6(b), or both, as adjusted to reflect any income, gain or loss attributable to such contributions through the date the excess aggregate contributions are distributed, shall be distributed. The income allocable to such contributions shall be determined in a similar manner as described in Plan Section 4.3. As between the Plan and any other plan or plans maintained by the Plan Sponsor in which excess aggregate contributions for a Plan Year are held, each such plan shall distribute a pro-rata share of each class of contribution based on the respective amounts of a class of contribution made to each plan during the Plan Year. The payment of the excess aggregate contributions shall be made without regard to any other provision in the Plan. In the event the multiple use of limitations contained in Sections 2(b) and 5(b) of this Appendix, pursuant to Treasury Regulation Section 1.401(m)-2 as promulgated by the Secretary of the Treasury, requires a corrective distribution, such distribution shall be made pursuant to Section 3 of Appendix A, and not this Section 6. For purposes of this Section 6, with respect to any Plan Year, 'excess aggregate contributions' means the excess of: (a) the aggregate amount of either (i) Matching Contributions, Qualified Nonelective Contributions and Qualified Matching Contributions or (ii) nondeductible employee contributions actually made by or on behalf of Highly Compensated Eligible Members for the Plan Year, over (b) the maximum amount of the contributions permitted under the limitations of Section 5 of this Appendix A, determined by reducing contributions made on behalf of Highly Compensated Eligible Members beginning with the greatest of such amounts. Distribution of nondeductible employee contributions or Matching Contributions in the amount of the excess aggregate contributions for any Plan Year shall be made with respect to Highly Compensated Employees on the basis of the respective portions of each class of excess aggregate contributions attributable to each Highly Compensated Employee. As to any Highly Compensated Employee who is subject to the family aggregation rules of Subsection (b) of the Plan Section containing the definition of the term 'Highly Compensated Employee,' any distribution of such Highly Compensated Employee's allocable portion of the excess aggregate contributions for a Plan Year shall be allocated among the family members of such Highly Compensated Employee which are combined to determine the contribution percentage in proportion to the contributions taken into account under this Section 6. SECTION 7 Except to the extent limited by rules promulgated by the Secretary of the Treasury, if a Highly Compensated Eligible Member is a participant in any other plan of the Plan Sponsor or any Affiliate which includes Matching Contributions, deferrals under a cash or deferred arrangement pursuant to Code Section 401(k), or nondeductible employee contributions, any contributions made by or on behalf of the Member to the other plan shall be allocated with the same class of contributions under the Plan for purposes of determining the 'actual deferral percentage' and 'contribution percentage' under the Plan; provided, however, contributions that are made under an 'employee stock ownership plan' (within the meaning of Code Section 4975(e)(7)) shall not be combined with contributions under any plan which is not an employee stock ownership plan (within the meaning of Code Section 4975(e)(7)). Except to the extent limited by rules promulgated by the Secretary of the Treasury, if the Plan and any other plans which include Matching Contributions, deferrals under a cash or deferred arrangement pursuant to Code Section 401(k), or nondeductible employee contributions are considered as one plan for purposes of Code Section 401(a)(4) and 410(b)(1), any contributions under the other plans shall be allocated with the same class of contributions under the Plan for purposes of determining the 'contribution percentage' and 'actual deferral percentage' under the Plan; provided, however, contributions that are made under an 'employee stock ownership plan' (within the meaning of Code Section 4975(e)(7)) shall not be combined with contributions under any plan which is not an employee stock ownership plan (within the meaning of Code Section 4975(e)(7))." 1. By adding the following language to the end of Section 4 of Appendix B of the Plan: "For purposes of applying the limitations set forth in this Appendix B, the term `Plan Sponsor' shall mean a Plan Sponsor and any other corporations which are members of the same controlled group of corporations (as described in Section 414(b) of the Code, as modified by Code Section 415(b)) as is a Plan Sponsor, any other trades or businesses (whether or not incorporated) under common control (as described in Code Section 414(c), as modified by Code Section 415(h) with a Plan Sponsor, any other corporations, partnerships, or other organizations which are members of an affiliated service group (as described in Section 414(m) of the Code) with a Plan Sponsor, and any other entity required to be aggregated with a Plan Sponsor pursuant to regulations under Code Section 414(o)." 2. By deleting the last sentence of Section 1(b)(1) of Appendix C in its entirety. 3. By substituting the following language for the last sentence of Section 1(d)(3)(B) of Appendix C of the Plan: "The actuarial assumptions utilized in calculating the present value of the accrued benefit for any participant in a defined benefit plan for purposes of this Subsection (b) shall be established by the Plan Administrator after consultation with the actuary for the Plan, and shall be reasonable in the aggregate and shall comport with the requirements set forth by the Internal Revenue Service in Q&A T-26 and T-27 of Regulation Section 1.416-1; provided that, the accrued benefit for any participant (other than a Key Employee) in a defined benefit plan shall be determined in accordance with Code Section 416(g)(4)(F)." 4. By substituting the following language for Section 2(a) of Appendix C of the Plan: "(a) Notwithstanding anything contained in the Plan to the contrary, except as otherwise provided in Subsection (b) of this Section, in any Plan Year during which the Plan is Top-Heavy, allocations of Plan Sponsor contributions for the Plan Year for the Account of each Member which is not a Key Employee and who has not separated from service with the Plan Sponsor prior to the end of the Plan Year shall not be less than three (3) percent of the Member's Annual Compensation. The Plan Sponsor shall make such allocations to each Member who is not a Key Employee regardless of whether such Member has declined to make a contribution to the Plan. For purposes of this Subsection, an allocation to a Member's Account resulting from any Plan Sponsor contribution attributable to a salary reduction or similar arrangement shall not be taken into account." 5. By deleting Section 4 of Appendix C of the Plan in its entirety. Except as specifically provided herein, the Plan shall remain in full force and effect as prior to this Third Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be executed as the day and year first above written. MORRISON HEALTH CARE, INC. By: /s/ Glenn Davenport Title:President and Chief Executive Officer ATTEST: By: /s/John E. Fountain Title: Secretary [CORPORATE SEAL] EXHIBIT 10.34 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement ("Agreement") is made this 9th day of January, 1998, by Morrison Health Care, Inc., a Georgia corporation ("Buyer"), the Drake Family Revocable Trust, Richard or Dianne Drake Trustees under agreement (the "Trust Agreement") dated September 17, 1991 (the "Drake Trust"), Richard Drake, an individual resident of the State of Arizona ("R. Drake"), Dianne Drake, an individual resident of the State of Arizona ("D. Drake"), and Philippe Michelin, an individual resident of the State of Arizona ("Michelin" and, collectively with the Drake Trust, R. Drake and D. Drake, "Sellers") and Drake Management Services, Inc., an Arizona corporation (the "Company"). RECITALS Sellers desire to sell, and Buyer desires to purchase, all of the issued and outstanding shares (the "Shares") of capital stock of the Company, for the consideration and on the terms set forth in this Agreement. AGREEMENT The parties, intending to be legally bound, agree as follows: 1. DEFINITIONS For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section DEFINITIONS: "AAA"-- as defined in Section 11.2(c). "Adjustment Amount"-- the principal and interest due on the Promissory Note on the Closing Date. "Affiliate" -- with respect to an individual, any family member, any Person that is directly or indirectly controlled by such individual or such individual's family members, or any Person with respect to which such individual, or a member of such individual's family, serves as a director, officer, partner, executor, or trustee (or similar capacity, and with respect to any Person other than an individual, any person that controls, in controlled by or under common control with such Person, and each Person that serves as a director, officer, partners, executor or trustee (or similar capacity) of such Person. "Agreement"-- as defined in the Preamble. "Applicable Contract"-- any Contract (a) under which the Company has or may acquire any rights, (b) under which the Company has or may become subject to any obligation or liability, or (c) by which the Company or any of the assets owned or used by it is or may become bound. "Balance Sheet"-- as defined in Section 0. "Buyer"-- as defined in the Preamble. "Buyer's Closing Documents"-- as defined in Section 4.2. "Closing"-- as defined in Section 0. "Closing Date"-- the date and time as of which the Closing actually takes place. "COBRA Rights" - as defined in Section 3.13(k) "Company"-- as defined in the Preamble. "Company Plans"-- as defined in Section 3.13(b). "Company Qualified Plans"-- as defined in Section 3.13(c). "Competing Business"-- as defined in Section 3.25. "Contemplated Transactions"-- all of the transactions contemplated by this Agreement, including: (a) the sale of the Shares by Sellers to Buyer; (b) the execution, delivery, and performance of the Promissory Note, the Employment Agreements, the Noncompetition Agreements, the Earnout Agreement and the Sellers' Releases; (c) the performance by Buyer and Sellers of their respective covenants and obligations under this Agreement; and (d) Buyer's acquisition and ownership of the Shares and exercise of control over the Company. "Contract"-- any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding. "Copyrights"-- as defined in Section 3.22(a)(ii). "CPR" - as defined in Section 11.2(b). "D. Drake"-- as defined in the Preamble. "Damages"-- as defined in Section 0. "Disclosure Letter"-- the disclosure letter delivered by Sellers to Buyer concurrently with the execution and delivery of this Agreement. "Dispute" -- as defined in Section 11.1. "Drake Trust" - as defined in the Preamble. "Efron Assignment" - assignment of a limited partnership interest in Efron Apartment Investors, an Indiana limited partnership, as payment for a debt to the Company. "Earnout Agreement" -- as defined in Section 2.4(a)(vii). "Employment Agreements"-- as defined in Section (iii) employment agreements in the form of Exhibit 2.4(a)(iii), executed by R. Drake and Michelin (collectively, the "Employment Agreements");. "Employees" -- as defined in Section 3.13(b). "Encumbrance"-- any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. "Environment"-- soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource. "Environmental, Health, and Safety Liabilities"-- any cost, damages, expense, liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law including fines, penalties, financial responsibility for cleanup costs, corrective action, removal, remedial actions and response actions, and any other compliance, corrective, investigative or remedial measures required under any Environmental Law or Occupational Safety and Health Law. The terms "removal," "remedial," and "response action," include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., as amended ("CERCLA"). "Environmental Law"-- any Legal Requirement that requires or relates to releases of pollutants or hazardous substances or materials, violations of discharge limits, or other prohibitions that relate to the Environment. "ERISA"-- the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law. "Facilities"-- any real property, leaseholds, or other interests currently or formerly owned or operated by the Company and any buildings, plants, structures, or equipment (including motor vehicles) currently or formerly owned or operated by the Company. "Governmental Authorization"-- any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement. "Governmental Body"-- any federal, state, local, municipal, foreign, or other government; or governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); "Hazardous Materials"-- any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos- containing materials. "Indemnified Persons" -- as defined in Section 10.2. "Initial Purchase Price"-- as defined in Section 2.2. "Intellectual Property Assets" -- as defined in Section 3.22 Intellectual Property.. "Interim Balance Sheet"-- as defined in Section 3.4 Financial Statements.Sellers have delivered to Buyer: (a) unaudited balance sheets of the Company as at December 31 in each of the years 1995 and 1996, and the related unaudited statements of income, changes in stockholders'equity, and cash flow for each of the fiscal years then ended, (b) an unaudited balance sheet of the Company as at September 30, 1997 (including the notes thereto, the "Balance Sheet"), and the related statements of income, changes in stockholders'equity, and cash flow for the fiscal year then ended, and (c) an unaudited balance sheet of the Company as at September 30, 1997 (the "Interim Balance Sheet") and the related unaudited statements of income, changes in stockholders'equity, and cash flow for the nine (9) months then ended. Such financial statements and notes fairly present the financial condition and the results of operations, changes in stockholders'equity, and cash flow of the Company as at the respective dates of and for the periods referred to in such financial statements, all in accordance with TBA, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse); the financial statements referred to in this Section Error! Not a valid bookmark self-reference. reflect the consistent application of TBA accounting principles throughout the periods involved.. "IRC"-- the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law. "IRS"-- the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury. "Knowledge"-- an individual will be deemed to have "Knowledge" of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the existence of such fact or other matter. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter. "Legal Requirement"-- any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty. "Marks"-- as defined in Section 3.22(a)(i). "Mediation Request"-- as defined in Section 11.2(b). "Michelin"-- as defined in the Preamble. "Noncompetition Agreements"-- as defined in Section (iv) noncompetition agreements in the form of Exhibit 2.4(a)(iv), executed by R. Drake and Michelin (collectively, the "Noncompetition Agreements"); . "Occupational Safety and Health Law"-- any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions. "Order"-- any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator. "Ordinary Course of Business"-- an action taken by a Person will be deemed to have been taken in the "Ordinary Course of Business" only if such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person. "Organizational Documents"-- the articles or certificate of incorporation and the bylaws of a corporation and any amendment to any of the foregoing. "Person"-- any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body. "Proceeding"-- any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator. "Promissory Note"-- as defined in Section 6.2. "R. Drake"-- as defined in the Preamble. "Release"-- any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment, whether intentional or unintentional. "Representative"-- with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors. "Sellers"-- as defined in the Preamble. "Sellers' Closing Documents"-- as defined in Section 3.2(a). "Sellers' Releases"-- as defined in Section 2.4 Closing Obligations.At the Closing:. "Shares"-- as defined in the Preamble. "Tax"-- all tax (including income tax, capital gains tax, value added tax, sales tax, property tax, gift tax or estate tax), levy, assessment, tariff, duty, deficiency or other fee and any related charge or amount (including fine, penalty and interest) imposed, assessed or collected by or under the authority of any Governmental Body. "Tax Return"-- any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax. "TBA" -- tax basis of accounting required for the preparation of Federal Tax Returns, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 hereof were prepared. "Threatened"-- a claim, Proceeding, dispute, action, or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future. "Trade Secrets" -- as defined in Section 3.22(a)(iii). "Trust Agreement" -- as defined in the Preamble. 2. SALE AND TRANSFER OF SHARES; CLOSING 2.1 Shares. Subject to the terms and conditions of this Agreement, at the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares from Sellers free and clear of any and all Encumbrances. 2.2 Purchase Price. The purchase price for the Shares will be (i) $5,000,000 minus the Adjustment Amount (the "Initial Purchase Price") plus (ii) any and all amounts payable to Sellers under the Earnout Agreement. 2.3 Closing. The purchase and sale (the "Closing") provided for in this Agreement will take place at the offices of Powell, Goldstein, Frazer & Murphy LLP, Sixteenth Floor, 191 Peachtree St., N.E., Atlanta, Georgia, 30303 at 10:00 a.m. (local time) on January [5], 1998 or at such other time and place as the parties may agree. Subject to the provisions of Article 9. TERMINATION, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section Error! Not a valid bookmark self-reference. will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement. 2.4 Closing Obligations. At the Closing: (a) Sellers will deliver to Buyer: (i) certificates representing the Shares accompanied by duly executed stock powers; (ii) releases in the form of Exhibit 2.4(a)(ii) executed by D. Drake, R. Drake and Michelin (collectively, the "Sellers' Releases"); (iii) employment agreements in the form of Exhibit 2.4(a)(iii), executed by R. Drake and Michelin (collectively, the "Employment Agreements"); (iv) noncompetition agreements in the form of Exhibit 2.4(a)(iv), executed by R. Drake and Michelin (collectively, the "Noncompetition Agreements"); (v) resignations from all current officers and directors of the Company other than R. Drake who shall remain President of the Company and Michelin who shall remain Vice President of the Company; (vi) a certificate executed by Sellers to the effect that (A) each of Sellers' representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date; and (B) each of the covenants and agreements of Sellers to be performed prior to the Closing Date has been duly performed or complied with by the Seller; (vii) a certificate from the Secretary of the Company attaching and certifying to (a) the Company's Organizational Documents and (b) resolutions of the board of directors of the Company approving the Contemplated Transactions; (viii) the earnout agreement in the form of Exhibit 2.4(a)(vii), execute by Sellers (the "Earnout Agreement"); and (ix) the documents contemplated by Section 7.3 hereof. (b) Buyer will deliver to Sellers: (i) the Initial Purchase Price by bank cashier's check or by wire transfer to the accounts specified by Sellers, to be allocated among the Sellers pursuant to the allocation schedule set forth on Part 2.4 of the Disclosure Letter; (ii) a certificate executed by Buyer to the effect that, (A) each of Buyer's representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date; and (B) each of the covenants and agreements of Buyer to be performed prior to the Closing Date has been duly performed and complied with by Buyer; (iii) a certificate from the Secretary of Buyer attaching and certifying to (a) the Buyer's Organizational Documents and (b) resolutions of the board of directors of Buyer authorizing the Contemplated Transactions; (iv) the Employment Agreements, executed by the Company and Buyer; (v) the Noncompetition Agreements, executed by Buyer; (vi) the Earnout Agreement, executed by Buyer; and (vii) the documents contemplated by Section 8.3 hereof. 3. REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers, jointly and severally, represent and warrant to Buyer as follows: 3.1 Organization and Good Standing. (a) Part 3.1 of the Disclosure Letter contains a complete and accurate list of the Company's name, its jurisdiction of incorporation, other jurisdictions in which it is authorized to do business, and its capitalization (including the identity of each stockholder of the Company and the number of shares held by each). The Company is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. The Drake Trust is a trust duly organized and validly existing under the laws of the state in which it was formed. (b) Sellers have delivered to Buyer copies of the Organizational Documents of the Company and the Trust Agreement, as currently in effect. (c) The Company has no subsidiaries and no ownership interest in any Person, except as may be deemed to exist as a result of the Efron Assignment. 3.2 Authority; No Conflict. (a) The Agreement constitutes the legal, valid and binding obligation of the Company and the Sellers, enforceable against the Company and Sellers in accordance with its terms, and upon the execution and delivery by Sellers of the Employment Agreements, the Sellers' Releases, the Earnout Agreement, the Promissory Note and the Noncompetition Agreements to which each such Seller is a party (collectively, the "Sellers' Closing Documents"), Sellers' Closing Documents will constitute the legal, valid, and binding obligations of each Seller party thereto and the Company, enforceable against such Seller and/or the Company in accordance with their respective terms. Sellers and the Company have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the Sellers' Closing Documents to which it is party and to perform their obligations under this Agreement and the Sellers' Closing Documents. (b) Except as set forth in Part 3.2 of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of the Company or the Trust Agreement, or (B) any resolution adopted by the board of directors or the stockholders of the Company; (ii) in any material respect, contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or any Seller, or any of the assets owned or used by the Company, may be subject; (iii) in any material respect, contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company; (iv) cause Buyer or the Company to become subject to, or to become liable for the payment of, any Tax except as the Company or Buyer would otherwise be subject to in the Ordinary Course of Business; (v) in any material respect, cause any of the assets owned the Company to be reassessed or revalued by any taxing authority or other Governmental Body; (vi) in any material respect, contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or (vii) in any material respect, result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company. Except as set forth in Part 3.2 of the Disclosure Letter, no Seller nor the Company is or will be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 3.3 Capitalization. The authorized equity securities of the Company consist of 1,000,000 shares of common stock, par value $1.00 per share, of which 3,157 shares are issued and outstanding, and 100,000 shares of eight percent (8%) convertible, cumulative preferred stock, par value $100.00 per share, none of which is issued and outstanding, and all issued and outstanding shares as set forth above constitute the Shares. Sellers are and will be on the Closing Date the record and beneficial owners and holders of the Shares, free and clear of all Encumbrances, in the amounts set forth on Part 3.3 of the Disclosure Letter. No legend or other reference to any purported Encumbrance appears or will appear upon any certificate representing the Shares except as otherwise set forth in Section 4.3. All of the Shares have been duly authorized and validly issued and are fully paid and nonassessable. There are no Contracts relating to the issuance, sale, or transfer of the Shares or other securities of the Company. None of the outstanding equity securities or other securities of the Company was issued in violation of the Securities Act or any other Legal Requirement. The Company does not own, or have any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business. 3.4 Financial Statements. Sellers have delivered to Buyer: (a) unaudited balance sheets of the Company as at December 31 in each of the years 1995 and 1996, and the related unaudited statements of income, changes in stockholders' equity, and cash flow for each of the fiscal years then ended, (b) an unaudited balance sheet of the Company as at September 30, 1997 (including the notes thereto, the "Balance Sheet"), and the related statements of income, changes in stockholders' equity, and cash flow for the fiscal year then ended, and (c) an unaudited balance sheet of the Company as at September 30, 1997 (the "Interim Balance Sheet") and the related unaudited statements of income, changes in stockholders' equity, and cash flow for the nine (9) months then ended. Such financial statements and notes fairly present the financial condition and the results of operations, changes in stockholders' equity, and cash flow of the Company as at the respective dates of and for the periods referred to in such financial statements, all in accordance with TBA, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse); the financial statements referred to in this Section Error! Not a valid bookmark self-reference. reflect the consistent application of TBA accounting principles throughout the periods involved. Each of the supporting documents listed on Part 3.4 of the Disclosure Letter is true and correct in all material respects. 3.5 Books and Records. The books of account, minute books, stock record books, and other records of the Company, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls for a company the size of the Company with the number of employees as the Company has. The minute books of the Company contains accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the Boards of Directors, and committees of the Boards of Directors of the Company. At the Closing, all of those books and records will be in the possession of the Company. 3.6 Title to Properties; Encumbrances. Part 3.6 of the Disclosure Letter contains a complete and accurate list of all leaseholds or other interests therein owned by the Company. Sellers have delivered or made available to Buyer copies of the deeds and other instruments (as recorded) by which the Company acquired such real property and interests, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of Sellers or the Company and relating to such property or interests. The Company owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that they purport to own located in the facilities owned or operated by the Company or reflected as owned in the books and records of the Company, including all of the properties and assets reflected in the Interim Balance Sheet (except for assets held under capitalized leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure Letter and personal property sold since the date of the Interim Balance Sheet in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Company since the date of the Interim Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice). All properties and assets reflected in the Balance Sheet and the Interim Balance Sheet are free and clear of all Encumbrances except (a) mortgages or security interests shown on the Balance Sheet or the Interim Balance Sheet as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (b) mortgages or security interests incurred in connection with the purchase of property or assets after the date of the Interim Balance Sheet (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, and (c) liens for current taxes not yet due. The Company does not currently own, and has never owned, any real property. 3.7 Condition and Sufficiency of Assets. In all material respects, the buildings, structures, and equipment of the Company are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, structures, or equipment is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The building, structures, and equipment of the Company are sufficient for the continued conduct of the Company's businesses after the Closing in substantially the same manner as conducted prior to the Closing. 3.8 Accounts Receivable. All accounts receivable of the Company that are reflected on the Interim Balance Sheet or on the accounting records of the Company as of the Closing Date (collectively, the "Accounts Receivable") represent or will represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date current and, to the Company's and the Seller's Knowledge, collectible (other than those accounts in bankruptcy which are set forth on Part 3.8 of the Disclosure Letter). There is no contest, claim, or right of set-off under any Contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter contains a complete and accurate list of all Accounts Receivable as of the date of the Interim Balance Sheet, which list sets forth the aging of such Accounts Receivable. 3.9 Inventory. All inventory of the Company, whether or not reflected in the Balance Sheet or the Interim Balance Sheet, consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Company as of the Closing Date, as the case may be. All inventories not written off have been priced at cost on a first in, first out basis. The quantities of each item of inventory (whether raw materials, work-in-process, or finished goods) are not excessive, but are reasonable in the present circumstances of the Company. 3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of the Disclosure Letter, the Company has no material liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the Balance Sheet or the Interim Balance Sheet, liabilities associated with the Promissory Note and current liabilities incurred in the Ordinary Course of Business since the date of the Interim Balance Sheet and the respective dates thereof. 3.11 Taxes. (a) The Company has filed or caused to be filed, on a timely basis, all Tax Returns that are or were required to be filed by or with respect to it, either separately or as a member of a group of corporations, pursuant to applicable Legal Requirements. Sellers have delivered to Buyer copies of, and Part 3.11 of the Disclosure Letter contains a complete and accurate list of, all such Tax Returns filed for 1994, 1995 and 1996. The Company has paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by Sellers or the Company, except such Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter and are being contested in good faith and as to which adequate reserves, if any (determined in accordance with TBA) have been provided in the Balance Sheet and the Interim Balance Sheet. (b) Except as described in Part 3.11 of the Disclosure Letter, no Seller nor the Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable. (c) The charges, accruals, and reserves with respect to Taxes on the respective books of the Company are adequate (determined in accordance with TBA). There exists no proposed tax assessment against the Company except as disclosed in the Balance Sheet or in Part 3.11 of the Disclosure Letter. No consent to the application of Section 341(f)(2) of the IRC has been filed with respect to any property or assets held, acquired, or to be acquired by the Company. All Taxes that the Company is or was required by Legal Requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body or other Person. (d) All Tax Returns filed by (or that include on a consolidated basis) the Company are true, correct, and complete in all material respects. There is no tax sharing agreement that will require any payment by the Company after the date of this Agreement. 3.12 No Material Adverse Change. Since the date of the Balance Sheet, there has not been any material adverse change in the business, operations, properties, prospects, assets, or condition of the Company, and no event has occurred or circumstance exists that may result in such a material adverse change. 3.13 Employee Benefits (a) Except as disclosed on Part 3.13 of the Disclosure Letter, no other corporation, trade, business, or other entity, other than the Company, together with the Company would now or in the past constitute a single employer within the meaning of Section 414 of the IRC. The Company and any other entities that now or in the past constitute a single employer within the meaning of IRC Section 414 are hereinafter collectively referred to as the "Company Group." (b) Part 3.13(b) of the Disclosure Letter contains a true and complete list of all the following agreements or plans which are presently in effect or which have previously been in effect and which cover employees of any member of the Company Group ("Employees"), and indicating, with respect to each, the plans for which the Company maintains or contributes to on behalf of their employees: (i) Any employee benefit plan as defined in Section 3(3) of ERISA and any trust or other funding agency created thereunder, or under which any member of the Company Group, with respect to Employees, has any outstanding, present, or future obligation or liability, or under which any Employee or former Employee has any present or future right to benefits which are covered by ERISA; or (ii) Any other pension, profit sharing, retirement, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, hospitalization, medical, life insurance or other employee benefit plan, program, policy, or arrangement, whether written or unwritten, formal or informal, which any member of the Company Group maintains or to which any member of the Company Group has any outstanding, present or future obligations to contribute or make payments under, whether voluntary, contingent or otherwise. The plans, programs, policies, or arrangements described in subparagraph (i) or (ii) above are hereinafter collectively referred to as the "Company Plans." Sellers have delivered to Buyer true and complete copies of all written plan documents and contracts evidencing the Company Plans, as they may have been amended to the date hereof, together with (A) all documents, including without limitation, Forms 5500, relating to any Company Plans required to have been filed prior to the date hereof with governmental authorities for each of the three most recently completed plan years; (B) attorney's response to any auditor's request for information for each of the three most recently completed plan years; and (C) financial statements and actuarial reports, if any, for each Company Plan for the three most recently completed plan years. (c) Except as to those plans identified on Part 3.13(c) of the Disclosure Letter as tax-qualified Company Plans (the "Company Qualified Plans"), no member of the Company Group maintains or previously maintained a Company Plan which meets or was intended to meet the requirements of IRC Section 401(a). Except as set forth on Part 3.13(c) of the Disclosure Letter, the IRS has issued favorable determination letters to the effect that each Company Qualified Plan qualifies under IRC Section 401(a) and that any related trust is exempt from taxation under IRC Section 501(a), and such determination letters remain in effect and have not been revoked or, in the alternative, the members of the Company Group currently maintain only one Company Qualified Plan and such Company Qualified Plan is a standardized form plan, within the meaning of Revenue Procedure 97-6, Section 8.05, with respect to which the IRS has issued a favorable determination letter and such determination letter remains in effect and has not been revoked. Copies of the most recent determination letters and any outstanding requests for a determination letter with respect to each Company Qualified Plan have been delivered to Buyer. Except as disclosed on Part 3.13(c) of the Disclosure Letter, no Company Qualified Plan has been amended since the issuance of each respective determination letter. The Company Qualified Plans currently comply in form with the requirements under IRC Section 401(a), other than changes required by statutes, regulations and rulings for which amendments are not yet required. To the Knowledge of Sellers and the Company, no issue concerning qualification of the Company Qualified Plans is pending before or is threatened by the IRS. To the Knowledge of Sellers and the Company, the according to their terms (except for those terms which are inconsistent with the changes required by statutes, regulations, and rulings for which changes are not yet required to be made, in which case the Company Qualified Plans have been administered in accordance with the provisions of those statutes, regulations and rulings) and in accordance with the requirements of IRC Section 401(a). No member of the Company Group or any fiduciary of any Company Qualified Plan has done anything that would adversely affect the qualified status of the Company Qualified Plans or the related trusts. Any Company Qualified Plan which is required to satisfy IRC Section 401(k)(3) and 401(m)(2) has been tested for compliance with, and has satisfied the requirements of, IRC Section 401(k)(3) and 401(m)(2) for each plan year ending prior to the Closing Date. (d) Each member of the Company Group is in compliance with the requirements prescribed by any and all statutes, orders, governmental rules and regulations applicable to the Company Plans and all reports and disclosures relating to the Company Plans required to be filed with or furnished to any governmental entity, participants or beneficiaries prior to the Closing Date have been or will be filed or furnished in a timely manner and in accordance with applicable law. (e) Except as expressly identified on Part 3.13(e) of the Disclosure Letter, no termination or partial termination of any Company Qualified Plan has occurred nor has a notice of intent to terminate any Company Qualified Plan been issued by a member of the Company Group. (f) No member of the Company Group maintains or has maintained an "employee benefit pension plan" within the meaning of ERISA Section 3(2) that is or was subject to Title IV of ERISA. (g) Except as listed in Part 3.13(g) of the Disclosure Letter, any Company Plan can be terminated on or prior to the Closing Date without liability to any member of the Company Group or Buyer, including without limitation, any additional contributions, penalties, premiums, fees or any other charges as a result of the termination, except to the extent of funds set aside for such purpose or reflected as reserved for such purpose on the Balance Sheet. (h) Each member of the Company Group has made full and timely payment of, or has accrued pending full and timely payment, all amounts which are required under the terms of each of the Company Plans and in accordance with applicable laws to be paid as a contribution to each Company Plan and no excise taxes are assessable as a result of any non- deductible or other contributions made or not made to a Company Plan. The assets of all Company Plans which are required under applicable laws to be held in trust are in fact held in trust and the assets of each Company Plan equal or exceed the liabilities of each such Company Plan. The assets of each Company Plan are reported at their fair market value on the books and records of each plan. (i) No member of the Company Group has any past, present or future obligation or liability to contribute or has contributed to any multiemployer plan as defined in ERISA Section 3(37). (j) No member of the Company Group nor any other "disqualified person" or "party in interest" (as defined in IRC Section 4975 and ERISA Section 3(14), respectively) with respect to the Company Plans, has engaged in any "prohibited transaction" (as defined in IRC Section 4975 or ERISA Section 406). All members of the Company Group and all "fiduciaries" (as defined in ERISA Section 3(21)) with respect to the Company Plans, including any members of the Company Group which are fiduciaries as to a Company Plan, have complied in all respects with the requirements of ERISA Section 404. No member of the Company Group and no party in interest or disqualified person with respect to the Company Plans has taken or omitted any action which could lead to the imposition of an excise tax under the IRC or a fine under ERISA. (k) Each member of the Company Group has complied with the continuation coverage requirements of Section 1001 of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601 through 608 (collectively, "COBRA Rights") and with the portability, access and renewability provisions of Subtitle K, Chapter 100 of the IRC and Section 701 et. seq. of ERISA. (l) Except as disclosed on Part 3.13(l) of the Disclosure Letter, no member of the Company Group has made or is obligated to make any nondeductible contributions to any Company Plan. (m) Except as set forth in Part 3.13(m) of the Disclosure Letter, no member of the Company Group is obligated, continently or otherwise, under any agreement to pay any amount which would be treated as a "parachute payment," as defined in IRC Section 280G(b) (determined without regard to IRC Section 280G(b)(2)(A)(ii)). (n) Other than routine claims for benefits, to the Knowledge of Sellers and the Company, there are no actions, audits, investigations, suits or claims pending, or threatened against any Company Plan, any trust or other funding agency created thereunder, or against any fiduciary of any Company Plan or against the assets of any Company Plan. (o) The consummation of the transactions contemplated hereby will not accelerate or increase any liability under any Company Plan because of an acceleration or increase of any of the rights or benefits to which Employees may be entitled thereunder. (p) No member of the Company Group has any obligation to any retired or former employee or any current employee of the Company upon retirement or termination of employment under any Company Plan, other than COBRA Rights. (q) Except as set forth in Part 3.13(q) of the Disclosure Letter or otherwise provided in this Agreement, since the last date through which the Interim Balance Sheet reflects financial information, no member of the Company Group has (i) increased the rate of compensation payable or to become payable to any of the employees of the Company, other than in the normal course of business and consistent with past practice; (ii) has not made any commitment and has not incurred any liability to any labor union; (iii) has not paid or agreed to pay any bonuses or severance pay; (iv) has not increased any benefits or rights under any Company Plan; and (v) has not adopted any new plan, program, policy or arrangement, which if it existed as of the Closing Date, would constitute a Company Plan. 3.14 Compliance with Legal Requirements; Governmental Authorizations. (a) Except as set forth in Part 3.14 of the Disclosure Letter: (i) the Company is, and at all times since September 30, 1997 has been, in full compliance in all material respects with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets; (ii) no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) may constitute or result in a material violation by the Company of, or a material failure on the part of the Company to comply with, any Legal Requirement, or (B) may give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and (iii) the Company has not received, at any time since September 30, 1997, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement, (B) any actual, alleged, possible, or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, or (C) either to revoke, withdraw or suspend any license to operate the Company or any of its assets, or to terminate or decertify or exclude from any participation of the Company in Medicare, Medicaid, CHAMPUS or other governmental health care programs. (b) Part 3.14 of the Disclosure Letter contains a complete and accurate list of each Governmental Authorization that is held by the Company or that otherwise relates to the business of, or to any of the assets owned or used by, the Company. Each Governmental Authorization listed or required to be listed in Part 3.14 of the Disclosure Letter is valid and in full force and effect. Except as set forth in Part 3.14 of the Disclosure Letter: (i) the Company is, and at all times since January 1, 1994 has been, in full compliance in all material respects with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Part 3.14 of the Disclosure Letter; (ii) no event has occurred or circumstance exists that may (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a material violation of or a material failure to comply with any term or requirement of any Governmental Authorization listed or required to be listed in Part 3.14 of the Disclosure Letter, or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification to, any Governmental Authorization listed or required to be listed in Part 3.14 of the Disclosure Letter; (iii) the Company has not received, at any time since January 1, 1994, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of or failure to comply with any term or requirement of any Governmental Authorization, or (B) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to any Governmental Authorization; and (iv) all applications required to have been filed for the renewal of the Governmental Authorizations listed or required to be listed in Part 3.14 of the Disclosure Letter have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies. The Governmental Authorizations listed in Part 3.14 of the Disclosure Letter collectively constitute all of the Governmental Authorizations necessary to permit the Company to lawfully conduct and operate their businesses in the manner they currently conduct and operate such businesses and to permit the Company to own and use its assets in the manner in which it currently owns and uses such assets. 3.15 Legal Proceedings; Orders. (a) Except as set forth in Part 3.15 of the Disclosure Letter, there is no pending Proceeding: (i) that has been commenced by or against the Company or that otherwise relates to or may affect the business of, or any of the assets owned or used by, the Company; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To the Knowledge of Sellers and the Company, (1) no such Proceeding has been Threatened, and (2) no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding. Sellers have delivered to Buyer copies of all pleadings, correspondence, and other documents relating to each Proceeding listed in Part 3.15 of the Disclosure Letter. The Proceedings listed in Part 3.15 of the Disclosure Letter will not have a material adverse effect on the business, operations, assets, condition, or prospects of the Company. (b) Except as set forth in Part 3.15 of the Disclosure Letter: (i) there is no Order to which the Company, or any of the assets owned or used by the Company, is subject; (ii) no Seller is subject to any Order that relates to the business of, or any of the assets owned or used by, the Company; and (iii) to the Knowledge of Sellers and the Company, no officer, director, agent, or employee of the Company is subject to any Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the business of the Company. 3.16 Absence of Certain Changes and Events. Except as set forth in Part 3.16 of the Disclosure Letter, since the date of the Interim Balance Sheet, the Company has conducted its businesses only in the Ordinary Course of Business and there has not been any: (a) change in the Company's authorized or issued capital stock; grant of any stock option or right to purchase shares of capital stock of the Company; issuance of any security convertible into such capital stock; grant of any registration rights; purchase, redemption, retirement, or other acquisition by the Company of any shares of any such capital stock; or declaration or payment of any dividend or other distribution or payment in respect of shares of capital stock; (b) amendment to the Organizational Documents of the Company; (c) payment or increase by the Company of any bonuses, salaries, or other compensation to any stockholder, director, officer, or (except in the Ordinary Course of Business) employee or entry into any employment, severance, or similar Contract with any director, officer, or employee; (d) adoption of, or increase in the payments to or benefits under, any Company Plans; (e) damage to or destruction or loss of any asset or property of the Company, whether or not covered by insurance, materially and adversely affecting the properties, assets, business, financial condition, or prospects of the Company; (f) entry into, termination of, or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to the Company of at least $25,000; (g) sale (other than sales of inventory in the Ordinary Course of Business), lease, or other disposition of any asset or property of the Company or mortgage, pledge, or imposition of any lien or other encumbrance on any material asset or property of the Company; (h) cancellation or waiver of any claims or rights with a value to the Company in excess of $25,000; (i) change in the accounting methods used by the Company; or (j) agreement, whether oral or written, by the Company to do any of the foregoing. 3.17 Contracts; No Defaults. (a) Part 3.17(a) of the Disclosure Letter contains a complete and accurate list, and Sellers have delivered to Buyer true and complete copies, of: (i) each Applicable Contract that involves performance of services or delivery of goods or materials by the Company of an amount or value in excess of $25,000; (ii) each Applicable Contract that involves performance of services or delivery of goods or materials to the Company of an amount or value in excess of $25,000; (iii) each Applicable Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of the Company in excess of $25,000; (iv) each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Applicable Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $10,000 and with terms of less than one year); (v) each licensing agreement or other Applicable Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any of the Intellectual Property Assets; (vi) each collective bargaining agreement and other Applicable Contract to or with any labor union or other employee representative of a group of employees; (vii) each joint venture, partnership, and other Applicable Contract (however named) involving a sharing of profits, losses, costs, or liabilities by the Company with any other Person; (viii) each Applicable Contract containing covenants that in any way purport to restrict the business activity of the Company or any Affiliate of the Company or limit the freedom of the Company or any Affiliate of the Company to engage in any line of business or to compete with any Person; (ix) each Applicable Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods; (x) each power of attorney that is currently effective and outstanding; (xi) each Applicable Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by the Company to be responsible for consequential damages; (xii) each Applicable Contract for capital expenditures in excess of $25,000; (xiii) each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business; and (xiv) each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing. (b) Except as set forth in Part 3.17(b) of the Disclosure Letter, each Contract identified or required to be identified in Part 3.17(a) of the Disclosure Letter is in full force and effect and is valid and enforceable in accordance with its terms. (c) Except as set forth in Part 3.17(c) of the Disclosure Letter: (i) the Company is, and at all times since September 30, 1997 has been, in full compliance with all applicable material terms and requirements of each Contract under which it has or had any obligation or liability or by which it or any of the assets owned or used by it is or was bound; (ii) to Sellers' Knowledge, each other Person that has or had any obligation or liability under any Contract under which the Company has or had any rights is, and at all times since September 30, 1997 has been, in full compliance with all applicable terms and requirements of such Contract; (iii) no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of, or give the Company or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; and (iv) the Company has not given to or received from any other Person, at any time since September 30, 1997, any notice or other communication (whether oral or written) regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Contract. (d) There are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any material amounts paid or payable to the Company under current or completed Contracts with any Person that would have a material adverse effect on the business of the Company and, to the Knowledge of Sellers and the Company, no such Person has made written demand for such renegotiation. 3.18 Insurance. (a) Sellers have delivered to Buyer: (i) true and complete copies of all policies of insurance to which the Company is a party or under which the Company, or any director of the Company, is currently covered; and (ii) true and complete copies of all pending applications for policies of insurance. (b) Part 3.18(b) of the Disclosure Letter describes: (i) any self-insurance arrangement by or affecting the Company, including any reserves established thereunder; (ii) any contract or arrangement, other than a policy of insurance, for the transfer or sharing of any risk by the Company; and (iii) all obligations of the Company to third parties with respect to insurance (including such obligations under leases and service agreements) and identifies the policy under which such coverage is provided. (c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for the current policy year: (i) a summary of the loss experience under each policy; (ii) a statement describing each claim under an insurance policy for an amount in excess of $10,000, which sets forth: (A) the name of the claimant; (B) a description of the policy by insurer, type of insurance, and period of coverage; and (C) the amount and a brief description of the claim; and (iii) a statement describing the loss experience for all claims that were self-insured, including the number and aggregate cost of such claims. (d) Except as set forth on Part 3.18(d) of the Disclosure Letter: (i) All policies to which the Company is a party or that provide coverage to any Seller, the Company, or any director or officer of the Company: (A) are valid, outstanding, and enforceable; (B) are sufficient for compliance with all Legal Requirements and Contracts to which the Company is a party or by which it is bound; (C) will continue in full force and effect following the consummation of the Contemplated Transactions or Sellers will exert their best, good faith efforts to continue such policies and, to Sellers' Knowledge, such policies will continue in full force and effect; and (D) do not provide for any retrospective premium adjustment or other experienced-based liability on the part of the Company, except that the Company's general liability insurance issued by Hartford is priced according to the level of the Company's sales and adjustments may be made based upon a sales audit, although any such adjustment will not be of a material dollar amount. (ii) No Seller or the Company has received (A) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (B) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder. (iii) The Company has paid all premiums due, and has otherwise performed its obligations, under each policy to which it is a party or that provides coverage to the Company or director thereof, except for an adjustment as noted in Section 3.18(d)(i) hereof. (iv) The Company has given notice to the insurer of all claims that may be insured thereby. (v) For the five-year period prior to the effective date of all current policies listed on Part 3.18(c) of the Disclosure Letter, the Company has had in effect coverage at least equivalent to all current coverages. 3.19 Environmental Matters. Except as set forth in part 3.19 of the Disclosure Letter: (a) The Company is, and at all times has been, in all material respects, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law. No Seller nor the Company has any basis to expect, nor has any of them or any other Person for whose conduct they are or may be held to be responsible received, any actual or Threatened order, notice, or other communication from (i) any Governmental Body or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any Facilities, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or Threatened obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets used by the Company. (b) There are no pending or, to the Knowledge of Sellers and the Company, Threatened claims, Encumbrances, or other restrictions of any nature, resulting from any Environmental, Health, and Safety Liabilities or arising under or pursuant to any Environmental Law, with respect to or affecting any of the Facilities or any other properties and assets used by the Company. (c) No Seller nor the Company has received or has any basis to expect any citation, directive, inquiry, notice, Order, summons, warning, or other communication that relates to Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets used by the Company, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used, or processed by Sellers, the Company, or any other Person for whose conduct they are or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled, or received. (d) Neither Seller nor the Company has any material Environmental, Health, and Safety Liabilities with respect to the Facilities. (e) There are no Hazardous Materials present on or in the Environment at the Facilities except in full compliance in all material respects with all applicable Environmental Laws. (f) There has been no Release or, to the Knowledge of Sellers and the Company, threat of Release, of any Hazardous Materials at or from the Facilities or at any other locations where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Facilities, or from or by any other properties and assets used by the Company. (g) Sellers have delivered to Buyer true and complete copies and results of any reports, studies, analyses, tests, or monitoring possessed or initiated by Sellers or any the Company pertaining to Hazardous Materials in, on, or under the Facilities, or concerning compliance by Sellers or the Company. 3.20 Employees. (a) Part 3.20 of the Disclosure Letter contains (i) a complete and accurate list of the following information for each employee or director of the Company, including each employee on leave of absence or layoff status: employer; name; job title; current compensation paid or payable and any change in compensation since September 30, 1997; and (ii) a list of all written contracts of employment with the Company. (b) No director or officer, or to the Knowledge of Seller, employee of the Company, is a party to, or is otherwise bound by, any agreement or arrangement, including any employment, confidentiality, noncompetition, or proprietary rights agreement, between such employee or director and any other Person ("Proprietary Rights Agreement") that in any way adversely affects or will affect (i) the performance of his duties as an employee or director of the Company, or (ii) the ability of the Company to conduct its business, including any Proprietary Rights Agreement with Sellers or the Company by any such employee or director. To Sellers' Knowledge, no director, officer, or other key employee of the Company intends to terminate his employment with the Company. (c) There are no retired employees or directors of the Company or dependants who are receiving benefits or are scheduled to receive benefits in the future, except for Company Plan benefits set forth in Section 3.13 which are properly accrued on the Financial Statements. 3.21 Labor Relations; Compliance. Since September 30, 1997, the Company has not been and is not a party to any collective bargaining or other labor Contract. Since September 30, 1997, there has not been, there is not presently pending or existing, and to Sellers' and the Company's Knowledge there is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee grievance process, (b) any Proceeding against or affecting the Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable Governmental Body, organizational activity, or other labor or employment dispute against or affecting the Company or its premises, or (c) any application for certification of a collective bargaining agent. To Sellers' and the Company's Knowledge, no event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees by the Company, and no such action is contemplated by the Company. The Company has complied in all material respects with all Legal Requirements relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health, and plant closing. The Company is not liable for the payment of any compensation, damages, taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements. 3.22 Intellectual Property. (a) Intellectual Property Assets -- The term "Intellectual Property Assets" includes: (i) the name "Drake Management Services, Inc.", all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, "Marks"); (ii) all copyrights in both published works and unpublished works (collectively, "Copyrights"); and (iii) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used, or licensed by the Company as licensee or licensor. (b) Agreements. Part 3.22(b) of the Disclosure Letter contains a complete and accurate list and summary description, including any royalties paid or received by the Company, of all Contracts relating to the Intellectual Property Assets to which Company is a party or by which any Company is bound. There are no outstanding and, to Sellers' and the Company's Knowledge, no Threatened disputes or disagreements with respect to any such agreement. (c) Know-How Necessary for the Business. The Intellectual Property Assets are all those necessary for the operation of the Company's businesses as it is currently conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use without payment to a third party all of the Intellectual Property Assets. (d) Patents. The Company owns no patents. (e) Trademarks. (i) Part 3.22(e) of Disclosure Letter contains a complete and accurate list and summary description of all Marks. The Company is the owner of all right, title and interest in and to each of the Marks, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims. (ii) No Mark has been or is now involved in any opposition, invalidation, or cancellation and, to Sellers' and the Company's Knowledge, no such action is Threatened with the respect to any of the Marks. (iii) To Sellers' and the Company's Knowledge, there is no potentially interfering trademark or trademark application of any third party. (iv) No Mark is infringed or, to Sellers' and the Company's Knowledge, has been challenged or threatened in any way. None of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third party. (f) Copyrights. (i) Part 3.22(f) of the Disclosure Letter contains a complete and accurate list and summary description of all registered Copyrights. The Company is the owner of all right, title and interest in and to each of the registered Copyrights, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims. (ii) No Copyright is infringed or, to Sellers' and the Company's Knowledge, has been challenged or threatened in any way. None of the subject matter of any of the registered Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party. (iii) All works encompassed by the registered Copyrights have been marked with the proper copyright notice. (g) Trade Secrets. (i) With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. (ii) Sellers and the Company have taken all reasonable precautions to protect the secrecy, confidentiality, and value of their Trade Secrets. (iii) The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and, to Sellers' and the Company's Knowledge, have not been used, divulged, or appropriated either for the benefit of any Person or to the detriment of the Company. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way. 3.23 Certain Payments. Since January 1, 1994, neither the Company nor any director, officer, agent, or employee of the Company, or any other Person associated with or acting for or on behalf of the Company, has directly or indirectly (a) made, directly or indirectly, any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any Affiliate of the Company, or (iv) in violation of any Legal Requirement, (b) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits from any vendor, governmental employee or other Person with whom the Company has done business, directly or indirectly, which would reasonably be expected to subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (c) established or maintained any fund or asset that has not been recorded in the books and records of the Company. 3.24 Fraud and Abuse; Financial Relationships. The Company does not have any government contracts, and the Company has no claims relating to Medicare, Medicaid CHAMPUS or other governmental reimbursements. 3.25 Relationships with Related Persons. No Seller or any Affiliate of Sellers or of the Company has, or since January 1, 1994, has had, any interest in any property (whether real, personal, or mixed and whether tangible or intangible), used in or pertaining to the Company's businesses. No Seller or any Affiliate of Sellers or of the Company is, or since January 1, 1994 has owned (of record or as a beneficial owner) an equity interest or any other financial or profit interest in, a Person that has (i) had business dealings or a material financial interest in any transaction with the Company, or (ii) engaged in competition with the Company with respect to any line of the products or services of the Company (a "Competing Business") in any market presently served by the Company except for less than five percent (5%) of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. Except as set forth in Part 3.25 of the Disclosure Letter, no Seller nor any Affiliate of Sellers or of the Company is a party to any Contract with, or has any claim or right against, the Company. 3.26 Brokers or Finders. Sellers and their Representatives have incurred no obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payment in connection with the Contemplated Transactions. 3.27 Disclosure. (a) No representation or warranty of Sellers in this Agreement and no statement in the Disclosure Letter omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading. (b) No notice given pursuant to Section 5.5 Notification. Between the date of this Agreement and the Closing Date, each Seller will promptly notify Buyer in writing if such Seller or the Company becomes aware of any fact or condition that causes or constitutes a Breach of any of Sellers'representations and warranties as of the date of this Agreement, or if such Seller or the Company becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. During the same period, each Seller will promptly notify Buyer of the occurrence of any Breach of any covenant of Sellers in this Article 5. COVENANTS OF SELLERS or of the occurrence of any event that may make the satisfaction of the conditions in Article 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE impossible or unlikely. will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading. (c) There is no fact known to any Seller that has specific application to any Seller or the Company (other than general economic or industry conditions) and that materially adversely affects the assets, business, prospects, financial condition, or results of operations of the Company (on a consolidated basis) that has not been set forth in this Agreement or the Disclosure Letter. 4. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers as follows: 4.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Georgia. 4.2 Authority; No Conflict. (a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of the Earnout Agreement, the Employment Agreements, and the Noncompete Agreements (collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents will constitute the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms. Buyer has the absolute and unrestricted right, power, and authority to execute and deliver this Agreement and the Buyer's Closing Documents and to perform its obligations under this Agreement and the Buyer's Closing Documents. (b) Except as set forth in Part 4.2 of the Disclosure Letter, neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer will not materially breach and/or give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant to: (i) any provision of Buyer's Organizational Documents; (ii) any resolution adopted by the board of directors or the shareholders of Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; (iv) any Governmental Authorization that is held by Buyer; or (v) any Contract to which Buyer is a party or by which Buyer may be bound. Except as set forth in Part 4.2 of the Disclosure Letter, Buyer is not and will not be required to obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 4.3 Investment Intent. Buyer is acquiring the Shares for its own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended. Buyer understands that any resale of the shares must be made in compliance with the registration requirements of the Securities Act of 1933, as amended, or pursuant to an exemption therefrom. Buyer understands that the certificate representing the Shares shall be endorsed with the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND (B) MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER SAID ACT. 4.4 Certain Proceedings. There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened. 4.5 Brokers or Finders. Buyer and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payment in connection with the Contemplated Transactions. 4.6 Disclosure. (a) No representation or warranty of Buyer in this Agreement omits to state a material fact necessary to make the statements herein, in light of the circumstances in which they were made, not misleading. (b) No notice given pursuant to Section 6.4 will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading. (c) There is no fact known to Buyer that has specific application to Buyer (other than general economic or industry conditions) and that materially adversely affects the assets, business, prospects, financial condition, or results of operations of Buyer (on a consolidated basis) that has not been set forth in this Agreement. 5. COVENANTS OF SELLERS 5.1 Access and Investigation. Between the date of this Agreement and the Closing Date, Sellers will, and will cause the Company and its Representatives to, (a) afford Buyer and its Representatives full and free access to the Company's offices, facilities, properties, equipment, inventories, books, contracts, commitments, records and other relevant information of the business and shall furnish such persons with all information concerning the business, assets and financial condition of the Company as Buyer and its Representatives shall reasonably request; provided, however, that no direct contact with Company customers shall be made without the consent of R. Drake and such access shall occur in a manner that does not disrupt Company employees or business. 5.2 Operation of the Businesses of the Company. Between the date of this Agreement and the Closing Date, Sellers will, and will cause the Company to: (a) conduct the business of the Company only in the Ordinary Course of Business consistent with past practices; (b) use their Best Efforts to preserve intact the current business organization of the Company, keep available the services of the current officers, employees, and agents of the Company, and maintain the relations and good will with suppliers, customers, landlords, creditors, employees, agents, and others having business relationships with the Company; (c) not make any material change in the operation of the business; (d) not enter into any material agreement or incur any material liabilities; (e) make all payments to vendors when due; (f) confer with Buyer concerning operational matters of a material nature; and (g) otherwise report periodically to Buyer concerning the status of the business, operations, and finances of the Company. 5.3 Negative Covenant. Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and the Closing Date, Sellers will not, and will cause the Company not to, without the prior consent of Buyer, take any affirmative action, or fail to take any reasonable action within their or its control, as a result of which any of the changes or events listed in Section 3.16 Absence of Certain Changes and Events. Except as set forth in Part 3.16 of the Disclosure Letter, since the date of the Interim Balance Sheet, the Company has conducted its businesses only in the Ordinary Course of Business and there has not been any: is likely to occur. 5.4 Required Approvals. As promptly as practicable after the date of this Agreement, Sellers will, and will cause the Company to, make all filings required by Legal Requirements to be made by them in order to consummate the Contemplated Transactions. Between the date of this Agreement and the Closing Date, Sellers will, and will cause the Company to, (a) cooperate with Buyer with respect to all filings that Buyer elects to make or is required by Legal Requirements to make in connection with the Contemplated Transactions, and (b) cooperate with Buyer in obtaining all consents identified in Part 4.2 of the Disclosure Letter. 5.5 Notification. Between the date of this Agreement and the Closing Date, each Seller will promptly notify Buyer in writing if such Seller or the Company becomes aware of any fact or condition that causes or constitutes a Breach of any of Sellers' representations and warranties as of the date of this Agreement, or if such Seller or the Company becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. During the same period, each Seller will promptly notify Buyer of the occurrence of any Breach of any covenant of Sellers in this Article 5. COVENANTS OF SELLERS or of the occurrence of any event that may make the satisfaction of the conditions in Article 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE impossible or unlikely. 5.6 Payment of Indebtedness by Related Persons. Except as expressly provided in this Agreement, Sellers will cause all indebtedness owed to the Company by its Seller or any Affiliate of any Seller to be paid in full prior to Closing. 5.7 No Negotiation. Sellers agree that until the earlier of March 5, 1998 or such date upon which Buyer notifies Seller that it has abandoned the Contemplated Transactions, the Company and Sellers shall deal exclusively with Buyer with respect to the Contemplated Transactions and the Company and Sellers will not, and will direct the Company's Representatives not to, (i) solicit the submission of proposals or offers from any person relating to any acquisition or purchase of all or a material part of the assets or stock of the Company or any merger, consolidation, or similar transaction with respect to the Company; (ii) participate in any discussions or negotiations regarding, or furnish any information to any other person other than Buyer with respect to any such possible transaction; or (iii) enter into any agreement or understanding, whether oral or in writing, that would prevent the consummation of the Contemplated Transactions. If, notwithstanding the foregoing, the Company or the Sellers should receive any such proposal from a third party or any inquiry regarding any such proposal, the Company shall promptly inform Buyer thereof. 5.8 Satisfaction of Obligations. On or before December 31, 1997, the Company shall pay in full all amounts owed to Graeme Crothall and R. Drake. 5.9 Payment of 1997 Profits. Prior to the Closing, the Company may pay out to its employees and shareholders as bonuses or other compensation such amounts as the Company deems appropriate, not to exceed $447,445 in the aggregate, provided that (i) there is sufficient cash in the Company to pay such bonuses and all related payroll taxes; (ii) if the Villa DeAnza accounts receivable is not collected at the time of such payment, such receivable must be written off and there shall be a dollar-for-dollar reduction in the total amount paid as bonuses hereunder; and (iii) all year- end adjustments, including without limitation expensing fixed assets purchased during the year, must be booked prior to the payment of such bonuses. 5.10 Termination of Company Qualified Plan. The Company shall take all appropriate corporate action no later than the day before the Closing Date to terminate the sole Company Qualified Plan maintained by the Company, effective no later than the day before the Closing Date. Unless the provisions of the Company Qualified Plan expressly provide to the contrary, appropriate corporate action shall mean duly authorized action by the Board of Directors of the Company. 6. COVENANTS OF BUYER 6.1 Approvals of Governmental Bodies. As promptly as practicable after the date of this Agreement, Buyer will, and will cause each of its Affiliate to, make all filings required by Legal Requirements to be made by them to consummate the Contemplated Transactions. Between the date of this Agreement and the Closing Date, Buyer will, and will cause each Affiliate to, (a) cooperate with Sellers with respect to all filings that Sellers are required by Legal Requirements to make in connection with the Contemplated Transactions, and (b) cooperate with Sellers in obtaining all consents identified in Part 3.2 of the Disclosure Letter; provided that this Agreement will not require Buyer to dispose of or make any change in any portion of its business or to suffer any other material adverse effect to obtain a Governmental Authorization. 6.2 Loan to the Company. On or before December 31, 1997, subject to customary conditions, Buyer shall lend the Company sufficient funds (or arrange for financing) to pay off the obligations of the Company due to Graeme Crothall and R. Drake in the aggregate amount of approximately $289,750.06 as of December 31, 1997. The Company shall execute and deliver to Buyer a promissory note (the "Promissory Note") in the form attached hereto as Exhibit 6.2. The Note shall be secured by a security interest in all accounts receivable of the Company and the proceeds thereof. 6.3 Notification. Between the date of this Agreement and the Closing Date, Buyer will promptly notify Seller in writing if Buyer becomes aware of any fact or condition that causes or constitutes a Breach of any of Buyer's representations and warranties as of the date of this Agreement, or if Buyer becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time or occurrence of discovery of such fact or condition. During the same period, Buyer will promptly notify Seller of the occurrence of any Breach of any covenant of Buyer in this Article 6 or of the occurrence of any event that may make the satisfaction of the conditions in Article 8 impossible or unlikely. 6.4 Employment Matters. (a) After the Closing, the Company will maintain a bonus program comparable to the existing bonus program of the Company for a period of two years following the Closing, and all employees of the Company other than Mr. Drake will be entitled to participate in such program. (b) David Hershberger, Julius Sacco, Joel Strandgard, Ken Wohl and Janet Keating shall be guaranteed employment with the Company for one year following the Closing, except that such individuals may be terminated for cause. (c) Any employee of the Company who is employed as of the Closing Date and who is subsequently terminated involuntarily by the Company without cause during the one-year period following the Closing shall receive no less than three months of base salary as severance pay, provided such employee continues to work for the Company until the termination date. (d) Upon the Closing, Michelin shall receive 5,000 options to purchase shares of Buyer's common stock, $.01 par value, pursuant to Buyer's standard stock option agreement, and each of David Hershberger, Julius Sacco, Joel Strandgard, Ken Wohl and Janet Keating shall receive 3,000 options to purchase shares of Buyer's Common Stock, $.01 par value, pursuant to Buyer's standard stock option agreement. (e) The Buyer shall provide credit for an employee's service with the Company prior to the Closing Date with respect to those employees of the Company who remain employed with the Company immediately after the Closing Date for the following purposes: (i) for purposes of determining both eligibility to participate and vesting under the Morrison Health Care, Inc. Salary Deferral Plan (the "SDP"), the Morrison Health Care, Inc. Deferred Compensation Plan (the "DCP"), the Morrison Health Care, Inc. Management Retirement Plan (the "MRP") and the Morrison Health Care, Inc. Executive Supplemental Pension Plan (the "ESP"); (ii) for purposes of determining the level of matching contributions under the SDP and DCP; and (iii) for purposes of determining the accrual of benefits under the MRP and ESP; provided, however, that for purposes of crediting service under this clause (iii), only one year of service credit shall be given for every two full years of service with the Company prior to the Closing Date and no more than a total of five years of service credit shall be granted to any Company employee for service performed prior to the Closing Date. 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE Buyer's obligation to purchase the Shares and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part): 7.1 Accuracy of Representations. (a) All of Sellers' representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement, and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. (b) Each of Sellers' representations and warranties in Sections 3.3, 3.4, 3.12, and 3.24 must have been accurate in all respects as of the date of this Agreement, and must be accurate in all respects as of the Closing Date as if made on the Closing Date. 7.2 Sellers' Performance. (a) All of the covenants and obligations that Sellers are required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects. (b) Each document required to be delivered pursuant to Section 2.4 Closing Obligations. At the Closing: must have been delivered. 7.3 Due Diligence. Buyer shall have completed its due diligence inquiry into the business, affairs and financial condition of the Company. 7.4 Consents. Each of the consents identified in Part 3.2 of the Disclosure Letter, and each consent identified in Part 4.2 of the Disclosure Letter, must have been obtained and must be in full force and effect. 7.5 Termination of Agreements. Each of (a) the Shareholders and Voting Agreement dated June 6, 1997, (b) the Stock Cross Purchase and Redemption Agreement dated June 6, 1997, and (c) the Stock Retirement and Subscription Agreement dated February 8, 1996, as amended, shall be terminated. 7.6 Additional Documents. Each of the following documents must have been delivered to Buyer: (a) an opinion of Bonn, Luscher, Padden & Wilkins, dated the Closing Date, in the form of Exhibit 7.6(a); (b) an certificate executed on behalf of the Sellers dated as of the Closing Date, in the form of Exhibit 7.6(b); (c) a UCC-3 termination statement shall be filed with respect to all obligations of the Company previously owed to Graeme Crothall and Mr. Drake and any collateral held by such individuals shall be released; and (d) such other documents as Buyer may reasonably request for the purpose of (i) enabling its counsel to provide the opinion referred to in Section 8.4 Additional Documents. Buyer must have caused the following documents to be delivered to Sellers:(a), (ii) evidencing the accuracy of any of Sellers' representations and warranties, (iii) evidencing the performance by either Seller of, or the compliance by either Seller with, any covenant or obligation required to be performed or complied with by such Seller, (iv) evidencing the satisfaction of any condition referred to in this Section 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE, or (v) otherwise facilitating the consummation or performance of any of the Contemplated Transactions. 7.7 No Proceedings. Since the date of this Agreement, there must not have been commenced or Threatened against Buyer, or against any Person affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking damages or other relief in connection with, any of the Contemplated Transactions, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Contemplated Transactions. 7.8 No Claim Regarding Stock Ownership or Sale Proceeds. There must not have been made or Threatened by any Person any claim asserting that such Person (a) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any stock of, or any other voting, equity, or ownership interest in, the Company, or (b) is entitled to all or any portion of the Initial Purchase Price payable for the Shares. 7.9 No Prohibition. Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause Buyer or any Person affiliated with Buyer to suffer any material adverse consequence under, (a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or Order that has been published, introduced, or otherwise formally proposed by or before any Governmental Body. 7.10 Board Approval. The contemplated transaction must be approved by the Board of Directors of Buyer. 8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE Sellers' obligation to sell the Shares and to take the other actions required to be taken by Sellers at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Sellers, in whole or in part): 8.1 Accuracy of Representations. All of Buyer's representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. 8.2 Buyer's Performance. (a) All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been performed and complied with in all material respects. (b) Buyer must have delivered each of the documents required to be delivered by Buyer pursuant to Section 2.4 Closing Obligations. At the Closing: and must have made the cash payments required to be made by Buyer pursuant to Section (i) the Initial Purchase Price by bank cashier's check or by wire transfer to the accounts specified by Sellers, to be allocated among the Sellers pursuant to . 8.3 Consents. Each of the consents identified in Part 4.2 of the Disclosure Letter must have been obtained and must be in full force and effect. 8.4 Additional Documents. Buyer must have caused the following documents to be delivered to Sellers: (a) an opinion of Powell, Goldstein, Frazer & Murphy LLP dated the Closing Date, in the form of Exhibit 8.4(a); and (b) such other documents as Sellers may reasonably request for the purpose of (i) enabling their counsel to provide the opinion referred to in Section (a) an opinion of Bonn, Luscher, Padden & Wilkins, dated the Closing Date, in the form of Exhibit 7.6(a);, (ii) evidencing the accuracy of any representation or warranty of Buyer, (iii) evidencing the performance by Buyer of, or the compliance by Buyer with, any covenant or obligation required to be performed or complied with by Buyer, (ii) evidencing the satisfaction of any condition referred to in this Section 8. CONDITIONS PRECEDENT TO SELLERS'OBLIGATION TO CLOSE, or (v) otherwise facilitating the consummation of any of the Contemplated Transactions. 8.5 No Injunction. There must not be in effect any Legal Requirement or any injunction or other Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become effective, since the date of this Agreement. 8.6 No Prohibition. Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause any Seller to suffer any material adverse consequence under (a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or Order that has been published, introduced, or otherwise formally proposed by or before any Governmental Body. 9. TERMINATION 9.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated: (a) by either Buyer or Sellers if a material Breach of any provision of this Agreement has been committed by the other party and such Breach has not been waived; (b) (i) by Buyer if any of the conditions in Section 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not waived such condition on or before the Closing Date; or (ii) by Sellers, if any of the conditions in Section 8. CONDITIONS PRECEDENT TO SELLERS'OBLIGATION TO CLOSE has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Sellers to comply with their obligations under this Agreement) and Sellers have not waived such condition on or before the Closing Date; (c) by mutual consent of Buyer and Sellers; or (d) by either Buyer or Sellers if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before January 31, 1998, or such later date as the parties may agree upon. 9.2 Effect of Termination. Each party's right of termination under Section 9.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated: is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 9.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated:, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 12.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants. and 12.3 Confidentiality. Between the date of this Agreement and the Closing Date, Buyer and Sellers will maintain in confidence, and will cause the directors, officers, employees, agents, and advisors of Buyer and the Company to maintain in confidence, any written, oral, or other information obtained in confidence, any written oral, or other information obtained in confidence from another party or the Company in connection with this Agreement or the Contemplated Transactions, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. will survive; provided, however, that if this Agreement is terminated by a party because of the Breach of the Agreement by the other party or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of the other party's failure to comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired. 10. INDEMNIFICATION; REMEDIES 10.1 Survival; Right to Indemnification Not Affected by Knowledge. All representations, warranties, covenants, and obligations in this Agreement, the Disclosure Letter, and any other certificate or document delivered pursuant to this Agreement will survive the Closing. The right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants, and obligations. 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys' fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by Sellers in this Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, or any other certificate or document delivered by Sellers pursuant to this Agreement; (b) any Breach of any representation or warranty made by Sellers in this Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by any Seller of any covenant or obligation of such Seller in this Agreement; (d) any product shipped or manufactured by, or any services provided by, any the Company prior to the Closing Date; (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with any Seller or the Company (or any Person acting on their behalf) in connection with any of the Contemplated Transactions. The remedies provided in this Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with: will not be exclusive of or limit any other remedies that may be available to Buyer or the other Indemnified Persons. 10.3 Indemnification and Payment of Damages by Sellers -- Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and the other Indemnified Persons for, and will pay to Buyer, the Company, and the other Indemnified Persons the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with any Environmental, Health, and Safety Liabilities arising out of or relating to: (i) (A) the ownership, operation, or condition at any time on or prior to the Closing Date of the Facilities or any other properties and assets used by the Company, or any Hazardous Materials or other contaminants that were present on the Facilities or such other properties and assets at any time on or prior to the Closing Date; or (ii) any Hazardous Materials or other contaminants, wherever located, that were, or were allegedly, generated, transported, stored, treated, Released, or otherwise handled by Sellers or the Company or by any other Person for whose conduct they are or may be held responsible at any time on or prior to the Closing Date. 10.4 Indemnification and Payment of Damages by Buyer. Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the amount of any Damages arising, directly or indirectly, from or in connection with (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions. Notwithstanding the foregoing, in the case of any Damages arising out of a third party claim brought against Parent based on the conduct of its business as a whole (as opposed to just the business of Drake), Parent will pay any reasonable defense costs related thereto. The remedies provided in this Section 10.4 will not be exclusive of or limit any other remedies that may be available to Sellers. 10.5 Time Limitations. If the Closing occurs, Sellers will have no liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, other than those in Sections 3.3, 3.11, 3.13 (with respect to matters other than Tax), 3.19, 3.23 and 3.24 unless on or before the second anniversary of the Closing Date Buyer notifies Sellers of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Buyer; a claim with respect to Section 3.11, 3.13, 3.23 or 3.24 shall be made within the applicable statute of limitations; a claim with respect to Sections 3.3 or 3.19 or a claim for indemnification or reimbursement based upon any covenant or obligation to be performed and complied with after the Closing Date, may be made at any time. If the Closing occurs, Buyer will have no liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, unless on or before the second anniversary from the Closing Date, Sellers notify Buyer of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Sellers; a claim for indemnification or reimbursement based upon any covenant or obligation to be performed or complied with after the Closing Date may be made at any time. Notwithstanding the foregoing, no party hereto shall waive any applicable statute of limitations with respect to any third party claim. 10.6 Limitations on Amount -- Sellers. Sellers will have no liability (for indemnification or otherwise) with respect to the matters described in Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with: until the total of all Damages with respect to such matters exceeds $25,000, and once such threshold is met, Sellers shall be liable for all Damages, including, without limitation, such $25,000. However, this Section Error! Not a valid bookmark self-reference. will not apply to any intentional Breach by any Seller of any representation, warranty, covenant or obligation, and Sellers will be jointly and severally liable for all Damages with respect to such Breaches. 10.7 Limitations on Amount -- Buyers. Buyer will have no liability (for indemnification or otherwise) with respect to the matters described in Section 10.4 Indemnification and Payment of Damages by Buyer. Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the amount of any Damages arising, directly or indirectly, from or in connection with (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions. until the total of all Damages with respect to such matters exceeds $25,000, and once such threshold is met, Buyer shall be liable for all Damages, including, without limitation, such $25,000. However, this Section Error! Not a valid bookmark self-reference. will not apply to any intentional Breach by Buyer of any representation, warranty, covenant or obligation, and Buyer will be liable for all Damages with respect to such Breaches. 10.8 Procedure For Indemnification -- Third Party Claims. (a) Promptly after receipt by an indemnified party under Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, 10.4 Indemnification and Payment of Damages by Buyer. Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the amount of any Damages arising, directly or indirectly, from or in connection with (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions., or (to the extent provided in the last sentence of Section 10.3 Indemnification and Payment of Damages by Sellers -- Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and the other Indemnified Persons for, and will pay to Buyer, the Company, and the other Indemnified Persons the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with) Section 10.3 Indemnification and Payment of Damages by Sellers -- Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and the other Indemnified Persons for, and will pay to Buyer, the Company, and the other Indemnified Persons the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party's failure to give such notice. (b) If any Proceeding referred to in Section (a) Promptly after receipt by an indemnified party under Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection , 10.4 with:Indemnification and Payment of Damages by Buyer. Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the amount of any Damages arising, directly or indirectly, from or in connection with (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions., or (to the extent provided in the last sentence of Section 10.3 Indemnification and Payment of Damages by Sellers -- Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and the other Indemnified Persons for, and will pay to Buyer, the Company, and the other Indemnified Persons the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with) Section 10.3 Indemnification and Payment of Damages by Sellers -- Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by Sellers. Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective Representatives, stockholders, controlling persons, and Affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys'fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and the other Indemnified Persons for, and will pay to Buyer, the Company, and the other Indemnified Persons the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party's failure to give such notice. is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party will, unless the claim involves Taxes, be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this Section 10. INDEMNIFICATION; REMEDIES for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation. If the indemnifying party assumes the defense of a Proceeding, (i) it will be conclusively established for purposes of this Agreement that the claims made in that Proceeding are within the scope of and subject to indemnification; (ii) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party's consent unless (A) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (iii) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within ten days after the indemnified party's notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will be bound by any determination made in such Proceeding or any compromise or settlement effected by the indemnified party, absent gross negligence or willful misconduct on the part of the indemnified party. Notwithstanding the foregoing, the indemnified party in such cases shall use its reasonable best efforts to provide notice of material events in any Proceeding and attempt to obtain the consent of the indemnifying party to any compromise or settlement. (c) Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise, or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld). (d) Sellers and Buyer hereby consent to the non-exclusive jurisdiction of any court in which a Proceeding is brought against any Indemnified Person for purposes of any claim that an Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein, and agree that process may be served on Sellers or Buyer with respect to such a claim anywhere in the world. 10.9 Procedure for Indemnification -- Other Claims. A claim for indemnification for any matter not involving a third- party claim may be asserted by notice to the party from whom indemnification is sought. 10.10 Insurance Coverages. Notwithstanding any of the foregoing, an indemnifying party shall not be liable for the amount of damages recovered by the indemnified party from any insurance policies unless otherwise agreed to by the parties, and this indemnification shall not be interpreted or construed, and the parties do not intend it, to negate or limit any such coverages. 11. Dispute Resolution 11.1 Dispute Defined. As used in this Agreement, "Dispute" shall mean any dispute or disagreement between the Buyer and the Sellers concerning the interpretation of this Agreement, the validity of this Agreement, any breach or alleged breach by any party under this Agreement or any other matter relating in any way to this Agreement. 11.2 Dispute Resolution Procedures. (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: (i) if the parties have not agreed within 15 calendar days of the Mediation Request on the selection of a mediator willing to serve, CPR, upon the request of either the Buyer or the Sellers, shall appoint a member of the CPR Panels of Neutrals as the mediator, and (ii) efforts to reach a settlement will continue until the conclusion of the proceedings, which shall be deemed to occur upon the earliest of the date that: (A) a written settlement is reached, or (B) the mediator concludes and informs the parties in writing that further efforts would not be useful, or (C) the parties agree in writing that an impasse has been reached, or (D) a period of 30 calendar days has passed since the Mediation Request and none of the events specified in the foregoing clauses (A), (B) or (C) has occurred. No party may withdraw before the conclusion of the proceeding. (c) If a Dispute is not resolved by negotiation pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. of this Agreement or by mediation pursuant to Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement within 70 calendar days after initiation of the negotiation process pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., such Dispute and any other claims arising out of or relating to this Agreement may be heard, adjudicated and determined by arbitration before a single arbitrator pursuant to the rules of the American Arbitration Association ("AAA"). Arbitration may be commenced at any time by any party hereto giving written notice to each other party to a dispute that such a dispute has been referred to arbitration under this Section 11.2. The arbitrator shall be selected by the joint agreement of the parties, but if they do not so agree within 20 days after the date of the notice referred to in the preceding sentence, the selection shall be made pursuant to the rules from the panels of arbitrators maintained by the AAA. Any award rendered by the arbitrator shall be conclusive and binding upon the parties hereto; provided, however, that any such award shall be accompanied by a written opinion of the arbitrator giving the reasons for the award. This provision for arbitration shall be specifically enforceable by the parties, and the decision of the arbitrator in accordance herewith shall be final and binding and there shall be no right of appeal therefrom. Unless otherwise designated by the arbitrator as a result of fault, each party shall pay its own expenses of arbitration and the expenses of the arbitrator shall be equally shared. 11.3 Provisional Remedies. At any time during the procedures specified in Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement, a party may seek a preliminary injunction or other provisional judicial relief if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action, the parties will continue to participate in good faith in the procedures specified in Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions:. 11.4 Tolling Statue of Limitations. All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement are pending. The parties will take such action, if any, as is required to effectuate such tolling. 11.5 Performance to Continue. Each party shall continue to perform its or his obligations under this Agreement pending final resolution of any Dispute. 11.6 Extension of Deadlines. All deadlines specified in this Article 11 may be extended by mutual agreement between the parties. 11.7 Enforcement. The parties regard the obligations in this Article 11 to constitute an essential provision of this Agreement and one that is legally binding on them. In case of a violation of the obligations in this Article 11 by either the Buyer or the Sellers, the other party may bring an action to seek enforcement of such obligations in any state or federal court specified in Section (c) If a Dispute is not resolved by negotiation pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. of this Agreement or by mediation pursuant to Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement within 70 calendar days after initiation of the negotiation process pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., such Dispute and any other claims arising out of or relating to this Agreement may be heard, adjudicated and determined by arbitration . 11.8 Costs. The parties shall pay their own costs, fees, and expenses incurred in connection with the application of the provisions of Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. In addition, the fees and expenses of CPR and the mediator in connection with the application of the provisions of Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement shall be borne 50% by the Buyer and 50% by the Sellers. 11.9 Replacement. If CPR is no longer in business or is unable or refuses or declines to act or to continue to act under Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement for any reason, then the functions specified in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either the Buyer or the Sellers may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within 15 calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within 30 calendar days of the disputing party's notice, or if the parties fail to meet within such 15 calendar days, either the Buyer or the Sellers may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either the Buyer or the Sellers may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: to be performed by CPR shall be performed by AAA. 11.10 Injunctive Relief Notwithstanding any provision to the contrary contained in this Article II, in the event a remedy at law for a breach of any provision would be inadequate, the non- breaching party shall be entitled to seek temporary or permanent injunctive relief. 12. GENERAL PROVISIONS 12.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants. 12.2 Public Announcements. Any public announcement or similar publicity with respect to this Agreement or the Contemplated Transactions will be issued, if at all, at such time and in such manner as Buyer determines with prior notice, if possible, given to Sellers. Unless consented to by Buyer in advance or required by Legal Requirements, prior to the Closing Sellers shall, and shall cause the Company to, keep this Agreement strictly confidential and may not make any disclosure of this Agreement to any Person. Sellers and Buyer will consult with each other concerning the means by which the Company's employees, customers, and suppliers and others having dealings with the Company will be informed of the Contemplated Transactions, and Buyer will have the right to be present for any such communication. 12.3 Confidentiality. Between the date of this Agreement and the Closing Date, Buyer and Sellers will maintain in confidence, and will cause the directors, officers, employees, agents, and advisors of Buyer and the Company to maintain in confidence, any written, oral, or other information obtained in confidence, any written oral, or other information obtained in confidence from another party or the Company in connection with this Agreement or the Contemplated Transactions, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. If the Contemplated Transactions are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request. 12.4 Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate by notice to the other parties): The Company or Sellers: Drake Management Services, Inc. 6263 North Scottsdale Road Suite 210 Scotsdale, Arizona 85250 Facsimile: (602) 951-9372 with a copy to: Bonn, Luscher, Padden & Wilkins 805 North Second Street Phoenix, Arizona 85004 Attn: Jon D. Ehlinger Facsimile: (602) 254-0656 Buyer: Morrison Health Care, Inc. Suite 400 1955 Lake Park Drive, S.E. Smyrna, Georgia 30080-3300 Attn: General Counsel Facsimile: (770) 437-3342 with a copy to: Powell, Goldstein, Frazer & Murphy LLP Sixteenth Floor 191 Peachtree Street, N.E. Atlanta, Georgia 30303 Attn.: Thomas R. McNeill, Esq. Facsimile: (404) 572-6999 12.5 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 12.6 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 12.7 Entire Agreement and Modification. This Agreement supersedes all prior agreements between the parties with respect to its subject matter (including the Letter of Intent between Buyer and Sellers dated December 5, 1997) and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment. 12.8 Disclosure Letter. (a) The disclosures in the Disclosure Letter must relate only to the representations and warranties in the Section of the Agreement to which they expressly relate and not to any other representation or warranty in this Agreement. (b) In the event of any inconsistency between the statements in the body of this Agreement and those in the Disclosure Letter (other than an exception expressly set forth as such in the Disclosure Letter with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control. 12.9 Assignments, Successors, and No Third-Party Rights. Neither party may assign any of its rights under this Agreement without the prior consent of the other parties except that Buyer may assign any of its rights under this Agreement to any subsidiary of Buyer. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns. 12.10 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 12.11 Section Headings, Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number, as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 12.12 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 12.13 Governing Law. This Agreement will be governed by the laws of the State of Arizona without regard to conflicts of laws principles. 12.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.] IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. BUYER: MORRISON HEALTH CARE, INC. By: /s/ Glenn Davenport ------------------------ Name: Glenn Davenport Title: President & CEO THE COMPANY: DRAKE MANAGEMENT SERVICES, INC. By: /s/ Richard Drake ------------------ - -------- Name: Richard Drake Title: President SELLERS: Richard Drake ------------ - ------------------- Drake Family Revocable Trust, Richard or Dianne Drake Trustee under agreement dated September 17, 1991 By: Richard Drake, Trustee /s/ Richard Drake ------------ - ------------------ RICHARD DRAKE /s/ Dianne L. Drake ------------ - ------------------ DIANNE DRAKE /s/ Philippe Michelin ------------ - ------------------ PHILIPPE MICHELIN EXHIBIT 10.35 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (the "Agreement") is made this 20th day of March, 1998, by Morrison Health Care, Inc., a Georgia corporation (the "Buyer") and Spectra Services, Inc., a Delaware corporation (the "Company"). RECITALS The Company desires to sell, and Buyer desires to purchase, substantially all of the assets of the Company and the business as a going concern (collectively, the "Business"), for the consideration and on the terms set forth in this Agreement. AGREEMENT The parties, intending to be legally bound, agree as follows: 1. DEFINITIONS For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article DEFINITIONS: "Accounts Receivable" - as defined in Section 3.6. "Affiliate" - with respect to an individual, any family member, any Person that is directly or indirectly controlled by such individual or such individual's family members, or any Person with respect to which such individual, or a member of such individual's family, serves as a director, officer, partner, executor, or trustee (or similar capacity, and with respect to any Person other than an individual, any person that controls, is controlled by or under common control with such Person, and each Person that serves as a director, officer, partner, executor or trustee (or similar capacity) of such Person. "Agreement" - as defined in the Preamble. "Applicable Contract" - any Contract (a) under which the Business has or may acquire any rights, (b) under which the Business has or may become subject to any obligation or liability, or (c) by which the Business or any of the Assets is or may become bound. "Assets" - shall mean all of the assets of the Business including, without limitation, (a) The Company's leasehold interests in any buildings, facilities and other structures or improvements located at or related to the Business; (b) All machinery, equipment, office furniture and tools, leasehold improvements and other tangible personal property owned by the Company; (c) All franchises, licenses, permits, consents and certificates of any regulatory, administrative, or other governmental agency or body issued to or held by the Company related to the Business; (d) All contracts, agreements, understandings, contract rights, license agreements, purchase and sales orders and other executory commitments of the Company, including, without limitation, all management or service agreements. (e) All inventories and supplies located at or related to the Business; (f) All customer lists, vendor lists, distributor or agency agreements, catalogues, and advertising materials owned by the Company; (g) The Company's books and records related to the Business; (h) All prepaid items related to the Business that will accrue to the Company's benefit; (i) All accounts, notes, and other receivables of the Company or prepaid accounts or notes, but only to the extent such receivables or payments relate to services to be provided by the Business from and after the Effective Date; (j) The name "Spectra Services;" and (k) All goodwill relating to the Business; provided, however, that Assets shall not include any Excluded Assets held by the Company or any Company Plans. "Assumed Liabilities" - the liabilities and obligations of the Company arising from and after the Effective Date under the Applicable Contracts, and such other liabilities as are set forth in Part 2.2 of the Disclosure Letter. "Balance Sheet" - as defined in Section 0. "Bill of Sale" - as defined in Section 2.5(a)(i). "Business" - as defined in the Recitals. "Buyer" - as defined in the Preamble. "Buyer's Closing Documents" - as defined in Section 4.2(a). "Closing" - as defined in Section 0. "Closing Date" - the date and time as of which the Closing actually takes place. "Company" - as defined in the Preamble. "Company Plans" - any (a) "employee welfare benefit plans" and "employee pension benefit plans" as defined in Section 3(1) and 3(2) of ERISA; or (b) any other pension, profit sharing, retirement, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, health, hospitalization, automobile, fringe benefit or other employee benefit plan or arrangement, whether written or unwritten, formal or informal, which the Company maintains or to which the Company has any outstanding present or future obligation to contribute or to make payments under. "Company's Closing Documents" - as defined in Section 3.2(a). "Competing Business" - as defined in Section 3.24. "Contemplated Transactions" - all of the transactions contemplated by this Agreement, including: (a) the sale of the Business by the Company to Buyer; (b) the execution, delivery, and performance of the Employment Agreements, the Noncompetition Agreements, the Earnout Agreement and the Bill of Sale; (c) the performance by Buyer and the Company of their respective covenants and obligations under this Agreement; and (d) Buyer's acquisition and ownership of the Business. "Contract" - any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding. "Copyrights" - as defined in Section 3.20(a)(ii). "CPR" - as defined in Section 11.2(b). "Damages" - as defined in Section 0. "Disclosure Letter" - the disclosure letter delivered by the Company to Buyer concurrently with the execution and delivery of this Agreement. "Dispute" - as defined in Section 11.1. "Earnout Agreement" - as defined in Section 2.5(a)(v). "Effective Date" - March 1, 1998, which shall be the effective date of the Closing. "Employment Agreements" - as defined in Section (ii) employment agreements in the form of Exhibit 2.5(a)(ii), executed by James W. HemphillandMark De Iorio (collectively, the "Employment Agreements");. "Encumbrance" - any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. "Environment" - soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource. "Environmental, Health, and Safety Liabilities" - any cost, damages, expense, liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law including fines, penalties, financial responsibility for cleanup costs, corrective action, removal, remedial actions and response actions, and any other compliance, corrective, investigative or remedial measures required under any Environmental Law or Occupational Safety and Health Law. The terms "removal," "remedial," and "response action," include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., as amended ("CERCLA"). "Environmental Law" - any Legal Requirement that requires or relates to releases of pollutants or hazardous substances or materials, violations of discharge limits, or other prohibitions that relate to the Environment. "ERISA" - the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law. "Excluded Assets" - (a) all cash and accounts receivable held by the Company related to services rendered prior to the Effective Date, (b) all Company Plans, (c) the microwave, (d) the refrigerator, and (e) pictures and other personal effects located at the Company's principal place of business in Naperville, Illinois. "Facilities" - any real property, leaseholds, or other interests currently or formerly owned or operated by the Company and any buildings, plants, structures, or equipment (including motor vehicles) currently or formerly owned or operated by the Company. "GAAP" - generally accepted United States accounting principles, applied on a basis consistent with the basis which the Balance Sheet and other financial statements referred to in Section 3.3 were prepared. "Governmental Authorization" - any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement. "Governmental Body" - any federal, state, local, municipal, foreign, or other government; or governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal). "Hazardous Materials" - any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos- containing materials. "Initial Purchase Price" - as defined in Section 2.3. "Intellectual Property Assets" - as defined in Section 3.20(a). "Interest" - shall be the highest one-year rate available at Citibank for a cash or certificate of deposit account as of the Closing Date to be applied to the Conditional Sales Price from the Closing Date through the date that the Conditional Sales Price is paid to the Company. "IRC" - the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law. "IRS" - the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury. "Knowledge" - an individual will be deemed to have "Knowledge" of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) with respect to an officer or director of a Person, a prudent individual acting in such capacity could reasonably be expected to discover or otherwise become aware of such fact or other matter in the ordinary course of conducting his duties as an officer or director. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter. "Legal Requirement" - any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty. "Marks" - as defined in Section 3.20(a)(i). "Mary Hospital Account" - the Little Company of Mary Hospital (Evergreen Park, Illinois) account. "Mediation Request" - as defined in Section 11.2(b). "Noncompetition Agreements" - as defined in Section (iii) noncompetition agreements in the form of Exhibit 2.5(a)(iii), executed by James W. Hemphill and Mark De Iorio (collectively, the "Noncompetition Agreements");. "Occupational Safety and Health Law" - any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards. "Order" - any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator. "Ordinary Course of Business" - an action taken by a Person will be deemed to have been taken in the "Ordinary Course of Business" only if such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person. "Organizational Documents" - the articles or certificate of incorporation and the bylaws of a corporation and any amendment to any of the foregoing. "Person" - any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body. "Proceeding" - any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator. "Purchase Price" - as defined in Section 2.3. "Release" - any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment, whether intentional or unintentional. "Replacement" - as defined in Section 11.9. "Representative" - with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors. "Stock Option" - an option to purchase a designated number of shares of common stock of the Buyer, $.01 par value per share. All Stock Options in favor of any employee will vest and become fully exercisable on the third anniversary of the date of grant (provided that the option holder remains an employee of Buyer at that time) and expire on the earlier of (i) ninety (90) days following termination of employment, or (ii) the tenth anniversary of the date of grant. All Stock Options shall have an exercise price equal to the closing price of Buyer's common stock on the day before the date of grant; provided that if the day before the date of grant is not a trading day, the exercise price shall be the closing price of Buyer's common stock on the last previous trading day prior to the grant. "Tax" - all tax (including income tax, capital gains tax, value added tax, sales tax, property tax, gift tax or estate tax), levy, assessment, tariff, duty, deficiency or other fee and any related charge or amount (including fine, penalty and interest) imposed, assessed or collected by or under the authority of any Governmental Body. "Tax Return" - any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax. "Threatened" - a claim, Proceeding, dispute, action, or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person acting in the capacity of such Person to conclude that such a claim, Proceeding, dispute, action, or other matter is reasonably likely to be asserted, commenced, taken, or otherwise pursued in the future. "Trade Secrets" - as defined in Section 3.20(a)(iii). 2. TRANSFER OF ASSETS AND ASSUMED LIABILITIES; CLOSING 2.1 Agreement to Sell and Purchase Assets. Subject to the terms and conditions of this Agreement, at the Closing, the Company shall sell, transfer, convey, assign and deliver to Buyer the Assets, and Buyer shall purchase, acquire and accept from the Company the Assets. 2.2 Assumed Liabilities. Subject to the terms and conditions of this Agreement, the Company shall transfer and assign to Buyer the Assumed Liabilities and Buyer shall assume the Assumed Liabilities and only the Assumed Liabilities. 2.3 Purchase Price. The purchase price (the "Purchase Price") for the Assets will be (a) $1,100,000 (the "Initial Purchase Price") payable at the Closing; plus (b) $400,000 on the tems and conditional set forth in Section 2.7 below (the "Conditional Purchase Price"); plus (c) any and all amounts payable to the Company under the Earnout Agreement; plus or minus (d) prorations for Assets, Assumed Liabilities, income and expenses as of the Effective Date. 2.4 Closing. The purchase and sale (the "Closing") provided for in this Agreement will take place at the offices of Nagle & Higgins, P.C., 1755 Park Street, Suite 360, Naperville, Illinois at 10:00 a.m. (local time) on March 20, 1998, or at such other time and place as the parties may agree effective as of the Effective Date. Subject to the provisions of Article 9. TERMINATION, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section Error! Not a valid bookmark self-reference. will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement. 2.5 Closing Obligations. At the Closing: (a) The Company will deliver to Buyer: (i) a bill of sale, assignment and assumption agreement with respect to the Assets and the Assumed Liabilities in the form of Exhibit 2.5(a)(i) (the "Bill of Sale") executed by the Company; (ii) employment agreements in the form of Exhibit 2.5(a)(ii), executed by James W. Hemphill and Mark De Iorio (collectively, the "Employment Agreements"); (iii) noncompetition agreements in the form of Exhibit 2.5(a)(iii), executed by James W. Hemphill and Mark De Iorio (collectively, the "Noncompetition Agreements"); (iv) a certificate executed by the Company to the effect that: (A) each of the Company's representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date; and (B) each of the covenants and agreements of the Company to be performed prior to the Closing Date has been duly performed or complied with by the Company; (v) the earnout agreement in the form of Exhibit 2.5(a)(v), executed by the Company (the "Earnout Agreement"); and (vi) the documents contemplated by Section 7.5 hereof; and (b) Buyer will deliver to the Company: (i) the Initial Purchase Price, plus or minus such prorations of Assets, Assumed Liabilities, income and expenses from the Effective Date to the Closing Date as may reasonably be determined and agreed to by the parties prior to the Closing Date, by bank cashier's check or by wire transfer to the accounts specified by the Company; (ii) a certificate executed by Buyer to the effect that: (A) each of Buyer's representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date; and (B) each of the covenants and agreements of Buyer to be performed prior to the Closing Date has been duly performed and complied with by Buyer; (iii) the Bill of Sale, executed by Buyer; (iv) the Employment Agreements, executed by Buyer; (v) the Earnout Agreement, executed by Buyer; and (vi) the documents contemplated by Section 8.4 hereof. 2.6 Post-Closing Purchase Price Adjustment. As soon as practicable following the Closing Date, but in no event later than thirty (30) days following the Closing Date, Buyer and the Company shall re-determine all prorations of Assets, Assumed Liabilities, income and expenses from the Effective Date to the Closing Date, and shall settle any upward or downward adjustments in the Purchase Price required by such re- determination. If the parties cannot reach agreement within such thirty (30) day period, the dispute shall be settled pursuant to the provisions of Article 11 hereof. 2.7 Conditional Purchase Price Payment. The Conditional Sales Price, plus Interest thereon, shall be paid by cashiers check or wire transfer to the Company as follows: (a) If Little Company Mary Hospital ("Mary Hospital") rescinds its termination of the Mary Hospital Account on or before June 30, 1998, within seven (7) days of receipt by the Company of such notice of rescission; or (b) If Mary Hospital enters into a new contract for a minimum term of one (1) year with the Company on or before March 1, 1999, within seven (7) days of execution of such contract. If neither of the foregoing events occur, then the Company shall not be entitled to receive the Conditional Purchase Price. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Buyer as follows: 3.1 Organization and Good Standing. (a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Applicable Contracts. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of its properties, or the nature of the activities conducted by it, requires such qualification, which jurisdictions are set forth on Part 3.1 of the Disclosure Letter. (b) The Company has delivered to Buyer copies of the Organizational Documents of the Company, as currently in effect. (c) The Company has no subsidiaries and no ownership interest in any Person. 3.2 Authority; No Conflict. (a) The Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, and upon the execution and delivery by the Company of the Employment Agreements, the Earnout Agreement, the Bill of Sale and the Noncompetition Agreements (collectively, the "Company's Closing Documents"), the Company's Closing Documents will constitute the legal, valid, and binding obligations of the Company, enforceable against it in accordance with their respective terms. The Company has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the Company's Closing Documents and to perform its obligations under this Agreement and the Company's Closing Documents. (b) Except as set forth in Part 3.2(b) of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of: (A) any provision of the Organizational Documents of the Company; or (B) any resolution adopted by the board of directors or the stockholders of the Company; (ii) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which the Company or any of the Assets may be subject, the breach of which would result in Damages to Buyer; (iii) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Business or that otherwise relates to any of the Assets; (iv) cause Buyer or the Business to become subject to, or to become liable for the payment of, any Tax imposed with respect to the transfer of the Assets, or otherwise imposed on the Company; (v) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or (vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets arising from any mortgage, lease, contract or other agreement to which the Company or any of its stockholders is a party. Except as set forth in Part 3.2(b) of the Disclosure Letter, the Company is not or will not be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 3.3 Financial Statements. The Company has delivered to Buyer: unaudited balance sheets of the Business as at December 31 in each of the years 1995, 1996 and 1997 and the related unaudited statements of income and changes in stockholders' equity for each of the fiscal years then ended, including a balance sheet of the Business as at December 31, 1997 (including the notes thereto, the "Balance Sheet"), and the related statements of income, changes in stockholders' equity and cash flow for the year then ended. Such financial statements and notes fairly present the financial condition and the results of operations, changes in stockholders' equity and cash flow of the Company as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP, with the following exceptions: (a) there are no notes; (b) there are no accounts receivable reflected; (c) there is no accrued vaction reflected; and (d) depreciation is determined on a tax basis. The financial statements referred to in this Section Error! Not a valid bookmark self-reference. reflect the consistent application of such accounting principles throughout the periods involved. 3.4 Title to Properties; Encumbrances. Part 3.4 of the Disclosure Letter contains a complete and accurate list of all leaseholds or other interests therein owned by the Company. The Company does not own and has never owned any real property. The Company owns all the Assets (whether tangible or intangible) including all of the properties and assets reflected in the Balance Sheet (except for Assets held under capitalized leases disclosed or not required to be disclosed in Part 3.4 of the Disclosure Letter and personal property sold since the date of the Balance Sheet in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Company since the date of the Interim Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice). All properties and assets reflected in the Balance Sheet are free and clear of all Encumbrances except for liens for current taxes not yet due. 3.5 Condition and Sufficiency of Assets. Except for the vehicles which are being conveyed in their "as is" condition, to the Company's Knowledge, the Assets are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such Assets is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The Assets constitute every thing that the Company used to conduct the Business. 3.6 Accounts Receivable. All accounts receivable of the Company to be conveyed herein, if any, relate to services to be provided from and after the Effective Date. 3.7 Inventory. The only inventory of the Company is miscellaneous office supplies. 3.8 No Undisclosed Liabilities. Except as set forth in Part 3.8 of the Disclosure Letter, to the Company's Knowledge, the Company has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the Balance Sheet and current liabilities incurred in the Ordinary Course of Business since the date thereof. 3.9 Taxes. (a) The Company has elected and is, and has at all times been fully eligible to be taxed in accordance with the provisions of subchapter S of the IRC. (b) The Company has filed or caused to be filed, on a timely basis, all Tax Returns that are or were required to be filed by or with respect to it, either separately or as a member of a group of corporations, pursuant to applicable Legal Requirements (all of which returns were true, correct and complete in all material respects), the failure of which to file would result in Damages to Buyer. The Company has delivered to Buyer copies of, and Part 3.9 of the Disclosure Letter contains a complete and accurate list of, all such Tax Returns filed for the past three years. The Company has paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by the Company. (c) Except as described in Part 3.9 of the Disclosure Letter, the Company has not given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Business may be liable. (d) There exists no proposed tax assessment against the Company except as disclosed in the Balance Sheet or in Part 3.9 of the Disclosure Letter. No consent to the application of Section 341(f)(2) of the IRC has been filed with respect to any property or assets held, acquired, or to be acquired by the Company. All Taxes that the Company is or was required by Legal Requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body or other Person, the breach of which would result in Damages to Buyer. 3.10 No Material Adverse Change. Since the date of the Balance Sheet, there has not been any material adverse change in the Business, operations, properties, Assets, or condition of the Company, and to the Company's Knowledge, no event has occurred or circumstance exists with respect to the Contracts or vendor relationships that is reasonably likely to result in such a material adverse change other than those events which effect the health care or food service industry as a whole. 3.11 Employee Benefits. (a) Part 3.11 of the Disclosure Letter contains an accurate and complete description of, and sets forth the annual amount payable pursuant to, each Company Plan, whether formal or informal, relating to the Business. The Company has no commitment, whether formal or informal and whether legally binding or not, to create any additional such plan or arrangement. (b) The Assets are not, and the Company does not reasonably expect them to become, subject to a lien imposed under IRC Section 412 or ERISA Section 4068. (c) Neither the Company nor any entity which together with the Company is required to be treated as a single employer under IRC Section 414 has ever had and neither currently has any obligation to contribute to any Multi-Employer Plan (as defined in ERISA Section 3(37). (d) Neither the Company nor any entity which together with the Company is required to be treated as a single employer under IRC Section 414 has ever maintained and does not currently maintain any Company Plan which is or was subject to Title IV of ERISA. (e) The Company and each entity which together with the Company is required to be treated as a single employer under IRC Section 414 have complied with the continuation coverage requirements of IRC Section 4980B and ERISA Sections 601 through 608 and with the portability, access and renewability provisions of Subtitle K, Chapter 100 of the IRC and Section 701 et seq. of ERISA. (f) No assets of the Company, including the Assets, have been, and the Company does not reasonably expect them to be, provided as security to any Company Plan pursuant to IRC Section 401(a)(29). (g) The Company has not received any notice of any actions, audits, or claims pending or to the Company's Knowledge, threatened against the Assets or the Business with respect to the maintenance of any Company Plans. 3.12 Compliance with Legal Requirements; Governmental Authorizations. (a) Except as set forth in Part 3.12 of the Disclosure Letter: (i) the Company is, and at all times since its incorporation has been, in full compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its Business or the ownership or use of any of the Assets, the breach of which would result in Damages to Buyer; (ii) no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) may constitute or result in a violation by the Company of, or a failure on the part of the Company to comply with, any Legal Requirement, or (B) may give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, the breach of which would result in Damages to Buyer; and (iii) the Company has not received, at any time since its incorporation, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement, or (B) any actual, alleged, possible, or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. (b) Part 3.12 of the Disclosure Letter contains a complete and accurate list of each Governmental Authorization that is held by the Company or that otherwise relates to the Business or to the Assets. Each Governmental Authorization listed or required to be listed in Part 3.12 of the Disclosure Letter is valid and in full force and effect. Except as set forth in Part 3.12 of the Disclosure Letter: (i) the Company is, and at all times since its incorporation has been, in full compliance with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Part 3.12 of the Disclosure Letter, the breach of which would result in Damages to Buyer; (ii) no event has occurred or circumstance exists that may (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization listed or required to be listed in Part 3.12 of the Disclosure Letter, or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification to, any Governmental Authorization listed or required to be listed in Part 3.12 of the Disclosure Letter, the breach of which would result in Damages to Buyer; (iii) the Company has not received, at any time since its incorporation, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of or failure to comply with any term or requirement of any Governmental Authorization, or (B) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to any Governmental Authorization; and (iv) all applications required to have been filed for the renewal of the Governmental Authorizations listed or required to be listed in Part 3.12 of the Disclosure Letter have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies, the breach of which would result in Damages to Buyer. The Governmental Authorizations listed in Part 3.12 of the Disclosure Letter collectively constitute all of the Governmental Authorizations necessary to permit the Company to lawfully conduct and operate the Business in the manner it currently conducts and operates the Business and to permit the Company to own and use the Assets in the manner in which it currently owns and uses such Assets. 3.13 Legal Proceedings; Orders. (a) Except as set forth in Part 3.13 of the Disclosure Letter, the Company has not received any notice of any pending Proceeding: (i) that has been commenced by or against the Company or that otherwise relates to or may affect the Business or the Assets; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To the Company's Knowledge, (1) no such Proceeding has been Threatened, and (2) no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding. The Company has delivered to Buyer copies of all pleadings, correspondence, and other documents relating to each Proceeding listed in Part 3.13 of the Disclosure Letter. The Proceedings listed or required to be listed in Part 3.13 of the Disclosure Letter will not have a material adverse effect on the business, operations, assets, or condition, of the Company, the Business or the Assets. (b) Except as set forth in Part 3.13 of the Disclosure Letter: (i) No Order has been received by the Company that relates to the Business or any of the Assets; and (ii) to the Company's Knowledge, no officer, director, agent, or employee of the Company is subject to any Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the Business. 3.14 Absence of Certain Changes and Events. Except as set forth in Part 3.14 of the Disclosure Letter, since the date of the Balance Sheet, the Company has conducted its business only in the Ordinary Course of Business and there has not been any: (a) amendment to the Organizational Documents of the Company; (b) payment or increase by the Company of any bonuses, salaries, or other compensation to any stockholder, director, officer, or (except in the Ordinary Course of Business) employee or entry into any employment, severance, or similar Contract with any director, officer, or employee; (c) adoption of, or increase in the payments to or benefits under, any Company Plan; (d) damage to or destruction or loss of any personal property of the Company, whether or not covered by insurance, materially and adversely affecting the properties, Assets, Business, or financial condition of the Company; (e) entry into, termination of, or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to the Company of at least $5,000; (f) sale, lease, or other disposition of any asset or property of the Company or mortgage, pledge, or imposition of any lien or other encumbrance on any asset or property of the Company; (g) cancellation or waiver of any claims or rights with a value to the Company in excess of $5,000; (h) change in the accounting methods used by the Company; or (i) agreement, whether oral or written, by the Company to do any of the foregoing. 3.15 Contracts; No Defaults. (a) Part 3.15(a) of the Disclosure Letter contains a complete and accurate list, and the Company have delivered to Buyer true and complete copies, of: (i) each Applicable Contract that involves performance of services or delivery of goods or materials by the Business of an amount or value in excess of $5,000; (ii) each Applicable Contract that involves performance of services or delivery of goods or materials to the Business of an amount or value in excess of $5,000; (iii) each Applicable Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of the Business in excess of $5,000; (iv) each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Applicable Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $5,000 and with terms of less than one year); (v) each licensing agreement or other Applicable Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any of the Intellectual Property Assets; (vi) each collective bargaining agreement and other Applicable Contract to or with any labor union or other employee representative of a group of employees; (vii) each joint venture, partnership, and other Applicable Contract (however named) involving a sharing of profits, losses, costs, or liabilities by the Company with any other Person; (viii) each Applicable Contract containing covenants that in any way purport to restrict the business activity of the Business or limit the freedom of the Business to engage in any line of business or to compete with any Person; (ix) each Applicable Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods; (x) each power of attorney that is currently effective and outstanding; (xi) each Applicable Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by the Business to be responsible for consequential damages; (xii) each Applicable Contract for capital expenditures in excess of $5,000; (xiii) each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business; and (xiv) each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing. (b) Except as set forth in Part 3.15(b) of the Disclosure Letter, each Contract identified or required to be identified in Part 3.15(a) of the Disclosure Letter is in full force and effect and is valid and enforceable in accordance with its terms. (c) Except as set forth in Part 3.15(c) of the Disclosure Letter: (i) the Company is, and at all times has been, in material compliance with all applicable terms and requirements of each Contract under which it has or had any obligation or liability or by which it or any of the assets owned or used by it is or was bound, and any material non-compliance has been cured; (ii) each other Person that has or had any obligation or liability under any Contract under which the Company has or had any rights is, and at all times has been, in material compliance with all applicable terms and requirements of such Contract, and any previous non-compliance has been cured; (iii) no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of, or give the Company or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; and (iv) the Company has not given to or received from any other Person, at any time, any notice or other communication (whether oral or written) regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Contract. (d) There are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any material amounts paid or payable to the Company under current or completed Contracts with any Person and, to the Knowledge of the Company, no such Person has made written demand for such renegotiation. 3.16 Insurance. Except as set forth on Part 3.16 of the Disclosure Letter: (a) All policies to which the Company is a party or that provide coverage to the Company: (i) are, to the Company's Knowledge, valid, outstanding, and enforceable; (ii) are, to the Company's Knowledge, issued by an insurer that is financially sound and reputable; (iii) to the Company's Knowledge, provide adequate insurance coverage for the Assets and the Business of the Company for all risks normally insured against by a Person carrying on the same business as the Company; (iv) are sufficient for compliance with all Legal Requirements and Contracts to which the Company is a party or by which it is bound, the breach of which would result in Damages to Buyer; and (v) do not provide for any retrospective premium adjustment or other experienced-based liability on the part of the Company. (b) The Company has not received (i) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (ii) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder. (c) The Company has paid all premiums due, and to the Company's Knowledge has otherwise performed its obligations, under each policy to which it is a party or that provides coverage to the Company. (d) The Company has given notice to the insurer of all known claims that may be insured thereby. 3.17 Environmental Matters. Except as set forth in part 3.17 of the Disclosure Letter: (a) The Company is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law. The Company has no basis to expect, nor has it or any other Person for whose conduct they are or may be held to be responsible received, any actual or Threatened order, notice, or other communication from (i) any Governmental Body or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any Facilities, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or Threatened obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets used by the Company. (b) There are no pending or, to the Company's Knowledge, Threatened claims, Encumbrances, or other restrictions of any nature, resulting from any Environmental, Health, and Safety Liabilities or arising under or pursuant to any Environmental Law, with respect to or affecting any of the Facilities or any other properties and assets used by the Company. (c) The Company has not received nor has any basis to expect, any citation, directive, inquiry, notice, Order, summons, warning, or other communication that relates to Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets used by the Company, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used, or processed by the Company, or any other Person for whose conduct they are or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled, or received. (d) The Company has no Environmental, Health, and Safety Liabilities with respect to the Facilities. (e) There are no Hazardous Materials present on or in the Environment at the Facilities except in full compliance with all applicable Environmental Laws. (f) There has been no Release or, to the Knowledge of the Company, threat of Release, of any Hazardous Materials at or from the Facilities or at any other locations where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Facilities, or from or by any other properties and assets used by the Company. (g) The Company has delivered to Buyer true and complete copies and results of any reports, studies, analyses, tests, or monitoring possessed or initiated by the Company pertaining to Hazardous Materials in, on, or under the Facilities, or concerning compliance by the Company. 3.18 Employees. (a) Part 3.18 of the Disclosure Letter contains: (i) a complete and accurate list of the following information for each employee or director of the Company, including each employee on leave of absence or layoff status: employer name; job title; current compensation paid or payable and any change in compensation since January 1, 1996; and (ii) a list of all written contracts of employment with the Company. (b) To the Company's Knowledge, no employee or director of the Company is a party to, or is otherwise bound by, any agreement or arrangement, including any employment, confidentiality, noncompetition, or proprietary rights agreement, between such employee or director and any other Person ("Proprietary Rights Agreement") that in any way adversely affects or will affect (i) the performance of his duties as an employee or director of the Company, or (ii) the ability of the Company to conduct its business, including any Proprietary Rights Agreement with the Company by any such employee or director. To the Company's Knowledge, no account managers of the Business nor James Hemphill, Mark De Iorio or Elizabeth Kolkman intends not to accept employment with the Buyer following the Closing. (c) There are no retired employees or directors of the Company. 3.19 Labor Relations; Compliance. The Company has not been in the past and is not now a party to any collective bargaining or other labor Contract. There has not been, there is not presently pending or existing, and to the Company's Knowledge there is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee grievance process, (b) any Proceeding against or affecting the Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable Governmental Body, organizational activity, or other labor or employment dispute against or affecting the Company or its premises, the breach of which would result in Damages to Buyer, or (c) any application for certification of a collective bargaining agent. To the Company's Knowledge, no event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees by the Company, and no such action is contemplated by the Company. The Company has complied in all respects with all Legal Requirements relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health, and plant closing where the failure of such compliance would have an adverse effect on the Buyer. The Company is not liable for the payment of any compensation, damages, taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements where the failure of such compliance would result in Damages to Buyer. 3.20 Intellectual Property. (a) Intellectual Property Assets. The term "Intellectual Property Assets" includes: (i) the name "Spectra Services, Inc.", all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, "Marks"); (ii) all copyrights in both published works and unpublished works (collectively, "Copyrights"); and (iii) all know-how, trade secrets, confidential information, customer lists, software, recipes, technical information, data, process technology, plans, drawings, and blue prints (collectively, the "Trade Secrets"); owned, used, or licensed by the Company as licensee or licensor. (b) Agreements. Part 3.20(b) of the Disclosure Letter contains a complete and accurate list and summary description, including any royalties paid or received by the Company, of all Contracts relating to the Intellectual Property Assets to which Company is a party or by which any Company is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $5,000 under which the Company is the licensee. There are no outstanding and, to the Company's Knowledge, no Threatened disputes or disagreements with respect to any such agreement. (c) Know-How Necessary for the Business. The Intellectual Property Assets are all those used in the operation of the Business as it is currently conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use without payment to a third party all of the Intellectual Property Assets. (d) Patents. The Company does not own any patents. (e) Trademarks. Other than a common-law trademark in the name "Spectra Services," the Company does not own any trademarks. (f) Copyrights. The Company does not own any Copyrights. (g) Trade Secrets. (i) The Company has taken reasonable precautions to protect the secrecy, confidentiality and value of its Trade Secrets. (ii) To the Company's Knowledge, the Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. To the Company's Knowledge, the Trade Secrets are not part of the public knowledge or literature, and, to the Company's Knowledge, have not been used, divulged, or appropriated either for the benefit of any Person or to the detriment of the Company. To the Company's Knowledge, no Trade Secret is subject to any adverse claim or has been challenged or threatened in any way. 3.21 Certain Payments. Except as set forth in Part 3.21 of the Disclosure Letter, since the Company's incorporation, neither the Company nor any director, officer, agent, or employee of the Company, or any other Person associated with or acting for or on behalf of the Company, has directly or indirectly (a) made, directly or indirectly, any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services, in violation of any Legal Requirement with respect to federal or state laws, rules or regulations relating to payments to or from health care providers or financial reporting or accounting requirements in connection therewith including without limitation applicable medicare and medicaid laws, rules and regulations, the breach of which would result in Damages to Buyer, (b) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits from any vendor, governmental employee or other Person with whom the Company has done business, directly or indirectly, which would reasonably be expected to subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (c) established or maintained any fund or asset that has not been recorded in the books and records of the Company. 3.22 Fraud and Abuse; Financial Relationships. The Company does not have any government contract, and the Company has not made any claims relating to Medicare, Medicaid CHAMPUS or other governmental reimbursements. 3.23 Disclosure. (a) To the Company's Knowledge, no representation or warranty of the Company in this Agreement and no statement in the Disclosure Letter omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading. (b) No notice given pursuant to Section 5.6 Notification.Between the date of this Agreement and the Closing Date, the Company will promptly notify Buyer in writing if it becomes aware of any fact or condition that causes or constitutes a Breach of any of the Company's representations and warranties as of the date of this Agreement, or if the Company becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. During the same period, the Company will promptly notify Buyer of the occurrence of any Breach of any covenant of the Company in this Article 5. COVENANTS OF THE COMPANY or of the occurrence of any event that may make the satisfaction of the conditions in Article 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE impossible or unlikely. will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading. (c) To the Company's Knowledge, there is no fact that has specific application to the Company (other than general economic or industry conditions) that materially adversely affects the Assets, Business, financial condition, or results of operations of the Company (on a consolidated basis) that has not been set forth in this Agreement or the Disclosure Letter. 3.24 Relationships with Related Persons. Except for the microwave, refrigerator, pictures and other personal effects located at the principal office of the Company, neither the Company nor any Affiliate of the Company has, or in the past three (3) years has had, any interest in any property (whether real, personal, or mixed and whether tangible or intangible), used in or pertaining to the Business. Neither the Company nor any Affiliate of the Company owns, or in the past three years has owned (of record or as a beneficial owner) an equity interest or any other financial or profit interest in, a Person that has (i) had business dealings or a material financial interest in any transaction with the Company, or (ii) engaged in competition with the Company with respect to any line of the products or services of the Company (a "Competing Business") in any market presently served by the Company except for less than one percent of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. Except as set forth in Part 3.23 of the Disclosure Letter, neither the Company nor any Affiliate of the Company is a party to any Contract with, or has any claim or right against, the Company. 3.25 Brokers or Finders. The Company and its Representatives have incurred no obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payment in connection with the Contemplated Transactions. 4. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to the Company as follows: 4.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Georgia. 4.2 Authority; No Conflict. (a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of the Earnout Agreement, the Employment Agreements, the Bill of Sale and the Noncompetition Agreements (collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents will constitute the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms. Buyer has the absolute and unrestricted right, power, and authority to execute and deliver this Agreement and the Buyer's Closing Documents and to perform its obligations under this Agreement and the Buyer's Closing Documents. (b) Except as set forth in Part 4.2 of the Disclosure Letter, neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer will give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant to: (i) any provision of Buyer's Organizational Documents; (ii) any resolution adopted by the board of directors or the shareholders of Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may be bound. Except as set forth in Part 4.2 of the Disclosure Letter, Buyer is not and will not be required to obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 4.3 Certain Proceedings. There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened. 4.4 Brokers or Finders. Buyer and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders' fees or agents' commissions or other similar payment in connection with the Contemplated Transactions. 5. COVENANTS OF THE COMPANY 5.1 Access and Investigation. Between the date of this Agreement and the Closing Date, the Company will, and will cause its Representatives to, (a) afford Buyer and its Representatives full and free access to the Company's properties, contracts, books and records, and other documents and data at the Company's principal office in Naperville, Illinois, (b) furnish Buyer and it Representatives with copies of all such contracts, books and records, and other existing documents and data as Buyer may reasonably request, and (c) furnish Buyer and its Representatives with such additional financial, operating, and other data and information as Buyer may reasonably request. 5.2 Operation of the Businesses of the Company. Between the Effective Date and the Closing Date, the Company will: (a) conduct the Business only in the Ordinary Course of Business; (b) use its good faith efforts to preserve intact the current business organization of the Company, keep available the services of the current officers, employees, and agents of the Company, and maintain the relations and good will with suppliers, customers, landlords, creditors, employees, agents, and others having business relationships with the Company; (c) confer with Buyer concerning operational matters of a material nature; and (d) upon request of Buyer, report to Buyer concerning the status of the business, operations, and finances of the Company. 5.3 No Distributions. Prior to the Closing, the Company shall not make or declare any dividend or distribution to any of its stockholders, or grant or declare any raises or bonuses to any employee of the Company, except in the Ordinary Course of Business, and except for any distributions to Mr. Hemphill of cash (which cash would otherwise constitute an Excluded Asset) in the form of salary or dividends. Following the Closing, the Company may make distributions of the Purchase Price, provided, however, that if the Company distributes some or all of the Purchase Price to its shareholder, the shareholder shall reimburse the Company for the amount of said distributions as may be necessary in order for the Company to pay any amounts due to Buyer pursuant to this Agreement. 5.4 Negative Covenant. Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and the Closing Date, the Company will not, without the prior consent of Buyer, take any affirmative action, or fail to take any reasonable action within its control, as a result of which any of the changes or events listed in Section 3.12 is likely to occur. 5.5 Required Approvals. As promptly as practicable after the date of this Agreement, the Company will make all filings required by Legal Requirements to be made by it in order to consummate the Contemplated Transactions. Between the date of this Agreement and the Closing Date, the Company will (a) cooperate with Buyer with respect to all filings that Buyer elects to make or is required by Legal Requirements to make in connection with the Contemplated Transactions, and (b) cooperate with Buyer in obtaining all consents identified in Part 4.2 of the Disclosure Letter; provided that this Agreement will not require the Company to dispose of or make any change in any portion of its business or to incur any other burden to obtain a Governmental Authorization. 5.6 Notification. Between the date of this Agreement and the Closing Date, the Company will promptly notify Buyer in writing if it becomes aware of any fact or condition that causes or constitutes a Breach of any of the Company's representations and warranties as of the date of this Agreement, or if the Company becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. During the same period, the Company will promptly notify Buyer of the occurrence of any Breach of any covenant of the Company in this Article 5. COVENANTS OF THE COMPANY or of the occurrence of any event that may make the satisfaction of the conditions in Article 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE impossible or unlikely. 5.7 Payment of Indebtedness by Related Persons. Except as expressly provided in this Agreement, the Company will cause all indebtedness owed to the Company by the Company or any Affiliate of the Company to be paid in full prior to its due date. 5.8 Name Change. As soon as reasonable practicable following the Closing, the Company shall change its name to a name not containing the word "Spectra" or any word or phrase substantially similar to "Spectra" or "Spectra Services." 5.9 No Negotiation. Until the earlier of April 15, 1998 or such date on which Buyer notifies the Company that it has abandoned the Contemplated Transactions, the Company shall deal exclusively with Buyer with respect to the Contemplated Transactions and the Company will not, and will direct its representatives not to, (a) solicit the submission of proposals or offers from any person relating to any acquisition or purchase of all or any material part of the assets or stock of the Company or any merger, consolidation or similar transaction with respect to the Company; (b) participate in any discussions or negotiations regarding, or furnish any information to any other person other than the Company with respect to such possible transaction, or (c) enter into any agreement or understanding, whether oral or in writing, that would prevent the consummation of the Contemplated Transactions. If, notwithstanding the foregoing, the Company should receive any such proposal from a third party or any inquiry regarding any such proposal, the Company shall promptly inform Buyer thereof. 6. COVENANTS OF BUYER 6.1 Required Approvals. As promptly as practicable after the date of this Agreement, Buyer will make all filings required by Legal Requirements to be made by it to consummate the Contemplated Transactions. Between the date of this Agreement and the Closing Date, Buyer will, (a) cooperate with the Company with respect to all filings that the Company is required by Legal Requirements to make in connection with the Contemplated Transactions, and (b) cooperate with the Company in obtaining all consents identified in Part 3.2 of the Disclosure Letter; provided that this Agreement will not require Buyer to dispose of or make any change in any portion of its business or to incur any other burden to obtain a Governmental Authorization. 6.2 Employment Matters. (a) All employees of the Company who accept Buyer's offer of employment shall be eligible for participation in Buyer's employee benefit programs on the same terms and conditions as similarly situated persons and will receive credit for service with the Company prior to the Closing for participation and vesting purposes under Buyer's employee benefit programs and for purposes of determining paid-time off benefits and matching contributions under the Morrison Health Care, Inc. Salary Deferral Plan and the Morrison Health Care, Inc. Deferred Compensation Plan. (b) Each full time employee of the Company who accepts employment with Buyer (other than Mr. DeIorio and Mr. Hemphill) shall enter into an employment agreement with Buyer pursuant to which, among other things, such individuals shall receive a Stock Option to purchase two hundred (200) shares of Buyer's Common Stock upon the Closing. Mr. De Iorio and Mr. Hemphill shall receive Stock Options to purchase that number of shares of Buyer's Common Stock as set forth in their respective Employment Agreements. 6.3 Post Closing Covenants. Buyer agrees to assume all of the Assumed Liabilities from and after the Closing Date. 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE Buyer's obligation to purchase the Business and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part): 7.1 Accuracy of Representations. All of the Company's representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement, and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. 7.2 The Company's Performance. (a) All of the covenants and obligations that the Company is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects. (b) Each document required to be delivered pursuant to SectioClosing Obligations.At the Closing:(a) must have been delivered. 7.3 Due Diligence. Buyer shall have completed its due diligence inquiry into the business, affairs and financial condition of the Company. 7.4 Consents. Each of the consents identified in Part 3.2 of the Disclosure Letter, and each consent identified in Part 4.2 of the Disclosure Letter, must have been obtained and must be in full force and effect. 7.5 Additional Documents. Each of the following documents must have been delivered to Buyer: (a) an opinion of Nagle & Higgins, P.C., dated the Closing Date, in the form of Exhibit 7.4(a); (b) estoppel certificates executed on behalf of the landlord dated as of a date not more than twenty (20) days prior to the Closing Date, in the form of Exhibit 7.4(b); (c) such other documents as Buyer may reasonably request for the purpose of (i) enabling its counsel to provide the opinion referred to in Section 8.4 Additional Documents.Buyer must have caused the following documents to be delivered to the Company;(a), (ii) evidencing the accuracy of any of the Company's representations and warranties, (iii) evidencing the performance by the Company of, or the compliance by either the Company with, any covenant or obligation required to be performed or complied with by it, (iv) evidencing the satisfaction of any condition referred to in this SectioCONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE, or (v) otherwise facilitating the consummation or performance of any of the Contemplated Transactions. 7.6 No Proceedings. Since the date of this Agreement, there must not have been commenced or Threatened against Buyer, or against any Person affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking damages or other relief in connection with, any of the Contemplated Transactions, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Contemplated Transactions. 7.7 No Claim Regarding Stock Ownership or Sale Proceeds. There must not have been made or Threatened by any Person any claim asserting that such Person (a) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any stock of, or any other voting, equity, or ownership interest in, the Company, or (b) is entitled to all or any portion of the Initial Purchase Price payable for the Business. 7.8 No Prohibition. Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause Buyer or any Person affiliated with Buyer to suffer any material adverse consequence under, (a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or Order that has been published, introduced, or otherwise formally proposed by or before any Governmental Body. 8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE The Company's obligation to sell the Assets of the Business and to take the other actions required to be taken by the Company at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Company, in whole or in part): 8.1 Accuracy of Representations. All of Buyer's representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. 8.2 Buyer's Performance. (a) All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been performed and complied with in all material respects. (b) Buyer must have delivered each of the documents required to be delivered by Buyer pursuant to Section 2.5 Closing Obligations.At the Closing:(b) and must have made the cash payments required to be made by Buyer pursuant to Section (i) the Initial Purchase Price, plus or minus such prorations of Assets, Assumed Liabilities, income and expenses from the Effective Date to the Closing Date as may reasonably be determined and agreed to by the parties prior to the Closing Date, by bank cashier's check or by wire transfer to the accounts specified by the Company;. 8.3 Consents. Each of the consents identified in Part 3.2 of the Disclosure Letter must have been obtained and must be in full force and effect. 8.4 Additional Documents. Buyer must have caused the following documents to be delivered to the Company; (a) an opinion of Powell, Goldstein, Frazer & Murphy LLP dated the Closing Date, in the form of Exhibit 8.4(a); (b) stock option agreements executed by Buyer in the form of Exhibit Error! Not a valid bookmark self-reference. with all employees of the Company (other than Mr. De Iorio and Mr. Hemphill) who accept employment with Buyer; and (c) such other documents as the Company may reasonably request for the purpose of (i) enabling their counsel to provide the opinion referred to in Section 7.5(a), (ii) evidencing the accuracy of any representation or warranty of Buyer, (iii) evidencing the performance by Buyer of, or the compliance by Buyer with, any covenant or obligation required to be performed or complied with by Buyer, (iv) evidencing the satisfaction of any condition referred to in this Section, or (v) otherwise facilitating the consummation of any of the Contemplated Transactions. 8.5 No Injunction. There must not be in effect any Legal Requirement or any injunction or other Order that (a) prohibits the sale of the Business by the Company to Buyer, and (b) has been adopted or issued, or has otherwise become effective, since the date of this Agreement. 9. TERMINATION 9.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated: (a) by either Buyer or the Company if a material Breach of any provision of this Agreement has been committed by the other party and such Breach has not been waived; (b) by Buyer if any of the conditions in Section 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not waived such condition on or before the Closing Date; (c) by the Company, if any of the conditions in Section 8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE has not been satisfied of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of the Company to comply with its obligations under this Agreement) and the Company has not waived such condition on or before the Closing Date; (d) by mutual consent of Buyer and the Company; or (e) by either Buyer or the Company if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before April 30, 1998, or such later date as the parties may agree upon. 9.2 Effect of Termination. Each party's right of termination under Section 9.1 Termination Events.This Agreement may, by notice given prior to or at the Closing, be terminated: is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 9.1 Termination Events.This Agreement may, by notice given prior to or at the Closing, be terminated:, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 12.1 and 12.2 will survive; provided, however, that if this Agreement is terminated by a party because of the Breach of the Agreement by the other party or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of the other party's failure to comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired. 10. INDEMNIFICATION; REMEDIES 10.1 Survival; Right to Indemnification Not Affected by Investigation. All representations, warranties, covenants, and obligations in this Agreement, the Disclosure Letter, and any other certificate or document delivered pursuant to this Agreement will survive the Closing. The right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy if such representations or warranties prove to be inaccurate, or if such covenants and obligations prove to be nonfulfilled. 10.2 Indemnification and Payment of Damages by the Company. The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys' fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by the Company in this Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, or any other certificate or document delivered by the Company pursuant to this Agreement; (b) any Breach of any representation or warranty made by the Company in this Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by the Company of any covenant or obligation of the Company in this Agreement; (d) any services provided by the Company prior to the Closing Date; or (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with the Company (or any Person acting on its behalf) in connection with any of the Contemplated Transactions. 10.3 Indemnification and Payment of Damages by the Company - Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with any Environmental, Health, and Safety Liabilities arising out of or relating to: (i) (A) the ownership, operation, or condition at any time on or prior to the Closing Date of any properties and assets used by the Company, or any Hazardous Materials or other contaminants that were present on such properties and assets at any time on or prior to the Closing Date; or (ii) any Hazardous Materials or other contaminants, wherever located, that were, or were allegedly, generated, transported, stored, treated, Released, or otherwise handled by the Company or by any other Person for whose conduct they are or may be held responsible at any time on or prior to the Closing Date. 10.4 Indemnification and Payment of Damages by the Company - Liabilities which are not Assumed Liabilities. Notwithstanding anything to the contrary contained herein, (a) the Company will indemnify and hold harmless Buyer for, and will pay Buyer the amount of, any Damages arising from liabilities or obligations of the Company which are not Assumed Liabilities, and (b) such indemnification shall not be limited in time or amount or subject to any deductible or cap. 10.5 Indemnification and Payment of Damages by Buyer. Buyer will indemnify and hold harmless the Company, and will pay to the Company the amount of any Damages arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement; (b) any Breach of any representation or warranty made by the Company in the Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement; (d) any services provided by the Buyer from and after the Closing Date; (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions; (f) any liabilities or obligations of the Buyer; or (g) the Assumed Liabilities. 10.6 Limitations on Indemnification. Notwithstanding the provisions of Sections 10.2, 10.3, 10.4, and 10.5 hereof, a party shall not be entitled to be indemnified to the extent: (a) that such party acted in bad faith with respect to a claim or failed to reasonably attempt to mitigate damages with respect to a claim; (b) that such party receives indemnity and collects for any Damages under the terms of any insurance policy then in force; or (c) of the net amount of any income tax deduction available to such party in the year in which the claim is made or any previous year. 10.7 Time Limitations. If the Closing occurs, the Company will have no liability (for indemnification or otherwise) for a claim with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, other than those in Sections 3.4, 3.9 Taxes., 3.11 Employee Benefits. (with respect to matters other than Tax), 3.17 Environmental Matters.Except as set forth in part 3.17 of the Disclosure Letter:, 3.21 and 3.22 unless on or before the third anniversary of the Closing Date Buyer notifies the Company of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Buyer; a claim with respect to Sections 3.9 Taxes. or 3.11 Employee Benefits., shall be made within the applicable statute of limitation for Tax matters; a claim with respect to Sections 3.21 or 3.22 shall be made within the applicable statute of limitations, provided, however, that in no event may such a claim be brought after the seventh anniversary of the Closing Date; a claim with respect to Sections 3.4, 3.17, or a claim for indemnification or reimbursement based upon any covenant or obligation to be performed and complied with after the Closing Date, may be made at any time. If the Closing occurs, Buyer will have no liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, unless on or before the third anniversary from the Closing Date, the Company notifies Buyer of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by the Company, provided, however, that a claim for indemnification under Section 10.5(f) or (g) shall not be limited in time or amount or subject to any deductible or cap. 10.8 Limitations on Amount - the Company. (a) The Company will have no liability (for indemnification or otherwise) with respect to the matters described in clause (a), clause (b) or, to the extent relating to any failure to perform or comply prior to the Closing Date, clause (c) of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with: and Section 10.3 Indemnification and Payment of Damages by the Company -Environmental Matters. In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with any Environmental, Health, and Safety Liabilities arising out of or relating to: (i) (A) the ownership, operation, or condition at any time on or prior to the Closing Date of any properties and assets used by the Company, or any Hazardous Materials or other contaminants that were present on such properties and assets at any time on or prior to the Closing Date; or (ii) any Hazardous Materials or other contaminants, wherever located, that were, or were allegedly, generated, transported, stored, treated, Released, or otherwise handled by the Company or by any other Person for whose conduct they are or may be held responsible at any time on or prior to the Closing Date. until the total of all Damages with respect to such matters exceeds $15,000, and then only for the amount by which such Damages exceed $15,000. However, this Section Error! Not a valid bookmark self-reference.Error! Not a valid bookmark self-reference. will not apply to any intentional Breach by the Company of any representation, warranty, covenant or obligation contained in this Agreement, and the Company will be liable for all Damages with respect to such Breaches. (b) The maximum liability the Company shall have under Section 10.2 shall be the $500,000; provided, however, that the foregoing limitation shall not apply to any intentional Breach by the Company of any representation, warranty, covenant or obligation contained in this Agreement, and the Company will be liable for all Damages with respect to such Breaches. 10.9 Limitations on Amount - Buyers. Buyer will have no liability (for indemnification or otherwise) with respect to the matters described in clause (a) or (b) or, to the extent relating to any failure to perform or comply prior to the Closing Date, cluase (c) of Section 10.5 Indemnification and Payment of Damages by Buyer.Buyer will indemnify and hold harmless the Company, and will pay to the Company the amount of any Damages arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement; (b) any Breach of any representation or warranty made by the Company in the Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement; (d) any services provided by the Buyer from and after the Closing Date; (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions until the total of all Damages with respect to such matters exceeds $15,000, and then only for the amount by which such Damages exceed $15,000. However, this Section Error! Not a valid bookmark self-reference. will not apply to any intentional Breach by Buyer of any representation, warranty, covenant or obligation contained in this Agreement, and Buyer will be liable for all Damages with respect to such Breaches. 10.10 Procedure For Indemnification - Third Party Claims. (a) Promptly after receipt by an indemnified party under Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, 10.4 Indemnification and Payment of Damages by the Company -Liabilities which are not Assumed Liabilities.Notwithstanding anything to the contrary contained herein, (a) the Company will indemnify and hold harmless Buyer for, and will pay Buyer the amount of, any Damages arising from liabilities or obligations of the Company which are not Assumed Liabilities, and (b) such indemnification shall not be limited in time or amount or subject to any deductible or cap., 10.5 Indemnification and Payment of Damages by Buyer.Buyer will indemnify and hold harmless the Company, and will pay to the Company the amount of any Damages arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement; (b) any Breach of any representation or warranty made by the Company in the Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement; (d) any services provided by the Buyer from and after the Closing Date; (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions, or (to the extent provided in the last sentence of Section 10.3 Indemnification and Payment of Damages by the Company -Environmental Matters.In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with) Section 10.3 Indemnification and Payment of Damages by the Company - -Environmental Matters.In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party's failure to give such notice. (b) If any Proceeding referred to in Section (a) Promptly after receipt by an indemnified party under Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, 10.4 Indemnification and Payment of Damages by the Company -Liabilities which are not Assumed Liabilities.Notwithstanding anything to the contrary contained herein, (a) the Company will indemnify and hold harmless Buyer for, and will pay Buyer the amount of, any Damages arising from liabilities or obligations of the Company which are not Assumed Liabilities, and (b) such indemnification shall not be limited in time or amount or subject to any deductible or cap., 10.5 Indemnification and Payment of Damages by Buyer.Buyer will indemnify and hold harmless the Company, and will pay to the Company the amount of any Damages arising, directly or indirectly, from or in connection with: (a) any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement; (b) any Breach of any representation or warranty made by the Company in the Agreement as if such representation or warranty were made on and as of the Closing Date; (c) any Breach by Buyer of any covenant or obligation of Buyer in this Agreement; (d) any services provided by the Buyer from and after the Closing Date; (e) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions, or (to the extent provided in the last sentence of Section 10.3 Indemnification and Payment of Damages by the Company -Environmental Matters.In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with) Section 10.3 Indemnification and Payment of Damages by the Company - -Environmental Matters.In addition to the provisions of Section 10.2 Indemnification and Payment of Damages by the Company.The Company will indemnify and hold harmless Buyer for, and will pay to the Buyer the amount of, any loss, liability, claim, damage, or expense (including costs of investigation and defense and reasonable attorneys'fees), whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:, the Company will indemnify and hold harmless Buyer for, and will pay to Buyer the amount of, any Damages (including costs of cleanup, containment, or other remediation) arising, directly or indirectly, from or in connection with of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party's failure to give such notice. is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party will, unless the claim involves Taxes, be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this Section 10. INDEMNIFICATION; REMEDIES for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation. If the indemnifying party assumes the defense of a Proceeding, (i) it will be conclusively established for purposes of this Agreement that the claims made in that Proceeding are within the scope of and subject to indemnification; (ii) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party's consent unless (A) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (iii) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within ten days after the indemnified party's notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will be bound by any determination made in such Proceeding or any compromise or settlement effected by the indemnified party. (c) Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise, or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld). 10.11 Procedure for Indemnification - Other Claims. A claim for indemnification for any matter not involving a third- party claim may be asserted by notice to the party from whom indemnification is sought. 10.12 Exclusive Remedy. The remedies provided in this Article 10 shall be exclusive of and limit any other remedies that may be available at law or in equity. 11. DISPUTE RESOLUTION 11.1 Dispute Defined. As used in this Agreement, "Dispute" shall mean any dispute or disagreement between the Buyer and the Company concerning the interpretation of this Agreement, the validity of this Agreement, any breach or alleged breach by any party under this Agreement or any other matter relating in any way to this Agreement. 11.2 Dispute Resolution Procedures. (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: (i) if the parties have not agreed within thirty (30) calendar days of the Mediation Request on the selection of a mediator willing to serve, CPR, upon the request of either Buyer or the Company, shall appoint a member of the CPR Panels of Neutrals as the mediator, and (ii) efforts to reach a settlement will continue until the conclusion of the proceedings, which shall be deemed to occur upon the earliest of the date that: (A) a written settlement is reached, or (B) the mediator concludes and informs the parties in writing that further efforts would not be useful, or (C) the parties agree in writing that an impasse has been reached, or (D) a period of sixty (60) calendar days has passed since the Mediation Request and none of the events specified in the foregoing clauses (A), (B) or (C) has occurred. No party may withdraw before the conclusion of the proceeding. (c) If a Dispute is not resolved by negotiation pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. of this Agreement or by mediation pursuant to Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement within one hundred (100) calendar days after initiation of the negotiation process pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., such Dispute and any other claims arising out of or relating to this Agreement shall be resolved pursuant to Section 12.2(d). (d) The parties shall submit the dispute to binding arbitration in accordance with the following procedures: (i) Any arbitration proceeding shall take place in Nashville, Tennessee, and shall be conducted in accordance with the then current rules of the Nashville Chapter of the American Arbitration Association. (ii) The parties shall have ten (10) days after the first to occur of the events in Sections 11.2(b)(ii) (B), (C) or (D) or Section 11.2(c) to agree upon an arbitrator to conduct such proceeding. If the parties fail to so agree within such ten (10) day period, then within five (5) days after the end of such ten (10) day period, each party shall select an arbitrator and, within ten (10) days after the end of such five (5) day period, such two (2) arbitrators shall select a third arbitrator. Each arbitrator shall have professional experience relating to the business, accounting or legal aspects of the subject of the arbitration. No arbitrators shall have any material interest in the result of the arbitration or be, or shall ever have been, an affiliate, equity holder or creditor of, or an attorney, accountant, agent or consultant, for any Party to such arbitration proceeding. (iii) Each arbitration proceeding shall start as soon as reasonably practical after the selection of the arbitrator(s). Specific timing, including the setting of the dates for hearings, shall be subject to the mutual agreement of each party, including the arbitrator(s); provided, however, that if agreement cannot be reached within a reasonable time, the arbitrator(s) shall have the sole authority to settle all timing issues after taking into account the needs of each party to prepare for, resolve and dispose of the matter as soon as reasonably practicable. (iv) The decision of the arbitrator or, if there are three (3) arbitrators, the decision of any two (2) arbitrators, shall be final and binding upon the Parties, and judgment may be entered upon any such decision in any court having jurisdiction. (v) Except as otherwise specifically provided herein, all costs incurred in connection with any arbitration proceeding, including the American Arbitration Association fees, the arbitrator(s) fees, the cost of using any facilities for the arbitration hearings and the reasonable fees and expenses of expert witnesses, legal counsel and accountants of the prevailing party may be included in whole or in part in the award to be paid by the non-prevailing party. 11.3 Provisional Remedies. At any time during the procedures specified in Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement, a party may seek a preliminary injunction or other provisional judicial relief if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action, the parties will continue to participate in good faith in the procedures specified in Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions:. 11.4 Tolling Statute of Limitations. All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved b negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement are pending. The parties will take such action, if any, as is required to effectuate such tolling. 11.5 Performance to Continue. Each party shall continue to perform its or his obligations under this Agreement and the Earnout Agreement pending final resolution of any Dispute. 11.6 Extension of Deadlines. All deadlines specified in this Article 11 may be extended by mutual agreement between the parties. 11.7 Enforcement. The parties regard the obligations in this Article 11 to constitute an essential provision of this Agreement and one that is legally binding on them. In case of a violation of the obligations in this Article 11 by either Buyer or the Company, the other party may bring an action to seek enforcement of such obligations in the United States District Court for the Middle District of Tennessee. 11.8 Costs. The parties shall pay their own costs, fees, and expenses incurred in connection with the application of the provisions of Sections (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel. and (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. In addition, the fees and expenses of CPR and the mediator in connection with the application of the provisions of Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by the Company. 11.9 Replacement. If CPR is no longer in business or is unable or refuses or declines to act or to continue to act under Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement for any reason, then the functions specified in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: to be performed by CPR shall be performed by another Person engaged in a business equivalent to that conducted by CPR as is agreed to by the parties (the "Replacement"). If the parties cannot agree on the identity of the Replacement within ten (10), calendar days after a Request, the Replacement shall be selected by the Chief Judge of the United States District Court for the Northern District of Georgia upon application. If a Replacement is selected by either means, Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section (a) If a Dispute arises, the parties shall follow the procedures specified in this Article 11. The parties shall promptly attempt to resolve any Dispute by negotiations between themselves. Either Buyer or the Company may give the other party written notice of any Dispute not resolved in the normal course of business. The parties shall meet at a mutually acceptable time and place within fifteen (15) calendar days after delivery of such notice, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been resolved by the parties within thirty (30) calendar days of the disputing party's notice, or if the parties fail to meet within such fifteen (15) calendar days, either Buyer or the Company may initiate mediation as provided in Section (b) If the Dispute is not resolved by negotiations pursuant to Section 11.2(a), the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: of this Agreement. If a negotiator intends to be accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3) business days' notice of such intention and may also be accompanied by legal counsel., the parties shall attempt in good faith to resolve any such Dispute by nonbinding mediation. Either Buyer or the Company may initiate a nonbinding mediation proceeding by a request in writing to the other party (the "Mediation Request"), and both parties will then be obligated to engage in a mediation. The proceeding will be conducted in accordance with the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the following exceptions: shall be deemed appropriately amended to refer to such Replacement. 12. GENERAL PROVISIONS 12.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants. 12.2 Public Announcements. Any public announcement or similar publicity with respect to this Agreement or the Contemplated Transactions will be issued, if at all, at such time and in such manner as Buyer determines. Unless consented to by Buyer and the Company in advance or required by Legal Requirements, prior to the Closing the parties shall keep this Agreement strictly confidential and may not make any disclosure of this Agreement to any Person other than their representatives. The Company and Buyer will consult with each other concerning the means by which the Company's employees, customers, and suppliers and others having dealings with the Company will be informed of the Contemplated Transactions, and Buyer will have the right to be present for any such communication. 12.3 Confidentiality. The Confidentiality Agreement dated October 27, 1997, executed by Buyer shall remain in full force and effect, and to the extent the following does not contradict such Confidentiality Agreement, between the date of this Agreement and the Closing Date, Buyer and the Company will maintain in confidence, and will cause the directors, officers, employees, agents, and advisors of Buyer and the Company to maintain in confidence, any written oral, or other information obtained in confidence from another party or the Company in connection with this Agreement or the Contemplated Transactions, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. If the Contemplated Transactions are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request. 12.4 Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given: (a) when personally delivered; (b) upon delivery by United States Express Mail or other nationally recognized overnight courier service which provides evidence of delivery when sent by such courier; (c) five (5) days after posting when sent by registered or certified mail, postage prepaid, return receipt requested; or (d) upon confirmation of transmission when delivered by facsimile transmission, provided a copy thereof is also delivered by regular mail; in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): Notice to the Buyer shall be sufficient if given to: Morrison Health Care, Inc. Suite 400 1955 Lake Park Drive, SE Smyrna, Georgia 30080-3300 Attn: General Counsel Phone: 770-437-3300 Facsimile: 770-437-3342 with a copy to: Powell, Goldstein, Frazer & Murphy, LLP 191 Peachtree Street, N.E. Sixteenth Floor Atlanta, Georgia 30303 Attn.: Thomas R. McNeill, Esq. Phone: 404-572-6681 Facsimile: 404-572-6999 Notice to the Company shall be sufficient if given to: Spectra Systems, Inc. 300 East 5th Avenue Suite 340 Naperville, Illinois 60563 Attn: James W. Hemphill Phone: 630-961-2555 Facsimile: 630-961-3785 with a copy to: Nagle & Higgins, P.C. 1755 Park Street Suite 260 Naperville, Illinois 60563 Attn: Brien J. Nagle Phone 630-355-8100 Facsimile : 630-355-8185 12.5 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 12.6 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 12.7 Entire Agreement and Modification. This Agreement supersedes all prior agreements between the parties with respect to its subject matter (including the Letter of Intent between Buyer and the Company, dated December 17, 1997, but excluding the Confidentiality Agreement dated October 27, 1997) and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment. 12.8 Disclosure Letter. (a) The disclosures in the Disclosure Letter must relate only to the representations and warranties in the Section of the Agreement to which they expressly relate and not to any other representation or warranty in this Agreement except that a disclosure may specifically cross-reference a duplicate disclosure. (b) In the event of any inconsistency between the statements in the body of this Agreement and those in the Disclosure Letter (other than an exception expressly set forth as such in the Disclosure Letter with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control. 12.9 Assignments, Successors, and No Third-Party Rights. Neither party may assign any of its rights under this Agreement without the prior consent of the other parties except that Buyer may assign any of its rights under this Agreement to any subsidiary of Buyer. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns. 12.10 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 12.11 Section Headings, Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number, as the circumstances require. Unless otherwise expressly provided, the work "including" does not limit the preceding words or terms. 12.12 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 12.13 Governing Law. This Agreement will be governed by the laws of the State of Illinois without regard to the laws of conflicts. 12.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. BUYER: MORRISON HEALTH CARE, INC. By: /s/ John E. Fountain Name: John E. Fountain Title: Vice President, General Counsel and Secretary THE COMPANY: SPECTRA SERVICES, INC. By: /s/ James W. hemphill Name: James W. Hemphill Title: President I, James W. Hemphill, the sole shareholder of Spectra Services, Inc., hereby agree that in the event the Company distributes some or all of the Purchase Price, I shall reimburse the Company for such amount of said distributions as may be necessary in order for the Company to pay any amounts due to Buyer pursuant to the Agreement. /s/ James W. Hemphill James W. Hemphill /s/ Jarrett Franklin Jarrett Franklin WITNESS EXHIBIT 10.36 EXECUTION COUNTERPART ============================================================ ====== AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 2, 1998 among MORRISON HEALTH CARE, INC., THE LENDERS LISTED HEREIN, SUNTRUST BANK, ATLANTA, as Issuing Bank, SUNTRUST BANK, ATLANTA, as Agent, and WACHOVIA BANK, N.A., as Co-Agent for the Issuing Bank and the Lenders ============================================================ ====== TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS; CONSTRUCTION ........................................1 Section 1.01 Definitions...............................................1 Section 1.02 Accounting Terms and Determination...................... 16 Section 1.03 Other Definitional Terms.................................16 Section 1.04 Exhibits and Schedules...................................16 ARTICLE II. LOANS AND LETTERS OF CREDIT.....................................17 Section 2.01 Commitments; Use of Proceeds.............................17 Section 2.02 Swing Line Subfacility...................................18 Section 2.03 Letter of Credit Subfacility.............................20 Section 2.04 Notes; Repayment of Principal............................23 Section 2.05 Voluntary Reduction of Commitments.......................23 Section 2.06 Increase of the Commitments..............................24 ARTICLE III. GENERAL LOAN TERMS.............................................25 Section 3.01 Funding Notices..........................................25 Section 3.02 Disbursement of Funds....................................26 Section 3.03 Interest.................................................28 Section 3.04 Interest Periods.........................................29 Section 3.05 Fees.....................................................29 Section 3.06 Voluntary Prepayments of Borrowings......................30 Section 3.07 Payments, etc............................................31 Section 3.08 Interest Rate Not Ascertainable, etc.....................34 Section 3.09 Illegality...............................................34 Section 3.10 Increased Costs..........................................35 Section 3.11 Lending Offices..........................................36 Section 3.12 Funding Losses...........................................37 Section 3.13 Assumptions Concerning Funding of Eurodollar Advances....37 Section 3.14 Apportionment of Payments................................37 Section 3.15 Termination of Commitments...............................38 Section 3.16 Sharing of Payments, Etc.................................38 Section 3.17 Capital Adequacy.........................................38 Section 3.18 Letter of Credit Obligations Absolute....................39 ARTICLE IV. CONDITIONS TO BORROWINGS........................................40 Section 4.01 Conditions Precedent to Initial Loans....................40 Section 4.02 Conditions to Each Loan..................................42 ARTICLE V. REPRESENTATIONS AND WARRANTIES...................................43 Section 5.01 Corporate Existence; Compliance with Law.................43 Section 5.02 Corporate Power; Authorization...........................43 Section 5.03 Possession of Franchises, Licenses, Etc..................43 Section 5.04 Enforceable Obligations..................................44 Section 5.05 No Legal Bar.............................................44 Section 5.06 No Material Litigation...................................44 Section 5.07 Investment Company Act, Etc..............................44 Section 5.08 Margin Regulations.......................................44 Section 5.09 Compliance With Environmental Laws.......................44 Section 5.10 Insurance................................................45 Section 5.11 No Default...............................................45 Section 5.12 No Burdensome Restrictions...............................46 Section 5.13 Taxes....................................................46 Section 5.14 Subsidiaries.............................................46 Section 5.15 Financial Statements.....................................46 Section 5.16 ERISA....................................................47 Section 5.17 Patents, Trademarks, Licenses, Etc.......................48 Section 5.18 Ownership of Property....................................48 Section 5.19 Indebtedness.............................................48 Section 5.20 Financial Condition......................................48 Section 5.21 Labor Matters............................................49 Section 5.22 Payment or Dividend Restriction..........................49 Section 5.23 Sharing Agreements.......................................49 Section 5.24 Disclosure...............................................49 Section 5.25. Year 2000 Compliant......................................50 ARTICLE VI. AFFIRMATIVE COVENANTS ..........................................50 Section 6.01 Corporate Existence, Etc.................................50 Section 6.02 Compliance with Laws, Etc................................50 Section 6.03 Payment of Taxes and Claims, Etc.........................50 Section 6.04 Keeping of Books.........................................50 Section 6.05 Visitation, Inspection, Etc..............................50 Section 6.06 Insurance; Maintenance of Properties.....................51 Section 6.07 Reporting Covenants......................................51 Section 6.08 Financial Covenants......................................55 Section 6.09 Notices Under Certain Other Indebtedness.................55 Section 6.10 Additional Credit Parties and Collateral.................55 ARTICLE VII. NEGATIVE COVENANTS.............................................56 Section 7.01 Indebtedness.............................................56 Section 7.02 Liens....................................................57 Section 7.03 Mergers, Sales, Acquisitions.............................58 Section 7.04 Investments, Loans, Etc..................................59 Section 7.05 Letters of Credit........................................60 Section 7.06 Sale and Leaseback Transactions..........................61 Section 7.07 Transactions with Affiliates.............................61 Section 7.08 Changes in Business......................................61 Section 7.09 ERISA....................................................61 Section 7.10. Limitation on Payment Restrictions Affecting Consolidated Companies................................................62 Section 7.11 Actions Under Certain Documents..........................62 Section 7.12 Additional Negative Pledges..............................62 Section 7.13 Changes in Fiscal Year...................................62 Section 7.14 Issuance of Stock by Subsidiaries........................62 Section 7.15 Dividends................................................62 ARTICLE VIII. EVENTS OF DEFAULT.............................................63 Section 8.01 Payments.................................................63 Section 8.02 Covenants Without Notice.................................63 Section 8.03 Other Covenants..........................................63 Section 8.04 Representations..........................................63 Section 8.05 Non-Payments of Other Indebtedness.......................63 Section 8.06. Defaults Under Other Agreements; Change In Control Provisions...............................................63 Section 8.07 Bankruptcy...............................................64 Section 8.08 ERISA....................................................64 Section 8.09 Judgments................................................65 Section 8.10 Ownership of Credit Parties..............................65 Section 8.11 Change in Control of Borrower............................65 Section 8.12 Default Under Other Credit Documents; Sharing Agreements.66 ARTICLE IX. THE AGENT....................................................... 66 Section 9.01 Appointment of Agent.....................................66 Section 9.02 Authorization of Agent with Respect to the Security Documents................................................67 Section 9.03 Nature of Duties of Agent................................67 Section 9.04 Lack of Reliance on the Agent............................67 Section 9.05 Certain Rights of the Agent..............................68 Section 9.06 Reliance by Agent........................................68 Section 9.07 Indemnification of Agent.................................68 Section 9.08 The Agent in its Individual Capacity.....................69 Section 9.09 Holders of Notes.........................................69 Section 9.10 Successor Agent..........................................69 ARTICLE X. MISCELLANEOUS............................................... .....70 Section 10.01 Notices.................................................70 Section 10.02 Amendments, Etc.........................................70 Section 10.03 No Waiver; Remedies Cumulative..........................71 Section 10.04 Payment of Expenses, Etc................................71 Section 10.05 Right of Setoff.........................................73 Section 10.06 Benefit of Agreement; Assignments; Participations.......73 Section 10.07 Governing Law; Submission to Jurisdiction...............75 Section 10.08 Independent Nature of Lenders' Rights...................76 Section 10.09 Counterparts............................................76 Section 10.10 Effectiveness; Termination of Commitments; Survival.....77 Section 10.11 Severability............................................77 Section 10.12 Independence of Covenants...............................77 Section 10.13 Change in Accounting Principles, Fiscal Year or Tax Laws....................................................77 Section 10.14 Headings Descriptive; Entire Agreement..................78 SCHEDULES Schedule 5.01 Organization and Ownership of Subsidiaries Schedule 5.05 Certain Pending and Threatened Litigation Schedule 5.09(a) Environmental Compliance Schedule 5.09(b) Environmental Notices Schedule 5.09(c) Environmental Permits Schedule 5.11 No Defaults Schedule 5.12 Burdensome Restrictions Schedule 5.13 Tax Filings and Payments Schedule 5.14 Material Subsidiaries Schedule 5.16 Employee Benefit Matters Schedule 5.17 Patent, Trademark, License, and Other Intellectual Property Matters Schedule 5.18 Ownership of Properties Schedule 5.19 Labor and Employment Matters Schedule 5.22 Dividend Restrictions Schedule 5.23 Disclosure Schedule 7.01 Existing Indebtedness Schedule 7.02 Existing Liens EXHIBITS Exhibit A - Form of Amended and Restated Revolving Credit Note Exhibit B - Form of Amended and Restated Swing Line Note Exhibit C - Subsidiary Guaranty Agreement Exhibit D - Form of Closing Certificate Exhibit E - Form of Opinion of Powell, Goldstein, Frazer & Murphy, LLP Exhibit F - Form of Assignment and Acceptance Exhibit G - Form of Letter of Credit Application Exhibit H - Form of Compliance Certificate Exhibit A AMENDED AND RESTATED CREDIT AGREEMENT THIS CREDIT AGREEMENT (this "Agreement") made and entered into as of July 2, 1998, by and among MORRISON HEALTH CARE, INC., a Georgia corporation (the "Borrower"), SUNTRUST BANK, ATLANTA, a banking corporation organized under the laws of the State of Georgia ("SunTrust"), the other banks and lending institutions listed on the signature pages hereof, and any assignees of SunTrust, or such other banks and lending institutions which become "Lenders" as provided herein (SunTrust and such other banks, lending institutions, and assignees referred to collectively herein as the "Lenders"), SUNTRUST BANK, ATLANTA, as the issuing bank (the "Issuing Bank"), SUNTRUST BANK, ATLANTA, as Agent (the "Agent") for the Issuing Bank and the Lenders, and WACHOVIA BANK, N.A., as Co-Agent (the "Co-Agent") for the Issuing Bank and the Lenders; W I T N E S S E T H: WHEREAS, on March 6, 1996, Borrower entered into a Credit Agreement by and among Borrower, SunTrust, the other banks and lending institutions listed on the signature pages thereof, and SunTrust Bank, Atlanta in its capacity as agent for such banks and lending institutions (the "Original Credit Agreement"); WHEREAS, in connection with this Agreement, Borrower, the Lenders, and the Agent wish to amend and restate the Original Credit Agreement to increase the revolving credit facility thereunder and provide for a letter of credit subfacility, all as more particularly evidenced herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Borrower, the Lenders, the Issuing Bank, the Agent and the Co-Agent agree, upon the terms and subject to the conditions set forth herein as follows: ARTICLE I. DEFINITIONS; CONSTRUCTION Section I.1. Definitions. In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined): "Account Party" shall mean the Borrower or any Guarantor in whose account a Letter of Credit is to be or has been issued. "Advance" shall mean any principal amount advanced and remaining outstanding at any time as (i) the Revolving Loans, which Advances shall be made or outstanding as Base Rate Advances or Eurodollar Advances, as the case may be, or (ii) a Swing Line Loan, which Advances shall be made or outstanding as Swing Rate Advances. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by, or under common control with, such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by", and "under common control with") as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person. "Agent" shall mean, SunTrust Bank, Atlanta, a Georgia banking corporation, as Agent for the Lenders and the Issuing Bank under this Agreement and the other Loan Documents and any successor agent appointed pursuant to Section 9.10 hereto. "Agreement" shall mean this Credit Agreement, as hereafter amended, restated, supplemented or otherwise modified from time to time. "Applicable Margin" shall mean the percentage designated below based on the Leverage Ratio of the Consolidated Companies, measured quarterly, effective in the next fiscal quarter immediately following the date of delivery of the Compliance Certificate to the Agent: ----------------------------------------- - - Applicable Margin Leverage Ratio (LIBOR Advance) =========================================- Less than 1.00:1.00 0.50% ----------------------------------------- - - Greater than or equal to 1.00:1.00 and less than 2.00:1.00 0.625% ----------------------------------------- - - Greater than or equal to 2.00:1.00 and less than 2.50:1.00 0.75% ----------------------------------------- - - Greater than or equal to 2.50:1.00 and less than 3.00:1.00 1.00% ----------------------------------------- - - For purposes of the foregoing, (i) the Applicable Margin as of the Closing Date is 1.00% and shall remain 1.00% through and including August 31, 1998 (by way of example, as of the first day of the second fiscal quarter of the Borrower the Applicable Margin shall be calculated based upon the Leverage Ratio of the Consolidated Companies in the Compliance Certificate delivered by the Borrower for the first fiscal quarter of such year); and (ii) if the Borrower fails to provide the Compliance Certificate and related financial statements required under Section 6.07(c) within the applicable time period set forth therein, the Applicable Margin shall be adjusted to 1.00% on the first day of the following fiscal quarter until such Compliance Certificate and related financial statements are delivered. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by the Issuing Bank or a Lender and an Eligible Assignee in accordance with the terms of this Agreement and substantially in the form of Exhibit F. "Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. 101 et seq.). "Base Rate" shall mean (with any change in the Base Rate to be effective as of the date of change of either of the following rates) the higher of (i) the rate which the Agent publicly announces from time to time as its prime lending rate, as in effect from time to time, and (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%) per annum. The Agent's prime lending rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to customers; the Agent may make commercial loans or other loans at rates of interest at, above or below the Agent's prime lending rate. "Base Rate Advance" shall mean an Advance made or outstanding as a Revolving Loan bearing interest based on the Base Rate. "Base Rate Borrowing" shall mean a Borrowing made up of Base Rate Advances. "Borrower" shall mean Morrison Health Care, Inc., a Georgia corporation, its successors and permitted assigns. "Borrowing" shall mean the incurrence by Borrower under the Commitments of Advances of one Type concurrently having the same Interest Period or the continuation or conversion of an existing Borrowing or Borrowings in whole or in part. "Business Day" shall mean any day excluding Saturday, Sunday and any other day on which banks are required or authorized to close in Atlanta, Georgia and, if the applicable Business Day relates to Eurodollar Advances, any day on which trading is not carried on by and between banks in deposits of the applicable currency in the applicable interbank Eurocurrency market. "Capital Lease" shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on a balance sheet of such Person, other than, in the case of Borrower or any of its Subsidiaries, any such lease under which Borrower or a wholly-owned Subsidiary of Borrower is the lessor. "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder which would, in accordance with GAAP, appear on a balance sheet of such lessee in respect of such Capital Lease. "Change in Control Provision" shall mean any term or provision contained in any indenture, debenture, note, or other agreement or document evidencing or governing Indebtedness of Borrower evidencing debt or a commitment to extend loans in excess of $500,000.00 which requires, or permits the holder(s) of such Indebtedness of Borrower to require that such Indebtedness of Borrower be redeemed, repurchased, defeased, prepaid or repaid, either in whole or in part, or the maturity of such Indebtedness of Borrower to be accelerated in any respect, as a result of a change in ownership of the capital stock of Borrower or voting rights with respect thereto. "Closing Certificate" shall mean that certificate of an officer of the Borrower substantially in the form of Exhibit D attached hereto. "Closing Date" shall mean July 2, 1998 or such later date on which the conditions to the initial loans set forth in Sections 4.01 and 4.02 are satisfied. "Co-Agent" shall mean, Wachovia Bank, N.A., a national banking association, as Co-Agent for the Lenders and the Issuing Bank under this Agreement and the other Loan Documents. "Commitment" shall mean, for any Lender at any time, the revolving credit facility severally established by such Lender pursuant to Section 2.01, including, without duplication, such Lender's Pro Rata Share of the Letter of Credit Subfacility and, in the case of SunTrust, the Swing Line Subfacility, as the same may be decreased from time to time as a result of any reduction thereof pursuant to Section 2.05, or increased from time to time as a result of any increase thereof pursuant to Section 2.06, any assignment thereof pursuant to Section 10.06, or any amendment thereof pursuant to Section 10.02. "Commitment Fee" shall have the meaning ascribed to it in Section 3.05(a). "Compliance Certificate" shall mean the certificate delivered by the Borrower to the Agent substantially in the form of Exhibit H attached hereto. "Consolidated Companies" shall mean, collectively, Borrower and all of its Subsidiaries. "Consolidated EBITDA" shall mean for any period, an amount equal to the sum for the trailing four fiscal quarter period of Consolidated Net Income (Loss), plus, to the extent deducted therefrom in determining such Consolidated Net Income (Loss), the sum of (i) taxes based on income (whether paid or deferred), (ii) Consolidated Interest Expense, (iii) depreciation of assets, and (iv) amortization. "Consolidated EBITR" shall mean for any period, an amount equal to the sum for the trailing four fiscal quarter period of Consolidated Net Income (Loss) of the Consolidated Companies, plus, to the extent deducted therefrom in determining Consolidated Net Income (Loss), the sum of (i) Consolidated Interest Expense, (ii) taxes based on income (whether paid or deferred), and (iii) Rental Obligations for such period. "Consolidated Funded Debt" shall mean, as of any date of determination, the Funded Debt of the Consolidated Companies. "Consolidated Interest Expense" shall mean, for any period, total interest expense of the Consolidated Companies (including without limitation, interest expense attributable to Capital Leases, all capitalized interest, all commissions, discounts and other fees and charges owed with respect to bankers acceptance financing, net costs (i.e., costs minus benefits) under Interest Rate Contracts, and total interest expense (whether shown as interest expense or as loss and expenses on sales of receivables) under a receivables purchase facility) determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income (Loss)" shall mean, with reference to any period, the net income (or deficit) of the Consolidated Companies for such period (taken as a cumulative whole), after deducting all operating expenses, provisions for all taxes and reserves (including reserves for deferred income taxes) and all other proper deductions, all determined in accordance with GAAP on a consolidated basis, after eliminating all intercompany transactions and after deducting portions of income properly attributable to minority interests, if any, in the stock and surplus of the Subsidiaries of the Borrower. "Consolidated Net Worth" shall mean the shareholders' equity of the Borrower calculated in accordance with GAAP, less treasury stock. "Contractual Obligation" of any Person shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking under which such Person is obligated or by which it or any of the property owned by it is bound. "Credit Documents" shall mean, collectively, this Agreement, the Notes, the Guaranty Agreement, all Letter of Credit Applications and all other instruments, documents, certificates, agreements and writings executed in connection herewith, each as amended, restated, supplemented or otherwise modified from time to time. "Credit Parties" shall mean, collectively, each of the Borrower and the Guarantor. "Default" shall mean any condition or event which, with notice or lapse of time or both, would constitute an Event of Default. "Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of the United States of America. "Eligible Assignee" shall mean (i) a commercial bank organized under the laws of the United States or any state thereof having total assets in excess of $1,000,000,000.00 or any commercial finance or asset-based lending Affiliate of any such commercial bank and (ii) any Lender. "Environmental Laws" shall mean all federal, state, local and foreign statutes and codes or regulations, rules or ordinances issued, promulgated, or approved thereunder, now or hereafter in effect (including, without limitation, those with respect to asbestos or asbestos containing material or exposure to asbestos or asbestos containing material), relating to pollution or protection of the environment and relating to public health and safety, relating to (i) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial toxic or hazardous constituents, substances or wastes, including without limitation, any Hazardous Substance, petroleum including crude oil or any fraction thereof, any petroleum product or other waste, chemicals or substances regulated by any Environmental Law into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or (ii) the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transport or handling of any Hazardous Substance, petroleum including crude oil or any fraction thereof, any petroleum product or other waste, chemicals or substances regulated by any Environmental Law, and (iii) underground storage tanks and related piping, and emissions, discharges and releases or threatened releases therefrom, such Environmental Laws to include, without limitation (a) the Clean Air Act (42 U.S.C. 7401 et seq.), (b) the Clean Water Act (33 U.S.C. 1251 et seq.), (c) the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), (d) the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), (e) the Comprehensive Environmental Response Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (42 U.S.C. 9601 et seq.), and (f) all applicable national and local laws or regulations with respect to environmental control. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time. "ERISA Affiliate" shall mean, with respect to any Person, each trade or business (whether or not incorporated) which is a member of a group of which that Person is a member and which is under common control within the meaning of the regulations promulgated under Section 414 of the Tax Code. "Eurodollar Advance" shall mean an Advance made or outstanding as a Revolving Loan bearing interest equal to LIBOR plus the Applicable Margin for such Advance. "Eurodollar Borrowing" shall mean a Borrowing made up of Eurodollar Advances. "Event of Default" shall have the meaning provided in Article VIII. "Executive Officer" shall mean with respect to any Person, the President, Vice Presidents, Chief Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties. "Federal Funds Rate" shall mean for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent. "Fiscal Year" shall mean any twelve calendar month period ending on May 31 of any year; references to a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal Year 1996") refer to the Fiscal Year ending on the first Saturday occurring after May 30 of that year. "Fiscal Year End" shall mean the last day of any Fiscal Year. "Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of (i) Consolidated EBITR to (ii) Fixed Charges for such period. "Fixed Charges" shall mean, with reference to any period, determined in accordance with GAAP on a consolidated basis, the sum of the following for the Consolidated Companies, after eliminating all intercompany items: (a) Consolidated Interest Expense for such period; and (b) all Rental Obligations payable as lessee under any operating lease properly charged or chargeable to income during such period in accordance with GAAP; provided that any interest charges or rentals paid or accrued by any Person acquired by the Borrower or any of its Subsidiaries during such period, through purchase, merger, consolidation or otherwise, shall be included in "Fixed Charges" only to the extent that the earnings of such Person are taken into account in determining EBITR for such period. "Funded Debt" shall mean, as applied to any Person, all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendable at the option of the debtor to a date one year or more (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of the creation thereof, provided that Funded Debt shall include, as at any date of determination, any portion of such Indebtedness outstanding on such date which matures on demand or within one year from such date (whether by sinking fund, other required prepayment, or final payment at maturity) and shall also include all Indebtedness of such Person for borrowed money outstanding under a line of credit, guidance line, revolving credit, bankers acceptance facility or similar arrangement for borrowed money, including, without limitation, all unpaid drawings under letters of credit and unreimbursed amounts pursuant to letter of credit reimbursement agreements, regardless of the maturity date thereof. "GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or, if no such statements are promulgated, then such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "Guarantors" shall mean, (i) Culinary Solutions, Inc. and (ii) all other Material Subsidiaries of the Borrower, and their respective successors and permitted assigns. "Guaranty" shall mean any contractual obligation, contingent or otherwise (other than letters of credit), of a Person with respect to any Indebtedness or other obligation or liability of another Person, including without limitation, any such Indebtedness, obligation or liability directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including contractual obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or any agreement to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make any payment other than for value received. The amount of any Guaranty shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which guaranty is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. "Guaranty Agreement" shall mean the Subsidiary Guaranty Agreement executed initially by Culinary Solutions, Inc. and thereafter by any and all Material Subsidiaries of the Borrower in favor of the Lenders, the Issuing Bank and the Agent, substantially in the form of Exhibit C as the same may be amended, restated or supplemented from time to time. "Hazardous Substances" shall have the meaning assigned to that term in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Acts of 1986. "Hostile Acquisition" shall mean any Investment resulting in control of a Person involving a tender offer or proxy contest that has not been recommended or approved by the board of directors of the Person that is the subject of the Investment prior to the first public announcement or disclosure relating to such Investment. "Indebtedness" of any Person shall mean, without duplication (i) all obligations of such Person which in accordance with GAAP would be shown on the balance sheet of such Person as a liability (including, without limitation, obligations for borrowed money and for the deferred purchase price of property or services, and obligations evidenced by bonds, debentures, notes or other similar instruments); (ii) all Capital Lease Obligations; (iii) all Guaranties of such Person; (iv) Indebtedness of others secured by any Lien upon property owned by such Person, whether or not assumed; and (v) obligations or other liabilities under currency contracts, Interest Rate Contracts, or similar agreements or combinations thereof. Notwithstanding the foregoing, in determining the Indebtedness of any Person, there shall be included all obligations of such Person of the character referred to in clauses (i) through (v) above deemed to be extinguished under GAAP but for which such Person remains legally liable except to the extent that such obligations (x) have been defeased in accordance with the terms of the applicable instruments governing such obligations and (y) the accounts or other assets dedicated to such defeasance are not included as assets on the balance sheet of such Person. "Interest Period" shall mean (i) as to any Eurodollar Advances, the interest period selected by the Borrower pursuant to Section 3.04(a) hereof, and (ii) as to any Swing Rate Advances, the interest period requested by the Borrower and agreed to by the Swing Line Lender pursuant to Section 3.01(a)(ii) hereof. "Interest Rate Contract" shall mean all interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, interest rate insurance and other agreements and arrangements designed to provide protection against fluctuations in interest rates, in each case as the same may be from time to time amended, restated, renewed, supplemented or otherwise modified. "Investment" shall mean, when used with respect to any Person, any direct or indirect advance, loan or other extension of credit (other than the creation of receivables in the ordinary course of business) or capital contribution by such Person (by means of transfers of property to others or payments for property or services for the account or use of others, or otherwise) to any Person, or any direct or indirect purchase or other acquisition by such Person of, or of a beneficial interest in, capital stock, partnership interests, bonds, notes, debentures or other securities issued by any other Person. "Issuing Bank" shall mean SunTrust Bank, Atlanta or any other Lender who hereafter may be designated as an Issuing Bank pursuant to an Assignment and Acceptance Agreement or otherwise. "Lender" or "Lenders" shall mean SunTrust, the other banks and lending institutions listed on the signature pages hereof, and each assignee thereof, if any, pursuant to Section 10.06(c). "Lending Office" shall mean for each Lender, the office such Lender may designate in writing from time to time to Borrower and the Agent with respect to each Type of Loan. "Letter of Credit Application" shall mean an "Application and Agreement for Standby Letter of Credit" duly executed and delivered by the Borrower or any of its Subsidiaries substantially in the form of Exhibit G attached hereto. "Letter of Credit Obligations" shall mean, with respect to Letters of Credit, as at any date of determination, the sum of (a) the maximum aggregate amount which at such date of determination is available to be drawn by the beneficiaries thereof (assuming the conditions for drawing thereunder have been met) under all Letters of Credit outstanding, plus (b) the aggregate amount of all drawings under Letters of Credit honored by the Agent not theretofore reimbursed by the Borrower. "Letter of Credit Subfacility" shall mean the $5,000,000 letter of credit facility established by the Lenders pursuant to which the Issuing Bank will issue Letters of Credit for the account of an Account Party pursuant to Section 2.03 hereof. "Letters of Credit" shall mean all letters of credit issued pursuant to Article II hereof after the Closing Date by the Issuing Bank for the account of the Borrower pursuant to the Commitments. "Leverage Ratio" shall mean for any period the ration of (i) Total Funded Debt to (ii) EBITDA. "LIBOR" shall mean, for any Interest Period, with respect to Eurodollar Advances the offered rate for deposits in U.S. Dollars, for a period comparable to the Interest Period and in an amount comparable to the Agent's portion of such Advances, appearing on the Telerate Screen Page 3750 as of 11:00 A.M. (London, England time) on the day that is two London Business Days prior to the first day of the Interest Period. If two or more of such rates appear on the Reuters Screen LIBO Page, the rate for that Interest Period shall be the arithmetic mean of such rates. If the foregoing rate is unavailable from the Telerate Page for any reason, then such rate shall be determined by the Agent from Reuters Screen LIBO Page or, if such rate is also unavailable on such service, then on any other interest rate reporting service of recognized standing designated in writing by the Agent to Borrower and the other Lenders; in any such case rounded, if necessary, to the next higher 1/16 of 1.0%, if the rate is not such a multiple. "Lien" shall mean any mortgage, pledge, security interest, lien, charge, hypothecation, assignment, deposit arrangement, title retention, preferential property right, trust or other arrangement having the practical effect of the foregoing and shall include the interest of a vendor or lessor under any conditional sale agreement, capitalized lease or other title retention agreement. "Loans" shall mean, collectively, the Revolving Loans and the Swing Line Loans. "Margin Regulations" shall mean Regulation G, Regulation T, Regulation U and Regulation X of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time. "Material Subsidiary" shall mean (i) each Credit Party other than the Borrower, and (ii) each other Subsidiary of the Borrower, now existing or hereafter established or acquired, that at any time prior to the Maturity Date, has or acquires total assets in excess of $1,000,000.00, or that accounted for or produced more than 5% of the Consolidated Net Income (Loss) of the Borrower on a consolidated basis during any of the three most recently completed Fiscal Years of the Borrower, or that is otherwise material to the operations or business of the Borrower or another Material Subsidiary. "Materially Adverse Effect" shall mean any materially adverse change in (i) the business, results of operations, financial condition, assets or prospects of the Consolidated Companies, taken as a whole, (ii) the ability of Borrower to perform its obligations under this Agreement, or (iii) the ability of the other Credit Parties (taken as a whole) to perform their respective obligations under the Credit Documents. "Maturity Date" shall mean the earlier of (i) July 2, 2003, and (ii) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable pursuant to the provisions of Article VIII. "MFCI" shall mean Morrison Fresh Cooking, Inc., a wholly-owned subsidiary of Morrison. "Morrison" shall mean Morrison Restaurants, Inc., a Delaware corporation. "Moody's" shall mean Moody's Investors Service, Inc. "Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of ERISA. "Net Proceeds" shall mean, with respect to any equity offering or issuance of Subordinated Debt, (i) all cash received with respect thereto, whether by way of deferred payment pursuant to a promissory note, a receivable or otherwise (and interest paid thereon), plus (ii) the higher of the book value or the fair market value of any assets (including any stock) received with respect thereto, in each case, net of reasonable and customary sale expenses, fees and commissions incurred and taxes paid or expected to be payable within the next twelve months in connection therewith. "Notes" shall mean, collectively, the Revolving Credit Notes and the Swing Line Note. "Notice of Borrowing" shall have the meaning provided in Section 3.01(a)(i). "Notice of Conversion/Continuation" shall have the meaning provided in Section 3.01(b)(i). "Notice of Swing Line Loan" shall have the meaning provided in Section 3.01(b)(ii). "Obligations" shall mean all amounts owing to the Agent, the Co-Agent, the Issuing Bank or any Lender pursuant to the terms of this Agreement or any other Credit Document, including, without limitation, all Loans (including all principal and interest payments due thereunder), Letter of Credit Obligations, fees, expenses, indemnification and reimbursement payments, indebtedness, liabilities, and obligations of the Credit Parties, direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising, together with all renewals, extensions, modifications or refinancings thereof. "Payment Office" shall mean with respect to payments of principal, interest, fees or other amounts relating to the Revolving Loans, the Swing Line Loans, Letter of Credit Obligations and all other Obligations, the office specified as the "Payment Office" for the Agent on the signature page of the Agent, or such other location as to which the Agent shall have given written notice to the Borrower. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "Permitted Liens" shall mean those Liens expressly permitted by Section 7.02. "Person" shall mean any individual, partnership, firm, corporation, association, joint venture, trust or other entity, or any government or political subdivision or agency, department or instrumentality thereof. "Plan" shall mean any "employee benefit plan" (as defined in Section 3(3) of ERISA), including, but not limited to, any defined benefit pension plan, profit sharing plan, money purchase pension plan, savings or thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan, fund, program, arrangement or practice providing for medical (including post-retirement medical), hospitalization, accident, sickness, disability, or life insurance benefits. "Pro Rata Share" shall mean, with respect to each of the Commitments of each Lender, each Revolving Loan to be made by, and each payment (including, without limitation, any payment of principal, interest or fees) to be made to each Lender with respect to the Revolving Loans, the percentage designated as such Lender's Pro Rata Share of such Commitments, such Loans or such payments, as applicable, set forth in Section 2.01, in each case as such Pro Rata Share may change from time to time as a result of assignments or amendments made pursuant to this Agreement. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time. "Rental Obligations" shall mean, with reference to any period, the aggregate amount of all rental obligations for which the Consolidated Companies are directly or indirectly liable (as lessee or as guarantor or other surety but without duplication) under all leases in effect at any time during such period (other than operating leases for motor vehicles, computers, office equipment and other similar items used in the ordinary course of business of the Consolidated Companies), including all such amounts for which any Person was liable during the period immediately prior to the date such Person became a Subsidiary of the Borrower or was merged into or consolidated with the Borrower or a Subsidiary of the Borrower, as determined in accordance with GAAP. "Requested Commitment Amount" shall have the meaning set forth in Section 2.06(a). "Required Lenders" shall mean at any time, the Lenders holding at least 66 2/3% of the committed funds under the Commitments, whether or not advanced, or, following the termination of all of the Commitments, the Lenders holding at least 66 2/3% of the aggregate outstanding Advances at such time. "Requirement of Law" for any person shall mean the articles or certificate of incorporation and bylaws 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. "Reuters Screen" shall mean, when used in connection with any designated page and LIBOR, the display page so designated on the Reuters Monitor Money Rates Service (or such other page as may replace that page on that service for the purpose of displaying rates comparable to LIBOR). "Revolving Credit Notes" shall mean, collectively, the amended and restated promissory notes evidencing the Revolving Loans in the form attached hereto as Exhibit A, either as originally executed or as hereafter amended, modified or supplemented. "Revolving Loans" shall mean, collectively, the revolving loans made to the Borrower by the Lenders pursuant to Section 2.01. "RTI" shall mean Ruby Tuesday, Inc., a Georgia corporation. "Security Documents" shall mean, collectively, the Guaranty Agreement and each other guaranty agreement, mortgage, deed of trust, security agreement, pledge agreement, or other security or collateral document guaranteeing or securing the Obligations, now or hereafter executed, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Sharing Agreements" shall mean, collectively, (i) that certain Distribution Agreement, dated as of March 2, 1996 by and among Morrison, MFCI and Borrower, as amended (ii) that certain License Agreement, dated as of March 2, 1996, by and between MFCI and Borrower, as amended (iii) that certain License Agreement, dated as of March 2, 1996, by and between Borrower and RTI, as amended (iv) that certain Amended and Restated Tax Allocation and Indemnification Agreement, dated as of March 2, 1996, by and among Morrison, Borrower, MFCI and certain other subsidiaries of Morrison, as amended and (v) that certain Agreement Respecting Employee Benefit Matters, dated as of March 2, 1996, by and among Morrison, MFCI and Borrower, as amended. "Subordinated Debt" shall mean all Indebtedness of Borrower subordinated to all obligations of Borrower or any other Credit Party arising under this Agreement, the Notes, and the Guaranty Agreement, created, incurred or assumed on terms and conditions satisfactory in all respects to the Agent, the Issuing Bank and the Lenders, including without limitation, with respect to interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, and subordination provisions, as evidenced by the written approval of the Agent, the Issuing Bank and the Lenders. "Subsidiary" shall mean, with respect to any Person, any corporation or other entity (including, without limitation, partnerships, joint ventures, and associations) regardless of its jurisdiction of organization or formation, at least a majority of the total combined voting power of all classes of voting stock or other ownership interests of which shall, at the time as of which any determination is being made, be owned by such Person, either directly or indirectly through one or more other Subsidiaries. "Swing Line Lender" shall mean SunTrust and its successors and assigns. "Swing Line Note" shall mean the amended and restated promissory note of the Borrower payable to the order of the Swing Line Lender, in substantially the form of Exhibit B hereto, evidencing the maximum aggregate principal indebtedness of the Borrower to the Swing Line Lender with respect to outstanding Swing Line Loans made by the Swing Line Lender pursuant to the Swing Line Subfacility, either as originally executed or as it may be from time to time supplemented, modified, amended, renewed or extended. "Swing Line Subfacility" shall mean $10,000,000, as such amount may be reduced pursuant to Section 2.05 or amended or modified pursuant to Section 10.02 hereof. "Swing Rate" shall mean, as to any Swing Line Loan, the interest rate per annum agreed to by the Borrower and the Swing Line Lender for such Loan for the requested Interest Period pursuant to the procedure set forth in Section 3.01(a)(ii). "Swing Rate Advance" shall mean any Advance outstanding hereunder bearing interest based upon the Swing Rate. "Swing Line Loan" shall mean a Loan made by the Swing Line Lender pursuant to Section 2.02 hereof. "Tax Code" shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time. "Taxes" shall mean any present or future taxes, levies, imposts, duties, fees, assessments, deductions, withholdings or other charges of whatever nature, including without limitation, income, receipts, excise, property, sales, transfer, license, payroll, withholding, social security and franchise taxes now or hereafter imposed or levied by the United States, or any state, local or foreign government or by any department, agency or other political subdivision or taxing authority thereof or therein and all interest, penalties, additions to tax and similar liabilities with respect thereto. "Telerate" shall mean, when used in connection with any designated page and LIBOR, the display page so designated on the Dow Jones Telerate Service (or such other page as may replace that page on that service for the purpose of displaying rates comparable to LIBOR). "Total Capitalization" shall mean, as of any date of determination, the sum of (i) Total Funded Debt, plus (ii) Consolidated Net Worth. "Total Funded Debt" shall mean, for any Person Consolidated Funded Debt plus the present value of all minimum lease commitments to make payments with respect to operating leases of such Person, determined based upon a discount of ten percent (10%) in accordance with the Standard & Poor's methodology. "Type" of Borrowing shall mean a Borrowing consisting of Base Rate Advances, Eurodollar Advances or Swing Rate Advances. "Voting Stock" shall mean securities of any class or classes, the holders of which are entitled to elect all of the corporate directors (or Persons performing similar functions). "Year 2000 Compliant" shall mean that neither the performance nor functionality of the operating systems for Borrower's or its Subsidiaries' computers, all software applications that run on Borrower's and its Subsidiaries' computers, and all of Borrower's and its Subsidiaries' machinery and equipment, is affected by dates prior to, during, spanning or after January 1, 2000, and shall include, but not be limited to (a) accurately processing (including, but not limited to calculating, comparing and sequencing) date and time data from, into, and between the years 1999 and 2000 and leap year calculations, (b) functioning without error, interruption or decreased performance relating to such date and time data, (c) accurately processing such date and time data when used in combination with other technology, if the other technology properly exchanges date and time data, (d) accurate date and time data century recognition, (e) calculations that accurately use same century and multi-century formulas and date and time values, (f) date and time data interface values which reflect the correct century, and (g) processing, storing, receiving and outputting all date and time data in a format that accurately indicates the century of the date and time data. Section I.2. Accounting Terms and Determination. Unless otherwise defined or specified herein, all accounting terms shall be construed herein, all accounting determinations hereunder shall be made, all financial statements required to be delivered hereunder shall be prepared, and all financial records shall be maintained in accordance with, GAAP. Section I.3. Other Definitional Terms. 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 Article, Section, Schedule, Exhibit and like references are to this Agreement unless otherwise specified. Section I.4. Exhibits and Schedules. All Exhibits and Schedules attached hereto are by reference made a part hereof. ARTICLE II. LOANS AND LETTERS OF CREDIT Section II.1. Commitments; Use of Proceeds. (a) Commitments. Subject to and upon the terms and conditions herein set forth, each Lender severally establishes in favor of the Borrower, from on and after the Closing Date, but prior to the Maturity Date, a revolving credit facility in favor of the Borrower in aggregate principal at any one time outstanding not to exceed the sum set forth opposite such Lender's name below, ("Commitment"), as the same may be reduced from time to time pursuant to the terms hereof: ProRata Share of Commitments Commitments SunTrust Bank, Atlanta $25,000,000.00 33.3333% Wachovia Bank, N.A. $20,000,000.00 26.6667% NationsBank, N.A. $15,000,000.00 20.0000% First Union National Bank $15,000,000.00 20.0000% -------------- - --------- Total $75,000,000.00 100.0000% ============== ========= The Lenders, subject to and upon the terms and conditions set forth herein, from time to time, agree to make to the Borrower Revolving Loans in an aggregate principal amount outstanding at any time not to exceed such Lender's Commitment. Borrower shall be entitled to repay and reborrow Revolving Loans in accordance with the provisions hereof. In addition to Revolving Loans, the Borrower may request, from on and after the Closing Date but prior to the Maturity Date, that the Swing Line Lender extend to the Borrower Swing Line Loans subject to and upon the terms and conditions herein set forth. Notwithstanding any provision of this Agreement to the contrary, within the limits of the Commitments, the Borrower may borrow, repay and reborrow under the terms of this Agreement, provided however, that (i) the Borrower may neither borrow nor reborrow should there exist a Default or an Event of Default, (ii) the aggregate outstanding amount of Advances after giving effect to each Borrowing plus the Letter of Credit Obligations shall not exceed the aggregate Commitments. (b) Amount and Terms of Loans. Each Revolving Loan shall, at the option of Borrower, be made or continued as, or converted into, part of one or more Borrowings that shall consist entirely of Base Rate Advances or Eurodollar Advances. Each Swing Line Loan shall consist of Swing Rate Advances made by the Swing Line Lender in accordance with the procedure described in Section 2.02. Each Eurodollar Borrowing shall be in a principal amount of not less than $5,000,000 or a greater integral multiple of $1,000,000, and each Base Rate Borrowing shall be in a principal amount of not less than $1,000,000 or a greater integral multiple of $100,000. At no time shall the aggregate number of Eurodollar Borrowings outstanding under this Article II exceed six (6). (c) Use of Proceeds. The proceeds of Revolving Loans, Swing Line Loans and Letters of Credit shall be used solely to refinance Indebtedness of Borrower existing on the Closing Date, to make Investments and finance acquisitions permitted by the terms hereof, to fund working capital needs of the Borrower and for other general corporate purposes of the Borrower. Section II.2. Swing Line Subfacility. (a) Swing Line Subfacility. Subject to and upon the terms and conditions herein set forth, the Swing Line Lender severally establishes in favor of the Borrower, from on and after the Closing Date, but prior to the Maturity Date, its Swing Line Subfacility within its Commitment. Sections 3.01 and 3.02 shall apply equally to Borrowings made under the Swing Line Subfacility and Borrowings requested or made through Section 2.01. The Swing Line Lender, subject to and upon the terms and conditions set forth herein, from time to time, agrees to make to the Borrower Swing Line Loans in an aggregate principal amount outstanding at any time not to exceed the Swing Line Subfacility. Borrower shall be entitled to repay and reborrow Swing Line Loans in accordance with the provisions hereof. Notwithstanding any provision of this Agreement to the contrary, the sum of (x) the aggregate principal amount of the Revolving Loans, plus (y) the aggregate principal amount of the Swing Line Loans at any one time outstanding, plus (z) the Letter of Credit Obligations, shall not exceed the aggregate Commitments. (b) Amount and Terms of Swing Line Loans. Each Swing Line Loan shall be made as a Swing Rate Advance from the Swing Line Lender at the Swing Rate and Interest Period established by the Borrower and the Swing Line Lender on the date of each request for a Swing Line Loan in accordance with Section 3.01(a)(ii). Each Swing Line Loan shall be in a principal amount of not less than $100,000 or a greater integral multiple of $10,000. At no time shall the aggregate number of Swing Line Loans outstanding under this Article II exceed two. (c) Repayment by Revolving Loans. If (i) any Swing Line Loan shall be outstanding upon the occurrence of an Event of Default, or (ii) after giving effect to any request for a Swing Line Loan or a Revolving Loan, the aggregate principal amount of the Revolving Loans, Swing Line Loans and Letter of Credit Obligations outstanding to the Swing Line Lender would exceed the Swing Line Lender's Commitment, then each Lender hereby agrees, upon request from the Swing Line Lender, to make a Revolving Loan (which shall be initially funded as a Base Rate Borrowing) in an amount equal to such Lender's Pro Rata Share of the outstanding principal amount of the Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the date such notice is given. On or before 11:00 a.m. (local time for the Agent) on the first Business Day following receipt by each Lender of a request to make Revolving Loans as provided in the preceding sentence, each such Lender (other than the Swing Line Lender) shall deposit in an account specified by the Agent to the Lenders from time to time the amount so requested in same day funds, whereupon such funds shall be immediately delivered to the Swing Line Lender (and not the Borrower) and applied to repay the Refunded Swing Line Loans. On the day such Revolving Loans are made, the Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of the Revolving Loans made by the Swing Line Lender. Upon the making of any Revolving Loan pursuant to this clause, the amount so funded shall become due under such Lender's Revolving Credit Note and shall no longer be owed under the Swing Line Note. Each Lender's obligation to make the Revolving Loans referred to in this clause shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of any Default or Event of Default; (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any other Credit Party; (iv) the acceleration or maturity of any Loans or the termination of the Commitments after the making of any Swing Line Loan; (v) any breach of this Agreement by the Borrower or any other Lender; or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (d) Purchase of Participations. In the event that (i) the Borrower or any Subsidiary is subject to any bankruptcy or insolvency proceedings as provided in Section 8.07 or (ii) if the Swing Line Lender otherwise requests, each Lender shall acquire without recourse or warranty an undivided participation interest equal to such Lender's Pro Rata Share of the Commitments of any Swing Line Loan otherwise required to be repaid by such Lender pursuant to the preceding clause by paying to the Swing Line Lender on the date on which such Lender would otherwise have been required to make a Revolving Loan in respect of such Swing Line Loan pursuant to the preceding clause, in same day funds, an amount equal to such Lender's Pro Rata Share of such Swing Line Loan, and no Revolving Loans shall be made by such Lender pursuant to the preceding clause. From and after the date on which any Lender purchases an undivided participation interest in a Swing Line Loan pursuant to this clause, the Swing Line Lender shall distribute to such Lender (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participation interest is outstanding and funded) its ratable amount of all payments of principal and interest in respect of such Swing Line Loan in like funds as received; provided, however, that in the event such payment received by the Swing Line Lender is required to be returned to the Borrower, such Lender shall return to the Swing Line Lender the portion of any amounts which such Lender had received from the Swing Line Lender in like funds. (e) Swing Line Loans Following Notice of Event of Default. Notwithstanding the foregoing provisions of this Section 2.02, no Lender shall be required to make a Revolving Loan to Borrower for the purpose of refunding a Refunded Swing Line Loan pursuant to Section 2.02(c) above or to purchase a participating interest in a Swing Line Loan pursuant to Section 2.02(d) above if a Default or Event of Default has occurred and is continuing, and, prior to the making by the Swing Line Lender of such Swing Line Loan, the Swing Line Lender had received written notice from the Borrower or any Lender specifying that such Default or Event of Default had occurred and was continuing (and identifying the same as a Default or Event of Default hereunder). Section II.3. Letter of Credit Subfacility. (a) Terms of Issuance of Letters of Credit. Subject to, and upon the terms and conditions set forth herein, the Borrower may request, in accordance with the provisions of this Section 2.03 and the other terms of this Agreement, that on and after the Closing Date but prior to the Maturity Date, that the Issuing Bank, on behalf of the Lenders, and in reliance on the agreements of the Lenders set forth below, issue a Letter of Credit or Letters of Credit for the account of the Borrower or any Guarantor; provided that the Borrower or such Guarantor executes and delivers to the Agent and the Issuing Bank a Letter of Credit Application, provided further that (i) no Letter of Credit shall have an expiration date that is later than one year after the date of issuance thereof (provided that a Letter of Credit may provide that it is extendible for consecutive one year periods); (ii) the Borrower shall not request that the Issuing Bank issue any Letter of Credit, if, after giving effect to such issuance, the sum of the aggregate Letter of Credit Obligations plus the aggregate outstanding principal amount of the Advances would exceed the aggregate amount of the Commitments; and (iii) the Borrower shall not request that the Issuing Bank issue any Letter of Credit if after giving effect to such issuance, the aggregate Letter of Credit Obligations would exceed the amount of the Letter of Credit Subfacility. To the extent of any conflict between the terms of this Agreement and any Letter of Credit Application, this Agreement shall control. (b) Notice of Issuance of Letter of Credit; Agreement to Issue. Whenever the Borrower desires the issuance of a Letter of Credit, it shall, in addition to any application and documentation procedures reasonably required by the Agent and the Issuing Bank for the issuance of such Letter of Credit, deliver to the Agent and the Issuing Bank a written notice no later than 11:00 AM (local time for the Agent) at least two (2) Business Days in advance of the proposed date of issuance and the Agent shall promptly forward a copy of such notice to each Lender. Each such notice shall specify (i) the Account Party, (ii) the proposed date of issuance (which shall be a Business Day); (iii) the face amount of the Letter of Credit; (iv) the expiration date of the Letter of Credit; and (v) the name and address of the beneficiary with respect to such Letter of Credit and shall attach a precise description of the documentation and a verbatim text of any certificate to be presented by the beneficiary of such Letter of Credit which would require the Issuing Bank to make payment under the Letter of Credit, provided that the Issuing Bank may require reasonable changes in any such documents and certificates in accordance with its customary letter of credit practices, and provided further, that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same Business Day that such draft is presented if such presentation is made after 11:00 AM (Atlanta, Georgia time). In determining whether to pay any draft under any Letter of Credit, the Issuing Bank shall be responsible only to determine that the documents and certificate required to be delivered under its Letter of Credit have been delivered, and that they comply on their face with the requirements of the Letter of Credit. Promptly after receiving the notice of issuance of a Letter of Credit, the Agent shall notify each Lender of such Lender's respective participation therein, determined in accordance with its respective Pro Rata Share of the Commitments. (c) Agreement to Issue Letters of Credit. The Issuing Bank agrees, subject to the terms and conditions set forth in this Agreement, to issue for the account of such Account Party a Letter of Credit in a face amount equal to the face amount requested under paragraph (b) above, following its receipt of a notice required by paragraph (d) below. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Bank a participation in such Letter of Credit and any drawing thereunder in an amount equal to such Lender's Pro Rata Share of the Commitments multiplied by the face amount of such Letter of Credit. Upon issuance and amendment or extension of any Letter of Credit, the Issuing Bank shall provide a copy of each such Letter of Credit issued, amended or extended hereunder to the Agent and each Lender. (d) Payment of Amounts Drawn Under Letters of Credit. In the event of any request for a drawing under any Letter of Credit by the beneficiary thereof, the Issuing Bank shall notify the Borrower, the Agent and the Lenders on or before the date on which the Agent intends to honor such drawing, and the Borrower and the Account Party (if other than the Borrower) jointly and severally agree to reimburse the Issuing Bank on the day on which such drawing is honored in an amount, in same day funds, equal to the amount of such drawing. (i) Notwithstanding any provision of this Agreement to the contrary, to the extent that any Letter of Credit or portion thereof remains outstanding on the Maturity Date, for any reason whatsoever, the Borrower, each Guarantor and the Lenders hereby agree that the beneficiary or beneficiaries thereof shall be deemed to have made a drawing under the Commitments of all available amounts outstanding pursuant to such Letters of Credit on the Maturity Date, which amount shall be held by the Issuing Bank as cash collateral for its remaining obligations pursuant to such Letters of Credit. provided however, that if any such Letter of Credit Outstanding on the Maturity Date is (i) surrendered for cancellation by the beneficiary, (ii) expires, or (iii) is terminated for any reason, prior to the Issuing Bank honoring a request for a drawing under such Letter of Credit for less than the full amount available under such Letter of Credit, the Issuing Bank shall promptly refund (x) the cash collateral to the extent of the undrawn amount of each Letter of Credit plus (y) the amount of each Letter of Credit honored by the Issuing Bank not theretofore reimbursed by the Borrower. The immediately preceding sentence will survive termination of this Agreement. (ii) As between the Borrower, any Account Party and the Issuing Bank, the Borrower and such Account Party assume all risk of the acts and omissions of, or misuse of, the Letters of Credit issued by the Issuing Bank, by the respective beneficiaries of such Letters of Credit, other than losses resulting from the gross negligence or willful misconduct of the Issuing Bank. In furtherance and not in limitation of the foregoing but subject to the exception for the Issuing Bank's gross negligence or willful misconduct set forth above, the Issuing Bank shall not be responsible (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of such Letters of Credit, even if it should in fact prove to be in any or all respects insufficient, inaccurate, fraudulent or forged or otherwise invalid; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof in whole or in part which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of any such Letter of Credit to comply fully with the conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy or otherwise; (v) for good faith errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or the proceeds thereof; (vii) for the misapplication by the beneficiary of any such Letter of Credit; and (viii) for any consequences arising from causes beyond the control of the Issuing Bank. (e) Payment of Letter of Credit Draws by Banks. In the event that the Borrower or the Account Party shall fail to reimburse the Issuing Bank as provided in paragraph (d) above, the Issuing Bank shall promptly notify each Lender of the unreimbursed amount of such drawing and of such Lender's respective participation therein. Each Lender shall make available to the Issuing Bank an amount equal to its respective participation, in immediately available funds, at the office of the Issuing Bank specified in such notice not later than 1:00 P.M. (Atlanta, Georgia time) on the Business Day after the date notified by the Issuing Bank and such amount shall be deemed to be outstanding hereunder as an Advance. Each Lender shall be obligated to make such Advance hereunder regardless of whether the conditions precedent in Article IV are satisfied and regardless of whether such Advance complies with the minimum borrowing requirements hereunder. In the event that any such Lender fails to make available to the Issuing Bank the amount of such Lender's participation in such Letter of Credit, the Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest. The Issuing Bank shall distribute to each Lender which has paid all amounts payable under this Section with respect to any Letter of Credit, such Lender's Pro Rata Share of all payments received by the Issuing Bank from the Account Party in reimbursement of drawings honored by the Issuing Bank under such Letter of Credit when such payments are received. Section II.4. Notes; Repayment of Principal. (a) The Borrower's obligations to pay the principal of, and interest on, the Revolving Loans to each Lender shall be evidenced by the records of the Agent and such Lender and by the Revolving Credit Note payable to such Lender (or the assignor of such Lender) in the amount of such Lender's Commitment completed in conformity with this Agreement. (b) The Borrower's obligations to pay the principal of, and interest on, the Swing Line Loans to the Swing Line Lender shall be evidenced by the records of the Swing Line Lender and the Swing Line Note payable to such Lender (or the assignor of such Lender) completed in conformity with this Agreement. (c) All outstanding Borrowings outstanding under the Notes shall be due and payable in full on the Maturity Date. Section II.5. Voluntary Reduction of Commitments. Upon at least three (3) Business Days' prior telephonic notice (promptly confirmed in writing) to the Agent, Borrower shall have the right, without premium or penalty, to terminate the unutilized Commitments, in part or in whole, provided that (i) any such termination shall apply to proportionately and permanently reduce the Commitments of each of the Lenders, and (ii) any partial termination pursuant to this Section 2.05 shall be in an amount of at least $5,000,000 and integral multiples of $1,000,000. Unless otherwise specified by the Borrower in the applicable notice, each of the Swing Line Subfacility and the Letter of Credit Subfacility shall not be reduced by any such reduction unless and until the aggregate Commitments are reduced to an amount less than the sum of the Swing Line Subfacility and the Letter of Credit Subfacility in which case each of the Swing Line Subfacility shall be reduced as determined by the Borrower and the Agent. Section II.6. Increase of the Commitments. (a) Borrower may, at any time by written notice to the Agent and the Lenders, request that the Commitments be increased up to an amount not to exceed $100,000,000 in the aggregate (the "Requested Commitment Amount") on a pro rata basis based on the Pro Rata Shares of the Lenders. No Lender (or any successor thereto) shall have any obligation to increase its Commitment or its other obligations under this Agreement and the other Credit Documents, and any decision by a Lender to increase its Commitment shall be made in its sole discretion independently from any other Lender, the Agent or the Co-Agent. Within fifteen (15) Business Days from each Lender's receipt of such request from the Borrower, each Lender shall notify the Agent in writing of whether or not it will agree to increase its Commitment and by what amount it will agree to increase its Commitment, up to its Pro Rata Share of the Requested Commitment Amount. Decisions to increase a Commitment must be affirmatively communicated in writing and shall not be presumed based upon a failure to respond to Borrower's request. (b) In the event that the aggregate amount to which the Lenders are willing to increase their Commitments is less than the Requested Commitment Amount based on the written notices delivered by the Lenders to the Agent, the Agent shall first offer to the Lenders who have agreed to increase their Commitments the opportunity to further increase their Commitments up to an amount equal to the Requested Commitment Amount. Such Lenders shall promptly respond in writing to the Agent of whether or not it will agree to further increase its Commitment and by what amount it will agree to further increase its Commitment. Within five (5) Business Days after receipt of all responses from such Lenders, the Agent shall inform the Borrower and all Lenders in writing of the amount by which each Lender will increase its Commitment. (c) In the event that the aggregate amount to which the Lenders are willing to increase their Commitments is less than the Requested Commitment Amount based on the notice from the Agent to the Borrower and all Lenders, the Borrower shall have the right, within sixty days (60) after receipt of such notice from the Agent, to obtain commitments from one or more new banks or financial institutions in an aggregate amount such that the existing Commitments, plus the aggregate principal amount by which the Lenders are willing to increase their Commitments, plus the aggregate principal amount of the new commitments by the new banks or financial institutions does not exceed the Requested Commitment Amount; provided, however, that (1) the new banks or financial institutions must be acceptable to the Agent and Required Lenders in their sole discretion, which acceptance will not be unreasonably withheld or delayed, and (2) the new banks or financial institutions must become parties to this Agreement pursuant to a joinder agreement in form and substance satisfactory to the Agent and the Required Lenders, pursuant to which (x) they shall be granted all of the rights that existing Lenders have under this Agreement and the other Credit Documents, (y) they shall assume the same liabilities and obligations that the existing Lenders have under this Agreement and (z) the existing Lenders and such new banks or financial institutions shall agree to either purchase or sell outstanding Advances, as the case may be such that each Lender (existing and new) shall have outstanding Advances in an amount equal to its Pro Rate Share of all Advances then outstanding. ARTICLE III. GENERAL LOAN TERMS Section III.1. Funding Notices. (a) (i) Whenever Borrower desires to make a Borrowing with respect to the Commitments (other than one resulting from a conversion or continuation pursuant to Section 3.01(b)(i)), it shall give the Agent prior written notice (or telephonic notice promptly confirmed in writing) of such Borrowing (a "Notice of Borrowing"), such Notice of Borrowing to be given prior to 12:00 noon (local time for the Agent) at the Payment Office of the Agent (x) one Business Day prior to the requested date of such Borrowing in the case of Base Rate Advances, and (y) three Business Days prior to the requested date of such Borrowing in the case of Eurodollar Advances. Notices received after 12:00 noon shall be deemed received on the next Business Day. Each Notice of Borrowing shall be irrevocable and shall specify the aggregate principal amount of the Borrowing, the date of Borrowing (which shall be a Business Day), and whether the Borrowing is to consist of Base Rate Advances or Eurodollar Advances and (in the case of Eurodollar Advances) the Interest Period to be applicable thereto. (ii) Whenever Borrower desires to obtain a Swing Line Loan, it shall give the Swing Line Lender prior written notice (or telephonic notice promptly confirmed in writing) of such Swing Line Loan (a "Notice of Swing Line Loan"), such Notice of Swing Line Loan to be given prior to 11:00 A.M. (local time for Agent) at the Payment Office of the Swing Line Lender on the Business Day of the such Swing Line Loan. Notices received after 11:00 A.M. shall be deemed received on the next Business Day. Each Notice of Swing Line Loan shall specify the aggregate principal amount of the Swing Line Loan, the date of the Swing Line Loan (which shall be a Business Day) and the requested Interest Period to be applicable thereto. The Swing Line Lender, shall within two (2) hours of receipt of such notice, provide to the Borrower telephonic or written notice of a quote of the Swing Rate to be applicable to such Swing Line Loan for the amount and the Interest Period requested by the Borrower. Within one (1) hour of receipt of such quote, the Borrower shall notify the Swing Line Lender whether or not it has elected to accept the offered Swing Rate and if accepted, the Swing Line Lender shall confirm such Borrowing in writing. (b) (i) Whenever Borrower desires to convert all or a portion of an outstanding Borrowing under the Commitments consisting of Base Rate Advances into a Borrowing consisting of Eurodollar Advances, or to continue outstanding a Borrowing consisting of Eurodollar Advances for a new Interest Period, it shall give the Agent at least three Business Days' prior written notice (or telephonic notice promptly confirmed in writing) of each such Borrowing to be converted into or continued as Eurodollar Advances. Such notice (a "Notice of Conversion/Continuation") shall be given prior to 11:00 A.M. (local time for the Agent) on the date specified at the Payment Office of the Agent. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify the aggregate principal amount of the Advances to be converted or continued, the date of such conversion or continuation and the Interest Period to be applicable thereto. If, upon the expiration of any Interest Period in respect of any Borrowing consisting of Eurodollar Advances, Borrower shall have failed to deliver the Notice of Conversion/Continuation, Borrower shall be deemed to have elected to convert or continue such Borrowing to a Borrowing consisting of Base Rate Advances. So long as any Executive Officer of Borrower has knowledge that any Default or Event of Default shall have occurred and be continuing, no Borrowing may be converted into or continued as (upon expiration of the current Interest Period) Eurodollar Advances unless the Agent and each of the Lenders shall have otherwise consented in writing. No conversion of any Borrowing of Eurodollar Advances shall be permitted except on the last day of the Interest Period in respect thereof. (ii) Upon the expiration of the applicable Interest Period with respect to any Swing Line Loan, the Borrower shall repay such Swing Line Loan to the Swing Line Lender, and in the event that the other Lenders have purchased a participation in such Swing Line Loan pursuant to Section 2.02 hereof, the Swing Line Lender shall distribute such payments pro rata amongst the Lenders participating therein. (c) Without in any way limiting Borrower's obligation to confirm in writing any telephonic notice, the Agent and the Swing Line Lender may act without liability upon the basis of telephonic notice believed by the Agent or the Swing Line Lender in good faith to be from Borrower prior to receipt of written confirmation. In each such case, Borrower hereby waives the right to dispute the Agent's or the Swing Line Lender's record of the terms of such telephonic notice. (d) The Agent shall promptly give each Lender notice by telephone (confirmed in writing) or by telex, telecopy or facsimile transmission of the matters covered by the notices given to the Agent pursuant to this Section 3.01 with respect to the Commitments. Section III.2. Disbursement of Funds. (a) No later than 12:00 noon (local time for the Agent) on the date of each Borrowing pursuant to the Commitments (other than one resulting from a conversion or continuation pursuant to Section 3.01(b)(i)), each Lender will make available its Pro Rata Share of the amount of such Borrowing in immediately available funds at the Payment Office of the Agent. The Agent will make available to Borrower the aggregate of the amounts (if any) so made available by the Lenders to the Agent in a timely manner by crediting such amounts to Borrower's demand deposit account maintained with the Agent or at Borrower's option, by effecting a wire transfer of such amounts to Borrower's account specified by the Borrower, by the close of business on such Business Day. In the event that the Lenders do not make such amounts available to the Agent by the time prescribed above, but such amount is received later that day, such amount may be credited to Borrower in the manner described in the preceding sentence on the next Business Day (with interest on such amount to begin accruing hereunder on such next Business Day). (b) No later than 3:00 p.m. (local time for the Swing Line Lender) on the date of each Swing Line Loan (other than one resulting from a continuation of a Swing Line Loan pursuant to 3.01(b)(ii)), the Swing Line Lender will make available the amount of such Swing Line Loan in immediately available funds by crediting such amount to the Borrower's demand deposit account maintained with the Swing Line Lender or, at Borrower's option, by effecting a wire transfer of such amounts to Borrower's account specified by the Borrower. (c) Unless the Agent shall have been notified by any Lender prior to the date of a Borrowing that such Lender does not intend to make available to the Agent such Lender's portion of the Borrowing to be made on such date, the Agent may assume that such Lender has made such amount available to the Agent on such date and the Agent may make available to Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender on the date of Borrowing, the Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest at the Federal Funds Rate. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify Borrower, and Borrower shall immediately pay such corresponding amount to the Agent together with interest at the rate specified for the Borrowing which includes such amount paid and any amounts due under Section 3.12 hereof. Nothing in this subsection shall be deemed to relieve any Lender from its obligation to fund its Commitments or its obligations pursuant to Section 2.02 hereunder or to prejudice any rights which Borrower may have against any Lender as a result of any default by such Lender hereunder. (d) All Borrowings under the Commitments (other than Swing Line Loans) shall be loaned by the Lenders on the basis of their Pro Rata Share of the Commitments. No Lender shall be responsible for any default by any other Lender in its obligations hereunder, and each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fund its Commitments hereunder. Section III.3. Interest. (a) Borrower agrees to pay interest in respect of all unpaid principal amounts of the Revolving Loans from the respective dates such principal amounts were advanced to maturity (whether by acceleration, notice of prepayment or otherwise) at rates per annum equal to the applicable rates indicated below: (i) For Base Rate Advances--The Base Rate in effect from time to time; and (ii) For Eurodollar Advances--LIBOR plus the Applicable Margin. (b) Borrower agrees to pay interest in respect of all unpaid principal amounts of the Swing Line Loans made to Borrower from the respective dates such principal amounts were advanced to maturity (whether by acceleration, notice of prepayment or otherwise) at the Swing Rate agreed to by the Borrower and the Swing Line Lender for each such Swing Line Loan. (c) Overdue principal and, to the extent not prohibited by applicable law, overdue interest, in respect of the Loans, and all other overdue amounts owing hereunder, shall bear interest from each date that such amounts are overdue at the applicable rate plus two percent (2%) per annum, provided however that for any Eurodollar Advance or Swing Line Loan, at the end of the applicable Interest Period, interest shall accrue at the Base Rate plus two percent (2%). (d) Interest on each Loan shall accrue from and including the date of such Loan to but excluding the date of any repayment thereof; provided that, if a Loan is repaid on the same day made, one day's interest shall be paid on such Loan. Interest on all outstanding Base Rate Advances shall be payable quarterly in arrears on the last day of each fiscal quarter, commencing on August 31, 1998. Interest on all outstanding Eurodollar Advances shall be payable on the last day of each Interest Period applicable thereto, and, in the case of Eurodollar Advances having an Interest Period in excess of three months, on each three month anniversary of the initial date of such Interest Period. Interest on all outstanding Swing Rate Advances shall be payable monthly in arrears on the last day of each fiscal quarter, commencing on August 31, 1998. Interest on all Loans shall be payable on any conversion of any Advances comprising such Loans into Advances of another Type, prepayment (on the amount prepaid), at maturity (whether by acceleration, notice of prepayment or otherwise) and, after maturity, on demand. (e) The Agent, upon determining LIBOR for any Interest Period, shall promptly notify by telephone (confirmed in writing) or in writing Borrower and the other Lenders. Any such determination shall, absent manifest error, be final, conclusive and binding for all purposes. Section III.4. Interest Periods. (a) In connection with the making or continuation of, or conversion into, each Borrowing of Eurodollar Advances, Borrower shall select an Interest Period to be applicable to such Eurodollar Advances, which Interest Period shall be either a 1, 2, 3 or 6 month period. (b) In connection with the making or continuation of each Swing Line Loan, Borrower shall request an Interest Period to be applicable to such Swing Line Loan for a period equal to a minimum of one (1) day and a maximum of thirty (30) days which request may be accepted by the Swing Line Lender as provided herein. (c) Notwithstanding paragraphs (a) and (b) of this Section 3.04: (i) The initial Interest Period for any Borrowing of Eurodollar Advances shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing consisting of Base Rate Advances) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (ii) If any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, provided that if any Interest Period in respect of Eurodollar Advances would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) Any Interest Period in respect of Eurodollar Advances which begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall, subject to part (v) below, expire on the last Business Day of such calendar month; and (iv) No Interest Period with respect to the Loans shall extend beyond the Maturity Date. Section III.5. Fees. (a) Commitment Fee. Borrower shall pay to the Agent, for the ratable benefit of each Lender, a commitment fee (the "Commitment Fee") for the period commencing on the Closing Date to and including the Maturity Date, payable quarterly in arrears on the last day of each fiscal quarter, commencing on August 31, 1998, and on the Maturity Date, equal to the percentage per annum designated below based on the Leverage Ratio of the Consolidated Companies, multiplied by the average daily unused portion of the Commitment of each Lender: ----------------------------------------------- - ------ Leverage Ratio Commitment Fee ===================================================== Less than 2.00:1.00 0.20% ----------------------------------------------- - ------ Greater than or equal to 0.25% 2.00:1.00 and less than 2.50:1.00 ----------------------------------------------- - ------ Greater than or equal to 0.30% 2.50:1.00 and less than 3.0:1.00 ----------------------------------------------- - ------ For the purposes of computing the Commitment Fee, (i) outstanding Letter of Credit Obligations shall not be usage of the Commitment, and (ii) in addition to the utilization by Revolving Loans, the Commitment of each Lender shall be deemed to be utilized by the amount of Swing Line Loans extended by such Lender (or in which such Lender has purchased a participation) but in no event shall the computation of any other Lender's Commitment Fee be affected by the Swing Line Loans extended by the Swing Line Lender unless and until a participation in such Swing Line Loans is purchased by the other Lenders pursuant to Section 2.02(d) hereof, and (iii) if the Borrower fails to provide the Compliance Certificate and related financial statements required under Section 6.07(c) within the applicable time period set forth therein, the Commitment Fee shall be adjusted to 0.30% on the first day of the following fiscal quarter until such Compliance Certificate and related financial statements are delivered. (b) Administrative Fees. The Borrower shall pay to the Agent an administrative fee in the amount and on the dates previously agreed in writing by Borrower with the Agent. The Borrower shall also pay to each Issuing Bank, following receipt of an invoice, in reasonable detail therefor, any customary fees charged by such Issuing Bank for issuance and administration of its Letters of Credit, which fees shall be fully earned when due, and non-refundable when paid. Section III.6. Voluntary Prepayments of Borrowings. (a) Borrower may, at its option, prepay Borrowings consisting of Base Rate Advances at any time in whole, or from time to time in part, in amounts aggregating $1,000,000 or any greater integral multiple of $100,000, by paying the principal amount to be prepaid together with interest accrued and unpaid thereon to the date of prepayment. Borrowings consisting of Swing Rate Advances may be prepaid at any time in whole, or from time to time in part, in amounts aggregating $100,000 or any greater integral multiple of $10,000, by paying the principal amount to be prepaid together with interest accrued and unpaid thereon to the date of prepayment. Borrowings consisting of Eurodollar Advances may be prepaid, at Borrower's option, in whole, or from time to time in part, in amounts aggregating $5,000,000 or any greater integral multiple of $1,000,000, by paying the principal amount to be prepaid, together with interest accrued and unpaid thereon to the date of prepayment, and all compensation payments pursuant to Section 3.12 if such prepayment is made on a date other than the last day of an Interest Period applicable thereto. Each such optional prepayment shall be applied in accordance with Section 3.06(c) below. (b) Borrower shall give written notice (or telephonic notice confirmed in writing) to the Agent of any intended prepayment of the Revolving Loans not less than three Business Days prior to any prepayment of Base Rate Advances or Eurodollar Advances. Borrower shall give written notice (or telephonic notice confirmed in writing) to the Agent of any intended prepayment of the Swing Line Loans not less than one (1) Business Day prior to such prepayment of such Swing Line Loans. Such notice, once given, shall be irrevocable. Upon receipt of such notice of prepayment pursuant to the first sentence of this paragraph (b), the Agent shall promptly notify each Lender of the contents of such notice and of such Lender's Pro Rata Share of such prepayment. Upon receipt of any notice of prepayment pursuant to the second sentence of this paragraph (b), the Agent shall promptly notify each Lender participating in such Swing Line Loan of the contents of such notice and of such Lender's Pro Rata Share of such prepayment. (c) Borrower, when providing notice of prepayment pursuant to Section 3.06(b), may designate the Types of Advances and the specific Borrowing or Borrowings which are to be prepaid, provided that (i) if any prepayment of Eurodollar Advances made pursuant to a single Borrowing of the Revolving Loans shall reduce the outstanding Advances made pursuant to such Borrowing to an amount less than $5,000,000, such Borrowing shall immediately be converted into Base Rate Advances; and (ii) each prepayment made pursuant to a single Borrowing shall be applied pro rata among the Advances comprising such Borrowing. In the absence of a designation by Borrower, the Agent shall, subject to the foregoing, make such designation in its discretion but using reasonable efforts to avoid funding losses to the Lenders pursuant to Section 3.12. All voluntary prepayments shall be applied to the payment of interest before application to principal. Section III.7. Payments, etc. (a) Except as otherwise specifically provided herein, all payments under this Agreement and the other Credit Documents shall be made without defense, set-off or counterclaim to the Agent not later than 11:00 A.M. (local time for the Agent) on the date when due and shall be made in Dollars in immediately available funds at its Payment Office. (b) (i) All such payments shall be made free and clear of and without deduction or withholding for any Taxes in respect of this Agreement, the Notes or other Credit Documents, or any payments of principal, interest, fees or other amounts payable hereunder or thereunder (but excluding, except as provided in paragraph (iii) hereof, any Taxes imposed on the overall net income of the Lenders or the Issuing Bank pursuant to the laws of the jurisdiction in which the principal executive office or appropriate Lending Office of such Lender or the Issuing Bank is located). If any Taxes are so levied or imposed, Borrower agrees (A) to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every net payment of all amounts due hereunder and under the Notes and other Credit Documents, after withholding or deduction for or on account of any such Taxes (including additional sums payable under this Section 3.07), will not be less than the full amount provided for herein had no such deduction or withholding been required, (B) to make such withholding or deduction and (C) to pay the full amount deducted to the relevant authority in accordance with applicable law. Borrower will furnish to the Agent, the Co-Agent and the Issuing Bank and each Lender, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by Borrower. Borrower will indemnify and hold harmless the Agent, the Co-Agent, the Issuing Bank and each Lender and reimburse the Agent, the Co-Agent, the Issuing Bank and each Lender upon written request for the amount of any Taxes so levied or imposed and paid by the Agent, the Co-Agent, the Issuing Bank or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or illegally asserted. A certificate as to the amount of such payment by such Lender, the Issuing Bank, the Agent or the Co-Agent absent manifest error, shall be final, conclusive and binding for all purposes provided that the Agent, the Co- Agent, the Issuing Bank and each Lender shall use reasonable efforts to furnish Borrower notice of the imposition of any Taxes as soon as practicable thereafter; provided, however, that no delay or failure to furnish such notice shall in any event release or discharge Borrower from its obligations to the Agent, the Co-Agent, the Issuing Bank or such Lender pursuant to Section 3.07(b) or otherwise result in any liability of the Agent, the Co-Agent, the Issuing Bank or such Lender; provided that such notice is provided to the Borrower within forty- five (45) days of such Lender or the Issuing Bank obtaining knowledge of the application of such Taxes to payments under this Agreement. (ii) Each Lender or Issuing Bank that is organized under the laws of any jurisdiction other than the United States of America or any State thereof (including the District of Columbia) agrees to furnish to Borrower and the Agent, prior to the time it becomes a Lender or Issuing Bank hereunder, two copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any successor forms thereto (wherein such Lender claims entitlement to complete exemption from or reduced rate of U.S. Federal withholding tax on interest paid by Borrower hereunder) and to provide to Borrower and the Agent a new Form 4224 or Form 1001 or any successor forms thereto if any previously delivered form is found to be incomplete or incorrect in any material respect or upon the obsolescence of any previously delivered form; provided, however, that no Lender or Issuing Bank shall be required to furnish a form under this paragraph (ii) after the date that it becomes a Lender or Issuing Bank hereunder if it is not entitled to claim an exemption from or a reduced rate of withholding under applicable law. (iii) Borrower shall also reimburse each Lender and the Issuing Bank, upon written request, for any Taxes imposed (including, without limitation, Taxes imposed on the overall net income of such Lender or Issuing Bank or its respective Lending Office pursuant to the laws of the jurisdiction in which the principal executive office or the applicable Lending Office of such Lender or the Issuing Bank is located) as such Lender or the Issuing Bank shall determine are payable by such Lender or the Issuing Bank in respect of amounts paid by or on behalf of Borrower to or on behalf of such Lender or the Issuing Bank pursuant to paragraph (i) hereof. (c) Subject to Section 3.04(c)(ii), whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. (d) All computations of interest and fees shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable (to the extent computed on the basis of days elapsed). Interest on Base Rate Advances shall be calculated based on the Base Rate from and including the date of such Loan to but excluding the date of the repayment or conversion thereof. Interest on Eurodollar Advances and Swing Rate Advances shall be calculated as to each Interest Period from and including the first day thereof to but excluding the last day thereof. Each determination by the Agent of an interest rate or fee hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes. (e) Payment by the Borrower to the Agent in accordance with the terms of this Agreement shall, as to the Borrower, constitute payment to the Lenders under this Agreement. Section III.8. Interest Rate Not Ascertainable, etc. In the event that the Agent shall have determined (which determination shall be made in good faith and, absent manifest error, shall be final, conclusive and binding upon all parties) that on any date for determining LIBOR for any Interest Period, by reason of any changes arising after the date of this Agreement affecting the London interbank market, or the Agent's position in such market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of LIBOR, then, and in any such event, the Agent shall forthwith give notice (by telephone confirmed in writing) to Borrower and to the Lenders, of such determination and a summary of the basis for such determination. Until the Agent notifies Borrower that the circumstances giving rise to the suspension described herein no longer exist, the obligations of the Lenders to make or permit portions of the Revolving Loans to remain outstanding past the last day of the then current Interest Periods as Eurodollar Advances shall be suspended, and such affected Advances shall bear the same interest as Base Rate Advances. Section III.9. Illegality. (a) In the event that any Lender or the Issuing Bank shall have determined (which determination shall be made in good faith and, absent manifest error, shall be final, conclusive and binding upon all parties) at any time that the making or continuance of any Eurodollar Advance or Letter of Credit has become unlawful by compliance by such Lender or Issuing Bank in good faith with any applicable law, governmental rule, regulation, guideline or order (whether or not having the force of law and whether or not failure to comply therewith would be unlawful), then, in any such event, the Lender or Issuing Bank shall give prompt notice (by telephone confirmed in writing) to Borrower and to the Agent of such determination and a summary of the basis for such determination (which notice the Agent shall promptly transmit to the other Lenders). (b) Upon the giving of the notice to Borrower referred to in subsection (a) above, (i) Borrower's right to request and such Lender's obligation to make Eurodollar Advances or participate in such Letters of Credit, as the case may be, or the Issuing Bank's obligation to issue Letters of Credit shall be immediately suspended, and such Lender shall make an Advance as part of the requested Borrowing of Eurodollar Advances as a Base Rate Advance, which Base Rate Advance shall, for all other purposes, be considered part of such Borrowing, and (ii) if the affected Eurodollar Advance or Advances are then outstanding, Borrower shall immediately, or if permitted by applicable law, no later than the date permitted thereby, upon at least one Business Day's written notice to the Agent and the affected Lender, convert each such Advance into a Base Rate Advance or Advances, provided that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 3.09(b). (c) Notwithstanding any other provision contained in this Agreement, the Issuing Bank shall not be obligated to issue any Letter of Credit, nor shall any Lender be obligated to purchase its participation in any Letter of Credit to be issued hereunder, if the issuance of such Letter of Credit or purchase of such participation shall have become unlawful or prohibited by compliance by the Issuing Bank or such Lender in good faith with any law, governmental rule, guideline, request, order, injunction, judgment or decree (whether or not having the force of law); provided that in the case of the obligation of a Lender to purchase such participation, such Lender shall have notified the Issuing Bank to such effect at least three (3) Business Days' prior to the issuance thereof by the Issuing Bank, which notice shall relieve the Issuing Bank of its obligation to issue such Letter of Credit pursuant to Section 2.03 hereof. Section III.10. Increased Costs. (a) If, by reason of (x) after the date hereof, the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation, or (y) the compliance with any guideline or request from any central bank or other governmental authority or quasi-governmental authority exercising control over banks or financial institutions generally made after the date hereof (whether or not having the force of law): (i) any Lender (or its applicable Lending Office) shall be subject to any tax, duty or other charge with respect to its Eurodollar Advances or its obligation to make Eurodollar Advances or the basis of taxation of payments to any Lender of the principal of or interest on its Eurodollar Advances or its obligation to make Eurodollar Advances shall have changed (except for changes in the tax on the overall net income of such Lender or its applicable Lending Office imposed by the jurisdiction in which such Lender's principal executive office or applicable Lending Office is located); or (ii) any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender's applicable Lending Office shall be imposed or deemed applicable or any other condition affecting its Eurodollar Advances or its obligation to make Eurodollar Advances shall be imposed on any Lender or its applicable Lending Office or the London interbank market; and as a result thereof there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Advances (except to the extent already included in the determination of the applicable interest rate for Eurodollar Advances) or its obligation to make Eurodollar Advances, or there shall be a reduction in the amount received or receivable by such Lender or its applicable Lending Office, then Borrower shall from time to time (subject, in the case of certain Taxes, to the applicable provisions of Section 3.07(b)), upon written notice from and demand by such Lender on Borrower (with a copy of such notice and demand to the Agent), pay to the Agent for the account of such Lender within five Business Days after the date of such notice and demand, additional amounts sufficient to indemnify such Lender against such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower and the Agent by such Lender in good faith and accompanied by a statement prepared by such Lender describing in reasonable detail the basis for and calculation of such increased cost, shall, except for manifest error, be final, conclusive and binding for all purposes. (b) If any Lender shall advise the Agent that at any time, because of the circumstances described in clauses (x) or (y) in Section 3.10(a) or any other circumstances beyond such Lender's reasonable control arising after the date of this Agreement affecting such Lender or the London interbank market or such Lender's position in such market, LIBOR as determined by the Agent will not adequately and fairly reflect the cost to such Lender of funding its Eurodollar Advances, then, and in any such event: (i) the Agent shall forthwith give notice (by telephone confirmed in writing) to Borrower and to the other Lenders of such advice; (ii) Borrower's right to request and such Lender's obligation to make or permit portions of the Loans to remain outstanding past the last day of the then current Interest Periods as Eurodollar Advances shall be immediately suspended; and (iii) such Lender shall make a Loan as part of the requested Borrowing of Eurodollar Advances as a Base Rate Advance, which such Base Rate Advance shall, for all other purposes, be considered part of such Borrowing. Section III.11. Lending Offices. (a) Each Lender agrees that, if requested by Borrower, it will use reasonable efforts (subject to overall policy considerations of such Lender) to designate an alternate Lending Office with respect to any of its Eurodollar Advances affected by the matters or circumstances described in Sections 3.07(b), 3.08, 3.09 or 3.10 to reduce the liability of Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous to such Lender as reasonably determined by such Lender, which determination shall be conclusive and binding on all parties hereto. Nothing in this Section 3.11 shall affect or postpone any of the obligations of Borrower or any right of any Lender provided hereunder. (b) If the Issuing Bank or any Lender that is organized under the laws of any jurisdiction other than the United States of America or any State thereof (including the District of Columbia) issues a public announcement with respect to the closing of its lending offices in the United States such that any withholdings or deductions and additional payments with respect to Taxes may be required to be made by Borrower thereafter pursuant to Section 3.07(b), such Lender or the Issuing Bnak shall use reasonable efforts to furnish Borrower notice thereof as soon as practicable thereafter; provided, however, that no delay or failure to furnish such notice shall in any event release or discharge Borrower from its obligations to such Lender or the Issuing Bank pursuant to Section 3.07(b) or otherwise result in any liability of such Lender or the Issuing Bank; provided that such notice is provided to the Borrower within forty-five (45) days of such Lender or the Issuing Bank obtaining knowledge of the application of such Taxes to payments under this Agreement. Section III.12. Funding Losses. Borrower shall compensate each Lender, upon its written request to Borrower (which request shall set forth the basis for requesting such amounts in reasonable detail and which request shall be made in good faith and, absent manifest error, shall be final, conclusive and binding upon all of the parties hereto), for all losses, expenses and liabilities (including, without limitation, any interest paid by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Advances to the extent not recovered by such Lender in connection with the re-employment of such funds and including loss of anticipated profits), which the Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of, or conversion to or continuation of, Eurodollar Advances to Borrower does not occur on the date specified therefor in a Notice of Borrowing, a Notice of Conversion/Continuation (whether or not withdrawn), (ii) if any repayment (including mandatory prepayments and any conversions pursuant to Section 3.09(b)) of any Eurodollar Advances to Borrower occurs on a date which is not the last day of an Interest Period applicable thereto, or (iii), if, for any reason, Borrower defaults in its obligation to repay its Eurodollar Advances when required by the terms of this Agreement. Section III.13. Assumptions Concerning Funding of Eurodollar Advances. Calculation of all amounts payable to a Lender under this Article IV shall be made as though that Lender had actually funded its relevant Eurodollar Advances through the purchase of deposits in the relevant market bearing interest at the rate applicable to such Eurodollar Advances in an amount equal to the amount of the Eurodollar Advances and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar Advances from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Advances in any manner it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article IV. Section III.14. Apportionment of Payments. Aggregate principal and interest payments in respect of Revolving Loans and Commitment Fees shall be apportioned among all outstanding Commitments and Revolving Loans to which such payments relate, proportionately to the Lenders' respective Pro Rata Share of such Commitments and outstanding Revolving Loans. Each payment of principal and interest of any Swing Line Loan shall be payable solely to the Swing Line Lender except as provided in Section 2.02(d). The Agent shall promptly distribute to each Lender at its payment office set forth beside its name on the appropriate signature page hereof or such other address as any Lender may request its share of all such payments received by the Agent. Section III.15. Termination of Commitments The unpaid principal balance and all accrued and unpaid interest on the Notes will be due and payable upon the first of the following dates or events to occur: (i) acceleration of the maturity of any Note in accordance with the remedies contained in Article VIII of this Agreement, or (ii) upon the expiration of the Commitments. Section III.16. Sharing of Payments, Etc. If any Lender or the Issuing Bank shall obtain any payment or reduction (including, without limitation, any amounts received as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code) of the Obligations (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share of payments or reductions on account of such obligations obtained by all the Lenders (other than payments of principal, interest and fees with respect to the Swing Line Loans which are payable solely to the Swing Line Lender or Lenders participating therein pursuant to Section 2.02(d)), such Lender or the Issuing Bank shall forthwith (i) notify each of the other Lenders, the Issuing Bank, Agent and the Co-Agent of such receipt, and (ii) purchase from the other Lenders or the Issuing Bank such participations in the affected obligations as shall be necessary to cause such purchasing Lender or the Issuing Bank to share the excess payment or reduction, net of costs incurred in connection therewith, ratably with each of them, provided that if all or any portion of such excess payment or reduction is thereafter recovered from such purchasing Lender or the Issuing Bank or additional costs are incurred, the purchase shall be rescinded and the purchase price restored to the extent of such recovery or such additional costs, but without interest unless the Lender or the Issuing Bank is obligated to return such funds is required to pay interest on such funds. Borrower agrees that any Lender or the Issuing Bank so purchasing a participation from another Lender or the Issuing Bank pursuant to this Section 3.16 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender or the Issuing Bank were the direct creditor of Borrower in the amount of such participation. Section III.17. Capital Adequacy. Without limiting any other provision of this Agreement, in the event that any Lender or the Issuing Bank shall have determined that any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital adequacy not currently in effect or fully applicable as of the Closing Date, or any change therein or in the interpretation or application thereof, or compliance by such Lender or Issuing Bank with any request or directive regarding capital adequacy not currently in effect or fully applicable as of the Closing Date (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) from a central bank or governmental authority or body having jurisdiction, does or shall have the effect of reducing the rate of return on such Lender's or Issuing Bank's capital as a consequence of its obligations hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such law, treaty, rule, regulation, guideline or order, or such change or compliance (taking into consideration such Lender's or Issuing Bank's policies with respect to capital adequacy) by an amount deemed by such Lender or Issuing Bank to be material, then within ten (10) Business Days after written notice and demand by such Lender or Issuing Bank (with copies thereof to the Agent), Borrower shall from time to time pay to such Lender or Issuing Bank additional amounts sufficient to compensate such Lender or Issuing Bank for such reduction (but, in the case of outstanding Base Rate Advances, without duplication of any amounts already recovered by such Lender or Issuing Bank by reason of an adjustment in the applicable Base Rate). Each certificate as to the amount payable under this Section 3.17 (which certificate shall set forth the basis for requesting such amounts in reasonable detail), submitted to Borrower by any Lender or Issuing Bank in good faith, shall, absent manifest error, be final, conclusive and binding for all purposes. Section III.18. Letter of Credit Obligations Absolute. The obligation of each Account Party to reimburse the Issuing Bank for drawings made under Letters of Credit issued for the account of the Account Party and the Lenders' obligation to honor their participations purchased therein 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: (a) Any lack of validity or enforceability of any Letter of Credit; (b) The existence of any claim, set-off, defense or other right which the Borrower or any Subsidiary or Affiliate of the Borrower may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such beneficiary or transferee may be acting), any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including without limitation any underlying transaction between the Borrower or any of its Subsidiaries and Affiliates and the beneficiary for which such Letter of Credit was procured); (c) Any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect; (d) Payment by the Issuing Bank under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (e) Any other circumstance or happening whatsoever which is similar to any of the foregoing; or (f) the fact that a Default or an Event of Default shall have occurred and be continuing. Nothing in this Section 3.17 shall prevent an action against the Issuing Bank for its gross negligence or willful misconduct in honoring drafts under the Letters of Credit. ARTICLE IV. CONDITIONS TO BORROWINGS The obligations of each Lender to make Advances to Borrower hereunder is subject to the satisfaction of the following conditions: Section IV.1. Conditions Precedent to Initial Loans. At the time of the making of the initial Loans hereunder on the Closing Date, all obligations of Borrower hereunder incurred prior to the initial Loans and prior to the obligation of the Issuing Bank to issue the initial Letter of Credit (including, without limitation, Borrower's obligations to reimburse fees and expenses payable to the Agent as previously agreed with Borrower), shall have been paid in full, and the Agent shall have received the following, in form and substance reasonably satisfactory in all respects to the Agent: (a) the duly executed counterparts of this Agreement; (b) the duly executed Revolving Credit Notes evidencing the Revolving Credit Commitments and the duly executed Swing Line Note evidencing the Swing Line Subfacility; (c) the duly executed Guaranty Agreement; (d) the duly executed Closing Certificate; (e) certificates of the Secretaries or Assistant Secretaries of the Credit Parties attaching and certifying copies of the resolutions of the board of directors of the Credit Parties, authorizing as applicable the execution, delivery and performance of the Credit Documents by the Credit Parties party thereto; (f) certificates of the Secretaries or an Assistant Secretary of the Credit Parties certifying (i) the name, title and true signature of each officer of the Credit Parties executing the Credit Documents, and (ii) the bylaws of the Credit Parties; (g) certified copies of the articles or certificate of incorporation of the Credit Parties certified by the Secretaries of State and by the Secretaries or Assistant Secretaries of the Credit Parties, together with certificates of good standing or existence, as may be available from the Secretaries of State of the jurisdiction of incorporation or organization of the Credit Parties and each other jurisdiction where the Credit Parties ownership of property or the conduct of its business require it to be qualified, except where a failure to be so qualified would not have a Materially Adverse Effect; (h) acknowledgments from CSC Corporation as to its appointment as agent for service of process for the Credit Parties; (i) the favorable opinion of Powell, Goldstein, Frazer & Murphy, LLP, counsel to the Borrower in the form of Exhibit E, addressed to the Agent, the Co-Agent and each of the Lenders. (j) copies of all documents and instruments, including all consents, authorizations and filings, required or advisable under any Requirement of Law or by any material Contractual Obligation of the Credit Parties, in connection with the execution, delivery, performance, validity and enforceability of the Credit Documents and the other documents to be executed and delivered hereunder, and such consents, authorizations, filings and orders shall be in full force and effect and all applicable waiting periods shall have expired; (k) certificates, reports and other information as the Agent may reasonably request from any Consolidated Company in order to satisfy the Lenders as to the absence of any material liabilities or obligations arising from matters relating to employees of the Consolidated Companies, including employee relations, collective bargaining agreements, Plans and other compensation and employee benefit plans; (l) [Reserved] (m) certified copies of the Sharing Agreements; (n) certificate of insurance issued by the Borrower's insurers, describing in reasonable detail the insurance maintained by the Borrower. (o) the Agent shall have received, for its own account, all costs and expenses incurred which have been invoiced and are payable on the date hereof, including without limitation, all costs and expenses actually incurred associated with the execution and delivery of this Agreement and the other documents contemplated hereby. The Agent shall have received for the account of King & Spalding, counsel to the Agent, all reasonable costs and expenses actually incurred which have been invoiced and are due and payable as of the date hereof. (p) certificates, reports and other information as the Agent may reasonably request from any Consolidated Company in order to satisfy the Lenders as to the absence of any material liabilities or obligations arising from litigation (including without limitation, products liability and patent infringement claims) pending or threatened against the Consolidated Companies; and (q) evidence assuring the Agent, the Co- Agent and the Lenders that all corporate proceedings and all other legal matters in connection with the authorization, legality, validity and enforceability of the Credit Documents and the Transaction are in form and substance satisfactory to the Lenders. Section IV.2. Conditions to Each Loan. At the time of the making of each Loan (but not including the continuation or conversion of any Revolving Loan or in the same principal amount or any Revolving Loan pursuant to Section 2.02(c)), including the initial Loans hereunder, (before as well as immediately after giving effect to such Loans and to the proposed use of the proceeds thereof), the following conditions shall have been satisfied or shall exist: (a) there shall exist no Default or Event of Default and no Default or Event of Default shall result after giving effect to such Loan; (b) all representations and warranties by Borrower contained herein shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Loans; (c) the Loans to be made and the use of proceeds thereof shall not contravene, violate or conflict with, or involve the Agent, the Co-Agent or any Lender in a violation of, any law, rule, injunction, or regulation, or determination of any court of law or other governmental authority applicable to Borrower; (d) since the date of the most recent financial statements of the Consolidated Companies described in Section 5.15 or delivered to the Agent pursuant to Section 6.07, there shall have been no change which has had or could reasonably be expected to have a Materially Adverse Effect; and (e) the Agent shall have received such other documents or legal opinions as the Agent or any Lender may reasonably request, all in form and substance reasonably satisfactory to the Agent. Each request for a Borrowing or a Swing Line Loan and the acceptance by Borrower of the proceeds thereof shall constitute a representation and warranty by Borrower, as of the date of the Loans comprising such Borrowing, that the applicable conditions specified in Sections 4.01 and 4.02 have been satisfied. ARTICLE V. REPRESENTATIONS AND WARRANTIES Borrower (as to itself and all other Consolidated Companies) represents and warrants as follows. Section V.1. Corporate Existence; Compliance with Law. Each of the Consolidated Companies is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation, and each of the Consolidated Companies has the corporate power and authority and the legal right to own and operate its property and to conduct its business. Each of the Consolidated Companies (i) has the corporate power and authority and the legal right to own and operate its property and to conduct its business, (ii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership of property or the conduct of its business requires such qualification, and (iii) is in compliance with all Requirements of Law, where (a) the failure to have such power, authority and legal right as set forth in clause (i), (b) the failure to be so qualified or in good standing as set forth in clause (ii), or (c) the failure to comply with Requirements of Law as set forth in clause (iii), would reasonably be expected, in the aggregate, to have a Materially Adverse Effect. The jurisdiction of incorporation or organization, and the ownership of all issued and outstanding capital stock, for each Subsidiary as of the date of this Agreement is accurately described on Schedule 5.01. Section V.2. Corporate Power; Authorization. Each of the Credit Parties has the corporate power and authority to make, deliver and perform the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of such Credit Documents. No consent or authorization of, or filing with, any Person (including, without limitation, any governmental authority), is required in connection with the execution, delivery or performance by any Credit Party, or the validity or enforceability against any Credit Party, of the Credit Documents, other than such consents, authorizations or filings which have been made or obtained. Section V.3. Possession of Franchises, Licenses, Etc. Except as set forth on Schedule 5.03 or as otherwise wuld not have a Material Adverse Effect, (a) each of the Credit Parties possesses all franchises, certificates, licenses, permits and other authorizations from governmental political subdivisions or regulatory authorities that are necessary in any material respect for the ownership, maintenance and operation of its properties and assets, and (b) no Credit Party is in violation of any thereof in any material respect. Section V.4. Enforceable Obligations. This Agreement has been duly executed and delivered, and each other Credit Document will be duly executed and delivered, by the respective Credit Parties, and this Agreement constitutes, and each other Credit Document when executed and delivered will constitute, legal, valid and binding obligations of the Credit Parties, respectively, enforceable against the Credit Parties in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. Section V.5. No Legal Bar. The execution, delivery and performance by the Credit Parties of the Credit Documents will not violate any Requirement of Law or cause a breach or default under any of their respective material Contractual Obligations. Section V.6. No Material Litigation. Except as set forth on Schedule 5.06 or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(e) at or prior to the respective times the representations and warranties set forth in this Section 5.06 are made or deemed to be made hereunder, no litigation, investigations or proceedings of or before any courts, tribunals, arbitrators or governmental authorities are pending or, to the knowledge of Borrower, threatened by or against any of the Consolidated Companies, or against any of their respective properties or revenues, which, if adversely determined would reasonably be expected to have a Material Adverse Effect. Section V.7. Investment Company Act, Etc. None of the Credit Parties is an "investment company" or a company "controlled" by an "investment company" (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended). None of the Credit Parties is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any foreign, federal or local statute or regulation limiting its ability to incur indebtedness for money borrowed, guarantee such indebtedness, or pledge its assets to secure such indebtedness, as contemplated hereby or by any other Credit Document. Section V.8. Margin Regulations. No part of the proceeds of any of the Loans will be used for any purpose which violates, or which would be inconsistent or not in compliance with, the provisions of the applicable Margin Regulations. Section V.9. Compliance With Environmental Laws. (a) The Consolidated Companies have received no notices of claims or potential liability under, and are in compliance with, all applicable Environmental Laws, where such claims and liabilities under, and failures to comply with, such statutes, regulations, rules, ordinances, laws or licenses, would reasonably be expected to result in penalties, fines, claims or other liabilities to the Consolidated Companies in amounts in excess of $2,500,000, either individually or in the aggregate (including any such penalties, fines, claims, or liabilities relating to the matters set forth on Schedule 5.09(a)), except as set forth on Schedule 5.09(a) or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(f) at or prior to the respective times the representations and warranties set forth in this Section 5.09(a) are made or deemed to be made hereunder. (b) Except as set forth on Schedule 5.09(b) or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(f) at or prior to the respective times the representations and warranties set forth in this Section 5.09(b) are made or deemed to be made hereunder, none of the Consolidated Companies has received any notice of violation, or notice of any action, either judicial or administrative, from any governmental authority (whether United States or foreign) relating to the actual or alleged violation of any Environmental Law, including, without limitation, any notice of any actual or alleged spill, leak, or other release of any Hazardous Substance, waste or hazardous waste by any Consolidated Company or its employees or agents, or as to the existence of any contamination on any properties owned by any Consolidated Company, where any such violation, spill, leak, release or contamination would reasonably be expected to result in penalties, fines, claims or other liabilities to the Consolidated Companies in amounts in excess of $2,500,000, either individually or in the aggregate. (c) Except as set forth on Schedule 5.09(c), the Consolidated Companies have obtained all necessary governmental permits, licenses and approvals which are material to the operations conducted on their respective properties, including without limitation, all required material permits, licenses and approvals for (i) the emission of air pollutants or contaminants, (ii) the treatment or pretreatment and discharge of waste water or storm water, (iii) the treatment, storage, disposal or generation of hazardous wastes, (iv) the withdrawal and usage of ground water or surface water, and (v) the disposal of solid wastes. Section V.10. Insurance. The Consolidated Companies currently maintain insurance with respect to their respective properties and businesses, with financially sound and reputable insurers, having coverages against losses or damages of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance being in amounts no less than those amounts which are customary for such companies under similar circumstances. The Consolidated Companies have paid all material amounts of insurance premiums now due and owing with respect to such insurance policies and coverages, and such policies and coverages are in full force and effect. Section V.11. No Default. Except as set forth on Schedule 5.11, none of the Consolidated Companies is in default under or with respect to any Contractual Obligation in any respect which default or defaults would be reasonably expected in the aggregate to have a Materially Adverse Effect. Section V.12. No Burdensome Restrictions. Except as set forth on Schedule 5.12 or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(k) at or prior to the respective times the representations and warranties set forth in this Section 5.12 are made or deemed to be made hereunder, none of the Consolidated Companies is a party to or bound by any Contractual Obligation or Requirement of Law which has had or would reasonably be expected to have a Materially Adverse Effect. Section V.13. Taxes. Except as set forth on Schedule 5.13, each of the Consolidated Companies have filed or caused to be filed all declarations, reports and tax returns which are required to have been filed, and has paid all taxes, custom duties, levies, charges and similar contributions ("taxes" in this Section 5.13) shown to be due and payable on said returns or on any assessments made against it or its properties, and all other taxes, fees or other charges imposed on it or any of its properties by any governmental authority (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided in its books); and no tax liens have been filed and, to the knowledge of Borrower, no claims are being asserted with respect to any such taxes, fees or other charges. Section V.14. Subsidiaries. Except as disclosed on Schedule 5.01, on the date of this Agreement, Borrower has no Subsidiaries and neither Borrower nor any Subsidiary is a joint venture partner or general partner in any partnership. Except as disclosed on Schedule 5.14 or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(l) at or prior to the respective times the representations and warranties set forth in this Section 5.14 are made or deemed to be made hereunder, Borrower has no Material Subsidiaries. Section V.15. Financial Statements. Borrower has furnished to the Agent, the Co-Agent, the Issuing Bank and the Lenders: (a) Audited Reports. The audited consolidated balance sheet as of May 31, 1997 of the Consolidated Companies and the related consolidated statements of income, shareholders' equity and cash flows for the Fiscal Years then ended, including in each case the related schedules and notes, setting forth in each case in comparative form the figures for the previous Fiscal Year of the Consolidated Companies. The foregoing financial statements fairly present in all material respects the consolidated financial condition of the Consolidated Companies as at the dates thereof and results of operations for such periods in conformity with GAAP consistently applied; (b) No Material Adverse Change. Since the date of the preparation of the financial statements set forth above, there have been no changes with respect to the Consolidated Companies which has had or would reasonably be expected to have a Materially Adverse Effect. Section V.16. ERISA. Except as disclosed on Schedule 5.16 or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(g) at or prior to the respective times the representations and warranties set forth in this Section 5.16 are made or deemed to be made hereunder: (1) Identification of Plans. None of the Consolidated Companies nor any of their respective ERISA Affiliates maintains or contributes to, or has during the past seven years maintained or contributed to, any Plan that is subject to Title IV of ERISA; (2) Compliance. Each Plan maintained by the Consolidated Companies have at all times been maintained, by their terms and in operation, in compliance with all applicable laws, and the Consolidated Companies are subject to no tax or penalty with respect to any Plan of such Consolidated Company or any ERISA Affiliate thereof, including without limitation, any tax or penalty under Title I or Title IV of ERISA or under Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of deduction under Sections 162, 404, or 419 of the Tax Code, where the failure to comply with such laws, and such taxes and penalties, together with all other liabilities referred to in this Section 5.16 (taken as a whole), would in the aggregate have a Materially Adverse Effect; (3) Liabilities. The Consolidated Companies are subject to no liabilities (including withdrawal liabilities) with respect to any Plans of such Consolidated Companies or any of their ERISA Affiliates, including without limitation, any liabilities arising from Titles I or IV of ERISA, other than obligations to fund benefits under an ongoing Plan and to pay current contributions, expenses and premiums with respect to such Plans, where such liabilities, together with all other liabilities referred to in this Section 6.15 (taken as a whole), would in the aggregate have a Materially Adverse Effect; (4) Funding. The Consolidated Companies and, with respect to any Plan which is subject to Title IV of ERISA, each of their respective ERISA Affiliates, have made full and timely payment of all amounts (A) required to be contributed under the terms of each Plan and applicable law, and (B) required to be paid as expenses (including PBGC or other premiums) of each Plan, where the failure to pay such amounts (when taken as a whole, including any penalties attributable to such amounts) would have a Materially Adverse Effect. No Plan subject to Title IV of ERISA (other than a Multiemployer Plan) has an "amount of unfunded benefit liabilities" (as defined in Section 4001(a)(18) of ERISA), determined as if such Plan terminated on any date on which this representation and warranty is deemed made, in any amount which, together with all other liabilities referred to in this Section 5.16 (taken as a whole), would have a Materially Adverse Effect if such amount were then due and payable. None of the Consolidated Companies would be subject to withdrawal liability with respect to any Multiemployer Plan, determined as if the event resulting in such withdrawal liability occurred on any date on which this representation is made or deemed to be made based on the most recent actuarial valuation data made available to employers participating in the Multiemployer Plan, in any amount which, together with all other liabilities referred to in this Section 5.16 (taken as a whole), would have a Materially Adverse Effect if such amounts were then due and payable. The Consolidated Companies are subject to no liabilities with respect to post-retirement medical benefits in any amounts which, together with all other liabilities referred to in this Section 5.16 (taken as a whole), would have a Materially Adverse Effect if such amounts were then due and payable. Section V.17. Patents, Trademarks, Licenses, Etc. Except as set forth on Schedule 5.17, (i) the Consolidated Companies have obtained and hold in full force and effect all material patents, trademarks, service marks, trade names, copyrights, licenses and other such rights, free from material burdensome restrictions, which are necessary for the operation of their respective businesses as presently conducted, and (ii) to the best of Borrower's knowledge, no product, process, method, service or other item presently sold by or employed by any Consolidated Company in connection with such business infringes any patents, trademark, service mark, trade name, copyright, license or other right owned by any other person and there is not presently pending, or to the knowledge of Borrower, threatened, any claim or litigation against or affecting any Consolidated Company contesting such Person's right to sell or use any such product, process, method, substance or other item where the result of such failure to obtain and hold such benefits or such infringement would have a Materially Adverse Effect. Section V.18. Ownership of Property. Except as set forth on Schedule 5.18, each Consolidated Company has good and marketable fee simple title to or a valid leasehold interest in all of its real property and good title to, or a valid leasehold interest in, all of its other property, as such properties are reflected in the financial statements referred to in Section 5.15(a), other than properties disposed of in the ordinary course of business since such date or as otherwise permitted by the terms of this Agreement, subject to no Lien or title defect of any kind, except Permitted Liens. The Consolidated Companies enjoy peaceful and undisturbed possession under all of their respective material leases. Section V.19. Indebtedness. As of the Closing Date, except for the Indebtedness set forth on Schedule 7.01, none of the Consolidated Companies is an obligor in respect of any Indebtedness for borrowed money or any commitment to create or incur any Indebtedness for borrowed money. Section V.20. Financial Condition. On the Closing Date, including without limitation, the use of the proceeds of the Loans as provided in Section 2.01, (i) the assets of each Credit Party at fair valuation and based on their present fair saleable value (including, without limitation, the fair and realistic value of any contribution or subrogation rights in respect of any Guaranty Agreement given by such Credit Party) will exceed such Credit Party's debts, including contingent liabilities (as such liabilities may be limited under the express terms of any Guaranty Agreement of such Credit Party), (ii) the remaining capital of such Credit Party will not be unreasonably small to conduct the Credit Party's business, and (iii) such Credit Party will not have incurred debts, or have intended to incur debts, beyond the Credit Party's ability to pay such debts as they mature. For purposes of this Section 5.20, "debt" means any liability on a claim, and "claim" means (a) the right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (b) the right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. Section V.21. Labor Matters. Except as set forth in Schedule 5.21 or in any notice furnished to the Lenders and the Issuing Bank pursuant to Section 6.07(k) at or prior to the respective times the representations and warranties set forth in this Section 5.21 are made or deemed to be made hereunder, the Consolidated Companies have experienced no strikes, labor disputes, slow downs or work stoppages due to labor disagreements which have had, or would reasonably be expected to have, a Materially Adverse Effect, and, to the best knowledge of Borrower, there are no such strikes, disputes, slow downs or work stoppages threatened against any Consolidated Company. The hours worked and payment made to employees of the Consolidated Companies have not been in violation in any material respect of the Fair Labor Standards Act or any other applicable law dealing with such matters. All payments due from the Consolidated Companies, or for which any claim may be made against the Consolidated Companies, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as liabilities on the books of the Consolidated Companies where the failure to pay or accrue such liabilities would reasonably be expected to have a Materially Adverse Effect. Section V.22. Payment or Dividend Restrictions. Except as described on Schedule 5.22, none of the Consolidated Companies is party to or subject to any agreement or understanding restricting or limiting the payment of any dividends or other distributions by any such Consolidated Company. Section V.23. Sharing Agreements. Each of the Sharing Agreements is in full force and effect and no material default exists thereunder. Section V.24. Disclosure. No representation or warranty contained in this Agreement (including the Schedules attached hereto) or in any other document furnished from time to time pursuant to the terms of this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary to make the statements herein or therein not misleading in any material respect as of the date made or deemed to be made. Except as may be set forth herein (including the Schedules attached hereto), there is no fact known to Borrower which has had, or is reasonably expected to have, a Materially Adverse Effect. Section V.25. Year 2000 Compliant. Borrower and its Subsidiaries shall be Year 2000 Compliant by December 31, 1999, except where a failure to be Year 2000 Compliant will not have a Materially Adverse Effect. ARTICLE VI. AFFIRMATIVE COVENANTS So long as any Commitment remains in effect hereunder or any Note shall remain unpaid, Borrower will: Section VI.1. Corporate Existence, Etc. Preserve and maintain, and cause each of its Material Subsidiaries to preserve and maintain, its corporate existence, its material rights, franchises, and licenses, and its material patents and copyrights (for the scheduled duration thereof), trademarks, trade names, and service marks, necessary or desirable in the normal conduct of its business, and its qualification to do business as a foreign corporation in all jurisdictions where it conducts business or other activities making such qualification necessary, where the failure to be so qualified would reasonably be expected to have a Materially Adverse Effect. Section VI.2. Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply with all Requirements of Law (including, without limitation, the Environmental Laws subject to the exception set forth in Section 5.09 where the penalties, claims, fines, and other liabilities resulting from noncompliance with such Environmental Laws do not involve amounts in excess of $2,500,000 in the aggregate) and Contractual Obligations applicable to or binding on any of them where the failure to comply with such Requirements of Law and Contractual Obligations would reasonably be expected to have a Materially Adverse Effect. Section VI.3. Payment of Taxes and Claims, Etc. Pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and governmental charges imposed upon it or upon its property, and (ii) all claims (including, without limitation, claims for labor, materials, supplies or services) which might, if unpaid, become a Lien upon its property, unless, in each case, the validity or amount thereof is being contested in good faith by appropriate proceedings and adequate reserves are maintained with respect thereto. Section VI.4. Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, containing complete and accurate entries of all their respective financial and business transactions. Section VI.5. Visitation, Inspection, Etc. Permit, and cause each of its Subsidiaries to permit, any representative of the Agent, the Co-Agent, the Issuing Bank or any Lender to visit and inspect any of its property, to examine its books and records and to make copies and take extracts therefrom, and to discuss its affairs, finances and accounts with its officers, all at such reasonable times and as often as the Agent, the Co-Agent, the Issuing Bank or such Lender may reasonably request. Section VI.6. Insurance; Maintenance of Properties. (a) Maintain or cause to be maintained with financially sound and reputable insurers, insurance with respect to its properties and business, and the properties and business of its Subsidiaries, against loss or damage of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance to be of such types and in such amounts as is customary for such companies under similar circumstances; provided, however, that in any event Borrower shall use its best efforts to maintain, or cause to be maintained, insurance in amounts and with coverages not materially less favorable to any Consolidated Company as in effect on the date of this Agreement. (b) Cause, and cause each of the Consolidated Companies to cause, all properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, settlements and improvements thereof, all as in the judgment of Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. Section VI.7. Reporting Covenants. Furnish to each Lender and the Issuing Bank: (a) Annual Financial Statements. As soon as available and in any event within 90 days after each Fiscal Year End of Borrower, balance sheets of the Consolidated Companies as at the end of such year, presented on a consolidated basis, and the related statements of income, shareholders' equity, and cash flows of the Consolidated Companies for such Fiscal Year, presented on a consolidated basis, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and accompanied by a report thereon of Ernst & Young, L.L.P. or other independent public accountants of comparable recognized national standing, which such report shall be unqualified as to going concern and scope of audit and shall state that such financial statements present fairly in all material respects the financial condition as at the end of such Fiscal Year on a consolidated basis, and the results of operations and statements of cash flows of the Consolidated Companies for such Fiscal Year in accordance with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (b) Quarterly Financial Statements. As soon as available and in any event within 45 days after the end of each fiscal quarter of Borrower (other than the fourth fiscal quarter), balance sheets of the Consolidated Companies as at the end of such quarter presented on a consolidated basis and the related statements of income, shareholders' equity, and cash flows of the Consolidated Companies for such fiscal quarter and for the portion of Borrower's Fiscal Year ended at the end of such quarter, presented on a consolidated basis setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of Borrower's previous Fiscal Year, all in reasonable detail and certified by the chief financial officer or principal accounting officer of Borrower that such financial statements fairly present in all material respects the financial condition of the Consolidated Companies as at the end of such fiscal quarter on a consolidated basis, and the results of operations and statements of cash flows of the Consolidated Companies for such fiscal quarter and such portion of Borrower's Fiscal Year, in accordance with GAAP consistently applied (subject to normal year-end audit adjustments and the absence of certain footnotes); (c) No Default/Compliance Certificate. Together with the financial statements required pursuant to subsections (a) and (b) above, a certificate of the treasurer or chief financial officer of Borrower (i) to the effect that, based upon a review of the activities of the Consolidated Companies and such financial statements during the period covered thereby, there exists no Event of Default and no Default under this Agreement, or if there exists an Event of Default or a Default hereunder, specifying the nature thereof and the proposed response thereto, and (ii) demonstrating in reasonable detail compliance as at the end of such Fiscal Year or such fiscal quarter with Section 6.08 and Sections 7.01 through 7.05; (d) Notice of Default. Promptly after any Executive Officer of Borrower has notice or knowledge of the occurrence of an Event of Default or a Default, a certificate of the chief financial officer or principal accounting officer of Borrower specifying the nature thereof and the proposed response thereto; (e) Litigation. Promptly after (i) the occurrence thereof, notice of the institution of or any material adverse development in any material action, suit or proceeding or any governmental investigation or any arbitration, before any court or arbitrator or any governmental or administrative body, agency or official, against any Consolidated Company, or any material property of any thereof seeking money damages in excess of $2,500,000 or which, if adversely determined, would otherwise reasonably be expected to have a Materially Adverse Effect, or (ii) actual knowledge thereof, notice of the threat of any such action, suit, proceeding, investigation or arbitration; (f) Environmental Notices. Promptly after receipt thereof, notice of any actual or alleged violation, or notice of any action, claim or request for information, either judicial or administrative, from any governmental authority relating to any actual or alleged claim, notice of potential responsibility under or violation of any Environmental Law, or any actual or alleged spill, leak, disposal or other release of any waste, petroleum product, or hazardous waste or Hazardous Substance by any Consolidated Company which could result in penalties, fines, claims or other liabilities to any Consolidated Company in amounts in excess of $2,500,000; (g) ERISA. (i) Promptly after the occurrence thereof with respect to any Plan of any Consolidated Company or any ERISA Affiliate thereof, or any trust established thereunder, notice of (A) a "reportable event" described in Section 4043 of ERISA and the regulations issued from time to time thereunder (other than a "reportable event" not subject to the provisions for 30-day notice to the PBGC under such regulations), or (B) any other event which could subject any Consolidated Company to any tax, penalty or liability under Title I or Title IV of ERISA or Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of deduction under Sections 162, 404 or 419 of the Tax Code, where any such taxes, penalties or liabilities exceed or could exceed $2,500,000 in the aggregate; (ii) Promptly after such notice must be provided to the PBGC, or to a Plan participant, beneficiary or alternative payee, any notice required under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412 of the Tax Code with respect to any Plan of any Consolidated Company or any ERISA Affiliate thereof; (iii) Promptly after receipt, any notice received by any Consolidated Company or any ERISA Affiliate thereof concerning the intent of the PBGC or any other governmental authority to terminate a Plan of such Company or ERISA Affiliate thereof which is subject to Title IV of ERISA, to impose any liability on such Company or ERISA Affiliate under Title IV of ERISA or Chapter 43 of the Tax Code; (iv) Upon the request of the Agent, promptly upon the filing thereof with the Internal Revenue Service ("IRS") or the Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report for each Plan of any Consolidated Company or ERISA Affiliate thereof which is subject to Title IV of ERISA; (v) Upon the request of the Agent, (A) true and complete copies of any and all documents, government reports and IRS determination or opinion letters or rulings for any Plan of any Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed with the IRS, PBGC or DOL with respect to a Plan of the Consolidated Companies or any ERISA Affiliate thereof, or (C) a current statement of withdrawal liability for each Multiemployer Plan of any Consolidated Company or any ERISA Affiliate thereof; (h) Liens. Promptly upon any Consolidated Company becoming aware thereof, notice of the filing of any federal statutory Lien, tax or other state or local government Lien or any other Lien affecting their respective properties, other than Permitted Liens; (i) Public Filings, Etc. Promptly upon the filing thereof or otherwise becoming available, copies of all financial statements, annual, quarterly and special reports, proxy statements and notices sent or made available generally by Borrower to its public security holders, of all regular and periodic reports and all registration statements and prospectuses, if any, filed by any of them with any securities exchange, and of all press releases and other statements made available generally to the public containing material developments in the business or financial condition of Borrower and the other Consolidated Companies; (j) Accountants' Reports. Promptly upon receipt thereof, copies of all financial statements of, and all reports submitted by, independent public accountants to Borrower in connection with each annual, interim, or special audit of Borrower's financial statements, including without limitation, the comment letter submitted by such accountants to management in connection with their annual audit; (k) Burdensome Restrictions, Etc. Promptly upon the existence or occurrence thereof, notice of the existence or occurrence of (i) any Contractual Obligation or Requirement of Law described in Section 5.12, (ii) failure of any Consolidated Company to hold in full force and effect those material trademarks, service marks, patents, trade names, copyrights, licenses and similar rights necessary in the normal conduct of its business, and (iii) any strike, labor dispute, slow down or work stoppage as described in Section 5.21; (l) New Material Subsidiaries. Within 30 days after the formation or acquisition of any Material Subsidiary, or any other event resulting in the creation of a new Material Subsidiary, notice of the formation or acquisition of such Material Subsidiary or such occurrence, including a description of the assets of such entity, the activities in which it will be engaged, and such other information as the Agent, the Co-Agent, the Issuing Bank and any of the Lenders may request; (m) Intercompany Asset Transfers. Promptly upon the occurrence thereof, notice of the transfer of any assets from any Credit Party to any other Consolidated Company that is not a Credit Party in any transaction or series of related transactions, where either the book value or the fair market value of such assets is greater than $2,500,000 (excluding sales or other transfers of assets in the ordinary course of business); and (n) Other Information. With reasonable promptness, such other information about the Consolidated Companies as the Agent, the Co-Agent, the Issuing Bank or any Lender may reasonably request from time to time. Section VI.8. Financial Covenants. (a) Fixed Charge Coverage. Maintain a Fixed Charge Coverage Ratio at all times greater than 3.00:1.00, measured as of the last day of each fiscal quarter of the Borrower, commencing on the last day of the fiscal quarter ending on August 31, 1998, for the immediately preceding four quarters ending on such date. (b) Leverage Ratio. Maintain a Leverage Ratio at all times of not more than 3.00:1.0, measured as of the last day of each fiscal quarter of the Borrower, commencing on the last day of the fiscal quarter ending on August 31, 1998, for the immediately preceding four quarters ending on such date. Section VI.9. Notices Under Certain Other Indebtedness. Immediately upon its receipt thereof, Borrower shall furnish the Agent a copy of any notice received by it or any other Consolidated Company from the holder(s) of Indebtedness referred to in Section 7.01(b), (c), (f), (g) or (i) (or from any trustee, agent, attorney, or other party acting on behalf of such holder(s)) in an amount which, in the aggregate, exceeds $2,500,000, where such notice states or claims (i) the existence or occurrence of any default or event of default with respect to such Indebtedness under the terms of any indenture, loan or credit agreement, debenture, note, or other document evidencing or governing such Indebtedness, or (ii) the existence or occurrence of any event or condition which requires or permits holder(s) of any Indebtedness to exercise rights under any Change in Control Provision. Section VI.10. Additional Credit Parties and Collateral. Promptly after (i) the formation or acquisition of any Material Subsidiary not listed on Schedule 5.14, (ii) the transfer of assets to any Consolidated Company if notice thereof is required to be given pursuant to Section 6.07(m) and as a result thereof the recipient of such assets becomes a Material Subsidiary, or (iii) the occurrence of any other event creating a new Material Subsidiary, Borrower shall cause to be executed and delivered a Supplement to Subsidiary Guaranty Agreement from each such Material Subsidiary, together with related corporate authorization documents, organizational documents, secretary's certificates and opinions, all in form and substance satisfactory to the Agent and the Required Lenders. ARTICLE VII. NEGATIVE COVENANTS So long as any Commitment remains in effect hereunder or any Note shall remain unpaid, Borrower will not and will not permit any Subsidiary to: Section VII.1. Indebtedness. Create, incur, assume, guarantee, suffer to exist or otherwise become liable on or with respect to, directly or indirectly, any Indebtedness, other than: (a) Indebtedness of the Borrower under this Agreement and of the Material Subsidiary of Borrower pursuant to the Guaranty Agreement; (b) Indebtedness outstanding or incurred on the Closing Date and described on Schedule 7.01 (c) purchase money Indebtedness to the extent secured by a Lien permitted by Section 7.02(b) in an aggregate principal amount at any time outstanding not to exceed $5,000,000; (d) unsecured current liabilities (other than liabilities for borrowed money or liabilities evidenced by promissory notes, bonds or similar instruments) incurred in the ordinary course of business and either (i) not more than 30 days past due, or (ii) being disputed in good faith by appropriate proceedings with reserves for such disputed liability maintained in conformity with GAAP; (e) Indebtedness of Borrower or any of its Subsidiaries under Interest Rate Contracts; (f) Subordinated Debt of the Borrower (but not Subsidiaries of the Borrower) expressly approved in writing by the Lenders; (g) Guarantees of advances to officers and employees in the ordinary course of business, or Guarantees otherwise disclosed to and approved in writing by the Agent and the Required Lenders; (h) Endorsements of instruments for deposit or collection in the ordinary course of business; (i) Unsecured Indebtedness of the Borrower pursuant to short term lines of credit in an aggregate principal amount at any one time outstanding not to exceed $5,000,000; (j) Indebtedness with respect to letters of credit permitted by Section 7.05; (k) Up to $25,000,000 of additional Indebtedness at any time outstanding for the purpose of issuing variable or fixed rate demand notes or bonds for the benefit of Borrower or any of its Subsidiaries to finance one or more advanced culinary center. Section VII.2. Liens. Create, incur, assume or suffer to exist any Lien on any of its property now owned or hereafter acquired to secure any Indebtedness other than: (a) Liens existing on the Closing Date and disclosed on Schedule 7.02; (b) any Lien on any property and proceeds thereof securing Indebtedness permitted by Section 7.01(c) or 7.01(k) above incurred or assumed for the purpose of financing all or any part of the cost of acquiring, developing, constructing, installing or equipping such property and any refinancing thereof, provided that such Lien does not extend to any other property (other than the proceeds of such property); (c) Liens for taxes not yet due, and Liens for taxes or Liens imposed by ERISA which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (d) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law and created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (e) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (f) zoning, easements and restrictions on the use of real property which do not materially impair the use of such property; and (g) rights in property reserved or vested in any governmental authority which do not materially impair the use of such property. Section VII.3. Mergers, Sales, Acquisitions. (a) Merge or consolidate with any other Person, except that this Section 7.03 shall not apply to: (i) any merger or consolidation of Borrower with any other Person provided that the Borrower is the surviving corporation after such merger or consolidation, (ii) any merger or consolidation of any of the Borrower's Subsidiaries with any other Person provided that any such Subsidiary shall be the surviving corporation after such merger or consolidation, or (iii) any merger between Subsidiaries of Borrower; or (b) sell, lease, transfer or otherwise dispose of its accounts, property or other assets (including capital stock of any Subsidiary of Borrower), except that this Section 7.03 shall not apply to: (i) any sale, lease, transfer or other disposition of assets of any Subsidiary of the Borrower to the Borrower or any of its Material Subsidiaries, (ii) sales of inventory in the ordinary course of business of the Borrower and its Subsidiaries, (iii) disposition of equipment or inventory determined in good faith to be obsolete or unusable by the Borrower or its Subsidiaries, or (iv) any other sale of the Borrower's assets during the term of this Agreement; provided that, such assets (x) have an aggregate book value, which when aggregated with all other such sales since the Closing Date, do not exceed seven and one-half percent (7.5%) of the aggregate book value of all of the Borrower's assets on the date of such transfer, and (y) when aggregated with all other assets of Borrower sold during such Fiscal Year, did not produce or otherwise account for more than ten percent (10%) of Consolidated EBITDA during the preceding Fiscal Year (or in the case of the first year of this Agreement, any of the four preceding fiscal quarters of the Borrower); (c) purchase, lease or otherwise acquire for cash, stock or other consideration, the stock of any Person or all or any substantial portion of the assets of any Person, unless such stock, assets or other considerations have fair market value in any one transaction less than $10,000,000, or less than $20,000,000 in the aggregate per Fiscal Year, and the Borrower provides to the Lenders the following information: (i) a description in reasonable detail of the assets proposed to be purchased in the transaction; and (ii) a certificate by the Chief Financial Officer of the Borrower stating that (1) after giving effect any such transaction in this Section 7.03(c) the covenants described in Section 6.08 have been met and (2) that no Default or Event of Default will exist as a result of the transaction; provided, however, that no transaction pursuant to clause (a), clause (b)(i), clause (b)(iv) or clause (c) above shall be permitted if any Default or Event of Default exists at the time of such transaction or would exist as a result of such transaction. Section VII.4. Investments, Loans, Etc. Make, permit or hold any Investments in any Person, or otherwise acquire or hold any Subsidiaries, other than: (a) Investments in (i) Subsidiaries of Borrower existing as of the Closing Date, (ii) Material Subsidiaries with respect to which the Borrower has complied with Section 6.10, and (iii) Subsidiaries created or acquired thereafter in connection with any acquisition permitted by Section 7.03(c) to the extent permitted by Section 7.03 in any Fiscal Year. (b) Investments in the stock or other assets of any other Person that is engaged in a business permitted by Section 7.08 hereof that, as a result of such Investment, becomes a wholly-owned Subsidiary of Borrower (other than Hostile Acquisitions); provided, however, that the aggregate amount of Investments made pursuant to this subsection (b) shall not exceed, (x) in the case of the acquisition of the stock or assets of any Person or related Persons, an aggregate amount of $1,500,000, and (y) an aggregate amount of $5,000,000 during any Fiscal Year of the Borrower; (c) marketable direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case supported by the full faith and credit of the United States and maturing within one year from the date of creation thereof; (d) Investments received in settlement of Indebtedness created in the ordinary course of business; (e) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, the interest from which is exempt from Federal income taxes, maturing within one year from the date of acquisition thereof and either having as at any date of determination the one of the two highest ratings obtainable from either Standard & Poor's or Moody's; (f) unsecured commercial paper, the interest from which is exempt from Federal income taxes, maturing no more than 270 days from the date of creation and having as at any date of determination either the highest rating obtainable from either Standard & Poor's or Moody's; (g) commercial paper issued by corporations, each of which has a consolidated net worth of not less than $500,000,000, and conducts a substantial portion of its business in the United States of America, maturing no more than 365 days from the date of acquisition thereof and having as at any date of determination the highest rating obtainable from either Standard & Poor's or Moody's; and (h) money market or similar depository accounts, certificates of deposit or bankers acceptances, in each case redeemable upon demand or maturing within one year from the date of acquisition thereof, issued by commercial banks incorporated under the laws of the United States of America or any state thereof or the District of Columbia, provided (x) each such bank has at any date of determination combined capital and surplus of not less than $1,000,000,000 and a rating of its long-term debt of at least A by Standard & Poor's or at least A by Moody's or a long-term deposit rating of at least A issued by Standard & Poor's or at least A issued by Moody's, (y) the aggregate amount of all such certificates of deposit issued by such bank are fully insured at all times by the Federal Deposit Insurance Company; provided however, notwithstanding the foregoing, the Borrower and any Subsidiary may continue to own any Investment which (A) complied with the provisions of clauses (f), (g) or (h) at the time such Investment was made and (B) at any date of determination does not so comply solely because (x) such Investment no longer has the rating required from Standard & Poor's or Moody's or (y) the bank having the money market or depository account or issuing the certificate of deposit or bankers acceptance ceases to have the required level of capital and surplus or to have a rating of its long-term debt of at least A by Standard & Poor's or at least A by Moody's or to have a long-term deposit rating of at least A by Standard & Poor's or at least A by Moody's, if, and for so long as, in the good faith judgment of the relevant Executive Officer, no loss of the principal amount of such Investment would occur as the result of the Borrower or such Subsidiary continuing to own such Investment to maturity. Nothing contained in the foregoing proviso shall be deemed to be applicable to any new or renewed Investment at the time such Investment is made or renewed. Section VII.5. Letters of Credit. Create, incur, issue, assume, guarantee, suffer to exist or otherwise become liable on or with respect to, directly or indirectly, letters of credit other than Letters of Credit issued pursuant to this Agreement and letters of credit issued to provide credit or liquidity support, or both in connection with Indebtedness permitted by Section 7.01(k), where the maximum amount available to be drawn under all such letters of credit would exceed, at any one time outstanding, $20,000,000 in the aggregate. Section VII.6. Sale and Leaseback Transactions. Sell or transfer any property, real or personal, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which any Consolidated Company intends to use for substantially the same purpose or purposes as the property being sold or transferred. Section VII.7. Transactions with Affiliates. (a) Enter into any transaction or series of related transactions which in the aggregate would be material, whether or not in the ordinary course of business, with any Affiliate of any Consolidated Company (but excluding any Affiliate which is also a wholly-owned Subsidiary of Borrower and any compensation arrangement with an officer or director of the Borrower or any other Consolidated Company entered into in the ordinary course of business), other than on terms and conditions substantially as favorable to such Consolidated Company as would be obtained by such Consolidated Company at the time in a comparable arm's-length transaction with a Person other than an Affiliate. (b) Convey or transfer to any other Person (including any other Consolidated Company) any real property, buildings, or fixtures used in the manufacturing or production operations of any Consolidated Company, or convey or transfer to any other Consolidated Company any other assets (excluding conveyances or transfers in the ordinary course of business) if at the time of such conveyance or transfer any Default or Event of Default exists or would exist as a result of such conveyance or transfer. Section VII.8. Changes in Business. Enter into or engage in any business which is substantially different from the business engaged in by the Borrower and its Subsidiaries on the Closing Date. Section VII.9. ERISA. Take or fail to take any action with respect to any Plan of any Consolidated Company or, with respect to its ERISA Affiliates, any Plans which are subject to Title IV of ERISA or to continuation health care requirements for group health plans under the Tax Code, including without limitation (i) establishing any such Plan, (ii) amending any such Plan (except where required to comply with applicable law), (iii) terminating or withdrawing from any such Plan, or (iv) incurring an amount of unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA, or any withdrawal liability under Title IV of ERISA with respect to any such Plan, which together with any other action or omission referred to in this Section 7.09 (taken as a whole) would have a Materially Adverse Effect, without first obtaining the written approval of the Required Lenders. Section VII.10. Limitation on Payment Restrictions Affecting Consolidated Companies. Create or otherwise cause or suffer to exist or become effective, any consensual encumbrance or restriction on the ability of any Consolidated Company to (i) pay dividends or make any other distributions on any stock of a Subsidiary of the Borrower, or (ii) pay any intercompany debt owed to Borrower or any other Consolidated Company, or (iii) transfer any of its property or assets to Borrower or any other Consolidated Company, except any consensual encumbrance or restriction existing as of the Closing Date. Section VII.11. Actions Under Certain Documents. Without the prior written consent of the Required Lenders (i) modify, amend, cancel or rescind any agreements or documents evidencing or governing Subordinated Debt or intercompany debt, (ii) make any payment with respect to Subordinated Debt, except that current interest accrued on such Subordinated Debt as of the date of this Agreement and all interest subsequently accruing thereon (whether or not paid currently) may be paid unless a Default or Event of Default has occurred and is continuing, (iii) voluntarily prepay any portion of intercompany debt, or (iv) amend or modify any of the Sharing Agreements to materially increase the obligations or liabilities of the Consolidated Companies thereunder. Section VII.12. Additional Negative Pledges. Create or otherwise cause or suffer to exist or become effective, directly or indirectly, any prohibition or restriction on the creation or existence of any Lien upon any asset of any Consolidated Company, other than pursuant to (i) Section 7.02, (ii) the terms of any agreement, instrument or other document pursuant to which any Indebtedness permitted by Sections 7.01(k) or 7.02(b) is incurred by any Consolidated Company, so long as such prohibition or restriction (in the case of Indebtedness permitted pursuant to Section 7.02(b)) applies only to the property or asset being financed by such Indebtedness, and (iii) any requirement of applicable law or any regulatory authority having jurisdiction over any of the Consolidated Companies. Section VII.13. Changes in Fiscal Year. Change the calculation of the Fiscal Year of the Borrower. Section VII.14. Issuance of Stock by Subsidiaries. Permit any Subsidiary (either directly or indirectly by the issuance of rights or options for, or securities convertible into such shares) to issue, sell or dispose of any shares of its stock of any class (other than directors' qualifying shares, if any) except to the Borrower or another Subsidiary. Section VII.15. Dividends. In any Fiscal Year the Borrower shall not pay or declare dividends in an aggregate amount in excess of twenty percent (20%) of its Consolidated Net Income. ARTICLE VIII. EVENTS OF DEFAULT Upon the occurrence and during the continuance of any of the following specified events (each an "Event of Default"): Section VIII.1. Payments. Borrower shall fail to make promptly when due (including, without limitation, by mandatory prepayment) any principal payment with respect to the Loans, or Borrower shall fail to make any payment of interest, fee or other amount payable hereunder within five (5) days of its due date; Section VIII.2. Covenants Without Notice. Borrower shall fail to observe or perform any covenant or agreement contained in Sections 6.01, 6.05, 6.07, 6.08, 6.09 or Article VII; Section VIII.3. Other Covenants. Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement, other than those referred to in Sections 8.01 and 8.02, and, if capable of being remedied, such failure shall remain unremedied for 30 days after the earlier of (i) Borrower's obtaining knowledge thereof, or (ii) written notice thereof shall have been given to Borrower by Agent, the Co- Agent, the Issuing Bank or any Lender; Section VIII.4. Representations. Any representation or warranty made or deemed to be made by Borrower or any other Credit Party or by any of its officers under this Agreement or any other Credit Document (including the Schedules attached thereto), or any certificate or other document submitted to the Agent, the Co-Agent, the Issuing Bank or the Lenders by any such Person pursuant to the terms of this Agreement or any other Credit Document, shall be incorrect in any material respect when made or deemed to be made or submitted; Section VIII.5. Non-Payments of Other Indebtedness. Any Consolidated Company shall fail to make when due (whether at stated maturity, by acceleration, on demand or otherwise, and after giving effect to any applicable grace period) any payment of principal of or interest on any Indebtedness (other than the Obligations) exceeding $2,500,000 individually or in the aggregate; Section VIII.6. Defaults Under Other Agreements; Change In Control Provisions. (a) Any Consolidated Company shall fail to observe or perform any covenants or agreements (whether or not waived) contained in any agreements or instruments relating to any of its Indebtedness exceeding $500,000 individually or in the aggregate, or any other event shall occur if the effect of such failure or other event is to accelerate, or with notice or passage of time or both, to permit the holder of such Indebtedness or any other Person to accelerate, the maturity of such Indebtedness; or any such Indebtedness shall be required to be prepaid (other than by a regularly scheduled required prepayment) in whole or in part prior to its stated maturity; or (b) any event or condition shall occur or exist which, pursuant to the terms of any Change in Control Provision, requires or permits the holder(s) of the Indebtedness subject to such Change in Control Provision to require that such Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in whole or in part, or the maturity of such Indebtedness to be accelerated; Section VIII.7. Bankruptcy. The Borrower or any Material Subsidiary shall commence a voluntary case concerning itself under the Bankruptcy Code or applicable foreign bankruptcy laws; or an involuntary case for bankruptcy is commenced against Borrower or any Material Subsidiary and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) or similar official under applicable foreign bankruptcy laws is appointed for, or takes charge of, all or any substantial part of the property of the Borrower or any Material Subsidiary; or the Borrower or any Material Subsidiary commences proceedings of its own bankruptcy or to be granted a suspension of payments or any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Borrower or any Material Subsidiary or there is commenced against the Borrower or any Material Subsidiary any such proceeding which remains undismissed for a period of 60 days; or the Borrower or any Material Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Borrower or any Material Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Borrower or any Material Subsidiary makes a general assignment for the benefit of creditors; or the Borrower or any Material Subsidiary shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Borrower or any Material Subsidiary shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or the Borrower or any Material Subsidiary shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate action is taken by the Borrower or any Material Subsidiary for the purpose of effecting any of the foregoing; Section VIII.8. ERISA. A Plan of either a Consolidated Company or of any of its ERISA Affiliates which is subject to Title IV of ERISA: (i) shall fail to be funded in accordance with the minimum funding standard required by applicable law, the terms of such Plan, Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a waiver of such standard is sought or granted with respect to such Plan under applicable law, the terms of such Plan or Section 412 of the Tax Code or Section 303 of ERISA; or (ii) is being, or has been, terminated or the subject of termination proceedings under applicable law or the terms of such Plan; or (iii) shall require a Consolidated Company to provide security under applicable law, the terms of such Plan, Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or (iv) results in a liability to a Consolidated Company under applicable law, the terms of such Plan, or Title IV of ERISA; and there shall result from any such failure, waiver, termination or other event described in clauses (i) through (iv) above a liability to the PBGC or a Plan that would have a Materially Adverse Effect; Section VIII.9. Judgments. Judgments or orders for the payment of money in excess of $2,500,000 individually or in the aggregate or otherwise having a Materially Adverse Effect shall be rendered against Borrower or any other Consolidated Company and such judgment or order shall continue unsatisfied (in the case of a money judgment) and in effect for a period of 30 days during which execution shall not be effectively stayed or deferred (whether by action of a court, by agreement or otherwise); Section VIII.10. Ownership of Credit Parties. If Borrower shall at any time fail to own and control the shares of Voting Stock of any Guarantor which it owned or controlled at the time such Guarantor became a Credit Party hereunder other than due to sale of the Voting Stock of such Guarantor permitted pursuant to Section 7.03 hereof; Section VIII.11. Change in Control of Borrower. (x) With the exception of Morrison prior to the Closing Date, any person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect on the date hereof) shall become the owner, beneficially or of record, of shares representing more than twenty-five percent (25%) of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower, or (y) a change in the board of directors of the Borrower shall occur such that the individuals who constituted the board of directors of the Borrower at the beginning of the two-year period immediately preceding such change (together with any other director whose election by the board of directors of the Borrower or whose nomination for election by the shareholders of the Borrower was approved by a vote of at least a majority of the directors then in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or Section VIII.12. Default Under Other Credit Documents; Sharing Agreements. (x) There shall exist or occur any "Event of Default" as provided under the terms of any other Credit Document, or any Credit Document ceases to be in full force and effect or the validity or enforceability thereof is disaffirmed by or on behalf of Borrower or any other Credit Party, or at any time it is or becomes unlawful for Borrower or any other Credit Party to perform or comply with its material obligations under any Credit Document, or the material obligations of Borrower or any other Credit Party under any Credit Document are not or cease to be legal, valid and binding on Borrower or any such Credit Party; or (y) any party to the Sharing Agreements shall default with respect to its covenants or obligations thereunder where such default results in a Materially Adverse Effect with respect to the Credit Parties; then, and in any such event, and at any time thereafter if any Event of Default shall then be continuing, the Agent may, and upon the written or telex request of the Required Lenders, shall, take any or all of the following actions, without prejudice to the rights of the Agent, the Co-Agent, the Issuing Bank, any Lender or the holder of any Note to enforce its claims against Borrower or any other Credit Party: (i) declare all Commitments terminated, whereupon the Commitments of each Lender shall terminate immediately and any commitment fee shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest on the Loans, and all other Obligations owing hereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; provided, that, if an Event of Default specified in Section 8.07 shall occur, the result which would occur upon the giving of notice by the Agent to any Credit Party, shall occur automatically without the giving of any such notice, and (iii) may exercise any other rights or remedies available under the Credit Documents, at law or in equity. ARTICLE IX. THE AGENT Section IX.1. Appointment of Agent. The Issuing Bank and each Lender hereby designates SunTrust as Agent to administer all matters concerning the Loans and Letters of Credit and to act as herein specified. The Issuing Bank and each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take such actions on its behalf under the provisions of this Agreement, the other Credit Documents, and all other instruments and agreements referred to herein or therein, and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through their agents or employees. Section IX.2. Authorization of Agent with Respect to the Security Documents. (a) The Issuing Bank and each Lender hereby authorizes the Agent to enter into each of the Security Documents substantially in the form attached hereto, and to take all action contemplated thereby. All rights and remedies under the Security Documents may be exercised by the Agent for the benefit of the Agent, the Issuing Bank and the Lenders and the other beneficiaries thereof upon the terms thereof. The Issuing Bank and the Lenders further agree that the Agent may assign its rights and obligations under any of the Security Documents to any affiliate of the Agent or to any trustee, if necessary or appropriate under applicable law, which assignee in each such case shall (subject to compliance with any requirements of applicable law governing the assignment of such Security Documents) be entitled to all the rights of the Agent under and with respect to the applicable Security Document. (b) In each circumstance where, under any provision of any Security Document, the Agent shall have the right to grant or withhold any consent, exercise any remedy, make any determination or direct any action by the Agent under such Security Document, the Agent shall act in respect of such consent, exercise of remedies, determination or action, as the case may be, with the consent of and at the direction of the Required Lenders; provided, however, that no such consent of the Required Lenders shall be required with respect to any consent, determination or other matter that is, in the Agent's judgment, ministerial or administrative in nature. In each circumstance where any consent of or direction from the Required Lenders is required, the Agent shall send to the Issuing Bank and the Lenders a notice setting forth a description in reasonable detail of the matter as to which consent or direction is requested and the Agent's proposed course of action with respect thereto. In the event the Agent shall not have received a response from any Lender or the Issuing Bank within five (5) Business Days after such Lender's or the Issuing Bank's receipt of such notice, such Lender or the Issuing Bank shall be deemed to have agreed to the course of action proposed by the Agent. Section IX.3. Nature of Duties of Agent. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Credit Documents. None of the Agent nor any of its respective officers, directors, employees or agents shall be liable for any action taken or omitted by it as such hereunder or in connection herewith, unless caused by its or their gross negligence or willful misconduct. The duties of the Agent shall be ministerial and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender or the Issuing Bank; and nothing in this Agreement, express or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or the other Credit Documents except as expressly set forth herein. Section IX.4. Lack of Reliance on the Agent. (a) Independently and without reliance upon the Agent, each Lender and the Issuing Bank, to the extent each deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Credit Parties in connection with the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of the Credit Parties, and, except as expressly provided in this Agreement, the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender or the Issuing Bank with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or the issuance of the Letters of Credit or at any time or times thereafter. (b) The Agent shall not be responsible to any Lender or the Issuing Bank for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectibility, priority or sufficiency of this Agreement, the Notes, the Guaranty Agreement or any other documents contemplated hereby or thereby, or the financial condition of the Credit Parties, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Notes, the Guaranty Agreement or the other documents contemplated hereby or thereby, or the financial condition of the Credit Parties, or the existence or possible existence of any Default or Event of Default. Section IX.5. Certain Rights of the Agent. If the Agent shall request instructions from the Required Lenders with respect to any action or actions (including the failure to act) in connection with this Agreement, the Agent shall be entitled to refrain from such act or taking such act, unless and until the Agent shall have received instructions from the Required Lenders; and the Agent shall not incur liability in any Person by reason of so refraining. Without limiting the foregoing, no Lender or the Issuing Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders. Section IX.6. Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cable gram, radiogram, order or other documentary, teletransmission or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper Person. The Agent may consult with legal counsel (including counsel for any Credit Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section IX.7. Indemnification of Agent. To the extent the Agent is not reimbursed and indemnified by the Credit Parties, each Lender will reimburse and indemnify the Agent, ratably according to the respective amounts of the Loans outstanding under all Commitments (or if no amounts are outstanding, ratably in accordance with the Commitments), in either case, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder, in any way relating to or arising out of this Agreement or the other Credit Documents; provided that no Lender or the Issuing Bank shall be liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Section IX.8. The Agent in its Individual Capacity. With respect to its obligation to lend under this Agreement, the Loans made by it and the Notes issued to it, the Agent shall have the same rights and powers hereunder as any other Lender or holder of a Note and may exercise the same as though it were not performing the duties specified herein; and the terms "Lenders", "Required Lenders", "holders of Notes", or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Consolidated Companies or any affiliate of the Consolidated Companies as if it were not performing the duties specified herein, and may accept fees and other consideration from the Consolidated Companies for services in connection with this Agreement and otherwise without having to account for the same to the Lenders or the Issuing Bank. Section IX.9. Holders of Notes. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. Section IX.10. Successor Agent. (a) The Agent may resign at any time by giving written notice thereof to the Lenders, the Issuing Bank and Borrower and may be removed at any time with or without cause by the Required Lenders; provided, however, the Agent may not resign or be removed until a successor Agent has been appointed and shall have accepted such appointment. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent subject to Borrower's prior written approval. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent subject to Borrower's prior written approval, which shall be a bank which maintains an office in the United States, or a commercial bank organized under the laws of the United States of America or any State thereof, or any Affiliate of such bank, having a combined capital and surplus of at least $1,000,000,000. (b) Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. ARTICLE X. MISCELLANEOUS Section X.1. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, telecopy or similar teletransmission or writing) and shall be given to such party at its address or applicable teletransmission number set forth on the signature pages hereof, or such other address or applicable teletransmission number as such party may hereafter specify by notice to the Agent and Borrower. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and the appropriate confirmation is received, or (iv) if given by any other means (including, without limitation, by air courier), when delivered or received at the address specified in this Section; provided that notices to the Agent shall not be effective until received. Section X.2. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the other Credit Documents, nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders (and in the case of any amendment, the applicable Credit Party), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders and the Issuing Bank to do any of the following: (i) waive any of the conditions specified in Section 4.01 or 4.02, (ii) increase the Commitments or contractual obligations of the Lenders or the Issuing Bank to Borrower under this Agreement, (iii) reduce the principal of, or interest on, the Notes or any fees hereunder, (iv) postpone any date fixed for the payment in respect of principal of, or interest on, the Notes or any fees hereunder, (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number or identity of Lenders which shall be required for the Lenders or any of them to take any action hereunder, (vi) agree to release any Guarantor from its obligations under any Guaranty Agreement, (vii) modify the definition of "Required Lenders," or (viii) modify this Section 10.02. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Agent and the Co-Agent, in addition to the Lenders and the Issuing Bank required hereinabove to take such action, affect the rights or duties of the Agent under this Agreement or under any other Credit Document. Section X.3. No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent, the Co-Agent, any Lender, the Issuing Bank or any holder of a Note in exercising any right or remedy hereunder or under any other Credit Document, and no course of dealing between any Credit Party and the Agent, any Lender, the Issuing Bank or the holder of any Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Agent, the Co-Agent, any Lender, the Issuing Bank or the holder of any Note would otherwise have. No notice to or demand on any Credit Party not required hereunder or under any other Credit Document in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agent, the Co-Agent, the Lenders, the Issuing Bank or the holder of any Note to any other or further action in any circumstances without notice or demand. Section X.4. Payment of Expenses, Etc. Borrower shall: (i) whether or not the transactions hereby contemplated are consummated, pay all reasonable, out-of- pocket costs and expenses of the Agent in the administration (both before and after the execution hereof and including reasonable expenses actually incurred relating to advice of counsel as to the rights and duties of the Agent, the Co-Agent, the Issuing Bank and the Lenders with respect thereto) of, and in connection with the preparation, execution and delivery of, preservation of rights under, enforcement of, and, after a Default or Event of Default, refinancing, renegotiation or restructuring of, this Agreement and the other Credit Documents and the documents and instruments referred to therein, and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees actually incurred and disbursements of counsel for the Agent), and in the case of enforcement of this Agreement or any Credit Document after an Event of Default, all such reasonable, out- of-pocket costs and expenses (including, without limitation, the reasonable fees actually incurred and reasonable disbursements and changes of counsel), for any of the Lenders or the Issuing Bank; (ii) subject, in the case of certain Taxes, to the applicable provisions of Section 3.07(b), pay and hold each of the Lenders and the Issuing Bank harmless from and against any and all present and future stamp, documentary, and other similar Taxes with respect to this Agreement, the Notes and any other Credit Documents, any collateral described therein, or any payments due thereunder, and save the Issuing Bank and each Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such Taxes; and (iii) indemnify the Agent, the Co-Agent, the Issuing Bank and each Lender, and their respective officers, directors, employees, representatives and agents from, and hold each of them harmless against, any and all costs, losses, liabilities, claims, damages or expenses incurred by any of them (whether or not any of them is designated a party thereto) (an "Indemnitee") arising out of or by reason of any investigation, litigation or other proceeding related to any actual or proposed use of the proceeds of any of the Loans or any Credit Party's entering into and performing of the Agreement, the Notes, or the other Credit Documents, including, without limitation, the reasonable fees actually incurred and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding; provided, however, Borrower shall not be obligated to indemnify any Indemnitee for any of the foregoing arising out of such Indemnitee's gross negligence or willful misconduct; (iv) without limiting the indemnities set forth in subsection (iii) above, indemnify each Indemnitee for any and all expenses and costs (including without limitation, remedial, removal, response, abatement, cleanup, investigative, closure and monitoring costs), losses, claims (including claims for contribution or indemnity and including the cost of investigating or defending any claim and whether or not such claim is ultimately defeated, and whether such claim arose before, during or after any Credit Party's ownership, operation, possession or control of its business, property or facilities or before, on or after the date hereof, and including also any amounts paid incidental to any compromise or settlement by the Indemnitee or Indemnitees to the holders of any such claim), lawsuits, liabilities, obligations, actions, judgments, suits, disbursements, encumbrances, liens, damages (including without limitation damages for contamination or destruction of natural resources), penalties and fines of any kind or nature whatsoever (including without limitation in all cases the reasonable fees actually incurred, other charges and disbursements of counsel in connection therewith) incurred, suffered or sustained by that Indemnitee based upon, arising under or relating to Environmental Laws based on, arising out of or relating to in whole or in part, the existence or exercise of any rights or remedies by any Indemnitee under this Agreement, any other Credit Document or any related documents. If and to the extent that the obligations of Borrower under this Section 10.04 are unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. Section X.5. Right of Setoff. In addition to and not in limitation of all rights of offset that any Lender, the Issuing Bank or other holder of a Note may have under applicable law, each Lender, Issuing Bank or other holder of a Note shall, upon the occurrence of any Event of Default and whether or not such Lender, Issuing Bank or such holder has made any demand or any Credit Party's obligations have matured, have the right to appropriate and apply to the payment of any Credit Party's obligations hereunder and under the other Credit Documents, all deposits of any Credit Party (general or special, time or demand, provisional or final) then or thereafter held by and other indebtedness or property then or thereafter owing by such Lender, the Issuing Bank or other holder to any Credit Party, whether or not related to this Agreement or any transaction hereunder. Section X.6. Benefit of Agreement; Assignments; Participations. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, provided that Borrower may not assign or transfer any of its interest hereunder without the prior written consent of the Lenders and the Issuing Bank. (b) Any Lender may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of such Lender. (c) Each Lender and may assign all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of any of its Commitments and the Loans at the time owing to it and the Notes held by it) to any Eligible Assignee; provided, however, that (i) the Borrower and the Agent each must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) unless such assignment is an Affiliate of the assigning Lender or unless (in the case of Borrower's consent) an Event of Default has occurred and is continuing hereunder, (ii) the amount of the Commitments of the assigning Lender subject to each assignment (determined as of the date the assignment and acceptance with respect to such assignment is delivered to the Agent) shall not be less than an amount equal to $10,000,000 or greater integral multiplies of $1,000,000 unless such assignment is to an Affiliate of the assigning Lender or such Lender is assigning it commitment in its entirety, (iii) the parties to each such assignment shall execute and deliver to the Agent an Assignment and Acceptance, together with a Note or Notes subject to such assignment and, unless such assignment is to an Affiliate of such Lender, a processing and recordation fee of $3,000. Borrower shall not be responsible for such processing and recordation fee or any costs or expenses incurred by any Lender or the Agent in connection with such assignment. From and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, the assignee thereunder shall be a party hereto and to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement. Within five (5) Business Days after receipt of the notice and the Assignment and Acceptance, Borrower shall execute and deliver to the Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the order of such assignee in a principal amount equal to the applicable Commitments assumed by it pursuant to such Assignment and Acceptance and new Note or Notes to the assigning Lender in the amount of its retained Commitment or Commitments. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the date of the surrendered Note or Notes which they replace, and shall otherwise be in substantially the form attached hereto. (d) Each Lender may, without the consent of Borrower or the Agent, sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments in the Loans owing to it and the Notes held by it), provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating bank or other entity shall not be entitled to the benefit (except through its selling Lender) of the cost protection provisions contained in Article III of this Agreement, and (iv) Borrower and the Agent and other Lenders shall continue to deal solely and directly with each Lender in connection with such Lender's rights and obligations under this Agreement and the other Credit Documents, and such Lender shall retain the sole right to enforce the obligations of Borrower relating to the Loans and to approve any amendment, modification or waiver of any provisions of this Agreement. Each Lender shall promptly notify in writing the Agent and the Borrower of any sale of a participation hereunder. (e) Any Lender or participant may, in connection with the assignment or participation or proposed assignment or participation, pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant any information relating to Borrower or the other Consolidated Companies furnished to such Lender by or on behalf of Borrower or any other Consolidated Company. With respect to any disclosure of confidential, non-public, proprietary information, such proposed assignee or participant shall agree to use the information only for the purpose of making any necessary credit judgments with respect to this credit facility and not to use the information in any manner prohibited by any law, including without limitation, the securities laws of the United States. The proposed participant or assignee shall agree not to disclose any of such information except (i) to directors, employees, auditors or counsel to whom it is necessary to show such information, each of whom shall be informed of the confidential nature of the information, (ii) in any statement or testimony pursuant to a subpoena or order by any court, governmental body or other agency asserting jurisdiction over such entity, or as otherwise required by law (provided prior notice is given to Borrower and the Agent unless otherwise prohibited by the subpoena, order or law), and (iii) upon the request or demand of any regulatory agency or authority with proper jurisdiction. The proposed participant or assignee shall further agree to return all documents or other written material and copies thereof received from any Lender, the Agent, the Co-Agent or Borrower relating to such confidential information unless otherwise properly disposed of by such entity. (f) Any Lender may at any time assign all or any portion of its rights in this Agreement and the Notes issued to it to a Federal Reserve Bank; provided that no such assignment shall release the Lender from any of its obligations hereunder. (g) If (i) any Taxes referred to in Section 3.07(b) have been levied or imposed so as to require withholdings and reductions by the Borrower and payment by the Borrower of additional amounts to any Lender as a result thereof or any Lender shall make demand for payment of any material additional amounts as compensation for increased cost pursuant to Section 3.10, then and in such event, upon request from the Borrower delivered to such Lender, such Lender shall assign, in accordance with the provisions of Section 10.06(c), all of its rights and obligations under this Agreement and the other Credit Documents to an Eligible Assignee selected by the Borrower and consented to by the Agent in consideration for the payment by such assignee to the Lender of the principal of and interest on the outstanding Loans accrued to the date of such assignment, the assumption of such Lender's Commitments hereunder, together with any and all other amounts owing to such Lender under any provisions of this Agreement or the other Credit Documents accrued to the date of such assignment. Section X.7. Governing Law; Submission to Jurisdiction. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. (c) BORROWER HEREBY IRREVOCABLY DESIGNATES CSC CORPORATION SERVICES, ATLANTA, GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF OF BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF SUCH PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. (d) Nothing herein shall affect the right of the Agent, the Co-Agent, the Issuing Bank any Lender, any holder of a Note or any Credit Party to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Borrower in any other jurisdiction. Section X.8. Independent Nature of Lenders' Rights. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights pursuant to this Agreement and its Notes, and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. Section X.9. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Section X.10. Effectiveness; Termination of Commitments; Survival. (a) This Agreement shall become effective on the date on which all of the parties hereto shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Agent or, in the case of the Lenders or the Issuing Bank, shall have given to the Agent written or telex notice (actually received) that the same has been signed and mailed to them; provided that, the Lenders have no obligation to make a Loan and the Issuing Bank has no obligation is issue Letters of Credit hereunder until the Closing Date. In the event that the Closing Date does not occur by July 2, 1998 , the Commitments and this Agreement shall terminate, subject to the survival of the Sections referenced below. (b) The obligations of Borrower under Sections 3.07(b), 3.10, 3.12, 3.13, 3.16 and 10.04 hereof shall survive the payment in full of the Notes after the Maturity Date. All representations and warranties made herein, in the certificates, reports, notices, and other documents delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement, the other Credit Documents, and such other agreements and documents, the making of the Loans hereunder, and the execution and delivery of the Notes. Section X.11. Severability. In case any provision in or obligation under this Agreement or the other Credit Documents shall be invalid, illegal or unenforceable, in whole or in part, in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. Section X.12. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitation of, another covenant, shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. Section X.13. Change in Accounting Principles, Fiscal Year or Tax Laws. If (i) any preparation of the financial statements referred to in Section 6.07 hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accounts (or successors thereto or agencies with similar functions) result in a material change in the method of calculation of financial covenants, standards or terms found in this Agreement, (ii) there is any change in Borrower's fiscal quarter or Fiscal Year, or (iii) there is a material change in federal tax laws which materially affects any of the Consolidated Companies' ability to comply with the financial covenants, standards or terms found in this Agreement, Borrower and the Required Lenders agree to enter into negotiations in order to amend such provisions so as to equitably reflect such changes with the desired result that the criteria for evaluating any of the Consolidated Companies' financial condition shall be the same after such changes as if such changes had not been made. Unless and until such provisions have been so amended, the provisions of this Agreement shall govern. Section X.14. Headings Descriptive; Entire Agreement. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. This Agreement, the other Credit Documents, and the agreements and documents required to be delivered pursuant to the terms of this Agreement constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and supersede all prior agreements, representations and understandings related to such subject matters. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in Atlanta, Georgia, by their duly authorized officers as of the day and year first above written. Address for Notices: MORRISON HEALTH CARE, INC. 1955 Lake Park Drive Atlanta, Georgia 30080-8855 By:/s/ K. W.Engwall Attn: K. Wyatt Engwall Name: K. Wyatt Engwall Senior Vice President, Finance and Title: Senior Vice President, Finance Assistant Secretary and Assistant Secretary Telecopy: (770) 437-3349 [CORPORATE SEAL] [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: SUNTRUST BANK, ATLANTA, As Agent 25 Park Place, N.E. 23rd Floor Atlanta, Georgia 30303 By:/s/ Daniel S. Komitor Attention: Dan Komitor Name: Daniel S. Komitor Title: Vice President Telecopy No.: (404) 588-8833 By:/s/ R.Michael Dunlap Name: R. Michael Dunlap Title: Vice President Payment Office: 25 Park Place, N.E. 23rd Floor Atlanta, Georgia 30303 [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: WACHOVIA BANK, N.A., as Co-Agent 191 Peachtree Street, N.E. 29th Floor Atlanta, Georgia 30303 By:/s/ John C. Canty Name: John C. Canty Title: Banking Officer Attention: Mr. John Canty Telecopy: (404) 332-5016 [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: SUNTRUST BANK, ATLANTA 25 Park Place, N.E. 23rd Floor Atlanta, Georgia 30303 By:/s/ Daniel S. Komitor Attention: Dan Komitor Name: Daniel S. Komitor Title: Vice President Telecopy No.: (404)588-8833 By:/s/R. Michael Dunlap Name: R. Michael Dunlap Title:Vice President [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: NATIONSBANK, N.A. 600 Peachtree Street, N.E. 19th Floor Atlanta, Georgia 30308 By:/s/Melinda M. Bergbom Name: Melinda M. Bergbom Title:Senior Vice President Attention: Melinda Bergbom Telecopy: (404) 407-6343 [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: WACHOVIA BANK, N.A. 191 Peachtree Street, N.E. 29th Floor Atlanta, Georgia 30303 By:/s/ John C.Canty Name: John C. Canty Title: Banking Officer Attention: Mr. John Canty Telecopy: (404) 332-5016 [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] Address for Notices: FIRST UNION NATIONAL BANK First Union National Bank 999 Peachtree Street 12th Floor Atlanta, Georgia 30309 By:/s/ Kimberly Daniel Name: Kimberly Daniel Title: Corporate Banking Officer Assistant Secretary Attention: Ms. Kimberly Daniel Telecopy: [SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] MHCI SCHEDULES MHCI SCHEDULES Schedule 5.01 Organization and Ownership of Subsidiaries 1. The following corporations are wholly-owned subsidiaries of Borrower: State of Corporation Incorporation ------------------------------------------------------ - ---------------- Custom Management Corporation Pennsylvania John C. Metz & Associates, Inc. Pennsylvania Culinary Solutions, Inc. Georgia Drake Management Services, Inc. Arizona 2. The following are wholly-owned subsidiaries of Custom Management Corporation: Place of Corporation Incorporation ------------------------------------------------------ - ---------------- Custom Management Corporation of Pennsylvania Pennsylvania Morrison Custom Management Corporation Pennsylvania of Pennsylvania 3. Borrower owns a 49% interest in Marcorp Diversified, Inc., a joint venture between the Borrower and Harry Miller, who beneficially owns the remaining 51% interest. Schedule 5.05 Certain Pending and Threatened Litigation A. Borrower has assumed the liability for the following claims from Morrison Restaurants Inc. and has indemnified Morrison Restaurants Inc. with respect to the following claims pursuant to the Sharing Agreements: 1. The EEOC charge brought by Karol Suskey alleges sex harassment by the CEO of Jackson Memorial Hospital and alleges that Morrison failed to take appropriate steps to prevent the harassment. 2. A claim of race discrimination has been brought by five employees of Fort Sanders Regional Medical Center in Knoxville, Tennessee. B. Please see the attached schedule of pending or threatened litigation, claims and assessments against the Borrower. PENDING OR THREATENED LITIGATION, CLAIMS AND ASSESSMENTS AGAINST MORRISON HEALTH CARE, INC. A. Suskey, Karol v. Morrison Restaurants Inc. et al. A lawsuit was filed by an employee, Karol Suskey, against both the Company and our client, Jackson Memorial Hospital and its CEO, alleging sexual harassment against our client and alleging further that Morrison failed to take appropriate steps to prevent the harassment and retaliated against plaintiff. The Company has investigated the matter and believes the claims are not valid. Plaintiff has filed an amended complaint. Defendants filed motions to dismiss which were denied. Discovery will be suspended pending appeal of co-defendants to the denial of motions to dismiss. The Company intends to vigorously defend itself against these claims. B. Burems, Cozart, Dupree, Robinson & Stepherson v. Morrison Restaurants Inc. A claim of race discrimination and retaliation was made to the State of Tennessee Human Rights Commission by five employees of Fort Sanders Regional Medical Center in Knoxville, Tennessee. The Commission dismissed the claims and issued Right to Sue letters. Suit has been filed and an answer by the Company has been made. Discovery is in progress. Plaintiffs were deposed on July 2, 1997. Plaintiffs have offered to settle for $20,000. Discovery is continuing. The Company intends to vigorously defend this claim. C. Bines, Melvin v. Realty South Investors, Inc. and Morrison Health Care. This suit was filed in U.S. District Court, Southern District of Florida and Morrison first received notice of its existence on April 23, 1997 (the suit was originally filed in December, 1996 with misnamed defendants that were never properly served). An answer has been filed. Discovery is continuing. The plaintiff was formerly employed by Fountainview Retirement Center, West Palm Beach, Florida, a former account of Morrison, and alleges race discrimination by Fountainview and Morrison under federal and Florida law. The Company has retained outside counsel. The Company does not believe the claim has any merit and intends to vigorously defend itself against it. D. Marcillac v. Morrison Restaurants, Inc. - A management employee filed a disability discrimination charge with the California Fair Employment and Housing Commission, San Francisco, California related to a worker's compensation injury. The Company believes there is no merit to this claim. It filed a position statement with the Commission on May 28, 1996. The California Commission closed its investigation and case on March 3, 1997. Marcillac filed an EEOC charge on March 21, 1997, but then filed a lawsuit on June 27, 1997 (served July 9, 1997) alleging disability, discrimination and contract breach. On May 6, 1998, the Court granted the Company's Motion for Summary Judgment. Absent appeal, this matter will be concluded. E. Morrison Health Care, Inc. v. Efthymios Hristopoulos. Morrison filed suit in Circuit Court, Pinellas County, Florida, for recovery of unpaid rent and right to possession against Efthymios Hristopoulos ("EH"), a tenant of Morrison's leased property located in St. Petersburg, Florida. On May 6, 1997, EH submitted an Answer and counter- claimed against Morrison, alleging breach of contract and intentional interference with a business relationship. At this time, the Company believes that its claims against EH have merit, that EH's counter-claims are without merit, and intends to vigorously protect and pursue its interests in this matter. The parties shortly may enter into an agreement whereby EH will purchase the property which will effectively resolve these matters. F. Kramer, William L. v. Morrison Health Care, Inc. A former employee was terminated in August, 1997. An EEOC Charge was filed and a Right to Sue Letter requested on December 22, 1997. On June 4, 1998, the Company received a suit alleging wrongful discharge, breach of implied contract, breach of implied covenant of good faith and fair dealing, age discrimination and tortious termination in violation of public policy. The suit is in its early stages, but the Company believes this claim is without merit and intends to vigorously defend these claims. G. State of Tennessee Tax Assessment. Morrison received an audit report from the State of Tennessee Department of Revenue issuing a estimated sales tax assessment in the original amount of approximately $3.29 million, based primarily upon Morrison's use of client- provided capital assets and supply expenses. The sales tax application to client-provided capital assets and expenses has not been applied to Morrison in the past. Morrison believes at this time that the estimated assessment amount for client-provided assets and expenses is arbitrary and for the most part based upon estimates of the value of capital assets and expenses of an unrelated hospital audit. Further, the Company believes that the language in most, if not all, of the contracts for the applicable accounts provides that the clients are responsible for a material portion of any tax which may ultimately be paid as a result of this assessment. The State thus far has reduced the assessment amount to $995,983. In order to protect its interest, the Company filed suit contesting the assessment in January, 1998. Morrison intends to vigorously defend itself against this claim and has engaged outside counsel. H. State of Florida Tax Assessment. The Company received on August 18, 1997, an assessment from the State of Florida in the amount of $109, 000. The Company intends to vigorously protect its interest in this matter. Outside counsel has filed the appropriate protest. I. Trannon, Comminita v. Morrison's Cafeterias, et al., Circuit Court, Jefferson County, Alabama. A workers' compensation benefit complaint was forwarded to GAB for handling. An amended complaint was filed alleging wrongful termination. The workers' compensation claim was subsequently settled. The Plaintiff was granted a partial summary judgment related to a defense by the Company related to issues resolved in a hearing held by the State of Alabama Department of Industrial Relations. Plaintiff's counsel has stated he is unwilling to reconvene mediation unless the Company is willing to come to the table with at least $50,000. The Company believes the claim to be without merit and intends to vigorously defend itself. J. Crawley v. Morrison's Health Care, Inc. A former management employee filed a race and sex discrimination charge with the EEOC on April 25, 1996, arising out of removal from her assignment at Metropolitan Hospital, Richmond, Virginia. The Company has no reason to believe that the charge has any merit, and intends to vigorously defend the claim. A response was sent to the EEOC on April 28, 1998. K. Theodore, Pierre v. Morrison Health Care, Inc. A former employee was terminated in November, 1997. A charge was filed for age and disability discrimination with the Ohio Civil Rights Commission and the EEOC on December 23, 1997 and a Notice of Right to Sue issued on March 31, 1998. An Amended Complaint (original complaint never served) was filed May 12, 1998. The Company believes this claim is without merit and intends to vigorously defend itself. L. Johnson, Robert v. Morrison Health Care, Inc. The Company received notice of this disability discrimination charge on June 18, 1997. It was filed with the EEOC and the South Carolina Human Affairs Commission on June 10, 1997 by an employee in Columbia, South Carolina. The Company responded to this allegation and a Determination Letter of No Reasonable Cause Found was issued in our favor on February 2, 1998. M. Metts, Calvin v. Morrison Health Care. This is an age discrimination charge filed on May 23, 1997, with the Jacksonville, Florida office of the Equal Employment Opportunity Commission (EEOC). Metts' employment as an Assistant Manager terminated in April, 1997, pursuant to a reduction in personnel at Methodist Hospital, Jacksonville, Florida. The Company has no reason to believe that the charge has merit, and intends to vigorously defend the charge. N. Patterson, Uhra v. Morrison Health Care, Inc. This is a charge of disability discrimination filed in April, 1997 with the EEOC and the City of St. Louis Civil Rights Enforcement Agency (SLCREA) in St. Louis, Missouri. The Company received notice of investigation/processing by the SLCREA on May 5, 1997. Patterson is a former cashier whose employment terminated in January, 1997. At present, Company does not believe this claim has merit and intends to vigorously defend against it. The Company's response to the claim was filed on December 24, 1997. O. Odom, Christopher v. Covenant Medical Center, Morrison Restaurants Inc. and Morrison-Crothall. A Notice of Substantial Evidence & Initiation of Conciliation was very recently received by the Company in December, 1996 from the Illinois Human Rights Commission. This involves a claim by another employer's former employee alleging race discrimination by Covenant Medical Center, Morrison and the employer company. Morrison intends to vigorously defend this claim. P. Winston, Keith L. v. Morrison's Health Care, Inc. This is a race discrimination charge filed on May 6, 1997 with the Tennessee Human Rights Commission. The Company received notice of this charge on June 30, 1997 via letter dated June 27, 1997. It was filed by a former assistant manager of Morrison at Methodist Medical Center, Oak Ridge, TN. The Company has begun its investigation of the claim, is not aware of any reason to suggest that the claim has merit, and intends vigorously defend against it. Q. Robinson, Sherrie v. Morrison Health Care, Inc. The Company received in November, 1997 a copy of a charge previously filed in November, 1995, alleging race, sex and color discrimination. Since the allegations may reference circumstances in the Burems, et al. suit referenced above, this claim has been sent to outside counsel in the Burems suit for handling. The Company intends to vigorously defend itself against these claims. R. Petillo, Michael O. v. Morrison Health Care, Inc. The Company received notice of a complaint being referred to the EEOC on January 6, 1998 alleging sex and national origin discrimination. The Company's investigation was begun. On April 24, 1998, the Company received a Notice of Right to Sue. The Complainant has ninety (90) days from receipt of the Right to Sue to file suit. The Company believes the claims to be without merit and intends to vigorously defend itself against these claims. S. Cole, Arthur v. Morrison Health Care, Inc. The Company received on March 6, 1998 a complaint with the Ohio Civil Rights Commissions alleging race and age discrimination. The Company's investigation is in the early stages but the Company believes the claims are without merit and it intends to vigorously defend itself against these claims. T. Conner, Demetruis J. v. Morrison Health Care, Inc. In April, 1998, the Company received a charge of discrimination filed with the EEOC alleging sex discrimination. The Company has investigated the matter and believes the allegations are without merit. A response to the charge was sent by the Company on May 22, 1998. The Company intends to vigorously defend itself against this claim. U. Onyeberechi, Francisca v. Morrison Health Care, Inc. This is a national origin discrimination charge filed in May, 1997 with the EEOC in Washington, D.C. Onyeberechi was an assistant manager at Stoddard Baptist Nursing Home in Washington, D.C. whose employment was terminated effective December, 1997. The Company submitted a response to the EEOC on December 8, 1997, and has not been notified of further action. The Company does not believe that the charge has merit and intends to continue to vigorously defend against it. V. McIntosh, Carrie Ann v. Morrison Health Care, Inc. This is a race discrimination complaint filed in December, 1996, with the New York State Division of Human Rights (through the Suffolk County Human Rights Commission). McIntosh was an assistant manager at University Hospital (SUNY), Stony Brook, New York, who was terminated in May, 1996. The Company has begun investigation of this claim, retained outside counsel to assist in its response and defense, and has informed the Commission of this. At this early stage of the investigation, it is too early to determine the merit or value of the claim, but the Company intends to vigorously defend against it. W. Ladson, Avemaria v. Morrison Health Care, Inc. This is a sex and disability discrimination complaint filed with the District of Columbia Department of Human Rights and Minority Business Development in July, 1997 and received by the Company in September, 1997. Ladson was an hourly employee at Lisner Louise Nursing Home, Washington, D.C., and her claims relate to an alleged on the job slip and fall type injury. The Company has begun investigating the claim, believes it is without merit and intends to vigorously defend its interests. A mediation meeting took place on March 13, 1998, and the Company may attempt to settle for nuisance value. X. Hall, Barbara v. Morrison Health Care, Inc. This is a claim of sex discrimination and retaliation for a complaint of discrimination filed with the New York State Division of Human Rights in March, 1998, by a former employee at University Hospital (SUNY), Stony Brook, New York. The Company has begun investigating this claim and has enlisted the assistance of outside counsel. The Company cannot yet determine with certainty as to any potential merit of value, but it intends to vigorously defend against it. Y. Shaw, Harold v. Morrison Heathcare Services. This is a race and sex discrimination claim filed in March, 1997 with the EEOC in Atlanta, Georgia. Shaw was an applicant from a placement agency that was not selected for a clerk position in the corporate headquarters in Smyrna, Georgia. The Company has conducted its initial investigation and does not believe the claim has merit. The Company plans to submit a response to the EEOC before the end of June, 1998, and intends to vigorously defend itself. Z. Pla, Rosa Maria v. Morrison Health Service. The Company received notice of this age and national origin discrimination charge on June 1, 1998. It was filed with the City of Tampa Department of Community Affairs, Office of Human Rights/ Community Services (and EEOC) in May, 1998 by an employee in Tampa, Florida. The Company has begun investigating, intends to respond to this allegation and vigorously protect its interests, but at this time cannot determine the merits or potential liability of the claims since all relevant facts are not yet known. Section 5.09(a) Environmental Compliance NONE Section 5.09(b) Environmental Notices NONE Schedule 5.09(c) Environmental Permits NONE Schedule 5.11 No Default None, other than alleged defaults which are the subject of pending or threatened litigation disclosed in Schedule 5.05. Schedule 5.12 Burdensome Restrictions NONE Schedule 5.13 Tax Filings and Payments 1. Borrower periodically receives notices of assessment from the IRS and other taxing authorities, the aggregate amount of which at any time is immaterial. These notices generally relate to misunderstandings regarding Borrower's tax situation, payments which have crossed in the mail with notices, and disputes which have been or are in the process of being resolved. 2. The Borrower owes the state of Arkansas $350.42 for franchise taxes due for years 1997 and 1998. 3. See also Schedule 5.05 - Certain Pending and Threatened Litigation. Section 5.14 Material Subsidiaries None Section 5.16 Employee Benefit Matters 1. Title IV Plans. The Consolidated Companies and its ERISA Affiliates maintain or contribute to the following Plans subject to Title IV of ERISA: a. Morrison Restaurants Inc. Retirement Plan b. Local 1115 District Council Pension Fund 2. Funding. a. The Morrison Inc. Retirement Plan (the "Retirement Plan"), if terminated as of June 6, 1998, would have had an amount of unfunded benefit liabilities equal to approximately $____________, projected using a ___% interest rate and the GATT-required mortality tables. b. As of June 6, 1998, Morrison Health Care has accrued $1,051,246 with respect to post-retirement medical expenses. Section 5.17 Patents, Trademarks, Licenses, and Other Intellectual Property Matters The National Livestock and Meat Board, a/k/a The Meat Board, The American Meat Institute and the Food Marketing Institute opposed Borrower's application for federal registration of the mark NUTRI- FACTS, which Borrower uses for certain computer software programs. Morrison entered into a license agreement with those parties under which Borrower may continue to use the mark NUTRI-FACTS, and Morrison has filed an abandonment of the subject trademark application. 22682295.W51 Section 5.18 Ownership of Properties NONE Section 5.19 Labor and Employment Matters NONE Section 5.22 Dividend Restrictions NONE Schedule 7.01 Existing Indebtedness As of May 31, 1998 (In thousands) Revolving Credit Loans under Original Credit Facility $ 5,000/1 Term Loans under Original Credit Facility 31,000/1 ------ - ---------- $ 36,000 ================ The Borrower has entered into the Sharing Agreements with MFCI and RTI providing for the assumptions of liabilities and cross- indemnities designed to allocate, generally, among these three companies, financial responsibility for liabilities arising out of or in connection with business activities prior to Distribution. /1To be refinanced by initial borrowing under this Agreement on the Closing Date. Schedule 7.02 Existing Liens NONE EXHIBIT A AMENDED AND RESTATED REVOLVING CREDIT NOTE July 2, 1998 $15,000,000.00 Atlanta, Georgia FOR VALUE RECEIVED, the undersigned, MORRISON HEALTH CARE, INC., a Georgia corporation ("Borrower"), promises to pay to the order of FIRST UNION NATIONAL BANK, a national banking association ("Lender") at the principal office of the Agent at 25 Park Place, Atlanta, Georgia 30303, or at such other place as the holder hereof may designate in immediately available funds in lawful money of the United States, the principal sum of (i) FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) or (ii) so much as shall have been advanced hereunder as Eurodollar Advances and Base Rate Advances pursuant to Article II of the Credit Agreement and remaining outstanding as shown on the records of the Agent and the Lender, plus all accrued and unpaid interest thereon as set forth in that certain Amended and Restated Credit Agreement dated as of July 2, 1998 among the Borrower, the financial institutions from time to time a party thereto (the "Lenders"), SunTrust Bank, Atlanta, as the issuing bank (the "Issuing Bank"), SunTrust Bank, Atlanta, as Agent for the Issuing Bank and the Lenders (the "Agent"), and Wachovia Bank, N.A. as Co-Agent for the Issuing Bank and the Lenders (the "Co-Agent") (as the same may hereafter be amended, modified, extended or supplemented from time to time, the "Agreement"). Interest shall accrue from the date hereof up to and through the date on which all principal and interest hereunder is paid in full, shall be computed on the basis of actual days elapsed in a 360-day year, and shall be calculated on the outstanding principal balance hereunder at the interest rates specified in Section 3.03 of the Agreement. Principal and interest hereunder shall be paid on the dates specified in the Agreement and shall be due and payable in full on the Maturity Date (as defined in the Agreement). Any installment of principal and, to the extent permitted by law, interest due under this Amended and Restated Revolving Credit Note (the "Note") that is not paid on the due date therefor whether on the Maturity Date, or resulting from the acceleration of maturity upon the occurrence of an Event of Default (as defined in the Agreement), shall bear interest from the date due until payment in full at the default rate specified in Section 3.03(c) of the Agreement. This Note is one of the Notes defined in, and evidences Advances incurred pursuant to, the Agreement, to which Agreement reference is hereby made for a full and complete description of such terms and conditions, including, without limitation, provisions for the acceleration of the maturity hereof upon the existence or occurrence of certain conditions or events, and the terms of any permitted prepayments hereof. All capitalized terms used in this Note shall have the same meanings as set forth in the Agreement. Upon the existence or occurrence of any Event of Default, the principal and all accrued interest hereof shall automatically become, or may be declared, due and payable in the manner and with the effect provided in the Agreement. Lender shall at all times have a right of set- off against any deposit balances of Borrower in the possession of Lender, and Lender may apply the same against payment of this Note or any other indebtedness of Borrower to Lender arising under the Credit Documents. The payment of any indebtedness evidenced by this Note shall not affect the enforceability of this Note as to any future, different or other indebtedness evidenced hereby. In the event the indebtedness evidenced by this Note is collected by legal action or through an attorney-at-law, or in bankruptcy or other judicial proceedings, Lender shall be entitled to recover from Borrower all costs of collection, including, without limitation, reasonable attorneys' fees actually incurred. Failure or forbearance of Lender to exercise any right hereunder, or otherwise granted by the Agreement or by law, shall not affect or release the liability of Borrower hereunder, and shall not constitute a waiver of such right unless so stated by Lender in writing. This Note shall be deemed to be made under, and shall be construed in accordance with and governed by, the laws of the State of Georgia (without giving effect to the conflict of laws provisions thereof). DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED. Time is of the essence hereunder. EXECUTED AND DELIVERED under seal of Borrower by its duly authorized officers as of the day and year first above written in Atlanta, Georgia. MORRISON HEALTH CARE, INC. [CORPORATE SEAL] By: /s/ K. W. Engwall Name: K. Wyatt Engwall Title: Senior Vice President Attest: /s/ John E. Fountain Name: John E. Fountain Title: Secretary EXHIBIT B FORM OF AMENDED AND RESTATED SWING LINE NOTE July 2, 1998 $10,000,000.00 Atlanta, Georgia FOR VALUE RECEIVED, the undersigned, MORRISON HEALTH CARE, INC., a Georgia corporation ("Borrower"), promises to pay to the order of SUNTRUST BANK, ATLANTA, a Georgia banking corporation ("Swing Line Lender") at its principal office at 25 Park Place, Atlanta, Georgia 30303, or at such other place as the holder hereof may designate in immediately available funds in lawful money of the United States, the principal sum of (i) TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) or (ii) so much as shall have been advanced hereunder as Swing Rate Advance pursuant to Article II of the Credit Agreement and remaining outstanding as shown on the records of the Swing Line Lender, plus all accrued and unpaid interest thereon as set forth in that certain Amended and Restated Credit Agreement dated as of July 2, 1998 among the Borrower, SunTrust Bank, Atlanta, a banking corporation organized under the laws of the State of Georgia, the other banks and lending institutions from time to time a party thereto (the "Lenders"), SunTrust Bank, Atlanta, as the issuing bank (the "Issuing Bank"), and SunTrust Bank, Atlanta, as Agent (the "Agent") for the Issuing Bank and the Lenders, and Wachovia Bank, N.A. as Co-Agent (the "Co-Agent") for the Issuing Bank and the Lenders (as the same may hereafter be amended, modified, extended or supplemented from time to time, the "Agreement"). Interest shall accrue from the date hereof up to and through the date on which all principal and interest hereunder is paid in full, shall be computed on the basis of actual days elapsed in a 360-day year, and shall be calculated on the outstanding principal balance hereunder at the interest rates specified in Section 3.03 of the Agreement. Principal and interest hereunder shall be paid on the dates specified in the Agreement and shall be due and payable in full on the Maturity Date (as defined in the Agreement). Any installment of principal and, to the extent permitted by law, interest due under this Amended and Restated Swing Line Note (the "Note") that is not paid on the due date therefor whether on the maturity date, or resulting from the acceleration of maturity upon the occurrence of an Event of Default (as defined in the Agreement), shall bear interest from the date due until payment in full at the default rate specified in Section 3.03(c) of the Agreement. This Note evidences the Swing Line Loans made pursuant to the terms and conditions of the Agreement, to which Agreement reference is hereby made for a full and complete description of such terms and conditions, including, without limitation, provisions for the acceleration of the maturity hereof upon the existence or occurrence of certain conditions or events, and the terms of any permitted prepayments hereof. This Note is being delivered by the Borrower and accepted by the Borrower as a substitution for that certain Swing Line Note, dated as of March 6, 1996 by the Borrower in favor of the Swing Line Lender, but not as payment of such indebtedness or as a novation with respect thereto. All capitalized terms used in this Note shall have the same meanings as set forth in the Agreement. Upon the existence or occurrence of any Event of Default, the principal and all accrued interest hereof shall automatically become, or may be declared, due and payable in the manner and with the effect provided in the Agreement. Swing Line Lender shall at all times have a right of set-off against any deposit balances of Borrower in the possession of Swing Line Lender, and Swing Line Lender may apply the same against payment of this Note or any other indebtedness of Borrower to Swing Line Lender arising under the Credit Documents. The payment of any indebtedness evidenced by this Note shall not affect the enforceability of this Note as to any future, different or other indebtedness evidenced hereby. In the event the indebtedness evidenced by this Note is collected by legal action or through an attorney-at-law, or in bankruptcy or other judicial proceedings, Swing Line Lender shall be entitled to recover from Borrower all costs of collection, including, without limitation, reasonable attorneys' fees actually incurred. Failure or forbearance of Swing Line Lender to exercise any right hereunder, or otherwise granted by the Agreement or by law, shall not affect or release the liability of Borrower hereunder, and shall not constitute a waiver of such right unless so stated by Lender in writing. This Note shall be deemed to be made under, and shall be construed in accordance with and governed by, the laws of the State of Georgia. DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED. Time is of the essence hereunder. EXECUTED AND DELIVERED under seal of Borrower by its duly authorized officers as of the day and year first above written in Atlanta, Georgia. MORRISON HEALTH CARE, INC. [CORPORATE SEAL] By: /s/ K. W. Engwall Name: K. Wyatt Engwall Title: Senior Vice President Attest:/s/ John E. Fountain Name: John E. Fountain Title: Secretary EXHIBIT C SUBSIDIARY GUARANTY AGREEMENT This SUBSIDIARY GUARANTY AGREEMENT (this "Guaranty"), dated as of July 2, 1998 is made by CULINARY SOLUTIONS, INC., a corporation organized and existing under the laws of Georgia (hereinafter, collectively with all Additional Guarantors hereafter becoming a party hereto, the "Guarantor"), in favor of SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as Agent (the "Agent"), and WACHOVIA BANK, N.A., a national banking association, as Co-Agent (the "Co-Agent) for the banks and other lending institutions parties to the Credit Agreement (as hereinafter defined) and each assignee thereof becoming a "Lender" as provided therein (the "Lenders"), and SUNTRUST BANK, ATLANTA, in its capacity as Issuing Bank (the "Issuing Bank") (the Lenders, the Issuing Bank, the Agent and the Co-Agent being collectively referred to herein as the "Guaranteed Parties"); W I T N E S S E T H: WHEREAS, MORRISON HEALTH CARE, INC., a corporation organized and existing under the laws of the State of Georgia (the "Borrower"), the Lenders, the Issuing Bank, the Agent and the Co-Agent have entered into that certain Amended and Restated Credit Agreement dated as of July 2, 1998 (as the same may hereafter be amended, restated, supplemented or otherwise modified from time to time, and including all schedules, riders, and supplements thereto, the "Credit Agreement"; terms defined therein and not otherwise defined herein being used herein as therein defined); WHEREAS, the Borrower owns, directly or indirectly, all or a majority of the outstanding capital stock of the Guarantor; WHEREAS, the Borrower and the Guarantor share an identity of interest as members of a consolidated group of companies engaged in substantially similar businesses with the Borrower providing certain centralized financial, accounting and management services to the Guarantor; WHEREAS, consummation of the transactions pursuant to the Credit Agreement will facilitate expansion and enhance the overall financial strength and stability of the Borrower's entire corporate group, including the Guarantor; and WHEREAS, it is a condition precedent to the Lenders' and Issuing Bank's obligations to enter into the Credit Agreement and to make extensions of credit thereunder that the Guarantor execute and deliver this Guaranty, and the Guarantor desires to execute and deliver this Guaranty to satisfy such condition precedent; NOW, THEREFORE, in consideration of the premises and in order to induce the Issuing Bank and the Lenders to enter into and perform their obligations under the Credit Agreement, the Guarantor hereby agrees as follows: SECTION 1. Guaranty. The Guarantor hereby, irrevocably and unconditionally, guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Loans, Letter of Credit Obligations and all other Obligations owing by the Borrower to the Lenders, the Issuing Bank, the Agent or the Co-Agent, or any of them, under the Credit Agreement, the Notes, any Letter of Credit and the other Credit Documents, including all renewals, extensions, modifications and refinancings thereof, now or hereafter owing, whether for principal, interest, fees, expenses or otherwise, and any and all reasonable out-of-pocket expenses (including reasonable attorneys' fees actually incurred and expenses) incurred by the Agent in enforcing any rights under this Guaranty (collectively, the "Guaranteed Obligations"), including without limitation, all interest which, but for the filing of a petition in bankruptcy with respect to the Borrower, would accrue on any principal portion of the Guaranteed Obligations. Any and all payments by the Guarantor hereunder shall be made free and clear of and without deduction for any set-off, counterclaim, or withholding so that, in each case, each Guaranteed Party will receive, after giving effect to any Taxes (as such term is defined in the Credit Agreement, but excluding Taxes imposed on overall net income of the Guaranteed Party to the same extent as excluded pursuant to the Credit Agreement), the full amount that it would otherwise be entitled to receive with respect to the Guaranteed Obligations (but without duplication of amounts for Taxes already included in the Guaranteed Obligations). The Guarantor acknowledges and agrees that this is a guarantee of payment when due, and not of collection, and that this Guaranty may be enforced up to the full amount of the Guaranteed Obligations without proceeding against the Borrower, against any security for the Guaranteed Obligations or under any other guaranty covering any portion of the Guaranteed Obligations. SECTION 2. Guaranty Absolute. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guaranteed Party with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and unconditional in accordance with its terms and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation, the following (whether or not the Guarantor consents thereto or has notice thereof): (a) any change in the time, place or manner of payment of, or in any other term of, all or any of the Guaranteed Obligations, any waiver, indulgence, renewal, extension, amendment or modification of or addition, consent or supplement to or deletion from or any other action or inaction under or in respect of the Credit Agreement, the other Credit Documents, or any other documents, instruments or agreements relating to the Guaranteed Obligations or any other instrument or agreement referred to therein or any assignment or transfer of any thereof; (b) any lack of validity or enforceability of the Credit Agreement, the other Credit Documents, or any other document, instrument or agreement referred to therein or any assignment or transfer of any thereof; (c) any furnishing to the Guaranteed Parties of any additional security for the Guaranteed Obligations, or any sale, exchange, release or surrender of, or realization on, any security for the Guaranteed Obligations; (d) any settlement or compromise of any of the Guaranteed Obligations, any security therefor, or any liability of any other party with respect to the Guaranteed Obligations, or any subordination of the payment of the Guaranteed Obligations to the payment of any other liability of the Borrower; (e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Guarantor or the Borrower, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding; (f) any nonperfection of any security interest or lien on any collateral, or any amendment or waiver of or consent to departure from any guaranty or security, for all or any of the Guaranteed Obligations; (g) any application of sums paid by the Borrower or any other Person with respect to the liabilities of the Borrower to the Guaranteed Parties, regardless of what liabilities of the Borrower remain unpaid; (h) any act or failure to act by any Guaranteed Party which may adversely affect the Guarantor's subrogation rights, if any, against the Borrower to recover payments made under this Guaranty; and (i) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Guarantor. If claim is ever made upon any Guaranteed Party for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations, and any Guaranteed Party repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over the Guaranteed Party or any of its property, or (b) any settlement or compromise of any such claim effected by the Guaranteed Party with any such claimant (including the Borrower or a trustee in bankruptcy for the Borrower), then and in such event the Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding on it, notwithstanding any revocation hereof or the cancellation of the Credit Agreement, the other Credit Documents, or any other instrument evidencing any liability of the Borrower, and the Guarantor shall be and remain liable to the Guaranteed Party for the amounts so repaid or recovered to the same extent as if such amount had never originally been paid to the Guaranteed Party. SECTION 3. Waiver. The Guarantor hereby waives notice of acceptance of this Guaranty, notice of any liability to which it may apply, and further waives presentment, demand of payment, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by the Guaranteed Parties against, and any other notice to, the Borrower or any other party liable with respect to the Guaranteed Obligations (including the Guarantor or any other Person executing a guaranty of the obligations of the Borrower). SECTION 4. Waiver of Subrogation; Rights of Contribution. No Guarantor will exercise any rights against the Borrower which it may acquire by way of subrogation or contribution, by any payment made hereunder or otherwise and each Guarantor hereby expressly waives any claim, right or remedy which such Guarantor may now have or hereafter acquire against the Borrower that arises hereunder and/or from the performance by the Guarantor hereunder, including, without limitation, any claim, right or remedy of any Guaranteed Party against the Borrower or any security which any Guaranteed Party now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under color of law or otherwise unless and until the Guaranteed Obligations have been indefeasibly paid in full. The following provisions of this Section 4 shall be effective at all times when there are multiple guarantors party hereto. In the event that any Guarantor (the "Funding Guarantor") shall make any payment or payments under this Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations hereunder, each other Guarantor (each, a "Contributing Guarantor") hereby agrees to contribute to the Funding Guarantor an amount equal to such Contributing Guarantor's pro rata share of such payment or payments made, or losses suffered, by such Funding Guarantor determined by reference to the ratio of (a) the dollar amount of the percentage of each such Contributing Guarantor's Net Assets (without giving effect to any right to receive any contribution or subrogation or obligation to make any contribution hereunder), to (b) the sum of the Net Assets of all Guarantors (including the Funding Guarantor) hereunder (without giving effect to any right to receive contribution or subrogation hereunder or any obligation to make any contribution hereunder); provided, that the Contributing Guarantor shall not be obligated to make any such payment to the Funding Guarantor if the Contributing Guarantor is not solvent at the time of such contribution or if the Contributing Guarantor would be rendered not solvent as a result thereof. Nothing in this Section shall affect each Guarantor's several liability for the entire amount of the Guaranteed Obligations, subject only to the limitations set forth in Section 14. For the purposes of this Section 4, (x) the "Net Assets" of any Guarantor shall mean the highest amount, as of any Determination Date, by which (A) the aggregate present fair saleable value of the assets of such Guarantor exceeds (B) the amount of all the debts and liabilities of such Guarantor (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder), and (y) "Determination Date" shall mean each of (1) the Closing Date, (2) the date of commencement of a case under the Bankruptcy Code in which a Guarantor is a debtor, and (3) the date enforcement hereunder is sought with respect to such Guarantor. Each Funding Guarantor covenants and agrees that its right to receive any contribution from any Contributing Guarantor hereunder shall be subordinated and junior in right of payment in full of all of the Guaranteed Obligations. SECTION 5. Severability. Any provision of this Guaranty 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. SECTION 6. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing executed by the Agent. SECTION 7. Notices. All notices and other communications provided for hereunder shall be given in the manner specified in the Credit Agreement (i) in the case of the Agent, at the address specified for the Agent in the Credit Agreement, and (ii) in the case of the Guarantor, at the addresses specified for the Guarantor in this Guaranty or the applicable supplement hereto. SECTION 8. No Waiver; Remedies. No failure on the part of the Agent or other Guaranteed Parties to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other further notice or demand in any similar or other circumstances or constitute a waiver of the rights of the Agent or other Guaranteed Parties to any other or further action in any circumstances without notice or demand. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9. Right Of Set Off. In addition to and not in limitation of all rights of offset that the Agent or other Guaranteed Parties may have under applicable law, the Agent or other Guaranteed Parties shall, upon the occurrence of any Event of Default and whether or not the Agent or other Guaranteed Parties have made any demand or the Guaranteed Obligations are matured, have the right to appropriate and apply to the payment of the Guaranteed Obligations, all deposits of the Guarantor (general or special, time or demand, provisional or final) then or thereafter held by and other indebtedness or property then or thereafter owing by the Agent or other Guaranteed Parties to the Guarantor, whether or not related to this Guaranty or any transaction hereunder. The Guaranteed Parties shall promptly notify the Guarantor of any offset hereunder. SECTION 10. Continuing Guaranty; Transfer Of Obligations. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until payment in full of the Guaranteed Obligations and all other amounts payable under this Guaranty and the termination of the Commitments, (ii) be binding upon the Guarantor, its successors and assigns, and (iii) inure to the benefit of and be enforceable by the Agent, its successors, transferees and assigns, for the benefit of the Guaranteed Parties. SECTION 11. Governing Law; Appointment Of Agent For Service Of Process; Submission To Jurisdiction; Waiver of Jury Trial. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF). (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE AGENT AND OTHER GUARANTEED PARTIES WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT RELATED HERETO. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES PRENTICE HALL CORPORATION OF ATLANTA, GEORGIA, AS THE DESIGNEE, APPOINTEE AND AGENT OF THE GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY DAYS AFTER MAILING THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF PROCESS BY MAIL TO THE GUARANTOR AT ITS ADDRESS SET FORTH HEREIN, BUT THE FAILURE OF THE GUARANTOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. (c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER. SECTION 12. Subordination Of the Borrower's Obligations To the Guarantor. As an independent covenant, the Guarantor hereby expressly covenants and agrees for the benefit of the Agent and other Guaranteed Parties that all obligations and liabilities of the Borrower to the Guarantor of whatsoever description including, without limitation, all intercompany receivables of the Guarantor from the Borrower ("Junior Claims") shall be subordinate and junior in right of payment to all obligations of the Borrower to the Agent and other Guaranteed Parties under the terms of the Credit Agreement and the other Credit Documents ("Senior Claims"). If an Event of Default shall occur, then, unless and until such Event of Default shall have been cured, waived, or shall have ceased to exist, no direct or indirect payment (in cash, property, securities by setoff or otherwise) shall be made by the Borrower to the Guarantor on account of or in any manner in respect of any Junior Claim except such payments and distributions the proceeds of which shall be applied to the payment of Senior Claims. In the event of a Proceeding (as hereinafter defined), all Senior Claims shall first be paid in full before any direct or indirect payment or distribution (in cash, property, securities by setoff or otherwise) shall be made to any Guarantor on account of or in any manner in respect of any Junior Claim except such payments and distributions the proceeds of which shall be applied to the payment of Senior Claims. For the purposes of the previous sentence, "Proceeding" means the Borrower or the Guarantor shall commence a voluntary case concerning itself under the Bankruptcy Code or any other applicable bankruptcy laws; or any involuntary case is commenced against the Borrower or the Guarantor; or a custodian (as defined in the Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or takes charge of, all or any substantial part of the property of the Borrower or the Guarantor, or the Borrower or the Guarantor commences any other proceedings under any reorganization arrangement, adjustment of debt, relief of debtor, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Borrower or the Guarantor, or any such proceeding is commenced against the Borrower or the Guarantor, or the Borrower or the Guarantor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Borrower or the Guarantor suffers any appointment of any custodian or the like for it or any substantial part of its property; or the Borrower or the Guarantor makes a general assignment for the benefit of creditors; or the Borrower or the Guarantor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Borrower or the Guarantor shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or the Borrower or the Guarantor shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate action shall be taken by the Borrower or the Guarantor for the purpose of effecting any of the foregoing. In the event any direct or indirect payment or distribution is made to the Guarantor in contravention of this Section 12, such payment or distribution shall be deemed received in trust for the benefit of the Agent and other Guaranteed Parties and shall be immediately paid over to the Agent for application against the Guaranteed Obligations in accordance with the terms of the Credit Agreement. The Guarantor agrees to execute such additional documents as the Agent may reasonably request to evidence the subordination provided for in this Section 12. SECTION 13. Automatic Acceleration in Certain Events. Upon the occurrence of an Event of Default specified in Section 8.07 of the Credit Agreement, all Guaranteed Obligations shall automatically become immediately due and payable by the Guarantor, without notice or other action on the part of the Agent or other Guaranteed Parties, and regardless of whether payment of the Guaranteed Obligations by the Borrower has then been accelerated. In addition, if any event of the types described in Section 8.07 of the Credit Agreement should occur with respect to the Guarantor, then the Guaranteed Obligations shall automatically become immediately due and payable by the Guarantor, without notice or other action on the part of the Agent or other Guaranteed Parties, and regardless of whether payment of the Guaranteed Obligations by the Borrower has then been accelerated. SECTION 14. Savings Clause. (a) It is the intent of the Guarantor and the Guaranteed Parties that the Guarantor's maximum obligations hereunder shall be, but not in excess of: (i) in a case or proceeding commenced by or against the Guarantor under the Bankruptcy Code on or within one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against the Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any state fraudulent transfer or fraudulent conveyance act or statute applied in such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or (ii) in a case or proceeding commenced by or against the Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against the Guarantor under any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or (iii) in a case or proceeding commenced by or against the Guarantor under any law, statute or regulation other than the Bankruptcy Code (including, without limitation, any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws), the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against the Guarantor under such law, statute or regulation including, without limitation, any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding. (The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties) shall be determined in any such case or proceeding shall hereinafter be referred to as the "Avoidance Provisions"). (b) To the end set forth in Section 14(a), but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidance under the Avoidance Provisions if the Guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render the Guarantor insolvent, or leave the Guarantor with an unreasonably small capital to conduct its business, or cause the Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect to the contribution by the Guarantor, the maximum Guaranteed Obligations for which the Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties), as so reduced, to be subject to avoidance under the Avoidance Provisions. This Section 14(b) is intended solely to preserve the rights of the Guaranteed Parties hereunder to the maximum extent that would not cause the Guaranteed Obligations of the Guarantor to be subject to avoidance under the Avoidance Provisions, and neither the Guarantor nor any other Person shall have any right or claim under this Section 14 as against the Guaranteed Parties that would not otherwise be available to such Person under the Avoidance Provisions. (c) None of the provisions of this Section 14 are intended in any manner to alter the obligations of any holder of Subordinated Debt or the rights of the holders of "senior indebtedness" as provided by the terms of the Subordinated Debt. Accordingly, it is the intent of the Guarantor that, in the event that any payment or distribution is made with respect to the Subordinated Debt prior to the payment in full of the Guaranteed Obligations by virtue of the provisions of this Section 14, in any case or proceeding of the kinds described in clauses (i)-(iii) of Section 14(a), the holders of the Subordinated Debt shall be obligated to pay or deliver such payment or distribution to or for the benefit of the Guaranteed Parties. Furthermore, in respect of the Avoidance Provisions, it is the intent of the Guarantor that the subrogation rights of the holders of Subordinated Debt with respect to the obligations of the Guarantor under this Guaranty, be subject in all respects to the provisions of Section 14(b). SECTION 15. Information. The Guarantor assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that the Guarantor assumes and incurs hereunder, and agrees that none of the Guaranteed Parties will have any duty to advise the Guarantor of information known to it or any of them regarding such circumstances or risks. SECTION 16. Representations and Warranties. The Guarantor represents and warrants as to itself that all representations and warranties relating to it contained in Sections 6.01 through 6.06 of the Credit Agreement are true and correct. SECTION 17. Survival of Agreement. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the Credit Agreement, the making of the Loans, the issuance of the Letters of Credit, and the execution and delivery of the Notes and the other Credit Documents. SECTION 18. Counterparts. This Guaranty and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. SECTION 19. Additional Guarantors. Upon execution and delivery by any Subsidiary of the Borrower of an instrument in the form of Annex 1, such Subsidiary of the Borrower shall become a Guarantor hereunder with the same force and effect as if originally named a Guarantor herein (each an "Additional Guarantor") and its obligations hereunder shall be joint and several with the Guarantor. The execution and delivery of any such instrument shall not require the consent of any other Guarantor hereunder. The rights and obligations of the Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any Additional Guarantor as a party to this Guaranty. IN WITNESS WHEREOF, the Guarantor and the Agent have caused this Guaranty to be duly executed and delivered by their respective duly authorized officers as of the date first above written in Atlanta, Georgia. Address for Notices: CULINARY SOLUTIONS, INC. 1955 Lake Park Dr., S.E. Suite 400 Smyrna, Georgia 30080 By:/s/ K. W.Engwall Name: K. Wyatt Engwall Attn: Wyatt Engwall Title: Senior Vice President, Finance Telecopy: (770) 437-3349 Attest:/s/ John E. Fountain Name: John E. Fountain Title: Secretary [CORPORATE SEAL] STATE OF GEORGIA COUNTY OF COBB Signed, sealed and delivered in the presence of: NICOLE DORNBUSCH Notary Public Date Executed by Notary: July 1, 1998 My commission expires: November 11, 2000 [NOTARIAL SEAL] SUNTRUST BANK, ATLANTA ("Agent") By:/s/ Daniel S. Komitor Name: Daniel S. Komitor Title: Vice President By:/s/ R. Michael Dunlap Name: R. Michael Dunlap Title:Vice President WACHOVIA BANK, N.A. ("Co-Agent") By:/s/ John C. Canty Name: John C. Canty Title:Banking Officer By: Name: Title: SECTION 12 OF THE FOREGOING GUARANTY ACKNOWLEDGED AND AGREED TO: MORRISON HEALTH CARE, INC. By:/s/ K. W. Engwall Name: K. Wyatt Engwall Title:Senior Vice President, Finance and Assistant Secretary SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT THIS SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT (this "Supplement to Guaranty Agreement"), dated as of ___________, _____, made by ______________________, a ________ corporation (the "Additional Guarantor"), in favor of SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as Agent (the "Agent") and WACHOVIA BANK, N.A., a national bank association, as Co-Agent (the "Co-Agent") for the banks and other lending institutions parties to the Credit Agreement (as hereinafter defined) and each assignee thereof becoming a "Lender" as provided therein (the "Lenders"), and SUNTRUST BANK ATLANTA, as Issuing Bank (the "Issuing Bank"), the Lenders, the Issuing Bank, the Agent and the Co-Agent being collectively referred to herein as the "Guaranteed Parties"). W I T N E S S E T H: WHEREAS, MORRISON HEALTH CARE, INC. (the "Borrower"), the Lenders, the Issuing Bank, the Agent and the Co-Agent are parties to an Amended and Restated Credit Agreement, dated as of July 2, 1998 (as the same may hereafter be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") pursuant to which the Lenders have made commitments to make loans and the Issuing Bank has committed to issue Letters of Credit to the Borrower; WHEREAS, Culinary Solutions, Inc., a Subsidiary of the Borrower ( the "Subsidiary Guarantor") has executed and delivered a Subsidiary Guaranty Agreement dated as of July 2, 1998 (the "Subsidiary Guaranty") pursuant to which the Subsidiary Guarantor has agreed to guarantee all of the obligations of the Borrower under the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement); WHEREAS, the Borrower, the Subsidiary Guarantor and the Additional Guarantor share an identity of interests as members of a consolidated group of companies engaged in substantially similar businesses; the Borrower provides certain centralized financial, accounting and management services to the Additional Guarantor; and the making of the loans will facilitate expansion and enhance the overall financial strength and stability of the Borrower's corporate group, including the Additional Guarantor; WHEREAS, it is a condition subsequent to the Lenders' obligation to make loans to the Borrower and the Issuing Bank's obligation to issue letters of credit on behalf of the Borrower under the Credit Agreement that the Additional Guarantor execute and deliver to the Agent this Supplement to Guaranty Agreement, and the Additional Guarantor desires to execute and deliver this Supplement to Guaranty Agreement to satisfy such condition subsequent; NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make the loans to the Borrower and the Issuing Bank to issue letters of credit on behalf of the Borrower under the Credit Agreement, the Additional Guarantor hereby agrees as follows: 1. Defined Terms. Capitalized terms not otherwise defined herein which are used in the Subsidiary Guaranty are used herein with the meanings specified for such terms in the Subsidiary Guaranty. 2. Additional Guarantor. The Additional Guarantor agrees that it shall be and become a Guarantor for all purposes of the Subsidiary Guaranty and shall be fully liable, jointly and severally thereunder to the Agent and other Guaranteed Parties to the same extent and with the same effect as though the Additional Guarantor had been a Guarantor originally executing and delivering the Subsidiary Guaranty. Without limiting the foregoing, the Additional Guarantor hereby jointly and severally (with respect to the guaranties made by the Subsidiary Guarantor under the Subsidiary Guaranty), irrevocably and unconditionally, guarantees the punctual payment when due, whether at stated maturity by acceleration of otherwise, of the Borrowings and all other Obligations (as defined in the Credit Agreement, and including all renewals, extensions, modifications and refinancings thereof, now or hereafter existing, whether for principal, interest, fees, expenses or otherwise, and any and all expenses (including reasonable attorneys' fees actually incurred and reasonable out-of-pocket expenses) incurred by the Agent and other Guaranteed Parties in enforcing any rights under the Subsidiary Guaranty (as supplemented hereby), subject, however, to the limitations expressly provided in the Subsidiary Guaranty in Section 14 thereof. All references in the Subsidiary Guaranty to the "Guarantor" shall be deemed to include and to refer to the Additional Guarantor. 3. Governing Law; Appointment of Agent for Service of Process; Submission to Jurisdiction; Waiver of Jury Trial. (a) THIS SUPPLEMENT TO GUARANTY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF). (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY AGREEMENT RELATED HERETO MAY BE BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS SUPPLEMENT TO GUARANTY AGREEMENT, THE ADDITIONAL GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE AGENT OR OTHER GUARANTEED PARTIES WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE ADDITIONAL GUARANTOR HEREBY IRREVOCABLY DESIGNATES CSC CORPORATION SERVICES OF ATLANTA, GEORGIA, AS THE DESIGNEE, APPOINTEE AND AGENT OF THE ADDITIONAL GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE ADDITIONAL GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY (30) DAYS AFTER MAILING THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF PROCESS BY MAIL TO THE ADDITIONAL GUARANTOR AT ITS ADDRESS SET FORTH HEREIN, BUT THE FAILURE OF THE ADDITIONAL GUARANTOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE ADDITIONAL GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ADDITIONAL GUARANTOR IN ANY OTHER JURISDICTION. (c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE ADDITIONAL GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER. IN WITNESS WHEREOF, the Additional Guarantor has caused this Supplement to Guaranty to be duly executed and delivered under seal by its duly authorized officers as of the date first above written. Address for Notices: ADDITIONAL GUARANTOR: By: Title: Attest: Title: [CORPORATE SEAL] EXHIBIT D CLOSING CERTIFICATE The undersigned, being the ______________ of MORRISON HEALTH CARE, INC., a Georgia corporation (the "Borrower"), hereby gives this certificate to induce SUNTRUST BANK, ATLANTA, a Georgia banking corporation, and the other Lenders party to the Credit Agreement described below (referred to collectively as the "Lenders"), SUNTRUST BANK, ATLANTA, as the issuing bank (the "Issuing Bank"), and SUNTRUST BANK, ATLANTA, as Agent (the "Agent") for the Issuing Bank and the Lender, and WACHOVIA BANK, N.A. as Co-Agent (the "Co-Agent") for the Issuing Bank and the Lender, to consummate certain financial accommodations with the Borrower pursuant to the terms of the Amended and Restated Credit Agreement dated as of July 2, 1998 by and among the Borrower, Lenders, the Issuing Bank, the Agent and the Co-Agent (the "Credit Agreement"). Capitalized terms used herein and not defined herein have the same meanings assigned to them in the Credit Agreement: The undersigned hereby certifies to the Agent, the Co- Agent, the Issuing Bank and the Lenders that: 1. In his aforesaid capacity as the ______________________ of the Borrower, he has knowledge of the business and financial affairs of the Borrower sufficient to issue this certificate and is authorized and empowered to issue this certificate for and on behalf of the Borrower. 2. All representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects on and as of the date hereof. 3. After giving effect to the initial Loans to be made to, or initial Letters of Credit to be issued on behalf of, the Borrower pursuant to the Credit Agreement on the Closing Date, no Default or Event of Default has occurred and is continuing. 4. Since the date of the unaudited proforma financial statements of the Consolidated Companies described in Section 5.15 of the Credit Agreement, there has been no change which has had or could reasonably be expected to have a Materially Adverse Effect. 5. The Advances to be made or Letters of Credit issued on the date hereof are being used solely for the purposes provided in the Credit Agreement, and such Advances and Letters of Credit and use of proceeds thereof will not contravene, violate or conflict with, or involve the Agent, the Issuing Bank or any Lender in a violation of, any law, rule, injunction, or regulation, or determination of any court of law or other governmental authority, applicable to the Borrower. 1. 6. The conditions precedent set forth in Sections 4.01 and 4.02 of the Credit Agreement have been or will be satisfied (or have been waived pursuant to the terms of the Credit Agreement) prior to or concurrently with the making of the initial Loans or issuance of initial Letters of Credit under the Credit Agreement. 7. The execution, delivery and performance by the Credit Parties of the Credit Documents will not violate any Requirement of Law or cause a breach or default under any of their respective Contractual Obligations. 8. Each of the Credit Parties has the corporate power and authority to make, deliver and perform the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of such Credit Documents. No consents or authorization of, or filing with, any Person (including, without limitation, any governmental authority), is required in connection with the execution, delivery or performance by any Credit Party, or the validity or enforceability against any Credit Party, of the Credit Documents, other than such consents, authorizations or filings which have been made or obtained. IN WITNESS WHEREOF, the undersigned has executed this certificate in his aforesaid capacity as of this 2nd day of July, 1998. By: Title: EXHIBI E -------- July 2, 1998 To: Each of the Lenders who are parties to the Credit Agreement referenced below and each assignee thereof that becomes a "Lender" as provided therein, SunTrust Bank, Atlanta, as Swing Line Lender, Issuing Bank and Agent, and Wachovia Bank, N.A., as Co-Agent Re: Amended and Restated Credit Agreement dated as of July 2, 1998 (the "Credit Agreement"), among Morrison Health Care, Inc., each of the Lenders listed on the signature pages thereto, SunTrust Bank, Atlanta, as Swing Line Lender , Issuing Bank and Agent, and Wachovia Bank, N.A., as Co-Agent Ladies and Gentlemen: This opinion is furnished pursuant to Section 4.01(i) of the Credit Agreement. Terms used herein which are defined in the Credit Agreement shall have the respective meanings set forth or referred to in the Credit Agreement, unless otherwise defined herein. We have acted as counsel for Morrison Health Care, Inc., a Georgia corporation (the "Borrower"), and Culinary Solutions, Inc., a Georgia corporation (the "Guarantor"; and together with the Borrower, the "Credit Parties"), in connection with the preparation, negotiation, execution and delivery of the following documents (the "Credit Documents"): 1. The Credit Agreement; 2. The Revolving Credit Notes; 3. The Swing Line Note; and 4. The Guaranty Agreement. In connection with our opinion we have examined the Credit Documents and the corporate proceedings of the Boards of Directors of the Credit Parties. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. This opinion letter is limited by, and is rendered in accordance with, the January 1, 1992 edition of the Interpretive Standards applicable to Legal Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion Committee of the Corporate and Banking Law Section of the State Bar of Georgia ("Interpretive Standards"), which Interpretative Standards are incorporated in this opinion letter by this reference. We have assumed the genuineness of all signatures (other than those on behalf of the Credit Parties) on, and authenticity of, all documents submitted to as originals and the conformity to original documents of all documents submitted to us as copies. With respect to any element of mutuality which may be required in order to support the enforceability of the Credit Documents, we have assumed that all parties thereto other than the Credit Parties (the "Other Parties") have all requisite power and authority to enter into and perform their respective obligations under the Credit Agreement and the other Credit Documents to which they are parties, that the Credit Agreement and such other Credit Documents have been duly authorized, executed and delivered by the Other Parties, and that the Credit Agreement and such other Credit Documents constitute the legal, valid and binding obligations of the Other Parties. Based on the foregoing, and subject to the qualifications hereunder set forth, we are of the opinion that: 1. Each of the Credit Parties is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. 2. Each of the Credit Parties has the corporate power to own and operate its property and to conduct its business as now conducted and to make, deliver and perform the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of such Credit Documents. Each of the Credit Parties has duly authorized, executed and delivered each Credit Document to which it is a party. 3. No consent, approval or authorization of, or registration, declaration or filing with any governmental authority of the United States of America or the State of Georgia is required in connection with the execution, delivery, performance, validity or enforceability of the Credit Documents. 4. (a) The execution, delivery and performance by each of the Credit Parties of the Credit Documents to which it is a party do not and will not violate (i) the articles of incorporation of such Credit Party, (ii) any existing Requirement of Law (other than any determination of an arbitrator or a court or other governmental authority) of the United States of America or the State of Georgia applicable to such Credit Party, or (iii) insofar as known to us, any determination of an arbitrator or a court or other governmental authority applicable to such Credit Party. (b) The execution, delivery and performance by the Borrower of the Credit Documents to which it is a party do not and will not result in a breach of or default under any material written agreements or the creation or imposition of a contractual lien or security interest in, on or against any of its properties under any material written agreements. With your permission we have assumed the term "material written agreements" as used in the preceding sentence includes only the Sharing Agreements. 5. Each of the Credit Documents constitutes the legal, valid and binding obligation of each of the Credit Parties that is a party thereto, enforceable against each such Credit Party in accordance with its terms. The provisions of the Credit Documents with respect to payment of interest, fees, costs and other charges for the use of money deemed to be interest under Georgia law (collectively "Interest Charges") do no violate the interest and usury laws as in effect in the State of Georgia. 6. None of the Credit Parties is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 7. The making of any Loans and the application of the proceeds thereof as provided in the Credit Agreement do not violate Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. Our opinions set forth above are subject to the following qualifications: A. Our opinions are limited to the laws of the United States of America and the State of Georgia. B. With respect to the opinions contained in paragraph 1 above, we have not obtained tax clearance certificates from the taxing authorities of the relevant jurisdictions. C. With respect to the opinion expressed in paragraph 5 above, we have assumed that: i) the Interest Charges have been or will be applied for the purposes described in the Credit Documents; and ii) all such Interest Charges have been or will be applied for purposes described in the Credit Documents; iii) interest will not be charged on overdue interest, in violation of O.C.G.A. 7-4-17; and iv) the Interest Charges shall not exceed five percent (5%) per month in violation of O.C.G.A. 7-4-18; Based upon the limitations and qualifications set forth above, we confirm to you that: i) Except for the claims described in Schedule 5.05 to the Credit Agreement, to our knowledge (but without independent investigation), no litigation, investigation or proceeding of or before any court, tribunal, arbitrator or governmental authority is pending or overtly threatened by a written communication by or against any of the Credit Parties or against any of their respective properties or revenues or with respect to the Credit Documents or any of the transactions contemplated thereby which would have a Materially Adverse Effect. ii) Each of the Credit Parties is qualified to transact business as a foreign corporation in the states set forth in Exhibit A hereto, except as noted to the contrary hereinbelow. The foregoing statement is based solely upon certificates provided by agencies of those states, copies of which Borrower has delivered to you on the date hereof, and is limited to the meaning ascribed to such certificates by each applicable state agency. In this connection, we draw to your attention that we were unable to obtain certificates of authority for the Borrower from the District of Columbia and Arkansas, due to the apparent failure of the Borrower to file its annual reports and/or pay any applicable franchise taxes in those jurisdictions. We have been advised that curative measures are being taken by the Borrower to bring itself into good standing in those two jurisdictions. This opinion has been delivered solely for the benefit of the Lenders, the Issuing Bank, the Agent and the Co-Agent, and their permitted successors and assigns under the Credit Agreement, and may not be relied upon by any other person or entity or for any other purpose without the express written permission of the undersigned. Very truly yours, POWELL, GOLDSTEIN, FRAZER & MURPHY LLP EXHIBIT A Morrison Health Care, Inc. (GA) Foreign Qualifications: Alabama Arizona Arkansas* California Colorado Connecticut Delaware District of Columbia* Florida Illinois Indiana Iowa Kentucky Louisiana Maine Maryland Massachusetts Michigan Mississippi Missouri New Hampshire New Jersey New York North Carolina Ohio (d/b/a Morrison Food and Nutrition Services) Oklahoma Pennsylvania South Carolina Tennessee Texas Vermont Virginia West Virginia Culinary Solutions, Inc. (GA) Foreign Qualifications: Maryland * Not in good standing. EXHIBIT_F FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "Assignment Agreement") dated as of _____________, 19__ between ______________________________________________ ("Assignor") and __________________________________ ("Assignee"). All capitalized terms used herein and not otherwise defined shall have the respective meanings provided such terms in the Credit Agreement referred to below. W I T N E S S E T H: WHEREAS, Assignor is a party to an Amended and Restated Credit Agreement, dated as of July 2, 1998 (as amended to the date hereof, the "Credit Agreement"), among Morrison Health Care, Inc. (the "Borrower"), the financial institutions from time to time party thereto (including Assignor, the "Lenders") SunTrust Bank, Atlanta, as the Issuing Bank (the "Issuing Bank"), SunTrust Bank, Atlanta, as Agent (the "Agent") for the Issuing Bank and the Lenders, and Wachovia Bank, N.A., as Co-Agent ("Co-Agent") for the Issuing Bank and Lenders (the "Co-Agent"); WHEREAS, Assignor has a Revolving Loan Commitment of $___________ under the Credit Agreement pursuant to which it has made outstanding Advances of $_____________; and WHEREAS, Assignor and Assignee wish Assignor to assign to Assignee its rights under the Credit Agreement with respect to all or a portion of its Commitment and its outstanding Advances; WHEREAS, Assignor and Assignee wish Assignee to assume the obligations of Assignor under the Credit Agreement to the extent of the rights so assigned; NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: 1. Assignment. Assignor hereby assigns to Assignee, without recourse, or representation or warranty (other than expressly provided herein) and subject to Section 4(b) hereof, ___% as the "Assignee's Share" ("Assignee's Share") of all of Assignor's rights, title and interest arising under the Credit Agreement relating to Assignor's Commitment, including with respect to Assignee's Share of the Advances heretofore made by the Assignor under the Credit Agreement. The dollar amount of Assignee's Share of Assignor's Commitment is $__________, the dollar amount of Assignee's Share of Assignor's outstanding Advances pursuant thereto is $__________. 2. Assumption. Assignee hereby assumes from Assignor all of Assignor's obligations arising under the Credit Agreement relating to Assignee's Share of Assignor's Commitment and of the Advances. It is the intent of the parties hereto that Assignor shall be released from all of its obligations under the Credit Agreement relating to Assignee's Share. 3. Assignments; Participations. Assignee may not assign all or any part of the rights granted to it hereunder. Assignee may sell or grant participations in all or any part of the rights granted to it hereunder in accordance with the provisions of Section 10.06 of the Credit Agreement. 4. Payment of Interest and Fees to Assignee. (a) As of the date hereof interest is payable by the Borrower in respect of Assignee's Share of the Eurodollar Advances at a rate equal to ___% per annum above LIBOR for Revolving Loans and a Commitment Fee equal to ___% per annum on the Assignee's Share of the average daily unused portion of the Commitments. (b) Notwithstanding anything to the contrary contained in this Assignment Agreement, if and when Assignor receives or collects any payment of interest on any Advance attributable to Assignee's Share or any payment of the Commitment Fee attributable to Assignee's Share which, in any such case, are required to be paid to Assignee pursuant to clause (a) above, Assignor shall distribute to Assignee such payment but only to the extent such interest or fee accrued after the Assignment Effective Date (as hereinafter defined). (c) Notwithstanding anything to the contrary contained in this Assignment Agreement, if and when Assignee receives or collects any payment of interest on any Advance or any payment of the Commitment Fee which, in any such case, is required to be paid to Assignor pursuant to clause (a) above, Assignee shall distribute to Assignor such payment. 5. Payments on Assignment Effective Date. In consideration of the assignment by Assignor to Assignee of Assignee's Share of Assignor's Revolving Loan Commitment, Term Loan and Advances as set forth above, Assignee agrees to pay to Assignor on or prior to the Assignment Effective Date an amount specified by Assignor in writing on or prior to the Assignment Effective Date which represents Assignee's Share of the principal amount of the respective Advances made by Assignor pursuant to the Credit Agreement and outstanding on the Assignment Effective Date. 6. Effectiveness. (a) This Assignment Agreement shall become effective on the date (the "Assignment Effective Date") (which is at least five days after the date hereof) on which (i) Assignor and Assignee shall have signed a copy hereof (whether the same or different copies) and, in the case of Assignee, shall have delivered the same to Assignor, (ii) the Borrower shall have consented hereto, (iii) a copy of the fully executed Assignment, a fee of $2,500 and the Note evidencing the Commitment and assigned hereby shall have been delivered to the Agent, and (iv) Assignee shall have paid to Assignor the amount set forth in Section 5. (b) It is agreed that all interest on any Advance attributable to Assignee's Share and all Commitment Fees attributable to Assignee's Share, which, in each case, accrues on and after the Assignment Effective Date shall be paid directly to the Assignee in accordance with the Credit Agreement. 7. Amendment of Credit Agreement. On the Assignment Effective Date the Credit Agreement shall be amended by deeming the signature of Assignee herein as a signature to the Credit Agreement. The Assignee shall be deemed a "Lender" for all purposes under the Credit Agreement and shall be subject to and shall benefit from all of the rights and obligations of a Lender under the Credit Agreement. The address of the Assignee for notice purposes shall be as set forth below, and the Credit Agreement shall be amended by deeming such signature page and address to be included thereon. Without limiting the generality of the foregoing, Assignee agrees that it will perform its obligations as a Lender under the Credit Agreement as required by the terms thereof and Assignee appoints and authorizes the Agent to take such actions as Agent on its behalf and exercise such powers under the Credit Agreement and the other loan documents as are delegated to the Agent by the terms of the Credit Agreement and the other credit documents, together with such powers as are reasonably incidental thereto. 8. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other party as follows: (a) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Assignment Agreement; (b) the making and performance by it of this Assignment Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation of the jurisdiction of its incorporation or any other law or regulation applicable to it; (c) this Assignment Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms; and (d) all consents, licenses, approvals, authorizations, exemptions, registrations, filings, opinions and declarations from or with any agency, department, administrative authority, statutory corporation or judicial entity necessary for the validity or enforceability of its obligations under this Assignment Agreement have been obtained, and no governmental authorizations other than any already obtained are required in connection with its execution, delivery and performance of this Assignment Agreement. 9. Expenses. The Assignor and the Assignee agree that each party shall bear its own expenses in connection with the preparation and execution of this Assignment Agreement. 10. Miscellaneous. (a) Assignor shall not be responsible to Assignee for the execution (by any party other than the Assignor), effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of the Credit Agreement, the Note or the Guaranty Agreement or for any representations, warranties, recitals or statements made therein or in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents made or furnished or made available by Assignor to Assignee or by or on behalf of the Borrower or any Guarantor to Assignor or Assignee in connection with the Credit Agreement, the Note or the Guaranty Agreement and the transactions contemplated thereby. Assignor shall not be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in the Credit Agreement, the Note or the Guaranty Agreement or as to the use of the proceeds of the Advances or as to the existence or possible existence of any event which constitutes an Event of Default or which with the giving of notice or the passage of time or both would constitute an Event of Default. (b) Assignee represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Borrower and each Guarantor in connection with the making of the Advances and the assignment of Assignee's Share of Assignor's Commitments and of Assignor's Advances to Assignee hereunder and has made and shall continue to make its own appraisal of the creditworthiness of the Borrower and each Guarantor. Assignor shall have no duty or responsibility either initially or on a continuing basis to make any such investigation or any such appraisal on behalf of Assignee or to provide Assignee with any credit or other information with respect thereto, whether coming into its possession before the making of the Advances or at any time or times thereafter and shall further have no responsibility with respect to the accuracy of, or the completeness of, any information provided to Assignee, whether by Assignor or by or on behalf of either the Borrower or any Guarantor. (c) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA. (d) No term or provision of this Assignment Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by both parties. (e) This Assignment Agreement may be executed in one or more counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same instrument. (f) The Assignor may at any time or from time to time grant to others assignments or participations in its Commitments or the Advances but not in the portions thereof assigned to Assignee pursuant to this Assignment Agreement. The Assignor represents and warrants that it has not at any time prior to the Assignment Effective Date encumbered or assigned the portion of its Commitments or Advances being assigned hereunder. (g) All payments hereunder or in connection herewith shall be made in Dollars and in immediately available funds, if payable to the Assignor, to the account of the Assignor at its address as designated in the Credit Agreement, and, if payable to the Assignee, to the account of the Assignee's address, as designated on the signature page hereof. (h) This Assignment Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Neither of the parties hereto may assign or transfer any of its rights or obligations under this Assignment Agreement without the prior consent of the other party. (i) All representations and warranties made herein and indemnities provided for herein shall survive the consummation of the transaction contemplated hereby. (j) The Assignee acknowledges receipt of copies of the documents received in connection with the transactions contemplated by the Credit Agreement, the Guaranty Agreement and this Assignment Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement as of the date first above written. [NAME OF ASSIGNOR] By: Title: Assignee's Share of [NAME OF ASSIGNEE] Revolving Loan Commitment: $ By: Title: Address: Tel. No: Fax No: CONSENTED TO AS OF THE DATE SET FORTH ABOVE: MORRISON HEALTH CARE, INC. By: Title: MORRISON HEALTH CARE, INC. EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (Amounts in thousands, except per share data) Year ended May 31, 1998 May 31, 1997 ---------------- -- - --------------- Basic Average shares outstanding.......................... 11,938 11,785 Net income............................... $11,552 $10,286 ================ ================= Per share amount............................... $ 0.97 $ 0.87 ================ ================= Diluted Average shares outstanding.......................... 11,938 11,785 Net effect of dilutive stock options-based on the treasury stock method using average market price................................. 254 56 ---------------- -- - --------------- Total................................ 12,192 11,841 ================ ================= Net income.............................. $11,552 $10,286 ================ ================= Per share amount.............................. $ 0.95 $ 0.87 ================ ================= EXHIBIT 13 Morrison Financials 1998 Financial Review Morrison Health Care, Inc. and Subsidiaries Selected Financial Data 14 Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Consolidated financial Statements 18 Notes to Consolidated Financial Statements 22 Report of Independent Auditors 32 Directors and Officers 33 Shareowner Information 33 Selected Financial Data Morrison Health Care, Inc. and Subsidiaries The following table summarizes certain selected financial information with respect to Morrison Health Care, Inc. (the Company or MHCI) and is derived from the Financial Statements of MHCI. The Selected Financial Data of MHCI is presented as if MHCI had been a separate entity for fiscal years 1996, 1995 and 1994. The financial information presented below for 1996, 1995 and 1994, may not be indicative of MHCI's future performance as an independent company. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Financial Statements of MHCI and notes thereto, and the Unaudited Pro Forma Financial Information of MHCI included in Note 2 of the Notes to Consolidated Financial Statements. Weighted average shares for 1996 were determined as if the shares issued in connection with the Distribution were outstanding from the beginning of the year. Earnings per share and dividend data have not been presented for fiscal years 1995 and 1994 as MHCI was not a separate publicly held company prior to March 1996. Net income for fiscal year 1994 includes the results of education, business and industry ("B&I") operations which were sold in fiscal year 1995. Net income for fiscal year 1995 includes an after-tax gain of $25.8 million from the sale of certain B&I contracts and assets to Gardner Merchant Services, Inc. for a cash payment of $100 million. The remaining B&I accounts were closed. For the fiscal year+ (in thousands, except per share data) 1998 1997 1996 1995 1994 Consolidated statements of income data: Managed volume (estimated and unaudited) $504,400 $464,800 $435,600 $408,300 * Revenues $250,371 $221,011 $219,995 $225,392 $461,780 Income before provision for income taxes $ 19,065 $ 17,576 $ 16,011 $ 65,295 $ 21,588 Provision for federal and state income taxes 7,513 7,290 6,731 28,469 8,351 Net income $ 11,552 $ 10,286 $ 9,280 $ 36,826** $ 13,237 Earnings per share - Basic $ 0.97 $ 0.87 $ 0.79 Earnings per share - Diluted $ 0.95 $ 0.87 $ 0.79 Weighted average common shares - Basic 11,938 11,785 11,673 Net dilutive effect of stock options and nonvested stock awards 254 56 51 Weighted average common shares - Diluted 12,192 11,841 11,724 + Fiscal year 1998 is a 12-month year. Fiscal years 1997, 1996, 1995 and 1994 are composed of 52 weeks. * Fiscal year 1994 information is not presented because it included B&I information. ** Includes an after-tax gain of $25.8 million from the sale of the B&I operations. Other Financial Data: Total assets $ 84,374 $ 60,203 $ 61,101 $ 69,028 $105,964 Long-term debt $ 31,690 $ 15,022 $ 20,034 $ 19,245 $ 3,128 Stockholders' equity $ 8,372 $ 5,628 $ 4,716 $ 9,015 $ 51,164 Cash dividends per share of common stock$ 0.82 $ 0.82 $ 0.205*** - - Working capital $ 7,344 $ 3,891 $ 8,677 $ 13,318 $ 9,239 Current ratio 1.2:1 1.1:1 1.3:1 1.5:1 1.2:1 ***Dividends were not paid prior to the fourth quarter of fiscal year 1996. Management's Discussion and Analysis of Financial Condition and Results of Operations Morrison Health Care, Inc. and Subsidiaries This discussion should be read in conjunction with the Financial Statements and related notes found on pages 18 to 31. RESULTS OF OPERATIONS Effects of Distribution on Results of Operations Effective March 9, 1996, Morrison Health Care, Inc. (the Company or MHCI) was spun-off (the Distribution) from Morrison Restaurants Inc. (MRI), becoming an independent corporation trading under the symbol MHI on the New York Stock Exchange. Management believes that the Distribution (see Note 2 of the Notes to Consolidated Financial Statements) has had a material impact on the results of operations due to the added separate company costs that are incurred by MHCI. The estimated effect of the Distribution on the results of operations of MHCI for the fiscal year ended June 1, 1996, is presented in the Unaudited Pro Forma Financial Information on pages 23 to 24. Such pro forma financial information is presented as if the Distribution had been effective as of June 3, 1995. 1998 Compared To 1997 Overview In MHCI's second full year as an independent company, fiscal year 1998 again demonstrated strong financial results, with increases in managed volume, revenue, operating profit and net income. The accomplishments are due to continued focus on cost reductions in all accounts, growth in existing accounts, strong new account sales, and the acquisitions of Drake Management Services, Inc. (January 1998) and Spectra Services, Inc. (March 1998) in the senior living market. (See Note 3 of the Notes to Consolidated Financial Statements for more information.) MHCI is the only national, publicly held company which specializes exclusively in health care food and nutrition services. MHCI's client base includes some of the largest and most prestigious hospitals in the United States. Managed Volume/Revenue The Company performs its services pursuant to one of two types of contracts, either management fee or profit and loss. While actual services performed are the same, revenue recognition varies by type of contract. In a management fee account, MHCI manages the services and facilities, but the client is responsible for all or nearly all the costs. Revenues and fees are recognized for the amount of the contractually agreed-upon management fee plus any earned incentives plus the amount of any expenses or employee payroll costs paid by the Company and charged back to the client. In a profit and loss account, MHCI assumes the risk of profit or loss for the foodservice operation. For such accounts, the amount of revenue reported is the actual revenue generated from meals served to patients, client employees and visitors. Because of the difference between the amount of revenue that is reported for the fee account (net management fees plus reimbursed expenses) and the profit and loss account (gross revenues of meal sales), Management uses the concept of managed volume to evaluate the Company's true growth. Managed volume is defined by MHCI as the total cost of operating the foodservices, regardless of which type of contract exists with the client. Management believes managed volume is a better indicator of performance because it measures total activity from all client accounts and provides an indication of what gross revenues would be if the Company performed all services pursuant to profit and loss contracts. Managed volume increased $39.6 million or 8.5% in fiscal year 1998 when compared to fiscal year 1997. Revenue increased $29.4 million or 13.3% in 1998 as compared to 1997. The primary sources of these increases were growth at existing accounts, including adding vending operations and increasing employee payrolls, opening more accounts and larger accounts than accounts which were closed, and key acquisitions. Gross Profit Gross profit, defined as revenue less operating expenses, increased $3.3 million or 8.4% for 1998. Growth of existing account business, continued emphasis on food and labor cost reductions, and acquisitions all contributed to the favorable results. Selling, General and Administrative Although selling, general and administrative expenses increased compared to the prior year, they decreased as a percentage of managed volume and revenue. The expenses were 4.5% of managed volume in fiscal year 1998 and were 4.6% of managed volume in fiscal year 1997. In fiscal year 1998, these expenses were 9.2% of revenues versus 9.7% in fiscal year 1997. Compared to fiscal year 1997, the expenses increased $1.5 million or 7.1%, versus the revenue increase of 13.3% for the same period. Interest Expense, Net Interest expense increased 39.0% compared to the prior year due to higher debt levels associated with the Company's acquisitions and increased capital expenditures for both the Advanced Culinary CentersT and improvements to the management information systems. Federal and State Income Taxes The combined federal and state effective tax rate decreased to 39.4% in 1998 from 41.5% in 1997. The higher effective income tax rate in fiscal 1997 as compared to fiscal 1998 is primarily due to higher non- deductible expenses in fiscal 1997. 1997 COMPARED TO UNAUDITED PRO FORMA 1996 Overview In MHCI's first full year as an independent company, fiscal year 1997 showed strong financial results with increases in managed volume, revenue, operating profit and net income. These achievements were due to continued focus on cost reduction in accounts and growth in existing accounts. Managed Volume/Revenue Managed volume is the Company's method of measuring total growth by determining the total amount of foodservices that the Company manages. In fiscal year 1997, managed volume increased $29.2 million or 6.7% when compared to fiscal year 1996. This increase was due to growth at existing accounts and to opening accounts with larger managed volumes than at accounts which were closed. Revenue increased $1.0 million or 0.5% in fiscal year 1997 when compared to fiscal year 1996. The increase was due to the increases in revenues at existing accounts, attributable primarily to adding vending operations and employee payroll at those accounts. Gross Profit Gross profit, defined as revenue less operating expenses, increased $0.4 million or 1% for 1997. The continuing emphasis on food and labor cost reductions combined with the general business growth at numerous existing accounts generated the improvements in gross profit. Selling, General and Administrative Selling, general and administrative expenses decreased slightly as a percentage of managed volume and revenue due to improved control of expenses. Interest Expense, Net Interest expense decreased 47% as the Company funded most of its activities with internally-generated funds, resulting in lower debt levels in fiscal year 1997. Federal and State Income Taxes The combined federal and state effective tax rate decreased to 41.5% in 1997 from 42.1% in 1996. IMPACT OF YEAR 2000 Currently, there is significant uncertainty within the software industry and among software users regarding the impact of installed software that has been programmed to accept only two-digit entries in the date code fields and use such two-digit entries in the software's calculation and report generation formats. Current versions of the Company's products have been and are being assessed to determine the impact of becoming "Year 2000" compliant. Similarly, as part of its continuing review and improvement of systems and operations, the Company is in the process of modifying or replacing certain software programs to avoid any detrimental effects in its installed software programs while upgrading and enhancing the overall effectiveness of its information management systems. The project is expected to be completed well in advance of December 31, 1999. While this project includes both Year 2000 issues and general improvements, the estimate of the costs to address both issues is less than $5 million, most of which has already been spent. The Company does not expect this project to pose significant operational problems for the Company. However, the Company cannot make any assurances that the Company will not be exposed to any potential claims resulting from the system problems associated with the century change. See "Special Note Regarding Forward-Looking Information." LIQUIDITY AND CAPITAL RESOURCES Cash Flow, Capital Expenditures and Financing Due to the nature of its contract foodservice business, MHCI is able to maintain a relatively steady cash flow. Cash flow from operations has historically financed MHCI's capital investments. MHCI plans for controlled expansion over the next several years and anticipates that cash flow from operations plus utilization of the existing lines of credit will be sufficient to provide for this expansion. See "Special Note Regarding Forward-Looking Information." To partially finance its activities in fiscal 1998, MHCI used a $50 million, five-year credit facility from various financial institutions. Of the total facility, $30 million was revolving lines of credit. The Company had $17.5 million outstanding under the terms of these lines of credit at May 31, 1998. The remaining $20 million of the credit facility was a five-year term note which was being repaid in quarterly installments of $1.25 million since June 30, 1997. The credit facility contained restrictions on incurring additional indebtedness and certain funded debt, net worth and fixed charge coverage requirements. The Company managed the interest costs of the term note through an interest rate swap agreement. This swap agreement effectively fixed the interest rate for the period of the term note at 6.7%. For day-to-day operating activities, additional lines of credit allow borrowing up to $5 million. The Company had $4.2 million under this agreement at May 31, 1998. On May 31, 1998, MHCI had $36.7 million outstanding in total debt, an increase of $16.7 million from the prior year. Subsequent to May 31, 1998, the Company replaced its $50 million credit facility with a $75 million revolving credit line from four financial institutions. Concurrent with this transaction, the Company cancelled the related interest rate swap agreement that had effectively fixed the interest rate for the term portion of that facility. The new credit line has a variable interest rate based upon LIBOR and variable interest payment requirements. The principal is due no later than June 30, 2003. The initial amount borrowed was $35.4 million, all of which was used to repay the balance due on the $50 million and $5 million credit facilities. Also in June 1998, the Company entered into two interest rate swap agreements to reduce the impact of changes in the interest rates on its floating rate debt and to exchange floating rate for fixed rate payments at certain dates. These swap agreements expire in June 2003 and June 2008 and effectively convert $20 million of variable rate borrowings to fixed. Trade accounts receivable make up the majority of MHCI's total current assets. Historically, the average days outstanding in trade accounts receivable is less than one month and bad debt expense has been minimal. MHCI requires capital principally for acquisitions, new accounts, equipment replacement and remodeling of existing accounts and the construction of Advanced Culinary Centers,T a food preparation and delivery system that was initiated in fiscal 1998. Cash provided by operating activities approximated $10.3 million for fiscal year 1998. Capital expenditures were approximately $8.9 million, an increase of $4.1 million or 83% compared to the prior year period. Capital expenditures are anticipated to total $12 million to $15 million in fiscal year 1999. MHCI plans to finance this amount primarily through internally generated funds. See "Special Note Regarding Forward-Looking Information." Working Capital As of May 31, 1998, working capital was $7.3 million while the current ratio was 1.2:1. Working capital increased $3.5 million and the current ratio increased 0.1 when compared to the prior year. Dividends MHCI paid approximately $9.9 million in cash dividends to stockholders during fiscal year 1998. The Company plans to pay annual dividends of approximately $1.9 million in the next fiscal year. See "Special Note Regarding Forward-Looking Information." Deferred Tax Assets The recognition of deferred tax assets depends on the anticipated existence of taxable income in future periods in amounts sufficient to realize the assets. A valuation allowance must be provided for the deferred tax asset if such future income is not likely to be generated. Management believes that future taxable income should be sufficient to realize all of MHCI's deferred tax assets based on historical earnings of MHCI; therefore, a valuation allowance has not been established. KNOWN EVENTS, UNCERTAINTIES AND TRENDS Impact of Inflation In the past, MHCI has been able to recover inflationary cost increases through contract inflation adjustments, increased productivity and menu changes. There have been and there may be in the future, delays in contract inflation adjustments and competitive pressures which limit MHCI's ability to recover such cost increases in their entirety. Historically, the effects of inflation on MHCI's net income have not been materially adverse. See "Special Note Regarding Forward-Looking Information." Management's Outlook In fiscal year 1997, Management began an extensive program of expanding, restructuring and training of the sales team. Management anticipates that its continued focus on the sales team will facilitate increases in the number and economic value of accounts sold in fiscal year 1999 and beyond. Management believes that growth will also occur through expanding services at existing accounts and the Advanced Culinary Centers,T a food preparation and delivery system that was initiated in fiscal 1998. In addition, Management believes the acquisition of companies that complement its core competencies will allow the Company to increase its presence in the senior living market while providing quality services for health care facilities nationwide. Several MHCI accounts are among the largest acute care and teaching hospitals in the United States. The Company strives to maintain its long-term partnerships with these facilities while continuing to increase quality and lower costs. MHCI believes that ongoing investments in people and programs designed to enhance its aggressive sales drive will add new clients while building stronger relationships with current accounts. By focusing on its primary market of hospitals and expanding into the senior living market, the Company believes that it is strategically positioned to maintain its steady growth. See "Special Note Regarding Forward-Looking Information." Special Note Regarding Forward-Looking Information The foregoing section contains various "forward-looking statements" which represent the Company's expectations or beliefs concerning future events, including the following: statements regarding account growth, impact of the Year 2000, future capital expenditures and borrowings, the payment of dividends, the impact of inflation and the effects of Management's strategies for growth. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following: health care spending trends; the growth of systems and group purchasing organizations; changes in health care regulations; increased competition in the health care food and nutrition market; customers' acceptance of the Company's cost saving programs; and laws and regulations affecting labor and employee benefit costs. Consolidated Statements of Income Morrison Health Care, Inc. and Subsidiaries For the Fiscal Year Ended (In thousands, except per share data) May 31, 1998 May 31, 1997 June 1, 1996 Revenues $250,371 $221,011 $219,995 Operating costs and expenses: Operating expenses 207,265 181,233 180,607 Selling, general and administrative 22,919 21,395 20,670 Restructuring costs 0 0 1,398 Asset impairment 0 0 193 Interest expense, net of interest income of $406 in 1998, $687 in 1997 and $428 in 1996 1,122 807 1,116 Total costs and expenses 231,306 203,435 203,984 Income before provision for income taxes 19,065 17,576 16,011 Provision for federal and state income taxes 7,513 7,290 6,731 Net income $ 11,552 $ 10,286 $ 9,280 Earnings per share - Basic $ 0.97 $ 0.87 $ 0.79 Earnings per share - Diluted $ 0.95 $ 0.87 $ 0.79 Weighted average common shares - Basic 11,938 11,785 11,673 Net dilutive effect of stock options and non-vested stock awards 254 56 51 Weighted average common shares - Diluted 12,192 11,841 11,724 The accompanying notes are an integral part of the financial statements. Consolidated Balance Sheets Morrison Health Care, Inc. and Subsidiaries (In thousands) May 31, 1998 May 31, 1997 Assets Current assets: Cash and short-term investments $ 5,720 $ 6,347 Receivables: Trade, less allowance for doubtful accounts of $887 at May 31, 1998 and $744 at May 31, 1997 21,381 16,387 Other 6,372 4,884 Inventories 2,936 2,686 Prepaid expenses 1,262 1,006 Deferred income tax benefits 1,949 1,929 Total current assets 39,620 33,239 Property and equipment - at cost: Buildings and improvements 3,425 2,326 Equipment 16,037 13,251 Construction in progress 4,729 766 24,191 16,343 Less accumulated depreciation 10,232 8,471 13,959 7,872 Deferred income tax benefits 2,503 1,610 Cost in excess of net assets acquired, net 12,097 4,582 Notes receivable, less current portion 3,729 3,817 Deferred charges 4,083 2,830 Other assets 8,383 6,253 Total assets $84,374 $60,203 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $14,545 $12,977 Accrued liabilities: Taxes, other than income taxes 1,818 1,546 Payroll and related costs 6,395 4,133 Insurance 2,289 3,436 Other 2,207 2,245 Current portion of long-term debt 5,022 5,011 Total current liabilities 32,276 29,348 Long-term debt 31,690 15,022 Other liabilities 12,036 10,205 Stockholders' equity: Common stock, $0.01 par value (authorized 100,000 shares; issued: 1998 - 12,379 shares, 1997 - 12,165 shares) 124 122 Capital in excess of par value 12,859 9,717 Unearned ESOP shares (3,195) (3,517) Retained earnings 2,322 647 12,110 6,969 Less cost of treasury stock 3,738 1,341 Total stockholders' equity 8,372 5,628 Total liabilities and stockholders' equity $84,374 $60,203 The accompanying notes are an integral part of the financial statements. Consolidated Statements of Cash Flows Morrison Health Care, Inc. and Subsidiaries For the Fiscal Year Ended (In thousands) May 31, 1998 May 31, 1997 June 1, 1996 Operating activities: Net income $ 11,552 $ 10,286 $ 9,280 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,538 1,992 2,330 Amortization of intangibles 377 153 152 Other, net 0 1,066 1,172 Deferred income taxes (811) 514 4,927 (Gain)/Loss on disposition of assets (19) 29 170 Changes in operating assets and liabilities: (Increase)/Decrease in receivables (6,359) 2,486 1,345 (Increase)/Decrease in inventories (246) (24) 218 (Increase)/Decrease in prepaid and other assets (675) 631 (2,005) Increase/(Decrease) in accounts payable, accrued and other liabilities 3,936 6,046 (12,112) Increase/(Decrease) in income taxes payable 0 (935) 6,928 Net cash provided by operating activities 10,293 22,244 12,405 Investing activities: Purchases of property and equipment (8,850) (4,843) (2,170) Proceeds from disposal of assets 268 459 387 Acquisition of businesses, net of cash acquired (7,464) 0 0 Other, net (2,745) (1,456) 764 Net cash used by investing activities (18,791) (5,840) (1,019) Financing activities: Net proceeds from long-term debt 21,690 0 800 Principal payments on long-term debt (5,011) (11) (11) Net change in short-term borrowings 0 (6,760) 6,760 Proceeds from exercise of stock options and issuance of stock, net of income tax benefits 3,054 679 1,544 Dividends paid (9,877) (9,725) (2,403) Payments to acquire Treasury Stock (1,891) 0 0 (Increase)/Decrease in Treasury Stock held by Deferred Compensation Plan (506) (412) 29 ESOP shares released 412 84 0 Net transfers to Morrison Restaurants Inc. 0 0 (12,749) Net cash provided/(used) by financing activities 7,871 (16,145) (6,030) (Decrease)/Increase in cash and short-term investments (627) 259 5,356 Cash and short-term investments at the beginning of the year 6,347 6,088 732 Cash and short-term investments at the end of the year $ 5,720 $ 6,347 $ 6,088 Supplemental disclosure of cash flow information - cash paid for: Interest 1,696 1,190 1,533 Income taxes 7,933 8,000 18,586 The accompanying notes are an integral part of the financial statements. Consolidated Statements of Stockholders' Equity Morrison Health Care, Inc. and Subsidiaries For the Fiscal Year Ended (In Thousands except per share data) May 31, 1998 May 31, 1997 June 1, 1996 Shares Amounts Shares Amounts Shares Amounts Common Stock Beginning balance 12,165 $ 122 11,791 $ 118 0 $ 0 Shares issued pursuant to spin-off from Morrison Restaurants Inc. 0 0 0 0 11,678 117 Shares issued to ESOP 0 0 255 3 0 0 Shares issued under Stock Incentive Plans 214 2 119 1 113 1 Ending balance 12,379 124 12,165 122 11,791 118 Capital in Excess of Par Value Beginning balance 9,717 5,441 0 Shares issued to ESOP 0 3,592 0 Shares issued under Stock Incentive Plans, net of income tax benefits 3,052 678 1,543 Shares released from ESOP 90 6 0 Distribution of Morrison Restaurants Inc.'s investment in the Company to Morrison Restaurants Inc. stockholders 0 0 3,898 Ending balance 12,859 9,717 5,441 Morrison Restaurants Inc. Equity Investment Beginning balance 0 0 9,015 Net income 0 0 6,791 Cash transfers to Morrison Restaurants Inc. 0 0 (12,749) Distribution of Morrison Restaurants Inc.'s investment in the Company to Morrison Restaurants Inc. stockholders 0 0 (3,057) Ending balance 0 0 0 Unearned ESOP Shares Beginning balance (249) (3,517) (255) (3,595) 0 Shares issued to ESOP 0 0 0 0 0 Shares released from ESOP 23 322 6 78 0 Ending balance (226) (3,195) (249) (3,517) 0 Retained Earnings Beginning balance 647 86 0 Net income 11,552 10,286 2,489 Cash dividends of $0.82 per share in fiscal 1998 and 1997 and $0.205 per share in fiscal 1996 (9,877) (9,725) (2,403) Ending balance 2,322 647 86 Treasury Stock Beginning balance (1,341) (929) 0 Distribution of Morrison Restaurants Inc.'s investment in the Company to Morrison Restaurants Inc. stockholders 0 0 (958) Purchase of Treasury Stock (1,891) 0 0 (Purchase)/Sale of Treasury Stock - held by Deferred Compensation Plan (506) (412) 29 Ending balance (3,738) (1,341) (929) Total Stockholders' Equity $ 8,372 $ 5,628 $4,716 The accompanying notes are an integral part of the financial statements. NOTE 1 Summary of Significant Accounting Policies Basis of Presentation On March 9, 1996, Morrison Health Care, Inc. and Subsidiaries (the "Company" or "MHCI") was spun off ("the Distribution") from Morrison Restaurants Inc. ("MRI"). Prior to the Distribution, MHCI was a wholly owned health care contract food and nutrition business of MRI. The accompanying financial statements for fiscal 1998 and 1997 reflect MHCI as a stand-alone entity. The financial statements for fiscal 1996 have been prepared as if MRI's health care contract food and nutrition business had operated as a stand-alone entity for fiscal year 1996. The fiscal 1996 statements include the assets, liabilities, revenues and expenses that are directly related to the Company's operations. They also include an allocation of certain assets, liabilities and general corporate expenses of MRI, such as executive payroll, legal, data processing and interest, which are related to the Company. Amounts were allocated on a specific identification method where appropriate and on a pro rata basis otherwise. Management believes the allocation methods used are reasonable. Use of estimates The preparation of financial statements in accordance with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk The Company primarily competes in the health care food and nutrition services industry, and encounters significant competition in the market in which it operates. The length of contract varies by customer. Concentration of credit risk with respect to accounts receivable are limited due to the large number of customers that make up the Company's customer base, thus spreading trade credit risk. The Company maintains reserves for potential uncollectible amounts which, in the aggregate, have not exceeded Management's expectations. Principles of Consolidation The accompanying consolidated financial statements include the accounts of MHCI and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Fiscal Year Effective with the fiscal year ended in 1998, the Company's fiscal year ends on May 31. The fiscal years ended May 31, 1997 and June 1, 1996 were each comprised of 52 weeks. Starting with fiscal year 1998, the Company changed from a 52-53 week fiscal year to a 12-month fiscal year ending May 31 each year. Cash and Short-Term Investments The Company's cash management program provides for the investment of excess cash balances in short-term money market instruments. Short- term investments are stated at cost, which approximates market. The Company considers marketable securities with a maturity of three months or less when purchased to be short-term investments. Inventories Inventories consist of materials, food supplies, china and silver and are stated at the lower of cost (first in-first out) or market. Property and Equipment and Depreciation Property and equipment are stated at cost and are being depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Annual rates of depreciation range from 3% to 5% for buildings and from 8% to 34% for kitchen and other equipment. Costs incurred in connection with the construction at major facilities or of Advanced Culinary CentersT are capitalized as construction in progress until such facilities or centers become operational. Interest is capitalized in connection with these capitalized construction costs. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's estimated useful life. In fiscal 1998, $127,000 of interest cost was capitalized. No interest was capitalized in fiscal 1997 and 1996. Property and equipment are periodically reviewed for impairment based on an assessment of future operations. The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Intangible Assets Excess of costs over the fair value of net assets acquired with purchased businesses generally is amortized on a straight-line basis over periods ranging from 10 to 40 years. At May 31, 1998, May 31, 1997 and June 1, 1996, the accumulated amortization for costs in excess of net assets acquired was $1.9 million, $1.6 million and $1.4 million, respectively. The carrying value of goodwill and other intangibles is evaluated periodically in relation to the operating performance and future undiscounted cash flows of each operating business acquired. Adjustments are made if the sum of expected future net cash flows is less than net book value. The Company believes that the remaining amounts of these assets have continuing value. Revenue Recognition Revenue is recognized upon performance of services. The Company performs its services pursuant to one of two types of contracts, either management fee or profit and loss. While actual services performed are the same, revenue recognition varies by type of contract. In a management fee account, MHCI manages the services and facilities, but the client is responsible for all or nearly all the costs. Revenues and fees are recognized for the amount of the contractually agreed-upon management fee plus any earned incentives plus the amount of any expenses or employee payroll costs paid by the Company and charged back to the client. In a profit and loss account, MHCI assumes the risk of profit or loss for the foodservice operation. For such accounts, the amount of revenue reported is the actual revenue generated from meals served to patients, client employees and visitors. Income Taxes For the first three quarters of 1996, the 1996 statement of income reflects an income tax expense representing the Company's allocated share of MRI's tax expense, which approximates the tax expense of the Company on a stand-alone basis. Beginning with the fourth quarter of fiscal year 1996, the accompanying statements of income reflect the Company's actual tax expenses. Deferred income taxes are determined utilizing a liability approach. This method gives consideration to the future tax consequences associated with differences between financial accounting and tax bases of assets and liabilities. Stock-Based Compensation Stock options are recorded in accordance with Accounting Principles Board Opinion ("APB") No. 25, with pro forma disclosures of net income and earnings per share as if Statement of Financial Accounting Standards ("SFAS") No. 123 had been applied. Earnings Per Share The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128), and has restated earnings per share amounts reported in prior periods in accordance with SFAS No. 128. Basic earnings per share is based on the weighted average number of shares outstanding during each quarter. Diluted earnings per share is based on the weighted average number of shares outstanding during each quarter plus the effect of outstanding stock options using the treasury stock method. New Accounting Standards In 1997, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and No. 131, "Disclosures about Segments of an Enterprise and Related Information." In 1998, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 132, "Employer's Disclosures about Pensions and other Postretirement Benefits." These statements, which are effective for fiscal years beginning after December 15, 1997, expand or modify disclosures and will have no impact on the Company's consolidated financial position, results of operations or cash flow. In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments. The statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999 and will be adopted by the Company in fiscal year 2001. Based upon the Company's current limited use of derivative instruments and hedging activities, Management does not believe the statement will have a material impact on the Company's consolidated financial position, results of operations or cash flows. Pre-Opening Expenses Pre-opening costs, such as salaries, personnel training costs and other expenses of opening a new account, are often reimbursed by the client. In circumstances when they are not reimbursed, these costs are charged to expense as incurred. Financial Instruments The Company's financial instruments at May 31, 1998, May 31, 1997 and June 1, 1996 consisted of cash and short-term investments, accounts and notes receivable, long-term debt and interest rate swap agreements. The fair value of these financial instruments approximated the carrying amounts reported in the balance sheets. Cash is deposited in financial institutions which carry FDIC insurance. From time to time, the cash balances at these institutions exceed the insured amount. Management does not believe that this is a significant risk to the Company. Although substantially all of the Company's trade accounts receivable are from health care institutions, Management believes that concentrations of credit risk are limited due to the geographic diversity of the Company's customer base. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. Historically, the Company has not experienced significant losses related to trade accounts receivable from individual customers or from groups of customers in any geographic area. Reclassification Certain prior year amounts and balances have been reclassified to conform to the current year presentation. NOTE 2 DISTRIBUTION On March 7, 1996, the stockholders of MRI approved the Distribution by MRI of all the outstanding shares of common stock of MHCI, a wholly owned subsidiary of MRI. The Board of Directors of MRI believed that the Distribution was in the best interests of MRI and its stockholders because the separation of MRI's three lines of business, among other things, (i) allowed management of each of the three companies to concentrate its full attention on its business and allowed each company to reward management and employees based on the performance of its business; (ii) allowed each company to access the capital markets directly to raise capital; (iii) established a value for each company that is independent of the other businesses and provided investors and securities analysts a clearer basis on which to understand and analyze the three businesses; and (iv) allowed each company to establish equity-based benefit plans which can hold its own common stock. The following Unaudited Pro Forma Consolidated Statement of Income has been prepared to illustrate certain estimated effects of the Distribution. This statement includes adjustments for the effect of costs and expenses which might have been incurred had the Distribution occurred June 3, 1995. Adjustments are based on the assumptions set forth below the statement. (In thousands, except per share data) For the fiscal year ended June 1, 1996 UNAUDITED PRO FORMA UNAUDITED HISTORICAL ADJUSTMENTS PRO FORMA Revenues $219,995 $ 0 $219,995 Operating costs and expenses: Operating expenses 180,607 0 180,607 Selling, general and administrative 20,670 1,420(a) 22,090 Restructuring cost 1,398 0 1,398 Asset impairment 193 0 193 Interest expense, net 1,116 400(b) 1,516 203,984 1,820 205,804 Income before provision for income taxes 16,011 (1,820) 14,191 Provision for federal and state income taxes 6,731 (760)(c) 5,971 Net income $ 9,280 $ (1,060) $8,220 Earnings per common and common equivalent share $ 0.70 Weighted average common and common equivalent shares 11,811(d) The pro forma adjustments to the accompanying historical statements of income for the fiscal year ended June 1, 1996 are described below: (a) To record the increase in selling and general and administrative expenses which presumably would have been incurred by MHCI had MHCI been a separate and stand-alone entity. (b) To record the increase in interest expense which would have been incurred by MHCI had MHCI been a separate and stand-alone entity. (c) To record the estimated income tax benefit associated with pro forma adjustments (a) and (b) at an assumed combined state and federal effective income tax rate of 41.8% for the year ended June 1, 1996. The assumed effective income tax rate is comprised of a 35% statutory federal income tax rate plus applicable state income taxes and permanent differences, less applicable tax credits. (d) The number of equivalent shares for periods prior to the spin-off is based on the number of MRI's common and common equivalent shares adjusted for the 1 for 3 distribution ratio. NOTE 3 ACQUISITIONS In January 1998, the Company acquired all of the outstanding common stock of Phoenix-based Drake Management Services, Inc. In March 1998, the Company acquired substantially all of the assets of Chicago-based Spectra Services, Inc. Both companies, which provide nutrition services in the senior living market, were acquired for cash, with a total acquisition price of $6.1 million. Additional contingent payments of $950,000 (of which $400,000 was paid during June 1998) may be earned by the sellers in fiscal year 1999. The acquisitions were accounted for using the purchase method. The resulting goodwill of $6.7 million is being amortized over 20 years using the straight-line method. The operating results of these companies have been included from their respective acquisition dates. Pro forma results are not presented for these acquisitions as they are not significant during the periods presented. NOTE 4 NOTES PAYABLE Notes payable consists of the following: (In thousands) Fiscal Year Ended May 31, 1998 May 31, 1997 Variable rate revolving credit facility due in full 3/11/01 $17,500 $ 0 Variable rate demand lines of credit 4,190 0 Term note due in equal quarterly installments of $1,250 from 1998-2001 15,000 20,000 Other notes and mortgages 22 33 36,712 20,033 Less current maturities 5,022 5,011 $31,690 $15,022 Aggregate maturities of long-term borrowings over the next five years are as follows: 1999 - $5,022; 2000 - $5,000; and 2001 - $26,690. In March 1996, the Company entered into a five-year $50 million unsecured credit facility with various banks. The credit facility includes a $30 million revolving line of credit which allows the Company to borrow under various interest rate options. Commitment fees of 0.25% per annum are payable on the unused portion of the credit facility. At May 31, 1998, the Company had $17.5 million in borrowings under the revolver, with a weighted average variable rate of approximately 6.6%. The balance of the $50 million credit facility, $20 million, is a term note which will be repaid in quarterly installments of $1.25 million commencing June 30, 1997. At May 31, 1998, the balance on the term note was $15 million. In order to control the interest cost on the term note, the Company entered into an interest rate swap agreement. This swap agreement effectively fixes the interest rate on the outstanding term note balance at 6.7% per annum for the period of the term note. In addition, the Company had uncommitted demand lines of credit amounting to $5 million. At May 31, 1998, the Company had $4.2 million outstanding under these lines, at a rate of 6.4%. The credit facility contains certain restrictions on incurring additional indebtedness and certain funded debt, net worth and fixed charge coverage requirements. See Note 11 regarding Subsequent Events. NOTE 5 INCOME TAXES The components of income tax expense are as follows: (In thousands) For the Fiscal Year Ended May 31, 1998 May 31, 1997 June 1, 1996 Current: Federal $6,875 $5,960 $1,479 State 1,449 816 325 8,324 6,776 1,804 Deferred: Federal (670) 440 4,127 State (141) 74 800 (811) 514 4,927 $7,513 $7,290 $6,731 Deferred tax assets and liabilities are comprised of the following: (In thousands) Fiscal Year Ended May 31, 1998 May 31, 1997 Deferred tax assets: Employee benefits $4,346 $3,547 Insurance reserves 1,366 1,841 Bad debt reserve 349 293 Other 487 438 Total deferred tax assets 6,548 6,119 Deferred tax liabilities: Depreciation 282 254 Retirement plans 479 452 Prepaid deductions 131 133 Other 1,204 1,741 Total deferred tax liabilities 2,096 2,580 Net deferred tax asset $4,452 $3,539 SFAS 109 specifies that deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. Management believes that future taxable income will be sufficient to realize all of the Company's deferred tax assets based on historical earnings of the Company and, therefore, a valuation allowance has not been established. A reconciliation from the statutory federal income tax expense to the reported income tax expense is shown below: (In thousands) For the Fiscal Year Ended May 31, 1998 May 31, 1997 June 1, 1996 Statutory federal income taxes $6,673 $6,152 $5,604 State income taxes, net of federal income tax benefit 853 804 732 Other, net (13) 334 395 $7,513 $7,290 $6,731 The effective income tax rate was 39.4%, 41.5% and 42.0% in 1998, 1997 and 1996, respectively. The higher effective income tax rates in fiscal years 1997 and 1996 were due to the nondeductibility of certain expenses. In connection with the Distribution, the Company entered into a tax allocation agreement with Morrison Fresh Cooking, Inc. ("MFC") and Ruby Tuesday, Inc. ("RTI"). This agreement provides that the Company will pay its share of RTI's consolidated tax liability for the periods in which the Company was included in MRI's consolidated federal income tax return. It also provides for sharing, where appropriate, of state, local and foreign taxes attributable to periods prior to the date of Distribution. Management does not believe this agreement will have a material effect on the Company. NOTE 6 Employee Benefit Plans Salary Deferral Plan Under the Morrison Health Care, Inc. Salary Deferral Plan, each eligible employee may elect to make pre-tax contributions to a trust fund in amounts ranging from 2% to 10% of their annual earnings. Employees contributing a pre-tax contribution of at least 2% may elect to make after- tax contributions not in excess of 10% of annual earnings. The Company's contribution to the Plan is based on the employee's pre-tax contribution and years of service. After three years of service (including service with MRI prior to the Distribution), the Company contributes 20% of the employee's pre-tax contribution, 30% after ten years of service and 40% after 20 years of service. Normally, the full amount of each participant's interest in the trust fund will be paid upon retirement or total disability. However, the Plan allows participants to make early withdrawals of pre- tax and after-tax contributions, subject to certain restrictions. Under the provisions of the plan, highly compensated employees, as defined by the Internal Revenue Code, are limited to contributions of 3% and receive a maximum of a 20% match. The Company's contributions to the trust fund approximated $414,000, $257,000 and $244,000 for 1998, 1997 and 1996, respectively. During fiscal year 1997, the Company began sponsorship of an employee stock ownership feature ("ESOP") covering participants in the Salary Deferral Plan. The Company loaned the Plan $3.6 million (with outstanding balances of $3.2 million and $3.5 million at May 31, 1998 and May 31, 1997, respectively) to purchase approximately 255,000 shares of common stock, at an interest rate of 5.47%. The loan is payable in 120 monthly installments of principal and interest. The Company makes monthly contributions sufficient to cover principal and interest on the loan made to the Plan. Shares are released and allocated to participant accounts monthly as loan repayments are made. The Company adopted the provisions of AICPA Statement of Position No. 93-6 which requires that compensation expense be measured based on the fair value of the shares over the period the shares are earned. Dividends paid on unallocated shares held by the Plan are used to make principal and interest payments and are not charged to retained earnings, and shares not yet committed to be released are not considered outstanding in the calculation of earnings per share. The fair value of unearned shares at May 31, 1998 and May 31, 1997 was approximately $3,874,000 and $4,046,000, respectively. Deferred Compensation Plan The Company maintains the Morrison Health Care, Inc. Deferred Compensation Plan for certain selected employees. The provisions of this Plan are similar to those of the Salary Deferral Plan. Differences include which employees are eligible to participate and the limitations on the amount of deferrals that may be elected by participants. The Company's contributions under the Plan approximated $104,000, $125,000 and $137,000, for 1998, 1997 and 1996, respectively. Assets of the Plan are held by a rabbi trust. Under current accounting rules, assets and liabilities of a rabbi trust must be accounted for as if they are assets and liabilities of the Company. Therefore, all earnings and expenses of the rabbi trust are recorded in the Company's financial statements. Assets and liabilities of the Plan approximated $6,043,000 and $4,667,000 at May 31, 1998 and 1997, respectively, and include $1,848,000 and $1,341,000, respectively, of MHCI common stock, which is accounted for as treasury stock at cost. Retirement Plan The Retirement Plan was frozen by RTI (formerly Morrison Restaurants Inc.) on December 31, 1987. The Company is a joint sponsor of the Retirement Plan. No additional benefits accrued and no new participants entered the Plan after that date. The Company will continue to share in future expenses of the Plan. Participants will receive benefits based upon salary and length of service. The Plan's assets include common stock, fixed income securities, short-term investments and cash. There were no contributions made to the Plan in 1998, 1997 or 1996. Executive Supplemental Pension Plan Under the Morrison Health Care, Inc. Executive Supplemental Pension Plan, employees with average compensation of at least $100,000 for five consecutive years (including service with MRI prior to the Distribution) in a qualifying position become eligible to earn supplemental retirement payments based upon salary and length of service (including service as part of MRI prior to the Distribution), reduced by Social Security benefits and amounts otherwise receivable under the Retirement Plan. Management Retirement Plan Under the Morrison Health Care, Inc. Management Retirement Plan, individuals who have 15 years of credited service (including service with MRI prior to the Distribution) and earn an average annual compensation of at least $40,000 for the immediately preceding three years become participants. Participants receive benefits based upon salary and length of service (including service with MRI prior to the Distribution), reduced by social security benefits and benefits payable under the Retirement Plan and Executive Supplemental Pension Plan. To provide a funding source for the payment of benefits under the Executive Supplemental Pension Plan and the Management Retirement Plan, the Company owns various life insurance contracts on some of the participants. The cash value of these policies, net of loans, was $1,897,000 at May 31, 1998, and $1,256,000 at May 31, 1997. The policies have been placed in a rabbi trust which will hold the policies and death benefits as they are received. The following table presents the components of pension expense, the funded status and amounts recognized in the Company's financial statements for the Retirement Plan, the Executive Supplemental Pension Plan and the Management Retirement Plan. Accumulated Benefits Exceed Assets - Assets Exceed Accumulated Benefits - Executive Supplemental Pension Plan (IN THOUSANDS) Retirement Plan and Management ReTirement Plan For the Fiscal Year Ended May 31, May 31, June 1, May 31, May 31, June 1, 1998 1997 1996 1998 1997 1996 Components of pension (income)/expense: Service cost $ 0 $ 0 $ 0 $ 108 $ 81 $ 63 Interest cost 347 341 354 270 230 251 Actual return on plan assets (1,046) (700) (833) 0 0 0 Amortization and deferral 629 341 526 149 122 122 $ (70) $ (18) $ 47 $ 527 $ 433 $ 436 Plan assets at fair value $ 4,425 $4,859 $4,766 $ 0 $ 0 $ 0 Actuarial present value of projected benefit obligations: Accumulated benefit obligations: Vested 3,895 4,210 4,691 2,615 1,950 1,606 Nonvested 0 0 0 274 0 0 Provision for future salary increases 0 0 0 1,429 1,296 1,116 Total projected benefit obligations 3,895 4,210 4,691 4,318 3,246 2,722 Excess (deficit) of plan assets over projected benefit obligations 530 649 75 (4,318) (3,246) (2,722) Unrecognized net loss (gain) 407 150 642 913 258 216 Unrecognized prior service cost 0 0 0 276 289 351 Unrecognized net transition obligations 280 348 412 516 576 541 Additional minimum liability 0 0 0 (658) (452) (376) Prepaid (accrued) pension cost $ 1,217 $1,147 $1,129 (3,271) $(2,575) $(1,990) The weighted average discount rate for all three plans was 7.5%, 8.25% and 7.75% for 1998, 1997 and 1996, respectively. The rate of increase in compensation levels for the Executive Supplemental Pension Plan and Management Retirement Plan was 4% for all three years presented. The expected long-term rate of return on Plan assets for the Retirement Plan was 10% for all three years. NOTE 7 Postretirement Benefits Other Than Pensions The Company provides health care benefits and life insurance benefits to eligible retirees. Benefits are funded as medical claims and life insurance premiums are incurred. Retirees become eligible for retirement benefits if they have met certain service and minimum age requirements at date of retirement. The Company accrues expenses related to postretirement health care and life insurance benefits during the years an employee provides services. The actuarial present value of accumulated postretirement benefit obligations and the amounts recognized in the Company's balance sheet are as follows: (In thousands) Fiscal Year Ended May 31, 1998 May 31, 1997 Retirees $1,504 $1,609 Fully eligible active plan participants 245 202 Other active plan participants 170 123 Accumulated postretirement benefit obligation 1,919 1,934 Unrecognized net loss (366) (328) Accrued postretirement benefit cost $1,553 $1,606 The postretirement benefit cost is as follows: (In thousands) For the Fiscal Year Ended May 31, 1998 May 31, 1997 June 1, 1996 Service cost $ 7 $ 7 $ 8 Interest cost 147 140 155 Amortization of unrecognized net loss 4 23 28 Postretirement benefit cost $ 158 $ 170 $ 191 The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 0% because the Company has frozen current and future contribution levels. Increases in health care cost due to factors such as inflation, changes in health care utilization or delivery patterns, technological advances and changes in the health status of Plan participants will be borne by the participants. Measurement of the accumulated postretirement benefit obligation was based on an assumed 7.50%, 8.25% and 7.75% discount rate for fiscal years 1998, 1997 and 1996, respectively. NOTE 8 Preferred Stock Under its Certificate of Incorporation, the Company is authorized to issue preferred stock with a par value of $0.01 in an amount not to exceed 250,000 shares which may be divided into and issued in designated series, with dividend rates, rights of conversion, redemption, liquidation prices and other terms or conditions as determined by the Board of Directors. No preferred shares have been issued as of May 31, 1998. The Board of Directors has designated 50,000 of such shares as Series A Junior Participating Preferred Stock and has issued rights to acquire such shares, upon certain events, with an exercise price to be determined, but substantially above the expected trading price. The rights will expire ten years after the date such rights are issued, and may be redeemed prior to ten days after the acquisition of 20% or more of the Company's common stock. NOTE 9 Stock Incentive Plans Under the Company's stock incentive plans, incentive and non- qualified stock options may be granted to Management, key employees and outside directors to purchase shares of Company stock. The Morrison Health Care, Inc. 1996 Stock Incentive Plan and the Morrison Health Care, Inc. 1996 Non- Executive Stock Incentive Plan (the "Plans") are administered by a Committee, appointed by the Board, which has complete discretion to determine participants and the terms and provisions of stock incentives, subject to the Plans. The Plans permit the Committee to make awards of a variety of stock incentives, including (but not limited to) dividend equivalent rights, incentive stock options, non-qualified stock options, performance unit awards, phantom shares, stock appreciation rights and stock awards. These discretionary awards may be made on an individual basis or pursuant to a program approved by the Committee for the benefit of a group of eligible persons. All options awarded under the Plans have been at the prevailing market value at the time of issue or grant. All options granted have five- or ten- year terms and become exercisable at the end of two or three years of continued employment. At May 31, 1998 and 1997, the Company had reserved a total of 1,704,376 and 804,376 shares, respectively, of common stock under the Company's 1996 Stock Incentive Plan. In March 1997, the Board of Directors approved a resolution to offer the Company's non-executive employees the opportunity to reprice certain options which were originally granted under the Company's 1996 Non-Executive Stock Incentive Plan. The repricing occurred on March 25, 1997, and resulted in the cancellation of approximately 290,000 options and the granting of approximately 174,000 new options with an exercise price equal to $13.125, the closing price on March 24, 1997. The canceled options were replaced with fewer new options in accordance with a formula to result in economic equivalence between the old and new options. The new options were granted with two-year vesting periods and ten-year terms. At May 31, 1998 and 1997, the Company had reserved a total of 1,464,820 and 2,582,127 shares, respectively, of common stock for this Plan. The Morrison Health Care, Inc. Stock Incentive and Deferred Compensation Plan for Directors provides nonmanagement directors with opportunities to defer the receipt of their retainer fees or to allocate their retainer fees to purchase shares of the Company. In general, the Plan sets a target ownership level for nonmanagement directors. To facilitate attaining the target ownership level, the Plan provides that the directors must use at least 60% of their retainer to purchase shares of the Company until they reach the target ownership level. Each director purchasing stock receives additional shares equal to 15% of the shares purchased and three times the total shares in options, which vest after six months and become exercisable for five years from the grant date. All options awarded under the Plan have been at the prevailing market value at the time of grant. Pursuant to this Plan, a one-time restricted stock award totaling 5,000 shares was made in fiscal year 1997 to a nonmanagement director. A Committee, appointed by the Board, administers the Plan on behalf of the Company. At May 31, 1998 and 1997, the Company had reserved 81,917 and 85,251 shares, respectively, of common stock for this Plan. Under the terms of the Distribution, holders of MRI stock options received adjusted, substitute options in MHCI, MFC and RTI which, in the aggregate, preserved the economic value as well as the material terms, such as option period, vesting provisions and payment terms, the optionee had in the original MRI options prior to the Distribution. For SFAS No. 123 disclosure purposes, these options, if granted in fiscal year 1996, were valued as of the original grant date. The Company applies APB No. 25 and related interpretations in accounting for its stock incentive plans. Under APB No. 25, because the exercise price of the Company's employee stock options equals the market price of the stock on the date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The fair value for these options was estimated at the date of grant using a Black- Scholes option pricing model with the following weighted average assumptions for 1998, 1997 and 1996, respectively: risk-free interest rates of 5.7%, 6.6% and 6.0%; volatility factors of .24, .19 and .22; dividend yields of 0.9%, 4.3% and 4.7%; and weighted average expected lives of 7.5, 7.6 and 4.8 years. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows (in thousands, except earnings per share amounts): For the Fiscal Year Ended May 31, 1998 May 31, 1997 June 1, 1996 Pro forma net income $10,771 $9,618 $9,157 Pro forma earnings per share - Basic $ 0.90 $ 0.82 $ 0.78 Pro forma earnings per share - Diluted $ 0.89 $ 0.82 $ 0.78 The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. SFAS No. 123 does not apply to awards made prior to fiscal year 1996, and additional awards are anticipated. A summary of the Company's stock option activity and related information for the years ended May, 31, 1998, May 31, 1997 and June 1, 1996 follows: May 31, 1998 May 31, 1997 June 1, 1996 Weighted Weighted Weighted Average Average Average Options Exercise Options Exercise Option Exercise (000) Price (000) Price (000) Price Outstanding - Beginning of year 2,307 $15.82 2,368 $15.97 0 $ 0.00 Converted MRI options 0 0.00 0 0.00 1,493 15.55 Granted 357 17.76 493 13.21 950 16.50 Exercised (274) 12.05 (200) 9.69 (57) 11.38 Forfeited (144) 15.55 (354) 16.78 (18) 24.44 Outstanding - End of year 2,246 $16.45 2,307 $15.82 2,368 $15.97 Exercisable at end of year 1,110 $17.09 1,068 $15.95 1,056 $14.52 Weighted average fair value of options granted during the year $ 6.66 $ 1.89 $ 2.70 The following table summarizes information about stock options outstanding at the end of: May 31, 1998 Options Outstanding Options Exercisable Weighted Average Range of Number Weighted Average Remaining Number Weighted Average Exercise Prices Outstanding Exercise Price Contractual Life Exercisable Exercise Price $ 8.98 - $14.38 567 $12.77 5.70 187 $11.93 $14.50 - $16.38 469 $14.78 1.83 432 $14.68 $16.50 - $16.50 578 $16.50 3.11 110 $16.50 $16.56 - $31.59 632 $20.94 4.48 381 $22.51 2,246 $16.45 3.88 1,110 $17.09 May 31, 1997 Options Outstanding Options Exercisable Weighted Average Range of Number Weighted Average Remaining Number Weighted Average Exercise Prices Outstanding Exercise Price Contractual Life Exercisable Exercise Price $ 8.98 - $13.13 676 $12.16 5.96 317 $11.15 $13.50 - $15.75 596 $14.56 2.70 475 $14.62 $16.50 - $16.50 622 $16.50 3.84 0 $ 0.00 $17.03 - $31.59 413 $22.61 2.40 276 $23.72 2,307 $15.82 3.91 1,068 $15.95 NOTE 10 Contingencies At May 31, 1998, the Company was contingently liable for approximately $4.6 million in letters of credit, issued primarily in connection with its Workers' Compensation and Casualty insurance programs. The Company is presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of its business. In the opinion of Management, the ultimate resolution of these pending legal proceedings will not have a material adverse effect on the Company's operations or financial position. Prior to the Distribution, the Company entered into an agreement with MFC and RTI providing for assumptions of liabilities and cross-indemnities. The agreements are designed to allocate generally, among the three companies, effective as of the Distribution date, financial responsibility for liabilities arising out of or in connection with business activities prior to the Distribution. No significant amounts were incurred under this agreement during fiscal year 1998 or 1997. NOTE 11 Subsequent Events Subsequent to May 31, 1998, the Company replaced its $50 million credit facility with a $75 million revolving credit line from four financial institutions. Concurrent with this transaction, the Company cancelled the related interest rate swap agreement that had effectively fixed the interest rate for the term portion of that facility. The new credit line has a variable interest rate based upon LIBOR and variable interest payment requirements. The principal is due no later than June 30, 2003. The initial amount borrowed was $35.4 million, all of which was used to repay the balance due on the $50 million and $5 million credit facilities. Also in June 1998, the Company entered into two interest rate swap agreements to reduce the impact of changes in the interest rates on its floating rate debt and to exchange floating rate for fixed rate payments at certain dates. These swap agreements expire in June 2003 and June 2008 and effectively convert $20,000,000 of variable rate borrowings to fixed. NOTE 12 Supplemental Quarterly Financial Data (Unaudited) Quarterly financial results for the years ended May 31, 1998 and May 31, 1997 are summarized below. For the year ended May 31, 1998, all quarters are composed of three months. For the year ended May 31, 1997, all quarters are composed of 13 weeks. First Second Third Fourth (Amounts presented are in thousands) Quarter Quarter Quarter Quarter Total For the year ended May 31, 1998 Revenues $57,754 $60,646 $63,337 $68,634 $250,371 Gross profit* $10,027 $10,688 $10,541 $11,850 $ 43,106 Income before income taxes $ 4,674 $ 5,035 $ 4,292 $ 5,064 $ 19,065 Provision for federal and state income taxes 1,846 1,989 1,695 1,983 7,513 Net income $ 2,828 $ 3,046 $ 2,597 $ 3,081 $ 11,552 Earnings per share: Basic $ 0.24 $ 0.25 $ 0.22 $ 0.26 $ 0.97 Diluted $ 0.24 $ 0.25 $ 0.21 $ 0.25 $ 0.95 For the year ended May 31, 1997 Revenues $52,658 $54,355 $57,483 $56,515 $221,011 Gross profit* $ 9,634 $10,291 $ 9,416 $10,437 $ 39,778 Income before income taxes $ 4,619 $ 4,648 $ 3,695 $ 4,614 $ 17,576 Provision for federal and state income taxes 1,923 1,922 1,533 1,912 7,290 Net income $ 2,696 $ 2,726 $ 2,162 $ 2,702 $ 10,286 Earnings per share: Basic $ 0.23 $ 0.23 $ 0.18 $ 0.23 $ 0.87 Diluted $ 0.23 $ 0.23 $ 0.18 $ 0.23 $ 0.87 *The Company defines gross profit as revenue less operating expenses. Common Stock Market Prices and Dividends Morrison Health Care, Inc. common stock is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol MHI. The following table sets forth the reported high and low prices on the NYSE or the high and low bid prices for each quarter during fiscal years 1998 and 1997. First Second Third Fourth Quarter Quarter Quarter Quarter 1998 market price per share: High $17.250 $19.750 $20.188 $22.875 Low $15.375 $15.750 $17.063 $16.250 1997 market price per share: High $15.000 $14.375 $14.875 $16.500 Low $11.125 $10.750 $13.250 $13.000 Cash dividends on the common stock of Morrison Health Care, Inc. were paid during each quarter of fiscal years 1998 and 1997 as follows: First Second Third Fourth Quarter Quarter Quarter Quarter Total 1998 cash dividends per share $0.205 $0.205 $0.205 $0.205 $0.820 1997 cash dividends per share $0.205 $0.205 $0.205 $0.205 $0.820 On July 1, 1998, the Company's Board of Directors declared a quarterly dividend of $0.04 per share, payable July 31, 1998, to 5,525 shareowners of record on July 13, 1998. Report of Independent Auditors Morrison Health Care, Inc. and Subsidiaries Stockholders and Board of Directors Morrison Health Care, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Morrison Health Care, Inc. and Subsidiaries as of May 31, 1998 and 1997, and the related consolidated statements of income, shareowners' equity and cash flows for each of the three fiscal years in the period ended May 31, 1998. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Morrison Health Care, Inc. and Subsidiaries at May 31, 1998 and 1997, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended May 31, 1998, in conformity with generally accepted accounting principles. Atlanta, Georgia June 23, 1998 MORRISON HEALTH CARE, INC. EXHIBIT 21.1 List of Subsidiaries State of Incorporation - Arizona Drake Management Services, Inc. State of Incorporation - Georgia Culinary Solutions, Inc. State of Incorporation - Tennessee Culinary Concepts, Inc. State of Incorporation - Pennsylvania Custom Management Corporation Custom Management Corporation of Pennsylvania Morrison Custom Management Corporation of Pennsylvania John C. Metz & Associates, Inc. State of Incorporation - Texas Morrison's Health Care of Texas, Inc. MORRISON HEALTH CARE, INC. EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Morrison Health Care, Inc. and Subsidiaries of our report dated June 23, 1998, included in the 1998 Annual Report to Stockholders of Morrison Health Care, Inc. and Subsidiaries. Our audits also included the financial statement schedule of Morrison Health Care, Inc. and Subsidiaries listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statements of Morrison Health Care, Inc. and Subsidiaries listed below of our report dated June 23, 1998, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Morrison Health Care, Inc. and Subsidiaries for the year ended May 31, 1998. -Registration Statement No. 333-2098 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-2100 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-2102 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-2104 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-2106 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-2108 on Form S-8 dated March 8, 1996 and related Prospectus -Registration Statement No. 333-4504 on Form S-8 dated May 3, 1996 and related Prospectus -Registration Statement No. 333-4508 on Form S-8 dated May 3, 1996 and related Prospectus -Registration Statement No. 333-20197 on Form S-8 dated January 22, 1997 and related Prospectus -Registration Statement No. 333-40177 on Form S-8 dated November 13, 1997 and related Prospectus /s/ Ernst & Young LLP Atlanta, Georgia August 28, 1998 MORRISON HEALTH CARE INC. EXHIBIT 27 FINANCIAL DATA SCHEDULE (in thousands except per share amounts) This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of income on pages 18 through 19 of the Company's 1998 Annual Report to Stockholders and is qualified in its entirety by reference to such financial statements. Item Number Item Description Year End 1998 - ------------------------------------------------------------ - ------------- 5-02(1) Cash and cash items $5,720 5-02(2) Marketable securities 0 5-02(3)(a)(1) Notes and accounts receivable - trade 22,268 5-02(4) Allowances for doubtful accounts 887 5-02(6) Inventory 2,936 5-02(9) Total current assets 39,620 5-02(13) Property, plant and equipment 24,191 5-02(14) Accumulated depreciation 10,232 5-02(18) Total assets 84,374 5-02(21) Total current liabilities 32,276 5-02(22) Bonds, mortgages and similar debt 31,690 5-02(28) Preferred stock - mandatory redemption 0 5-02(29) Preferred stock - no mandatory redemption 0 5-02(30) Common stock 124 5-02(31) Other stockholders' equity 8,248 5-02(32) Total liabilities and stockholders' 84,374 equity Item Number Item Description 52 Weeks 1998 - ------------------------------------------------------------ - ------------- 5-03(b)1(a) Net sales of tangible products $250,371 5-03(b)1 Total revenues 250,371 5-03(b)2(a) Cost of tangible goods sold 207,265 5-03(b )2 Total costs and expenses applicable to 207,265 sales and revenues 5-03(b)3 Other costs and expenses 0 5-03(b)5 Provision for doubtful accounts and notes 0 5-03(b)(8) Interest and amortization of debt 1,528 discount 5-03(b)(10) Income before taxes and other items 19,065 5-03(b)(11) Income tax expense 7,513 5-03(b)(14) Income/loss continuing operations 11,552 5-03(b)(15) Discontinued operations 0 5-03(b)(17) Extraordinary items 0 5-03(b)(18) Cumulative effect - changes in 0 accounting principles 5-03(b)(19) Net income or loss 11,552 5-03(b)(20) Earnings per share - primary 0.97 5-03(b)(20) Earnings per share - fully diluted 0.95 -----END PRIVACY-ENHANCED MESSAGE-----